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  2. Established in Sydney in 2013 and now also operating in the US and Europe, Practifi aims to deliver a new form of technology platform for advice businesses to run the whole organisation, not just part of it. This is a business management system that extends across an enterprise. Leveraging Salesforce as a platform for infrastructure and security, they have added 115 customer objects which can be deployed to meet a range of customer needs. The service is designed to accommodate multi-disciplinary practices that include estate planning and tax advice in addition to financial planning. The system can display a wide range of dashboards and provide a full perspective of all interactions an organisation is having with a client, a family, another extended group of related individuals or entities. It can also identify where multiple clients are supported by the same external third-parties. Wherever possible extensive summaries of key information are contained within a single screen but they can be viewed from multiple different perspectives. This is an end to end business management platform, it does not provide product speciality systems, such as portfolio management or financial planning, or for accountants an accounting platform, but delivers clients the ability to run every workflow across multiple different third party systems all in a single view. This is particularly beneficial for multi-disciplinary firms needed to use individual specialist systems. They can use Salesforce communities to build client portals for individual clients, but do not produce an off the shelf tool. The ideal client is a growth orientated firm who have either complex business themselves, supporting multiple disciplines, very complex processes where they need to bring together several third party systems, or complex clients such as those needed by a ultra high net worth or multi-family office. I am coming across an increasing number of situations where there is a need to connect different professional specialities within larger organisation works, in the second stances this may have much to offer. (written by Ian McKenna) Founded in 2010, the company have 700 clients live on their platform with close to $2 trillion in assets from firms with under $50 billion in assets, i.e. excluding some of their largest clients who include global banks and asset managers. InvestCloud have created over 300 different apps which can be combined to create a wide range of content, either as end-to-end solutions or as gap filling components to supply features and functionality which an organisation may not have in their native technology proposition. They will deliver as much or as little as a customer needs. You don’t have to take the full suite of their services. Prioritising design as a core competence means propositions can support different personas from the very digitally savvy to traditional analogue customers. Services range from client portals, adviser portals, digital on-boarding, financial planning and a wide range of other functions. It is worth looking at their periodic table of financial apps at investcloud.com to get a feel for the full range of options. If you look at the table it highlights InvestCloud expertise in Experience (InvestCloud Blue), Management (InvestCloud Orange) Analytics InvestCloud Black and Processing InvestCloud Green. All services are fully mobile optimised and tablet-enabled. This summer they acquired the rplan business set up by former Cofunds tech guru Andy Creak, who will be well known to anyone in the UK investment industry. This demo really only scratched the surface of what can be offered by the firm who are becoming and increasingly significant player. (written by Ian McKenna) Founded in 2016, Clearnomics is a report writing tool to provide advisers and wealth managers with detailed market and economic insights for their clients via desktop, mobile and tablet devices. Using a series of pre-programmed online questions, with bespoke customisation available, the adviser is able to select specific data items such as stock market and investment performance, which is of particular interest to the client, over a desired timeframe. This will automatically create a ‘chart book’ using a combination of their Intelligent Assistant and API feeds, which can be adviser-branded and saved to the client record for use as part of the advice process in order to save the adviser time in conducting their own lengthy research documents. (Written by Jason Green) Smartleaf is an automated rebalancing platform tool to improve efficiency and compliance for advisers. The company was founded in 1999 originally as a D2C offering many years before the term ‘robo’ was coined. In 2003 they gained their first Bank Trust client and the proposition seen today was developed. Smartleaf provides highly automated tax management, at scale, for any sized portfolio ranging from $100,000,000, open architecture UMA accounts, to $5 robo equity investments which in turn can save more in taxes on average than what is paid in fees. Distributing via three product channels, the service is used by over 1,000 advisers, TAMPs (Turn Key Asset Platforms) and robo clients. The number of end users has not been disclosed. Everyday each account is rebalanced using a series of filters and queries which select various accounts and trades. These filters are all set by the client so that Smartleaf can trade the required accounts when necessary. The system understands which accounts need to be traded and which don’t (such as unknown securities). This produces tax savings and reduces tracking errors in the portfolio and makes it more aligned to the client’s desired asset allocation and goals. Each trade which is suggested by Smartleaf is assigned a cost benefit score. This identifies the commissions and taxes (cost) and how much closer this trade will get the client to their chosen goal or targets (benefits). Portfolio health check reports for advisers are also produced to give to clients which demonstrate the savings made via the tax optimisation. The average taxes saved for accounts managed on Smartleaf last year was 1.60% of portfolio value, which is more than most adviser fees. (Written by Jason Green)
  3. Day 2 at InVest West kicked off with Mimi Chan discussing her new gifting platform - Littlefund. Mimi who is currently heavily pregnant founded Littlefund in 2018. The platform provides a new way of saving for millennials, which is designed to help them save for their children, the so called Generation Alpha and their future. Littlefund is a platform which allows family (via the family account) and friends (via the gifter account) to start saving for multiple goals in their GenA childrens' future. Mimi had the concept for Littlefund after having her first child and being racked with guilt at the number of unused gifts that she received when her daughter was born. Littlefund is designed so that close family and indeed friends, god parents and extended relatives are able to log in to the platform and make a monetary contribution to child’s savings account rather than giving a more traditional tangible, and often unwanted, gifts. There is no app, which they say is because its so simple an app isn’t needed! Just log in the website and make bank transfer to nominated gift account. I don’t really buy that argument so hopefully an app will arrive sooner rather than later. This isn’t a one-off activity. Think birthdays, christenings and graduations. There will be no more receiving socks at Christmas or a cheque/cash posted in a card (who uses cheques and who even posts cards these days?) Recent research in the US stated that 69% of Americans biggest financial worry is not being able to provide a comfortable upbringing for their family. Existing 529 plans which are available in the US are primarily used to save for college education with tax advantages. Unlike 529’s with a Littlefund account, there is no tax advantage, but you do have more control of your savings. You are able to contribute as much or as little as you like, make fund withdrawals at any point, and will not incur any penalties or have to conform to differing interstate regulations. The key marketing strategy is to leverage social media with a heavy focus on the use of Instagram. But they have also gone back to good old-fashioned word-of-mouth. New parents like to talk! To encourage further growth, they are aiming to get 10,000 users by the end of the year by offering referral awards for new investors. Although a very simple concept, I really liked the idea of Littlefund and could see how something similar could work well in other markets market.
  4. At the first main session of the opening day of Invest West 2018, Suleman Din, technology editor of Financial Planning magazine had a fireside chat with Personal Capital CEO Jay Shah on how the company is progressing. This provided a fascinating snapshot of perhaps the most successful hybrid advice firm operating today. Shah highlighted that the firm has been a hybrid adviser from the start. Beginning in San Francisco, where I remember my first meeting with Shah and Personal Capital founder Bill Harris back in 2012, in an office that was still being built around us while we talked. Since then the firm has reported +50% growth every year and now has in excess of $8 billion assets under advice. The business is growing in multiple locations, with hubs in Dallas and Atlanta having recently been added to the Denver base which opened in 2013. Shah says while they deliver virtually, the strategy is based on being in customers different time zones, not building a bricks and mortar network, which he identifies as a significant unnecessary cost that would ultimately be passed on to the customer. The new locations have been selected as areas where they have found a rich pool of adviser talent. Typically they communicate with their clients by video, using screen sharing, rather than in-person meetings, which the firm finds their clients would rather avoid. This strategy has seen a 130% increase in assets since the start of 2017. Theirs is a mass affluent service to support consumers who have a compelling need for advice. The vast majority of the company’s relationships are advisory, although consumers can still access their free app and use it themselves to aggregate their finances and take their own decisions. The software can build a cash-flow for households and help them identify their savings and investment goals. The average client is in the mid $400,000 range. This is right in the middle of the mass affluent asset space, which Shah described as $100,000 to $5,000,000 investable assets representing 28% of American consumers and totaling 60% of investable assets in the US. Shah is clearly proud of the 90% retention rate the firm has achieved, pointing out that consumers vote with their wallets if they believe your story, and their feet if they do not. Having moved from 0 to $8 billion assets in just six years Personal Capital must represent one of, if not the, most successful hybrid advice models in the market.
  5. Positioned as the elephant in the room at Invest West, Ric Edelman (Edelman Financial Services) and John Bunch (Financial Engines) discussing how they have joined forces to build the USA’s largest RIA advice service. Self-proclaimed as the first of the robo solutions in the market, the proposition was built to help shift workplace 401K pensions from DB to DC plans and to help with fund selection and rebalancing. 330 registered financial advisers are currently serving more than 10million clients with an impressive 36 billion held in assets. With some advisers serving up to 500 clients each (which includes a diverse mix of low investors and millionaire clients) they have had 150,000 potential new clients reach out to them for help this year. The financial planning element is based on automated “robo” algorithms which are not standardised or off the shelf like some others. They currently have 883,000 personalised portfolio algorithms available which have been developed over the last 20 years. Their view is that they are still a few years off being able to deliver a fully automated holistic advice service. However, from what we are seeing currently being developed in the UK market, we may disagree. Ric and John have a great ethos which states that everybody deserves financial help. Although they typically have a $5,000 entry AUM per household, they will take clients who have less to invest and will often work on a pro-bono basis. They state that these may not be the ideal or best client today - but might be in future. What a refreshing approach to offering affordable financial planning to all. All clients are treated the same regardless of the amount of money they have to invest. There is a flat fee of $800 for the financial planning, and all clients go through the same financial planning process. They do not run TV adverts or structured marketing plans. They do have financial planning education though, which they offer through all channels - which is free to all consumers. Ric has just published a children’s book to address financial literacy aimed at 4-8yr olds (The Squirrel Manifesto, which is available on Amazon - https://www.amazon.com/Squirrel-Manifesto-Ric-Edelman/dp/1534441662/ref=sr_1_1?ie=UTF8&qid=1544153861&sr=8-1&keywords=the+squirrel+manifesto
  6. How should an advisor with a fiduciary duty to their clients’ address client’s who no longer fit within the optimal client profile of the advisor firm? Facet Wealth has created a novel way to help advisor firms with clients who are no longer in their core customer segment by buying part of a firm’s book so the vendor can focus on growing their core target audience. Facet was established early 2016 when co-founder Anders Jones was motivated to find a solution to help the 8 million households who would potentially lose their advisor had the DOL rule proceeded. Using proprietary technology including artificial intelligence the firm aims to reduce costs and make advisors more efficient. They targeting mass affluent customers rather than high net worth. Advisors working for Facet are not asked to sell but their bonus is based on client satisfaction and similar measures. The firm currently have nine advisors and expect to be at twelve by the end of the year. They have low hundreds of clients who have fully transitioned and around another 1,000 in process of transition. The firm does not have a bricks and mortar presence but works virtually. Fidato Wealth are an example of a firm who have transferred clients to Facet. During the last year Fidato identified that their ideal client is an individual who is not retired yet, in the 50-60 year bracket with a net wealth of over $1,000,000, and business owners within three years of an exit event. In assessing their optimal clients’, the firm also recognised that as a fiduciary they had a duty to identify to clients when they were no longer the right advisor for them. They have migrated two groups of clients away over the last year. The first were moved across to a retail branch of TD Ameritrade as they had not yet come across Facet at that time. Fidato recognised that each advisor can only handle so many households, they also looked at if they should create an in-house robo but felt that would take away and dilute the brand. The second group of clients they transitioned away they moved to Facet, a dedicated CFP who will provide them with a full financial plan. The latter group of clients who were transitioned away actually saved money on their fees. Facet see their target audience as the 33-million mass affluent households in the US, defined as $100,000 to $1,000,000 investable assets, excluding home equity. They have also identified that there are approximately 8 million households in the US who have a relationship with an advisor where that relationship is not profitable for the advisor. If a client grows above $1,000,000 Facet will send them back to the firm they came from. Facet use Pershing, Schwab and TD as custodians and are adding Fidelity. Fidato found their clients were happier that, while moving away, they were able to stay with the same custodian. Facet have already entered into about 20 partnerships and raised $33 million of funding in September. While an advisor who hold physical meetings typically have 75 clients, Facet advisors look after 300 each. The philosophy is to use technology including AI to reduce the three hours of admin an advisor typically undertakes for every one hour they spend with clients down to virtually zero through the use of their proprietary technology. This form of part-sale partnership is certainly a fascinating model and would appear a far better option than simply turning away unprofitable clients.
  7. Day one at InVest West, Bradley Leimer the Co-Founder of Unconventional Ventures talks to MoneyLion founder Dee Choubey. Founded in 2013 MoneyLion is a financial services app designed to help consumers better manage their money. Their objective is to better understand personal finance using advanced technology in order to help cater to the 90 million Americans who struggle with their finances. Dee Choubey, CEO describes themselves as a one-stop shop for financial needs. To date, they have on-boarded 3.5 million clients, which they’d like to grow to 50 million in the coming years, and carried out over 2 million financial transactions. Some of the key features of the service are: A consumer checking account, with no opening or ongoing fees TransUnion credit score and monitoring service A registered investment advisor and zero fee managed investing An authorised credit lender in 50 US states and the proposition allows consumers access to low-interest rate lending against their own acquired assets Their research shows that the typical American has a small amount of left-over cash nine months of the year, and overspends for three – typically around this time of year. This is where the lending comes in to play as customers can borrow up to $500 at a typical rate of 5.99% in times of financial hardship. MoneyLion have Financial Wellness at the heart of the proposition, which measures four areas in order to understand a client’s financial stress and provides them with a heart rating score. They have also partnered with Fitbit, and for every 15,000 steps walked a client gets $1 invested into their investment account. The app is available on two pricing models. The first is free of charge and the second is $29 a month. The latter includes $1 daily cash back for logging into the app. By building financial education, consumers are being rewarded and in essence not paying for the service. By comparison the average American pays $90 a month for banking services. The Digital Wealth Insights team will be speaking to MoneyLion in due course in order to explore the proposition further. More analysis will follow shortly.
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