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Advisor Applications
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Man Bites Dog: MoneyGuide Pro Criticized By Advisor; An Update On PIEtech |
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Tuesday, December 13, 2011 18:39
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Tags: Financial Planning Apps
The headline represents what journalism professors call a “man-bites-dog” story. MoneyGuide Pro is so beloved by advisors that saying it was criticized is news.
So when New Jersey advisor Tim Knotts criticized the most vaunted vendor in the RIA software business in a comment on A4A yesterday, it drew my attention. This Website Is For Financial Professionals Only
Knotts is smart, sincere, and professional. (View a video of Tim Knotts and you’ll see what I mean.)
It’s not like Knotts to lash out angrily at MGP but he ripped into them in posting this comment yesterday on an article in A4A:
“I just got a call from MoneyGuide Pro about their licensing fee. I just paid my annual renewal fee of $1,095 last week (I know...hard to believe the price right?). They just called up and said that I have the "wrong" license. Based on my business model, and the fact that I have a business partner, we need to be in a "firm" license rather than a "solo" license (which we've held and paid for over two years now). Not only did they raise their fee by about 10% over last year, now they want me to pay MORE based on my business model? When I asked what the additional benefit would be they came up with next to nothing. (I could have my firm's brand on the web site?) I was having a pretty good day....but now I'm ticked. USED to love MGP, spoke highly of it on the web and at all conferences, but now it’s time to start looking at the alternatives!!!
Sorry, Mr. Knotss but I respectfully disagree.
A 10% price increase on MGP is probably warranted, and, at $1,095, it’s a good value.
MGP is a major component in a wealth management practice. It enables investment advisors to provide broader wealth management services, to add value in client relationships beyond the increasingly commoditized investment management service that is the core of most advisory businesses.
PIEtech, the company that makes MGP, has blazed a trail of innovation in helping advisors build a wealth management advisory business. Bob Curtis, its CEO, is brilliant.
Don’t get me wrong, PIEtech is far from perfect and will likely face some stiff competition starting in 2012. Advisor Software Inc.’s new online app for RIAs will be attractive to more sophisticated private wealth managers. Nonetheless, advisors have to pay up for good software. (Advisor Software’s new software cost about $1,500 annually and available add-on modules boost the price.).
Keep in mind, PIEtech is not standing still. In early 2012, it will be rolling out the third generation of its MGP software, and “G3” undoubtedly cost hundreds of thousands of dollars to develop. In addition, PIEtech is entangled in a patent infringement legal battle with Financeware, a competitor, which is costing MGP hundreds of thousands of dollars, and it was probably not an expense the company expected.
That legal battle, by the way, is moving ahead, albeit slowly. The tussle began in August 2011 when Financeware sued one of MGP’s largest customers, UBS, for patent infringement stemming from UBS’s use of MGP. Financeware claims to have invented a new method of financial advising and was granted several patents by the U.S. Patent Office.
Last month, PIEtech filed a motion asking Judge John F. Keenan to allow it to become a party to the case so it can address allegations made by Financeware against UBS. That motion was recently granted, according to Curtis. Curtis says that the court’s schedule calls for discovery and depositions to continue through September.
PIEtech must prove that the patents granted to Financeware are invalid. One tack is claiming that Financeware did not present all of the inventions in financial planning software when it applied to the government for its patents. The legal wrangling could easily drag on into 2013.
PIEtech is a very popular app. In the Advisors4Advisors Review Database, MGP gets a 3.8 rating on a scale of five. A few other apps have better ratings. But MGP also has 128 reviews, far more than any other apps.
My guess is most of its users, for now, won’t mind paying another $100 a year for MGP.
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TD Ameritrade Demos How Its New Electronic Signature App For Clients Of Advisors Streamlines An RIA's Work |
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Thursday, December 08, 2011 21:57
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Tags: client communications | cloud | custodians | document management system TD Ameritrade Institutional (TDAI) just showed me its new system to help advisors get client signatures electronically.
To streamline the process of getting clients to sign account applications and other documents, TDAI integrated its brokerage recordkeeping system for investment advisors with LaserApp, an app for automatic form-filling used widely in the financial services industry, and DocuSign, an app for collecting electronic signatures securely.
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“Until now, advisors would print the account application and mail it to the client,” says Jon Patullo, director of technology product management at TDAI. “Time is wasted on getting accounts opened.”
With the integration, Patullo says the advisor pre-populates an account form with a client’s name, address, phone number, social security number, beneficiaries, and other data stored in Laser App’s desktop version.
The advisor sends the filled-in account form to DocuSign, which sends an email that can be personalized by the advisor to the client asking him to sign the document digitally. The email to clients contains a link to the document, which is stored on DocuSign’s server.
Before a client can view a document that needs a signature, however, clients must answer identity verification questions, such as which of several addresses listed they lived in 10 years ago and which state their father owned real estate.
Clients click on a distinctive icon in the document where a signature or initials are required. Clicking on the icons are equivalent to a client’s signature.
Advisors have a dashboard in DocuSign that displays a list of documents awaiting signatures as well as those already signed.
Once the client finishes signing the document, it is sent to TDAI and stored on its servers.
A client can save a copy of the signed document for his own records on his computer, but its up to the client to encrypt, password-protect, and store it in a safe place with other financial records. An advisor receives a notification when this occurs.
Patullo says integrating Laser App and DocuSign e-signature capabilities into the TDAI’s custodial platform will make advisors less likely to submit incomplete account forms, which could improve TDAI’s clients.
It looks to me like this e-signature app will streamline account opening, but I’d like to hear from A4A readers about how much of a time saver it could be.
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BondDesk Completes BondWorks Rollout At Raymond James |
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Tuesday, December 06, 2011 03:26
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About 5,400 financial advisors now have BondDesk's fixed income platform, which, accroding to a press release, connects broker-dealers through a centralized marketplace by offering a diverse pool of liquidity for odd-lot fixed income securities in multiple asset classes.
BondDesk says it executes over 20,000 transactions per day by providing 2,000 broker-dealers access to 100,000 live and executable offerings from over 100 premier fixed income dealers.
Any thoughts on BondDesk from readers?
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Wealthfront, A Potentially Disruptive Online Wealth Management Solution, Is Funded By Silicon Valley Bigshots And Competes Against Advisors |
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Friday, December 02, 2011 03:01
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Tags: competitors | Financial Planning Apps | online financial advice | Wealth Management Wealthfront is the latest in a series of incarnations of a wealth management platform funded by major Silicon Valley investors including Netscape founder Marc Andreessen and Jeff Jordan, former president of PayPal. And with each new incarnation, Wealthfront is learning from its mistakes and refining its business model and wants to become a competitive threat to advisors.
Founded in 2008 with more than $10 million in venture capital, according to TechCrunch, Wealthfront’s management team includes veterans of eCommerce and university endowments. Partners at Benchmark Capital, Index Ventures, and Kleiner Perkins Caufield & Byers are among the original investors. The company was originally called kaChing. This Website Is For Financial Professionals Only
In December 2009, Andrew Rachleff, a general partner at venture capital firm Benchmark Capital, one of the VCs originally backing the company, was named President and CEO. Rachleff, a lecturer on entrepreneurship at Stanford University, his alma mater, has overseen a major strategic shift in direction.
Till now, Wealthfront’s investment offering mimicked portfolios offered by separate account money managers and, thus, provided access to SAMs with low minimum investments. Investors paid Wealthfront between 50 and 200 bps depending on the managers used.
Today, Wealthfront phased out that business model and replaced it with a new investment product and an imaginative new fee structure.
According to the firm’s ADV, management of the first $25,000 in assets is free, and you pay 25 bps on assets above $25.000.
I’ve got a lot of questions about the business model and tried calling Rachleff and his PR firm at several different phone numbers this morning, but have not heard back from him yet.
To me, Wealthfront seems to have potential to turn into a disruptive force in the wealth management business. Here’s why.
Wealthfront has money. Benchmark Capital, where Rachleff’s a partner, has invested in more than 150 startups and manages nearly $3 billion in committed capital. Investments include AOL, eBay, Ariba, Juniper Networks, Red Hat, MySQL, OpenTable, Second Life, Yelp, Inc., Zillow, 1-800-Flowers, Ebags.com, Friendster, Palm Computing, and Seeking Alpha.
Wealthfront’s made mistakes but keeps refining its business model and trying again. It’s no wonder Rachleff lectures at Stanford on entrepreneurship; great entrepreneurs make mistakes and keep coming back and fixing them. That appears to be what Wealthfront is doing.
kaChing was just a first attempt at a wealth management platform by this group of Silicon Valley investors. According to GIGaom, kaChing offered investors access to managers that normally required a $1 million investment at just a $3,000 minimum and kept 25% of the investment manager's fee. In another incarnation reported on by TechCrunch, kaChing targeted mutual fund managers.
After Rachleff came, Wealthfront changed its name and he today essentially jettisoned Wealthfront’s existing solution for investors, called Money Manager Model Portfolio Service. Today’s announcement said that only current investors will now get access to that program; all new investors on the Wealthfront platform will invest in the new, much less expensive platform, which costs just 25 bps on assets of more than $25,000.
Ingenious fee structure. 25 bps is incredibly low , and free is even lower. Free means you can do some social good by giving really new investors a free way to access professional money management. But one day those really new investors will be grown-ups with real wealth and Wealthfront will have a foot in the door with them.
But the real genius of free is that wealthy investors can try out Wealthfront for free. If you have a few million dollars, there’s almost no additional risk to putting $25,000 on Wealthfront to try it out. If Wealthfront starts reporting that many of its clients are putting $1 million or two on its platform, then it becomes a competitive threat to independent financial advisors—even the group often referred to as “the profession.”
Great Spiel. “Wealthfront's unique web-based Precision-Investing Platform is built around the well-known model of Modern Portfolio Theory (MPT),” says Wealthfront’s website. “Nearly every academic and investment professional believes MPT is the best approach to manage an individual's portfolio, but historically, rigorous MPT-based financial advice has only been available through high-end financial advisors. These advisors often require account minimums in the millions, and charge fees of 1% or higher.”
“We’re democratizing access to the benefits of MPT with a service that is simple, cost-effective, financially rigorous and accessible to any investor,” the company website adds.
According to the brochure, “Wealthfront, an SEC registered investment advisor, offers an online service that makes it possible for everyone to access sophisticated financial advice. Our unique Precision-Investing Platform pinpoints your risk tolerance to recommend a precise mix of ETFs to maximize your expected return for your specific level of risk and then periodically rebalances your investments whenever market changes move your allocation away from your risk tolerance level.”
To advisors building portfolios using low-cost DFA and other index funds or ETFs, the methodology will likely sound familiar.
A post on Wealthfront’s blog today, entitled “Introducing The First Online Financial Advisor Built In Silicon Valley For Silicon Valley,” throws down the competitive gauntlet.
“Six months ago, we started hearing complaints from our Silicon Valley-based customers about the wealth managers lined up in their lobbies,” says CEO Rachleff’s blog post today.
“These 'suits' were taking advantage of the new wealth being created by the surge in IPOs. But our friends in technology companies didn’t trust the financial advisors, because of their high fees and biased advice," adding, “They started asking us if we could manage their entire portfolios in a quality way, but without all the costs.”
Rachleff told TechCrunch Wealthfront was today rolling out its platform to the “tech community, appealing to professionals from the tech communities who favor doing everything online, and are looking for ways to have their new wealth managed for far lower fees.” That’s smart marketing on two levels. Firstly, Silicon Valley geeks are early adopters of online wealth management. Secondly, coverage by the tech press of wealth management apps is naive.
TechCrunch and GIGaom reporters are great at covering technology but don’t know how asset managers charge retail investors. That’s why TechCrunch today totally missed the big story here: the fact that Wealthfront could be incredibly disruptive to the wealth management advice business because of its fee schedule—as in FREE. (Ironically, it is a free service best-suited for Occupy Wall Street types.)
Before advisors get too worried about Wealthfront and others of its ilk that are sure to follow, remember that really smart Silicon Valley bigshots have failed so far in trying to reinvent the wealth management business online. In fact, Marc Andreesen, one of the original investors in Wealthfront, cofounded Netscape with Jim Clark, who in 1999 started myCFO.com, which was supposed to be a revolutionary new wealth management system. That platform is still alive but never lived up to its swagger. It eventually was purchased by a bank and turned into a less ambitious advisor platform.
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A New Salesforce Integrator Targeting Advisors Springs Up From Nowhere |
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Thursday, December 01, 2011 01:00
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Tags: cloud | CRM
Technology is changing so fast in the independent financial advisor business that PC World is writing about a CRM system for advisors that’s integrated with Salesforce and Albridge and I’ve never heard of it before. This Website Is For Financial Professionals Only
GlobalOne’s release of the first of three CRM packages that help financial services firms transition to cloud computing with Salesforce.com was heralded in PC World.
Loyal readers know I’m the hardest working man in financial advisor technology journalism and that getting scooped by a general interest publication like PC World on an advisor tech story damages me ego. But that appears to be what has happened.
While PC World’s story contains few details about the advisor CRM offered by GlobalOne via Salesforce, it alludes to its social media capabilities.
“Until now, most financial services organizations have struggled to find vertical-focused solutions that leverage cloud and social technologies,” Geoff Merrick, CTO of GlobalOne says in a press release. “This industry is burdened with decades-old legacy technology and new regulatory requirements. For the first time, these firms can realize the business benefits of cloud and social technologies at a speed and cost that was traditionally unrealistic.”
Has any A4A reader heard of this company? Am I getting lazy?
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