together all the components of the
tech stack combined with investment
management services. But today’s
API-driven, cloud-native platforms
can integrate separate, best-in-breed
components together so advisors and
clients can substantially lower costs and
improve overall client outcomes.
This most likely threatens the big
TAMP incumbents, such as Envestnet.
How did Envestnet respond? By going
back to its playbook and deciding to
manage advice at the beginning of the
process — bundling the advisor tech stack
and doing more on the advisor desktop.
Case in point, Envestnet’s recent $500
million mega-deal for financial planning
software provider MoneyGuidePro,
part of the firm’s $1-plus billion
spending spree that included Tamarac,
FolioDynamix and data-aggregator
Yodlee. The firm now is actively looking
to bundle all of this into one offering:
Even the independent RIA — the fastest
growing segment of the industry —
typically bundles its advice and financial
planning services via an AUM fee. How
will these models need to adjust as the
unbundling movement accelerates,
driven by new retainer, hourly and
subscription models embraced by
Michael Kitces and Alan Moore via their
XY Planning Network and AdvicePay
platforms? What does the future portend?
Beyond 2020, we see yet another
unbundling of advice in the form of
financial planning services being sold via
a Netflix-like subscription model (rather
than based on AUM), most notably the
concept of advice from a CFP professional
on the phone for $30 a month from Schwab.
Ultimately, what all of this
unbundling from tech innovation has
caused is the further commoditization
of investment management. Everyone
agrees that wealthy people will still
need and pay for professional financial,
tax and estate planning advice from a
credentialed human advisor, since they
have too much at stake to leave it up to
a website or mobile app. Plus, humans
excel at relationships, which really is the
value advisors provide, so we all believe
that the advisor will remain paramount.
But for everyone else, the questions are
daunting — to bundle or unbundle?
If I were an asset manager not named
Vanguard or Blackrock, or a managed
account product manager at a wirehouse/
broker-dealer or an exec running a TAMP,
or even a large RIA bundling planning via
an AUM fee, I would immediately start to
find ways to unbundle myself before the
next wave of unbundling does me in.
Timothy D. Welsh, CFP, is President, CEO
and founder of Nexus Strategy, LLC, a leading
consulting firm to the wealth management
industry and can be reached at firstname.lastname@example.org or on Twitter @NexusStrategy.
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