The World of Wealthtech for Advisors
June 20, 2023 | Johnathan Rickman | Blue Vault
Learn About the Dizzying Array of Service Providers That Offer Technology Solutions for Alts Advisors
Like other industries, the world of alternative investments has been flooded with new technology. These innovative digital solutions help advisors tackle everything from subscription processing, electronic signature, and customer relationship management (CRM) to analyzing and reporting investment data.
The phenomenon comes amid the advancement of cloud computing, software-as-a-service (SaaS) technology, and AI, as well as increasing acceptance of a remote workforce—all of which reinforce digital-first expectations among wealth management professionals and the public.
A subset of the larger “fintech” umbrella, wealthtech tools and platforms can help make alternative investment advisors’ everyday tasks more efficient, giving them more time with clients. But they also introduce fresh cybersecurity and connectivity concerns. Can they all talk to each other? And can they connect one industry partner to the other if different advisors and firms use different tech solutions?
At the end of the day, advisors should base their wealthtech choices around the investment needs of their clients. The degree to which these tools transform investing in alts for advisors and investment firms is a story for another day, but for now let’s look at some of what the world of wealthtech offers:
Marketplaces
Some of the largest online platforms for alternative investments, such as those of CAIS and iCapital, are distribution marketplaces that offer turnkey solutions for advisors that are okay with others curating their alts offering options for them. These platforms connect advisors with asset managers, custodians, clients, and other partners and provide educational and analytical tools—one-stop alts shops, if you will. Competitors such as Moonfare, RealBlocks, and Titanbay have emerged, each offering value-added services along with automation and digital investment workflows. Some of these platforms let users:
•Invest on behalf of clients or co-manage client funds
•Bundle products and services
•Access research, ratings, and other fund information from platform partners
Investment Processing Platforms
Smaller-but-powerful platforms like AIX and Altigo offer alts subscription services that allow advisors to choose which funds they wish to engage with. Advisors can invite their preferred asset managers to join them on these platforms (and vice versa), offering a user-centered tech solution that promotes existing industry partnerships and the freedom to choose one’s own adventure.
Customer Service Software
Whether steeped in alts or not, advisors also have a wealth of generalized tech tools to choose from:
•Customer relationship management: CRM tools help advisors streamline the everyday tasks of client prospecting and onboarding, billing, and reporting and can also act as a secure portal for interacting with contacts. Platforms such as AdvisorEngine, Envestnet Tamarac, Skience, and Wealthbox also offer add-on services and integration options that tailor to an advisor’s needs.
•Financial planning software: Need help pinpointing appropriate investing and tax management plans for your clients and prospects? Tools such as Envestnet MoneyGuide, Holistiplan, Orion, and RightCapital can help you with that as well as provide a portal for interacting with contacts.
•Data management tools: Product such as Snowflake and Advent Data Solutions help advisors manage internal data as well as aggregate real-world business performance and market insights to help advisors monetize external data.
Blue Vault’s professional service partners like Computershare, Phoenix American, SS&C, and others also offer tailored tech solutions for alts advisors and their partners. This story only touches the tip of the iceberg!
Regulation and Cybersecurity
The advent of fintech, which also includes virtual currency, has introduced several regulatory and cybersecurity challenges flowing from both its complexity and online exposure. The U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA), the self-regulatory organization that governs broker-dealers, both keep a watchful eye on wealthtech advancements along with those of other emerging technologies and have issued reports to help promote risk awareness:
•FinTech Topics and Reports at FINRA
•FINRA Regulatory Notice 22-18 on digital signatures
•FINRA Regulatory Notice on 22-29 on ransomware risks
•SEC FinHub: Strategic Hub for Innovation and Financial Technology
Wealthtech is here to stay and will continue to grow in innovation. Indeed, the alternative investment industry’s slow walk away from paper-based processes continues to make it necessary. For now, navigating the world of wealthtech requires advisors to first determine what solutions they need to better help them help their clients, and then research both the product maker’s reputation and the products themselves to ensure whether they will be helpful or ultimately make life more complicated.
So, where is Blue Vault in all of this? We may not be a fintech phenomenon per se, but we use the power of the internet to provide information that helps educate advisors and protect investors—including information on the intersection of wealth and technology.
