Welcome to the February 2024 issue of the Latest News in Financial #AdvisorTech – where we look at the big news, announcements, and underlying trends and developments that are emerging in the world of technology solutions for financial advisors!
This month's edition kicks off with the news that financial planning software platform RightCapital has launched a workflow management tool called RightFlows to help advisors manage and assign steps in the financial planning process to team members and clients – which on the one hand capitalizes on advisor demand for workflow solutions tailored to the financial planning process without using a separate third-party tool, but on the other hand raises questions about how many different workflow support tools advisors will want to manage, given that many already use workflows within their CRM software (and other individual software tools may follow RightCapital's lead by offering their own embedded workflows).
From there, the latest highlights also feature a number of other interesting advisor technology announcements, including:
- Dispatch (formerly OneAdvisory) recently raised $8 million in seed funding as it seeks to provide a centralized data warehousing solution for advisory firms and eliminate the need for point-to-point data integrations between individual software solutions – which although a relatively new category for AdvisorTech, seems poised to pick up steam as advisors increasingly seek better integration among their constantly-expanding tech stacks
- Flourish has launched a new annuities platform, aiming to not only provide a marketplace of fee-based annuities for fiduciary RIAs but also to solve for the operational challenges of implementing annuities (and their notoriously burdensome paperwork) through streamlining and automation of the application process
- Estate planning software provider Vanilla has announced a partnership with Vanguard's Ultra-High-Net-Worth (UHNW)-focused Personal Advisors Wealth Management, as Vanguard seeks to improve its estate planning offerings to better compete with other UHNW-focused firms and shows that the market for estate planning technology remains strong even as fewer and fewer people are actually subject to estate tax
Read the analysis about these announcements in this month's column, and a discussion of more trends in advisor technology, including:
- Income Lab has released Life Hub, its holistic "financial dashboard" tool, as a standalone software offering where it will compete with Asset-Map – which underscores the growing popularity of tools that can clearly visualize a client's current financial situation, while highlighting how different software companies have approached the question of whether to split off popular features as their own standalone solutions or to leave them "bundled" with their other offerings
- At the annual T3 Technology Conference, Artificial Intelligence (AI)-related vendors were present, but overall the tone towards AI was more measured than expected given the hype surrounding AI over the past year – suggesting that even though AI may prove transformative for AdvisorTech in the long run, it has a long road ahead for gaining trust and adoption in the advisory industry
And be certain to read to the end, where we have provided an update to our popular "Financial AdvisorTech Solutions Map" (and also added the changes to our AdvisorTech Directory) as well!
*And for #AdvisorTech companies who want to submit their tech announcements for consideration in future issues, please submit to [email protected]!
Traditionally, a financial plan was a single, standalone document that a financial advisor created for the client once at the beginning of the advisory relationship, which was updated and re-generated at most once per year thereafter. Which meant that the extent of the client's responsibilities in creating the plan usually involved filling out a comprehensive data gathering questionnaire, handing over copies of account statements, insurance policies, tax statements, etc., and then letting the advisor take the reins to put the plan together.
As time went on, however, the depth and scope of financial plans became increasingly complex as clients hungered for more planning beyond their investment portfolio or insurance coverage, and financial planning gradually became the actual thing that the client paid for (as opposed to simply the implementation of the plan's recommendations, which was what the advisor was typically paid for before). Simultaneously, the financial plan morphed from a single, standalone plan to a more ongoing process of planning, as advisors sought to deliver value on a year-round basis and the expanding scope of financial plans necessitated splitting up their delivery over the course of multiple meetings.
From a process perspective, the nature of more modular and multifaceted plans means there are more moving parts involved: More steps in the data gathering process (as different parts of the plan may be updated at different times of the year), more back-and-forth between the advisor and client (as more data overall naturally leads to more questions around vetting and quality-checking that data), and more confusion over whose turn it is to do what action (as parts of the process get handed off between the client, the advisor, and other members of the advisory team). Which ultimately can lead to missed steps and stalled progress on creating, delivering, or implementing the plan, simply because project-managing the plan itself has become such a complex endeavor.
It's notable, then, that financial planning software platform RightCapital has launched RightFlows, a workflow management tool developed specifically for managing the steps in the upfront and ongoing financial planning processes that's embedded directly in the planning software itself. Advisors can use RightFlows to kick off ordered workflows for specific planning projects (new client onboarding, annual reviews, Roth conversion analysis, etc.) with specific tasks within those workflows being assigned to members of the advisory team as well as the client themselves, to make it always clear who is responsible for completing the next step in the process and hopefully ensure that the planning continues to move forward.
For planning-focused advisors, the launch of RightCapital's workflow tool makes sense as financial planning processes have stretched themselves out with more steps and handoffs between parties, and while RightCapital had already offered users the ability to create and assign individual planning tasks, RightFlows represents the next step in turning those individual tasks into a systematized and repeatable workflow that can be used across multiple clients. And for advisors who've been using other workflow tools like Asana or Hubly to support workflows in their financial planning process, RightFlows' kanban-style task manager features a similar interface that could eliminate the need for a third-party solution by embedding the workflows into the financial planning software itself.
The caveat, however, is that advisory firms often have workflow needs beyond just their financial planning processes – including, for instance, portfolio management, compliance, and client service – for which they have largely used their CRM software (since workflow tools have long been a standard feature among the major players in that category). Which raises questions about whether advisors who are already using their CRM for one set of workflows will be willing to use other workflows that live in a different piece of software. It's possible to imagine a future where each major software platform in an advisor's tech stack – financial planning, investment management, CRM, digital marketing, etc. – has its own set of embedded workflow tools, but it's uncertain if advisors would really desire having such a scattered fellowship of workflow tools when they can instead just have one workflow to rule them all. Maybe there could be a third option, with individual workflows living in their own respective software ecosystems while being managed by a more centralized workflow in the CRM, but such an option would require even deeper integration capabilities between software platforms, when many have long struggled to integrate effectively at even a basic level.
In the end, given how many advisors have been using third-party tools to manage their planning workflows, or using collaboration tools like Knudge to handle back-and-forth requests with clients, there is clearly some demand for collaborative workflow management, which RightCapital has seized on (further burgeoning its already notable reputation for quickly rolling out new features in response to shifting advisor preferences). The question in the long term, however, is where advisors will ultimately want all of their workflows to live, and how they'll respond to an increasing number of software tools offering their own individualized workflow options.
OneAdvisory Raises $8M In Seed Funding And Rebrands As Dispatch As Centralized Data Warehousing Gains Momentum
One of the positive aspects of the explosion in the number of AdvisorTech solutions over the last few years is that advisors have never had more options to choose from in the technology they select, or as many different functions for technology to serve, than they do today. At the same time, however, with Kitces AdvisorTech Research showing the average advisor's tech stack comprises at least 15 separate functions, there's an increasingly urgent need for integration between technology solutions – not only for the added efficiency of eliminating double data entry across multiple platforms, but also to ensure that the client data within each platform is consistent with all the others. But the challenge with the proliferating number of AdvisorTech solutions is that the number of integrations needed to connect each solution with every other one grows exponentially compared to the number of solutions themselves – in mathematical terms, for any n number of AdvisorTech solutions that exists at any time, there needs to be n × (n − 1) integrations to connect them all. At some point, it becomes impossible for every vendor to maintain high-quality connections with every other vendor out there, simply because there isn't enough time or engineering resources to do so.
As a result, the AdvisorTech industry has experienced a 'balkanization' of software solutions, wherein certain key providers (e.g., custodial platforms, or more recently all-in-one portfolio management platforms and CRM systems) have become hubs around which a large number of other, more specialized providers build their integrations. Which for advisors often means that choosing one of those "hub" providers also means de facto opting into the constellation of other solutions that deeply integrate with it – effectively giving advisors the choice between stable and high-quality integrations centered primarily around the hub platform and its chosen partners, or a more independent and open-architecture technology ecosystem with platforms of the advisor's choosing (but which may or may not actually integrate as well with each other).
In recent years, the advisory industry has pushed hard at technology vendors to increase their integration capabilities by including more and deeper integration and bidirectional data and workflows (i.e., allowing data entered in any one tool to be reflected in every other tool, rather than needing to be entered in one specific platform in order for data to flow correctly), for which ratings systems like Ezra Group's integration scores (as used in the Kitces AdvisorTech Directory) can give advisors a high-level idea of how well a given software platform integrates with others.
However, the underlying assumption in pushing individual technology vendors to integrate better with each other is that a proliferating number of point-to-point integrations is really the solution that will help advisors get the most out of their tech stack – when in reality, that might not actually be the best way for advisors to get all of their technology to work together.
Over the past year or two, another approach to integration has begun to emerge, where rather than relying on point-to-point connections to move data between each technology vendor, advisory firms pipe all of their tools' data into a centralized data 'warehouse', which standardizes the data, forms the advisory firm's single source of truth, and then pushes it out to the other software platforms, ensuring the data's consistency across all the firm's technology. Although other firms had used this method in the past using vendors like Skience and AppCrown, in practice it was typically only an option for large firms with the resources to build and manage their own data lake, which put it out of reach to smaller firms that rely more on 'off-the-shelf' software from third-party vendors.
In this context, it's notable that OneAdvisory – now rebranded as Dispatch following a recent $8 million capital raise – has launched a new data warehousing solution with the goal of becoming the centralized data hub that advisors can use as a single source of truth for their client data, and 'dispatch' (thus the new name) that data out to all of the technology they use. And notably, Dispatch is made to work with various off-the-shelf AdvisorTech providers, avoiding the need for firms to create their own pathways to move their data into those solutions. And by allowing for the flow of data between different software platforms that may not have previously had useful direct integration capabilities (because it all flows in and out of the advisor's centralized data warehouse instead), Dispatch could conceivably help to solve the 'balkanization' dilemma of each platform only integrating effectively with a limited number of other solutions.
From an advisor perspective, arguably the real goal in pushing technology vendors to integrate better was simply to ensure accurate and consistent data (down to the basics of names, addresses, and birthdays) across the many tools that advisors use, and if having a centralized data warehouse turns out to be a better path toward that goal than point-to-point integrations between every different software provider, then that's the likely direction in which the industry will go. The caveat, however, is that data warehouse providers still ultimately need to maintain their own array of integrations with the different technology solutions on the map, and as the number of AdvisorTech solutions – and the number of data warehousing providers – increases over time, it's possible to see a world where there are so many warehouse providers that the number of required integrations just explodes again, such that each warehousing provider only supports integration with a limited number of 'preferred' other solutions that they can manage to – in other words, effectively resurrecting the 'balkanization' that data warehousing had promised a pathway out of to begin with, simply building around various data warehouse providers as the 'hub' instead of the advisor's CRM or portfolio management system.
Additionally, the relative newness of the data warehousing category means that most advisors don't have much experience doing due diligence on data warehousing solutions, including the quality of everything from their data engineering capabilities to their external integrations, and – most importantly – knowing which firms will prove to be a reliable steward of client data, which will remain a challenge for the first wave of providers in that space (and the advisors who use them, who must balance the benefits of a single data hub against the risks of entrusting so much client data to what may be a relatively new and unproven vendor). Nonetheless, as it becomes increasingly feasible for firms to really actually 'own' their own data, independent of other technology providers they use, and pipe it themselves to all the places where it needs to go from their single source of truth, the rise of data warehousing solutions for advisors is clearly set to be an emerging trend in the years to come – for which Dispatch seems well positioned to capitalize as an early entrant.
Flourish Launches A New Annuities Platform To Solve For The Operational Challenges Of Offering Annuities In A Portfolio Management World
For most of their history, annuities were sold almost exclusively by agents who earned a commission on the sale. This remained true even as the financial advisory industry largely shifted towards the fee-based model over the last 20 years, and products like mutual funds (which also were historically sold by either captive or independent registered representatives of brokerage firms) increasingly shed their commission-based roots and came to be used predominantly in commission-free forms in AUM-based advisory accounts.
In the last 5 years, however, annuity companies have tried to shift gears to capitalize on the popularity of the RIA model and the appeal of products that don't require a commission-based salesperson to distribute. Catalyzed by a 2019 IRS Private Letter Ruling confirming that advisory fees could be paid pre-tax directly from annuities without triggering a taxable event, a new breed of fee-based annuities began to emerge, helped along by marketplaces such as DPL Financial Partners that sought to connect fee-only annuity providers with the small but growing cohort of RIAs who were interested in adopting them.
But despite the increasing breadth of options for fee-based annuities and solutions for advisors to research and find them, in practice the growth of fee-based annuities has been lackluster. Although many advisory firms may find them useful for certain one-off transactions (e.g., to facilitate a 1035 exchange of a client's older, more expensive annuity into a newer and cheaper product), annuities have made little headway in terms of advisory firms actually making regular allocations to them within the portfolios of clients who didn't already own annuities. Which may be in part because many advisors still harbor biases based on memories of annuities being overly expensive and inflexible, but also might be at least somewhat because of how hard it can be to actually manage annuities at scale. For instance, if an advisor wants to make an allocation to a new bond fund, they can easily make the change to the model in their portfolio management software and roll out the new allocation across client portfolios in a few hours or less. But if they want to do the same thing with an annuity, every client needs to fill out and sign an annuity application. Which might be easier today with Docusign and other forms management tools than it was even 10 years ago, but even if each application takes just 5 minutes to populate and process, that would take over 80 hours of team time for a client base of 1,000 client (or 8 hours – literally an entire workday – for 'just' a single advisor's load of 100 clients).
In this vein, Flourish recently announced the launch of a new annuities platform for RIAs, adding to its suite of existing tools for managing clients' cash and cryptocurrency assets. In its new annuities platform, Flourish aims to not only build a marketplace for annuity products where advisors can shop for the best solution for their clients (akin to DPL's existing offering), but also to develop an order management system for annuities that can better automate the trading and implementation of annuities at scale. Which in practice means building a system that doesn't simply forward applications to clients or pre-fill PDFs, but ideally populates entire digital applications that queue up immediately for e-signature and processing to make it more feasible to actually implement annuities at scale – in other words, to make allocating to annuities as simple as allocating to any other investment in a client's portfolio.
The big challenge that Flourish will face in streamlining annuities in the RIA space is that with annuities' deep roots as agent-sold products, there's no regulatory framework for discretionary asset managers to simply make the choice to buy annuities on behalf of their clients in the same way that they can with stocks, bonds, and mutual funds. Which means that unless the current regulatory structure changes (which seems unlikely with 50 different state insurance regulators controlling how annuities are sold in each jurisdiction), Flourish can at best hope to minimize – though not eliminate entirely – the operational friction involved in applying for and purchasing annuities. But given their experience in providing cash and crypto solutions for advisors, Flourish clearly sees an opportunity in being able to streamline the management of assets that pose implementation challenges for RIAs, which makes them arguably well positioned to tackle the same challenges with annuities.
Vanilla Lands Blockbuster Deal To Support Vanguard's UHNW Clientele As Demand For High-End Estate Planning Remains
Estate planning has been a core component of financial planning for as long as financial planning has existed as a profession. The obvious reason for this is that a key question of personal finance for almost anyone is what will happen to their money after they die; however, the less obvious reason has to do with the insurance-based roots of financial planning.
In the 1970s through the 1990s, when selling various forms of life insurance was a core component of many financial planners' business, the Federal estate tax exemption was much lower than it is today: Before 1977 it was only $60,000, and even by 2001 it was still 'just' $675,000. And in a world where even a young married couple in their 20s or 30s with nothing more than a 'proper' level of term life insurance would be subject to estate tax, estate planning and insurance went hand-in-hand. For example, up until 2002, the proceeds of a $1 million life insurance policy would have been enough to subject the owner's estate to taxation, which meant that advisors had many opportunities to apply estate planning techniques that could be used to avoid estate tax (e.g., using an Irrevocable Life Insurance Trust [ILIT] to own the insurance policy to keep the proceeds out of the deceased's estate). Similarly, planners educated business owners on the benefits of buy-sell arrangements in the case of a partner's death, an estate planning discussion for business succession… which would then position the planner to sell both partners the lucrative permanent life insurance that would fund the arrangement.
Over the last 20-plus years, however, estate planning has become less of a focus among financial planners, driven both by a shift in the advisory business model away from insurance sales and more towards the AUM and planning-only models (eliminating the incentives to have estate planning conversations to solve for the estate tax problems caused by certain insurance product sales), as well as by a rapid increase of the estate tax exemption itself from $675,000 per person in 2001 to $13,610,000 in 2024, which has driven a 95%+ decline in the number of Federally taxable estates. Yet at the same time, individuals still do need to be concerned about where their money goes after they die, regardless of their net worth (and whether it will be estate-taxed at death), and at a bare minimum generally want to avoid dying without a will and leaving the distribution of their assets up to the courts (or the state's default intestacy provisions).
And so the topic of estate planning for financial advisors has essentially bifurcated into 2 separate camps, depending on the client's net worth: On one end are middle class and mass affluent clients with no foreseeable Federal estate tax issues (and in most cases no state issues either), for whom estate planning is focused mostly on deciding how the client's assets will be distributed if they are disabled or pass away, and ensuring they have documents to make that happen; while on the other end is the much smaller subset of clients who still do have exposure to the Federal estate tax, and for whom the 'alphabet soup' of estate planning strategies (GRATs, CRTs, IDGTs, etc.) remain as relevant as ever.
From an AdvisorTech perspective, the estate planning solutions that have arisen over the last 5–10 years have largely broken down along similar lines. On the one hand, for more middle-class and mass affluent clients, solutions like EncorEstate, Trust & Will, and Wealth.com are mostly centered around easily and economically providing estate documents that ensure the client's desired asset distribution. On the other hand, more estate tax-conscious (i.e., ultra-high net worth) clients may require software that can carry out more in-depth analysis and illustration/comparison of strategies in order to support conversations around the huge dollar amounts involved, for which Vanilla has emerged as a market leader in UHNW-focused estate planning software alongside competitors like Yourefolio, FP Alpha, and MoneyGuide's Wealth Studios.
And in this vein, it's notable that Vanilla recently announced a blockbuster deal with Vanguard and their Personal Advisor Wealth Management (PAWM) platform to offer Vanilla's estate planning technology Vanguard's Ultra-High Net Worth (UHNW) clients. Not to be confused with Personal Advisor Services (which serves clients with as little as $50,000 of assets under management), PAWM has a $5 million asset minimum, and serves clients who may have tens or even hundreds of millions of assets with Vanguard, meaning that the partnership is clearly an effort by Vanguard to bolster its own service offering towards the high-end UHNW market.
From an advisor perspective, the Vanilla-Vanguard deal emphasizes the reality that amongst firms that do serve UHNW clients, there really is still a need and desire for tools that support complex analyses and conversations that might combine 7- to 8-figure estate tax bills, charitable planning, trust distributions, and figuring out how to use one's wealth adequately support future generations of offspring without spoiling them. And at least so far, Vanilla is among the few publicly-available software solutions that fit that description.
From an industry perspective, the deal has 2 main takeaways. First is that in offering an UHNW-focused estate planning solution in Vanilla, Vanguard appears to be looking to improve its position to retain and compete for UHNW clients with the likes of Morgan Stanley, Goldman Sachs, and other large institutions among whom the UHNW market tends to be concentrated – which means that this is not likely about competing directly with independent advisors, few of which outside of single- or multifamily offices serve a meaningful number of UHNW clients. Second is that even though Vanilla has a relatively limited market of potential users – since UHNW clients themselves are relatively rare, with fewer than 0.1% of annual deaths even resulting in a taxable estate, and most are clients of a few big firms – and even though the ongoing trend is towards even fewer families being subject to the estate tax as the exemption continues to rise, there's still enough complexity amongst those who do have Federal estate tax exposure for Vanilla to maintain a market with its UHNW focus, either among big institutional clients like Vanguard, or perhaps with independent firms for whom just 1 or 2 UHNW clients might be enough to make it worth paying for a software like Vanilla to effectively support the conversations that are unique to those very-high-dollar clients.
One of the benefits of going through the financial planning process – if not the ultimate goal – is that it helps clients to organize their financial lives. In some cases, clients literally may not be sure where all of their money is (e.g., when frequent job changes leave behind a trail of old 401(k) accounts scattered like breadcrumbs), much less what it all adds up to, and going through the data gathering phase of the process helps them to put all the pieces together for the first time. Even when they do know where all of their accounts are, the client may have never had a good way to visualize their full financial picture. And so the 'get organized' stage of the process can have its own value in the present, separate from its importance towards building a plan for clients to meet their future goals.
Traditionally, the way that financial advisors would visualize their clients' financial lives would be to create a balance sheet listing all the clients' assets and liabilities, and possibly a statement of cash flows summarizing their income and expenditures over a period of time. But as technology has evolved over time, so too has the ability to create a more detailed and visually appealing "financial dashboard". Tools like Mint, and advisor-specific equivalents like eMoney's client portal, led to more of an emphasis on Personal Financial Management (PFM) tools as a way to collaboratively monitor the client's financial situation and track their progress over time. But even more recently, newer tools have gone even further to create more comprehensive visualizations, including not just net worth and cash flows, but also details on family members, financial goals, and insurance coverage, to capture the entire gestalt of the client's financial situation in a single one-page report.
The OG financial "dashboard" tool, Asset-Map, drew on the principles of mind-mapping to create one-page visuals that were appealing to clients in both their comprehensiveness and their clarity. Soon, other financial planning software providers began to release their one-page visualizations, copying and expanding upon Asset-Map's model – most notably, RightCapital's Blueprint and Income Lab's Life Hub, both of which were originally released as features within in their respective financial planning software platforms. Which made sense for advisors who already used either RightCapital or Income Lab as their core financial planning software and didn't want to buy a separate financial dashboard solution, but for everyone else, Asset-Map remained effectively the only option as a standalone financial dashboard tool.
Now, however, Asset-Map may have its first direct competitor in this space, after Income Lab announced last month that they are releasing Life Hub as a standalone product, meaning that advisors can now use Life Hub on its own without needing to buy the whole bundle of Income Lab software to go with it.
On first glance, what's perhaps most striking is the difference in pricing between Asset-Map and Life Hub. While Asset-Map starts at $99/month or $1,128/year, Life Hub costs just $49/month or $399/year, significantly undercutting Asset-Map's pricing for a product that at least on the surface fulfills a similar role for advisors and functions in a similar way.
But what's also notable is that Income Lab even made the decision to split off Life Hub as its own product to begin with. At a high level, the move makes sense given the growing interest and demand in financial dashboarding tools, with their ability to quickly communicate where the client stands financially at any given moment. But it also makes particular sense for Income Lab to release Life Hub on its own, since Income Lab's core planning software is heavily focused around retirement income planning, while the appeal of a financial dashboard tool is perhaps more weighted towards clients who are still in their working years and may not yet have much need for detailed retirement income planning. In other words, by separating its offerings into individually-available pre-retirement (financial dashboard) and retirement (income planning) tools, Income Lab can potentially increase its visibility and appeal among non-retirement-focused advisors (who may eventually decide to upgrade to its full retirement planning package as their current clients age and retirement planning becomes more relevant).
Which ultimately highlights the interesting challenge of what happens when a software company makes a feature outside of their core focus that gains traction and popularity on its own. Eventually, the provider reaches a crossroads where they need to decide whether to continue to only include the product bundled with the core offering, to sell it separately as its own solution, or even to spin it off entirely and sell it or rebrand it as its own company. In general, advisors usually prefer to buy only what they want to buy, and to pay for only the features that they use, which for many software vendors increases the appeal of splitting off popular features into their own standalone products. But at the same time, there's an impulse for technology companies to incentivize advisors to use all of their products, and breaking up the bundle comes with the risk that advisors will choose competing vendors for their other solutions. And so ultimately, the long-term traction of tools like Asset-Map and the standalone Life Hub will come down to the question of whether more financial planning platforms will follow the lead of RightCapital (and keep their financial dashboard tools as a bundled feature within their core software) or Income Lab (and offer them as a standalone product for advisors to choose which one best appeals to them and their clients).
T3 Technology Conference Highlights The AdvisorTech Industry's Measured Approach To Adopting AI
The financial advisory world has a lot of industry conferences – 86 nationally-focused conferences in 2024, according to our own Master Conference List, plus countless local professional association meetings, internal gatherings of major industry platforms, and more – but arguably the industry has only one trade show, which is the T3 Technology Conference. In contrast to traditional advisor conferences, which at their core are built around CE sessions and networking with advisor peers on practice management (with breaks in between to give attendees the opportunity to visit with sponsor companies in the exhibit hall), with T3 the exhibit hall is the conference. While there are some knowledge sessions, many of T3's attendees are there solely to meet with vendors, and to get a look at the latest offerings in AdvisorTech. And in conjunction with the conference, T3 and Inside Information also release their annual Advisor Software Survey, providing a valuable measurement of advisor satisfaction across a broad range of AdvisorTech tools.
Celebrating its 20th anniversary in January of this year, the overall tone of this year's T3 conference was quite positive. Exhibitor turnout was the highest it's been since before the pandemic (which also coincided with the pinnacle of venture capital investment into AdvisorTech and the highest proliferation of new companies and offerings), while the composition of the vendors at the conference continues to reflect the changing landscape of the AdvisorTech ecosystem itself.
In that vein, this year there were notably far fewer portfolio management solutions exhibiting at T3 than in the past, and far more focus on tools that support various elements of financial planning and new and expanded ways for advisors to engage with prospects (e.g., with Catchlight, Powder, and Calendly, all of which exhibited at the conference) and expanded ways to engage with clients (e.g., from FutureVault and Sidedrawer for collaborating on client files, to Fiduciary Genius and Conquest Planning across the spectrum of financial planning software).
What was also notable was that, in contrast to the buzz over the past year over Artificial Intelligence (AI) with the emergence of ChatGPT and ensuing proliferation of AI-related hype, was that the AdvisorTech industry's approach to AI seemed to be significantly more measured. Despite expectations that this year's T3 conference would feature a litany of AI startups, in reality there were only a handful of specialized AI tools featured, including Arqa.ai (which uses AI to support investment research and analytics) and Zocks (an advisor-specific tool for capturing meeting notes and creating post-meeting summaries akin to Otter, Fathom, and Fireflies, but with advisor-specific templates and meeting note organization).
At the same time, despite the few specialized AI vendors present at the conference, it's clear that AI is still rippling its way through the industry, with most major vendors at least experimenting internally with ways to usefully integrate AI within their platforms – from chatbot interfaces to more sophisticated client data analytics to using generative AI to support various advisor marketing and communication tasks.
Which serves to highlight the likely reality that while advisors may be slow to adopt new standalone AI tools – since advisors are generally slow to change or adopt new software in general, which is even more the case with a relatively new and unproven technology like AI where there still appears to be a general level of advisor distrust – advisors may be more receptive to new AI-driven features integrated into the tools they're already using. Because for one thing, the fact that the advisor is already using the software means that they have at least some level of familiarity and trust when engaging with it (compared to a buzzy startup that could just as easily prove to be a flash in the pan); and for another, if the software provider frames it as simply a feature that helps the existing tool do something new or better, rather than a brand-new tool that 'does' AI, advisors will be more likely to view it as an actually useful thing that will help them to their job than as just another shiny object. Not to mention that when existing AdvisorTech platforms incorporate AI themselves, advisors are often simply happy to not need to buy yet another vendor (for another $49 or $99/month) to fulfill yet another function that ideally could and would be done from the advisor's existing tech stack and vendors.
To that end, even though there's a fair amount of mistrust around AI in the advisory industry at large, particularly as it relates to due diligence and fiduciary concerns when using AI to advise clients, and unanswered questions about where the lines of data privacy will need to be drawn when it comes to AI ingesting client data that might include Personally Identifiable Information (PII), it's still likely that AI will have a significant role in the future of AdvisorTech, at least once the newness and hype surrounding all things AI begins to wear off. Similar to how the internet took shape in the 1990s and early 2000s – featuring massive early hype, a brief blowup after that initial hype wave crested, and eventually becoming just a boring part of how absolutely everything works – AI could prove transformative in the long term even if the current speculative fantasies don't pan out in the short term. But in the meantime, the more measured approach that the advisory industry appears to be taking towards AI (at least from the perspective of its leading technology conference) makes sense, especially given the stakes of advising clients on what to do with their savings over their lifetimes.
In the meantime, we've rolled out a beta version of our new AdvisorTech Directory, along with making updates to the latest version of our Financial AdvisorTech Solutions Map (produced in collaboration with Craig Iskowitz of Ezra Group)!
So what do you think? Does it make sense to use a workflow tool embedded in your financial planning software instead of running it all through the CRM? Would you be more likely to recommend annuities to clients if your technology streamlined the application and implementation process? Does the appeal of an all-encompassing "financial dashboard" to clients make it worth buying as a standalone product? Let us know your thoughts by sharing in the comments below!