Broadridge Expands Canadian Partnership; start-up attracts funding from advisers

It’s early days, but the biggest tech story of 2023 so far is the sudden explosion of interest in artificial intelligence.

Once one of the buzziest terms in tech, AI took a back seat in recent years to things like cryptocurrency and the metaverse. But as they turned out to be at best overhyped or at worst outright scams, AI returned with a vengeance in 2022, with new applications that can create images or text based on just about any message.

The commercial applications are wide-ranging and just beginning, and it is only a matter of time before this technology enters wealth management. To test it out, I asked some of my friends questions they have about finance and fed them to ChatGPT, arguably the most successful of the current wave of generative AI. I then showed ChatGPT’s responses to financial advisors and asked them to evaluate them without knowing they were generated by a computer.

The results were quite interesting. While one counselor guessed that the answers came from ChatGPT, the others had no idea. Although they would have given slightly different recommendations and agreed that the answers were quite vague, they also agreed that the advice given was quite good, actually. Not good enough to threaten a human financial advisor, but good enough to answer basic questions for someone just starting out.

I’d love for you to check out the story and let me know what you think. AI is going to be a big story for adviser fintech for the rest of the year, and advisers need to start thinking seriously about how this technology can play a role in their practice.

Otherwise, this week in Fintech Bytes we have a couple of stories affecting the international wealth management market, as well as a new start-up getting funding from financial advisers.

BROADRIDGE EXTENDS PARTNERSHIP WITH CANADIAN FIRM

IG Wealth Management, a Canadian firm with $113.7 billion in assets under management as of Nov. 30, has agreed to continue using fintech company Broadridge Financial Solutions’ R.Broker product for another five years. IG will use Broadridge’s core recordkeeping, regulatory capabilities and other tools for processing across currencies, dealers, regulations and jurisdictions.

Broadridge is best known for providing the infrastructure to support investor proxy voting, but the company has been trying for years to expand into a more general provider of fintech for wealth management firms. While confirming the relationship with IG is undoubtedly a big win for Broadridge, it’s unclear how much traction the company will gain in the US market.

MARKETING RAISES $3.1 MILLION

A startup hopes technology can explain in real time why stock and ETF prices move, and the company, MarketReader, just closed $3.1 million in seed funding to make it happen. The tool is being built specifically for financial advisors and asset managers, and MarketReader plans to launch in 2023.

What is most interesting to me about this fundraiser is that it was led almost entirely by financial advisors and family offices. As Michael Smith, managing partner of Oakridge Management Group, said in a statement, “I could easily see all financial advisors in the US eventually integrating real-time market analytics, like those pioneered by MarketReader, into their daily workflow.” This could be an interesting startup to keep an eye on.

FIRST RATE BUYS CHILEAN FINTECH

Finantech SpA, a reporting fintech based in Santiago, Chile, has been acquired by First Rate, an Arlington, Texas-based wealth management technology provider. First Rate plans to use the acquisition to start a locally operated office serving the Latin American region.

Given how difficult 2022 was for many startups, as well as the competition they face from broker-dealers, TAMPs, custodians and more established fintech providers – some of which have grown quite large through M&A – it may not be surprising to see companies start to look out. international for opportunities. With venture capital likely to remain tight for the foreseeable future, entrepreneurs may have to consider leaving an already saturated American landscape.