Envestnet, Addepar, FLX Networks and more
The week saw several layoffs from a prominent technology company.
No, I’m not talking about Elon Musk firing significant chunks of staff at Twitter offices around the world. Chime, one of the biggest names in digital banking, announced on Tuesday that it is laying off 12% of its workforce as a result of “current market dynamics”.
The company joins other fintech startups with once-high valuations that have come under fire this year, including Swedish payments company Klarna and buy-now-pay-later firm Affirm Holdings, according to Reuters. In the wealth area, Canadian robo-advisor Wealthsimple let go of 13% of its staff.
This was something many at the Charles Schwab Impact conference wanted to talk about — when this tightening will reach the advisor fintech market, and which companies will be most affected. My answer is that it is already here. Startup Tifin laid off 10% of its workforce in June, and others may have made moves without notifying the press.
It’s not all doom and gloom. SoFi Technologies stock rose this week after it reported a smaller-than-expected third-quarter loss and 424,000 new customers, while Envestnet actually beat earnings expectations and posted positive net asset flows despite the market downturn’s impact on net income, according to Citywire RIA.
However, more pain is likely to come, to use the language of the Federal Reserve. While advisor fintech companies have raised significant capital and have a wealthy client base of financial advisors, sooner or later the difficulties of the current economy will begin to affect fintech.
Let me know what you think on Twitter or via email. In the meantime, here are some of the rest of the fintech stories you may have missed this week.
ENVESTNET UPDATES THE USER EXPERIENCE
Turnkey asset management provider Envestnet rolled out a series of updates across its technology ecosystem throughout the quarter to give financial advisors greater insight into their clients’ finances. The improvements include new reporting views and a prospecting center in MoneyGuide, as well as new features for the MyBlocks product on debt consolidation and life insurance valuation.
These announcements come alongside new integrations between Envestnet Tamarac and the company’s insurance exchange, credit exchange and two third-party cryptocurrency companies. The company has previously been criticized for its ability to aggregate its vast menu of products, so it’s likely encouraging for advisers to see these improvements.
ADDEPAR IMPROVES WEALTH TECH AT HSBC
HSBC US Private Banking, the bank’s wealth and personal banking business, chose Addepar as its new customer performance reporting provider. Addepar will provide comprehensive portfolio views and in-depth analysis, as well as enhance HSBC’s private and alternative investment reporting capabilities.
Portfolio management and reporting remains one of the most contested markets within fintech advisors. Addepar remains a relatively small player, according to the 2022 T3 Inside Information survey of advisor technology (although it should be noted that Addepar primarily serves private banks and family offices rather than the RIA market), but in 2021 it acquired trading and rebalancing software AdvisorPeak . Landing US asset manager HSBC, which has around $65 billion in assets under management, is a major win for the company.
FLX NETWORKS SECURES $10 MILLION
Investment manager Barings, fintech company Broadridge Financial Solutions and insurer Allianz Life Ventures have invested $10 million in FLX Networks, a technology company that seeks to modernize engagement between capital and wealth managers. The fundraising values the company at $50 million and will go toward building new technology and hiring.
The company claims it has passed $1 billion in sales of investment products on its platform and has collectively saved asset managers $10 million in discretionary costs. According to Tom Bavin, Barings’ head of corporate and product strategy, FLX simplified the way his firm delivers investment strategies to wealth managers.
INVESTMENT CONSULTANCY LAUNCHES OCIO
Taiber Kosmala & Associates, an independent investment consulting firm advising $15 billion in client assets, launched Taiko, a boutique outsourced investment manager solution designed for RIAs, national advisory firms, broker-dealers and trust companies. Taiko combines institutional research and Taiber Kosmala’s unique consulting strategy to provide advisors with investment portfolios, a personal back office and an integrated technology stack.
Taiko hopes it can stand out in an already crowded TAMP marketplace by offering something different – outsourced investments and technology tailored to each unique adviser. As the company’s PR team put it, Taiko is an alternative for advisors who disdain traditional TAMPs. Given how much we talk about investor demand for personalization, it makes sense that advisors demand it from their vendors as well. Maybe that will be enough for Taiko to cut through.
HUBLY PUBLISHES AUTOMATED TASK PROCESSING
To help financial advisors better assign and manage tasks, workflow fintech Hubly announced a new product, Service Teams, that will automatically assign tasks to team members based on role, workload and client needs. Service teams can be synced with CRMs, and custom roles can be created to assign to team members who perform specialized tasks. The software will also redirect tasks if an employee is absent.
Teaming is becoming increasingly popular with wealth management firms as advisors are asked to provide a greater number of clients with a wider range of services beyond just investment management. Every company wants scale, but it can get crazy to keep track of every single task. A program like this that can intelligently assign tasks makes sense and can also help hold anyone who slacks on the job accountable.
[More: Schwab’s Bernie Clark addresses questions, concerns about TD integration]
