Fintech Bytes: InvestCloud, 55ip and Broadridge

My colleague Jeff Benjamin recently did a deep dive into the explosion of financial advisor interest in alternative investments, and I suggest you check it out.

A survey of 200 advisors and financial professionals found that 43% plan to add exposure to at least one alternative asset class this year, and 46% plan to increase their average allocation to altar over the next three years.

It’s generating a ton of interest in fintech companies as entrepreneurs see an opportunity to provide easier access to traditionally difficult-to-navigate markets. Companies like CAIS and iCapital are already giants in the market, but I get pitches from (no exaggeration) at least one tech startup every day.

What is interesting to me is that much of the interest in alternatives stems from the disappointing returns of classic 60/40 portfolios. The 60/40 model just had its worst year since 2008, but traditional assets have done very well for most of the past decade.

When the markets are ticking down, advisors love to talk about how their clients don’t panic because they’ve created a plan and trained investors to stick to it instead of chasing short-term gains. But if a bad year has prompted advisers to rewrite their investment strategies to chase more exotic asset classes, how is chasing short-term gains not? It sounds to me like a lot of advisors aren’t “eating their own dog food,” as the tech world likes to say.

INVESTCLOUD PAIR WITH 55IP

Tax optimization technology from 55ip comes to InvestCloud’s “Financial Supermarket.” The technology uses automation to make tax-smart transitions, management and withdrawals.

The technology will be integrated into InvestCloud’s core platform and will be available to the 400 asset management companies that use InvestCloud. Tax optimization has quickly become a key offering for financial advisers, and this agreement is a big win for 55ip.

OPTO INVESTINGER PARTNERS WITH SELLER

Merchant, an advisor network of more than 60 registered investment advisors with a combined $140 billion under management, will offer Opto Investments as a private markets access tool. Every RIA in Merchant’s network can use Opto’s portfolio construction tools and marketplace of exclusive, pre-screened funds, including private credit, private equity, real estate and venture capital.

It’s hard to understate how hot the marker is for alternative investments and the technology platforms that provide access to them. How many of these companies want to thrive as independent options, and how many want to be bought by a major player like iCapital or CAIS?

BROADRIDGE PARTNERS WITH POINT FOCAL

Financial advisors using NYFIX, Broadridge’s online order routing platform, will soon receive automated reports using data, visual analytics and natural language processing from Point Focal. The reports include a premarket summary of recent news activity and sentiment results; earnings summary and outlook; a post-market report summarizing portfolio performance; and a weekly report summarizing on-and-off exchange activity.

These reports are likely useful for active traders, but data shows that a growing number of financial advisors are moving toward outsourcing and investment automation. However, it sounds like an interesting opportunity to provide end customers with differentiated news tailored to their portfolio.

PONTERA LANDES ANOTHER MAJOR CUSTOMER

Benjamin F. Edwards, a wealth management firm with $38 billion in client funds and 300 financial advisors, announced that it will use Pontera to allow advisors to manage retained retirement accounts.

Another week, another Pontera announcement. Last week, the company merged with Envestnet, and apparently it can’t be stopped. Being able to manage retained accounts is a huge opportunity for advisors, and Pontera is growing rapidly.

ASSET MAP SECURES USD 6 MILLION

Advisory fintech company Asset-Map closed a $6 million Series B round, bringing its total funding to $7.6 million. The company plans to use the funds to scale operational resources, enhance sales and partnership capabilities and “execute its product and marketing strategies.” Asset-Map’s technology focuses on visualizing household assets, helping advisors create customized presentations for clients.

After a year where venture capital became much tighter to come by, it’s good to see startups in the area continuing to attract investment. See below for further funding news.

CONQUEST PLANNING CLOSES FUNDING

Canadian software company Conquest Planning has raised $24 million (CAD) in a Series A funding round led by Fidelity International Strategic Ventures. The company plans to use the funding to expand into the US and UK markets.

Conquest was founded by Mark Evans, who helped build the NaviPlan financial planning software. The company says the secret sauce is a proprietary AI engine, the Strategic Advice Manager, which can help recommend plans that steer the user toward an optimized outcome. AI is all the rage right now, so we’ll see if the idea catches on with American advisers.