Lumiant acquires longevity and health planning fintech Genivity

At the 2017 Envestnet Advisor Summit, Genivity was chosen by attendees as the best fintech innovation to come out of the Envestnet Yodlee technology incubator, which gave startups access to data, APIs and infrastructure to develop their products. Founder and CEO Heather Holmes joined Blake Wood, then Envestnet’s Product Director, on the conference stage to pitch her company.

Six years later, with Envestnet’s 2023 summit set to kick off in Denver on Wednesday, the two are officially teaming up.

Wood, who is now CEO of advisory fintech company Lumiant, which closed a $3.5 million funding round in March to bring its total funding to $9 million, announced a deal to acquire Genivity. Holmes will join Lumiant’s management team as chief evangelist and was named to the board as CEO.

Genivity’s core product is the Health Analysis and Longevity Optimizer, or HALO, which creates a customized longevity model based on a client’s health risks, lifestyle choices and demographics. Instead of relying on averages and actuarial estimates, advisors can use HALO’s models to offer more accurate and personalized estimates of health care costs in financial plans, Holmes said.

“Advisors really do a poor job of addressing clients’ concerns about health risks and costs,” she said. “Healthcare costs are the number one cause of bankruptcy, but most planning software out there leaves this blank for people to make their own assumptions.”

While the timing of the announcement is coincidental with their first meeting, a more personal story drove the executives’ decision to bring their companies together. After Holmes’ father passed away last year, she experienced firsthand what can happen when counselors focus only on values ​​and numbers rather than the emotionally charged conversations about a family’s values ​​and wishes.

“It caused a lot of turmoil and confusion, and it didn’t have to be that way,” Holmes said.

When a mutual customer reintroduced her to Wood, she realized Lumiant’s suite of engagement tools could have helped. “This is exactly what my counselor should have done with my mother,” Holmes said.

Lumiant offers client discovery and client capture tools that advisors use to communicate with clients about both financial and non-financial goals. For example, the software helped Wood discover that his own mother’s top priority was to avoid being a financial burden on her family, so she saved far more than she needed for retirement.

“Had she had that conversation with her adviser in the earlier years, she could have lived a very different retirement,” he said. “It took away some very good years for her.”

While advisors using traditional planning software average less than two goals per household, advisors using Lumiant average 7.6. These can be used with Lumiant’s own financial planning tool or in conjunction with technology such as eMoney and MoneyGuide.

“Everyone offers financial planning. It’s table stakes. It’s not fancy,” Holmes said. “The only thing that makes goal-based planning good is the data and assumptions behind it. So many advisors start with bad data and bad assumptions. Longevity and health risk are two of the biggest wild cards [in retirement planning].”

Integrating Genivity gives Lumiant what Wood calls the three pillars of financial planning—lifestyle, inheritance and longevity—needed to address the often emotional conversations associated with health risks and care costs.

While these topics can be difficult for advisors more comfortable with traditional portfolio management, Lumiant’s goal is to ground them in science, Wood said. For example, Genivity’s algorithm was developed by Emily Chang, who completed her doctoral work in theoretical, computational chemistry at Stanford and post-doctoral work in computational genetics at Stanford Medical School, and worked as a health researcher at the consumer genetics company 23andMe.

“Putting these together is not a guess, there’s really meaningful research behind this,” Wood said. “It used to be that the smartest advisers could win because they could build the best portfolios. Today, it is the advisor or the planner who has the highest EQ [emotional intelligence] is the one who wins relationships.”

Launched in Australia before a $3 million investment from Savant Wealth Management, a Rockford, Illinois-based registered investment adviser with $13.4 billion in assets under management (according to its most recent Form ADV filing), Lumiant helped the fintech to move to the US in 2022. It is now used by more than 150 advisers and 7,000 households, and Wood expects business to double by the end of the summer.

Lumiant plans to continue to offer HALO to the market as a standalone product and to make the product available to customers in Australia and New Zealand.

The terms of the agreement were not made public.