Happy New Year! While wealthtech news does not take a holiday, we definitely do! Thus, this week, we’re going to give you the second half of a top 10 of sorts, the 10 biggest financial advisory technology stories of 2024.
Some of the five stories listed below are quite specific, discussing key moves by individual companies, while others bundle a number of stories into trends that dominated our wealthtech headlines throughout the year.
While we believe that many of these trends are self-evident to outside observers of the financial services industry, they’re not always easy to recognize for day-to-day wealth management practitioners during the year until someone like ourselves turns around and looks at how far we’ve all come over the past 12 months.
For me, your Advisor Tech Talk editor, it’s been one of the best 12 months of my life. At the end of 2024, I find myself happier, healthier and wealthier than I have been in nearly a decade, and I hope that all of our readers can say the same.
If not, let’s all try together to make 2025 a year of joy and positivity.
Let’s get to the final five of our top 10 wealthtech stories of 2024 (part 1 of this series can be viewed at this URL).
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As AI Surges, More Direct Disruption Looms
As 2024 unfolded, AI began to sink its tendrils into wealth management technology like never before. While advisors have had access to some AI tools in their technology stack over the years—prominent examples have included certain sophisticated but “AI-lite” applications like Holistiplan and FP Alpha that have proven handy at helping advisors save time and go deeper into their client relationships, AI is now everywhere and seemingly infused in every piece of technology we handle.
This can be seen in a number of news items throughout the year as incumbent technology companies sought out artificial intelligence solutions of their own, either by partnering with AI developers, building their own capabilities in-house or by making an AI-oriented acquisition. For an example of the latter, look no farther than FusionIQ’s acquisition of InterVAI. AI has also come to dominate venture capital fundraising over the past 12 months—and we’ll have plenty more on VC funding in wealthtech below.
Artificial intelligence tools more formally became a permanent part of advisors’ technology stacks in 2024, and nowhere was this better borne out than by the launch of new AI wealthtech maps. Taking a page from wealth management guru Michael Kitces, founder of the Nerd’s Eye View blog, a few companies, including The Wealth Mosaic and The Oasis Group, produced their own AI-centric wealthtech maps.
Now, instead of being cluttered in with the ever expanding universe of wealthtechs, AI companiies like Jump, Zeplyn, Jiffy.ai and TIFIN have distinctive homes of their ownn where advisors can go to take a peek at the next generation of software—and experiences that the next generations of clients will likely expect, if not demand.
Because of the surge in AI expectations and adoption, advisors everywhere will have to become more serious about collecting, maintaining and protecting data about their clients and operations. As the AI wealthtech maps expand (and they have expanded rapidly over the last few months), wealth management will need to invest more in data management and security to have any chance of keeping up with the times.
This Was a Big Deal
We talked a little bit about some of the transactions in wealth management last week, but we left a big one out: Robinhood bought TradePMR. Robinhood, originally a stock-trading mobile phone application that boasted commission-free trades on a huge selection of stocks, agreed to acquire RIA custodian and wealthtech TradePMR. Robinhood reportedly will pay $300 million for TradePMR.
The deal is widely seen as a win for both companies. Robinhood is buying credibility, especially with a cohort that it has struggled with in the past: financial advisors and their high-net-worth clients. TradePMR’s Robb Baldwin built a business that has earned raves from financial advisors for its service and technology.
TradePMR, on the other hand, gets access to Robinhood’s technology and its clients. Yes, TradePMR is already a tech-forward custodian—its pitch to financial advisors tends to be wealthtech centric—but Robinhood’s technology is built to face clients and the general public, which should enable advisors to create modern, digital client experiences.
Perhaps most importantly, advisors who custody with TradePMR will likely access what will become one of the largest, most robust and youngest client referral networks in the country when all is said and done. If TradePMR and Robinhood are able to take advantage of their many synergies, then the client referral network may equal or better those developed by Charles Schwab and Fidelity.
Robinhood’s clients skew young. Many of them have been investing steadily for years, but without the aid of financial advice. Many of them have also taken advantage of Robinhood’s cryptocurrency offerings and are likely sitting on large unrealized gains. While the average account size for a Robinhood client may be well below what most RIAs are looking for in potential clients, there are also plenty of higher net-worth users on the platform that traditional wealth managers covet.
What isn’t happening in this deal, so far, anyway, is Robinhood getting directly involved in providing tech-centric wealth management to its users. There’s not yet any talk of a 100% technology wealth management offering which might compete with traditional RIAs themselves. While TradePMR’s technology might support such an offering, it’s unclear whether Robinhood would risk alienating its new RIA custody clients by setting up a competitor.
Everything Is Being Bundled and Embedded, Even In Consumer Fintech
Robinhood’s wealth management acquisition was but a small symptom of a much larger trend in wealth management technology: bundling and embedding. Wealthtech has long been offered as bundled, all-in-one solutions. The largest wealthtechs, like Orion and Envestnet, have excelled by building bundled solutions and, over time, bolting new products onto their bundles through mergers and acquisitions. In recent research, Envestnet found that 61% of advisors prefer all-in-one technology platforms.
Along with the bundling trend for financial advisors, there’s also been an “as-a-service” trend, starting with software as a service, or SAAS, but expanding to banking as a service (BAAS), investing as a service, compliance as a service, IT as a service and now, wealth management as a service, where wealth management and financial planning offerings are being attached to not just banks and insurance companies, as they traditionally are, but also to fintechs, budgeting apps and credit monitoring services, where large numbers of younger clients have formed lasting financial relationships via technology. That’s clearly the future of wealth management.
Envestnet’s research also found that 62% of consumers prefer receiving all of their financial services—including wealth management and financial planning—from a single source—which bodes well for Robinhood’s entry into wealth management. Consumers are rapidly adapting to a world in which they save, invest and transact in very large amounts without ever speaking to a person.
But more impactful for advisors today is the momentum back towards bundling and embedding services. For many advisors, adopting an all-in-one approach to building a technology stack has long meant sacrificing quality and the ability to customize and personalize certain services for clients to the simplicity and ease of a bundled solution. With the spate of large acquisitions by major wealthtechs like SEI, Orion and Envestnet, and many special or strategic partnerships that has allowed different wealthtech providers to create deeper integrations and even embed others’ functionality within their own platforms, advisors aren’t often sacrificing quality and customizability to the ease of all-in-one platforms.
To that end, Fidelity this year introduced a bundled tech offering for small-to-mid-size RIAs including Advyzon, Wealthscape and eMoney in its new technology stack. Orion launched a “Foundation Stack” for small and nascent advisors (while simultaneously launching unbundled offerings). Apex boosted its mar-tech offerings with the acquistion of FinTron. Fiserv took a step towards more consumer-oriented wealthtech with the acquisition of Payfare.
Advisors Embrace More and Better Tools, for a Price
I’m an optimist—if I have an unmitigable bias, it’s towards the idea that things, meaning the flow of history and society, are moving towards a better and more positive future. It’s hard not to be optimistic about the trajectory of wealth technology. So one of my top trends of 2024 is certainly that advisors are accessing better tools, and not just through AI. Over the past year, we’ve seen the launch of new CRMs and CRM-adjacent tools like Quivr CRM and Current Client.
2024 also saw the launch of a new category of fintech or wealthtech—let’s call it “BeFinTech” for Behavioral Financial Technology. While sales enablement technology has trended in this direction, Alai Studios and Shaping Wealth took a big step forward with the launch of Lydia. Lydia is really best understood as a bundle of chatbots. According to Shaping Wealth, Lydia helps advisors with behavioral marketing, navigating difficult client conversations, and enabling advisors to offer their clients “funded contentment,” meaning a financial planning solution that addresses both their financial needs and their happiness. Unlike tools that simply crunch the numbers and spit out an optimal solution, Lydia is capable of considering and comprehending emotional, psychological and otherwise behavioral elements in money management.
Improving wealthtech is coming just as inflation is finding its way into financial technology. It’s becoming more and more expensive to build a comprehensive technology stack, which is one of the reasons for a renewed push towards bundled solutions—doing it yourself is becoming prohibitively expensive for smaller providers. This year, the most talked about pricing increase announcement came from Orion, but wealthtech observers have noted increases in basis-point and per-user fees across the industry. Advisors report that the rise in technology costs, however, has been eclipsed by the rising cost of labor across financial services.
While one might think that rising labor costs would accelerate the trend towards more technologically oriented firms and digital financial services, the proptech, insuretech, investech and fintech universes are all still evolving faster than wealth management technology itself.
After a Lull, Venture Funding Starts Accelerating Again
Most observers tabbed 2023 as a down year for wealthtech venture capital funding. While final numbers aren’t available as of this writing, it appears that the downward trend will be short-lived and that VC money will resume pouring into wealth management technology, driven in part by the rise of artificial intelligence and artificial intelligence-related technologies. When the VC universe is taken as a whole, AI now accounts for more than 50% of the funding announcements over the past year.
The year saw a few huge raises in wealthtech, including a $200 million round from Earned Wealth, a provider oriented towards clients in the medical field, and $169 million for retirement specialist Altruist. AI-oriented advisor technology provider Tifin anounced its own $109 million Series D round.
Some familiar names also had notable funding announcements, including a $72 million Series C haul for Farther. Farther is an interesting case as it explicitly supports hybrid wealth management and financial planning, a marriage of technology-driven do-it-yourself investing and planning, and traditional wealth management working with a professional. Vanilla raised $35 million to expand its estate planning platform into document management. Also worth noting were raises from Savvy Wealth, which announced a $15.5 million Series A; GeoWealth, which announced an $18 million undisclosed round, and AI-oriented Range, which announced a $28 million Series B round.
Newcomers included Cashemere, which announced a $3.6 million seed round; Powder, whose seed round raised $5 million; Dispatch, formerly known as OneAdvisory, whose seed round reached $8 million; and Zeplyn AI, which raised $3 million in a seed round. Funding was also brisk in Asia and Europe, where firms like Centricity, Syfe and Stable Money all announced successful funding rounds.
