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The Word on WealthTech for September 2023

Welcome to the Word on WealthTech where we break down a few recent industry headlines, to share our opinion and what we think they could mean for advisors across the industry. As we head into fall, here are the WealthTech headlines we are talking about in September 2023:

Creative Planning will add Goldman Sachs alongside it’s current custodians, Schwab and Fidelity, to gain access to a digital middle and back office for alternative investments, a lending platform, advanced portfolio analytics and Goldman Sachs Investment products. It’s clear new custodians are gathering steam, but like worrying about robo-advisors a few years ago, we don’t see this crop of custodians threatening the larger custodians any time soon. We expect as these new custodians become more mature, Pershing, Fidelity and Schwab will become more competitive. These types of moves will drive innovation from the traditional large custodians, which in our opinion, is a good thing.

The SEC issued a statement that it is considering a proposal to address conflicts of interest that may emerge when investment advisers and broker-dealers use predictive data analytics in their interactions with investors. We’re all excited about the great promise of AI, but we need rules and regulations baked into it and we don’t have them yet. We’re waiting for regulators to develop a litmus test and to help shape compliance requirements. Until then, proceed with caution. Before spending money on these models, be aware that regulatory oversight is coming that will help us prove that AI doesn’t endanger our clients with incorrect or misleading information, intentionally or not.

Evan Rapoport is stepping down from his role as CEO, having held the job since the company launched its TAMP in 2017. Jonathan Pincus will take over. First, we say congratulations to Evan. He solved a problem the industry didn’t know we had at just the right time. Second, it’s our opinion Jonathan is the best choice to drive the business into its next era. We see this as a positive step for SMArtX.

Nitrogen says its AI content tool has been implemented by 500 customers since May. It included the tool in its Advisor Marketing Kit. Nitrogen is just one example of a growing trend. This month we’ve seen a number of mature firms bring solutions to market that have AI included in the mainstream platform.

More and more industry thought leaders like McNabb are participating in the venture capital space. To us, wealth management insiders using their experience to guide investments in technology is a sign of the maturity of the market. We spoke with McNabb about his new role and his passion was infectious. “I loved what Nick (Beim) and Venrock were doing, their people-first approach really resonated with me and aligned with a culture we focused on at Vanguard, that’s why I initially got involved as an investor. I’ve been lucky to have the opportunities that I’ve had in my professional life to date and now it’s time to give back, at the end of the day I really think the goal is to create a couple of businesses that maybe make a difference out there.”

The world of wealthtech news never slows down so we’ll be back with more words in October.



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