Tech innovation is alive and well in the wealth management space. When it comes to designing the optimal tech stack to support their desired value propositions, financial advisors and their management teams face a rapidly increasing number of options.
One expression of that is the Michael Kitces’ Financial AdvisorTech Solutions Map (“the Map”), which organizes available advisortech offerings by use case across dozens of categories. As the Map approaches its five-year anniversary, it has doubled in size, and as of March 2023 boasts more than 380 companies spanning 33 categories. It is updated on a monthly basis with input from both the Kitces team and Ezra Group’s Craig Iskowitz.
While the Map doubling in size over the past five years is impressive, the growth has not been uniform across all categories. There is a “Constant Core” of evergreen categories such as Financial Planning, Risk Analytics and Account Aggregation that have seen relatively modest growth. On the other end of the spectrum are brand new categories that are experiencing explosive growth, resulting in the addition of net-new firms to the Map and the advisortech landscape.
Two categories that have proven particularly popular among advisors are Advice Engagement and Lead Generation. These new categories and the firms therein align with and drive the strategic shift that is afoot in our industry – a shift away from simply providing investment products and towards leading with advice, optimizing both the client and prospect experience.
From obscurity to center stage
The Advice Engagement category is taking off, helping financial advisors to engage and serve their clients with impactful, personal and relevant insights and advice that goes beyond investing. Investors are placing a greater emphasis on the value of advice versus how their portfolio is performing, as a study by Vanguard highlights. The category was established on the Map in February of 2022, recently celebrating its one-year anniversary, and includes offerings such as such as Asset-Map, Bento Engine and visiWealth.
The category was formed after some consolidation, whereby the Mind Mapping category was dissolved and the very robust Asset Map offering merged into the legacy Advice Support bucket. This new unified category was ultimately renamed Advice Engagement to better express the nature of this important and dynamic area - engaging and serving clients and prospects with advice, which is increasingly becoming the core of wealth management.
After starting with five companies in February 2022, the category has more than doubled over the past year to comprise 11 offerings, with AI-based “next best action” system ForwardLane the latest addition in March 2023.
The Advisor Lead Generation category in the Map has also experienced rapid growth, expanding from four companies in 2018 to 16 as of April 2023. Firms in this category benefit advisors by garnering qualified leads and automating repetitive tasks such as sending emails, scheduling appointments and following up with potential clients. Using these innovative technologies to identify and attract new clients, advisors’ time is freed up to focus on enhancing the experience for their existing roster of investors.
The future is bright
Given the many industry needs for which leading with advice solves, it’s clear to see why the Advice Engagement and Advisor Lead Generation categories are taking root in wealth management circles. While there might be some M&A-driven consolidation of certain offerings in the future, we would expect the overall growth of both categories to continue – they’re becoming key enablers for client-centric firms to drive organic business growth.
Furthermore, the sheer number of innovative solutions coming to market on a regular basis serves as an indication of the many unmet client needs and business opportunities that still exist within the financial advice community. We fully expect the aforementioned categories will continue to attract creative minds and the capital required to drive innovation from which everyone benefits – clients, advisors and advisortech firms alike.
Philipp Hecker, Chief Executive Officer of Bento Engine, a fintech empowering financial advisors to deliver proactive, comprehensive advice at scale to better serve clients, deepen relationships and convert more prospects faster.