/by Francis Groves, Senior Analyst/
Yesterday there was news of two major acquisitions of fintech companies in the United States with the takeover of Advent Black Diamond by SS&C in a deal worth $2.3bn and the purchase of eMoney Advisor, the financial planning software company.
The eMoney Advisor deal is reported to have cost Fidelity Investments just $250 million and reflects the fact that although financial planning software can bring great advantages to financial advisors and eMoney Advisor seems to be highly regarded in its field, the software itself seems surprisingly cheap. A license for eMoney Advisor’s emX PRO product currently costs less than $4,000 a year. Other financial planning products in the U.S. are even cheaper.
In fact eMoney Advisor offers more than financial planning software with marketing tools (advisor branded media such as videos and presentations), account aggregation, vault solutions and, perhaps most importantly, its client portal. The eMoney Advisor personal financial management (PFM) tool (they call it a client site) is seen as possibly the most attractive of the company’s products in the eyes of Fidelity. MyPrivateBanking’s view is that Fidelity’s purchase should probably not be seen as a cherry picking opportunity and that they have plans for the whole product range. That said services like MINT.com or Personal Capital’s financial software are showing that personal finance portals have plenty of potential in the retail segment.
Just what those plans may be is unclear at this stage but the eMoney Advisor purchase has raised concerns among financial advisors that use its products even though Fidelity has promised not to interfere with emX’s integration on the platforms of other custodians such as Charles Schwab and TD Ameritrade. Concerns have also been expressed at the possibility of Fidelity making use of big data on HNWIs’ portfolios available on the eMoney Advisor platform but this raises such serious questions about who really owns that data that we think Fidelity Investments would see this as a highly dangerous strategy.
Although we shall have to wait to see how Fidelity plans to build on its eMoney Advisor acquisition, it is clear that the company is fully aware of the need to accelerate the speed with which it engages with digital technologies to provide more help to investors. MyPrivateBanking believes that, in particular, the new collaborations between Fidelity Institutional and Betterment Institutional, and with LearnVest may be a sign that Fidelity’s focus on providing advice and planning services to the mass affluent and the young via technology is increasing.
The eMoney Advisor deal also sheds an interesting light on the volume of investment going into fintech from venture capital funds. Fidelity is paying a lot more than start up’s funding but it is getting an established revenue stream of at least $30 million a year as well as a well qualified team of 250 people. It seems likely that they have interesting plans for that team as a team but that they will respect what eMoney Advisor has already achieved since it started 15 years ago.