By Thomas Coyle September 27, 2016
FolioDynamix is making a bet.
Drawing on its own research and “longer-term conversations” with institutional clients, the financial technology and investment platform outsourcer says consumers want some aspects of “robo” or automated service delivery, but not without humans in the mix.
FolioDynamix, which competes with companies like Envestnet and Assetmark, also thinks financial advice firms need robo capabilities to make their frontline advisors more efficient in an age of greater consumer choice and ever-higher regulatory hurdles. That’s with the aim either of letting FAs go deeper with existing clients or equipping them to handle more clients than they can now without going nuts from busywork.
So FolioDyanamix plans to hook up with other fintech makers to offer firms the wherewithal to give clients a rational blend of automation and person-to-person interaction.
FolioDynamix is forming these combinations to support what it calls a “Fiborg Constellation,” according to the company’s president Steve Dunlap.
The term “fiborg” — a play on “financial” and “cyborg” — is “a term we came up with to encapsulate the idea that robos aren’t going to replace humans,” Dunlap tells FA-IQ. “Instead, they’re going to make humans better, stronger, faster — like the Six Million Dollar Man.”
In the future, Dunlap says FolioDynamix will offer its “sweet spot” customers — regional and independent brokerages, banks, trust companies and big, wealth-oriented RIAs — a sort of “convenience store” where they can mix and match ways to combine FolioDynamix services with integrated offerings from robo-like fintech vendors.
The convenience-store nickname contrasts with managed account “super markets” available to advisors through vendors like Schwab and Pershing, the custody and clearing unit of Bank of New York Mellon. Where these managed account complexes offer dozens of investment products in a one-stop, open-architecture setting, FolioDynamix’ fiborg convenience store will feature just three to five fiborg combinations.
This numerical restriction is partly due, says Dunlap, to FolioDynamix’ view that the market can’t support too many more than five or six freestanding robo-tech vendors. If that holds true and the company succeeds in making itself a one-stop shop for advice firms in search of client-centric automation, it will have made itself a major playmaker in the robo arena – at least for the middle market.
First up in FolioDyanamix’ quest for robo-tech tie-ins is Scivantage, a company not usually viewed as a robo. But, in FolioDyanamix’ eyes, it makes a good fiborg partner because it makes — among other things — a straight-through wealth management platform for FAs and a customer service and online trading platform for investors.
By melding FolioDynamix’ investment capabilities with Scivantage’s expertise in data delivery, the companies figure they can come up with “an enterprise-grade digital advice solution allowing advisors to collaborate with clients of all account sizes,” they say in a joint press release.
According to Scivantage “digital wealth” executive Joe Stensland, “Investors — even Millennials, who are comfortable with technology — are searching for a hybrid model when it comes to wealth management.”
Adds Stensland: “Delivering a digital robo advice solution at the enterprise level is the way to address this, and integrating market-tested solutions from Scivantage and FolioDynamix is the logical answer.”
For the moment, FolioDynamix has no date for the first phase of its fiborg rollout. That, says Dunlap, is because it works on a project basis, not on a general delivery timeline.
In other words, it has a Scivantage fiborg assembled already but won’t give it life it until an institutional customer asks for it. And from there, adds Dunlap, there will probably be a beta phase before any announcements are made.
As for pricing, a FolioDynamix spokeswoman will only say “it’ll follow our general pricing, which is based around volume of accounts plus an implementation fee.”
Similarly, the spokeswoman expects end-client investment minimums for the FolioDynamix’ Fiborg Constellation to come in at $5,000 — though again, that’s not set in stone.