This summer is heating up with marriages between WealthTech providers and other players being the talk of the industry. Wedding guests are gossiping that the relationship may not be as blissful as it looks. And the big question on everyone’s mind is “who is the winner in this union?” Will it be the advisors, RIAs, BDs, Custodians, or none of these answers? We think the answer is likely the latter.

There is a lot at play when WealthTech’s and other partners decide to marry, just like a human relationship, combining households can be challenging. Especially when there are others involved-like children and debt, and, well, you get the picture.

While we can only speculate if these marriages benefit the industry, the impact on advisors is what we are concerned about. Here are a few things to consider when any WealthTech or partner marriage occurs:

A Powerhouse Couple. While everything looks shiny on the outside, every relationship has its issues. It can be the same when large WealthTech or partners marry too; becoming bigger is not always better. With any WealthTech marriage, advisors, RIAs, and BDs need to assess how it may impact them:

  • Is my tech stack going away, or will it be changed?
  • Will my cost increase?
  • My customer service from my tech stack provider is so-so. Now what? Will it improve or be worse?
  • Can I still trade at multiple custodians, or am I now tied to one due to my tech stack contract?
  • How does this benefit me?

These are all valid concerns. If you are using a WealthTech provider that is merging or sold, it is in your best interest to start asking questions. The more you know now, the better prepared you will be if you need to change providers.

Custody Issues. While we can try to sum this up as creatively as possible, the real issue is when there are others involved besides the couple.

If the provider is a custodian partner, what happens when the provider BECOMES the custodian? Is it a conflict? If, and when, there is a divorce, who will get custody? Will your tech stack be in jeopardy of failing due to the custodian not accepting the trade, or the custodian divorce the provider leaving you to execute trades exclusive to their platform? 

If there is a fallout, it is quite possible that you, the user of the technology, will be forced to choose sides. How messy could it get?

Debt. When there is debt brought into a marriage, it can complicate things between the parties, and a prenup will not help if there are irreconcilable differences, and the marriage ends.

Scaling a business may require financing through a lender. Often, the lender provides other products such as checking, savings, investments, or technology. Unfortunately, your loan approval may be tied to ‘moving everything over’ or switching to their platform. But what happens when you no longer want to do business with the lender? Do they make it impossible to leave?

Our industry is at the cross-roads as WealthTech players start to increasingly combine. Custodians become lenders, WealthTech providers become custodians, and so on.

Remember this. As WealthTech marriages continue to occur, the advisors are really in control because they have choices. Emerging tech will provide the tools for other WealthTech and players to move forward into partnerships that enhance technology platforms across our entire industry. While WealthTech mergers and buyouts can be evolutionary resulting in more significant advancements. Here at AdvisorPeak we encourage you to evaluate the marriage and analyze for yourself if it will genuinely benefit you in the long run.