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Sunday, June 16, 2024

The Estate Tech Revolution Is Picking Up Speed


One of the growing trends in the financial advice industry is advisors talking (and for the most part, just that) about leveraging estate planning to both add value for current clients and to create stronger connections with their families (aka potential future clients).

In response, the past few years have seen several tech companies (largely founded by financial professionals) create products to facilitate the estate planning process for clients, advisors or both—Estateably, FP AlphaTrucedentVanilla, Trust & Will and Wealth.com, to name a few. Despite some inevitable early hiccups, these products are just about ready for prime time, and advisors are finally taking notice.

Estate planning platform Wealth.com’s announcement today of its partnership and upcoming integration with consumer fintech subscription company Facet and its 23,000 members managing over $3.11 billion in investments is the latest development in a year that’s seen estate tech begin to take its first baby steps into the spotlight.

“The integration of technology into estate planning has revolutionized the field, breaking down long-standing barriers,” said Shruti Joshi, president and chief operating officer at Facet, in a statement. “With Wealth.com, we bridge the gap between awareness and action, empowering our members to protect their financial futures with confidence.”

The Facet announcement follows Wealth.com’s partnership (though not full integration) with the $2.2B AUM firm Farther, announced in January.

In an interview with Wealthmanagement.com, Farther founder Taylor Matthews echoed a sentiment shared by several of Wealth.com’s early adopters in praising the platform’s advisor-first nature and adaptability. “After surveying the market, Wealth.com stood out as a very advisor-centric solution for what our clients were asking,” he said, “We aspire to be that family office—everything in one place, everything just works—so the ability to be highly tailored and thoughtful was important.”

While Wealth.com wins converts by focusing solely on advisors, Others casts a wider net, with offerings for both professionals (advisor or otherwise) and regular folks.

Digital estate planning and settlement platform Trust & Will made waves in April, announcing a strategic partnership with LPL Financial and its massive advisor network.

And Steve Lockshin’s Vanilla, after unveiling its fully integrated estate advisor platform in mid-2023, then announced its own partnership with Vanguard in January of this year after a successful trial run with some handpicked investors.

“Vanguard bet on us early as a series A investor, and they’ve long bought into Steve’s vision,” said Vanilla CEO Gene Farrell, “so we like to joke that this has been a 2 1/2-year overnight success.”

“Recognizing that some clients have intricate estate planning needs that will span multiple generations, implementing Vanilla’s capabilities supports our commitment to helping clients achieve stronger financial and legacy outcomes,” said Massy Williams, principal and head of wealth management at Vanguard.

One advantage of Vanilla’s wider outlook is that its also finding fans among estate planners. Accelerant is one of the nation’s most tech-forward estate planning firms, and founder Dana Foley is involved with Vanilla, both as a consultant in its development and an end user herself. For Foley, though, the value add of estate tech like Vanilla is less about finding new services to offer her clients, but in allowing her to subtly change her relationship with them.

“The billable hour model stymies communication among attorneys clients and advisors,” she said.

By shifting some of the labor-intensive drafting and data gathering work her team once did on a billable hour basis to be handled more quickly by technology at a flat fee, Foley not only finds more time to spend with clients but also said her relationship with them is improved by not having to produce as intense an itemized billing of her time working for them.

“It makes the relationship less transactional,” she said.

Estateably and Trustate are among the other notable companies with products targeting estate planners and back office functionality more directly.

And that’s just the 10,000-foot view. Unsurprisingly, as you get more granular, more highly specified products emerge. Most of these are beyond the scope of this piece, but philanthropy—and DAFs, in particular—are an emerging battleground.

Long one of estate planners’ and high-net-worth advisors’ favorite tools for easing clients into philanthropy, a pair of companies have emerged looking to offer even greater access to these vehicles—Adam Nash’s Daffy and Charityvest.

Both look to ease client access to DAFs by offering access to prebuilt investment packages (the clients still get to direct any charitable distribution of the invested funds), all managed via the ubiquitous dashboard. Daffy largely leaves its investment options at that, and Charityvest offers some more knobs to turn for advisors looking for something more customizable (albeit at a higher price).

“Where we’re headed with advisors and giving ties into the macro trend of advisors as a commoditized service.” Charityvest founder Stephen Kump said. “Advice surrounding giving can play an important role as a differentiator for an advisor, allowing them to create value at a deeper, more personal level.”

It seems like that sentiment pretty neatly applies to the estate tech space as a whole as well.

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