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Fidelity’s Purchase of eMoney

Submitted by Technology Tools for Today on February 2nd, 2015


A T3 Special Report by Joel Bruckenstein

Now that the long rumored purchase of eMoney by Fidelity is official, we are already seeing wild speculation across social media about what this acquisition means for advisors and the competitive landscape. That being the case, we thought it timely to add our own perspective for subscribers as well as other interested parties.

In a nutshell, we like the deal. Unlike some other deals we’ve seen lately, this one makes a great deal of strategic sense to us as well as financial sense. From an eMoney standpoint, they have just released their next generation platform EMX, which is receiving excellent reviews from most people, including me. (See my Financial Planning review). With a lot of private equity money chasing too few targets in our space, now is a good time for eMoney shareholders to cash in. Furthermore, the technological knowhow and the financial might of Fidelity should allow eMoney to innovate and release enhancements even faster in the future.

From the Fidelity side, eMoney offers a number of attributes that Fidelity needs. The user experience for both advisors and their clients is simple and elegant, yet powerful. Collaboration tools, industry leading client and advisor portals, well documented account aggregation capabilities, and more make EMX a platform that can be combined with Fidelity’s existing assets such as Streetscape and WealthCentral to form the basis of Fidelity’s next generation advisor platform and consumer platform.

It seems pretty clear to me that the eMoney purchase will greatly accelerate the building of Fidelity’s next generation advisor platform. It should also be an asset should they choose to release some type of robo-advisor platform, or include robo type attributes in their next generation platform.

Some have quickly questioned the independence of eMoney going forward. Will others still share data with them? Will other financial planning programs be frozen out of the Fidelity/eMoney ecosystem, etc.?

We think that most of this speculation is bull. First, if you read the press release, eMoney will not fall directly under Ed O’ Brien’s group (Ed is Head of platform technology for Fidelity Institutional, the group responsible for, among other things, WealthCentral and Streetscape). Instead, eMoney will be part of Michael Wilens’ group, Fidelity Enterprise Services. This is significant because other entities within this group, XTRAC being a prime example, have a long history of providing technology and services to non-Fidelity companies successfully. Fidelity Enterprise Services also has a history of providing services to a wide range of Fidelity entities, which suggests that Fidelity may see opportunities to leverage eMoney in other ways that other commentators have overlooked.

Furthermore, Fidelity is not the first major custodian to purchase a software company. Schwab purchased the forerunner of PortfolioCenter (Centerpiece) years ago, and it to this day remains available to all advisors who want it. Schwab has no problem obtaining data feeds from others. They also purchased Etelligent. TD Ameritrade purchased iRebal which is available to all advisors, regardless of affiliation (The web version of iRebal is currently available, at no charge, to TD Ameritrade advisor clients). Scottrade purchased Portfolio Director some time ago, and the list goes on.

We expect that as EMX morphs into a Fidelity platform that it will follow many of the policies that WealthCentral, for example, currently follows. That means that they will integrate selectively with those third party vendors that Fidelity sees as industry leaders. We see no reason to believe that they will welcome anywhere near the number of vendors as TD Ameritrade’s VEO, nor do we think that they will become more restrictive than they currently are. Ultimately, we think they will judiciously add a number of additional integration partners that strengthen their competitive position.

In our opinion, this acquisition is primarily about the account aggregation and the portals, at least initially. It enables Fidelity, on both the advisor side of the business and the retail side (should they so choose) to rapidly bring to market a platform capable of competing with the B2C robo-platforms. That should be good news for Fidelity, eMoney, and all their respective clients. It is also probably good news for the advisor community because it will keep the pressure on all custodians and third party technology firms to continue innovating in order to stay competitive.

Longer term, we suspect that Fidelity will find additional ways to wring value out of eMoney in other segments of Fidelity’s operations.

I look forward to discussing this new development and much more at the T3 Advisor Conference in Dallas next week (Feb. 12-14, 2015). If you haven’t registered yet, please do so now.

Best regards,
Joel Bruckenstein

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