Franklin Templeton buys AdvisorEngine in bigger play for advisor desktop

Franklin Templeton is the latest asset manager to embrace a new role: technology provider to independent financial advisors.

While still closing a $4.5 billion acquisition of LeggMason, Franklin Templeton announced the purchase of AdvisorEngine, a vendor offering integrated wealth management technology to 1,200 advisory firms. Terms of the deal were not disclosed.

AdvisorEngine’s platform includes several pieces of core financial advisor tech, including CRM, portfolio management, reporting, marketing and a white-label robo advisor.

Franklin Templeton plans to use AdvisorEngine to create new proprietary technology, including a goals-based financial planning tool and digital portfolio construction analytics. Future products will emphasize “smart automation,” especially the next generation of Junxure, an advisor CRM AdvisorEngine acquired in 2018.

“We’re in the midst of the fourth industrial revolution, and technological advances are reshaping how financial solutions are delivered,” said Franklin Templeton CEO Jenny Johnson in a statement.

Franklin Templeton also sees additional opportunities to boost financial advisors’ use of its portfolio construction and practice management strategies, says Harshendu Bindal, head of digital strategy and wealth management.

M&A

What Morgan Stanley’s E-Trade deal means for digital wealth

The all-in-one platform model is attracting some of the largest firms as consumers increasingly acclimate to housing all their financial needs under one roof.

By Sean Allocca

February 20

Asset managers have increasingly used fintech acquisitions to expand their footprint with RIAs. BlackRock has FutureAdvisor and a stake in Envestnet, Invesco has Jemstep and Principal Financial Group has RobustWealth, just to name a few.

Asset managers see fintech as a way to diversify revenue in the age of passive, low-cost index funds, says Nexus Strategy President Tim Welsh.

“It’s all about distribution,” Welsh says. “As wholesale becomes less and less important and as more investment products become commoditized, distribution is king.”

And to attract independent RIAs, asset managers have to offer investment choice and open-architecture technology, says Wealth Consulting Partners President Gavin Spitzner.

“They can’t shove product down the pipes,” he says. “They know they’ll get their piece of the pie if they do a good job of just driving overall adoption of capabilities.”

AdvisorEngine will operate as an independent subsidiary of Franklin and its leadership team will remain in place, according to the firm. Despite plans to build proprietary products, AdvisorEngine founder and CEO Rich Cancro says the firm is committed to open-architecture and will keep building relationships with other asset managers and fintech vendors.

“It isn’t about shelf space,” adds AdvisorEngine COO Craig Ramsey. “It’s about deepening client relationships and expanding capabilities instead of pushing products.”

AdvisorEngine was founded in 2014 as digital advice firm Vanare. ETF giant WisdomTree took a $20 million stake in AdvisorEngine in 2016 and provided an additional infusion of $30 million in 2018. But WisdomTree announced it was looking for an exit from its investment in January, and the firm will take an estimated non-cash impairment charge of $22 million to $30 million for its exit.

WisdomTree did not respond to a request for comment.

Cancro wouldn’t comment on AdvisorEngine’s past with WisdomTree, saying the company is focusing on moving forward and growing with Franklin Templeton.

“The way we look at it is fairly simple — we were very thoughtful and spent over a year finding a good partner and good fit for the future,” Cancro says.

Welsh is surprised to see another asset manager step into the buy AdvisorEngine instead of a bank, custodian or large technology vendor. But he says Junxure CRM may be key to Franklin Templeton’s strategy, noting it’s a technology that no other asset manager has. The asset manager can use data from the CRM to better market products and services.

“Junxure is an amazing asset. It could be the hidden gem that they are going after,” Welsh says.

Many advisors use Junxure as their core technology and workflow hub, says Joel Bruckenstein, a technology consultant and founder of the T3 Conference. Franklin Templeton has an opportunity to build an integrated, all-in-one technology platform.

Combined with Cancro’s vision and Franklin Templeton’s deep trove of resources for advisors, the ceiling is sky-high for AdvisorEngine, Bruckenstein says.

Now the company just needs to pull it off.

“They’ve got the LEGO blocks to make it happen,” Bruckenstein says. “If they can execute, they can be successful.”