FP Alpha, a financial planning software that uses artificial intelligence to help wealth managers analyze tax and estate documents, has integrated with Envestnet’s MoneyGuide. The partnership between the companies will save users from inputting data into two systems and could dramatically expand FP Alpha’s customer base if FP Alpha proves as useful as it claims.
Andrew Altfest, president of Altfest Personal Wealth Management, a New York-based RIA managing $1.5 billion in assets, was tired of reviewing tax and estate documents for clients so he founded FP Alpha in 2020. The software he and others (including a former developer at the Mexican Stock Exchange) created and incubated at the RIA uses artificial intelligence to review documents like tax returns, trusts, and insurance policies. It takes only a few minutes for the software to create a report, summarize the data, and make recommendations across 16 different areas of an investor’s financial plan. With FP Alpha’s help, advisors could save their clients a lot of money and themselves hours of time, Altfest told RIA Intel.
FP Alpha is already more than 99 percent accurate at reading tax returns and 90 percent accurate at reviewing estate plans, the company claims. Summaries of estate plans still must be reviewed by a person, but the company is working to improve it and rolling out a new version of the tool in the coming weeks.
The software costs $1,500 per year for one advisor to use it and $1,000 per year for every additional advisor. Each advisor can use it for an unlimited number of clients and documents.
Before FP Alpha partnered with Envestnet, advisors using both had to manually input client data or upload documents twice (once for each software). The new integration will allow advisors to use data already in MoneyGuide within FP Alpha, something customers were asking for, Altfest said.
The improvement will save advisors even more time and is expected to boost the number of advisors using FP Alpha, the company says. Altfest declined to share how many advisors are using the software.
But Envestnet is a software juggernaut in financial services used 6,000 firms with a collective $5.2 trillion assets. Convincing even a fraction of those professionals to use some additional software that “pays for itself” will make for a successful business, according to Altfest.
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Companies have tried to build services like FP Alpha, but none have succeeded or caught on with advisors, Doug Fritz, founder and CEO of F2 Strategy, a technology and marketing consulting firm to wealth management firms, said.
Tax and other structured documents are uniform, so creating an optical character recognition (OCR) program that can analyze those documents with a high level of accuracy is relatively easy, according to Fritz. He doubts the technology can truly understand the language and complexity of trusts and will documents that lack standardization.
“I’m not trying to be overly skeptical, but knowing the details in some of these documents, it would be astonishing if they were able to read [sic] a 50-year-old, iPhone-pictured image of an estate plan,” Fritz said.
One problem with computers is that they often don’t know when they get something wrong.
“It may read something and not be able to understand or interpret it. But a lot of times it tries to interpret it wrong,” Fritz said. A good plan based on bad data is a bad plan that you might not know is bad, he added.
Gregory O’Gara, lead analyst at Javelin Strategy and Research, was less skeptical. The ability to navigate and interpret data from unstructured documents is something that would be very useful to advisors and if the technology doesn’t currently exist, it will in the next couple of years, he said.
In November, FP Alpha launched a tool advisors could use with prospective clients. The tool provides a comprehensive list of financial health scores based on information collected through a questionnaire, helping advisors have more informed conversations with investors. Fritz said a tool like that is unusual.
“There are a lot of estate planning and financial planning tools available. There aren’t a lot of proposal generation tools out there. So, if they actually did a good job at that, that’d be pretty badass,” Fritz said.
Altfest is confident in FP Alpha and its technology and said every tool and product they produce is first tested by his wealth management firm, Altfest Wealth Management, before it is released to market.
The company already integrates with CRM platforms Salesforce, Wealthbox, Riskalyze, Redtail, and Dynamics. Altfest anticipates more to come.
O’Gara said partnerships with name-brand companies, like MoneyGuide, go a long away to building trust with advisors.
“If a solution does not live up to its claims, it’s going to be vetted out very, very quickly in the advisory world,” he said.
FP Alpha is another example of Envestnet’s confidence in AI improving advisor software. In October, the company partnered with and launched Healthpilot, an AI-driven software company to help advisors select and enroll clients in Medicare plans.
Rose Palazzo, head of Envestnet’s MoneyGuide, told RIA Intel that AI, and any other technology that makes advisors more efficient, are “absolutely a focus” at her company.
Holly Deaton (@HollyLDeaton) is a staff writer at RIA Intel and based in New York City.
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