Interesting #AdvisorTech news this morning - @FTI_US is buying @AdvisorEngine (and @JunxureCRM) from @WisdomTreeETFs. Yet another asset manager in the 'robo' business, along with Invesco's Jemstep & Blackrock's FutureAdvisor. financial-planning.com/news/franklin-… via @ryanWneal #FinTech
The news of AdvisorEngine sale isn't entirely surprising. As discussed in our February #AdvisorTech coverage, WisdomTree signaled in its Q4 Earnings Call that it anticipated an exit from AdvisorEngine (with a significant write-down).
Terms of the Franklin Templeton acquisition weren't disclosed, but WisdomTree previously indicated an expected $22M - $30M writedown of its $58M stake from successive @AdvisorEngine investments.
Notably, though, @AdvisorEngine acquired @JunxureCRM in 2018 for an estimated $22M (kitces.com/blog/wisdomtre…) which implies that AdvisorEngine may have been sold for little more than its existing Junxure asset value?
Although it appears that @AdvisorEngine also struggled to hold onto @JunxureCRM users (and certainly didn't grow market share), as Junxure had a reported 1,400 firms (just on Junxure) when acquired, but AdvisorEngine reports only 1,200 firms total today.
On the other hand, the real 'grand experiment' of @AdvisorEngine buying @JunxureCRM was whether they could convert Junxure CRM users ($/seat) into AdvisorEngine's robo model (charging bps). Charging bps for #AdvisorTech is every #FinTech entrepreneur's dream. :)
But in the end, the typical advisor firm only spends about 2% to 3% of revenue on technology, but AdvisorEngine pricing started at 10bps (and still didn't include the full advisor tech stack). This just wasn't going to fly. kitces.com/blog/wisdomtre… 
And so having not succeeded in selling software for bps, @AdvisorEngine will now go the path of @JemStep, @FutureAdvisor, & of course @ENVintel, & try to generate software bps as a distribution channel for asset manager (Franklin Templeton) bps instead. kitces.com/blog/advisor-f…
Of course, every press release from Franklin Templeton is emphasizing that @AdvisorEngine will remain 'open architecture' and not solely be loaded with Franklin product. Still, though, they call these 'strategic acquisitions' for a reason... wealthmanagement.com/technology/fra… @ddjanowski
On the other hand, it's not clear that @AdvisorEngine even GOT much adoption from Junxure users (to be a channel for Franklin products), or whether this is 'mostly' just a Junxure (re-)sale with AdvisorEngine IP & team thrown in?
As @NexusStrategy has noted as well, though, what is perhaps even more striking is that it was an asset manager that acquired @AdvisorEngine and NOT a bank, custodian, or other #FinTech firm. Incumbents now have their own 'robo' strategies rolling out & don't need to buy anymore?
From the advisor perspective, though, the real question is "What happens to Junxure?" Firm count in today's AdvisorEngine acquisition suggests >10% of Junxure firms already left. But 1,200 is still a sizable user base, now facing its 3 owner in 3 years.
On the one hand, CRM data just makes AdvisorEngine even more valuable to Franklin (more prospecting data & cross-selling opportunity?). And if AdvisorEngine struggled with cross-selling software-for-bps to Junxure users already, this is MOSTLY about Junxure.
On the other hand, CRM itself is still a large and growing opportunity, as a part of the broader trend of better automating the advisor back office. Franklin has noted that "smart automation" is on the new roadmap. And @FTVCapital just acquired @Docupace for the same strategy?
So perhaps Franklin sees a path to control the Advisor desktop itself by not pursuing 'robo' investment tools, per se, but advisor CRM (with robo automation) instead. Which puts Franklin on more of a collision course with @ENVintel (everyone wants to control advisor desktop!)?
And in practice, @JunxureCRM had long struggled to compete simply because it didn't have the depth of capital/funding of some of its competitors. If Franklin plans to pursue a big advisor CRM push, they certainly have the deep pockets to fund it.
Bottom line, though, is that @WisdomTree exit-at-a-big-loss sale of @AdvisorEngine is another nail in the coffin of 'sell robo software for bps' model we've long been bearish on. Robo tools are asset manager distribution channels.
Real question now is: whither next, Junxure?
Real question now is: whither next, Junxure?
