No matter how many times Fidelity Investments tries to reassure eMoney Advisor customers that it is not going to restrict access to the popular software only to advisers who hold assets with the firm, doubts persist.
Those concerns first surfaced in February when Fidelity announced it had acquired eMoney, one of the most widely used financial planning software programs. And they surfaced again last month when Fidelity announced that eMoney's founder and chief executive, Edmond Walters, was stepping down after only seven months working under his new parent company.
Originally, Fidelity had used the fact that Mr. Walters was staying on to run eMoney as a way to assure customers that no radical changes were in store for the software firm. The fact that neither Fidelity nor Mr. Walters discussed his reasons for leaving only added to the speculation as to the future of eMoney.
“My concern is as a custodian of advisory assets, [Fidelity could] make some of these technologies they've acquired only available to people who custody with them,” said Peter Huminski, president of Thorium Wealth Management, which has $25 million in assets under management.
(Related read: Why advisers are worried about Fidelity's eMoney deal)
Mr. Huminski said he is worried that Fidelity will either completely cut off the eMoney customers who don't hold assets with the firm, or stop offering them updates to the software.
INCENTIVES
Matt Cosgriff, a financial adviser at BerganKDV who holds assets with Charles Schwab & Co., started using eMoney two weeks before it announced it was being bought by Fidelity. Though he isn't worried about Fidelity closing eMoney's doors to non-custody customers, he expects Fidelity to package the software in a way that makes it look advantageous to move over to the custodian.
He doesn't think he'd change his custodian, or his financial planning software, though.
“As long as the technology and openness of the platform stays where it is meant to be, we don't have any issues,” he said.
An added concern among advisers was that with Mr. Walters gone, eMoney would lose its creative drive. At the time of the acquisition, eMoney and Fidelity vowed the firm would continue with its plans for updating the software and integrating with third-party vendors.
Despite, Mr. Walters' exit, Fidelity has lived up to that promise.
Fidelity Wealth Technologies president Michael Durbin, who is running eMoney until a new CEO can be found, said that the company is on track to complete all of the integrations it had promised. During an eMoney summit last week, the software provider announced three more integrations were complete, including one with competitor MoneyGuidePro.
Mr. Durbin said Fidelity has said the same thing since February, and will continue to repeat itself: eMoney, which Fidelity reportedly paid $250 million for, will remain independent.
"BEAUTY OF THE MODEL'
“The idea that we would create unique things just for Fidelity — that runs counter to the whole ethos of the firm,” he said. “eMoney is constantly innovating its offerings. That's the beauty of the model.”
There may be a more practical reason for keeping eMoney available to Fidelity's non-custodial clients. As spokeswoman Erica Birke pointed out when the acquisition was announced, only one-quarter of eMoney's adviser clients hold assets with Fidelity. Cutting them off would put a serious dent in eMoney's revenue stream.
eMoney's financial planning platform is the second most used in the financial planning software sector, according to
InvestmentNews' 2015 Most Popular Tech study. Of the 80% of advisers surveyed who said they use financial planning software, 23.6% said they used eMoney, only slightly less than the 25.3% who use MoneyGuidePro.
Tim Welsh, president of consultant Nexus Strategy, said Fidelity would be making a huge public relations mistake if it were to restrict eMoney only to its custodial clients.
Mr. Welsh said he has seen this before.
“The last time someone tried to do a monopolistic use of software was Schwab,” he said.
Schwab acquired Performance Technologies, a technology firm that developed portfolio management system Centerpiece, which later morphed into PortfolioCenter. In 2002, Schwab announced it was pulling the technology from working with other custodians, such as TD Ameritrade. It was a surprise, considering Schwab and Performance Technologies had both said the technology company was independent of Schwab.
“They were going to take PortfolioCenter off the market,” he said. “The backlash was so powerful.”
Under such pressure, Schwab reversed its decision.
Mr. Welsh said the best bet for Fidelity is to keep eMoney as the separate entity it says it will.
“Ideally, they will treat it as a utility,” he said.
As the dust settles, advisers say they will just have to wait to see what Fidelity does with eMoney. They aren't all optimistic, though.
“You trust as much as you possibly can, but in reality they own it, it's theirs, and they can do what they want with it,” Mr. Huminski said.
