Ambitious advisor-tech provider sees reaching "next level" in deal's wake. Cherry Hill, N.J.-based Commerce Bancorp has acquired wealth-management technology provider eMoney Advisor in a $32-million stock transaction. Industry observers say the deal could result in broader uptake of eMoney's core AdvisorPlatform offering, especially in bank-based advisory channels.

"This is a smart move by eMoney," says Alois Pirker, an analyst with Celent, a Boston-based research consultancy. "It gives them financial backing and an opportunity to develop software for the banking space."

Shot in the arm

Meanwhile six-year-old eMoney seems to have done fairly well on its own, especially in the insurance channel. Its clients include MassMutual (which owned a chunk of the firm before Commerce came into the picture), Century Business Services, First Commonwealth, PricewaterhouseCoopers, Ameritas/Acacia, New England Financial, Principal Financial Group and Union Central. By early August 2005, eMoney's AdvisorPlatform monitored over $50 billion in end-client assets.

Edmond Walters, CEO of Conshohocken, Pa.-based eMoney says his firm was pretty flush going into talks with Commerce, but he'd known for some time his firm needed more funding to reach "the next level." His choices came down to raising investment capital - a prospect he didn't relish - or finding a buyer.

Walters says the deal with Commerce "keeps the competition away, and it allows us to scale ourselves very quickly." For instance, Walters expects his staff, now at about 50, to double by the end of 2006.

Financial backing is important to a smallish tech vendor because it helps allay fears a potential client may have about doing business with a wobbly provider, according to Pirker. "That's even more the case for an [application-service provider (ASP)] like eMoney," he says. "If you're talking about something that's primarily a software product as a opposed to a web-based ASP, you might be able adapt the technology and keep going even if the provider is no longer around, but a firm like UBS - just for example - wants to make sure that an ASP is going to be around for a long time."

Virtual banker

Commerce CEO Vernon Hill agrees. "This deal eliminates concerns about the stability of a small firm," he says. "We're going to use our branding and financial clout to keep eMoney expanding in the marketplace."

Hill also sees eMoney as a way for Commerce to distinguish its private-client platform from those of its rivals. "eMoney will adapt its software for a bank version called Virtual Private Banker," he says. "We're always looking for ways to differentiate ourselves from the competition," noting that Commerce branches are open on Sundays and well into the evening on weekdays. "eMoney is a way for us to give our clients daily snapshots of their financial holdings."

Commerce has about 350 branches - "stores" in its own parlance - in New Jersey, New York, Pennsylvania, Delaware and Greater Washington, D.C.

Hill says Commerce will offer Virtual Private Banker to high-net-worth private clients and to select commercial clients. He expects to see a beta version of Virtual Private Banker this quarter and to have the thing up and running by the end of the year. It's also possible that Commerce will try to sell its Virtual Private Banker technology to other banks - provided they're well out of Commerce's competitive footprint. "Maybe on the West Coast," says Hill.

Pirker doesn't see competitive conflicts standing in the way of Commerce's plans to help eMoney make headway with bank-based advisors. "I think this is more about the whole ASP and outsourcing movement than any specific competitive issues," he says. "The Bank of New York has had lots of uptake" with Lockwood Advisors, its third-party investments subsidiary.

Vaults and alarms

eMoney's AdvisorPlatform gives advisors access to client information such as securitized investments, liabilities, cash-flow and estate-planning vehicles and documentation. The interface includes alerts to help advisors keep track of time-sensitive matters from stock options to passport renewals. The technology also segments client information to facilitate task delegation to juniors within a firm and to a client's outside advisors.

The point of all that is to help advisors "manage their client relationships by identifying strengths and weaknesses in asset allocation, keeping accounts up-to-date and monitoring significant changes in their clients' financial status," according to a blurb on eMoney's website.

Advisors who use eMoney's AdvisorPlatform can also give their clients Internet access to their updated financial information, online storage "vault" for copies of legal and financial documents, and a tracking system for their frequent-flier mileage and other point programs.

List price for a single advisor is $1,500 per seat license and $400 per client seat. Enterprise builds are available to large advisor groups and financial institutions. The cost includes basic technology set up, training and 200 megabytes of storage for online document storage. AdvisorPlatform can also be purchased as a monthly subscription for $299 per month with a three-month minimum.

For the moment AdvisorPlatform doesn't have a bill-pay function, but Commerce's Hill says eMoney plans to build that into the Virtual Private Banker version of the software.

Saddle sores

Industry consultants who've vetted it say that eMoney's AdvisorPlatform is a solid offering. Last spring Forrester Research, a Cambridge, Mass.-based market-research company, gave AdvisorPlatform top marks for "adaptability and entitlement" and for "event triggers and alerts" in its second-quarter 2005 "Forrester Wave" report on financial-planning software.

"eMoney Advisor offers two comprehensive tools in one," write Forrester Wave authors Tom Watson and Bill Doyle. "Advisors can review the basic planning concepts with their clients using the goal based tool and then escalate portions of the plan to the more advanced cash-flow tool for a deeper analysis."

John Olsen, a Kirkwood, Mo.-based estate planner and financial-planning software consultant, calls AdvisorPlatform "a pretty good product, with perhaps the best data-aggregation capabilities out there."

Olsen says that many advisors gripe about technologies that give them access to client data but don't interface with planning engines. For example, he says, Schwab's PortfolioCenter, better known as Centerpiece, Advent's Axys and Financial Profiles' software all provide client-contact information and performance reporting, but "you can't do any planning with them." Emerging Information Systems' Naviplan, on the other hand, is a robust planning tool, but it has "no portfolio capabilities," according to Olsen.

"These are all fine products, but if you want to know if a client should pay down some debt before buying a Roth IRA, they're not going to help you get the answer," says Olsen. "With eMoney you can grab the client's real-time information and stick it inside a planner."

And that, says Olsen, puts eMoney at the forefront of advisory technology. "People have been talking about web-based connectivity for advisors and their clients for the past four years at least, but eMoney is in the vanguard of actually doing it," he says. "It comes down to eliminating the use of first-century technology to solve twenty-first-century problems. Why would you use a paper-based questionnaire when your client can provide that information from the comfort of his bedroom? You might as well ask him to fill in the form by candlelight and put it in his saddlebag and ride his horse down to your office."

Still scared

Although the eMoney's ability to link data aggregated by partners like Albridge Solutions and CashEdge with its planning software makes it a compelling offering, industry watchers say it isn't suitable for all advisors, especially ones with ultra-high-net-worth practices.

"This is particularly for the broad base of mass-affluent clients," says Celent's Pirker. For instance, AdvisorPlatform's planning capabilities "aren't on the same level as Naviplan," he says. On a similar note, Olsen says that AdvisorPlatform has decent estate-planning capabilities, but they wouldn't do the trick for his own high-end practice.

But Pirker adds that Naviplan's "complex planning" options of "can be too much" for the insurance- and bank-channel advisors eMoney has in its sights - which in turn makes eMoney a good fit with Commerce. "Insurance companies and banks have the same "broad, mass-affluent client base," he says. "eMoney is easy to use, so you can see a bank's self-directed clients jumping on this."

eMoney's Walters says his strategy for eMoney has always been to "give our clients white-label solutions, customized to their needs. We built [AdvisorPlatform] knowing that big enterprises would have their own requirements and preferences in place when they came to us, and that it would be up to us make it all run seamlessly. This deal doesn't change that," he says. "We're still running hard and we're still running scared." -FWR

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