In the wake of Envestnet’s purchase of PIEtech, the developers of MoneyGuidePro (MGP) for more than $500 million, many industry participants are asking whether the purchase has broader implications for financial services technology. How does the purchase impact advisors? How does it impact the financial planning software competitive landscape? How will it affect the current partners that MoneyGuidePro integrates with? Does it have larger implications for the industry?

Perhaps the most pressing question is how the Envestnet deal will affect MoneyGuidePro’s existing clients (as well as its potential clients). The initial indications are that the future seems bright, for the next several years at least. PIEtech’s Bob Curtis will continue to design innovative software, while the company’s Tony Leal will continue on as president and head of technology. And Envestnet has ponied up $30 million in retention bonuses to keep key personnel on board.

The interconnections between these top players in financial planning software run deep. Curtis will continue to support Edmond Walters’ efforts at Apprise Labs to build out and integrate high-net-worth estate planning and legacy software. Envestnet also owns about one-third of Apprise Labs. Walters was the founder of MPG’s top rival, eMoney, which he sold to Fidelity for more than $250 million several years ago. Fidelity has long been a major Envestnet client and both Envestnet CEO Jud Bergman and Curtis have indicated that MoneyGuidePro will continue to integrate with partners and that it will operate as an independent unit.

How does the deal impact the competitive landscape? According to the 2019 T3/Inside Information Software Survey, when the deal closes, Envestnet will be the market leader in professional financial planning software, holding 26.18% of the market. The firm leads the fee-only advisor market as well, grabbing a 42.36% share. This has led some to suggest that Envestnet and eMoney (which has a 22.93% market share and 31.73% of the fee-only market), are becoming too powerful and that there will be a lack of competition going forward.

Several factors suggest this is not the case. First, according to the survey, only 63.57% of respondents said they were using financial planning software. This would indicate 36.43% of the market is still up for grabs, a significant percentage.

eMoney appears to be competing effectively. The firm “offers full-spectrum planning on a single, integrated platform, which is a true differentiator in today’s landscape,” says Ed O’Brien, eMoney Advisor’s CEO. “With 60,000 users serving 4.1 million households—and growing each day—we’ve never seen more opportunity to help people talk about money and work toward financial peace of mind.

“eMoney has always believed that a planning-led solution is the strongest way to attract, retain and build relationships with clients,” he says. “With Fidelity’s support, we’ve proudly evangelized the value of planning and scaled our organization to support the noticeable shift in the industry. Four years after Fidelity acquired eMoney, we’ve more than doubled in size, working side by side with financial professionals to deliver products and services that meet the evolving needs of their businesses and their clients.”

Fidelity, eMoney’s parent, sees more growth ahead in the financial planning sector. “There’s been a clear shift towards advisors becoming more planning-led, and we expect the demand for planning to increase as investors continue to ask for more from their advisors,” says Lisa Burns, head of platform development at Fidelity Institutional. “Advisors value the solutions that eMoney offers because they help them address clients’ higher needs—things like reaching their life goals. We’ve seen strong growth with eMoney, and it’s been great collaborating with them to help advisors add that deeper value and do it in a way that can be easily implemented.”

If Burns is right, demand for financial planning software is likely to increase not only from the traditional buyers that the T3/Inside Information survey measures, but from other financial intermediaries and some new sectors as well.

Almost every competing developer of financial planning software that we talked to put a positive spin on the acquisition. “We look at this news positively,” says Pietro La Greca, vice president of enterprise solutions at financial planning software firm RightCapital. “The pricing of the deal gives legitimacy to our belief that financial planning drives client engagement. Profiles and NaviPlan were the market leaders until PIEtech came along. Bob and Tony are an inspiration for us.”

Angela Pecoraro, CEO at Advicent, the developers of NaviPlan and Profiles, says, “The acquisition adds a dynamic to the competitive landscape; it does not change it.” She welcomes the competition: “It will cause us all to raise our game.” She says the MoneyGuidePro approach also validates Advicent’s approach of having a single calculation engine that can provide a solution for all end-client needs from very simple to very complex. “We truly believe in holistic planning, but we will do it differently than the competition. Our next-generation tools will be more competitive and easier to use.”

Pecoraro believes that the market is going through a transformation. “The key is providing value in a dynamic advice ecosystem. Those who can meet the need of the future advisor will win.”

Tirdad Shojaie, the senior vice president of product, marketing and strategy at Fiserv, currently competes with MoneyGuidePro primarily in the enterprise arena. He believes that the acquisition validates his firm’s strategy, too. “Our strategy is to provide an end-to-end integrated platform, not just financial planning software.” Fiserv, he says, provides a solution that takes the client from initial engagement through the risk-assessment process, holistic goal-setting through implementation and ongoing monitoring of both the investment portfolio and the goals.

Shojaie believes that with the acquisition of MoneyGuidePro, Envestnet is following a similar strategy. “This is the beginning of an industry movement towards end-to-end advice,” he says. “This is a better dynamic for the client and for the independent broker-dealers.” He thinks the same philosophy will begin to permeate the independent RIA space as well. “For a long time, people have been selling pieces of a solution, but they are not integrated,” he says. Shojaie believes that Fiserv’s position as a pure technology provider gives his firm a competitive advantage.

Eric Clarke, CEO of Orion Advisor Services, disagrees with Shojaie, at least regarding independent RIAs: “We help support independent advisors, and we are advocates of independent software providers.” Orion has worked closely with MoneyGuidePro over the years to ensure a tight integration between the two firms’ platforms. “Our hope is that Envestnet will continue to support our deep joint integration,” Clarke says. For now, he is positive: “Look at the situation with eMoney. Initially, many people were skeptical, but the [acquisition by Fidelity] was a net positive for Fidelity, for eMoney and for advisors. Hopefully in a few years, we can say the same about MGP and Envestnet.”

In Clarke’s opinion, competitively it is less about who owns the software and more about providing the right solution. “With boomers retiring, they are less concerned about accumulation and more about income planning. Much of the software out there today is lacking when it comes to income planning.”

Alois Pirker, research director with the Aite Group, says that while Envestnet’s previous foray into financial planning software (Finance Logix) gave it some capabilities in the financial planning sector, MoneyGuidePro gives the firm adoption. “MGP has great market penetration,” he says. “The playing field has shifted. … Specialized high-end planning is important, but the total market for the service is relatively small. A lighter solution, like MoneyGuideOne, is something that virtually everyone needs.

“With the MGP acquisition, Envestnet is well positioned. Their investment platform, plus planning, plus Yodlee, with analytics on top, provides advisors with a full picture of the client’s financial situation. It offers an immense opportunity to gather insights that can lead to better client outcomes.”

For Mike Kerins, the CEO and founder of RobustWealth (now owned by Principal Financial Group), the acquisition spells opportunity. His platform, originally designed to bring institutional-quality money management to advisors, has been adding to its goals-based planning capabilities for some time now. This includes deepening projections, providing data aggregation and adding a financial wellness score. He says the Envestnet acquisition is prodding his firm to accelerate its development of additional financial planning capabilities.

“Envestnet made the right call buying MGP,” he says. “I would have done the same thing if I was them. This will accelerate, not decelerate competition.”

Finally, it is rumored that one more developer with an excellent track record in financial planning plans to release new comprehensive planning software sometime early next year.

Besides the market participants competing in the traditional financial planning arena, there are several newer firms that are looking to broaden the boundaries of what is traditionally thought of as financial planning. For example, Whealthcare, co-founded by Carolyn McClanahan, a physician and CFP, develops software that helps advisors to older adults and their families make better financial decisions by implementing health care into wealth planning.

LoanBuddy is a new financial technology platform that focuses on providing solutions for advisors who are student loan planning for their clients. The firm processes the raw National Student Loan Data System (NSLDS) file into modern software to generate a detailed analysis of a client’s student loan debt.

i65 is filling a planning void with software that helps advisors provide their clients with expert, individualized Medicare enrollment guidance, and there are multiple firms that have developed detailed Social Security claiming strategy applications.

So while the dust has not yet settled on the Envestnet/MGP hookup, early indicators are that competition will remain alive and well in the financial planning software sector. Industry participants tell us that the acquisition is causing them to accelerate development in some areas, and others no doubt are reassessing their strategy going forward. These developments are likely a net positive for advisors.

While there seems to be disagreement on the virtues of an all-in-one provider versus a best-of-breed solution, it seems clear that both strategies will continue to proliferate, at least for the foreseeable future.

One suspects that there will be some further M&A activity in the months ahead, but it is too early to tell whether the MoneyGuidePro acquisition will be a catalyst for a meaningful industry realignment.