Products May 11, 2023

Investment Product and Service Launches

Envestnet launches ActivePassive ETFs; Orion Advisor Technology reveals industry’s first ChatGPT integration; AI chatbot Mo debuts on Morningstar platforms; and more.

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Envestnet PMC Launches ActivePassive ETFs

Envestnet PMC has launched a series of ActivePassive exchange-traded funds.

“Our mission has always been to provide investors with a single portfolio that marries the best attributes of both active and passive investing at a low cost,” said Dana D’Auria, co-chief investment officer and group president of Envestnet Solutions.

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The new ETFs will be featured in the ActivePassive PMC ETF Portfolios. The ETF allows financial advisers to access the combined strategy within cost-effective, tax-efficient, liquid and transparent investment vehicles.

“Our ActivePassive portfolios and ETF wrapper options simplify the blending of active and passive investments for advisors, aimed at allowing them to devote more time to revenue-producing activities and helping to improve outcomes for their clients,” said Brooks Friederich, principal director of research strategy at Envestnet PMC.

Orion Advisor Technology Goes Live With Industry’s First ChatGPT Integration

Orion Advisor Solutions went live with a ChatGPT 3.5 series integration available in Redtail Speak, its compliant, real-time communication platform for financial advisers.

“Redtail Speak’s first-of-its-kind integration with ChatGPT will allow advisors to have an assistive technology at their fingertips while keeping them in control of responding to clients,” said Brian McLaughlin, president of Orion Advisor Technology and the co-founder and CEO of Redtail Technology before its 2022 acquisition by Orion, in a statement. “This marks the beginning of Orion’s journey to integrate AI into our applications.”

The integration builds upon the previous 20 text messages between the adviser team and client, incorporating the necessary context into the dialogue created by ChatGPT. Using artificial intelligence, the platform is then able to provide automatic prompts and recommended responses to client questions with vital knowledge of the adviser-client relationship.

AI Chatbot Mo Debuts in Morningstar Platforms

Morningstar Inc. launched a beta version of its generative artificial intelligence chatbot named “Mo” across multiple Morningstar platforms.

Mo is designed to summarize Morningstar’s independent insights in a conversational format for investors and investment professionals.

“Mo is a digital research assistant that uses the power of the Morningstar Intelligence Engine to put Morningstar’s research just a question away,” said James Rhodes, Morningstar’s chief technology officer, in a statement. “We look forward to learning how people interact with the beta so we can improve and expand its capabilities to make the day-to-day investing experience better.”

Mo is powered by the Morningstar Intelligence Engine, a platform that pairs Morningstar’s investment research library with Microsoft’s Azure OpenAI Service.

Savvy Ladies Expands Free Financial Helpline

Savvy Ladies LLC announced the mobile expansion of its Free Financial Helpline, supported by the Nasdaq Foundation.

The new mobile portal provides a personalized experience for on-demand access to pro bono volunteer financial professionals for women seeking answers to financial questions.

“Women from all backgrounds face daunting barriers to financial security, including income inequality, a wide gap in retirement savings, and the impact of family and caregiving,” said Stacy Francis, founder of Savvy Ladies, in a statement. “Compounding the problem is a wide gender gap in financial literacy and confidence—consistent across women from all backgrounds, socio-economic levels, and generations. Savvy Ladies, with its new Helpline expansion, is changing that.”

GreenHill Launches Performance Reporting Solution

GreenHill Investment Reporting, an independent provider of investment performance reporting services, announced an enhanced solution for registered investment advisers.

The solution enables RIAs to deliver an improved, personalized client experience by providing access to customizable reporting and analysis.

“Retaining and attracting investors in the highly competitive financial services industry requires providing today’s increasingly savvy investors with a differentiated experience that builds client trust,” said Jack Curran, executive vice president of sales at GreenHill, in a statement. “Our investment performance reporting solution empowers RIAs to do just that by providing sophisticated reporting and analysis that enable them to provide expert insights and guidance that maximize portfolio performance outcomes.”

AssetMark Launches First Trust Investment Strategies for Financial Advisers

AssetMark announced the addition of First Trust, one of the industry’s largest actively managed exchange-traded fund providers and innovators, to its platform.

Three First Trust strategies were added to AssetMark’s platform spanning the investment spectrum from core to satellite: First Trust Strategic Risk Core Portfolios, First Trust Diversified Low Duration Fixed Income and First Trust Alternatives.

“First Trust is known for providing trusted investment products and advisory services as well as for their focus on the needs of financial professionals and their clients,” said David McNatt, executive vice president of investment solutions for AssetMark, in a statement. “The addition of First Trust to AssetMark’s platform of solutions is another proof point in our ongoing journey to provide advisers access to innovative products and service to help them best serve the evolving needs of their clients.”

Compliance May 11, 2023

House Republicans Eye SEC Regulatory, Enforcement Budget

A letter from the House Financial Services Committee calls for a freeze on the SEC’s enforcement budget and the defunding of five total SEC proposals.

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The chairman of the U.S. House Committee on Financial Services, Representative Patrick McHenry, R-North Carolina, wrote to the House Committee on Appropriations on Tuesday seeking to block funding for enactment of specific proposed rules from the Securities and Exchange Commission.

McHenry asked the Appropriations Committee, chaired by Representative Kay Granger, R-Texas, to spell out in spending bills that any money provided to the SEC cannot be used to implement three out of the four market structure proposals the SEC made in December 2022: the order competition proposal, the tick-size proposal and the Regulation Best Execution proposal. McHenry also asked the Appropriations Committee to block SEC proposals on swing pricing and climate disclosure.

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The fourth market structure proposal, which McHenry did not mention, would update disclosure requirements under Rule 605 of Reg NMS, the execution disclosure proposal. It would require larger broker/dealers to file monthly quality-of-execution reports and expand the number of trades subject to disclosure. This proposal has consistently been the most popular in the financial industry of the four, and its omission in McHenry’s letter underlines that sentiment.

Curiously, the proposal to reduce tick-size increments for certain tick-constrained stocks, has received a lot of positive feedback, though not as universally as the Rule 605 proposal. Much of the criticism levied against the tick-size proposal has come in the form of recommended modifications, humble ones at that, such as reducing ticks to half-penny increments. All the same, McHenry requested a full defunding of this proposal should it ever become a final rule.

The other two market structure proposals—Reg BE, which would take over enforcement of trade execution standards from FINRA, and the order competition rule, which would require auctions for certain retail orders—have received much more pushback from the industry, and they can now count McHenry as an ally.

McHenry also asked the Appropriations Committee to block the swing pricing proposal. He said the hard market close requirement in the proposal would prevent many investors from getting the best price available on their investment sales and purchases. The proposal would require orders for mutual funds to come in by 4 p.m. Eastern Time in order to get that day’s price, called a “hard close.” Members of the Financial Services Committee previously expressed concerns about the effect a hard close would have for investors on the West Coast.

The other proposal McHenry wants defunded is the climate disclosure proposal, which would require public companies to disclosure their climate-related risks, the direct greenhouse gas emissions generated by their operations and their indirect emissions from electricity consumption. Some securities issuers and funds would also have to disclose emissions from their value chain, known as Scope 3 disclosures, but only if they have a stated, climate-related goal.

Lastly, McHenry requested a freeze on the SEC’s enforcement budget and said it does not need the more than 50 additional personnel that have been requested. The SEC’s budget request provides for 53 net hires for its Enforcement Division alone.

McHenry added that the SEC’s aggressive enforcement actions against cryptocurrency have brought “further uncertainty to this nascent industry.”

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