Hello, readers!
This week, we dove into something of an existential question for the alternative-data industry: what happens when alt-data goes mainstream?
The market for selling what was once unorthodox information like satellite images and credit card data to customers like hedge funds looking to gain an investing edge has exploded. (Deloitte projects it will top $7 billion in 2020.) New entrants have been rushing in, and old-school data giants like Bloomberg have launched their own alt-data platforms.
M Science was a pioneer in selling non-traditional data sets to financial firms. But as Bradley Saacks and Dan DeFrancesco reported, it cut several people from its 20-person data-science team this week. And black-box data, once an easy, off-the-shelf way for customers to get in on the craze, is becoming a tougher sell for quant funds who have beefed up their own data-digesting capabilities.
This is definitely a space we’ll be keeping an eye on. We reported earlier this year that alt-data company Thasos struggled to make money selling to its main financial services to clients and was forced to fire two-thirds of its staff in August.
Rebecca Ungarino has been surveying top wealth management execs about the future of the industry (you can read their full responses here.)
Across the board, there’s an expectation that basic portfolio management will continue to be automated away, and that human advisers will need to act more like coaches and concierges to justify their fees. And this week, we saw the perfect example of that: Charles Schwab debuted a new tool for its robo-adviser that helps customers grapple with tricky tax issues as they take money out of retirement accounts.
Finally, Meghan Morris talked to tech bankers at JPMorgan and Goldman Sachs to understand how the IPO outlook is shaping up for 2020. They told us that they expect the year to be front-loaded with public debuts to avoid an election season that could be even crazier than usual. And they said they’re anticipating (and embracing) more innovation beyond direct listings in how companies go public, and telling clients to keep an open mind.
A roundup of more headlines and deep dives from this week is below.
Have a great weekend,
Meredith
This week in headlines
- Leaked memo sent by SoftBank’s Vision Fund CEO defends 2 senior execs at the heart of a blistering Businessweek report
- Marlette Funding, the fintech behind the Best Egg personal lender, just hired away rival LendingClub’s head of institutional sales. Now, it’s dusting off old plans to launch a credit card.
- Bill McGlashan, the former TPG exec accused in the college admissions scam, isn’t going down without a fight. His lawyers are locked in a battle with the government to turn up new evidence.
- Charles Schwab’s charitable giving arm just got dragged into the college-admissions scandal
- Goldman Sachs just made a high-profile pledge to stop financing Arctic drilling, but an insider says it hasn’t touched the space in recent memory anyway
- This year’s unicorn IPO flops exposed a culture clash between private and public markets, and a top tech banker warns that the growth-at-all-costs mentality won’t cut it anymore
The Amazon effect is coming for the mortgage industry, and that could mean a future where closing on a house takes days instead of dragging on for weeks
The home-buying industry transformed over the past decade, as it recovered from its disastrous role in the global financial collapse. We asked execs at companies innovating in the home-lending industry about what changes they see coming in the next decade.
Experts expect the industry, which is still bogged down in byzantine, paper-heavy steps, to rapidly evolve in the coming years as the Amazon effect hits mortgage providers.
In the not-too-distant future, tech advancements and continued partnerships between banks and fintechs could mean home-closings happen in days instead of dragging on for weeks.
We got a firsthand look at the tech used at SoftBank-backed real-estate brokerage Compass, including a sneak peek at beta features
SoftBank-backed real-estate brokerage Compass is developing what it calls the first end-to-end software platform for real-estate agents.
Compass New York regional manager Rory Golod walked Business Insider through its tools for real-estate agents and explained the short-term road map for the company’s tech vision.
Founded in 2012, Compass was valued at $6.4 billion in its most recent funding round and has grown rapidly through buying up other brokerages.
Online brokers have been racing to let investors buy small slices of pricey stocks. Now, digital banking app MoneyLion is getting into the game.
A startup that’s raised more than $200 million in funding on the premise of offering digital banking services to financially-stressed customers will start offering commission-free stock trading next year — including the option to buy small slivers of pricey shares.
MoneyLion, the digital banking company that is geared toward people who need help managing their finances on a day-to-day basis, will roll out stock-trading capabilities in 2020.
Other firms have rolled out similar features in recent months. JPMorgan last month began allowing some of its self-directed investing clients to trade fractional shares. Charles Schwab in October said it would begin offering fractional shares, the Wall Street Journal first reported, making it the first big discount broker to do so.
The new head of Wells Fargo’s massive wealth arm explains why human financial advisers should embrace roboadvisers, not fear them
The conversation around the big business of managing wealthy people’s money — and where the industry is headed — has revolved around three big themes: fees, robots, and scale.
We recently asked Jim Hays, who was named president and head of Wells Fargo Advisors in July, to predict where the wealth industry is headed in the next decade. This marks Hays’ first interview in his position. He joined the unit’s parent firm Wells Fargo in 2005, and was previously head of its Private Wealth Financial Advisors group.
Some firms are pouring resources into making the basics of managing money more automated. And pure-play roboadvisers like Wealthfront and Betterment have created an expectation among some younger users for low-cost wealth solutions that can be found right on your phone screen.
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