The folksy Kitces 'fintech map' ballooned by 265% to 485 brands over six years, a sensation sowing seeds of its own destruction, making Kitces chart two new 'maps' -- including an app
The Kitces map is wildly popular but increasingly Nascar-ized, which may not discourage further RIA software brand atomization, but has bundlers scrambling to react.
12 min read
Brooke's Note: I often query RIA technology founders about whether they are making headway in the industry, and frequently they respond by – half-quipping and half-serious – saying they have made it onto the ‘Kitces map.’ It's rather like a tadpole being interviewed by a biologist who can point to a cycle chart of pond ecology and ecosystems and show them where they fit. The creation of Michael Kitces' map is now a fixture and a coming-of-age symbol for a world of small RIA companies that want to show they belong. [Yes, I dream of the day RIABiz might get added.] But like any success, it can plant the seeds of its own destruction by becoming bigger, less personal, and more unwieldy. Kitces, being Kitces, is responding to this demand – though he makes zero direct revenues from the map – by automating it a bit as a directory. But he's also responding to firms that want in on being charted but don't quite fit the tech category… by making a new map! So what about an app for your iPhone? Long since contemplated – and covered. Read on.
RIA software makers on the “Kitces map” have leaped in number by at least 265% in the last six years, with new start-ups appearing far faster than private equity and software giants can swallow them.
In that spirit, Michael Kitces, who publishes the Nerd's Eye View industry newsletter, has already responded with an alternative map. Now, he's ready to unleash a third to capture a whole world of brands still outside looking in.
"Looks like a Cambrian explosion*," says Steve Chen, founder and CEO of retirement start-up Boldin, in a LinkedIn post. See: Steve Chen sunsets 'NewRetirement,' launches a new brand.
“If you're an RIA, [it's] exhausting,” adds former Andreessen Horowitz partner Rex Salisbury, also in a LinkedIn post.
In 2018, 133 companies across 29 categories sold dedicated RIA software; today, some 485 do, across 26 categories, according to the latest version of RIA entrepreneur*, Michael Kitces' popular – and increasingly NASCAR-like – map of financial technology firms.
Losing value
Salisbury, now founder and general partner of angel investor Cambrian, sparked a major discussion among analysts and executives earlier this month in a widely viewed LinkedIn thread, noting the spike in software makers.
“[It] used to be wealth advisors had no good software; now, the problem is too much software and a nightmare to get it integrated. It's only getting harder,” he said.
Yet the real growth in software companies selling to RIAs is also likely far higher than the number listed on Kitces' map.
In fact, the number of firms tracked by the map is artificially low, because it omits ‘service’ companies like alternative-assets marketplace iCapital and estate document preparation vendor Trust & Will, Kitces says.
“The sheer volume of logos on the map makes it less of a navigational aid than it used to be," he adds, via email.
Cartography
The explosion in software makers has also triggered Kitces' inner map-maker.
He has two new ‘maps’ in progress – with 2025 as their tentative release year. They will detail the RIA services sector, iCapital, CAIS, EncorEstate, et al, included.
“In the future, you'll see a services map from us ... though because there is such a cottage industry of service providers, we're taking our time here.
I actually anticipate the services map will be even more crowded than the advisor technology map,” he says.
“We'll probably end up launching a services directory, akin to our advisor technology directory … a more 'searchable' format … [with] a few thousand unique advisors visiting each month,” he adds.
Kitces launched an advisory services directory in early 2022 to complement the fintech map.
Eating the world
The 2018-launched Kitces “fintech map” tracks the number and type of RIA software makers in a chart. The directory lets advisors visually build a technology stack, piece-by-piece.
Hitting home run, Envestnet buys FolioDynamix creating '$2-trillion' super-platform
Yet keeping the maps, and the directories even close to streamlined is a Sisyphean challenge.
“The map will continue to grow,” says Stephen van de Wetering, founder of Empaxis Data Management in Los Angeles, via email.
“[The] valuation multiples of software companies have made a lot of people rich and pull in new entrants. Marc Andreessen, [general partner of Andreessen Horowitz]' said ‘software is eating the world,’ in 2011; perhaps it is eating even faster now,” he adds.
The rapid growth in RIA vendors is also notable for the fact that it dovetails neatly with the arrival of billions of dollars of private equity (PE) cash, which has not heralded the "great consolidation" many industry analysts predicted.
In fact, private equity's ever-growing influx into the RIA market has had almost the opposite effect.
New business launches have consistently outpaced the loss of vendors to acquisition or closure, the “fintech map” shows.
Market in motion
For every RIA vendor that shuts down or is acquired – either by a bundler like Orion or Envestnet, or a PE firm with a consolidation strategy like Motive Partners – at least two new ventures seem to spring up to fill the gap. See: InvestCloud sold at $1-billion.
“It's incredible how fragmented the wealth-technology universe has become,” says Alois Pirker, founder and CEO of Marblehead, Mass. consultancy, Pirker Partners, via email.
“Clearly, we've seen much consolidation, but similar to RIA space itself, we see both roll-up and start-up motion at the same time.
Many of the successful firms are getting absorbed by the big platforms, such as TAMPs, while newer firms still have to prove their mettle,” he adds.
PE cash that broke the bottleneck keeping new ventures under the radar is largely in-house, Kitces says.
"Historically, almost all advisor technology solutions were what I call ‘homegrowns.' [An] advisor has a problem, can't find a solution, makes a solution. But that means limited capital and bootstrapped slow growth; PE has accelerated growth," he says.
Unbundling the bundle
It also shows the RIA in real life, buying favorites and making do, "the counter-trend triumph of ‘best-in-breed’ over ‘all-in-one,’" Kitces says.
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“The industry has talked all-in-one for years. But the truth is that it's the not-all-in-ones that are proliferating, as the map shows.
“Despite a bajillion dollars poured into all-in-one platforms … [they] are being unbundled right now. Even the largest firms are now buying various components of technology, and at least not entirely building their own in-house all-in-ones,” he adds.
Indeed, in June 2024, Orion Advisor Solutions and Nitrogen, né Riskalyze reopened their software bundles to sell parts, including risk management and trading, on an à la carte basis. See: Natalie Wolfsen restores Orion's 'standalone' strategy.
Fidelity also just repackaged its software into smaller bundles, in partnership with software maker Advyzon, and leading RIA Carson Group just replaced the bundled Orion Risk Intelligence with YCharts. See: Carson begins era of buying à la carte tech.
“There will never be a one-size-fits-all platform that can serve the entire market … [the] model is constantly evolving," adds Pirker.
“When vendors get absorbed into a larger platform through acquisition, white space gets created that is filled by newcomers... New technologies, like large language models, create opportunities; established wealth technology firms often have a hard time leveraging,” he adds.
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The map's ever-growing size can also make exactly the opposite point to Kitces, who accepts it is also “used as a marketing tool for bundled software salespeople."
Many vendors the map lists are also just treading water behind a top-two or top-three grouping per segment – portfolio management has a big-five.
Several are basically in-house solutions with no pressure to bring in revenue, according to Kitces.
“In practice, most categories we track have 80%-plus market share in just two-to-three category leaders, with little other adoption,” he explains, in a LinkedIn post.
“The revenue needed [for smaller software makers] to be cash flow break-even is very low, so I don't anticipate a large wave of failures. Many will stick around with their niche segment for a looong time," he says..
The boom might also be about to get boomier, according to van de Wetering.
More money, better data warehousing, easier software up-skilling through webinars, apps, and AI tools, easier outsourcing; and the greater data portability afforded by the implementation of Dodd-Frank section 1033, make a further explosion in the number of RIA software makers likely, he says.
“Development has become cheaper, and with [fewer] barriers to entry ... so more software companies come into the market," he explains.
Who vanished?
Initially designed to help advisors find available technology, now it's “the punchline to a joke” and “a form of commentary."
Kitces receives no payment from companies listed on the map.
To be listed, a software maker must have a ‘live’ product and sales process, and be advisor-specific, rather than a general tool like AI note-taker Otter, according to Kitces.
The latter is larger than even the 352 firms that the map's growth – from 133 listings to 485 listings – implies, as a result of acquisitions, mergers, and closures.
Disappearances from the map include HiddenLevers and Advizr (acquired by Orion); Totum (acquired by Tifin); Folio and NextCapital (acquired by Goldman Sachs), FolioDynamix (acquired by Envestnet); and the entire robo-advice category, with most acquired and InvestmentPod closed. See: Marty Bicknell Shark Tank contest chooses to back InvestmentPod.
'More will perish'
The rate of insolvencies among financial technology firms serving RIAs could also soon grow.
“If you look at the companies on the 2018 map and fast-forward to today, you'll find three main outcomes: insolvency, acquisition [and] market share gains,” says Danny Lohrfink, co-founder and chief product officer of Wealth.com, in a LinkedIn post. See: Wealth.com extends win streak, again -- Google Ventures (GV) leads its 'A' round.
“Same will happen here, except with more money in the sector, the acquisitions will be larger, the advisor and client impact from insolvency will be greater, and the ‘incumbents’ will face stiffer competition,” Lohrfink explains.
Although insolvency wasn't a big problem for RIA vendors before PE got involved, it will likely become an issue in the future as ‘dying’ products merge into bigger firms, according to Kitces.
“Exits were ‘always’ viable because valuations were moderate and there were no big early VC rounds to validate,,,large capital rounds. I expect there will be more [that] perish,” he says.
An app for that?
So can Kitces create technology that can manage all this proliferating RIA software – maybe even an app?
"We already have created an app to be something that's more holistic than the Map - that's where what we call "AdvisorTech Directory" came from," he says.
The Map itself just has clickable logos, but the directory also has secondary categories to generate a list of potential vendors for an RFP. It also has advisor satisfaction scores and adoption rates for vendors.
But is it really an app?
“You can load the website app on your phone if you wish!” replies Kitces by email.
* Kitces is a notable RIA industry commentator and analyst, who edits the popular Nerd's Eye View Blog. He is also the co-founder and CEO of Bozeman, Mont. RIA network, XY Planning Network, and the co-founder of billing service AdvicePay.
* The Cambrian explosion is the name given to a 13-million-to-25-million-year period, roughly 530 million years ago, when a huge volume of new life evolved on Earth.
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