Early in his career, Akhil Lodha worked in quantitative analysis and trading. That eventually inspired him to develop platforms for financial advisors and accredited investors to access alternatives and other private investments.
This path ultimately led Lodha to embrace the wealth management financial technology space. In 2016, he founded StratiFi and now serves as its CEO.
The risk assessment and investment analysis platform competes with entrenched industry leaders such as Nitrogen (formerly Riskalyze) and BlackRock’s Aladdin. It also integrates with third-party platforms, including Schwab, TD Ameritrade, Orion, Redtail, Black Diamond, Envestnet MoneyGuide and others.
DWN sat down with Lodha recently. We got his perspectives on why he believes his San Francisco-based wealthtech provider can succeed in an environment dominated by heavily resourced incumbents with deep experience adapting to advisors’ demands, their firms and regulatory requirements.
DWN: It seems like tech/software targeting financial advisors and firms is a crowded market. What does StratiFi bring to the table that doesn’t currently exist?
Lodha: Yes, the space is crowded. And financial advisors often are overwhelmed with the multitude of tools for each step of onboarding a client. These tools can include risk tolerance assessment, investment analysis, proposal generation, Investment Policy Statement (IPS) creation, account aggregation and suitability assessment. StratiFi solves this issue by combining the essential steps into one comprehensive platform, aligning with the market’s demand for streamlined and efficient solutions.
Our customers and industry experts recognize our platform’s effectiveness, as evidenced by our recent accolade as the only T3 all-star Risk Analysis provider. This prestigious recognition is given to firms with an 8-plus user rating and which are in the top five in market penetration, demonstrating our significant impact and acceptance in the market.
What sets StratiFi apart is our robust, intuitive and affordable platform. When profiling clients, we consider risk tolerance and capacity, providing a more holistic view of a client’s unique situation. Our PRISM system takes portfolio risk assessment a step further by considering multiple factors such as tail event risk, volatility risk, position concentration and other factors. This multifaceted approach goes beyond the traditional one-factor, volatility-based portfolio risk measurement and risk tolerance assessment popularized by some incumbent providers.
DWN: With compliance being a key focus of the offering, what does StratiFi offer compliance officers they are not already getting today?
Lodha: The SEC levied a record $6.5 billion in fines in 2022, and the compliance landscape is rapidly evolving with new regulations. Compliance officers and consultants are increasingly seeking technology solutions to help navigate these changes. StratiFi is at the forefront of this shift, helping RIAs, hybrid RIAs and broker-dealers future-proof their businesses.
StratiFi is more than just a compliance tool – it’s an integrated risk and compliance system. Our platform is trusted by several fast-growing billion-dollar firms with anywhere between 25 to 250 reps. Altogether, we are monitoring over $50 billion in assets. We offer drift monitoring, position concentration, cash concentration alerts and workflows for resolving exceptions. These features provide a comprehensive view of risk across the enterprise, helping firms manage obligations more effectively.
One of the key areas we focus on is the SEC’s 2023 priorities. Our platform simplifies account surveillance, reasonable basis suitability, home office supervision, books and records management and more. This allows firms to provide evidence of an ongoing relationship between the client and advisor, aligning with several FINRA requirements.
DWN: Do you think clients have a good understanding of risk? In what ways does StratiFi believe it can help those who may not?
Lodha: In the institutional world, where I come from, risk is a cornerstone of every financial decision. But in the retail sector, it’s often overlooked, primarily because existing tools to understand risk can be overwhelming for the average client.
We’re demystifying risk, making it as accessible as understanding returns. Our customers, including their clients, appreciate our system for its intuitive user experience and ability to capture clients’ wants, needs and willingness to take risk. It allows advisors to present their analysis, simplifying the process for clients to understand and navigate market volatility.
To help clients understand how much risk is appropriate, we also evaluate their portfolio risk in the context of risk tolerance and risk capacity. Retirees with low-risk capacity shouldn’t be exposed to high tail risk, which could harm their financial future. A busy executive with significant wealth tied up in company stock should reduce concentration risk. StratiFi’s system helps identify such risks and highlights ways advisors can provide solutions to help their clients navigate them.
In essence, StratiFi equips advisors to educate clients on essential risks and improve their decision-making as well as confidence in achieving a better financial future.