Advisor Tech Talk (Week of 5/6/24)

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There’s nothing like a good surprise to keep us humble and ready to learn, and there’s a nice surprise embedded in this week’s advisor headlines. 

Altruist, which has recently been billing itself as the “No. 1 Schwab” RIA Alternative,” now also names itself as the third-largest RIA custodian behind Charles Schwab and Fidelity by number of RIAs served. When total assets served are considered, the current big three remain Schwab, Fidelity and Pershing. 

Altruist’s latest funding raise, announced this week amid some eye-popping growth numbers, values the company at more than $1.5 trillion. 

But Altruist’s rise can be traced to five years ago, when Schwab bought what was then the second-largest RIA custodian, TD Ameritrade. At the time, those of us who cover the industry knew that a custodian other than Schwab would benefit from the consolidation—TD Ameritrade’s independent RIA clients were, taken as a whole, considerably different from Schwab’s core clientele, and some of those clients had gravitated towards TD Ameritrade in lieu of forming relationships with Schwab or after a previous relationship with Schwab had ended poorly. 

What most of us didn’t know four or five years ago is that Altruist would end up being such a large indirect beneficiary of the so-called “Schwabitrade” acquisition. I think much of the expectation was that TD Ameritrade RIAs dissatisfied with the move to Schwab would go to Pershing or Fidelity if they were big and profitable enough, to an incumbent diversified firm evolving their own RIA custody offering like Raymond James, to one of the smaller incumbents like TradePMR or Shareholder Service Group, or to a technology upstart like Betterment for Advisors. 

In 2019, Altruist didn’t even exist. Today it’s one of the largest players in RIA custody, in part because it bought Shareholders Service Group last year, but also because it has embraced a digital-first approach and adopted much of TD Ameritrade’s stance towards technology (even if Schwab ended up with the intellectual property): keep the ecosystem as open as possible to enable advisors to do what they want. 

Don’t blink, or you might just miss how rapidly technology is changing the wealth management industry—and Altruist is this week’s “Exhibit A.” 

Let’s get to your headlines…


AI for Alpha 

Ai For Alpha, a pioneering fintech specialized in AI investment strategies, announced the launch of its “CTA Flows Oracle” technology. 

The “CTA Flows Oracle” predicts flows of Managed Futures funds across all major asset classes. This innovative approach leverages Ai For Alpha’s unique technology for replicating hedge fund strategies. 

Altruist 

Altruist, a modern custodian built for RIAs, announced a $169M Series E round of funding led by ICONIQ Growth with participation from new investor Granite Capital Management, and continued support from existing investors Adams Street Partners and Sound Ventures. The new round brings the company’s total funding to over $450M and values the company north of $1.5B. In conjunction with the funding, Yoonkee Sull, General Partner at ICONIQ Growth, will be joining the board of directors. 

After growing revenue over 550% in 2023 and tripling assets under management for two consecutive years, Altruist has quickly become the third largest custodian behind Schwab and Fidelity (based on RIAs served). This year, the company was recognized by industry analyst, T3, as the #1 custodian advisors are considering switching to. 

While all custodians share responsibility for safekeeping assets and adhering to rigorous regulatory requirements, their business practices vary. Custodians can influence investment options, tax savings, yield on cash, portfolio performance, fees, and the quality of the user experience for clients and advisors alike. Considering the size and scale of the industry–approximately $114T assets across 61.9 million clients–even subtle differences can have significant downstream effects on client outcomes. 

Artificial Intelligence Risk 

Artificial Intelligence Risk announced the launch of RIA GPT, a new software platform providing safe, secure, generative-AI for registered investment advisors (RIAs). The platform, the first of its kind, complies with all SEC confidentiality, recordkeeping, and cybersecurity rules for RIAs. 

RIA GPT features “AI agents” that save advisors and their firms both time and money. AI Agents are essentially AI tools that provide specialized services within the AI Risk (AIR) platform suite. Examples of AI Agents include “personal assistant,” “business strategist,” “legal disclaimer writer,” “sales consultant,” “marketing strategist,” and “programming assistant.” The Enterprise version of the software can also integrate with Outlook, leading CRM systems, and a given RIA’s proprietary data and documents, such as client portfolios. This creates a seamless and robust generative AI solution that improves productivity and client outcomes, while also managing regulatory and security concerns. 

Betterment 

Betterment, the largest independent digital financial advisor, announced that Betterment for Advisors, its RIA custody division has deepened its partnership with XYPN, the turnkey advice and planning platform that makes it possible for fee-only financial advisors to build the independent firm of their dreams with complete autonomy.  

XYPN advisors who use Betterment currently receive an exclusive discount on the platform fee along with no AUM minimums. Now they will no longer pay any additional technology fees, making it easy for new advisors to get started. 

As part of this new offering, XYPN Advisors will receive access to Betterment for Advisors’ suite of tools and additional resources. This announcement comes on the heels of Betterment for Advisors’ addition of mutual funds to their custom portfolios earlier this year and is the first of many partnerships and integrations to come in 2024.  

CLARA Analytics 

CLARA Analytics announced the company is expanding its relationship with Origami Risk (“Origami”), the industry-leading risk, safety and insurance software as a service (SaaS) technology firm. The two companies have deepened the integration between their products and aligned their operations to offer a seamless solution to help self-insurers, brokers and carriers reduce costs and accelerate AI adoption. 

CLARA is helping carriers to make sense of voluminous information, streamline claims management, improve medical outcomes, and reduce administrative burdens for adjusters. The company’s CLARAty.ai platform uses machine learning, predictive AI, natural language processing (NLP), and generative AI (GenAI) to power a suite of products aimed at improving efficiency and accuracy in claims management. 

The partnership between CLARA and Origami will enable risk managers to fast-track their adoption of AI, giving them immediate access to secure, SOC2 compliant, and HIPAA compliant technology. Self-insured organizations, insurers, risk pools, MGAs and others already using Origami can gain new AI-driven insights to help them identify high-risk claims, improve collaboration with third-party administrators, optimize medical outcomes for injured parties, and speed the resolution of claims. 

FLX Networks 

FLX Networks announced the launch of its Professional Membership, aimed at empowering industry professionals with unparalleled access, productivity enhancements, and exclusive financial benefits. 

Since its inception four years ago, FLX Networks has been at the forefront of reshaping how professionals in the asset and wealth management industry connect, access investment ideas, and leverage business services. With the introduction of FLX Professional Memberships, individuals can unlock value for themselves and their team members, clients through aggregated insights, data, and solutions. 

FusionIQ 

FusionIQ announced the launch of FIQ Freedom, the latest addition to its suite of innovative products on the FusionIQ One platform. FIQ Freedom empowers advisors thinking of breaking away to the freedom of a more entrepreneurial business model by supporting a comprehensive, turnkey platform tailored to their needs that enables them to transition to independence swiftly and confidently. 

FIQ Freedom streamlines the transition process, offering a turnkey white-label wealth management platform that delivers a modern advisor and client experience in as little as six weeks. The platform features sophisticated rep as portfolio manager (Rep as PM) tools, a seamless workflow connecting the front, middle, and back offices, and process automations designed to scale advisors for success. 

Key features of FIQ Freedom include streamlined digital compliance, fast and flexible client onboarding, customizable risk tolerance, and the ability to have advisor models sit next to third-party strategies. With streamlined digital compliance, advisors have tools that automate tracking of Anti-Money Laundering (AML), incorporate Know Your Customer (KYC) processes, and focus on collecting and verifying customer information through a Customer Identification Program (CIP), reducing manual effort and paperwork in a compliant-friendly middle office. 

iCapital 

iCapital, the global fintech platform driving the world’s alternative investment marketplace for the wealth management industry, announced the introduction of iCapital Model Portfolios. More than 100,000 U.S. Financial Advisors who use iCapital’s platform can now access the first model portfolio, iMAP (iCapital Multi-Asset Portfolio), with additional portfolio models set to follow in the coming months. Paired with iCapital’s portfolio construction tool, Architect, advisors will be able to run an analysis to easily evaluate the impact of incorporating alternative investments alongside traditional portfolio holdings. 

The Model Portfolios by iCapital are designed to assist with asset allocation within alternative investments and identify top-tier products that fit those allocations. Developed using quantitative analysis by iCapital’s research and due diligence team, the Model Portfolios suite offers a comprehensive and flexible way for financial advisors to include these investments in their practice. The Multi-Asset Portfolio easily provides a balanced alternative investment allocation across five funds from top-tier managers in private equity, private credit, and real assets. 

The first portfolio available, iMAP, is a balanced portfolio that combines income and growth through private markets investing. It aims to generate total returns with reduced volatility and fewer drawdowns than traditional asset classes, helping to manage market stress more effectively. The portfolio simplifies the entire process, from due diligence and manager selection to investment, construction, and ongoing monitoring. 

Ledgible 

Ledgible announced the availability of their Digital Asset Assessment program on the back of the Internal Revenue Service’s unveiling of their new draft Form 1099-DA form last week. Ledgible’s Readiness Assessment program is designed to examine and assess a company’s existing compliance, data, and reporting infrastructure for upcoming digital asset reporting requirements. 

Ledgible has established itself as the technology integration partner of tax reporting for digital assets, enabling digital asset tax information to be ingested through traditional 1099 reporting workflows. This announcement comes on the heels of Ledgible’s VP of Tax Information Reporting, Jessalyn Dean, lead testimony to the IRS’s REG-122793-19, regarding the proposed reporting of digital assets back in November. 

Additionally, the Ledgible team analyzed the recent release of the Form 1099-DA by the IRS, leading the charge on public commentary of the new form in a company post. 

Saphyre 

  • Saphyre, an industry award winning fintech company using patent-approved technology to solve pre-trade activities and post-trade issues, announced that ABRDN joins its network of financial institutions using the Saphyre platform.

    Saphyre’s automated intelligence handles onboarding and maintenance of custody, broker trading, and buy-side accounts while synchronizing in real-time associated reference data between them. This provides a real-time golden source of data to all external parties. Downstream, this solution eliminates issues related to failed trades, and at the same time enables real-time, T+0, collaboration between parties which is necessary to meet the upcoming T+1 commitments. 
  • Saphyre also announced plans to collaborate with DTCC, the premier post-trade market infrastructure for the global financial services industry, to deliver a solution to support clients with U.S. T+1 settlement requirements. Saphyre plans to link Saphyre’s Ready-To-Trade solution with data from DTCC’s ALERT to increase transparency, efficiency, and straight-through processing across the institutional trading industry.

    Ready-To-Trade subscribers will be able to query the status of critical standing settlement instructions (SSIs) reference data for all accounts, across all parties and across electronic systems directly from the Saphyre platform. The SSI status query can be done at the point of account opening or at any time during the trade lifecycle, resulting in less trade breaks and settlement fails and increased efficiency in support of a T+1 settlement cycle. The SSI status information for trade permissions will be available via DTCC’s ALERT API.

    Today Saphyre’s patented platform enables buy-sides, sell-sides, custodians, fund administrators, asset owners, electronic trading platforms, and order management systems to efficiently onboard, as well as maintain the updates to their client accounts before trading and throughout their lifecycle – all in real-time. 

SMArtX Advisory Solutions 

  • Syntax LLC, a leading provider of innovative financial data and technologies, and Mansueto Ventures, publisher of Fast Company and Inc., have launched the Fast Company Most Innovative Companies US-Listed Index (“the Index”) on the SMArtX Advisory Solutions platform. 

    The Index is designed to capture publicly traded companies that are recognized for their trailblazing innovations across all facets of the US economy and meet minimum liquidity standards. The companies held within the index are selected from the annual Fast Company Most Innovative Companies List (the “MIC List”). 

    First introduced in 2008, the annual MIC List is curated by Fast Company’s editorial staff who selects that year’s 10 (or in a few cases 15) most transformative companies within 58 distinct industries by assessing and reviewing the novel significance of the business initiatives of thousands of companies and considering the impact of those efforts on each company’s business, industry, and society at large. 
  • Asset Management (“17 AM”) and Syntax Data (“Syntax”) announced the launch of the 17AM-SDG 9 US Infrastructure & Innovation Index, designed to capture investment opportunities aligned with the 9th United Nations (“UN”) Sustainable Development Goal (“SDG”).

    This thematic equity Index provides investors with access to a curated selection of publicly traded companies poised to drive the modernization of infrastructure within the United States. Utilizing a rules-based methodology that incorporates qualitative ESG and SDG screens, the 17AM-SDG 9 US Infrastructure & Innovation Index has a selection of approximately 115 companies (subject to periodic rebalancing) that derive over 50% of revenues from activities and operations that are aligned with UN SDG 9, which aims to build resilient infrastructure, promote sustainable industrialization, and foster innovation.

    Many of the companies in this Index are experiencing strong tailwinds propelled by historic capital allocation due to the growing societal imperative to repair aging infrastructure and shift industry into the age of AI. This Index provides diversified, transparent, and efficient exposure to a long-term trend by identifying leading SDG 9-aligned companies traded in the US that are leveraging rapid innovation, new regulations, and increased government spending. 

Stratifi 

StratiFi announced a partnership with Altruist, which offers technology and tools designed to help financial advisors achieve better outcomes. 

StratiFi’s all-in-one risk platform serves financial advisors, investment managers and compliance officers at RIAs, independent broker-dealers, family offices and other institutions. The partnership with Altruist will give users of StratiFi access to software for account opening, trading, reporting and billing. 

With this partnership, advisors using Altruist can seamlessly integrate positions, accounts and client records from Altruist into StratiFi’s platform, allowing them to efficiently analyze and manage risk across client portfolios. 

Tiger Brokers 

Tiger Brokers (HK) (“Tiger Brokers (HK)” or “Tiger Brokers”) announced the launch of its virtual asset trading services, becoming one of the first online fintech brokers in Hong Kong to offer a single platform that allows trading and managing both traditional securities and virtual assets. Professional investors in Hong Kong can now use Tiger Trade, Tiger Brokers’ flagship investment app, to trade 18 virtual assets including Bitcoin (BTC) and Ethereum (ETH), alongside stocks, options, futures, US Treasury bonds, funds, and other global assets, all at an affordable cost. This eliminates the need for multiple accounts across different brokers and platforms, making global asset allocation simpler and more convenient. 

Having previously secured an upgrade to its Type 1 license conditions from the Securities and Futures Commission of Hong Kong (“SFC”), Tiger Brokers is aiming to offer professional investors secure virtual asset trading services, strictly adhering to legal and regulatory requirements. 

Tiger Brokers continues to offer competitive trading rates, with virtual asset trading fees at only 0.2% of the transaction value, and custody fees waived. Unlike stock trading, virtual assets are settled instantly and can be traded 24/7. All registered users in Hong Kong can view real-time quotes, as well as top gainers and losers of virtual assets, via the user-friendly Tiger Trade interface, keeping abreast of market conditions anytime, anywhere. Furthermore, the Tiger Trade App enables instant T+0 exchange between Hong Kong dollars and US dollars. 

Willow Network 

BlackRock, Inc. (NYSE: BLK) has made a minority investment in Willow Network, Inc. (“Willow”), a startup providing services to help financial advisors better serve a growing population of new investors. 

Willow (trustwillow.com) is using the funds to launch two new certificate programs to help advisors better respond to the unique financial and planning challenges faced by this next generation of clients. A generational wealth-transfer opportunity is expected to significantly grow the number of women and younger investors over the next few years, and these new educational programs will provide advisors with the unique skills needed to serve more diverse client segments. 

Advisors who complete Willow’s new educational programs will be eligible for two certificates, Advisor for Women and Advisor for NextGen. To earn the certificate, advisors must complete on-demand continuing education (CE) video trainings and assessments, live coaching assessments, and uphold Willow’s Ethical Standards. Once that is complete, advisors can gain access to prospective clients through Willow’s digital marketing platform.