A small group of large, well-known national players has long dominated the clearing and custody space. The most substantive change of note recently within the industry was the 2019 purchase of TD Ameritrade by Schwab – and that integration took years to complete. While the clearing and custody arena hasn’t changed much, the wealth management industry it supports has.
As mega-aggregators and RIA consolidators (many of which are accountable to their private equity backers), increase in size and number, they are reducing overhead by outsourcing clearing functions. The opportunity to serve these lucrative clients has led some large clearing firms to forgo relationships with smaller wealth management firms – or price them out of the market – to focus their efforts solely on larger enterprises.
This evolution offers smaller clearing and custody firms an opportunity to disrupt the current ecosystem by filling this service gap. When financial services veteran Gil Addeo joined the clearing and custody subsidiary of Axos Financial, Axos Clearing, as its new SVP of Business Development, he found himself navigating a landscape that was mired in the status quo trying to serve clients that were looking for a fresh approach.
Digital Wealth News spoke to Mr. Addeo about the state of the clearing and custody industry and the role he – and his firm – will play in its future.
Digital Wealth News: Your firm positions itself as “Clearing Evolved.” In a space dominated by mega-sized custody and clearing providers, what does your tagline mean, and what can smaller platforms like Axos offer financial professionals and their firms that the larger players cannot?
Gil Addeo: Axos Clearing is backed by the power of Axos Bank, a digital banking leader since 2000. We deliver a holistic view of a client’s banking, brokerage and advisory assets as well as a full suite of products to our clearing clients … and we do this globally. Our clients support investors around the world, and so do our products and services.
Our technology is built on ease of use and what is relative to the needs of investors and the financial professionals who support them. But we believe in meeting clients where they are, so we balance digitization with human capital. This is what we refer to as “Clearing Evolved.”
DWN: What are your plans for your new role that will help differentiate Axos and expand the firm’s footprint among IBDs and RIAs? Where will your firm be focusing its resources?
GA: I am excited about this new opportunity with Axos. I have worked in the clearing space for more than 15 years, and I can bring first-hand perspective to the continuous evolution of our business. I have spent a number of years in the international clearing and custody space, as well as on the client side. In my new role, I will spend time growing our business with firms that support investors in Latin America.
This is a great market, and we can support those firms not only with clearing services but also with our banking products as well. Overall, we are dedicating our resources to providing clients with a full suite of banking, brokerage and advisory solutions in one single place.
DWN: AI is on everyone’s mind. Do you see it dramatically impacting your firm’s ability to elevate its service offering?
There’s little doubt that AI will continue to grow in importance, so we need to embrace it, understand it and leverage its capabilities in the best way possible within applicable laws and regulations. When harnessed and implemented correctly, I think AI can create tremendous efficiencies and customizations that benefit our teams, clients, and end investors.
With data becoming more accessible, firms can plug into an alternative provider much more easily than they could in the past. Still, we also know talent and human connection will always be at the heart of moving business forward, so we aim to strike a balance with using AI in our service offering.
DWN: What challenges and opportunities do you see for Axos and the sector?
GA: As I visit with our clients and prospects, I truly believe we have a tremendous opportunity to capture market share. Firms want an alternative; they want access to banking for their clients, and they want a partner that is building products that meet their needs, not just for today but for the future. We are committed to being that partner.
Axos has the platform and team of experts to serve wealth management firms and clients. I believe we will see a continuous evolution of how clearing providers support the market and grow their businesses.
In this evolution, I anticipate innovative firms, like Axos Clearing, will be able to capture market share from the more traditional providers. The only challenge I see is building brand awareness, which we are currently working on. An important part of that is continuing to tell our story.
