financial advisor technology

#ItzOnWealthTech Ep. 75: When The Wealthtech Rubber Meets the Road

It’s another fantastic day in the wonderful world of wealthtech. Welcome to episode 75 of the Wealth Management Today podcast.

This is our monthly roundup of some of the top wealthtech news and we’ve got a terrific mix of stories to keep you on top of the latest industry updates.

When is a custodian less of a custodian and more of a digital brokerage platform? The build versus buy dilemma is solved for the country’s largest broker-dealer.  Should fintech firms be responsible for providing insurance to their clients in case they fail?

All these questions and more will be answered in this episode.

For more wealth management industry news, we would highly recommend checking out these additional sources:

Now hit the Play button!

Click here and schedule a free Discovery Session to find out how Ezra Group can help your fintech firm grow revenue in the wealth management space.

Companies Mentioned

Topics Covered in this Episode

  • Altruist Switching from DriveWealth to Apex Clearing [00:33]
  • LPL Financial Acquires Blaze Portfolio [06:04]
  • YCharts Gets New Equity Investment [11:09]
  • Envestnet Positioning MoneyGuide As Advisor Portal [15:11]
  • Oranj Closing Down on December 31 [21:09]

Related Articles:

Complete Episode Transcript:

Craig: And here we are with the news roundup for this month, November, it’s almost over but we’re just getting in under the wire. So let’s talk about what’s going on in November in the wonderful world of wealthtech.

Altruist Switching Over from DriveWealth to Apex

First story up is Altruist is switching over from DriveWealth to Apex for clearing custody provider. Altruist, which I consider a sort of a hybrid custodian in that they call themselves a fully integrated digital brokerage platform, which really can be said about a lot of custodians, but they have switched from using DriveWealth for their underlying custodian and custody services to Apex Clearing. And Altruist is a great story, with Jason Wenk, it was his third startup, they’re really killing it. There’s no other firms out there that have been growing as fast as Altruist has certainly not in the, whether you call yourself a digital brokerage platform or you call yourself a advisor technology

I believe they’re up to 600 RIA clients and they just piloted this software in December of last year. So less than a year in operation and already close to 600 RIA clients, it’s impressive. Their technology is great from what I can see, I’ve seen demos and talked to people who are using the software and everyone seems to like it. Even though it was just piloted and it only had limited functionality, what they offered was good enough to attract a decent number of firms.

One thing that’s interesting about Altruist is they didn’t build their own custodian platform, that’s a huge, huge lift for any company, especially a startup. They’re basically just an introducing broker for another custodian, whether it’s DriveWealth or now Apex. So Apex is the underlying custody for Altruist. We’ve seen some other of, we used to call second tier custodians but I’m not sure you can use that term anymore, but firms like TradePMR, which resold custody from First Clearing, or partnered with First Clearing for their custody. And a firm called TradingFront, which partners with interactive brokers for custody. I mean, there are some second tier custodians who built their own custody firms like Scottrade, Trust Company of America, Folio Institutional, which are all gone. They’re all acquired by other firms, Scottrade by TD, Trust Company of America by E-Trade, which then got bought by Morgan Stanley and Folio Institutional of course by Goldman Sachs. The other couple of firms that are still competing in the second tier space for the small advisors are Shareholder Services Group, LifeWorks Advisors, which is a new company I never heard of before, National Advisors Trust and Millennium Trust.

So there is still some competition in the space, although it’s so tiny when you compare them to Schwab with trillions in Aand these guys have tens of billions if that each so it’s like a drop in the bucket, but it’s still a business model and it’s still profitable for these firms that they can build on top of their custody and give their technology away for free basically, which is what I know a TradePMR does and Trading Front does. And so Altruist’s business model is to give away the technology and make the money up on the backend, the 15 to 25 basis points of custodial services and things that they can sell.

What’s interesting is the conversion from DriveWealth to Apex was driven really by from what I heard one of DriveWealth’s subcontractors that was providing ACAT services for them that firm was bought out by Peak6, Peak6 being a PE firm that owns Apex. So Apex-Peak6 bought DriveWealth’s ACAT vendor, and then had some issues or shut them off and then DriveWealth couldn’t provide ACATS to Altruist, so Altruist switched over to Apex. I’s a vicious cycle, but that’s the the dog-eat-dog world. DriveWealth has a lot of high profile clients, but mostly in the B2C space, firms like MoneyLion, Stake, Revolut, Hatch, there’s mobile financial apps with retail direct to retail investors, and that’s really where DriveWealth’s strengths have been. Building these platforms that go directly to consumers. They don’t really have the infrastructure to support what financial advisors need, which is one of the reasons why Apex was a better choice for Altruist than DriveWealth. So that was behind this move.

One of the other interesting things I like about Altruist besides the name, which is great no one else really thought to do that and make a name that sort of speaks ESG to people. And it’s almost its own marketing without even having to spend a lot of time on money marketing. One thing that Jason Wenk, the CEO told me which I found was interesting was the way he staffs his firm. They don’t really hire a lot of people from the wealth management industry. His limit is no more than 15% wealth management experience people. He’s looking for Silicon Valley, SaaS people, cloud people who know the business from that end, building cloud native technology, not specifically wealth management tech, and then they get them up to speed on wealth and he feels that brings in a whole new line of thinking and really helps move his firm forward and grow a lot faster and build a lot more cooler tools and better stuff. So much luck to Altruist in continuing their success in the industry.

LPL Financial Acquires Blaze Portfolio

The next story is, LPL Financial acquiring Blaze Portfolio rebalancing software for $12 million plus $5 million in contingencies for a total of $17 million. Is it just me, or does it seem like some wealth management tech just doesn’t have the cachet that other startups have, payment firms and other types of technology? These wealth management firms are going for what seems to be a pittance, $12-17 million. It’s nothing to shake a stick at, but when you hear firms like Robinhood or others that are going for billions, and then here these wealth firms that are going for double digit millions, even LPL’s other acquisition of AdvisoryWorld, which is great technology on the portfolio proposal generation side, they got them for $28 million. So still not breaking the bank of LPL with 16,000 advisors and their assets, but it’s still some cool technology, something that fits into a need for advisor technology

And the way I see it, LPL has been looking to offer more flexibility for advisors to manage their own portfolios. For example, with their essentially managed Model Wealth Portfolios, or MWP platform, which is a unified managed accounts (UMA) program running on a portfolio rebalancing engine technology provided by Tegra118. And they needed that type of really robust technology considering the size of their business, and it’s been growing tremendously. I think the last data I saw was $2 billion that was in May, sorry that’s just Advisor Sleeves, their overall UMA is much bigger. But one thing about theory UMA program is they’re pushing the Advisor Sleeve function, which hasn’t taken off anywhere else as far as I know. It’s been something that’s been talked about in UMA for a long time, allowing advisors to dabble, really just to build their own models in just one sleeve of the UMA.

It still acts as a centralized system where the home office is managing everything, the rebalancing, the models, the trading, the recon, it’s all managed by the central home office, but this gives advisors some flexibility in just one sleeve that they can say, Hey, Mr. Client, I’m doing a little bit here too, it’s not all the main office doing all the work. And while this type of tech has been available for a while in UMA no, one’s really pushed to like LPL has. And as I said before, they announced $2 billion in assets in just the sleeves. It’s not the overall UMA, which I don’t have the numbers on at the moment, but it’s much bigger than that. And this gives the advisors the ability to have best of both worlds. They’re outsourcing rebalancing, trading, recon to LPLs overlay management teams, and they can still build their own models as well.

And there aren’t that many firms left that do portfolio rebalancing, right? Morningstar built TRX couple years ago, Invesco bought Jemstep and RedBlack and Portfolio Pathways, BlackRock even bought some of Envestnet. AdvisorPeak is one of the only remaining pure play portfolio rebalancing tools left in the market. So I would expect some new ones to crop up soon, whenever there’s a lot of acquisitions, some new players always come into the space.

LPL or rather Blaze, isn’t just rebalancing. One of the things that I know about them from talking to the CEO Bryson over the years, they’re rebalancer is built on top of a pretty decent order management system with real-time pricing, intraday trading, which most rebalancers are not. Most rebalancers that are out there, including all the ones I mentioned before, are just rebalancing. Then they interface with an OMS and send the orders to there, and then they’re sort of out of it with the Blaze built on top of the OMS and integrated tightly into it, you get a lot more functionality and a lot more control. Now it’s a little more complicated, but that’s why Blaze isn’t for everyone. It isn’t for every advisor or advisory firm. It’s only the ones that really want to get hands-on into that aspect of the business.

I believe that on Blaze’s side, half their trades were going being done at the custodians and half being done at execution management services like Bloomberg and others. And a lot of algorithmic trading was going on. They were emphasizing that. So that’s another very different type of advisor that needs that, is looking for that type of trading and believes that that is part of their value added. Whereas most advisors are moving away from that. So that’s still a niche service Blaze, but LPL is large enough that even a niche like Blaze can find a place inside their 16,000 advisors, and they want to offer these types of services to their teams and continue to attract advisors to the platform.

YCharts Gets Some Equity Investment

And next up on the news roundup for November, we have YCharts, YCharts gets some get some equity investment. In fact, they were bought out, all their previous investors were bought out by a company called LLR Partners, which now owns 100% of YCharts. You can check them out And they started out as a charting tool for active managers, targeting advisors who really were looking for deep equity research capabilities at an affordable price. They also had a free version for awhile. I’m not sure if they have it anymore, and I know I used it, the free version, which I thought was really cool when they first started out back in 2013, 2014 or so, 2015, I think I was using the free version. I’m not sure they have that anymore, but going from a tactical trading charting tool and building out into a full fledged research and analytics platform for RIAs, broker dealers, and asset managers, and now YCharts has more than 6,000 users, which are primarily financial advisors. But they also have partners, other clients that are much bigger, like LPL, Dynasty and John Hancock Investments. That shows the strength of their tools and how they’ve been growing. They do compete with Morningstar direct and a bit with Refinitiv. And they’ve been investing in their tools that help advisors build their own models. By the way, Morningstar was an investor in YCharts, but they’ve been bought out. So now I guess they’re free to compete a little bit more openly with Morningstar’s products since they do overlap a bit. Some of the things I like about YCharts besides their investing, their analytics platform, their models are well done the way they built them, the way they design them the way it’s managed is very cool. They’ve got some proposal generation tools, which again is all part of the same platform.

They have a current versus proposed screen. So for advisors to show, Hey, Mr. Client, here’s your holdings that you have now, here’s where I’m going to put you, here’s why it’s better. That’s a very common offering for portfolio, rather proposal generation tools. So now YCharts is building that. So they’re really expanding beyond, way beyond just investment analytics. The other interesting things I think about this deal with LLR Partners, a private equity firm buying YCharts is that they also own in their portfolio, a company called PCS Retirement, which offers retirement solutions for financial advisors plan sponsors, TPAs. And that seems like a company that could use tools like YCharts is offering to those advisors, why not give them more services? You know, these advisors are managing retirement plans, they might be doing some of their own equity research and could use the YCharts offering. So bundling PCS Retirement’s offering with YCharts could be a bonus or even part of the plan for LLR Partners besides just helping YCharts grow, and then flipping it at some point and cashing out.

Another aspect of YCharts that I like besides the other parts of it is they’re starting to position themselves more as a communications tool. And we’re seeing that with a lot of companies firms like, eMoney Advisor with their financial planning, they built out a marketing tool to help advisors communicate. Orion Advisor did something similar, launched their own marketing platform. So a lot of firms are seeing marketing and investor communication as a way to be stickier, a way to offer advisors more options and also sell more product. It’s always easier to sell more stuff to your existing clients than trying to bring in new clients. So a lot going for YCharts, I expect big things for them. They’ve even said they’re planning possibly on some acquisitions with this new funding from LLR Partners. So waiting to see what goes on with them. And again, you can find them at

Envestnet and MoneyGuidePro

Next story we’re going to cover is Envestnet and their MoneyGuidePro financial planning, software. Cool stuff they’re doing with them. This is something I wrote about when they purchased them a couple of years back, that I saw this as more than just a deal for financial planning software. They weren’t just buying MoneyGuide because they wanted to offer planning and that’s all. They really saw MoneyGuide as a gateway, as a way to access advisors who lived inside their planning tool. Envestnet, not looking at the Tamarac piece of the business, but looking at their ENV2, their enterprise business they expect most advisors to live inside their tool, which means the advisors would be more investment focused, but there’s a large contingent of advisors who are planning focused and they live in their planning tool.

So buying MoneyGuidePro, which was the top or the top two with eMoney, depending on what data you look at for market share, a top one, two of a market share in the advisor business that was generating $2 million plans a year is a great way to get access to advisors who weren’t living inside their trading tool, weren’t living inside their portfolio management tool. So what does Envestnet do? They’re building out more functionality inside MoneyGuide, so that advisors never have to leave instead of going into MoneyGuide, doing your plan and switching to do trading, rebalancing or to do or to for example, buy insurance, now you can do it all inside of MoneyGuide. So it becomes a gateway, it becomes the all-in-one place for advisors to live, and it gives Envestnet more things to sell them through that platform, whether it’s insurance and their credit through their insurance and credit exchanges or other tools and technologies, you’re going to see a lot more stuff coming through there.

I’m expecting more integration on the backend. Right now, financial planning is all separate. Everything’s a silo. People ask me why, why is financial planning a silo? Because it’s always been, it’s just the way we’ve always done it. The CRM was a silo. Financial planning was a silo portfolio. Management was a silo, which makes no sense. They’re all the same clients, the same clients that are in the CRM eventually go, once they become clients, into the financial planning, into the portfolio management. And right now we’re passing data back and forth, which is silly. Why not have it in one place? So I would expect Envestnet to slowly start to migrate the data model over, and their data architecture from money guide into the Envestnet platform, or combine it in some way with Yodlee, so they have one giant data lake for everything, and that will give in so much more power and so much more of an ability to offer things like a recommendations tool they announced as well, which isn’t available yet, but should be really cool if it does what they say it does and does things like next best actions and gives advice to advisors on what they should be doing based on all the data they’re getting, whether it’s data from the portfolio management system, from the financial planning system, from Yodlee, from held away accounts, take all that, normalize it and provide the advisor with just the basics. Here’s what you have to do. Boom, boom, boom. Here are the things you want to call this client about, and it will save them so much time and help advisors expand scale, be able to support more clients but better. Offer them more services, have a better touch, even more empathy and more understanding of what the client’s needs are.

One thing I wanted to mention as well, was Envestnet bought a company called Wheelhouse Analytics back in 2016. This was a really cool purchase for them, kind of a watershed in their shift to being more of a data company, right? The Yodlee acquisition also, really screamed, Hey, we’re a data company. And I think the MoneyGuidePro purchase was also about data. As I mentioned earlier, they do 2 million plans a year. That’s a lot of data that’s really just sitting in a silo and not really being analyzed and not being managed. So offering tools like I think they’re offering something called Plan Pulse in their plan analytics premium service, which gives advisors some identification of clients that are missing certain things, missing goals or missing tools, missing insurance, whatever they are that they can then call them and say, Hey, do you need this product, saves a lot of time should provide more revenue for clients. I think Wheelhouse Analytics is in there somehow providing data analytics and other tools to help drive some of these dashboards and some of those analytics that they’re showing in these demos of MoneyGuidePro. So it’s all going to be great for advisors. It’s all going to help advisors grow better provide better services to more clients and basically should be keeping Envestnet in the number one spot when it comes to both portfolio management systems and venture planning tools. And you can find Envestnet | MoneyGuidePro at

Invest In Others

Oranj Closing Down on December 31

Craig: Our last story for this episode news roundup is Oranj closing, the company called Oranj RIA platform model marketplace portfolio rebalancing portfolio management software freemium software is closing, announced on November 18th. They’re closing their doors as of December 31st. So I had a lot to say about this. I called it a “nasty surprise and a year of nasty surprises”, which was quoted in And you know, this really caught me off guard, I’m sure it caught their clients off guard a lot more than me, but I’d spent some time talking to David Lyon, I interviewed him on my podcast a couple of times and saw him at conferences when we used to do that sort of thing. And they seemed like they had it altogether that they were doing well. But I guess a lot is hidden below the surface. I even visited their offices out in Chicago, so it just goes to show you that there’s a lot more going on than what the is shown publicly.

It seemed to me that they really f-ed up here, leaving their clients in a lurch. Six weeks, six calendar weeks, and I think there was only like 15 actual days, looking at the a number of days or 30 extra days, six weeks which is 30 days or 31 days minus two, so 29 actual days, right? So there was 29 actual business days between the time they announced and the time that they’re closing that is just absurd. A lot of these firms are small, I get it, they’re individual advisors or small RIAs, but still you don’t just turn these things on and off in a couple of weeks and expect it to work.

And if they have any larger firms it’s even gonna be more of a problem. Now you want to be running this stuff for a while. You want to spend some time making a decision to pick another vendor, they picked Oranj for a reason,m they must have liked the interface, they must have liked the way they put things together. Now they’ve got to find someone else and they probably have to change their processes because most firms adjust their processes to their vendor or find a vendor that meets most of their processes the way they work. Now that’s all out the window. So they’ve got to go in these six weeks, start doing some searching, find the vendors that are there, and they’re not, I’m in this industry every day, I’m always looking at vendors but most people are not doing that.

So trying to find all the vendors, schedule demos, see which ones you like make a decision, sign a contract, convert your data over and and then get trained, get everything running, do some sort of parallel testing. I mean, usually you want to run at least one or two billing cycles in parallel to make sure things are working, and they can’t do that.

It’s going to be a disaster for a bunch of firms, I wasn’t happy about it. And I talked to ThinkAdvisor about that. So they’re really forcing a lot of firms to cram, it could be six months or more of work into less than six weeks and with the holidays, so people are, were planning on going vacation and now what are they going to do? So what else did I say? I said, it’s “coal in the stockings of hundreds of mostly small RIAs”, which is true. It’s not a good thing.

I wrote about this on on LinkedIn as well. And it was a couple interesting comments from people Randy Bullard, from Charles River. He’s been through a couple of startups himself, and he was talking about how he’s seen this wave of consolidation happen back in 2000 when the tech bubble burst back then that firms look solid with good tech and then justice appeared. Which again, I don’t know what’s going on in the background with Oranj, but I really think they should have known a little bit more, a little bit more in advance. I think Randy’s comment was, “the day their investors don’t have religion it’s over” and that’s true. So maybe they just pulled the plug.

Joe Mrak, who is the head of wealth management at Refinitiv said, “it’s all about stability and cashflow. If there’s no new investors and cashflow is out, then basically i’s is down the drain”. They couldn’t pull through. He’s seen it firsthand, he thinks he doesn’t blame him for giving six weeks notice and he thought he could have given them none and just shut down, which is true. So Joe’s got a good point of view there. Another good article I thought was from Jason Wenk CEO of Altruist, who we mentioned earlier in the program, he had a really good article, which I believe was on, he basically did a little back of the envelope calculation that they were probably only getting like $250,000, a month in monthly recurring revenue from their clients, but they probably had over $500,000 of expenses.

So that’s a $3 million run rate of income versus a $6 million burn rate. So no that’s unsustainable, if that was true, again, that’s just Jason’s opinion. So in his opinion, the math doesn’t work and he makes some another points that in advisortech, you see a lot of people say, we built this, this is advisors building this for advisors. It’s very common for advisors to see a need and go and build something and then say, this is working great for us. Now let’s go sell it. That’s how Orion Advisor got started and a lot of other firms as well that were very successful.

But not all of them are, as Jason mentioned, most firms just stay small, like less than $5 million in revenue. And they justice are lifestyle businesses, and then over time they sort of go away and other things come around, and new tech comes in and new players and they get overturned.

Advisortech is a tough business. It’s tough to go in. most companies don’t succeed. You’re not going to make a fortune, in our industry especially if you look at the earlier articles, I was talking about Blaze Portfolio, the guy spent 10 years of a hard work and equity of his life, and got $17 million. When you’re looking at other firms and other industries where they’re throwing hundreds and hundreds of millions of dollars around like it’s nothing. Even the institutional players can get burned, right? Wisdom Tree wrote off a $50 million investment in AdvisorEngine, FinTech firm, which was eventually sold to another asset manager who knows how well they’ll do. It’s not easy for anybody in this space, you gotta be careful. You want to keep your costs low, make sure you can stay in business and you’re not going out over your skis as they say. So that’s a wrap on this month’s tech news, hope you enjoyed it. Please make sure to like, and subscribe to this podcast, whether it’s on iTunes or anywhere you listen and share it on your social media.

Click here and schedule a free Discovery Session to find out how Ezra Group can help your fintech firm grow revenue in the wealth management space.



The Wealth Tech Today blog is published by Craig Iskowitz, founder and CEO of Ezra Group, a boutique consulting firm that caters to banks, broker-dealers, RIA’s, asset managers and the leading vendors in the surrounding #fintech space. He can be reached at