Ep. 152: We Want to be the Shopify of TAMPs with Evan Rapoport, SMArtX

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Come on in and sit back and relax, listen to episode 152 of the WealthTech Today podcast. I’m your host, Craig Iskowitz, founder of Ezra Group consulting. And this podcast features interviews news analysis on the trends and best practices around wealth management technology.
Our topic for this month is TAMPs, turnkey asset management platforms. And we chose this topic because it’s one of the areas we focus on so we’re experts in TAMPs. This is all we do is wealth and asset management. So TAMPs is a big area of focus for us. We have worked with TAMPs as clients, basically all the biggest TAMPs have been our clients at one point or another, as well as their clients. We understand the industry really well. We’ve helped some of them build their platforms or do M&A, we’ve helped broker dealers and RIAs select TAMPs. So we thought it was great to sort of dive down into TAMPs, bring on some of the leading TAMPs onto the program like today’s guest Evan Rapoport from SMArtX and hear from them and kind of drill down into some of the technology, how it’s working, what they’re seeing in the industry, whether certain trends that they’re seeing and share that with you.
Before I introduce our guest for today, allow me to first expound on how important data is to the success of any AI-based initiative or any technology written program at a wealth management firm. That’s why Ezra Group launched our Data Assessment Service to conduct in an depth review of data sources, downstream consumers, data utilization analysis for enterprise wealth management firms and deliver a comprehensive strategy and roadmap to get your data architecture under control. For more information on Ezra Group’s Data Assessment Service go to ezragroupllc.com

Companies Mentioned

Topics Covered

  • More of a Tech Vendor Than a TAMP
  • API-Based Architecture
  • The Shopify of TAMPs
  • Trends in the TAMP Space
  • Morningstar Investment
  • SMArtX Use Cases

Episode Transcript

Craig: I am excited to introduce our next guest. It is Evan Rapoport, founder, and CEO of SMArtX Advisory. Hey Evan, welcome to the program.

Evan: Hey, thanks for having me, Craig.

Craig: Glad you are here. I’m excited to talk to you. Where are you calling in from?

Evan: I am in my office in sunny hot west Palm Beach, Florida.

Craig: So nice down there in the winter.

Evan: It is, it’s nice during the summer too, if you stay inside or in your pool, right, the weather’s nice, but you know, it’s it’s not something we’re not built for. Right. So it’s Florida people, people worry about or talk about Florida in the summers. I gotta tell you growing up in New York, my whole life, New York during the summers can get pretty bad as well. So you know, not too bad of a place to be.

Craig: Yeah. It’s all the sun just shining off that pavement in Manhattan. Just kind of eats away at you.

Evan: Oh yeah. Am wearing a suit and tie, right. Or just the business casual, I used to walk home from work. I was talking to my assistant today, 15 blocks to my apartment and I’d be drenched and I’d sit in front of the air conditioner like this, so fun times.

Craig: I get it. Cool, man. Okay. So let’s get right into things. So can you please give us the 30-second elevator pitch for SMArtX?

Evan: Sure. So at SMArtX we build unified managed accounts technology very specific. It’s certainly a niche within the wealthtech industry, but we focus on being able to provide a platform based solution that allows advisors and broker dealers to come in and choose from over a thousand third party asset manager products assemble those into a single account using advanced rebalancing functionality, substitutions exclusions, proposal, generation tax loss, harvesting you name it, but really being able to run their investment practice entirely through SMArtX, including the ability to even manage a portion of that account themselves. Last part of that is we also have a strong enterprise side. And so while we offer a front facing TAMP as I’ve mentioned, we really focus on building that tamp technology or UMA technology, very few firms that do this. And as such, we look to power other TAMPs. And so we really prefer and, and really aspire to be that Intel inside within all of the TAMPs out there in the space and look to standardize the, the technology so that everybody can utilize it in a congruent and in an efficient manner.

More of a Tech Vendor Than a TAMP

Craig: So when was it that you decided to shift to be more of a tech vendor than a TAMP and why did you do that? And what’s the opportunity you see there?turnkey asset management platforms

Evan: Yeah, it’s a great question. So no, one’s really asked me that we were always a tech provider and we’d always planned on being and building UMA technology at the firm is not new. We’ve actually been around for 20 years. And prior to this, we built hedge fund technology, which is very advanced, right. So black box and such and really advanced stuff. And so when we, when we looked at this space, the managed account space, and we first sort of blueprinted out our thoughts and our design we built this for hedge funds. And so when we were thinking about UMA technology, we were thinking about it in a way that really has never been thought about before, and we didn’t come from this space, right.

Evan: We came from the hedge fund side. So I didn’t even know what a TAMP was when we built this. And so we just built what we thought everybody would want in today’s markets, not knowing what was out there currently. And so sometimes ignorance is bliss. You put blinders on and you just build. And so some of the benefits that came out of that lack of knowledge and building included the ability to provide real time trading, right. Which was important to provide sleep based architecture, because we were building for hedge funds long and short. And so if we had 500 apple short and 500 apples long, we couldn’t just show zero. We had to show the attribution. And so some of the hard stuff that we had to do for hedge funds really led us to building advanced technology that is so applicable to the current long, only, and existing third party, asset manager structure and products that are out there that it just, it just worked wonderfully. It was a really nice surprise for us to recognize that we were building this technology and to see that it could advance the existing space so far.

Craig: You don’t normally hear that that ignorance is bliss and you start building not really knowing, but it seems like it worked out like that was the right way. You weren’t tied down by legacy thinking.

Evan: Well that’s ignorance in the sense that you’ve gotta remember where I come from, right? So I come from hedge funds. And by the way, I think a lot of people know this, but I personally am an advisor and a broker, right. And I still maintain my licenses. I’m series 3, 7, 24, 55, 63, 66, 79, 55. I’ve lived this my entire life. So I’m not building something that I hope, or I think advisors may use, no, I am the advisor. Ive been frustrated. I’ve sat with these legacy tools and they don’t work, or they don’t work as well as they should. And so that’s what I built. I built for what I needed and what I knew, you know the, the industry needed to be able to invest in those types of products in this specific way, in a more modern way, Craig, because look, if it was 30 years ago or 50 years ago, and, and, and models traded every quarter, or once a month, it’d be different, but they don’t right.

Evan: We’re in a very fast moving market. We’re talking about 3-5% daily, intra day, sometimes you’re watching like yesterday markets swing five, 600 points. You can’t use legacy technology and trade these things a day or two later, it doesn’t work. And when I realized for us, we’re dealing with hedge funds, they have 250 positions long and short. You can trade that stuff next day. So again, we did what we thought everybody would expect in today’s market understanding. We were working at a higher level, but being able to take that same complex technology and bring it back down to the level where it really works properly with long only and gives advisors the responsiveness that they expect from trading and technology in 2022, not 1995.

API-Based Architecture

Craig: When you built out your platform, you built it out all API based, and you pushed into microservices. How’d you see that coming? A lot of firms didn’t build it that way. They built it old school very, very insular. So why did you build it that way? What did you see in the market and how is it helping you now?turnkey asset management platforms

Evan: I gotta tell you, Craig, your questions are awesome. It’s really great to talk to somebody that kind of knows this space in the way that you do because you know, the APIs are so important, right? And as a technologist, you almost look for industries that have not been advanced. It’s like a gem in the rough, right? You say to yourself, I can’t believe no one has taken this in 25 years and built modern technology. And so we saw this within the, the managed account space that there just wasn’t a means to be able to take those component parts and utilize them in again, another ecosystem. So we wouldn’t want to build this stuff it’s super complex and really expensive, right? Like we’ve spent what, 30 million, like it’s very expensive. And we just raised $30 million. And so for someone or some firm to take this project on and think that they can do it with a couple of million dollars and continue to optimize, it’s never going to happen.

Evan: And so if there was technology out there that could do what we were looking for, we would’ve bought it, and leased it in a heartbeat and focused on the other, but it wasn’t right. And that was the opportunity, Craig. And so it was the only, because there wasn’t something available that we recognized that that was the opportunity that we could jump in there. And we could provide that technology for others that were looking for the same solution that we were looking for now, as it relates to APIs, we were always a technology firm. As I mentioned, we built hedge fund technology previously. And so we were always, I think on the cutting edge if you will, of technology. And so building with APIs was commonplace. I mean, it was just you almost couldn’t envision building a foundation that wouldn’t be open architecture because that’s the way modern technologies built.

Evan: We all, I think most of us know now that there’s not one firm that is going to be an expert at everything. And we also know that even if they go out there and buy other firms, it doesn’t mean that they’re going to give you an integrated, seamless solution, right, a good experience. aAPIs naturally make sense. And that’s why the whole industry uses them, at least the modern industry, because it allows you to do what we’ve talked about for me to just, and for us to build our specific piece and then take other experts on the tax side, on the planning side, on the reporting side and plug them in. Additionally, what I also knew in being an advisor and working in this space is that every advisor uses different, not every advisor, but many advisors use different tools.

Evan: So not everybody uses the same tools, some use MoneyGuidePro, some use eMoney, some use Orion, some use Tamarac, some use Black Diamond, etc. And so if we’re going to build for the modern marketplace and the modern broker dealer and RIA environment, well, then we need something that’s open architecture where those advisors can continue to use the tools that they love alongside of SMArtX. And that’s why we chose the APIs. Now, the second part of your question is even more interesting, which is the microservices. Most people probably don’t even know what that is, right. And so micro servers of course allow us to have multiple servers as opposed to the single server. And so that we can deliver the information back faster as opposed to hitting the monolith with all the queries. And so Netflix uses microservices. They were one of the first, right.

Evan: And so there are, there are a few firms that sort of took that leap well as a small firm, which we were only a couple of years ago, right. I don’t know how much people know about SMArtX, but we’ve we’ve grown a lot since the pandemic. We were about a billion and a half before the pandemic. We’re now just about $29 billion. So we’ve seen tremendous growth. I think it’s the fastest growing TAMP ever you know, over that time span. But when we were still nascent, still feel like we’re nascent, but when we were still nascent we had an option and I had to make a decision. It was, we could build functionality like tax loss harvesting we didn’t even have, right. And some of this other functionality, or we could convert to microservices. So we had already built our platform out using APIs.

Evan: And for those that know technology it’s laborious, right? You’ve gotta build every single API, every single bit of information that comes out of SMArtX today is driven by an API, it’s API first. So we built that first, but then as time progressed, Craig, we saw that we were starting to slow a little bit, right. And when you’d click the page and go to the next page, it would lag a couple of seconds. So you think about the future and sometimes you have to make that big investment, take that step back to take that step forward. And we spent about a million dollars at that time, which was a ton of money for us to recode everything into microservices API, and we pushed off some of the other technology because we thought about the long term growth. And what that allows us to do today is to handle millions of accounts without slowing down one iota. And and the system is incredibly fasting experience is really good.

The Shopify of TAMPs

Craig: One of the things you mentioned when we were talking before the podcast started, about how you’re you see yourself as a Shopify of TAMPs, a TAMPify so how should people consider that and what does that mean to be TAMPified?

Evan: So I actually bought that name, I think at a point TAMPify.com. But you know, it’s a lot of folks are looking for that as firms are looking to become sort of TAMPs or TAMP lites or something like that. And so when I think about the Shopify, TAMPify, it really does give you that same experience Shopify, you could bring them the product and they do everything for you. Same thing here. So when I think about TAMPify, if you’re an asset manager or you’re a broker dealer or an RIA aggregator, we can come in, we can build you a proprietary solution, your logo, your look, feel etc, whatever you’d like there, or you could build it also, but then you have the full chassis. And so you can tell us and say, we’ve got our own models.

Evan: We want you to charge X, we’ve got these third party manager models. We want you to charge, Y we have the platform. We want you to charge X plus one for this client. We want you to charge X plus two, right? And so you have all of that flexibility because you truly own the platform. So you can set the manager fees, you can set the client fees, but one of the other big benefits we find Craig is that currently there’s only a couple providers that offer this type of service, but they don’t allow you to negotiate the manager fees because they are making a market and manager fees. And what I mean by that is they’ve negotiated a fee with the manager and they may receive, again, a piece on the inside or something like that.

Evan: We don’t do that. We’re very transparent over here. The managers charge what they charge and we reflect that. So when I say TAMPify if you have a lot of assets and you’re running your own platform, so to speak on another service, you may be able to go back to some of those managers and you have a lot of assets with them and ask them if they could take a little bit less, right? Because they’re currently taking less with the other provider anyway. And so instead of 35, maybe you can ask them if they could take 25. So you can still keep your assets with them, because now you’re building your, that 10 basis points on a billion dollars is a lot of money, right? On $500 million. So I go back to Craig, it really allows you to run your own business. We’re not giving you this handcuffed or, or you know, version of our technology that has fees built in for us.

Evan: No, it’s yours. You do what you want. You tell us what to do. We’ll run it all for you. We’ll run the technology. We’ll do all the trading. We’ll do other billing. We’ll send you a check at the end of the month. And so we will run that business for you. And to that end, we have clients that we do that for, one in which we’re running $75 million annual business for them currently. So it’s real money, right, that we’re talking about here. And very often you’re going to help the end user by giving them a better experience, better technology, and maybe even a lesser cost. So win/win/win.

Trends in the TAMP Space

Craig: I like the sound of that win/win. So let’s move on to the next segment in this episode, let’s talk about trends. I talk about TAMP trends. You’ve been the business for a while. Whenever I call you we was talk about trends. You built your own UMA rebalancer and something Ezra Group we experts in is managed accountant rebalancing. It’s one of the first projects we we did in managed accounts is building a rebalancer. I know it’s a non-trivial task. You built your own, and you’ve replaced some of the big legacy UMA platforms. How did you do that? How’s it possible? What are some of the trends you’re seeing in UMA technology?

Evan: Well, I think certainly rebalancing is commonplace, of course, but the ability to rebalance with precision and drift is, is somewhat newer, right? And I think when a lot of folks think about rebalances, they think about the traditional rebalancer that rebalances individual equities, but they don’t think about a sleeve based rebalancer. Right. And that is really unique because, and this goes back to what makes SMArtX unique is that we keep our investment book of record at the sleeve level. Every other firm is keeping their investment book at the account level, not at the sleeve level. And they’re trying to do sub accounting and trying to back it back in and such what happens is it’s not clean. The cash maybe is not right. The tax is not aware, maybe do tax lot tagging, but it’s not tax aware relative to the sleeve, which is not it’s not nearly as good.

Evan: And so because of our architecture that is the investment book at the sleeve level, it really gave us the ability to then build tools that are specific to those sleeves, including that rebalance that is so so efficient and so effective. Right. It’s very, very precise. And and so I think that’s why it’s gotten so much traction Craig. It just it’s without going into the guts of the algos and how they work, but you can imagine rebalancing a sleeve, which is 30 securities versus another 30, but then even underneath that sleeve, you can make adjustments within, and you could have a sub-account within that account that also rebalances. So, wow. Blow your mind. The complexity of the levels. One on top of another, on top of another rebalancing, all those in groups and individually, because outside of just the sleeves, you also have Rep-as-PM, so you can add apple or a mutual fund, and then it’s going to rebalance those individual positions versus the sleeve based positions.

Evan: Right. So it gets crazy, but yeah, I mean, it’s a lot of work. Thank you for recognizing that Craig, and it’s it’s a really great tool and something we’re really proud of. And just to further on that, there’s a couple tools that we didn’t talk about this earlier, but a couple tools we built for advisors that are kind of unique to SMArtX that I think are really interesting. One of those is cash management tool that we built that allows for automated required, minimum distributions and automated dollar cost averaging. So in working with advisors one of the best parts of doing that is, and owning a technology firm is listening to them and then building technology that they really want and will use.

Evan: A lot of people don’t do that. They just build. And like I said earlier, they kind of think that someone might use it. No, we want to work alongside of our clients. We’ve got 120 employees here now we’ve got 70 people on the tech side, let’s build it, let’s build something really great that everybody’s going to use and everybody’s going to want. Why not?

Craig: Why not?

Evan: So that’s what we did. Right. So it’s fun. And that’s what we did with this, this cash tool. So now the advisors, they don’t have to put sticky notes or their admin’s going to remind them to do an RMD, because if you missed an RMD, it’s not good. Now you’ve automated that process. It automatically freezed it up rebalanced or prorata whatever you want. Same thing with dollar cost averaging, you have 10,000 in there every week or every month, it’ll put a thousand dollars into the rebalancer and allocate it across all the different models appropriately or wherever you want to allocate. So little things like that are kind of cool things that we’ve built. Right. We talked about the real time trading. We talked about the breadth of product a little bit. We talked about the sleeve based architecture. We talked about the open architecture of the platform.

Morningstar Investment

Craig: Let’s talk about a little more about the UMA platform. I want to congratulate you on your recent deal with Morningstar, congrats on that and your investment. So they invested in you as well as took you on as a vendor. How did you, what was one, if you pick one thing, what was the one reason why? They already had a platform, they’ve been a TAMP for 15 years, they replaced their vendor with you. What was the biggest reason why they did that, what would you say it is?

Evan: Ooh, it’s tough. I mean, there are a couple big ones. One is certainly the APIs, right? Being able to take the component pieces that they needed and ingest them and build them into their own ecosystem. When you look at Morningstar new direct indexing platform, that’s about to launch in the next week or so. Right. you would never know that SMArtX is on the inside there. Right? same thing with their TAMP, right? So we become a piece on the inside that they can pull in through the APIs manipulate in a way in which they need or optimize. And then go ahead and utilize, you can’t do that with any of the other technology that in itself is enough for most firms to say, we need to use SmartX because we don’t want to use this existing could see monolith.

Evan: Because we’ll need it. Right. We’ve got our own tools. Like Morningstar’s version of SMArtX will be really interesting. And the Morningstar project is, is multifold. Right? So one I think the APIs were important. I think the trading technology was really important, Craig, and then being able to make sure and understand that the data is is correct and accurate on a constant basis. Even if they’re not intra day trading, cuz a lot of their products are mutual funds and such. And so they don’t need to intra day trade those. But just having that visibility and understanding that the data is accurate and the intra day flexibility, whether it be freeing up cash or whatever it is is, is really important it’s you know, the RIAbiz article that you reference, one of the notes that they mentioned I think is important and that is liquidity is an important part of being an advisor, right?

Evan: Part of being a fiduciary is making sure that you provide your clients with liquidity when it’s available in marketplace. Right? So if you have two products that are sitting side by side and then the same product and one’s illiquid and one’s liquid as the fiduciary, your responsibility is really to choose the more liquid product. Because if something was to happen, you want the liquidity, right? Let’s take this. As an example, markets are moving substantially day to day. You know, now it’s a 3-5% is like average for the market, right?

Evan: Well, what happens when the client says, and the client has a $5 million account with you and they say this market, Craig, it’s not good. I don’t like what’s going on. I don’t like this whole war and deflation inflation, just get me out, sell, sell me out. And you go to sell and you don’t get out that day because you don’t have liquidity and you don’t get out out next day. Because you didn’t make the window. And now you’re on the third day or the second day. And now the account’s down 7%. What happens? You just lost that client $350,000 because you didn’t have liquidity. And on SMArtX you could have clicked that button and been out in five seconds. Right. Been out in five minutes or whatever that time is. That is disconcerting, it creates liability. And I don’t think it gives clients the experience that they deserve, they deserve liquidity. And so we provide them with that. And and so anyway, so that doesn’t answer your question, that last part about the SmartX, but I think liquidity’s part of what they’re looking for.

Evan: And the last part I’d add to that is that they Morningstar is an exciting opportunity. I’m really excited for that firm. They’re such a great organization and we’re really close even with Kunal, their CEO, but what they’re going to do over there is not only transform their existing TAMP, but they’re going to expand that TAMP to now include other third party asset managers. So currently Morningstar is a product based TAMP, there are two types of TAMPs product based their own product, platform based other third party asset managers. On the platform based side there’s not a lot left there’s Envestnet, us and the AssetMark right now or Adhesion, which is now AssetMark, not many other places you can source third party asset managers.

Evan: And so now Morningstar in time here will look to integrate twofold one. We will take the existing TAMP at Morningstar, they will expand that to include other third party asset managers in a more curated form. So call it AssetMark like SEI like, right, they’ll be not only advising on their own strategies, but they’ll also be including third party asset manager strategies outside of Morningstar in their TAMP. And they’ll have a rated, which they’ll be nice because they have little Morningstar ratings, right? They’ll have a rated TAMP of like a hundred products or so that’ll be Morningstar.

Evan: The next step will be integrating directly into Morningstar Office, right? And office will become this really powerful tool, all cloud based. Right. All optimized now for 2022 with modern technology you know, they’ve hired some really great people over there and that will have all the investment management built within. And there are no other products today that really do that to be clear, black diamond, doesn’t have an integrated solution. Tamarac doesn’t have it, Orion, doesn’t have an integrated solution. So Morningstar, which is like the phoenix from the ashes Craig, right? Like I love the Morningstar story because they’re great people, they’ve got a great product. But their tech fell behind a little bit. Right. And now that they’ve got the chance to catch it up and they’re going to do that with the most powerful UMA technology, I say that humbly, and and they’re going to come out with a product that can really compete with the likes of Envestnet and the others. So that’s really exciting.

Craig: Well, I think Orion is working on integrating their acquired TAMPs into their platform. So that’s some competition for ya.

Evan: Well, no, no Orion. And by the way, we’re very friendly with Orion. We I like those guys a lot. Right. So I like Orion because I like the vision. I like Eric’s vision he’s he’s, he’s really focused on fintech and you know, really understands the space and the component part’s necessary to put together to create a, a cohesive experience. But Orion is mostly product based TAMP. Right. You have a lot of Brinker and now you have town square. Right. And and so they don’t have, have the full third party asset manager suite. And so you can’t take a client from Envestnet and move them onto Orion like you could with SMArtX or Adhesion. Because of those third party asset managers.

Evan: Now one day I’d expect Orion to get there. Right. And they will be that comprehensive player, but right now Morningstar will be the only reporting solution that will have the fully integrated solution unless Orion can catch them up. And I will say we are in the process of integrating with Orion currently. And so we will if you’re an Orion user and you’re a SMArtX user, like you are able today to see all of your sleeves in Black Diamond, that’s very unique to SmartX. We talked about the sleeve based architecture. We deliver that through the reporting platforms. So currently if you use Envestnet and use black diamond, you just see an aggregate group of securities. You have no idea who they’re assigned to the delineation performance of the managers, et cetera, with SmartX, you are able to see all those sleeves, the performance, the holding, etc, in Black Diamond, we’re going to be doing the same thing for Orion users now also. So they too can have that transparency and be able to use Orion to its, its fulles with all of its full its functionality and to utilize its full benefits. So that is very exciting. And we’re really optimistic about the relationship with Orion.

Smartx Use Cases

Craig: Excellent. All right. Let’s get onto third topic, which is use cases. So we got a lot of broker dealers, very large RIAs listening to this program if they wanted to work with, or not also asset managers as this program. So if they wanted to work with the SMArtX, can you use a use case? I think that we had three use cases we talked about first one was RIA aggregators or broker deals looking for a solution. Can you give, can you walk us through the use case and how that would work with SmartX plugging into there?

Evan: Yes, absolutely. There’s two kind of clients there, right? One, there was one of the traditional RIA couple hundred million you’re looking for better experience service technology. Again, I say that humbly you’ll make your own decision, but a different offering than what’s out there currently, we’d love to bring you on. One of the aspects that I really deterred was the or disliked rather was, was the, the lack of service I was getting from some of the providers. And so one of the parts that I focused on here at SMArtX was the service, right? And really making sure that we surround our customers with customer service. And so that includes relationship manager, client advocate, customer service rep, and live chat.

Evan: So our clients can always get someone on the phone. And let me tell you something, the advisors love that. They love the ability, Craig, to be able to rebalance their accounts and see them rebalanced in 15 minutes, right. And to do trades and see them actually happen intra day, right. To make adjustments to client portfolios and actually have those respond. All those things that you get from SMArtX that are currently not out there in market, I think are great. And you know, advisors really like those now to that end, there are some things we don’t offer and some things that some other firms do offer, right. And there’s always going to be that that qualification of a client to determine whether the solution’s appropriate for them. I’m not going to say every solution’s appropriate for every client because it’s not, and so that’s part of the, the the process that we work through the clients. But you know, very often we’re able to decrease cost and improve the experience with the traditional broker and RIA.

Evan: Now for the aggregator, it’s a much different story because then we’re building a business, right? So for that firm, we do one or two things. One, we create a profit center for them where they can come in, they can proprietary, help us or work with us to build a proprietary solution. Again, we’ll do everything. They just tell us which pieces to put it in place. But then they figure out the fees and then we obviously you know, create that revenue center for them. Or if they don’t want to create a revenue center, they could just pass it right onto the, the end user and give them the best possible costs. That’s up to them. But very often as we, we know broker deals and RIAs, they have to keep the lights on. And so this is a good way for them to do that and we help them to do that. So that’s the, that’s the use case for broker dealers and for RIAs.

Craig: Cool. let’s move on to another use case. So as an asset manager, you spoke before, about about 20 billion asset manager. They tried building their own TAMP and they spend millions to do it and they couldn’t do it. They brought you in, why couldn’t they do it? And what did you do for them?

Evan: That’s another great question. You know, it’s really, really hard to build TAMP technology. It’s what we talked about. Right. And so putting a couple guys or gals in a room and putting some spreadsheets together, it’s not going to work, it’s not scalable. Whatever money you spend, it’s almost like it, you throw into the fire because this isn’t it’s not a static product. It’s not something you can build one time and just forget about right. It’s continually being optimized and needs to be you know maintained. And you know, I think like we talked about, I’ve got a hundred and something people over here is 70, just on the tech side. If you think you can do that kind of work and maintain it, good luck. So what happens when folks do that is they end up with a substandard product.

Evan: But what most people forget about is the liability, huge liability. You make a trade, you do a calculation wrong and you make a million dollar error. Guess what? You’re never getting ENO again, you’re not going to be able to manage money because once you put through a claim in your ENO you don’t get a second shot. So there’s a lot of liability to what you’re talking about. So you’re giving clients a lesser experience. You’re creating tremendous liability for the firm. I mean, you can put the firm out of business. That’s crazy, right? You’re talking about multi-billion dollar firms risking their entire business on technology, which is not what they do as opposed to licensing it for a couple of basis points. So for those asset managers, right, or whatever the cost is before those asset managers, we created a product that allows them to do the trading.

Evan: And this is something new. So I’m glad you asked about it, Craig, because it’s something we did even for Morningstar, right? So typically we’ll do everything. We’ll do the trading, the billing, we do everything for the firm, but for the asset managers who want to be able to handle some of this themselves, cuz they have some traders in house they’ve already built some infrastructure and they want a lesser cost. We now have a solution for that too. So we’ll organize, we’ll do all the recon. We’ll do all the corporate actions. We’ll do all the trade but we’ll prepare the trades for them and then we’ll give them a tool and they can click the buttons on their side. And so that reduces the cost tremendously. And and decreases the liability because we’re preparing all the trades. We do all the recon for them and they’re just clicking the buttons.

Evan: Now, if they click the wrong one, that’s on them. But if they click the green one, not the red one when they should, everything should be great. And so thank you for asking about that. It’s, it’s a really exciting product then it’s to your point, it’s one, the asset manager are looking for a lot of the asset managers, the large ones, they have like a billion or two or 500 million or whatever the number is of these smaller accounts that came in via SMA direct. And it’s hard for them to manage those. Right. whereas with a TAMP managing it scale, we’ll now make that easy for them. Right? We’ll organize everything and we’ll make that process super simple for them. Very, very excited about that. And if you’re an asset manager looking for a solution to administer those please reach out, love to talk to you.

Craig: Evan, I’m going to push the red button on this one cuz you, we run out of time. You’ve said it all. Can you tell people listening where they can find more information about SMArtX?

Evan: So you can come to SMArtXadvisory.com. I think that’s our website.

Craig: You want to be sure about that.

Evan: Yeah. SMArtXadvisory.com.

Craig: Not TAMPify.com. You should redirect that one.

Evan: You know what? I’m going to redirect it because I definitely own it. No, actually it says no it’s well, that’s weird. It says for sale 7,695. I’m pretty sure I own it. So I don’t know how that’s out there, but anyway, yeah, you could find me. That’s a long digression SMArtXadvisory.com. And or on Twitter, on the internet, LinkedIn, whatever. We’d love to talk.

Craig: Great, Evan, thanks so much for being here, appreciate it.

Evan: Pleasure’s mine. Thanks for having me, Craig.

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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 craig@ezragroupllc.com

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