Ep. 229: The Breakaway Blueprint, with Advyzon

Come on in and sit back and relax. You’re listening to Episode 229 of the WealthTech Today podcast. I’m your host, Craig Iskowitz, founder of Ezra Group Consulting. This podcast features interviews, news and analysis on the trends and best practices, all about wealth management technology.

This episode is part of our Breakaway advisors series where we’re highlighting showcasing Advyzon. Advyzon is a wealthtech vendor founded in 2012 by Hailin Li, who was one of the original developers and chief architect behind Morningstar Office platform. He founded Advyzon with the purpose of building an intuitive all in one technology platform for advisory firms. They started out with a robust CRM, performance reporting and billing client statements in a portal. They recently launched their own portfolio rebalancing engine called Quantum and Advyzon was named the best all in one software solution for the seventh consecutive year in the 2024 T3 Advisor Software Survey

But before we get started, let’s talk about tech stacks. At Ezra Group, we’ve seen tech stacks of hundreds of RIAs and let me tell you, most of them are loaded down with tech debt. So you shouldn’t feel too bad about yours. But let’s face it tech debt is like a giant anchor, holding back your business growth. If you want to free your firm for exponential growth, you should run, not walk to our website EzraGroup.com and fill out the Contact Us form. Our experienced team can evaluate your current tech ecosystem, deliver targeted recommendations, optimize your existing systems and operations or run an RFP and help you implement new software to take your firm to the next level. You can take advantage of our free consultation offer by going to EzraGroup.com.

Topics Mentioned

  • Advyzon Company Overview
  • Quantum Rebalancer
  • Diving Into CRM
  • Enhancing Client Experience

Episode Transcript

Craig: Welcome to another episode in our series on Breakaway Advisor Tech! And we’ve got a panel here. We’ve got a team of people, all from Advyzon, who are going to talk about the great technology that’s available from Advyzon for breakaway advisors. Let me just quickly run down the list of distinguished guests we have. First, we have John Mackowiak, Chief Revenue Officer at Advyzon. John, this is your cue.

John: Hi, Craig.

Craig: Hey, John. Okay. Next up is Lee Andreatta, CEO of Advyzon Investment Management.

Lee: Happy to be here, Craig.

Craig: Hey there, Lee. Next up is Dirk Pearson, COO of Advyzon.

Dirk: Hey, Craig.

Craig: And finally, last but not least, the founder and CEO of Advyzon, Hailin Li.

Hailin: Hi, Craig.

Advyzon Company Overview

Craig: Hey, how are you doing? This is quite the panel we’ve got here. We’ve only got about 30 minutes, so I want to make sure we get to all the great stuff we want to talk about. But first off, can you give us, John, a 30-second elevated pitch for Advyzon?

John: A 30-second elevated pitch, certainly. We are a comprehensive platform. As far as breakaways are concerned, we’re going to make the technology shopping easy and give you most, if not all, of the technology that you need to run your new business. At our core, we’re a reporting and billing solution.

John: We’ve built our own CRM system, white-label client portal and mobile app, and full document management system. We have some growth tools that we’ve built around data collection and digital account opening. A couple of years ago, we launched our full-service TAMP. The rebalancing tool launched right around the same time. And last year, we launched our model marketplace called Advyzon Nucleus.

Craig: You did it in 30 seconds. Well done, John.

John: I’ve done it before.

Craig: Normally, we go through where everyone’s calling in from. We’re going to skip that and jump right into the company overview because I think maybe not everyone is aware of Advyzon and your history. I find it fascinating, guys, how you grew up, how you started out, and how you’ve expanded from a core bit of functionality into a full-featured end-to-end platform. John—or, if you want to pass it off to someone else—a quick overview.

John: Yes, I could field that one too. I think it’s important to point out to a lot of our clients and prospects, and certainly relevant to this audience here, that we are a breakaway, not just a technology company. Much of our early team—all four of us here—worked together at a much larger company in the space. Our bios are on our website if anyone is interested.

John: Like many breakaways, our thought process was that we think we can serve our clients a little bit better and serve the market a little bit better when we’re doing it ourselves versus being a small part of a much larger organization, and we’ve been able to achieve that.

Craig: John, we are not allowed to say Morningstar? Is there something wrong with that? You guys broke off from Morningstar.

John: You can. You could say Morningstar.

Craig: Broke away from Morningstar. No shame in that.

John: We still have a lot of friends and former colleagues over there. We’ve got a good relationship with them. But yes, we broke away from Morningstar.

Craig: Like an incubator.

John: Sure. We built the Morningstar Office platform. Hailin was the chief architect of that system. I was the first salesperson, about 20 years ago. We’ve been doing this for a long time. And I do strongly believe that our experience there set us up for a lot of the success we’ve been able to find at Advyzon.

Craig: It’s a great proving ground. Morningstar is a great company, as I’m sure you would agree. And lots of large companies incubate startups. And then people leave, and they’ve got their own ideas, and they go out and start some new stuff. And it’s better for the industry overall, so we’re happy about that. Let’s specifically get into the technology that Advyzon’s offering that breakaway advisors and firms would be interested in. John, where do you guys want to start?

John: You look at portfolio management. I think that’s a good starting point because that’s not something that you go out and see a million different choices for. The reason is that it’s hard to do. We’ve done it twice now, successfully. There’s a very small circle of people who can say that. I’d say we start there, and there are a bunch of different aspects to it that we could cover.

The Quantum Rebalancer

Craig: Let’s jump in. Talk about rebalancing—the new Quantum rebalancer. Talk about that.

John: Yes. I’ll kick that one over to Dirk. Dirk has been instrumental in conceptualizing Quantum. We started with two beta testers and grew that to a little more than 100 over the 15 months we beta-tested prior to launching. Dirk was there every step of the way, so he’s the best person to talk to through that.

Dirk: I think there are over 300 firms now using Quantum. I think that with anything you’ll find in Advyzon, the goal is to make the setup and the functionality as flexible as possible to meet the needs of the various types of businesses and firms that are using the product. That includes household bubble rebalancing, subgrouping of household accounts, account level, and UMA sleeving. That’s where you’ll get into our Nucleus model marketplace product, where you can take off-the-shelf strategists and incorporate them into custom UMAs for client portfolios. We’ve built out a robust feature set in a short period of time. It’s only continuing to get built out as we move forward as well. Lee, is there anything you want to add on the portfolio management side?

Lee: Yes. I think when you think about an advisor’s role within a wirehouse or a bank and they’re breaking away, typically they’re team-based. Somebody might be a portfolio manager, somebody might be a trader, but they’re all servicing this group of clients. What Advyzon has done masterfully is that it has taken all those different models and made them available to whoever the breakaway, he or she, is to support their business.

Lee: Dirk mentioned Quantum, which is our rebalancer. It’s advisor is PM. They could get in, create their own models, trade them, rebalance them, and do tax loss harvesting—the whole suite that you’d think of with a rebalancer. Also, through the model marketplace, they could take traditional SMA managers and sleeve it out into a UMA account structure. It becomes the horsepower of that single account household up into derivatives of those household-specific groupings. It gives the ability to have exclusions, equivalencies, or any of that horsepower that you need to support a breakaway’s book of business, either as a trader or as an asset allocation and investment specialist. It’s all there, right under the hood, to be taken advantage of within Advyzon.

Craig: Lee, did you say equivalency so I could set up security equivalences for alternative options in a model?

Lee: Absolutely. And for wash sales in particular, if it’s a non-qualified account. All of that functionality is inherent in the rebalancer itself. And then, on our TAMP side, we offer a more advanced institutional type of trading.

Lee: Think of low-cost basis. An IBM executive—they don’t want to sell. We could create an equivalency within an overall asset allocation that becomes a large-cap growth portion of that portfolio.

Craig: Nice. That’s helpful for higher-net-worth clients. We find that’s often a capability that some rebalancers lack—security equivalence—and it’s very, very handy. One other thing I wanted to ask you was that with breakaways and their team base—they’re coming from wire houses or large broker-dealers—they often have multiple taxable and non-taxable accounts. Do you guys have location optimization where we can automatically allocate different securities to different types of accounts?

Dirk: I can do that one, Craig. Sorry, Lee, you were ready to jump on that one. Our baseline starting point for getting into Quantum was to make it as sophisticated from a logic perspective as possible. We started with household-level trading so that we could tackle the optimization from an asset location perspective. We also do some asset class-specific optimization, finding a more optimal portfolio on the efficient frontier that serves as a more—I guess I’m going to use the word optimal again—optimal after tax and wealth scenario relative to maybe what the target portfolio was. That’s certainly optional. We don’t force that upon people, but given that there is that advanced sophistication under the hood, it’s an extra value-add that we see that we’re bringing to our users.

Craig: Dirk, when you say household-level trading, that means I can apply a model to an entire household, and it allocates across all the accounts that are connected to that household?

Dirk: Exactly. As part of that asset location, the system is built to recognize the qualified, non-qualified, or tax-free nature of any of the accounts that are within the household so that we make the decision on where to locate the assets that need to be purchased relative to the strategy. The advisors themselves have the ability to override our default logic. If they have specific preferences that maybe don’t align with ours, they can override that logic. But built-in to make it as turnkey as possible, that logic exists out of the box.

Craig: Nice. That’s useful. That’s a pretty powerful feature. We always ask about that, and not a lot of other rebalancers have that capability. Kudos to you guys for building that out. And it’s not easy to build. We built a couple of rebalancers and helped enhance them. Building the stuff from scratch is not a trivial task.

Dive Into CRM

Craig: I’m breaking this into segments. We just did rebalancing and portfolio management. I want to be able to cover a couple of other areas of your technology. Let’s move into CRM. This is another area in which I think you’re somewhat unique. Not a lot of firms have a built-in integrated CRM. Can you talk about that and how it improves the lives of breakaway advisors?

John: Yes. I think if you look at breakaway advisors, oftentimes, their whole tech stack is selected for them, handed to them, and then they get into the process. And now they have to go shop and look at three different CRMs, three different reporting systems, and so on down the line. Advyzon CRM is built in-house. What makes it unique is not just that we built it in-house; it’s that it’s fully integrated throughout the rest of the Advyzon experience. Even back when Hailin and I were talking about how we were going to build this out, the user experience was at the forefront of his mind. Building our own CRM and baking it in throughout, there’s not even a button in Advyzon that says CRM. That is because it’s built around the user experience: How does an advisor work with their clients?

John: If, just as an example, a client calls their advisor for whatever reason [and has] questions on their account, you pull up a single client record. In that client record—and I think our LinkedIn just put out a quick video I did of the client record today—CRM data is right next to reporting data. CRM capabilities like leaving a note—it’s all right there. We’ve built a deep integration with both Office 365 and with whatever Google is calling their product—Workspace—these days. They’ve changed it a few times on us. Those deep integrations are there.

John: When someone clicks the calendar button on Advyzon, the calendar is just your calendar. It’s not a calendar that just lives within our system. It’s a deep integration back and forth. Emails to or from anyone in the household are automatically going to log within that client record. And then we’ve got little widgets, as we call them. It’s a widget called “Recent History” that works like a feed. All of that information and communication going back and forth is going to log there.

John: Documents—we’ve built a lot of integrations with custodians. I think we’ll talk about it in more detail here. But a monthly custodial statement—we’re in February recording this—and tax forms are all available through the advisor’s portal. And you’re not forcing the investor to go out to one or multiple custodians to grab those tax forms. Automations and workflows are another thing. Dirk, I’d like you to expand on that because you’ve done a ton of work in the last, say, 12 months. And I’d say that’s very high on the priority list for 2024 here.

Dirk: We’ve spent a lot of time building out our task management system and the capabilities around making it super flexible. I think the best way to put the direction we’re going with workflows in general and certainly hitting on this theme of automations is that we’re no longer telling you what you need to go and do; we’re also going to start to perform the actions for you. When we’re talking about automations, it’s triggers that occur from some actions—some time-based events or some client-age-based events—and then it’s performing a follow-up.

Dirk: An easy example of this would be our client review tracking that we’ve built out in the system as well. If you have client tiers and you’re hoping to meet with certain clients on a regular quarterly interval, we’ll track the last meeting, and we’ll track when the next meeting is supposed to happen. Then, leveraging our automations feature, it could also run reports and send out the meeting invite automatically, all by just setting up that automation to begin with. Then, at scale, it’ll take client by client and perform that executed step-by-step cadence for you every time you have a client review coming up.

Dirk: There’s exciting potential there. I could go on about that for an hour if we have the time, but that’s a little gist of where we’re going with workflows and automations.

Craig: Dirk, I’m interested in workflows and automations. It’s something we do a lot here at Ezra Group, working with our RIA clients. If we’re implementing a new CRM or they’ve got a CRM, oftentimes their workflows and automations are very light. They don’t have them, or they haven’t implemented them. They’re not using them. To me, 50% of the value of a CRM is the workflows and automations. I’m interested in your triggers. If you can just go a little bit deeper into that. When I’m building client tiers, which a lot of larger RIAs that are growing fast know to do, how does it help me manage those?

Dirk: Let’s just take two steps back and get to John’s point real fast about having all of the data from your portfolio management system in your CRM system within the same system. Whether it’s report-based triggers or whether it’s just segmenting my book of business based on some type of AUM or portfolio characteristic—and then applying a rating based upon that dynamic grouping of clients that meet certain thresholds, and then for clients who meet certain rating—have these triggers go off or have the next review dates go on a quarterly interval versus a semi-annual or annual interval.

Dirk: Then maybe, within certain client reviews, we have higher touches on this. We have different types of report triggers. Reports can also be delivered through the body of an email, not even an email attachment. Or I could have personalized data delivered to that client ahead of the review meeting. I can also set up to-do lists through their client portal. Our workflows have previously been in-house only—only users of advice on the staff or advisor side can interact with them—but in our next-gen workflows, what we’re doing is bringing this capability to loop in your end investors into the workflow engine itself. We’re inside their portal. They would get to-do lists. If it’s a review period and I need updated material on demographics or any material changes to the household or their network, I can capture those all through simple to-dos ahead of the review meeting itself. In addition to pushing those extra touches out seamlessly and without any friction or manual effort, you trigger them to go out.

Dirk: You can imagine a lot of different scenarios, Craig, in which you can leverage triggers. Somebody could edit a record. You can move it from a prospect to a client. You could manually move it from one tier to another, which then maybe needs to update the review cadence automatically. It doesn’t necessarily need to just trigger a workflow itself. It might just be performing a simple action step in the system. It might be running a report. It might be running a rebalance. It could be a daily monitoring check on the portfolio [to determine] if it’s out of balance with its mandated target allocation, and if it is out of its target mandate, to go and run one of our rebalance scenarios to present the traits of the advisor and get that portfolio back within its target asset allocation.

Dirk: I guess they’re all technically operational workflows. But when you think about all of the different functionality that Advyzon has baked within one single source vertically integrated piece of technology, we just feel like the workflows that we’re able to drive through automations are vastly, I’m not going to say superior, but wider as far as the possibilities are concerned.

Craig: Yes, indeed. And back to the important point that Lee mentioned, breakaways are often team-based. Having these workflows that can move certain triggers, certain actions, or certain events to different team members is critically important.

Dirk: Yes. One quick thing to add to that. Another baseline change that we made to Advyzon recently is what we call servicing teams. Servicing teams are comprised of custom roles that are defined in-house. Based on those roles and/or the teams themselves, our workflows can dynamically assign themselves out to the team. We recognize who the owner of an object is. It might be a record action that triggers a workflow to go off. Within that workflow that was predetermined, it might have dynamic assignments for each task, who that report needs to get generated for, and who needs to do what. What you can do within Advyzon on that is have one workflow that dynamically signs itself out based upon the team and/or the roles that are servicing a particular relationship or that service a particular function within the operation.

Craig: I’m hesitant to ask this question, because I want to move on to the next segment here. But what do you mean by dynamically assigning themselves? How does a workflow dynamically assign itself to a certain person?

Dirk: This is just using system intelligence and the preconfigured setup of the system—who each user is, what their role is, what a servicing team might look like on a particular record, or what a servicing team looks like within the operation. When you go and you set up your workflow and you say, “This is task one; that needs to get completed as part of this broader workflow,” task one might have a specific role that needs to be completed.

Dirk: Let’s just think about a bigger firm in this case, Craig, where you have different operations people, maybe servicing different advisors within a firm. That servicing team can get dynamically assigned out to the advisor as new accounts and new relationships come into our system. But then we know exactly who the person is behind that role. If a record triggers a workflow to go off, let’s just say it’s John Doe’s record, and his client segment changes from a four-star to a five-star—I’m just using a basic rating system—that first task now, based upon that workflow setup to define this team-based role that that specific task needs to get assigned to, is going to find its way to that specific individual who relates to John Doe’s record within that servicing team that was set up.

Dirk: Based on your broader operation, you’ll have these roles and/or servicing teams assigned to all these tasks. It could be the advisors themselves. Certainly, you can hardcode these to individual users if your firm isn’t larger and if it doesn’t need the dynamic sophistication associated to it. But we have all the logic in place behind the scenes to handle that dynamic assignment. And let’s just say you’re a single advisor and you don’t yet have a team within that firm. That role doesn’t exist as a servicing advisor on John Doe. It’s going to go back to that advisor by default. We have this funnel-up logic to get the task assigned to somebody, even if it maybe doesn’t exist for that specific [inaudible].

Lee: Real quick, Craig, can I jump in and maybe take 15 seconds? Think of a client associate. The client associate onboards a client. That client is now opened at the custodian. The custodian sees the account there. Dynamically, it alerts the trader within the firm that the trade needs to be made or that a rebalance needs to be made. Then it could dynamically alert the advisor that they need to reach out to the end client and tell them that their account is open, their account has just been traded, and everything’s looking good for them. That’s what we mean by dynamic roles spurring on the next point through the process.

Enhancing Client Experience

Craig: I get it. Thank you. That’s a lucid and very concise explanation. The last segment. Let’s talk about another area of your technology that is useful for breakaway advisors at the client portal. John, who wants to take that?

John: I could start with it. If we look at our client portal, that is the firm’s brand. That is how the investor in 2024 is consuming their account data. What we did a few years ago, in conjunction with a revamp of our custom reporting, was build a tool called Brand Kit. Brand Kit allows the user to upload their logo and their color scheme that’s going to flow through to reports that’s going to flow through to the client portal that’s going to flow through to the mobile app. Effectively, the investor experience. In the client portal itself, which is part of that Brand Kit, the firm would make the portal look like an extension of their website. That’s uploading their own background image to start, putting their own logo on there.

John: I think the white background with a tiny little firm logo is lame at this point. We want it to look nice and polished and put our users’ best foot forward in the eyes of their clients and prospects.

John: Hand to hand with the client portal is our prospect portal. I think one of the things we’ve excelled at over the years—and frankly, something we all probably enjoy more than most—is that we really listen to our clients, and all of us thrive on delivering something that delights them. What we’re hearing is that our clients were using the first version of our client portal to communicate with their prospects. This is presumably someone you want to impress, and you’re saying: “Here, log in and ignore three-quarters of what you’re looking at. Just upload documents to me.” We thought, “We can do better.” The prospect portal, the same experience as the client portal, can be designed down to the individual contact level. Presumably, husband and wife can have different portals if the need arises. We’re able to say: “Things like performance history, let’s take that out of the prospect portal. Let’s give them the ability to sync their held-away accounts, first of all. Let’s put my bio on there. Let’s put a market update. And then we’ll have our document vault for secure document exchange.”

John: We also have a tool called Fact Finder that incorporates into the client portal. The Fact Finder tool can be used for data collection for a risk tolerance questionnaire. Last fall, we added proposal generation tools. And then, with a number of different custodians, we have digital account opening capabilities. The user can leverage our client portal, not just for existing clients, but to get the digital account process started and finished and everything in between.

John: Dirk, I think you should probably expand upon proposal generation because I know you’ve done a lot of hard work on that over the last 12 months.

Dirk: Yes. As part of the Fact Finder process, you can also include our risk tolerance questionnaire. You can also create a custom risk tolerance questionnaire. Ultimately, what we’re trying to achieve is figuring out the client’s time horizon and risk appetite so that the advisor can figure out the right recommendation to make back to that client as far as an investment proposal is concerned. Our investment proposal ties in a lot of different analytics, comparisons, and simulated rebalances just to give a comprehensive idea.

Dirk: Obviously, that’s data-dependent as far as how deep we can go with that analysis. But I think it’s just trying to provide a more comprehensive set of information about suggesting strategies or products themselves. That’s meant to then seamlessly carry through an approval step into our rebalancing engine. Or if you want to use our outsourced TAMP services, it can seamlessly flow as far as pushing the accounts or records over to them.

Craig: I like the comprehensive nature of that. I think the prospect portal is a differentiator. I’ve not heard of that before. Usually, the RIA’s website is their prospect portal. That’s where the prospects are coming in. But you have a different capability there. It’s like a link where a prospect would click “Click here,” and if they get their own screens, it walks them through some process?

John: Yes. Go ahead, Dirk.

Dirk: I was just going to say it’s a self-registration link to create their own portal account. What advisors can do in a differentiated fashion with a prospect versus a client is preconfigure what the landing experience is for that first login experience. What we see people using our prospect portal for is that they’ll provide a self-registration link, whether they want to embed it in their website or send it out selectively once they have a prospect that is ready to provide more information than just to get to know you. At that point, it can be a comprehensive data-gathering assignment through the Fact Finder. We’re collecting everything digitally and securely. That gets sent over to the advisor with notifications once the end investor gets through whatever the preconfigured Fact Finder process is.

Dirk: We have multiple sections that can be included in Fact Finder. It doesn’t have to be everything. They can curtail it to exactly the type of information that they want to get. Whether they want a risk tolerance questionnaire or not is totally up to the advisor. But then that information can seamlessly flow into the CRM and be seamlessly leveraged for things like digital account opening or any other type of paperwork that the firm needs to go through with any type of new prospect or client relationship. We found that to be a very popular tool, and it is only growing in popularity as we add more functionality to it as well.

Craig: You guys are a great team. You’ve handed off information, provided details, and worked together well to deliver this podcast to our listeners. And we’re now out of time. I think we’ve gotten through everything we wanted to get through. I thank you, guys, for being here. John, where can listeners find more information about Advyzon?

John: More information about Advyzon is on Advyzon.com. Our TAMP services are on Advyzon IM (Investment Management) at AdvyzonIM.com. And both have forms to fill out to connect with our sales team to have a deeper discussion.

Craig: Fantastic. Thanks again, guys, for being here. I appreciate it.

John: Thanks for having us, Craig.

Dirk: Thanks, Craig. 




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