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Aaron Klein | Aug 04, 2022
Here is your Riskalyze Fintech Five for August, a focused take on what we think are the recent top five stories in wealth management technology.
Direct indexing isn’t a new idea—but a lot of large firms are placing big bets that it will make the leap from ultra high net worth to a mainstream strategy for any client.
The key blocker is at the custodian level—for direct indexing to work, it needs the ability to execute fractional shares in advisory accounts.
First Trust Capital Partners announced the latest acquisition in the space, buying Jim Dilworth’s Veriti Management to place a long-term bet that it can build a strong direct indexing offering that offsets any long-term shift in assets from ETFs.
First Trust is a beloved name among advisors, with AUM of over $200 billion. With the loyalty they command among advisors, this seems like a terrific match.
(Editor’s Note: Jim Dilworth, Veriti’s co-founder and managing partner, was named one of WealthManagement.com’s Ten to Watch in 2022.)
Bento Engine, a new startup offering a predictive analytics platform to financial advisors, has assembled an Avengers-level list of initial investors in its seed round of funding.
If you’ve been in the RIA space for any length of time, you’ll immediately recognize names like Marty Bicknell, Shannon Eusey, Doug Fritz, Kelly Waltrich—and the list goes on.
What attracts all this top-shelf talent to Bento Engine?
The root of it all is that advisors only have 24 hours in a day and it’s hard to find the time necessary to know what each client needs next, and when to reach out to them about those needs.
Bento Engine aims to predict what those next, best actions are—and help advisors with taking them. Can they pull it off? They certainly have the right brain trust to help them figure it out.
Sanctuary Wealth is the first hybrid RIA to offer its advisors full digital access to alternative investments. Alternative assets, like direct indexing, are having their moment in the sun right now as technology is also increasing the ability of advisors to expand access to mass affluent clients, rather than just the high-net-worth investors who would invest directly.
Sanctuary’s offering puts control of finding and selecting alternatives in the hands of each advisor so they can find the right fit for their clients.
It’s a move that illustrates the continued disruption of public markets. With all of the downsides of going public, far more companies are creating value while staying private, and the capture of that value is happening in private equity funds, hedge funds and other alternative asset classes that are increasingly available to any investor.
Government regulators don’t like getting cut out of the mix, so it’ll be fascinating to see how they respond to this trend.
How about some integration news?
Since joining as CEO of Docupace in 2020, David Knoch has been on a tear with the acquisition of PreciseFP late last year, getting named as one of the most innovative wealthtech companies and now its announcement of a strategic integration with Envestnet.
This upgraded integration with Envestnet’s APIs allows Docupace to customize the advisor, client and back-office experiences related to proposal and account opening workflows. In layman’s terms, this is a win for advisor efficiency and helps surface data-driven insights on behalf of clients.
Congratulations to the teams at Docupace and Envestnet, and I look forward to giving an update on the joint success both organizations will experience from this.
AssetMark has announced the acquisition of Adhesion from Vestmark. The move will fold in Adhesion’s unified managed accounts and model marketplace into AssetMark’s platform and add nearly $10 billion of assets and 2,800 advisors.
It’s the latest in a clear set of signals that Natalie Wolfsen, who took over as CEO last year, is looking to invest and grow even in the face of this market downturn. Congrats to our friends at AssetMark and Adhesion.
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