Altruist wants to take on Schwab, Fidelity in RIA market after $112 funding round: Wealthtech Weekly

April 13, 2023 5:23 PM

In the aftermath of becoming a full custodian and acquiring brokerage and custodial platform Shareholders Service Group, Altruist is continuing its spring sprint with a lot of new capital and some bold-faced names as investors.

The Los Angeles firm that combines a self-clearing brokerage with a suite of wealthtech software this week announced a $112 million series D funding round led by Insight Partners, new investor Adams Street Partners and continued support from existing investors.

The company said former Vanguard CEO Bill McNabb, Carson Group CEO Ron Carson and Mariner Wealth Advisors CEO Marty Bicknell took part.

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The new funding adds to a previously undisclosed $110 million series C round in November 2021 that was led by Declaration Partners with Venrock, Insight Partners and Vanguard. Altruist's total funding now sits at $290 million, and the firm says it now trails only Schwab and Fidelity in the number of firms served with 3,300 RIAs on the platform.

The company plans to invest the funds to further develop and expand its service offerings to empower a broader segment of the RIA market, including mid-sized firms that manage between $100 million and $1 billion in total assets.

"While the RIA industry has evolved rapidly over the past 20 years, the custodians serving them have not," Altruist CEO Jason Wenk said in a statement. "Legacy custodians have little incentive to innovate and rebuild technology that would enable advisors to scale and reach as many people as possible."

According to Altruist, the RIA market is going strong with more than $128 trillion in assets under management and more than 3,000 new firms launched each year. But just 1 in 3 Americans works with a financial advisor due to access and affordability.

The firm says the majority of RIAs that work with legacy custodians are hampered with high operational costs, paper-based processes and disjointed software that makes it difficult for firms to service more households in a cost effective way.

Jon Rosenbaum, managing director at Insight Partners, said Altruist has invested time and resources into building what they call a "modern custodian" for RIAs. With an exclusive focus on RIAs, the company said it has rebuilt the advisor technology stack from the ground up, vertically integrating a clearinghouse, custody, and all-in-one software that offers account opening, trading, reporting, and billing.

"A vertically integrated platform that puts clearing and custody at the core is a game changer for advisors," Rosenbaum said. "It's a deeply technical problem at every level that the team has solved with an intuitive user experience that's unlike anything the RIA industry has ever seen."

Altruist nearly tripled assets under management in 2022 while growing revenue by over 1,700% year-over-year, according to the company. Altruist recorded record asset inflows in Q1 2023, and the company also expects to reach profitability this calendar year after less than five years of operating history.

"Great, human financial advice starts with the client relationship," said Altruist Chief Product Officer Harpreet Ahluwalia. "We believe our relentless focus on innovation and commitment to help RIAs save time and improve their offer through automation is the only way to improve financial outcomes at scale."

Scroll down to get caught up on other recent fintech news you might have missed in our Wealthtech Weekly recap. And check out the previous edition here.

BlackRock fixed income SMAs added to Orion Portfolio Solutions platform

BlackRock’s bonus pool increased by around 9% in 2017.

Michael Nagle/Bloomberg News

Orion Advisor Solutions has strengthened its extensive partnership with asset manager BlackRock by bringing the latter's fixed income separately managed accounts to the Orion Portfolio Solutions platform.

"We're excited to expand on our collaboration with BlackRock as we bring its professionally managed Fixed Income SMAs to the OPS platform," Ryan Beach, president of Orion Wealth Management, said in a statement. "BlackRock is the first fixed income SMA manager on the OPS platform with strategies that are accessible to all types of investors, not just high net worth individuals. This is one more way Orion is delivering on our promise of providing advisors with a broad investment line-up to build well-diversified portfolios that are customized to investors' unique needs."

BlackRock's fixed income SMAs are available through the Orion Portfolio Solutions platform within its Unified Managed Account portfolio structure. This includes:

Intermediate Municipal Fixed Income
Intermediate Taxable Fixed Income
Laddered Municipal Fixed Income 1-5 Year
Laddered Municipal Fixed Income 1-10 Year
Corporate Fixed Income Ladder 1-5 Year
Corporate Fixed Income Ladder 1-10 Year

A ChatGPT inspired investment assistant arrives with a major disclaimer

Hand-out/TigerGPT

With ChatGPT hitting the mainstream late last year and jumpstarting the conversational AI craze, people have been wondering how similar text-based tools may eventually play out in financial services.

This week, a fintech with a global focus launched a new AI-powered investor tool clearly aimed at taking advantage of the moment.

Testing for TigerGPT, a text-generating AI chatbot developed by UP Fintech Holding Limited, has begun testing in select markets. The feature will soon be rolled out on the fintech's platform Tiger Trade app, and is being promoted as "the industry's first AI investment assistant."

Officials say TigerGPT works by leveraging UP Fintech's content library and paid sources to offer timely and informative responses to investment questions. That includes listed companies' profiles and data, financial knowledge, investor education materials and market insights.

In the meantime, TigerGPT is undergoing daily-basis training and absorbing the latest market updates to ensure the interactions are concise and to-the-point, thanks to the company's self-owned meticulous classification and easy navigation of information — two key benchmarks that define UP Fintech's ever-improving R&D capabilities.

"Our commitment is to constantly facilitating global investing by placing innovations at the center of every step we take in creating the best possible user experience, boosting our users' overall investing literacy and bringing more sense to smart investing," Wu Tianhua, the founder and CEO of UP Fintech, said in a statement.

But before you get started, don't skip the fine print. The news of TigerGPT's debut also comes with the following disclaimer.

"Please note that the information provided by TigerGPT is for reference only, and should not be treated as financial advice. UP Fintech shall not be liable in any way in connection with the use of TigerGPT. TigerGPT does not provide any recommendation, all information provided is from the open data source."

Opto Investments forms advisory council of industry veterans

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Wealthtech startup Opto Investments has announced the formation of an advisory council featuring experts in portfolio management, financial technology, marketing, cybersecurity, management of high-growth companies and more.

Co-founded in 2020 by Addepar, Palantir, and OpenGov founder Joe Lonsdale, Opto is a tech-powered solution that allows independent investment advisors to access alternatives. The New York-based firm is led by CEO Mark Machin who was most recently CEO of the largest pension fund in Canada, CPP Investments.

Opto is also positioning itself to go head to head with incumbent alts providers iCapital and CAIS for advisor attention.

"Wealth advisors operate in an increasingly complex environment, and without bold ideas and differentiated access much of their work is easily commoditized," Lonsdale said in a statement. "This group of some of the most thoughtful industry leaders understand what sets apart the top wealth management businesses, and will support Opto's business and continued growth."

The council formation follows Opto emerging from stealth mode last fall with a $475 million valuation and wrapping a Series A funding round that brought in $145 million with participation from 8VC, Michael Dell's MSD Capital, Clocktower Ventures, FinVC, HOF Capital and others.

"We are delighted to establish our advisory council with this esteemed group of industry luminaries," Kamal Jafarnia, co-founder and general counsel at Opto Investments, said in a statement. "Their collective financial services experience and acumen is poised to further accelerate our firm's growth while augmenting our ability to help advisors and their clients access sought-after private market investments."

Here are the members of the firm's new formed council:

David Barnard, CEO of Luminary
Michael Batnick, managing partner at Ritholtz Wealth Management
Keri Findley, managing partner at Tacora Capital
Mark Goldberg, former CEO of Griffin Capital and former CEO of Carey Financial
David Kleinhandler, founder and CEO of Lifewize, co-founder of Dynasty Financial Partners
Steve Lockshin, founder and CEO of AdvicePeriod and Vanilla
Kelly O'Connor, founder and CEO of Lumiere Partners
Andrew Rubin, CEO and founder of Illumio
Todd Ruppert, Former CEO and president of T. Rowe Price Global Investment Services and CEO of Ruppert International
James Waldinger, founder and former CEO of Artivest

Bitwise expands crypto SMA suite

Bloomberg Creative Photos/Bloomberg

In a move they say was motivated by advisor demand, cryptocurrency index fund provider Bitwise Asset Management has announced the launch of three new separately managed account strategies available through the Eaglebrook platform.

The SMA structure, which only recently became possible for crypto, allows individuals to move existing held-away crypto assets from digital wallets to a custodial account that can be monitored and reported on by their advisor without triggering a taxable event.

Clients retain direct ownership of the assets, which provides greater opportunities for tax-loss harvesting compared to traditional fund vehicles, according to Bitwise.

Of the three Bitwise SMA offerings on Eaglebrook, two are tied to existing indexes: the Bitwise 10 Large Cap Crypto Index, which includes 10 of the most highly valued crypto assets, and the Bitwise Decentralized Finance Crypto Index, which tracks an index of the largest assets in decentralized finance.

The third offering, the Bitwise Crypto Category Leaders SMA, is a new rules-based strategy that aims to select the leading crypto asset in each of the most important sectors in crypto. The launch brings Bitwise's total number of SMA offerings to seven at a time when investors are embracing the vehicle.

"In the hundreds of conversations we have with professional investors across the country every week, one thing has become increasingly clear. SMAs present a major business opportunity for them," Bitwise Chief Distribution Officer Mick McLaughlin said in a statement. "Through this partnership with Eaglebrook, we're happy to provide a smart and integrated way for them to access the crypto opportunities many of their clients demand."

Eaglebrook's platform now serves dozens of RIAs collectively managing more than $200 billion since the company's founding in 2019. The firm says the total number of RIAs, advisor teams, family offices and institutions that rely on Bitwise for their clients' crypto exposure doubled in 2022 to more than 1,500 firms.