Come on and sit back and relax. We
listen to Episode 248
of the Wealth tech today podcast.
I'm your host, Greg It's Founder of Ezra
Group consulting. And this podcast features interviews news
and analysis on the trends of best practices,
all around wealth management technology.
And this is our news roundup for July,
we've got a jam packed show for you.
In this episode of, news. We're going deeper
rather than broader. So fewer stories, but a
lot more detail, a lot more to analysis
on those stories. So only 3 stories this
month. 1,
invest not going private,
2,
Orion breaking off their eclipse rebalance as a
standalone application.
3, Nitrogen goes back to basics with A99
dollar risk wise,
and then finally, of course, the adviser tech
map and integration scores.
But before we get started, A few quick
housekeeping items that we always do before the
interview,
please subscribe to the show... Ever you listen
to podcasts. So you don't miss an episode.
Check out
invest in others of Or g. That's the
invest in others charitable
foundation. They do a lot of good work
in our industry, raising money to donate to
charities that are, either run by or helped
by financial advisors.
Alright. First story of the day
is a big 1. En is going private.
En announced, they are being taken private,
being acquired by a consortium,
led by Bain Capital and reverence capital.
What promises be a seismic take private deal
according to investment news,
According to the press release,
the valuation of the company's is 4500000000.0,
they're offering 63 dollars and 15 cents a
share.
And reference Capital and May capital, and the
strategic partners who were also in on the
deal include a who's who in the asset
management business, Black rock.
Fidelity,
Franklin Temple,
and State Street. So that's quite the the
rundown. So... If I'm sure, I'm sure Everyone
with systems podcast knows who invest is. But
in case you don't,
with the largest players in the Wealth Techs
and tam space.
Over 6000000000000 in assets under advise and management,
20000000 accounts, hundred thousand advisors,
17 to the top
something the largest Us banks, 40 of the
50 largest wealth management and Brokerage company. So
a huge deal, big announcement, and joining me
to discuss the implications of this deal is
longtime
industry consultant and partner at Ic Strategies, Felix
Rivera, Felix. How doing, man. Hey. Not bad.
How's it going, Greg? Excellent. Thanks for getting
up early in the morning here to talk
about this deal. So, I just gave the
the rundown, which you knew, of course.
What are your thoughts, So let's start with
the financing and the and the and the
strategic partners?
I I think it's kinda interesting some of
the... Strategic partners that are involved in this
deal
because, several of them had in some way
or another, some interest in
either acquiring investment or buying segments of en.
So
it's interesting how this deal structured in that,
at least 3 of the 4 main
investor cited that a part of the deal
have some vested in interest in en, meaning
either
they were interested at some point and looking
at the platform and acquiring them or there
are segments of the en net business that
they would like to take on.
Black rock had had invested a hundred and
23000000 dollars a while back. And a much
higher valuation. So they... They've been... They've been
under underwater for a while.
Yeah. I think I think the Black white
1 is more of an investment a strategic
investment for Black black to protect its assets
that are on that platform because
Black rock obviously with that initial investment,
when that stock, the last November hit 36
dollars. I I thought Black rock would be
in there kinda trying to strip. Direct the
deal. If they were really interested in buying
the Whole platform.
When they didn't do that then,
considering they were under water and that initial
investment, like it it just kinda at least
from my perspective kind of
kinda signaled that they weren't the the with
the bidding. They weren't the ones so we're
looking to really...
Interested in buying En net or wiring en
net. But it... So so to me there,
the more a strategic investment on Black rocks
behalf,
Remember what year that was?
I believe that was
3 and a half years ago. I think
it was a... Maybe you know what? It
was... It was right around the pandemic. Maybe
was it was 20 18.
Wow. Has it club? I was on guess
the same thing with 20 20. But no.
So.
6 years, almost 6 years. You know what's
funny? It's it's ironically, because I think about
it and it's like I was looking at...
Some of the news pressing, some of the
clipping that came out on this deal. And
when it pointed out that Judd had passed
away in 19.
Mh.
This doesn't seem like 5 years since he
passed, but, I guess, he be flying by
something... It's it's it's it's horrible. I, he
was an incredible human being and but
Not Him to to realize like that was
just such a shock.
What's interesting. So there's there's article in, 1
of my favorite publications R biz. From 20
18 about the Black rock investment. And it
says the 6000000000000 dollar New york mega manager
buys 5 percent thing. Oh they're talking about
Black rocket at 6000000000000. Okay. Although they're saying
invest at 6000000000000. Like, it couldn't be 6000000000000
then there's 6000000000000 now.
Right. Black rocket at 6000000000000. So investment had
2000000000020
18. So they've tripled
their assets under advise in the last 6
years.
Mh. Yes. Pretty just pretty big growth. I
didn't realize that there was it was that
that much growth since then.
Yeah. No. They found substantial growth. The problem
is, you know, obviously,
publicly traded company pressures from shareholders
to... And, you know, like, even when it
went public, had been on a run, but
the company was growing at, like, 40, 50,
60 percent a year. Mh. Continuously for 4
to 5 to 6, to 7, 8 years
later,
Ko public
still has significant growth rate. But the street
really punished to start punishing the stock because
it wasn't seen 20 plus percent growth rate.
Even though they dominated the market sharing, and
really,
it was once Judd passed, kinda trying to
understand what the strategy was.
To where the growth was gonna come from,
that wasn't very clear to the street. And
as a result, the shareholders
started to get impatient and Wall Street in
general started getting patient. And unfortunately,
private was the only real option for En.
At least, if you're looking at a very
viable company that dominates the market in its
particular space
has an ecosystem that is pretty much second
on on the industry level.
And has a rich clientele tell There's pretty
much broad brush across the R and broker
dealer space in the independent space. Mh. So
it's kind of an interesting situation that we
you we kind find ourselves standing with this
company going now from a public company to
a private company, but I think, you know,
obviously, the prospects looks really
interesting for investment down the road, depending on,
you know, what the capital commitment is
and what the strategic vision is going forward.
Where you think of Fidelity being part of
this deal?
I think, you know, Fidelity is very interesting
in that Boston based firm,
like Bain Capital
like Ta and associates.
So, you know,
obviously, they've been about the... You know, they
get involved in a lot of deals with
these Pe firms.
What's interesting about the Fidelity side of it
is
Fidelity core wealth management platform
is F max and F max
at the end of the day is really
a white label version of investment name. Which
just announced recently of of an extension of
their
strategic partnership with investment for F max. Yeah.
Yeah. So, you know, that all bode well
for, obviously for Bain and those that invest
in are taking investment
private, but
I think it it kinda raises the question,
you know, down the road, what does it
mean for en at a year from now?
How does it look? How it different? And
I think that will be interesting to watch?
Because, obviously,
we know what Fidelity typically does.
When they go out and purchase someone if
they do.
And
most notably,
the the acquisition that they made that really
kinda shows you what their strategy is is
when they purchased emo money.
And, basically, emo money went from a brand
that was really building a lot of momentum
in the financial planning space and as a
terrific Ui for client facing.
An adviser facing
solution.
And once
Fidelity bought emo money, you basically hardly hear
emo money anymore. They've embedded money is the
core it's part of their pork platform.
And I guess the feeling is is if
if down the road, they were to actually
getting the business of taking on En nets
platform. It's somewhere down the road.
That would be an interesting
you know, to take on that piece of
biz. I I kinda struggle with them taking
over that the the the core legacy platform
only because
the clientele tell the on, and obviously, they're
being a clearing firm as well.
You know, it could it it would be
very disruptive at the industry level. So that's...
That one's gonna be interesting to watch.
And that's a little known fact that Fidelity
drives a lot of business to invest in
it through their white label
partnership, which they've they've had for 20 years
at least.
Yeah. Yeah. Fidelity was pretty much investments for
it to really pick wine.
And
en
was able to get
unprecedented
integration with fidelity at the start. And that
created for such seamless
equal,
experience
to their platform that
it was unrivaled in the industry for a
long time.
And now now when you look around that
type of integrations is going on,
with some of the other custodian.
And I think it's... At the end of
day, what
world is striving for. On the per side
where they're gonna have a super tight integration
obviously with purging. Mh. But the goal is
to also have that level of integration with
with fidelity
and trial before that remains to be... Actually
gotta come to fruition. Well what's a hold
on there. So you mentioned Whoa. So let's
So like, that is a good segue into
competitors.
So how does this deal
affect en nets market position, their competitors
like
move like,
invest cloud Ap like V mark on the
enterprise side, or on the Ra side, like
Orion,
black Diamond
advise on and others.
Well, I think
I think it it... You have to kind
of segment that audience and understand a different
core components that or different markets that they
operate against en or compete with en. So
when I think a like on Orion, I
don't think Orion ever
competed with en at the enterprise level. But
I think they've done a nice job in
the R side.
Obviously, they they've they got... Kinda they're 1
of the market leaders there.
But when I look at who who were
the 2 main competitors for the small R
space, I really see Ryan and I see
Tamara.
And I think Tamara has a
and really compelling platform.
I think to complete very well against Orion.
I think some of the enhancements that were
made with Tamara, some of the integration with
the legacy investment platform,
make it really interesting down the road.
If you were thinking about a piece that
you might wanna sell off
because you might have some redundant pieces.
Tamara might be that piece sell off from
the en deal. Hey, Don't jump. We're talking
about competitors. We have... I get the breakup
up
conversation next. Don't when we look get it.
I know you're anxious to get to the
breakup or keep it at breaking up, conversation.
Oh, looks like just let's not get through
it. Talk about market position. What what does
this impact
any use of other companies at all? So
they'd be afraid? They'd be happy
or no or does it?
I think you know what? I think Orion
get a lot of competition from Tamara, and
I think that that will remain, especially within
the integration they've done to bring in the
third party managers that are offered through Pm
into the Tamara platform. That was the, like,
the 1 missing piece tamara Had and now
they have and now they could compete up
with that. So I think that will remain
competition remain fierce. You're talking about the the
the investments we're integrating the ability for giving
the ability for Tamara clients to access their
match major marketplace,
build
Sma, and which is what in that manager
marketplace has also been sort of a hidden
gen
in the en net ecosystem and that a
lot of larger broker dealers
love that ability because,
it gives them
a way to bring on advisors some other
firms but without having to re re repay
their accounts or move an out of the
Sma that they might be in going especially
advisors. So they're huge month manager marketplace with
hunt, I think, 400 or 500 managers,
in many many thousands of strategies
is just as huge benefit for them on
the enterprise side. Yeah. I think that's a
massive and massive. Now As as it relates
to the best mark... Best mark has had
a hard time competing with En
because while Best mark Best mark application is
really more geared toward the asset management my
community,
the way it is today. It's not as
user friendly on the adviser side. And they
they don't really have
real... It's not a a comprehensive
platform port advisors she use.
So... And it doesn't offer the full array
of wealth offering and services that the best
that platform can. So I don't need to
see them competing there. I think that'll remain
status quo. I think they're continue, you know,
west continue to go after that Ap business
and that
asset management type business and Invest continue to
cater to the enterprise the larger Bd
and the largest R in the market as
well as banks.
Iso assume it relates to, you know, some
of the other competitors. I think a lot
of the other competitors have all been falling
in short, relative to invest that.
Because of the fact that the offering is
so broad, and it has so many services
they can offer...
I mean, when you go to invest in
that today, it's pretty much you're getting an
A la carte menu.
And you're basically creating your own wealth experience
and you're just picking which services you want.
And they're the only platform on the street
that you can really make that claim for.
Where they can offer for the broad array
of services. There's really no 1 out there.
That offers the breadth of services that investment
destiny. Yeah. And you and I partnered on
some deals
especially this... 1 that was announced, this is
not a secret. It was announced last year
that first command based in Fort worth, Texas,
40000000000 dollar broker dealer
is moving on to the investment platform and
we're we're helping that. We're spear heading that
that project. And and there really wasn't any
other vendor that they were looking at.
At the time. That that could handle that
as you mentioned, the scale and breadth and
depth of not only the platform, but the
outsourced
capabilities to run it as well
besides investment.
That's that's correct. I mean, at the end
of the day, everybody else is still falling
short. And,
unfortunately, that's kinda like where we refine ourselves
at the industry level and En has the
most complete solution in the marketplace.
Orion been trying for years. I know Tn
and Associates has made a big investment into
Orion.
They have made up some ground.
The problem they've had is getting
enterprises to take a chance on adopting them.
Until they get a couple of enterprises to
really adopt them and kinda
take on their new version of Orion. I
I don't think they're gaining any traction in
the marketplace other than they continue to get
the smaller R, which they've always had. So...
They've got some larger R and also their
R that they have are growing.
So firms like private advisor group, started with
invest. Started with a sorry, Orion,
when they were 4000000000, I think, 4 years
ago. And now they're at 8000000000, well, maybe
9000000000. So
now they've they're... They they do have experience
now with clients that getting close to the
10000000000, you know, plateau and above.
And I I know they work with a
number of other,
large
nationwide R. So their their experience in the
enterprise space is growing, but it's a it's
a different business,
a different
issue to
help firm growth from 4 to 10
as opposed to converting
a 10000000000 dollar client. 20000000000 dollar client,
from 1 vendor to another, that's a very
different experience. Which is why firms hire us.
Right? So,
because it is so complicated
and it's it's just it's not an easy
lift to do. Alright. But let's let's scale
if that's ways we talk with competitors. We
talked about the financing.
Now let's get to the meat
run it as it is, Keep en. Keep
it growing or break it up.
What are your thoughts on on what the...
These guys gonna do?
You know, it's... I think it... Obviously, you
can go 1 of the either 1 of
those paths, but
I'm inclined to think that there are pieces
of this that you're gonna have to you're
probably gonna wanna sell
and then the... I think the core platform,
the legacy platform. I think that'll remain intact.
Or you package it and sell it somewhere
down the road. But,
initially, I I think they, you know, obviously,
the way it's being positioned and it's gonna
be posture. It's gonna be that you know,
they're gonna come in. They're gonna help managing
and developing the strategy and they're gonna continue
to run it, and it's, you know, to
market. If it is dumb market leader or
continue to be the market leader and nothing
will change.
But those of us that have been kinda
watching,
typically when Pe firms get involved.
What typically happens,
the deal will close at the end of
the year.
Then after that, I think,
it's gonna be interesting. And again, this is
why we were kind of going having that
discussion about some of these strategic partners that
are involved in this deal. Mh. And invested
interest in
the outcome down the road.
So you... At the end of the day,
we don't know what deals have struck behind
the scenes.
And
obviously, we'll find out in the near future.
But it kinda makes sense to me
that at some point, if you really look
at it,
en is been really focused the last couple
of years and doing a lot of integration
work, with all these acquisitions they had made.
Prior to 20 19.
And
some of that work has paid off, and
I obviously this
still work that needs to be done
that and... They're still working through.
So
that's that's that's part of the story.
But when you really look at it and
you look at it, kinda like, where there
are a lot of redundancy, you know, where
there where there is redundancy. Yeah. The legacy
platform supported all the audience is meaning the
enterprise the B,
the light and the small.
What...
When you think about Tamara rack and the
reasons why you acquired Tamara, it was really
because you were looking for a better solution.
For the 8 Apm side of the business.
So the advisor,
management side of the business where the advisor
discretion is managing the assets. Mh.
Because they had a much more cleaner solution,
more efficient a lot more streamlined
than what the core legacy platform offered.
The reality is is that, with, some of
the trading enhancements that investments doing escalated slated
to do,
down the road,
If you if you're looking at 1 aspect
of
1 of the components of the Investment that
platform that you could potentially sell off
and get a nice premium for it. It
would be, I would I would venture a
guess would be Tamara.
Because I think Tamara is a pretty complete
solution. It caters to a very
to the small R marketplace. I think there
are a lot of players out there that
they're looking for a good solution for the
R marketplace.
Some of which are some of the strategic
investors in this deal.
So, like, if I think about a Charles
River, and it's owned by State Street,
kinda how weird that States treats investing and
they own a competitor, not a direct competitor.
Like the Charles river has been... Does have
a wealth management business. If they were looking
to address a smaller a marketplace,
the the tamara is a very elegant solution,
that would play really well and they can
develop that over time.
And I I think, you know,
relatively speaking, that could be a nice.
That could be a nice little adjunct for
Charles river side of the equation. It feel
a hole for them that they haven't been
able to grow. So that's a nice next
edition.
If you look at a F,
and the states reached restarted where we're still
there. You got a custodial platform that's greek
done well on the international side it's been
coming states side. Going through the registration process.
They have an interest.
They've always have... They forged that strategic alliance
with En that.
We don't know where that stands at the
moment, but we know it's, you know, the...
We know that work been done, integrate the
2 platforms,
assuming they come out of registration sometime within
the next 12 months.
It'll be interesting to see how this plays
out relative to that,
oh, or or what may happen. But the
1 that I think is the most
interesting is definitely the
the fidelity investment in this, and, you know,
starting F max
and their investment into their wealth offering
as well as what it could potentially mean
down the road, even though
I think the likelihood of fidelity actually, you,
somewhere down the road acquiring
invested that is is small because
I'm not sure they wanna get into that
business, you know, Mh. Scale that en has
it.
Alright. So wrapping things up here, we're just
about a time? The...
What do you think about the offering price?
There... Or was right now to closed, yesterday
at 61 56.
There's almost no premium. Why is there's... I
I would have expected the 15 percent to
20 percent premium at least. Is this gonna
be a problem will there be investors who
are gonna push back on this?
I think there's a possibility
of that because it's kinda like when you
look at the... What's happened to the stock
price of investment and where the pressures come
from from the board and.
And
the, you know, some of the shareholders,
it it kind of... You you kinda have
to wonder why there wasn't a much bigger
premium
into this deal. I mean, at the end
of the day, you know, they do have,
as you stated earlier, they're dominant market leader
in the space.
Granted they're not getting you the multiple
that you would typically associate with the Fintech
company.
So
you know, you're not gonna pay up. If
company not growing at 20 plus percent a
year,
but they have a solid revenue based. Their
behemoth
and they built a strong foundation. They're solid.
I mean, at the end of the day,
they're look, you know, they're a solid company
that you would thought
would command a slight, some premium over where
the more where it has been training for
the last 2 months. Do you think that
there's any, talking turn interrupt to you Do
you think there's any
synergies there or any, maybe reason reverence Scott
in the deal since they also own Oz
mosaic?
Well, they actually... They they own a 10
percent a a 10 percent stake in Mosaic.
No the the Ola, they have a 10
percent stake in case.
So the Own Mosaic formerly known as advisor
1 the largest broker deals in the country,
which is also 1 of invest largest clients
and longest clients over 15 years on the
platform.
So is that... Also some reason why they
wanted to get in?
Yeah. I I would think there it's protecting
their interest. Right? Because
it's a lot of these... Like, if you
look at all these players, there's just so
many of them on this deal with so
unusual, I think.
And I a lot of them are just
literally protecting their interest because they know how
disruptive. And it would be
depending on where depending on swings
with it with legacy investment down the road,
I think 1 more idea, you.
We've we talked about keeping it as it
is and into the growing the business.
Obviously, if if
They're not their... Bane in in reverence didn't
buy this to hold it forever as a
nice little shiny object. They bought it because
they think they can clean it up and
improve it and then sell it in 5
to 7 years or so. In order to
do that, they would really need to grow
their their their revenue of the business, and
invested as already a market leader in so
many parts of our business.
How can they do that? What... So we
talk about breaking it up talked about what
I'm running as it is, what about them
do some sort of crazy merger
like going it and buying something else and
emerging invest? Here's a crazy idea. They're gonna
go out and buy f ed and merge
it with investment. They're gonna go by, you
know, ts been looking to to take a
Orion public or sell Orion. They take Orion.
They merge that even... They don't sell time
They buy Orion. Are they need crazy ideas
like that eats you see down the road.
You know, the only crazy idea that I
could see down the road is
is
You know, for... The 1 thing investment doesn't
has never really participated in is the asset
management side of the business. Which is if
you think about
how investment was gonna grow that business if
they were gonna keep up with the Jones
is and continue to grow their business at
20 percent a year. It would have been
to make a significant strategic investment into the
asset management side of the business and grow
that out and get their fair share of
that market share.
So having said that,
I guess if somebody's out there aggregate collecting
platforms
or from an investment perspective,
I think a powerhouse.
And again, this is just off the top
of the head. It's not really well thought
out, but
I think a powerhouse and investment would be
you're buying investment in what term, you know,
at a very modest price.
Why not go out and and and buy
best marketing
put the 2 together. And they'll dominate 2
sides of the the both sides of the
fence and you can get that all reasonable
bias here,
invest that has... I'm assuming, West has a
lot of tentacles
all the Pe money that's already in so
to unwind that would Yes.
And marks been on the on the block
for many years. That's a room been trying
to sell best for a long time. Although
there's a lot of overlap. On the on
the wealth side,
and there'd be some... There be some any
antitrust issues, but maybe they sell off that,
but just keep the. The the asset management
tech
side is something you find as as a
as a as a gap.
Yeah. I I think I think they're... I
think Benchmark is interesting in that there asset
a management side can really,
I think can really compete and really...
Really make a dent into the Ap business.
Mh. And really go after that old F
business
Cloud don't now invest cloud Ap. So Ap
has a significant footprint on the asset management
side for portfolio accounting.
I also have the network. That that was
how Ap got.
Really the their dominant position in that their
their galaxy network, connecting managers
and sponsors on the managed account side, West
mark has something similar.
Right. Exactly. But again, that's kinda high in
the sky. I don't see it
to be candid with you. I... I kinda
see keeping core legacy investment together. Mh. And
potentially, the 1 I really feel like if
you're gonna sell...
Some of the component It's it's, you know,
it's public knowledge They've been trying to get
a sell y for years now. So I
think,
eventually that happens.
Let's see what kind deal these guys can
get. But the 1 that I think, if
you wanted to recover some of that capital,
in the near term,
I think Tamara is in a really good
position where you could sell get a nice
premium for it. It's a nice package product.
Yep. It has a nice audience, and it
caters to a market
that's really only being it's being served by
a lot of small point solution. Interrupt you
1 more time. So boy before I finish
up, what about this Id idea This crazy
idea, but we're talking about pie in the
sky, crazy idea ideas.
Make investment at a global
wealth management powerhouse.
Like buying F ed. Because F has very
little footprint in the Us. Alright? So that's
1 crazy option They're they're a crazy large
company. T
No there... Another company that they they could
buy that has a large footprint overseas and
not much in the, not much the Us.
Ava lock.
When do you think of that that turns
investing into a global player and gives them
access to that other market?
I think that's,
you know, I think investment has 2 paths
to go to grow.
1 is go after that asset management business,
2 is to go global.
I think before he passed, that was something
that Judd had been exploring.
I know it's fallen.
You know, I haven't heard of mention any
of it, now.
Passing, but that was the next logical step
for investment to go. And I think
with their ecosystem... I mean, we're not saying
it's simple, we're saying because, you know, there
are a lot of challenges that get introduced
when you go into these different markets how
they operate.
And
it's significant amount of chain between the languages,
the cultures, the... And you need multi currency.
So there's a lot there, but
that that was gonna be the next big,
obstacle they. And we've been working with a
a lot of Latin American banks, and none
of them are looking at En. For that
reason that they're not multi currency. They're not
multi language on their platform. So that's. So
that's an area that investment that can't really
get into now, but could if they had
an acquisition of
another firm that did have that capability.
Well, they... You know, it's funny. They started
dabbling,
but it's you a, on a very limited
basis. So what they have is to have
an offering that they they offer investment in
Canada now in Canadian dollars,
but that's just more single currency there as
well. So you have Us and you have
Canadian.
And that's it. But, I mean, I think
it shows that they're they're kinda looking at
what it's gonna take to really bring on
full multi currency, but I think
I think going global
is the right answer for investment because of
its sheer size. It's the logical... It's the
1 logical way you can grow this business
So
I... But it it does introduce a lot
of challenges, but I think that's where the
opportunity set lives. You're heard hear first folks.
Feels rivera. Thanks so much. We talk every
day, and anyway I thought we record it.
Right? Okay. We we've we talk about... We've
been talking about this every day. So let's
just get it on on on on on
the on the podcast and and make make
some product productivity out of our conversations. Alright.
Thanks, Felix. Thank you. Thank you, Craig. You.
Alright. Let me introduce our special guest for
this episode of the news. It's Kristen Schmidt
again from R I Oasis. Hey, Chris. How's
going. I am good how you.
Fantastic here. We're enjoying the summer here in
New. I know you you enjoy the summer
there in Wisconsin.
As short as it is, we go enjoy
it. Absolutely. In the 2 weeks of summer,
then he'll be... If might it'll be snowing
again in the least another the 2 weeks.
Right. So our our new story we've got
now, Orion unveil new stand trading to empower
advisors with greater flexibility.
So it looks like Orion is
breaking out their eclipse platform into a stand
offering.
As according to the press release to equip
advisors with the resources and support. They need
to succeed at every stage of their firm's
growth journey. So Yeah.
And I worked with a lot of Orion
clients and you work with we both work
with Orion directly on and off. So what's
your thoughts about this? Why they do it?
What's the driving factor behind this? Sure.
Interesting
release,
let's set the stage of what's happened in
the industry because sometimes I feel like in
tech we fast forward to new trends and
then we rewind and we're right back to
the old trends.
So the facts of the case are
Craig, I don't know if you degrees. Maybe
7 years ago,
all of the independent trading tools that we
used to have, like, T x, red, black,
all of the other tools that were out
there at the time,
they were all standalone alone themselves.
And the portfolio management systems did not have
their own proprietary tools. So it was for
an r job to kind of piece mail
it together.
Then,
Orion Tamara and Black Diamond, although Tamara always
had their own, and that's how they enter
the industry,
developed their own tool. And rolled it into
a package a bundled offering where it was
included. And now for the past, I would
say 5 years or so that has been
the standard.
So
fast forward to today, we're rewind.
Now we're un that and they're the first
ones to do so. If we're talking about
trend, Orion does things first most of the
time. So we'll see if the rest of
the vendors start to offer that. Deborah, has
offered their trading and rebalancing tool separately.
They don't necessarily advertise it
in a majority way. But you can still
get that from them, but the question is,
will Black Diamond also do this. Why are
they doing it? And where's is the competition?
So,
There's a couple reasons, And I actually true
transparency talked with them this morning, based on
their release just so that I could get
the facts straight as we discussed
the functionality of what they're releasing, and actually
how it works, so I can get into
that as well.
They are doing this so that they can
be competitive in the market
in a
non
all in 1 fashion.
Because now as you know, Craig, you and
and everyone else is considering Orion to be
and all in 1 platform
as they have Crm, portfolio management trading rebalancing,
client portal, all of those fun things.
So they're trying to be versatile in offering
an all in 1 platform
or in offering
bundling packages.
So on the Orion platform, what is standalone
now
is what was announced today, trading and rebalancing
the eclipse tool
Red tail and their risk
I
Ips
proposal statement software.
Which we know was hidden lovers is now
called Orion risk.
So they're starting to un bundle.
And the first thing that came to my
mind as a consultant was why.
1, they're trying to all lure
R
that might be mid contract with their competitors.
To bring them over.
And we see that happen a lot.
Contracts with these vendors are long term because
these are not systems you transition to often
quickly,
or without cost. So when you make an
investment in these systems, you're making what I
call a forever home investment.
But When you're signing 3 or 5 year
contracts, which is pretty common.
Oftentimes if a firm is not happy, 1
of those spaces is the trading and rebalancing
tool. Either it cannot handle the specific needs
of the firm,
specific features and functions or Sometimes these tools
are just too archaic or too hard to
use. And so we need something different.
So instead of moving your entire all in
1 platform, they're off the opportunity to test,
drive them in a training rebalancing setting. So
I think that's the number 1 reason they're
doing it.
The other reason is is that and this
is my opinion.
These platforms are very overwhelming, no matter how
big or small you are. As an R.
And so
trading and rebalancing becomes the last thing that's
adopted on these platforms
Firms can still survive by using Excel and
using the custodian to trade and pseudo
rebalance in quotes. Right? By
rebalancing 1 to account at a time. Yes.
Or yes. Or manually manipulating data to see
what actions you need to take using a
block account and such. So it's not that
it's efficient or easy, but it's doable
to if a firm has not established,
the best practice of their model management
of their rules based
automation which is rebalancing. I talk about that
a lot with my clients and say,
this type of tool does not magically
work.
It's not a plug and play. You actually
have to feed it all of the rules
or in better words if then scenarios. If
this happens with this holding,
this ticker,
this
higher low medium of cash balance, whatever that
if is,
then I need the system to do something.
Place trades
create trades for me to approve,
notify my team, whatever that then
outcome is.
So firms need to build it. So these
systems become very, very hard to manage, but
also to define. And that's where I think
Orion is trying to say, even if you
don't use this as a platform, maybe this
is a stepping stone for you to do
so.
So the question is,
what do you think the driver... With were
they losing business to stand balance? Were they
losing business were they couldn't come in with
a single solution I mean, they're they're pretty
big company now. They've they've got Pe backing.
I'm sure they've got a lot of data.
Do you think that's what drove of this?
Yeah. So
I think because of what has happened
in the industry where stand
are now actually very minimal.
If we look at that tech stack and
we really look at the vendors,
we have blaze
and red black, which has a very small
percentage of the market and hasn't necessarily
stepped it up to be standalone alone leads
in the industry.
We have Eye rebound. Obviously, you know, created
purchase excuse me and optimized by Td Am
and now,
a schwab product, which is kind of in
question
as to whether
that product
is going to still be free
and still be
sole custodian to schwab. Right? That's the pluses
and the minuses. It's a great tool but
it stands with its custodian that owns it.
So the question is, will it become multi
custodial in a sense of becoming competitive.
And then you have kind of that that
stand of flyer, which traditionally is used for
a lot more complex, larger firms. Who are
also looking to in house a lot of
the feature function capability
instead of.
And that's usually for a lot of the
larger
Ra that we see in the industry, while
you're also tagging on other tools.
So
with that said, the standalone market is pretty
small.
And not very competitive. The competitive market that's
out there still is Orion eclipse, Black Diamond
owns their own just doesn't have a name.
Tamara has their own, and they're traditionally used
within the full platform
package offering.
Orion the first 1 to disconnect it and
un bundle it.
You do have Mornings star, which bought T
x many, many years ago, a great tool,
but owned by them. So a little behold
to that platform in a sense.
And then you kind of have that standalone
alone story. We got... We heard about while
back of adviser peak, which was bought out
by, At par, but it's pretty much put
on hold from what we've heard.
On their platform as as far as a
full rollout. So not a lot of stand
left, but it's an interesting piece to have
Orion become standalone and we'll have to see
what everybody else decides to do in the
industry. Now, what about up coming firm that's
been having a gathering a lot of market
share. Advise. They built their own rebalance.
They did. They did build their own rebalance.
Advise on is
traditionally hitting this the smaller market currently just
as they grow. They certainly do have a
lot of larger R, But in a sense
of market share,
is just kind of branching out.
This does come down to feature function within
these tools. So you'll hear a lot of
firms say, it doesn't fit for me because
I have alternatives. It doesn't fit for me
because I have Reits. It doesn't fit because
of... I mean, we could go on to
penny stocks and all the things we like
to do. Also depending upon how you trade
in a sense of household level, account level
holding level,
like registration level. So the recipes of how
you trade and your intentions of using are
very important for a firm to identify
before they start making decisions on what system
is best for them.
But to your point,
this allows a firm to cross poll
their decision. They can be
a black diamond user
potentially
and
utilize the Orion trading tools standalone if interested.
Now real quick on the side of how
this works
I'm a logistics and implementation person. So how
does this work?
Technically,
you can be on another platform and use
the Orion trading and rebalancing tool called eclipse.
By tapping into your custodian.
So it's not as if any integration needs
to be made by the competitors. They tap
in directly to schwab Fidelity per,
And, ultimately, all they need are your holdings,
right? In order to make these executions, S
t straight through processing and other features available.
They will be onboarding you just like any
vendor would be. But, you know, they estimate
it's a 6 to 8 week onboarding that
depends on how much you have your room
in order, your rules in order and everything
find.
So they onboard you in what they call
household trading.
That means you need to set up your
accounts within households
or within buckets in order to identify then
the modeling and the rules based
functions that need to be built. Mh. But
it does create a little bit of freedom,
keep in mind though. What are the negatives?
1
you're at the mercy of having multiple custodian
and needing to manage
or excuse me, multiple vendors and needing to
manage those relationships.
Also,
currently with... Let's use Black Diamond as an
example, you are paying for their trading tool
because it's ban bundled. Whether you use it
or not.
So you have to look at your costs
and see if the extra cost of a
standalone tool is worth it for your firm.
Alright. So I... I've been by our our
producer,
Alana that we need to keep our sessions...
Our segments look shorter because you might never
stop talking. I know. Last month we do
like. Great habit. Isn't it? Oh, it is.
Well,
the problem. Alright. So wrapping this segment up,
do you see
this being a trend will en that well,
make time. Time are available, make the rebalance
or available stand
Will, mornings star make T x standalone alone,
will Black diamond and do... Well, other vendors
follow suit with what Orion is doing or
it's just but what they're doing.
I think it's a wait and see. I
wish I have my magic ball.
As make guess. Guess. Yeah. What do I
guess? Shake it up.
As we've seen in the trend, we have
seen everybody else follow slowly, but surely. I
don't think it'll be immediate. For example, Orion
was the first to release a clip. As
their own proprietary trading tool and within 18
months black diamond released. There's... Tamara Already had
theirs, but they bundled it accordingly. So we
have seen the trickle effect.
I don't know if this will be a
trend or if this is just a way
for Orion to differentiate themselves as a platform
versus stand
opportunities.
Already hear first folks. Okay. Awesome. Thank you,
Kristen.
Absolutely. Thank you.
Okay. The next story.
Nitrogen
simultaneously
launches integrated software products for financial planning,
investment research and risk alignment.
So Nitrogen formally.
Today announced what today. Sorry. Last week, announced
the availability of an integrated client engagement platform
featuring 3 products from the Wealth Tech innovator.
Nitrogen risk Center,
Nitrogen planning Center, and Nitrogen
research center.
This is from the press release of products
are available to sole advisors,
A la carte as an annual subscription, or
as a team solution with accounts based pricing
for growing R.
Nitrogen also announced the availability of the risk
plan, the industry standard risk tolerance in proposal
generation tool for financial advisors at 99
dollars a month.
So this is the first of big announcement
slash product launch since C founder and Ceo
Aaron Klein left the company
last year, and was replaced by current Ceo
Dan Z.
So while very interested in breaking down this
this announcement
So the last year, of course, was a
big year for nitrogen as they rebranded for
eyes, last May at there, then announced that
big launch, and then Aaron Klein stepping down
as Ceo,
who the, as well as after Sip as
a Ceo.
He
we announced him as an executive in residence
here as a group. Yeah. Yes.
And so so we're still working with Aaron
there. And
So last was a big year, and this
year's turning out to all be a big
year, because there's a lot to this announcement.
The the firm has been really slowly morph
over time away from their core risk tolerance
software
into really an all purpose application that does
a whole lot more. They've constantly been releasing
new applications, new tools that are all around
the different aspects of the beginning of the
client relationship and and the onboarding process.
They've always been doing things like
sending out messages there have that their email
function where they can do a... A quick
client survey and gain
some information about the sentiment of clients,
meeting tools. They've built some some light financial
planning tools,
so solely solely adding more features and functionality
to their platform. And then last year when
they rebranded as nitrogen wealth.
And, by the way,
I predicted this name change back in February
20 17.
That's way back when it's 7 years when
risk lies,
launched their autopilot platform and, a model marketplace.
I predict they're gonna have to change the
name because they can't be risk,
anymore than ever doing so much more. And
now I was a little 7 years of
6 years early, but I did predict that.
Now, I've also noticed a slight pivot in
that they've in this... In the announcement last
week, they claim they are a... They pushed
themselves as a client engagement platform whereas last
year when they announced the re brand, they
were a growth platform. So not unusual to
do that,
I was a little confused about what a
growth growth platform was, but I do know
what a client engagement platform does. And you
can see the the growth in in the
expansion
of their messaging and their platform
as they've as it as they've expanded, whereas
now when you look at
their their website, their their platform was described
as a client engagement platform, and the use
cases right on the homepage
Number 1 use cases generate leads, not risk,
but generate leads. Number 2 is quantified risk
tolerance. Number 3, ref
ref framing client expedition. So
Nitrogen is 1 of the best
marketers
of software in the Wealth tech space. So
if they're putting generate leads as the first
use case, that must mean they really believe
that the power of the platform, 1 of
the 1 of the most important parts of
the platform is generating leads.
See, the platform has
morph over the years as I mentioned. And
now their product set
is listed says 6 different products. 1 is
risk wise, 2 Risk center. 3 is a
research center, horse planning center,
5 is command center and 6 marketing center.
That's listed on the website as the 6
product. So interesting
allocation and
consolidation and and bundling of these products.
And full disclosure,
Nitrogen Wealth has hired,
ezra Group, our a company, a number of
times for product strategy,
competitive analysis, pricing analysis, things like that.
So we can see a little bit of
our handy work in this announcements and the
recommendations we made.
So really proud that we got to
to provide some input there. So risk tool
which we all know and love as the
the the risk tones platform has now... They've
pushed the the proposal generation and bonded it
into the risk tool, as they mentioned for
99 dollars a month, which is a great
great number to have It's it's that kind
of pricing
really jumps out of people
as a fixed price for Ra to get
the risk class platform as well as the
proposal generation tool. So they're bundling those together
under the risk name.
And then the risk center, which is something
we saw
as moving them in as another feature they
added for the enterprise platform, enterprise clients. Which
they have really done a great job
expanding from,
small R into enterprises.
Risk 10 looks across the platform across your
your company,
and highlights
clients that are... Where their portfolios are moving
away from their risk score. So if when
they did a risk tolerance, their score came
in as you know, 52,
if now their portfolio was a 65.
That's a problem. But it's hard to see
that from the old way risk looking at
1 clan in a time, the risk center
can look across all of your clients, all
the risk scores in highlight areas where there
are economies or or dispersion from from what
you're looking for.
So the next product, the research center was
launched a call discovery in November 21, which
I see that as there... That... Which is
their investment
research and data analytics tool
that encompasses their
proprietary risk Gpa,
which
evaluates expected performance and expected downside risk in
any given investment. So that's their proprietary
data
scoring that they can then roll that into
their discovery product, which is not called research
center, which is why I full featured investment
data analytics platform
I... Which I think they, I would if
I would venture guests that they're looking to
target Mornings star advisor workstation
overall. If you can... If you look at
some of the the tools, that they've bundled
together,
especially proposal generation, which is a big use
case for Mornings star adviser workstation and of
course,
investment
analytics and data. So those 2 together,
place that tool directly in the target of
what what risk wise is selling,
The fourth product is planning center, which is
their light financial planning, then command center, I
find to be a very interesting product.
In that, it is AAA firm wide dashboard
that
companies can use beyond just risk and beyond
just investing.
But can look across,
many aspects. And we've we've v actually built
some of these kind dashboards as 1 offs
more firms. Now you can get it from
risk rises an off the shelf plot product,
looking at risk alignment across the firm, total
number of accounts, total Au,
and things like that. So you can kinda
see it in a dashboard that the business
can use
to to manage and monitor what's going on
across the firm,
slicing and d it many different ways. And
this is just the first release. I I
would imagine there there'll be a lot more
features functionality coming, in this command center,
which which really pushes risk away from just
the, you know, these these are standalone tools
into more of managing the business, having,
aria, broker dealers,
rely and risk,
as a business intelligence tool,
and a business management tool more than just
even client engagement. So there's a lot of
room for them to run with the command
center.
And finally, marketing center. I also take a
little bit of
credit for this III was talking to Aaron
his c cofounder. At least 5 years ago.
And
basically, you know, loans smoke that you guys
are great at marketing,
and we see a lot of applications out
there lot... A software vendors who are very
bad. If great products.
But if you don't not to market it,
no one's gonna really understand what you do
and understand why you are better, about So
it's not a build and and and they
will come. If you have to build it
and know how to market it. So I
always saw risk now nitrogen. As being premier
marketing
experts.
So I suggested why don't they
blend some of their marketing expertise to their
clients. And they laughed about it, but then
they thought about it, and they launched marketing
center.
And that this is a a tool again
It's a light marketing tool
enables firms to brand and white label marketing
assets, a lot of content, like, emails and
newsletters and and 1 pager and and things.
So Again this is also expanding, and a
lot of other vendors are are launching
these kind of a marketing platforms
that don't directly compete. With the standalone alone
digital marketing tools, but sort of lightweight for
for
firms that maybe can't afford to bring in
a full digital marketing platform.
So I don't expect
a nitrogen to rest on their laurel. They've
they've done a lot.
We really like their their announcement with these
different rebranding of their their tools into these
different centers,
the pricing,
the availability of risk now a la carte.
I know a lot of
firms were asking for that and that they
didn't want the full platform, that that it
isn't a great platform, but not everyone wants
that, all in 1 solution.
We see this a lot when we get
asked about pricing
analysis and go to market strategies. Sometimes that
it's better to go with an all in
1 price depending on who you're client target
audiences and what your capabilities are. And sometimes
it's better to have a la carte pricing
and give your clients the ability to pick
and choose,
what features and functionalities they want if they
only want specific ones. It also gives you
the ability to plug into
a clients and get your foot in the
door,
where you may not have been able to
in the past. If you only have an
all in 1, that's it. If a client
only has a gap here or there, you
can help them. If you do offer some
a la carte features, you can plug in
and they're very well integrated, which which nitrogen
has always been very strong
in their integrations, which you can see at
the
as a group wealth tech integration score.
So we expect them to continue to grow
and continue to grow wallet share because I'm
I'm sure a lot of their risk clients,
which I know was over 25000
advisors using the risk class platform.
Don't have necessarily these client engagement platforms of
the tools, the research center, the planning center,
the command center. So lot of roof for
them to run in cross selling and growing
wallet share from their existing client base.
Alright. Now with my favorite part of the
news, when Talk about the Adviser tech map
and the Az Buff tech integration scores.
Now, this month, for this news update, I
actually don't have any news for the adviser
tech map because I read it last month.
Michael and I
meet once a month to review
new applications that wanna get into the map.
Also talk about changes to categories
and other,
aspects of making them map more of a
useful tool for, wealth Management firms,
but we don't always line up with what
I'm doing by news and when we have
our meetings.
So we had our meeting later last month,
and it lined up with my June news,
so I reported it then. So our Michael
on my... Our July meeting hasn't happened yet,
and I'm record the news now. So we
don't have any updates
for the August map. I'll have them for
the August news report.
But we do have integration score
updates, we have done a full review,
and now an overview of all of the
applications over 524
products in our database. We had made some
changes to the methodology over time. We've we
launched this
research 2 over 2 years ago back in
20 22.
And since then, we have done some tweaking
to the methodology, but we didn't do it
across the board to all applications because it
was a lot of work We only did
it as new applications came in.
But since then, we
realized things were diver a bit, so we
did a full review, had the team go
through all 500 plus applications. And make sure
they were updated with the latest methodology. So
I'm gonna go through a quick couple of
changes that we made, so you can understand.
Number 1, breath criteria
So since when we launched the research less
than 400
applications on the adviser tech map. And since
then, we've added over a hundred and 20
of applications, hundred and 30 applications and
expanded 12 more categories or 20 more categories.
So we've got I think 50 categories now.
On 524
applications. So that changes the breath criteria,
and this might be a little bit confusing
because breath is a relative score.
Because each category has unique breadth needs, some
categories require more integration, some require less. We
don't want to...
Compare them to each other. So we only
compare applications in the breath... Criteria
inside each category.
What this means is
when
we... Sometimes, Michael and I merge categories or
move applications into different categories,
that can change your integration score even though
the number of integrations you have may not
have changed.
Your breath criteria because it's relative to the
other applications in your category
may change. Now, breath is only 25 percent
of the score, which is 2.5 out of
10. So it should be a minor change
if an application is moved to a different
category, but it will change the score.
We adjusted the
breakdown in the criteria when we first launched
the scoring, it was 60 percent depth
25 percent breath and 15 percent usability.
And we realized that wasn't quite the right
breakdown,
because use usability
really encompasses how well,
a vendor is has built out their Apis.
And all the supporting
information around Apis.
And we felt that Apis is becoming much
more, a part of more firms,
capabilities and more firms are relying on Apis
that are building out dashboards and workflows and
other tools. So we felt Apis needed a
bit more weight. So we took 10 percent
away from depth and put it onto to
usability. It's now the breakdown is 50 percent
25 25.
And we expanded the usability questions. So we
forget, when we first started, We only had
a couple of questions around usability, and we
thought that wasn't really capturing
all of the
robust
support that is required for Api to be
useful. And as consultants in the industry for
almost 20 years, We have seen a lot
of vendors who shall remain nameless who claim
they have Apis, but when we go to
try to use them, we find out either
a, They haven't been tested, b there's no
documentation for them, or there's no sample code.
There's no developer sandbox where we can test
things, which makes it very difficult.
For us to get usage out of those
Apis.
So we added more questions
in
our questionnaire
about how the the vendor is supporting their
Apis what documentation they have, what the platform
is. So those questions
will drive the usability score, which is as
I mentioned earlier, 2.5
out of 10.
If you, are a vendor, and you have
not filled out a vendor scoring survey integration
scoring server recently, please reach out to us
at the integrations at Ezra group, l c
dot com, and we will get back to
you with a link to the survey, and
you can update that, and that will almost
always increase your score because there's probably some
integrations or some capabilities, we don't know about
if they're not on your website. So giving
us that information will usually increase your score.
There is a part of the
methodology,
around key applications.
Reason we created the key applications list is
we wanted to encourage
vendors to build integrations to the most popular
applications, which just makes sense. Do these applications
are the most popular, then building integrations to
them, we'll give you the most
breadth we'll give you the most, access to
other other firms. And make it easier for
you to,
for for clients like our clients, ra and
broker dealers to build out better,
internal applications or or dashboards or portals and
things. So the more integrations are integrated... Systems
are integrated with each other
in a big mesh the better.
So we built a a list of what
we call key applications, which... How many it
is? I think it's 20 second. Let me
just do my
Me just add this number up here, Changes
to
numeric rather than bullets. And there are 24
key applications, and you can see the list
on our website as group
dot com.
And so
applications of the 524
that integrate with these 24 applications
will get a higher score.
The reason we have the key
applications
is because we felt that
having them
would make it more transparent as to why
we're trying to drive
connections to them, and we
increase the scores
slightly. There's a little bit of a weighting
towards the key application. So if you had
integrations and they... You didn't integrate to any
of the key applications,
another vendor that had the same mode of
integrations as you have,
but maybe half of them with key applications
would get a higher score. Even if those
integrations are at the exact same levels because
they are with key applications.
So, the key applications is going into effect,
so that will slightly change
product scores. Whether or not they integrate with
these 24 key applications. So check them out
auto our website as dot com.
And finally,
a couple minor points. We added Zapier integrations
into our scoring since more and more vendors
are leveraging the power of Zapier. I know
we We use it a lot here at
as group, both for our clients, products, integration
products could do for our clients as well
as internally. We've been using a bunch of,
of, Zapier period
integrations, much as apps
to connect into
outlook in into and out of outlook into
and out of Asana,
into and out of our marketing platform, which
is called Sharp spring,
super useful tool. So we felt that it
needed to be captured. So there is an
integration score for a affirm that connect with
Zapier.
And finally, if you are a vendor out
there with We'll tech product, and you have
a score that we have scored you, and
it's 6
or above,
you are eligible for the Wealth tech integration
score recognition program.
What this program gives you is the licensing
ability to use
a beautiful badge that says azure group, you
know, certified integration score that you can use
on your website, marketing materials, email, social media,
anywhere you like.
As well as getting access to other exclusive
program benefits such as,
time with our integration team, so you'll get
quarterly meetings with them to help you understand
more about integrations and help you improve your
integrations.
You'll also get access to our quarterly
private research webinars,
only recognition program,
members get access to that, plus discounts on
consulting. So if you hire as a group
for any consulting projects, competitive analysis, partnership analysis,
go to market strategies, pricing analysis, you will
get a discount on that. And there's also
more capabilities coming to the recognition program. So
you can get more information about that by
content at integrations at Az group Llc dot
com.
Right. You've made it the end of the
episode of all tech podcast. Thanks for listening.
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