In our new series Research and Analysis, we cover some of today’s brightest B2B WealthTech companies that bring digital solutions to financial advisors and financial services firms. These tech companies bring financial instruments that help financial advisors and their clients better understand the financial options at hand and make informed decisions.
Our first article in this series is about AdvisorEngine, a trailblazer that created a unique offering, infusing a white-label digital B2B solution for financial institutions and advisors with lots of integrations and impressive API abilities.
AdvisorEngine is driven to help advisors to digitize and scale. The firm provides wealth management technology to power growth.
At AdvisorEngine, users will find in one single tool all the components they need for running the business smoothly and managing client accounts with the help of 100% custom-tailored digital platform. AdvisorEngine offers a variety of dashboards that allow the advisor to keep an eye on account performance, analyze business development, and streamline billing.
Wealth managers can work with both traditional clients and fully digital ones using one single solution offered by this WealthTech player. Integrating traditional and online technologies, AdvisorEngine creates a balanced eco-system where demand for high-quality services meets the supply of innovative solutions giving wealth management firms a competitive edge.
Founders and Senior Management
Rich Cancro, Founder and CEO
Rich Cancro is the Founder and Chief Executive Officer of AdvisorEngine. As the CEO, Rich sets the strategic vision, oversees the company’s business operations, and manages product strategy for AdvisorEngine. Rich has over 20 years of experience building and managing wealth management businesses, platforms and products. He has a successful track record of creating innovative solutions, re-inventing technology platforms and driving financial growth for his businesses.
Prior to founding AdvisorEngine, Rich served as a Managing Director at Bank of America/Merrill Lynch where he was the Head of their RIA custody business (Money Manager Services) serving independent RIAs and their HNW clients. He was also responsible for their Global Wealth and Investment Management Financial Planning and Reporting tools. Prior to BofA/Merrill, Rich was a Managing Director at J.P. Morgan, where he was head of their Investment Advisor Services RIA custody business.
Additionally, he was a Senior Managing Director at Bear Stearns and Head of Product Development for their Broker Dealer-Investment Advisor Services clearing and custody business, as well as Group Program Manager for Pershing’s NetExchange Wealth Management Technology Platform (now called NetX360 which has over 100,000 professional users). Rich also held various leadership roles, including Head of Investment Advisor Services and Head of Institutional Brokerage at DLJ Direct. Rich graduated with a B.A. in Business from Gettysburg College.
Vladimir Baranov, Founder and CTO
Vladimir Baranov is a Founder and Chief Technology Officer of AdvisorEngine. He oversees the company’s software development and technological operations. Prior to AdvisorEngine, he was the CTO of NestEgg Wealth, a next-generation technology company and RIA that pioneered online wealth management in partnership with financial advisors.
Vladimir was also President of Avtomat Software, which built custom technology products and provided consulting services to various industries. He held several positions at major financial firms including Citigroup, National Bank of Canada, Tradition North America and Deutsche Bank, where he built technical solutions in Equities and Derivatives.
He graduated from Stony Brook University with a B.A. in Computer Science and a B.S. in Computer Engineering, where he was actively engaged in robotics innovation. He holds two Global Executive MBAs from Columbia University and London Business School.
David Scalzo, Founder and CFO
David Scalzo is a Founder and Advisor at AdvisorEngine, supporting business development, client management and the financial operations of the company. David has nearly 20 years of experience initiating, growing and managing businesses.
Prior to AdvisorEngine, David was the Chief Operating Officer for Securities Client Management at Credit Suisse as well as the Head of Investor and Client Services at Citadel Solutions (now Northern Trust). He also served as a Managing Director at Bear Stearns in charge of Strategy and Business Development for the Global Clearing Services Division. At Bear Stearns, he launched their Investment Advisor Services Business and served as COO.
Prior to joining Bear, he was the Director of Operations for Precision Plating Company in Chicago. David holds a B.S. in Mechanical Engineering from Northwestern University, M.S. in Manufacturing Engineering from the Illinois Institute of Technology, a Masters in Engineering Management from Northwestern University, and an M.B.A from the Kellogg School of Management at Northwestern University.
In 2016, the company raised $20MUSD in Series A financing and signed an agreement with WisdomTree. Cancro and his team also announced that it would rebrand, moving from the original company name, Vanare, to become AdvisorEngine.
Founded in 2006, WisdomTree is a leading ETF provider in the US, asset manager and index developer that utilizes its own fundamentally weighted index methodology with operations all around the globe.
The strategic alliance with WisdomTree Investments set the beginning of a new chapter for AdvisorEngine. Joel Bruckenstein writes about this new chapter in an article published on the T3 Tech Hub, saying this strategic partnership was beneficial both for WisdomTree, which had an innovative line-up of ETF products based upon their own proprietary methodologies, and the open architecture platform of AdvisorEngine, which would make WisdomTree’s asset allocation models available to a larger swath of financial advisory firms.
Mergers and Acquisitions
(1) Vanare acquired NestEgg Wealth. Founded by Lex Sokolin in 2009, NestEgg Wealth added more flexibility to the parent company’s solutions and made it an influential pioneer back in 2014 that presented an enterprise platform incorporating both conventional wealth management services and a fully-digital robo-advisor solution all-in-one.
In his interview, Lex Sokolin mentions the following:
“NestEgg was bought by Vanare, Rich Cancro’s company, which is now AdvisorEngine, essentially as a way to bring two ideas, two things together. Those things were:
- The robo-advisor concept, which at the time did not exist within traditional wealth management platforms at all; and
- Combining that with a traditional platform, which of course had to be built”.
As AdvisorEngine continued to grow and gain market share, new opportunities presented themselves. During the first 6 months of 2017, AdvisorEngine bought Wealthminder and Kredible.
(2) In February, the company acquired Wealthminder, a cloud-based easy-to-use solution that enables financial advisors to collaborate with clients and helps them achieve their financial targets.
(3) Later on, in April, AdvisorEngine acquired Kredible Technologies Inc., a firm that had developed unique online reputation management tools.
AdvisorEngine: Solution from the inside out
Through strategic partnerships and acquisitions, AdvisorEngine created a unique web-based offering for client-facing financial advisors and became a promising player in the financial services industry. The platform offered by AdvisorEngine helps personal financial advisors easily start collaboration with newly-acquired clients by utilizing simple workflows and progress tracking tools. The engine offers digital investment management with an embedded robo-component and comprehensive practice management with varied functionality.
Digital wealth management components include:
- Financial planning
- Asset allocation
- Investment selection
- Tax management
Practice management components include:
- Easy client onboarding
- Integration with CRM
- Performance reporting
- Client/Advisor dashboard
AdvisorEngine’s onboarding supports 18 different account types, including individual, joint, IRA and trust accounts, and offers options to choose from electronic signature, click through agreements, or validated print documents. An intuitive interface helps users target their particular business goals.
“The user experience is always important, and it should be tailored to the task which we’re trying to do. The form needs to be constructed in a way that makes it easier to be filled out, especially if it’s a dropdown. It must be easy to use,” says CTO Vladimir Baranov, “AdvisorEngine uses several approaches to make the platform architecture scalable and flexible. One, from a scalability perspective, we are engaging tools that are provided by AWS (Amazon Web Services), and are using tools like ZooKeeper and Spark, which allow scaling on demand.”
In addition, AdvisorEngine allows advisors to custom-tailor risk tolerance questionnaires. This is what Vladimir Baranov says about AdvisorEngine surveys:
“We like to provide the framework which allows advisors to set up as many questions as they would like.”
Along with its innovative platform, AdvisorEngine presents a number of other services including implementation, IT and business consulting. With the help of the AdvisorEngine tool kit, companies can easily include their advisory agreements, disclosure documents, and custodian forms without switching between multiple solutions.
AdvisorEngine has over the years broadened its services to become an advisor solutions company that can provide portfolio consulting services, model portfolios, and practice management, incorporating leadership along with organizational development and marketing ideas. With the acquisition of Kredible, AdvisorEngine got research-based tools that enable advisors to build up their own – and their clients’ – reputation online and turn prospects into customers through:
- Attracting more prospects and generate new leads by optimizing presence on the web (e.g. social profiles and organic search rankings)
- Accessing relevant content and analytics
- Using behavioral, research-based analysis that helps fill a void in most financial advisors’ online presence
“Overall, AdvisorEngine was developed by less than 50 developers overall using a POD approach, where people were grouped by business initiatives and worked together on a project in order to accomplish that business initiative,” says Baranov.
Beyond robo-advisor and wealth management classics, AdvisorEngine has integrated the best of Wealthminder’s IP. The collaborative process, which is sometimes likened to having a virtual assistant, simplifies the life of advisors helping them tackle the challenges such as data collection about prospects, 401(k)-plan advice, and client follow-up. Clients submit necessary insights online beforehand, so that the financial advisor has enough time to analyze the aspirations and goals of potential clients before meeting them in person.
In late 2016, AvisorEgnine also joined forces with Boston-based FinMason to increase traditional institutional capabilities of risk analysis. AdvisorEngine can now offer sophisticated portfolio analytics that were previously available only to institutional investors.
As for the platform architecture, AdvisorEngine uses a few microservices. The solution does have monolithic components, which the company tries to break out into microservices. In general, it’s a mixed environment. The platform is running on Scala and Java, uses PostgreSQL database and Hazelcast for data management and distribute processing.
AdvisorEngine created its own product exclusively for advisors that uses 2 types of authorization through username and password as well as two-factor authentication (Google Authenticator) on demand. The offering includes a powerful feature stack. The engine has:
- Intuitive client portal that offers a 360 degree view on client’s portfolio providing meaningful insights into the activity, positions, and accounts health;
- Easy account opening that allows selecting models and asset allocations, using investment instruments, opening numerous types of custodial accounts, and moving money or ACAT positions. AdvisorEngine’s product has simple workflows, digital signatures, customizable approvals, and automated alerts;
- Seamless integration with industry-leading trading platforms, AdvisorEngine fully supports Separately Managed Accounts, Unified Managed Accounts, Advisor-Managed Models, and Tax-Efficient Trade Management offering powerful trading and rebalancing tools;
- Institutional-level analytics, performance reporting, and robust billing capabilities, all in one place practice management solution;
- Fully customizable digital advice allowing advisors to manage clients across different geographies and easily juggle accounts of varied sizes;
- Digital record keeping across all the activities: accumulation of household and client data, integration with custodial information, and storage of investment documents electronically all in one place guaranteeing easy regulatory reporting and compliance.
AdvisorEngine and Similar Offerings
Although robo-advisors are unlikely to replace human consultants (especially when it comes to HNWI), financial advisors keep seeking ways to optimize their working hours and outsource routine tasks to machines.
Along with AdvisorEngine, there are several companies that offer similar solutions for wealth management.
|Jemstep Advisor Pro offers seamless integration with existing in-house systems of a client guaranteeing cost efficiency of operations. This article published by T3 Technology Hub states that AdvisorEngine and Jemstep help financial advisors streamline the onboarding process even before the actual meeting with a prospect. Additionally, both the platforms have compliance capability with all the related documents stored at hand.|
|Estimated Revenue: $2.2M
Total Funding: $15M
|VestmarkONE Robo Solution is another all-in-one platform that is meant for financial advisors.
VestmarkONE Robo Solution offers custom-tailored investment solutions, trading and rebalancing tools, real time reports and alerting features, easy integration with 3rd party vendors and in-house systems on clients’ sites.
|Estimated Revenue: $34.2M
Total Funding: $32M
Total accounts: 1234
|Motif Investing, which is really more of a B2C offering, has a different concept for investors presenting a choice of up to 30 ETFs or stocks to put money into. Although “basket” investing allows clients to reach “hard-to-find” niches, tradable securities are limited to stocks and ETFs, IPOs, and American depository receipts.
As a DIY option, Motif Advisor might be sutable for clients who look for a lot of participation and control when it comes to asset allocation. Automated rebalancing is available only in Motif Blue, monthly subscription option.
|Estimated Revenue: $4M
Total Funding: $132M
Total accounts: 157
|FutureAdvisor, which is primarily a B2C offering, is famous for 529 accounts management while college savings plan is not usually available among its competitors. Business Insider in its review points out that FutureAdvisor is not rich in features like most of its competitors, however. The reasons are that FutureAdvisor does not have many account types to choose from but has a main focus on tax-loss harvesting. FutureAdvisor might be a good choice for clients who look for 529 Plan Account feature specifically but not for those who prefer more diversity when it comes to investment options.|
|Estimated Revenue: $6M
Total Funding: $22.7M
Total accounts: 13751
|Digital wealth solutions provider Trizic has an enterprise platform suitable for asset managers, RIAs, credit unions and banks. Its investor-facing robo-solution has robust advisor portal and role-based access as well as API-based architecture that allow clients to deal with traditional custodians, homegrown custodial and clearing systems.The solution offers simple 3-step onboarding process as well as compliance reporting features that is similar to digital record keeping available at AdvisorEngine.
The platform architecture of Trizic’s product has a modular feature set that offers the advisor an option to hand-pick particular features from the list of available components.
|Estimated Revenue: $3M
Total Funding: $12M
|Anaplan has an asset management application that takes care of funds, investment, and overall account management with a profitability planning model developed by Deloitte. Anaplan’s planning and performance management engine utilizes the power of predictive analytics and presents intelligent cloud collaboration offerings to project potential investment management as well as expense buckets for an asset management firms.
Although in some quarters, the solution is called “Excel killer” for its ability to take care of massive computations, it cannot be compared to a comprehensive all-in-one robo-advising platform: Anaplan’s app stats show the level of complexity of the offering is “Beginner” which is unlikely to suit the needs of clients who have significant amounts of investable assets and require more sophisticated approach to manage their capital.
|Estimated Revenue: $12.7M
Total Funding: $233.6M
|SigFig offers a B2C robo-solution that covers a number of features such as personalized portfolio allocation, automated rebalancing and reinvesting, cash optimization, tax-loss harvesting, and a whitelisting option that protects clients’ systems from malicious apps. Their free Portfolio Tracker has a limited set of features that are also present in a broader Managed Account option which is a paid product: investment account synchronization, external portfolio analysis, portfolio tracking, client support, and reporting dashboards might be seen as similar to some of what AdvisorEngine provides.|
|Estimated Revenue: $5.1M
Total Funding: $56M
Total accounts: 2610
|Betterment is another tech partner for wealth managers who choose to reduce time on backoffice tasks during account opening, automate asset allocation, tax-harvesting, and rebalancing, although Betterment is primarily seen as a B2C offering. Similar to AdvisorEngine, Betterment for Advisors has intuitive dashboards giving key information for RIAs in real time. Like AdvisorEngine, Betterment offers easy account opening and technology that allows clients to see all their investments in one single dashboard.|
|Estimated Revenue: $12M
Total Funding: $267M
Total accounts: 330 315
|TradingScreen is one more company that assists advisors with managing their daily tasks offering electronic trading platform with a broad range of assets to choose from. Their TradeWealth product has an HTML5 interface that is topped with an integration platform that serves the needs exclusively of HNWI, traders in private banking as well as RIAs. On demand, TradeWealth offers white-labeling putting a company’s offering in one row with AdvisorEngine and Trizic, for example. TradeWealth equips asset managers with a powerful toolkit offering trade generation and management, profit attribution, benchmarking, risk compliance and reporting similar to the comprehensive practice management features of AdvisorEngine.|
|Estimated Revenue: $11.3M
Total Funding: $12M
Unlike many market players in the WealthTech niche who built up their capabilities initially as a B2C offering and use legacy technology to offer a B2B solution, AdvisorEngine started with a B2B approach in mind from the very beginning and created a pioneering solution that was and is still exclusively for advisors. Most of the robo-advisors have only “client views” which creates a problem when advisors need to take care of multiple accounts.
AdvisorEngine solved this problem by offering a simple and clear dashboard and allowing advisors to view accounts at different levels. HNWIs’ asset management became a centric theme in the AdvisorEngine offering. Along with clients who have large capital balances, AdvisorEngine has a “robust online investment platform” that helps advisors connect with the “next generation” of end users, as clients say. Such a niche-centric approach is something not every other robo-advisor or wealthtech provider can say.
As per Vladimir Baranov, CTO at AdvisorEngine:
“We do not compete with other platforms on features, but on approach of how we treat advice and what we think about advice. Our platform goal, and our focus, is to help our advisors grow.”
To stay ahead of the curve, institutional advisors may want tune up their engine and adapt to the specific needs their clients continually demand. AdvisorEngine’s white-label offering is worth strong consideration.