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We’ve been fans of Aaron Klein’s FinTech Five news recap for some time now, so when we had the opportunity to take the reins, we jumped at the chance to add our voice to each month’s hot news stories. Thank you Aaron for passing the torch. We’re calling our version “The Word on WealthTech” and we’ll pick a few big new stories and offer our perspective on them. So without further ado, here’s our word on wealthtech for July 2023:
Obviously, given that we’re taking over from Aaron, we had to lead with the announcement that the company we’ve known as Riskalyze is now Nitrogen, which better conveys its role as a growth platform for wealth management firms, helping advisors turn leads into clients. We think the new name was a smart move because it more broadly encompasses the company’s risk tool and prospect tool and defines the lead generation and business development ecosystem more fully. For a long time there’s been a hole between “marketing” and “CRM” and it’s nice to see it beginning to fill in.
After 24 years, Eric Clarke will retire from his role at the end of 2023. Coming from first-hand experience, as a founder, you have to be pretty self-actualized to know it’s time for someone else to take care of your “baby.” That takes some real emotional intelligence. Now the question is, who has the gravitas to lead all of Orion’s properties? Without Eric and his relationships, it’s a tall order to find the right replacement. We’re interested to see who the board decides can fill these shoes. In my opinion, it must be someone with technology, innovation and investment management leadership experience. Congratulations Eric on your well-earned retirement!
The SEC has stated it will consider artificial intelligence rules for brokerages and the European Union recently passed an AI act. Two big headlines show governments are working to manage AI. The U.S. Securities and Exchange Commission announced that it planned to more tightly regulate technology—including predictive data analytics and machine learning—in order to reduce conflicts of interest and that those rules could be introduced this fall. Ultimately, what we need to avoid when many firms are using technology to optimize their clients’ portfolios against risk, is all of the portfolios selling out on the same day. The SEC’s job is to ensure that the algorithms follow normalcy. However, because AI is a highly complex and evolving set of data, it exists outside of accepted outcomes models making it resistant to regulation. This is a problem not only for regulators, but for advisors as well. They will find it will be harder to bring AI into decision making than they anticipated.
It’s not every day that we get to be the news ourselves, so announcing our deal to acquire Oakbrook with a strategy investment from Renovus was fun. This brings our client base to $2.5 trillion in AUM and our employee headcount to 100, which strengthens our ability to support advisors’ technology needs. What advisors can take away from this news is that private equity is taking an increased interest in the wealthtech and services industries. Lee Minkoff, principal at Renovus Capital Partners, felt it was important to make an investment after identifying a high growth end-market in wealth management. “It’s an industry in which having a best-in-class tech stack is a requirement to growth—to recruit and retain advisors and other wealth management professionals, and to empower those professionals to provide a platform of high-quality solutions to their clients.”
And those are the big wealthtech headlines we think you need to know about. See you in August for a few more words on wealthtech.
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