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This is the Transition To RIA Vendor Profile Series where we take a look at the solution providers powering the RIA model. On this episode:
Vendor name:
Advyzon
Vendor category:
Portfolio Management (tech)
Episode host:
Brad Wales
Episode guest:
John Mackowiak
Vendor contact info:
Full Transcript:
Brad Wales – Hi, I’m Brad Wales with Transition To RIA, and this is the Transition To RIA Vendor Profile Series where we take a look at the solution providers powering the RIA model. On today’s episode, we’re answering the question, “What is Advyzon?”. To help me with that is John Mackowiak. John, thank you for coming on.
John Mackowiak – Thanks for having me, Brad. Thanks for getting my name right.
Brad – For those tuning in I had a little practice session before we hit record as I was nervous going into the intro and thank you John for validating. I think, John, most people have probably heard of Advyzon, you have a lot of a footprint out there. But for those that either have not heard of it or have maybe heard the name but don’t necessarily know what it does, what’s kind of the 30,000-foot elevator pitch of what exactly Advyzon does?
John – Sure. We are really the industry’s only truly comprehensive technology platform. We’ve built everything in-house. So to start to kind of run down the list of things that we do for someone considering independence, we’re going to be your one-stop shop, your easy button.
At our core, client reporting and billing, is kind of where our background started. We built our own CRM system, white label client portal, and mobile app. We have growth tools to help with digital data collection, proposal generation, digital account opening with a number of different custodians. We have a rebalancing solution that we launched a few years back.
We also have an investment management group. What started there with proprietary portfolios with what many people would call a TAMP really has evolved over the years. So if someone has their own models, we can trade their models so they don’t have to hire a team of traders. Our team can handle that for them.
We have UMA capability, direct indexing capability, tax transition tools. So if you bring on a new client, you want to implement your model portfolio, you’re able to do so in an optimized manner when it comes to tax. You can spread a tax hit out over two, three, four years, for example. And then we have our model marketplace, Advyzon Nucleus. I think we’re up to about 700 strategies and a couple hundred strategists in the marketplace.
So really everything you need and really what makes us unique is we’ve built all this ourselves. So there’s been no bolt-on solutions or acquisitions or no overlays to existing products. It’s all built by our team and so it really gives us a big advantage when we do talk about a comprehensive platform.
For example, there’s no button in Advyzon that says CRM. CRM capabilities are tightly woven throughout where they make the most sense to the user’s workflow, not just kind of living off in a different browser tab because of their functionality.
Brad – I don’t know that you have an easy two-, three-word answer for this, but traditionally and maybe historically, folks possibly including myself have called this a portfolio management tool. For those that are new to portfolio management tools, that name itself is a little misleading because portfolio management tools typically do a lot of additional things such as client fee billing.
But then once you throw in the model marketplace and these other sort of TAMP-type services, what do you call yourself? Is there a good name nowadays for it or how do you kind of encompass what the tool is?
John – That’s a great question. The best I’ve been able to come up with is a comprehensive solution. Because we do so many things, we do them natively and at the end of the day, it’s about the user experience. So the advisors, the staff, the portfolio managers, the planners, they’re all using a single platform. You’re not bouncing between two, three, four, five different browser tabs just to do your job. So comprehensive solution is the best we can come up with.
You see it a lot of times called all-in-one, but I kind of shy away from that one because there’s a lot of kind of fringe technologies that are complementary to what we do. We’ll cover the core and then some of the RIA tech stack but then if you get into some of the long tail as we could call it, there’s some great solutions out there so I don’t know that there’s ever going to be a truly all-in-one solution.
Brad – In the evolution of the industry, there was a time that to kind of get this comprehensive bundle that you’ve put together, you would have had to possibly go to six, seven, eight different vendors, depending on what it is, such as a standalone solution just for performance reporting or whatnot.
So as far as how you compare to your competitors, there is that this is an all-in-one versus a more fragmented approach. Others are kind of working to bundle it up more. Is this where you think the future is going, this is why you guys have built this out and that that will kind of fundamentally replace this more multi-vendor approach?
John – Absolutely. I’m biased, but I’ve also been doing this for two decades. And in my experience as a salesperson, sales manager, and then however many hats I’ve worn here over the years, RIA firms of all sizes would truly love to have less vendors, less integrations to try to manage.
Integration should also evolve. They shouldn’t be static as you often see. As we set out to do this, it truly has been a collaboration with our clients, with our prospects to evolve it to this point.
Not to give ourselves too much credit, the industry has really embraced the idea. We’ve kind of led the charge on that. But the industry has embraced the idea of I can get more services from less vendors because at the end of the day, the capability set needs to be there. I think that’s been the biggest blocker to a more comprehensive tech stack.
Prior to Advyzon, the capability set always fell short on something and our special sauce is easier said than done, but we listen and we take whatever the pain point is or necessary feature, apply our deep experience. It’s not just me. We’ve got a team full of folks that have been working in this space for years and years and we released something that is really intended to delight them, not just check a box.
Brad – Where does this start to make the most sense? Most of my audience has already established advisors and teams that are looking to make a transition and generally have the scale for having this third party kind of comprehensive solution make sense.
Maybe for a completely new person in the industry like a startup, the math doesn’t necessarily work. Then some might say, hey, is there a point where you outgrow kind of an all-in-one bundle like this? How would you answer it of where your sweet spot is and where this really makes sense?
John – We get that question a lot too. The way we look at it is we don’t really have a sweet spot. We work great for a multi-billion-dollar firm. Oftentimes they’re able to consolidate their technology, especially a growing firm. Not only are you consolidating your technology, you bring in a new advisor or a new team to some of these roll-ups or aggregators, it’s one piece of technology that you’re handing to them.
That hasn’t existed in the independent space. There’s always been this fragmented approach. So here’s one piece of technology, go learn it. Work with their support team to learn it. On down to sole practitioners. For a sole practitioner considering independence, we’re a no-brainer almost because we’re going to make things easy as far as shopping for technology. You look at Advyzon, you’re not going to have to go look at four different reporting systems and three different CRMs and so on down the line.
For a large firm that maybe has a trading team, like I was saying, you don’t necessarily need to have a trading team. We can take that off your plate. So when you think about growth and you think about scale, employee turnover is real. We experience it too. But if you’re at a $500 million RIA and you have two traders and one of them leaves, you have a big problem on your hands. So outsourcing that to our team, we’re big enough. We can absorb that. Take that off your plate.
Brad – We’ll wrap towards the end on contact information and how people can reach out. To put it out there for folks that don’t know, this will be by far the biggest part of your tech stack. With so many different parts to the service offering, when someone wants to evaluate a tool like this and you may or may not bolt on a few other smaller things, but it’s by far the biggest decision, what does that process look like?
Is this where your team walks people through demos and in choices on screenshots? I mean it’s tough because there’s so many features. How do you help advisors that are trying to understand is this something that’s going to be a good fit for me? What is that experience like?
John – It is all about meeting them where they’re at. A lot of them come in, they don’t know a whole lot about the technology landscape or really the independent landscape altogether. So my team does a lot of education.
We enjoy doing that education too because we’ve been in the independent space as long as we have. So number one, it’s about understanding where they’re at. Number two, it is about ensuring that they know what they’re buying and we have the right fit.
There’s no order form on our website for a reason. Everybody goes through at least one demo so we ensure that we’re aligned. At the end of the day, it’s again about educating them, but it’s also kind of going above and beyond just selling them Advyzon.
A lot of times we’re making introductions to third party consultants that can help with compliance, for example, or should I get Microsoft or should I get Google for email hosting? Questions like that. What phone service do you guys recommend? Do you integrate with texting? Questions that go well outside the scope of just our product.
So it’s a ton of education for a breakaway team that has kind of been spoon-fed everything in a lot of cases for the entirety of their career. Now everything is in play, so it really is about ensuring that we’re that trusted advisor and we can help them in their journey and hopefully at the end of the day they do select Advyzon.
Brad – To extend that, you give them a lot of education to help them decide whether Advyzon is the right tool. Let’s say they select it, and now they’re making the transition, launching an RIA. How does your team help the RIA and the team members learn how to use this new tool? I’d put that in kind of two branches, and I welcome your feedback.
When the team’s in transition, they don’t necessarily need to know about every single bell and whistle because at that point, the most important thing is getting the clients over and getting the clients reset up and getting fee billing turned on.
Then I’d say kind of phase two could be some of the more powerful features that can be kind of implemented as well. Either way, and I welcome your thoughts on what I just said, but either way, how does your team help folks learn how to use this new tool if indeed they choose to implement it?
John – Yeah, learning is ever evolving. We start with the evaluation process. A lot of times that’s kind of the kickoff point for where you might consider training to begin. It then goes to our onboarding team.
Projects are really all shapes and sizes. So depending on what the project looks like, we’ll get that knocked out. For a true breakaway, there’s typically not a whole lot of an onboarding project going on. So we’ll get things set up, data feeds from the custodian or custodians, and then we’ll dig in with training.
More often than not, we’ll be able to start a little bit early, maybe a month prior to the breakaway date, six weeks, and get things like standardized reports set up. We can help get calendars and emails connected through Office 365 or through Google. We can help get client portals built out. That way, some of the legwork is done by the time that that break actually happens.
At that point, you typically see the focus shift to ensuring that all of the clients are moving over in a smooth manner. Once that data is set up, though, that’s going to start flowing directly from the custodian and to Advyzon.
Once the dust settles around that transition, then we can dig into some of the more enhanced features. So digital account opening, for example, you’re probably not going to use that during the initial transition. But for any of the stragglers or new clients that come in afterwards, you can start to leverage some of these tools for data collection, proposal generation, and digital account opening.
Brad – I’m glad you see it that way. I’m a big proponent of the idea that the three most important parts of the actual transition process are opening accounts, ACAT’ing accounts, and turning the fee billing back on. Everything else kind of comes secondary to that because that’s going to get the revenue back online.
John – Exactly. You need to get paid once you make that transition. So we can get that set up pretty quickly as well.
Brad – Well, most of my audience, and John and I were talking about this before I hit record, but most of my audience are folks that are looking, that are making a transition where they are needing to build a new tech stack because they’re walking away from maybe a proprietary platform or whatnot.
But for folks that might be watching here that are already an RIA, that have chosen some vendor, maybe they are still using that fragmented approach of multiple different solutions and they’re thinking about going to Advyzon as well, I assume you’re able to help those folks evaluate that. If it is a fit, how do you help folks change from essentially a competitor of yours to Advyzon instead?
John – Yeah, yeah, like I was saying that the onboarding, the projects vary. So if someone’s already an established RIA using one of the competitive tools out there, and more often than not, it’s multiple competitive tools at this point with all we do, we come up with a project plan on the front end. So typically that’s going to be getting the portfolio management and the billing process transitioned over.
We have done projects that span decades, pulling over all of the transactional data from the incumbent system. I would issue a word of warning to anyone out there that is on a current system. Once you’re set up, start downloading your custodial files on a daily basis. Save them. You don’t have to do anything with them. Save them. That is what one of the highest priority, best practices, value adds I can possibly share.
Save your source data. We save it on your behalf. The gotcha moment is if you try to leave a system and they don’t provide a full database backup to you and your new provider. There’s one large competitor out there that’s kind of notorious for not providing a backup database.
So it’s like buying insurance on your history. If you don’t do that and you can’t get your history back because it’s not made available to you, then you’re sacrificing, in some cases, your life’s work if you feed historical data in and can’t get it out.
So you’ve had a client for 20 years and you want to talk about what is the best investment that we made? Can’t do it, it’s gone. You want to talk about how we’ve transitioned you from your mid-40s, maybe an aggressive portfolio, and we’ve dialed things back as you’ve approached retirement. We’ve done a great job, we’ve grown your portfolio. All you can show is performance if you don’t save those files and ensure that you have a database backup.
So we get the backup. We’ll get the portfolio management data in. Like I said, we’ll do that first. Generally speaking, that’s pretty black and white as far as transitioning that over. Most of the vendors, we’ve got a good process to address that with. Then we’ll move to CRM, typically second, because CRM can be a little more nuanced than portfolio management.
For example, my dad and my son, we all have the same name. That causes havoc in CRM systems more often than not. We’ll get CRM going. We’ll work with our new client on things like deduping a database, cleaning things up, householding. But when you get to the other side, the efficiency, it’s really second to none because you are operating within a single environment. There’s that single source of truth that everybody kind of aspires to have.
Advyzon is the single source of truth once we get to the other side of these projects and we’ve done thousands of them and have a deep expertise and a great process designed to ensure they’re as smooth as possible.
Brad – I think your comments reflect how big of a decision this is. So yes, it’s possible to change. Ideally, you just get the right solution from the jump because it’s likely you’re going to be using that provider for a very long time to come because it’s not seamless to make the change. Now if you’re on a path and it’s no longer working, you do need to take a step back if that’s what it takes to go two steps forward. But ideally you just identify this on the front end.
In relation to identifying a timeline as you mentioned a moment ago, I think it’s important and I just want to make sure it’s clear and get your feedback. For that transition and advisor that still needs to evaluate and do demos and all that, let alone whatever prep needs to be done ahead of time and what not, how much much lead time do you typically prefer from when someone’s first having a conversation with your team to understand it to when they might be going live with their own RIA? What’s the preferred at least timeline?
John – Yeah, before I answer that, I have one comment to make. Teams are not outgrowing Advyzon. You asked that question earlier and I didn’t really answer it. Teams are not outgrowing us. We’re not hitting a point where you reach a certain asset size or employee size and all of a sudden it no longer works.
So to your point about getting it right at the jump, we’re a great solution and as owners of the company, we’re committed to continue to evolve things. So timeline-wise, it really depends on our starting point.
A pure breakaway with not much of an onboarding project, three to six months is plenty of time to evaluate technology, make a decision, and even give yourself that four to six weeks’ lead time from pulling the trigger to making your break.
If you have a project where we’re onboarding and converting from an incumbent system, that really is dependent on the project itself. How far back are we going? How big is the RIA? If we’re moving somebody with 600, 700 accounts, those usually are, I’d say, evaluate 12 months out, six to 12 months out. That gives us plenty of time for evaluation. We do want you to run parallel probably for one quarter just to ensure everything is in good order. We don’t want any hiccups to cause issues or delays with billing. So six to 12 months on evaluation.
For a very large firm, I would say 12 to 18 months, 18 months being preferable on our end. It sounds like an eternity. But when you start to think about a $2 billion firm, maybe they have 20, 30 employees, various stakeholders that are going to use different pieces of the system. We have to be very mindful and very methodical about how we approach the evaluation. That’s going to take a lot of demos.
How we approach these data conversions, how we approach implementation and training, and then typically the incumbent provider is going to require 90 days’ notice. So to do all that, 18 months is preferable. That way everybody’s comfortable and we can do this in a very comfortable manner for everyone involved when we have the gift of time.
Brad – To double down on that, the 18 months is ideal for very large teams. We have that runway if you’re within that 18 months. If you’re smaller, you’re not out of the option pool at that point. You still could take a look.
So with all these great features or whatnot, that’s wonderful and all, but everything has a price, right? So how is something like this priced out? I’m guessing that’s not a super simple answer because it matters whether they’re using those asset management services as well or if they’re using all of the built-in features. So how do you bake the cake on a price on something like this?
John – Yeah, Advyzon should be a very, very cost effective solution, particularly when you consider everything that you get for the price that we charge. I think our value in the industry is second to none and it’s not particularly close versus a fragmented tech stack, as I like to call it.
So we have no intention of being the cheapest solution out there because I do feel very strongly you end up getting what you pay for with some of the low cost, no cost solutions. Those are the ones where you end up forcing a change, but our value proposition is second to none. So for our core technology, we’re typically pricing based on the number of accounts that we process.
For a smaller firm, the idea is that we’re very accessible. I think we’ve done really well with that. Larger firms, as things get larger, the price goes up as well. The idea is we grow together. We price on the number of accounts when we get up to the larger firms as well.
Once we start to consider the investment management components, it really depends on the scope of the project. That’s typically price basis points based on the asset levels that we’re considering. So very flexible on both sides of the house but just different pricing models.
Brad – The only way to know is first you have to do demos and understand if it’s the right product and then fully understand what a particular advisor team situation is and that’s going to start with a conversation and likely multiple conversations. So what is the best way for someone that does want to begin to learn more and go down this path of due diligence? What’s the best way to get started?
John – Yeah, yeah, certainly we’re not trying to be elusive on pricing either. It’s just not an easy question to answer, like you said.
Brad – There’s a lot of variables to it, and I’d prefer you not try to give a one-size-fits-all answer that is then not going to potentially fit every situation.
John – No, no bait and switch here. We will be cost effective, that much I can promise.
Go to Advyzon.com, that’s the best way to learn about our services. We’ve got a demo button on there. Fill in a little bit of information that’ll connect you with the right salesperson. Then we can start the conversation. A lot of times it is just an exploratory call that we’re very happy to have, just to, again, help educate and show these folks what’s out there because the independent space two decades plus has come a long way. We’re doing a lot of great work. A lot of great people have contributed over the years.
Brad – Wonderful. So go to Advyzon.com. I’ll put that in the show notes as well. John, you’re humble. You didn’t point out that you’re one of the early employees of Advyzon so you have seen its growth.
I was giving you a chance to see if you’d bring up the surveys on your own. So I’ll point it out. But for those that don’t know, Advyzon routinely performs very well on different industry surveys that are out there. So it’s very humble of you, John, to not proactively point all that out but Advyzon does score very high.
Well, I’m going to leave it with you if there’s anything to wrap up. If there’s any final thought you’d like to tie a bow on about Advyzon, please do share.
John – Final thought, we’ve built all this ourselves, like I’ve said, and a lot of people thought we were nuts to attempt it. But when you look across the individual categories that we compete in, not just the comprehensive or the all-in-one, whatever it’s called in the survey, we lead the category in our client satisfaction in multiple industry surveys. So T3 is annually. Michael Kitces does his every other year. Advyzon leads the industry in each category, not just in a single category. So when you think about should I do an all-in-one or a best of breed, guess what? We’re both.
Brad – Those are advisor surveys, so it’s coming from users directly. Obviously that’s the direct feedback.
John – Like I said, it is not bought, it’s earned.
Brad – Indeed, well, that’s a good way to end it. So John, I appreciate you coming on and helping us understand what is Advyzon.
John – Thanks for having me, Brad. Loved it.
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