What is CircleBlack?

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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:

CircleBlack

Vendor category:

Portfolio Management (tech)

Episode host:

Brad Wales

Episode guest:

Sarah Toole

Vendor contact info:

Website; sales@circleblack.com

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 are answering the question, “What is CircleBlack?” And to help us with that is Sarah Toole, the Director of Partnerships at CircleBlack. Sarah, thank you for coming on.

Sarah Toole – Of course, good morning. Thank you for having me. Excited to be here.

Brad – Absolutely. We will dive right in as we always do. So if you could give us the proverbial elevator pitch, a 30-second answer for someone who has heard of CircleBlack but doesn’t really know what you guys do. What is CircleBlack?

Sarah – So first off, we are headquartered in Boston. We have been around since about 2013. In the last, call it two to three years, I would say we’ve shifted our go-to-market strategy to really focus on the independent RIA space specifically.

We are a portfolio management software within the wealth tech space. The core of what we do is data aggregation. So we work with all of the major custodians within the space.

We provide performance reporting, we provide advisors with the advisor portal, their client with a client portal, and a bi-directional document vault for advisors to be able to send information securely back and forth with their clients.

Then on all of the other pieces, which we’ll go through throughout this call, that’s really where we differentiate ourselves from some of the other portfolio management providers in terms of being open architecture and providing flexibility and choice.

But the core of what we do is portfolio management software, data aggregation and performance reporting.

Brad – What tool would you call this?

For the viewers following along here, there was a time you had to go to one piece of software for a performance report and another piece of software for client portal and that’s been mushed together through acquisitions or through building it out.

In my observation, it’s usually thought of as portfolio management. You’ve used that phrase as well. Is that generally what you would bucket CircleBlack is it’s a portfolio management tool albeit it does a number of things?

Sarah – Yes, absolutely. That’s the core of what we do. We also are a CRM provider as well. We’ve recently rolled that piece out. So it’s portfolio management and CRM.

We refer to that a little bit more as lead management, but don’t want to necessarily pigeonhole ourselves directly into just portfolio management. I would say portfolio management and CRM.

Brad – Okay, and it’s getting tough, for those that know the Kitces tech map and he’s got hundreds of little logos on the thing, and so yeah,  CircleBlack arguably should maybe be penciled in that CRM bucket. But is that really the main thing, so it’s tough so I’d agree. Think of it as portfolio management to the viewers, but that’s more than just literally managing a portfolio. There’s a lot more to it in that regard.

So how would you say, as there’s other portfolio management tools out there, that CircleBlack is different than some of the other options available out there?

Sarah – That’s a great question. I would say the biggest piece that makes us different is our all-in-one, but with flexibility and choice approach.  We very much lean into freedom and flexibility.

We find that within the RIA model, advisors that are breaking away from a broker-dealer or a major wirehouse, this might be one of the first opportunities they have to be able to pick and choose their own tech stack. So that being said, we offer our core functionality and then we really partner and have bi-directional data synchronization with the other point solutions.

For example, on the financial planning side, we partner with RightCapital, Money Guide and eMoney. On the risk side, we partner with Nitrogen, Stratify and Tiffin. On the CRM side, although we have come up with our own native CRM, we also have partnerships and integrations with Wealthbox and Redtail and Salesforce.

So the idea of providing the advisor our core functionality and letting them pick and choose their other point solutions, we really lean into that flexibility and choice model. I would also say our UI is very intuitive. It’s always a balancing act of being a robust but intuitive platform.

So we try to make it simple for an advisor to be able to click through and get trained up on it. And it’s easy to look at.

I would also say from a cost perspective, we’re a bit more of an affordable solution than some of the others. The way in which we try to make sure that that’s the case is we really lean into more of a modular approach where you’re only paying for what you use versus paying for 100% of something that maybe you’re only utilizing 30 to 40% of the service.

So those are the core differences between us and some of the other providers out there.

Brad – I was waiting for you to say simple because one of the first times I ever spoke to Sarah way back when, whenever that was, that’s how you framed it.

I remember that kind of resonated with me that it’s one of the simpler solutions used and simple does not equate to inferior, but the reality is you can have a solution with all the bells and whistles imaginable, but realistically, if you’re not going to use them because it’s too hard to figure out, then it’s backwards, you know, it’s not a good tool for you at all.

Certainly it has a lot of features, but you actually have to be able to use them. I would reiterate the simple part, which, and again that’s not a bad way, but I’m glad you brought that up.

And then how do you, most vendors that support the RIA model, there’s typically kind of minimums. It could be a custodian with a certain amount of assets before they’d be willing to work with you.

There might be other solutions where there’s kind of no minimum, where economically it doesn’t really make sense to reach a certain size. So how would you define the minimums where it makes sense to be using a full service solution like a CircleBlack?

So the brand new startup RIA, one person RIA, doesn’t have any clients yet, probably a little premature at that point. So where do you define or how do you define what someone should be thinking of where this starts to make sense?

Sarah – So I think there’s two parts or two answers to that question. I think by digging in and figuring out what other solutions they’re going to be using.

For example, if they’re going to be using a MoneyGuide and they’re going to be using a Nitrogen and they’re going to be using a WealthBox, that’s a really good indicator that CircleBlack would be a really good partner there because we have those integrations already set up. So some are single sign-on, some are iframe.

They’re all set up differently when it comes to integration. I think digging in and seeing what they’re thinking from a tech stack perspective will ultimately define whether or not CircleBlack is a good fit.

I will say there’s no threshold necessarily that we have, but we typically see the most traction and we find that our solution is best fit for typically firms that are under one billion in AUM, usually under 15 advisors at the firm.

So we are really focusing on the small to medium size RIA. Then kind of going back to some of the pieces that make us different, I would say from a pricing perspective, I do think that because we are a bit more of an affordable solution, I think that we try very hard for costs not to be a barrier of entry.

So when an advisor is just starting out, we don’t want them to be extremely shocked by the cost of the service. And again, you might not need all the bells and whistles right from the beginning.

What we’ll do is we’ll provide you with an overview on all of the different services and we really leave it to the advisor to then choose what they want to take advantage of from the start.

Maybe they grow and they want to start taking advantage of other pieces. It’s totally fine. It’s not a use it or lose it type of scenario.

Brad – How do you typically price something out like that? I guess there’s kind of two parts to that.

One, it sounds like if I’m hearing you right you kind of have a la carte where you can pick different modules. So if you could extrapolate on that.

Then however that gets built, is it then on a per account, per year basis? Is it a flat dollar amount or how does that typically work?

Sarah – Currently, we recently revamped our pricing and have CRM functionality coming out as well. So what we’re doing now is we have just a basic core package.

So we’ll have the performance reporting, we’ll provide the advisor with the portal, the end client with the portal as well, the bidirectional document vault, all the data aggregation. That’s the core of what we do. So that’s our core package.

From there, the integrations have no cost associated with them. It’s really just a plug and play model.

But say, for example, an advisor wants access to billing or they want access to our trading and rebalancing. That’s really where the a la carte pieces come in.

Our CRM is included at no cost for up to five users. So the way that we price our solution altogether is we lead with account-based pricing, but we do have custom pricing available. And I think that’s a little bit of a differentiator for us.

We’re a little bit smaller than some of the other providers and therefore I find that we have a little bit more flexibility on having a case-by-case scenario with different clients. But we do lead with account-based pricing.

We do have custom pricing available. So if AUM or household-based pricing is beneficial to the client, we’re very happy to accommodate that.

We also have modular-based pricing versus bundled. And I know that we’ve alluded to this already during this conversation, but it really means that advisors can pick and choose which services they need and they’re billed accordingly for that.

We typically do come in a tad more affordable than Advyzon and we do see roughly a 30 to 40% savings from Orion and Black Diamond. And we are happy to provide discounts with certain partnerships as well. So I would say that is the model of our pricing.

Brad – I appreciate that.

For those that don’t know and that have never built a tech stack before, portfolio management tools because they’ve morphed into doing so much, are typically by far the most expensive part of a tech stack. It is going to be important to understand how they’re priced and where they might stand against the competition. So thanks for clarifying that.

Then speaking of bells and whistles and whatnot, different modules, and different tools, again I’m a big believer, you shouldn’t get a tool that has a hundred features if you’re realistically not going to use most of them.

But you still, even if you’re gung-ho, even if you think you’re going to use them or whatever amount you’re going to use, you still have to actually learn how to use it.

So for folks that have never used a CircleBlack, they’ve been in a wirehouse, they’ve never even seen this kind of technology, how do you folks help new users get up to speed to try to take advantage of all that it offers?

Sarah – Yeah, and I think that’s a huge piece of it too. I think that when an advisor is looking at a solution similar to CircleBlack, it can sound great, but I think that when it’s so many bells and whistles, that that can ultimately create a tough environment for an advisor to actually get a good understanding of what they’re gonna be using day in and day out.

We have a very clear schedule of orientation and training calls that we schedule with the firm directly and an onboarding consultant. From the time that somebody signs up with CircleBlack, and I would imagine this is leading into a next question, but from the time that somebody signs up with CircleBlack, our implementation is roughly four weeks.

So we have a very clear schedule that we outline working with the firm directly. And then from there, they have a dedicated client success manager. So I think that’s a really important piece especially when they’re breaking away and they’re starting their own thing, there’s a lot of pieces that go into it.

To feel the support and the handholding is very important to make sure that A, they can justify the costs that they’re paying and making sure that they’re utilizing all of what they’re paying for but B, CircleBlack is designed to be the first thing that an advisor logs into every day. When they have their morning cup of coffee, they have a holistic view into all of their clients’ underlying financial pictures.

You have to be comfortable using it day in and day out because it really should be the single source of truth instead of having to log into a million different websites. So our training piece is very important and it’s very clearly defined from the time that they come on board.

Brad – It is important that advisors get trained on all these features, but I usually suggest to advisors that they do this in phases, right? Initially, you got a lot of moving parts when you’re perhaps launching your own RIA for the first time. A lot of moving parts that have nothing to do with technology that you’ve got to be figuring out. So you want to focus on just what the core most important pieces of the technology are that you need to solve for.

And there’s some really other cool stuff, but if that doesn’t have to be done on kind of the initial transition period, okay, be patient and come back to that. But the key is you should come back to it. Don’t just let life get away from you. Next thing you know, you’re never circling the wagon. So I think the training is important.

I referenced someone new to the RIA model or folks that might have come across this that are already in RIA and they are potentially using one of those other solutions; you mentioned a couple.

For whatever reason, maybe they’re not satisfied with that solution anymore, they like CircleBlack better, but do you help folks transition from other solutions to CircleBlack and what does that kind of look like?

Sarah – We do. That’s a great question. So we support the mapping of accounts and clients into households to match how they had it configured with their prior provider.

For certain providers, we may be able to convert historical performance as well. That’s on a case-by-case basis. And the reason for it being on a case-by-case basis is because it’s a very difficult process to get right. And we only want to offer it when we know that it can 100% be successful.

Brad – Probably there’s nothing worse than no information than wrong information. And for folks that are coming from a wirehouse, it is what it is. You don’t carry a lot of that historical, if any of that historical data, with you. It is just part of the transition, but clearly the accuracy of it’s gonna be important.

I’m a big believer in trying to set the tone for advisors for whom this sounds interesting, maybe I should look into this. If they call in, or we’ll get to what the best way to reach out to your team is, literally what is that first conversation? They call and say I’m planning on starting to launch an RIA in five months or whatever, talk to me about CircleBlack. What can they expect on that very first conversation?

Sarah – It’s very much a discovery call. Our goal at CircleBlack is not to tell everybody that they’re a right fit for us. The initial call is just about the advisor figuring out if CircleBlack is a good fit for them. It’s also us trying to figure out if they’re a good fit for CircleBlack, depending on what they have going on. So it’s very much a discovery call.

We have two account executives here. They’re great. They’ve been with the company for a bit now and they work directly with an advisor that is open to talking to CircleBlack.

We learn about the firm, we learn about where they came from, are they on another provider, have they just broken away, what have they gone through, and of course Brad this comes back to you, but do they know all of the steps that go into breaking away, what phase are they at, and we try very hard to be as much of a resource as possible.

I think that due to our entire open architecture and flexibility and freedom approach, it makes it easy for us to be a resource to these advisors. So say they come to CircleBlack first in their entire journey of potentially breaking away, they probably haven’t even talked to a custodian yet. They probably don’t know what they’re gonna do from a CRM perspective or a financial planning perspective or a risk perspective.

We make introductions all the time there. So we really serve as a resource to figure out where they’re at currently, where they’re looking to go, what initially made them reach out to CircleBlack, and it’s a very consultative approach.

Brad – And so for that, because it’s early, it’s education, it’s consultation, and then even if it progresses, then there’s maybe a deeper dive and then decisions about what modules to use and all that.

So in a perfect ideal world, and knowing advisors that are making the transition, again, they’ve got 10 different things they’re working on. So what is an ideal amount of time?

Give or take from when someone first reaches out, if it ends up working out, they go through all this process with your team, and to the point where then they’ll be going live and be prepared for that, what would you generally ask for from a time perspective?

Sarah – So I think it’s definitely a case-by-case scenario. So for example, the Morningstar announcement, right? They had no choice but to look at other providers. And I think that if people are looking to go, we’re willing to go as fast as the advisor is willing to go.

So it always depends on when their contract is up. Sometimes they don’t even know when their contract’s up. And if it’s two to three years from then, then obviously that scenario is a bit different.

I would say though for the advisor and the firms that are ready to make a switch and know that they are going to make a switch, we move as quickly as they’d like. Typically on average, if they’re ready to make a switch, they do the discovery meeting.

From that initial discovery to them being live on CircleBlack, I’d say that’s between four and six weeks. From the moment that they signed with CircleBlack to going live, that’s four weeks.

So it really just depends on how quick that discovery piece is, but we’re willing to go as fast as they are.

Brad – Yep, and as I tell folks starting an RIA, for one thing you literally cannot launch an RIA in 30 days. There’s regulatory parts of it that take longer, and ideally you want to do this at a measured pace. But to the degree you do need to expedite it, it’s so good to hear your team will try their best to do that.

However, for those following along, even if you wanted to do all this in 30 days, it’s not going to happen anyway. When she’s throwing out four to six weeks, that’s actually, I would argue, even moving along pretty quickly. Sometimes these things can take months. So thanks for that perspective.

And then we’ll wrap up. I know we’ve just kind of been high level here, but for folks that say, hey, maybe I should be taking a look here at CircleBlack, what’s the best way for folks to reach out to begin that initial conversation just to see if it’s worth digging into further?

Sarah – They can send an email to sales@circleblack.com or they can go directly to our website, www.circleblack.com and in the top right corner click “Book a Demo”. They obviously can follow me on LinkedIn. I think just for the sake of simplicity they’ll be able to get in touch with somebody through sales@circleblack.com or going to our website and doing “Book a Demo”.

Brad – Okay, and for those listening along like I said portfolio management could arguably be the biggest piece of the tech stack, though there’s other important parts as well. It’s going to be worth taking your time to really make this a good decision for folks that are taking a look.

Sarah, we appreciate you coming on to give us a kind of an initial preview on CircleBlack and where it might be a fit.

Sarah – Absolutely. Thank you for having me. And I’m hoping if anybody has any questions, don’t hesitate to reach out. We try to be as flexible as possible and we are here as a resource. So thanks, Brad.

Brad – Sounds good, thanks, Sarah.

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