Enterprise-grade Digital Wealth platform

Today, it is very clear that consumer-facing fintech is bleeding into how incumbents do business across investing, lending, banking, and insurance. OnDeck and SigFig both rent their B2C approach to the big banks. Not so in 2013, when I had just joined forces with Rich Cancro, Dave Scalzo and Vladimir Baranov to launch Vanare. The best thing we've done since is rename the company to AdvisorEngine. We also raised over $50 million, served 50+ financial firms (RIAs) with core digital wealth management software and many more with CRM, and launched multiple roboadvisors across the industry and on multiple custodians.

While the positioning of the company has shifted since I was there, in my mind the core value proposition is still to deliver the most powerful financial advisory digital experience, by leveraging roboadvisor DNA. Unlike traditional advisor desktops, which wrap software primarily around trading (e.g., portfolio management, rebalancing) or relationship management (e.g., performance reporting, CRM), our platform was built around the customer. That meant the experience of the human being receiving financial advice is the key entry-point for risk assessment, asset allocation, financial planning, account opening, money movement, and all the other bells and whistles that come with a full platform. It also meant that we designed a chassis that extended the customer-centricity of NestEgg and married it with the full-featured, enterprise data architecture of a scalable, sophisticated solution required for large broker/dealers and wealth managers. Eat your heart out Envestnet! 

Solving the hard problems

Building a roboadvisor is a narrow entry point into wealth management. Generally, you start out with a single RIA firm (i.e., yourself), a single account (i.e., brokerage), and a single user. The investment offering is also simple -- likely a set of low cost, no-transaction fee ETFs packaged into a portfolio. Maybe you hard-code this allocation into your software, or maybe you create some back-end way to manage it. But generally, complexity is low and integration is unnecessary. While there may be millions of potential users for these solutions, and they are rightly putting pressure on the industry, such an approach misses the vast majority of assets, which are part of complicated households, have many different types of accounts and needs, and are intermediated by a professional. 

In building AdvisorEngine, we solved what I still believe are some of the hardest problems in wealth management. We figured out how to build flexible groups of accounts into households, and report differently on different parts of the total portfolio to different people. For example, what happens to access when a household goes through a divorce! We created permissions so that customers could see their data directly at the household or account level, while the advisor could see all of their relationships in any grouping permutations, while the branch manager could see aggregated reporting on their advisors, all the way up to the firm level. We flexed the platform to turn on and off different types of integrations and features depending on what our customers chose to use. 

On the digital servicing side, the asset allocation modules were fully customizable across individual holdings, ETFs, managed accounts and other investment types, taking CIO input for models. The risk questionnaire could be changed down to the word and multiple choice question weight in real time. Multiple questionnaires could be swapped depending on client type. Our solution is still the only one on the market that would allow a firm to run all of its traditional high-net-worth relationships, which expect financial planning and complex reporting, as well as a direct-to-consumer Millennial channel on trading and rebalancing auto-pilot, with advisor approval of course. 

Platform or Application

With this much complexity in usability, we had to constantly focus on simplifying the user experience, as the number of "screens" expanded into the hundreds. Instead of creating individual designs, I built visual systems and templates for how wireframes turn into end-product. This was further complicated by our visual identity for enterprise users, and the customizable visual identity between the advisor and end-user.  This was a major step from building NestEgg as a point-solution.

A related challenge that came up was deciding whether we were a "one stop shop" or a set of integrated "apps" that could plug into custodians like TD Ameritrade and Pershing, and transfer data into third party applications like FolioDynamix or Redtail. End of the day, this is foremost a marketing distinction. A collection of applications is easy to understand, while a web of data architecture and integration are not. As a result, our Sales team had overly broad conversations when prospecting. 

To clarify these purchasing decisions, I created 4 app identities in addition to the core engine: (1) NestEgg for digital wealth, (2) Spark for online account opening, (3) Flow for grouping and billing and (4) Synapse for integrating into AdvisorEngine through APIs. Each one could be purchased as a standalone product in addition to the platform as a whole, and turning on broader features was just a matter of toggling on different settings. We already had your data and preferences!

Company Building

Three other lessons stuck with me from the experience. We spent a large amount of time internally negotiating our Product Development approach, because building enterprise financial technology is qualitatively different from sprinting through experimental features in media apps. This led us to vacillate between Agile and Waterfall methodologies, settling on monthly releases with rapid iteration on new features, and a backlog of bug-fixing and functionality improvements. Balancing Fintech product management, especially when touching regulated assets, is a difficult act. You have to be flexible in the choice of management style and methodology that fit your team at the time -- do not expect out-of-the-box philosophies to work without adjustment.

Second, there is a big difference between building a product, a team, and a business. To solve for the challenge of creating a software, you focus on design, customer needs, and scrounge enough talent to get it done. To solve for team, you have to think about full-time vs. contractor hires, local vs. remote vs. third party developers, and what that implies for your process and the enterprise value of your company. To solve for the business, product is but one pillar among many. Failing at building a meaningful marketing, sales, regulatory, finance and fund-raising machine is just as lethal as missing a release.

Finally, good governance really matters. We were lucky to have broad alignment with our large investor, WisdomTree, and to still seat many of the founders and early equity holders on the Board of Directors. But as acquisitions (Junxure, Wealthminder) added up and ownership percentages changed, keeping track of who wanted what and how became increasingly more important. The best advice I have for others here is transparency -- track your metrics, show them often, and agree on a direction everybody wants to go.

Current Status

The company was acquired by Franklin Templeton, the asset manager, in 2020.

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