HiddenLevers has its first new client since being
Cardea Capital, a $3 billion RIA and turnkey asset management platform based in Atlanta, announced it would start using HiddenLevers’ portfolio stress-testing and risk analytics capabilities. The firm has worked with Orion for more than 10 years and was considering HiddenLevers’ technology even before the acquisition, says Cardea Capital CEO Kendall Borchardt. Now it hopes to benefit from even tighter integrations with the two companies.
The firm plans to use HiddenLevers’s workflows to make asset allocation and trade execution simpler within Orion, and give advisors access to portfolio analysis and real-time stress testing along with HiddenLevers’ investment proposal engine.
“HiddenLevers’ scenario analysis helps us breathe life into the risk-reward trade-offs of our model portfolios, and ultimately our recommended allocations,” Borchardt said in a statement. “After the past 12 months of rocky market conditions, our clients want to discuss what is happening out there, and HiddenLevers helps us do just that.”
Some industry observers saw Orion’s purchase of HiddenLevers in March as the next shot in an escalating arms race between Orion and Riskalyze, giving the former capabilities to compete more directly with the latter for advisors’ tech budgets. At the time, the companies downplayed any competition and emphasized that they remain close business partners.
But in May, Riskalyze CEO Aaron Klein launched a marketing campaign aimed at HiddenLevers and RiXtrema, accusing the competitors of “predictive guesswork” that is “wildly inaccurate,”
Cardea did not know about the report and it did not influence the decision to use HiddenLevers, says Dara Day, Cardea’s marketing and communications manager. The firm collected feedback from some of its advisor clients and decided HiddenLevers’ integration with Orion’s back office technology made it the best fit.
“We used a process, we are standing behind our decisions and we are excited about using it,” Day says.
When asked about Riskalyze’s marketing campaign, Udeshi did not address using the phrase "Kung Flu," which many consider a racist epithet referencing the initial outbreak of the coronavirus in Wuhan, China.
The company is focused on making customers happy and expanding HiddenLevers’ footprint, Udeshi says.
“If risk analysis and methodology is being put center stage, I love that,” he says. “If that’s a front-of-mind conversation for advisors, that means the industry is moving in the right direction.”
Riskalyze has since softened its marketing strategy,
“Riskalyze has no additional content to share with regards to HiddenLevers and is now focused squarely on maintaining and expanding their firm grip on market share in the risk tolerance arena,” said a representative of the company when asked for comment. “Recent deal wins leave no doubt they are doing exactly that.”
On the same day as HiddenLevers’ deal with Cardea, Riskalyze announced a new partnership with Foundations Investment Advisors, a Tempe, Arizona-based RIA with 180 financial advisors and $2 billion in AUM (according to its
Riskalyze has made large wealth management firms a centerpiece of its growth strategy. In January, it
Pronounced market volatility has made risk assessment tools like Riskalzye and HiddenLevers more important to wealth management firms, according to a recent report by research and consulting firm Cerulli Associates.
“Client-facing staff need to be prepared to help investors reach their goals and mitigate risk with portfolios that are optimally designed,” said Cerulli director Scott Smith in a statement. “Ultimately, when risk and reward is presented to clients in an intuitive way, and in a manner that allows them to see the strategies in relation to their financial goals, it becomes easier to make an educated investment decision while allowing for otherwise risk-averse clients to make the most out of rising markets—even in more unstable times.”
