Leaders from both firms say the deal between
It's about providing understanding to advisors who hope to serve high net worth and ultrahigh net worth clients to their greatest potential, and laying the groundwork for that understanding to permeate the industry as volatile markets demand a new approach.
When speaking to Financial Planning in the aftermath of the announcement, Opto co-founder Jacob Miller likened the evolution of the tech-enabled alternative investment space to innovations like MapQuest eventually giving way to rideshare apps that have become household names.
"Once that is built, then you can have a company like Lyft or Uber. You need that utility to be in place in order to provide that sort of more consumer-oriented, value-driven transaction business. And I think a similar thing has happened here where the data infrastructure, the availability, the servicing, the administration and the links into custody were not there in a way five years ago that this was going to be anything but just the worst migraine ever for most RIA practices," said Miller, who runs Opto's advisory practice. "So it has evolved as private markets have evolved. These things are happening in parallel, which makes us really excited about the sort of secular wave here.
"I am thrilled to be part of this wave. I used to be a surfer. I'm a little bit too uncoordinated to be great at it. But that feeling when you get on the wave that you know has the power to carry you all the way to shore … it does feel very similar to today."
That passion is shared by Merchant Managing Partner Tim Bello. When asked how it feels to have his team's search for the right alts partner lead them to the fast-growing fintech, Bello reflected on the genesis of the organization.
"I'm a pretty emotional guy. I care about our company because I remember the day we started. I know where I was sitting and the piece of paper I was writing on with the idea," Bello said. "So when you see something come from a yellow legal pad to reality, you start to realize you're causing and affecting change. Not just on the partners and the people that work in the company, but literally every area you touch … you're also helping hundreds and thousands of underlying families that rely on those advisors for advice.
"In this case, we're putting people in a position to generate better returns to survive what are really just hard-to-navigate markets — more so than 2002, more so than 2008. We'll help people protect their hard-earned money. And that for me and the rest of us at Merchant makes us feel pretty darn good."
The partnership,
And more than just making money, the firm has been busy making friends. So far, Opto has built relationships with more than 150 RIAs across the country.
Co-founded in 2020 by
Opto is also positioning itself to go head to head with incumbent alts providers
The company said it runs on four core tenets: That the private investment process is broken; all investors deserve access to high-quality private investments, most investors are overexposed to public markets, and aligned incentives are key to great partnerships.
But Opto's big draw is providing RIAs an end-to-end solution to craft tailored private market investment portfolios comprising funds from coveted private credit, private equity, real estate, venture capital and infrastructure managers.
As a result of the agreement, Merchant's partner RIAs will gain access to Opto's exclusive private market opportunities and the software to serve affluent clients. That means every RIA in Merchant's ecosystem can now leverage Opto's portfolio-construction tools and access prevetted funds while relying on Opto's team of analysts and technologists to build customized investment strategies.
Merchant partner firms will also have access to a bespoke software interface that will include additional product offerings and insights.
"Merchant is a major strategic investor in RIAs across the country, and we're thrilled to partner with them as we advance our mission of simplifying advisors' lives and increasing investors' access to well-regarded private investments," Machin said in a statement. "It's clear that Merchant shares our vision of being long-term, strategic partners to RIAs and helping them provide better client outcomes."
Marc Spilker, executive chairman of Merchant, said the organization's strategic partnerships are centered around providing capital or solutions to help financial services firms achieve their growth potential.
And for him, allowing clients to include alternatives as part of their overall asset allocation is an essential building block for any high-quality and growing independent wealth management firm.
"Opto's consultative, personalized approach, combined with their unparalleled technology, made Opto the perfect solution for partner firms," Spilker said.
Coming into 2023, RIAs in Merchant's network of more than 60 partner firms collectively managed more than $140 billion in assets in 30 states and across three countries. Bello said those partner firms have already begun tapping into the potential of Opto's offering, adding that advisors need more than just access. They need assistance.
"It's also a matter of fairness, right? I feel like for so many years, people were unfairly kind of kept away from full understanding of the alternative space. And I remember thinking to myself, why can't everybody get a taste of the alternative space? Why is it just for a chosen few when the return stream and the nature of being decorrelated should be enjoyed by everyone?" he said. "And I know not everything is perfect in the world. But I feel like Opto brings this education into the market. But the other thing that they bring, which I for years I looked at it like 'geez why doesn't this exist,' which is the integration. The portfolio-construction mechanism that is tech-enabled and that allows the advisor to truly understand, not just in an absolute sense, but on a relative basis to their overall overall portfolio, how a good basket of right-sized alternatives can actually impact the whole mix.
"I don't know that there's too many situations that present themselves that are easy to use and allow for portfolio construction, and Opto allows for education, curation and integration. And that, to me, mixed with great pedigree from Mark Machin and his team, really makes for this super solution that we're excited about."
Miller, meanwhile, is ready for the opportunity to ride the aforementioned wave and create a few ripples in the industry along the way.
"This is a very positive-sum space to be operating. When someone asks me who our competitors are, there are companies I could name. But the more important way to think about it is when you talk to someone at Visa and you ask who your competitors are, they are not going to say AmEx. They're going to say cash," Miller said. "And similarly today, my competitor is not the other platforms out there. I'm sure we will go toe to toe sometimes. And it'll be in the spirit of friendly competition. But all of our competitors are inertia and the way things have been done. It's the stay-the-course mentality that we don't think is appropriate in this environment. We think most advisors realize that as well."
