Orion Advisor Services has purchased Advizr, a financial planning tech company, in a move to incorporate the technology into its turnkey asset management program and tech tools while helping clients take more of the reins in the planning process.
“Our advisors are having to compete with Schwab’s retail planning offering, with Vanguard’s, with Betterment’s, and they have to be able to offer something that's on par,” says Eric Clarke, CEO of Orion, who says the company had been looking into an acquisition of a financial planning tech company for about a year.
The deal is yet another signal that financial planning technology has become a vital part of an advisor’s tech stack — and that integrations don’t always suffice. Earlier this year, one of the portfolio management company’s competitors, Envestnet,
“Not everyone, but more and more [clients] want one-stop shopping,” says Craig Iskowitz, CEO of tech consulting firm Ezra Group.
The shift to integrate planning and investing is part of a larger industry trend, according to Rob Foregger, founder of NextCapital, who noted the Envestnet and Fidelity deals. "The future is integrated goal-based financial planning and automated portfolio management,” he said in an email.
Clarke and Hussain Zaidi, CEO of Advizr, declined to provide terms of the deal. Clarke did note that Orion is spending seven figures a year, a “mutli-million dollar investment,” in financial planning technology integration and improving client experience.
Orion is one of the leading portfolio management and client portal providers, according to Financial Planning’s annual
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Advizr works with approximately 900 advisors, about 20% of which are advisors for employee retirement plans. Prior to the acquisition, it marketed itself primarily as a service for the over 500,000 employees on its platform.
Iskowitz didn’t expect Orion to buy Advizr.
“[Advizr] had just gotten funding [two years ago], so I didn’t expect them to be acquired so quickly,” he says. “They were getting a lot of traction, especially in the 401(k) space.”
For Orion, Clarke thought advisors were not utilizing financial plans as much as they could be. About 70% of the firms that use Orion technology use financial planning software, he says. Of those firms, 70% of the households don’t have a plan.
“We realized that this planning process was a bit broken, and we needed to do something to bring better technology to our advisors and extend that out to their households,” Clarke says.
The currently regulatory environment has only enhanced that need, he says.
“As we look at the fiduciary requirements and the ways that different states and the regulators are defining fiduciary, obviously we feel it's very important that our advisors understand the investors' goals, have a full picture of their net worth, have an idea of the amount of risk that the investor wants to take, and then bring all of those elements together,” he says.
This planning-centric model will be “on par with the robos or the Personal Capital’s of the world,” according to Clarke.
Orion was also attracted to how Advizr’s technology allowed clients to initiate the planning process themselves.
“[Advisors] can put our technology right on their website, and the clients can start that process and register all on their own,” Zaidi says.
Orion also has plans to make the TAMP it purchased last year, FTJ FundChoice, more focused on planning, retirement and income-oriented solutions, rather than only on investments.
"The future is integrated goal-based financial planning and automated portfolio management,” says Rob Foregger, founder of NextCapital.
“What we were really attracted to with Advizr’s offering is that they provide the client and the advisor the ability to do planning on an iterative basis. So in other words, they can do episodic planning,” Clarke says. “So if you want to do a little work flow around college savings, you can do that. If you want to do a workflow only relating to retirement income, you can do that.”
Orion anticipates to have Advizr planning tech available to its clients in August and integrate it into its TAMP in November, according to Clarke. The Advizr client portal will be available around November.
“We’ll be doing a lot of work over the next six months to bring the technology together, bring the companies together,” Clarke says.
Orion will not drop its current integrations with the nine financial planning software companies it works with, according to Clarke.
Zaidi and Mustapha Baassiri, COO of Advizr, will be joining the executive team at Orion as president and executive vice president of Financial Planning Solutions, along with about 30 other Advizr employees.
“The plan is for everyone to stay on,” Zaidi says.
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Orion is currently undertaking a rebranding initiative to align messaging around its advisor technology, TAMP and asset management company as well as its trust company. The initiative should be complete in September, according to Clarke.
Will other companies follow Fidelity, Envestnet and now Orion through acquisitions to combine financial planning with portfolio management?
“You won’t see everyone buying [a financial planning tech company], but it’s definitely raising heads,” Iskowitz says.
