SMArtX Advisory Solutions is rolling out a free version of its wealth management platform with the needs of smaller firms and cost-conscious advisors in mind.
Called
Many features in the SMArtX TAMP platform are also present, including an AI portfolio construction tool, cash management tools, tax impact and tax harvesting technology.
"The creation of SMArtY leverages managed accounts technology that helps advisors scale their business, and offers it in a simple, straightforward, free solution,"
But why go free-to-play at all?
And as a former advisor himself, Rapoport wanted to deliver a free solution that wouldn't blindside users with unexpected paywalls once they made it part of their workflow.
"I'm actually still a registered advisor today even though I don't practice," Rapoport said. "I don't like being nickeled and dimed. I don't like being hit with a 'gotcha,' or backdoored with fees that I wasn't aware of. So it's super exciting for us to be able to offer this entirely free and really provide value that just isn't available in the market."
As SMArtX gears up for the launch of SMArtY, Rapoport caught up with Financial Planning to talk about his team's motivations, the benefit of empowering advisors of all sizes and why now is the right time to bring it to market.
This interview has been lightly edited for length and clarity.
Financial Planning: How long have you been considering the idea of releasing a free version of the SMArtX platform?
Evan Rapoport: We actually came up with the name about three years ago, so we've been thinking about this for a long time. And, you know, we primarily focus on the larger advisor or enterprise and we really haven't had a product that caters towards the type of advisor that uses free models or model marketplaces and less costly solutions.
And right outside of that, there are (advisors) that are a little bit more sophisticated. Either have an in-house CIO or know how to assemble strategies properly when using outsourced providers. With this product, we really are looking to broaden our reach and address advisors that are either using free or low-cost solutions, but are still having to do a lot of the work themselves. For example, if I use some of the free models that are out there, I still have to go pull them down. I have to buy or rebalance or use the tool. I have to trade it myself. And God forbid I make an error, that's all on me, right?
Also I need someone to actually do the training if it's not me. And if it is me, it takes time away from my day. We're able to now do all of that at no cost for the advisor, and really give them that depth within their firm and that extra resource to allow them to focus more on their client and to grow their organization.
And it's not just for smaller advisors necessarily, although this will certainly address a lot of the concerns that smaller advisors have. The reason that a lot of them use their own models and are trying to manage money themselves is because they don't want to go out there and spend on the outsourced resources because they can't afford it yet. Those advisors are limited versus the larger advisors who can scale their practice and can afford outsourced investment management. This democratizes the playing field for those types of advisors.
FP: How important was it to include a very complete package in this free offering?
ER: It was very important for me specifically. I don't know if people know, but I formally am an advisor. One of the important parts of the pricing model that SMArtX has put forth is really that one price covers everything. We don't componentize and charge for individual services like tax-loss harvesting. Some firms charge 10 basis points just for that. We charge one fee, and that includes everything. So the advisor doesn't have to worry about whether they need to use a service and what that service costs. We don't want that advisor to think twice about servicing their clients with all the proper tools that are available because of cost. That's the way the SMArtX has always worked. Now we're taking that same model and bringing it over to SMArtY and are able to offer the complete solution at no cost.
Keep in mind, if you decide you want to use services that are not complementary with SMArtY — and by the way, many advisors may never use them — but if you want them, they're there. They're small charges for them. But for most folks, it's going to be an entirely free solution.
FP: You say this has been many years in the making. So why is now the right time to launch?
ER: It is really that we are starting to see more demand. Not only for the outsourced investment management, but some of the other products that we're introducing within SMArtY. And what's great about SMArtY is that it's not just what's available on SMArtX today. In addition to that, we've also added some new tools. One of those new tools is true AI for portfolio optimization and portfolio construction, which has never been available and is not available today, even if you bought it. And what that means is you can go into our system and ask the system to build you a portfolio based on the parameters that you set. And you don't have to go and search and try to do the work and computing and optimizing. The AI will do that for you. So that's one really great tool that we're adding to this in addition to what's there.
One of the other great tools is our new tax technology that will show the implication of what the tax would be on a trade. So for example, if you decide to change models, this is what the tax implication would be. What is shortly coming, also at no cost, is full tax transition technology. And so that would be akin to what's out there from firms like 55ip. And that will also be free within the system.
But another reason is that we've got some great partners. As a firm, we've now grown to over $31 billion in assets. And we work with some of the largest institutions in the world. And that's earned us a lot of credibility in the market. And we've established some wonderful relationships with asset managers who know that we're able to really work in a consultative way with our clients and bring them advisors that are appropriate for their service. So it is their support, because this is a manager-supported platform, that allows us to provide all these services at no cost. And candidly, we were ranked as the fastest-growing TAMP ever by age. It's that type of notoriety that has allowed us to establish these relationships; to then have the ability to provide these services at no cost because of those relationships.
FP: Any words of welcome to advisors who may join the SMArtX via SMArtY?
ER: We have solutions for everybody. So even if today you were only using model portfolios, but you want to matriculate and eventually use more services, we have a more sophisticated offering for you also.
And it may be that you come in today, and we talk to you about what you're looking for, and maybe SMArtY isn't the right solution but SMArtX is. So sign up for the waitlist, because that is first come first serve. And we've already got a lot of folks signed up. We know we can't handle everybody day one, and the ones that get in there faster will be able to get better discounts for themselves and for their clients. And give us a call. We are here to talk to you, consult with you and discuss the various offerings because, like I just mentioned, I think mostly it is that conversation.
Because we're not selling anything here. It's free. So it really becomes more consultative. Is this right for you? Because if it is, there's tremendous value. If it's not, you'll know, and we'll know. And maybe we can provide the service through SMArtX. Or maybe you continue to use what you're using today. But when there's no cost, and you're talking about what could be hundreds of thousands of dollars worth of value. I think, if nothing else, it's worth a phone call to our team to discuss the opportunity and to see if it's right for you.
