Altruist Pitches Tech, Personalization to Advisers

Altruist Corp., a digital custodian for registered investment advisers, started an open channel for advisers to make suggestions and request tweaks to services. The firm, which created the functionality a little over a year after its founding, provides its community of users updates on its progress addressing the issues and requests.

This responsive user experience, combined with the continuous updates resulting from user input, is part of what Altruist believes will help it stand out from the legacy custodians that have dominated the space for years, the company’s head of investment, Adam Grealish, said in an interview last Friday.

“Newer features are coming out weekly, and larger ones twice a month,” Grealish says. “We are truly co-creating this platform with advisers.”

Culver City, California-based Altruist was founded in 2018 and has raised $280 million from investors that include the likes of investment giant Vanguard Group Inc. and a $112 million round led by private equity firm Insight Partners and and investment manager Adams Street Partners earlier this month. In March, the firm roughly doubled the amount of advisers on its platform to more than 3,000 with the acquisition of Shareholder Service Group, according to an announcement of the deal, which is still pending regulatory approval.

The deal added both clients and capabilities to Altruist’s digital account opening, trading, reporting and billing services. It also made Altruist the third-largest custodian by advisers behind industry leaders Charles Schwab, which supports more than 15,000 advisers, and Fidelity, which has more than 3,600, according to company websites.

Altruist’s business proposition to advisers—and its investors—has been a one-stop custodial service combined with a low barrier to entry for clients. That includes easy client onboarding, lower fees and consolidated software programs, according to Grealish.

“It’s challenging for advisers to assemble their tech stack. … Opening accounts is challenging, getting the right portfolio management software is challenging,” Grealish says. “The idea is that we are putting all this together in one package so they can run and scale their practice.”

Long-Term Investors

Grealish says the firm’s digital-forward and personalized nature is key in an adviser industry that is evolving toward more holistic financial advice and offerings. He says that as more and more people are managing their own retirement savings—as opposed to the old days of a company pension—RIAs are stepping in to advise on workplace 401(k) investments, rollovers and retirement income.

“Financial advisers are playing a much bigger role in thinking about retirement, whether investments are sitting in plan or are being rolled over to an IRA,” Grealish says. “Retirement accounts are a very meaningful percentage of overall accounts and overall assets among Altruist advisers.”

By seeking to give advisers access to faster, cheaper resources, Altruist can help independent advisers manage more complex client needs, the head investor says. That includes being able to put a human touch to the many developments in robotic advice or consumer-managed investing tools.

“We are absolutely thinking about this holistically in terms of what’s in each retirement account and how to think about that with respect to the larger plan with taxable accounts, cash flows going into accounts and cash flows going out,” he says.

Reaching the Masses, Digitally

The RIA industry was managing about $128.4 trillion in the U.S. at the end of 2022, with more than 80% of advisers working in firms with 50 or fewer employees, according to the Investment Adviser Association.

Advisers care a good deal about the “front-office” technology by which they run their practice, according to research released Tuesday by consultancy Cerulli Associates, a trend that was only cemented by operating during the pandemic.

In a survey of financial advisers, Cerulli found that the technologies most frequently cited as creating a positive client experience include e-signature (77%), video conferencing (75%) and the client portal (64%).

This front-office focus for advisers will mean they are looking for the best possible services to meet their needs, according to Cerulli. Grealish says Altruist is up to the challenge of bringing in more advisers to keep on its growth trajectory.

“Advisory practices are looking to simplify and scale and are generally looking to models to help them take one moving part and simplify it,” Grealish says. “When they know those areas are being done well, they can focus on the planning part, the client relationship part and building their business overall.”