Olivia Eisinger, Head of Advisory at Apex Fintech Solutions, joined Julie Cooling, Founder and CEO of RIA Channel, to discuss how the slow organic growth of advisory firms can be improved by offering fintech services to mass affluent and next generation clients.
Apex is a custodian with $170 billion in assets under custody. The firm supports 200 businesses with 22 million customer accounts. The firm was started to support fintech firms, such as Robinhood, Betterment, and Webull, and help them build digital experiences that resonate with today’s consumers. Apex also works with advisors to modernize their clients’ digital experience.
The asset-weighted average age of fintech customers is 42, significantly younger than the clients of advisory firms. Eisinger notes that fintech companies do two things well: reduce barriers to entry and create digital experiences that make it easy for consumers to engage with their finances. Apex facilitates truly digital account opening, instant funding, and fractional share trading. Apex acquired a rebalancer that increases the efficiency of model management and trading.
Apex coined the term augmented advice, which applies to advisors who digitize experiences and drive efficiency, yet maintain human relationships with their clients. Organic growth has stalled at traditional advisory firms, with new asset flows of just 4% of AUM each year, as advisors are targeting a limited pool of high-net-worth clients. With retention rates of 95%, it is difficult to get a client to switch advisors. Fintech companies are doing a great job of acquiring customers, especially the mass affluent and next generation. Traditional advisors can use augmented advice to accelerate growth by offering the experience desired by clients who are now attracted to fintech firms and don’t meet the high minimum investment requirements of advisory firms.
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