Traditional financial service models are out. Adding even a slice of technology to your delivery platform can boost your enterprise value and accelerate your growth.
It’s been a bumpy couple of weeks in the market but you can tell where investors are betting the asset management industry goes from here.
Conventional brokerage stocks like Raymond James and Charles Schwab have dropped 12% over the past month. LPL has given up 16% of its market cap.
But AssetMark is still up 20% over the same period. It went public at $20 and today is the first time it dropped below $24.
The writing is on the wall. Wall Street itself thinks the old face-to-face investment advisory model has reached its limit.
The future belongs to companies like AssetMark that bundle that advice with a slice of artificial intelligence and distribute it via modern technology.
That’s what “fintech” is all about. And if you want a piece of that success story for yourself, you’re going to want to watch our webinar on Tuesday.
We’re talking about how traditional RIAs and other service firms are evolving into asset management platforms like AssetMark.
I have to admit it’s a little advanced for some people. You need to be ambitious and alert to make this leap. But the rewards are immense.
Firms that can market themselves as “TAMPs” can sell their proprietary expertise to other advisors as well as their own clientele. Suddenly the entire world becomes your sales force, driving assets into your strategies even if you don’t manage them directly on your own.
In return, of course, you get a piece of the overall fee income. As your reach scales, that can add up to a lot of cash generated on the platform you already built to attract your existing clients.
Think of it as letting other advisors subsidize your hard work. Maybe you’ve created a proprietary risk management system that protects investors when the market shudders. Or maybe you’ve put time and resources into a killer small cap allocation, emerging markets, alternative assets or some other rarefied niche.
Either way, becoming a TAMP vendor has helped a lot of firms just like yours take their business to the next level. They’re institutions now, running models for multiple RIAs. And they’ve grown far beyond the point where normal RIAs hit a wall.
Look at AssetMark. It’s one of the biggest TAMPs around now and the firm is worth $1.8 billion. That’s 5 times revenue and about 25 times annual profit. When was the last time you saw even a world-class RIA sell for above 3.5 times revenue?
LPL is a best-of-breed brokerage network. Right now Wall Street says it isn’t even worth 1.1 times revenue. Even if it found a buyer, that’s the multiple on the table right now.
Compare to other technology-driven companies like Envestnet, SEI, Fiserv or Morningstar, I’d rather build a business like AssetMark or one of its privately held counterparts . . . all worth double to triple a typical pure RIA firm, no matter how dynamic or large.
And it isn’t just the public market that pays a premium for remote delivery. This is why venture capital pushed a record $39 billion last year at start-ups that automate everything from nickel-and-dime cash transfers to all the intricacies of running an elite family office.
We’ve talked a lot in recent years about the joy of harnessing that automation inside a conventional RIA structure to effectively bring a “robo” in house. This is a little different. It’s about putting your own robot together and letting other firms pay to use it.
That’s where venture capital sees the big money. It’s definitely where high-tech disruption swings from existential threat to strategic opportunity for you.
All you need to do is take the steering wheel instead of hiding under your bed waiting for retirement. If you’re ready for that kind of opportunity, this webinar should hit the spot.
We’ve got people from AssetMark and FTJ FundChoice (soon to be Orion Portfolio Solutions, speaking of strategic evolution) as well as the smartest consultants in the space.