Wealth management is taken very seriously by Americans given that confidence in the future of social security is at an all time. The infrastructure needed for prudent planning an operational support for firms and advisors hasn’t changed much. Enter AdvisorEngine. Formerly Vanare, this NYC startup a digital wealth management platform for firms and advisors to deliver unparalleled service to clients.
AlleyWatch spoke with CEO and cofounder Rich Cancro about the startup and the latest round of funding.
Who were your investors and how much did you raise?
We raised $20 Million in Series A financing from WisdomTree Investments, Inc. (NASDAQ: WETF), which was announced on November 18, 2016. Previously we raised about $7.5 million in seed rounds.
Tell us about your product or service.
AdvisorEngine is a next-generation wealth management technology platform that uniquely supports both traditional advisor, face-to-face client relationships and completely digital, low-touch interactions through our white-label RoboAdvisor.
Our open architecture investment platform provides a fully customizable Roboadvisor, dashboards to analyze and track business development, billing, and performance reporting. These features help wealth management firms serve both the mass affluent and high-net-worth market segments, scale profitably, and connect with the next generation of clients and advisors.
What inspired you to start the company?
We saw that the market for financial advice was shifting. Millennials don’t trust financial markets and want an engaging digital experience. Parallel to that, financial advisors are facing increased competition, fee pressure and ongoing regulatory costs.
This has resulted in a climate where financial advisors are looking for new technologies to create a compelling digital experience for both their clients and themselves that will allow them to scale their current business model and simultaneously appeal to the next generation of investors.
How is it different?
AdvisorEngine differentiates itself from the market in 4 key ways.
First, we are the only wealth management technology platform built for both financial advisors and their clients to use. A firm can use our platform to offer a direct-to-consumer low touch offering, and provide the same technology for advisors to serve traditional client relationships.
Second, we have an incredibly flexible open architecture investment framework that makes it possible to incorporate a financial firm’s models, risk questionnaires, asset allocation methodologies and investments.
Third, our customizable RoboAdvisor can be delivered via APIs for financial firms that wish to create and control the entire client experience.
Lastly, AdvisorEngine’s enterprise controls enable financial firms and advisors to establish functional roles (e.g., home office, compliance, advisor, admin) and data entitlements to support the various roles and levels of the organization.
What market you are targeting and how big is it?
We serve financial institutions and financial advisors. This segment represents over $25 trillion of investment assets in the US.
What’s your business model?
AdvisorEngine’s B2B business model is fundamentally about asset gathering. We earn basis points on all assets managed on the platform. As a financial advisor scales their business and brings more assets on the AdvisorEngine platform, our profitability increases.
What happened to Vanare?
Vanare is the firm’s former name. The name change to AdvisorEngine underscores our vision to empower financial firms and advisors using integrated technology across the full client spectrum, ranging from high-net-worth clients to lower-balance relationships. Now it’s easier for financial advisors to understand who we were built to serve and what are vision is – to help them grow their business in a highly scalable manner.
What was the funding process like?
We met with many VCs and strategic investors. Ultimately, we wanted to partner with an investor who was aligned with our vision and was committed to supporting our long-term growth plan. We’re excited about the relationship with WisdomTree because they’re focused on forward-thinking financial advisors, just like us.
WisdomTree’s strategic investment gives us added financial strength, allowing us to continue innovating and help to enhance our client solutions. We will benefit from WisdomTree’s asset allocation models and deep distribution network, allowing us to more quickly reach a broader population of financial firms and advisors.
What are the biggest challenges that you faced while raising capital?
Time and focus are key. We were rapidly growing so there was a competition for our time. We still needed to spend time and focus on growth initiatives like product enhancements, brand awareness, and sales, while at the same time spending cycles on capital discussions. This may be a common problem that many companies in their early stages experiences.
What factors about your business led your investor to write the check?
There were several key factors that appealed to WisdomTree. A key reason was that AdvisorEngine was first and foremost an enterprise solution built for financial firms and advisors. Like WisdomTree, innovation is in our DNA. Finally, our companies are philosophically aligned in many ways, namely both sharing a burning desire to help financial advisors provide better outcomes for their clients.
What are the milestones you plan to achieve in the next six months?
We are focused on several key milestones over the next several months: First, we are adding resources in all areas of our company ranging from technology engineers, to sales and service team members. These new resources will help us continue our leadership and innovation in the space to grow even more quickly. We are also focused on finalizing the rebranding and increasing our marketing efforts.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
Demonstrate product-market fit. Companies should focus relentlessly on product development and listening to the customer. For us, speaking with financial advisors has been critical in developing a product that meets the complex demands of the market.
Where do you see the company going now over the near term?
AdvisorEngine will enhance our overall execution and continue to grow as an independent, open architecture firm. We will keep building new product features and enhancements to support the evolving needs of financial advisors. At the same time, we intend to increase our focus on marketing and bringing new clients onto the AdvisorEngine platform.
Where is your favorite fall destination in the city?
Hudson River Park. It’s a quiet, tranquil place to escape from the urban hustle and take in the beautiful fall foliage. I love walking and biking along the river from Chelsea to the SoHo, and beyond.
