Wealthtech Roundup: Smarsh, Orion, Dynasty, BetaNXT, COMPLY, FMG And Ritholtz

Sheldon Cummings
Chris Latham, Managing Editor, Wealth Solutions Report

Smarsh Enhances Risk And Compliance Portfolio, Orion CEO Plans To Retire, Dynasty Launches Investment Bank, BetaNXT Upgrades Operations And Communications Tools, COMPLY Hires New CMO, FMG Achieves 400% Growth And Ritholtz Files For New Robo

In this edition of the Wealthtech Roundup, we speak with our newest Wealthtech Leader of the Month, Sheldon Cummings, General Manager of the Corporate Business Unit at Smarsh. Other entries this month include Orion Advisor Solutions connecting its client portal within Redtail CRM, and CEO Eric Clarke planning to retire; Dynasty Financial Partners launching Dynasty Investment Bank, and promoting from within as two executives prepare to depart; BetaNXT releasing client communications and outsourced operations enhancements; FMG achieving 400% growth in enterprise business relationships since 2021; COMPLY hiring veteran technology marketing executive Gayle Nixon as CMO; and Ritholtz Wealth Management preparing a robo platform called Good Advice.

1. Smarsh Brings Together Entreda And Privva Subsidiaries With Professional Archive

Smarsh, a digital communications compliance and intelligence provider, announced at the FINRA Annual Conference that its Privva vendor risk management and Entreda cyber compliance subsidiaries joined its unified risk and compliance portfolio along with the Professional Archive platform for RIAs and broker-dealers. Smarsh acquired Entreda in 2020, which in turn acquired Privva in 2021. The upgrades aim to evolve Smarsh into an easy-to-use and time-saving cloud-based suite that archives and captures virtually all data across a firm’s channels, surfaces risk in various forms and enables firms to meet regulatory obligations – while automating processes. Smarsh serves global banks, broker-dealers, RIAs, insurers, and state and local government agencies.

And now for our Q&A with Wealthtech Leader of the Month Sheldon Cummings, General Manager of the Corporate Business Unit at Smarsh.

Sheldon Cummings, General Manager, Corporate Business Unit, Smarsh

WSR: What have regulators been telling wealth management firms to focus on regarding vendor risk management, cybersecurity and digital communications oversight? Are there any specific types of threats that are most prevalent for each of these focus areas?

Cummings: Regulators are increasingly concerned with the amount of cybersecurity threats as the interconnectedness of financial services firms could cause a “waterfall” effect should a breach occur. Risk areas include inadequate controls for data and privacy breaches. Proposed SEC rules on Cybersecurity Risk Management may also require additional transparency through reporting and disclosure.

Vendors present opportunity for risk where data sharing is prevalent. Regulators are emphasizing the importance of a robust due diligence framework. Firms should develop standardized processes for selecting vendors, ensuring they align with the firm’s risk appetite and regulatory requirements (this should include ongoing monitoring and periodic reassessment). Regulators expect firms to enhance operational resilience by strengthening due diligence and controls for third-party risk.

Regulators continue to increase focus on digital communications compliance through examinations and fines. The SEC has stated enforcement actions are necessary to rebuild trust within the industry and to help fix a culture of non-compliance around communications. Off-channel communications are the root of books and record and supervision failures across the industry.

WSR: What are some best practices that wealth management firms can implement to safeguard against the major risks stemming from vendors, security breaches and problematic digital communications?

Cummings: Firms can strengthen relationships through open communication, vendor assessments and onsite visits to understand risk management practices and data protection. Beware of vendors unfamiliar with financial regulations and cybersecurity. Proactively assess data implications considering factors such as vendor affiliations that could expose data to unauthorized parties.

Regular monitoring and audits help assess effectiveness of vendor, cyber and regulatory risk management policies. Identify gaps, verify policy compliance and address issues promptly. Collaborate with IT to evaluate cybersecurity threats and maintain ongoing dialogue for success.

Prioritize data privacy and encryption in digital communications and storage. Establish policies for secure transmission, storage and archival of sensitive client information. Work with IT to implement and update encryption protocols aligned with industry best practices to prevent unauthorized access and breaches. Should a breach occur, compliance will need to work swiftly with IT to fulfill regulatory obligations under the proposed rules around Cybersecurity Risk Management from the SEC.

2. Orion Connects Client Portal Within Redtail CRM, CEO Eric Clarke Plans To Retire

Eric Clarke, Founder and CEO, Orion

Orion Advisor Solutions connected its client portal within Redtail CRM in an effort to improve how advisors attract prospects and onboard new clients, minimize manual data entry, create and deliver proposals. Orion’s platform enhancements also include three times faster billing, reporting experience and report generation, and nine times faster search query. A week before the Redtail announcement, Orion Founder and CEO Eric Clarke announced his intention to retire by the end of 2023. He plans to remain on Orion’s Board of Directors and continue providing strategic direction and counsel. Charles Goldman, Executive Chair of the Board, is leading the CEO search. Orion’s combined platform services $3.6 trillion in assets under administration and $61.7 billion of wealth management platform assets.

“We are excited to roll out the industry’s first CRM with a connected client portal, made possible by our acquisition and integration of Redtail Technology,” Clarke said. “This is something no other CRM provides and will vastly improve the client experience and deepen relationships between advisors and their clients.”

3. Dynasty Promotes From Within As Execs Leave, And Launches An Investment Bank

Shirl Penney, CEO, Dynasty Financial Partners

Dynasty Financial Partners, a company largely known for wealthtech supporting RIA growth, launched Dynasty Investment Bank to serve buyers and sellers of wealth management firms inside and outside the Dynasty Network, as well as for other firm types. The investment bank’s capabilities include guidance on M&A, sales and divestitures, recapitalizations, strategic valuations, succession planning, RIA search and placement services, as well as M&A transition and integration.   Separately, Dynasty made internal appointments, CityWire RIA reported. Jamie Gardiner, formerly head of sales for ASx and for RIA business development, will become director of RIA growth platform Advisor Services Exchange (ASx). Brendan Bell, formerly chief of staff to Dynasty CEO Shirl Penney, will become director of client referral program Dynasty Connect. Meanwhile, Dynasty confirmed that its COO and Co-Founder Ed Swenson, as well as Chief Client Officer Austin Philbin, are leaving the company.

“At Dynasty, we are facing substantial demand for M&A and investment banking services from advisors in our Network and outside our Network,” Penney said. “With our deep expertise and years of experience working with hundreds of leading advisors, we are well-positioned to offer RIAs a wide range of investment banking capabilities in this ever-complicated market.”

4. BetaNXT Releases Client Communications And Outsourced Operations Enhancements

BetaNXT, a provider of wealth management infrastructure software, launched two service enhancements: an Operations as a Service (OPaaS) outsourcing solution and enhanced Client Communications Solutions. The company also helps firms streamline their securities, custody and operations processes with real-time data APIs and integrated workflows.

Stephen Daffron, Chairman and CEO, BetaNXT

OPaaS is designed to streamline middle and back-office operations, allow firms to reduce costs, realize new revenue streams, reduce complexity and better manage risk. The communications enhancement aims to help financial services firms create, generate, deliver and manage statements, trade confirmations, client letters and tax reports. BetaNXT is a portfolio company of the private equity firm Motive Partners, whose wealthtech investments also include InvestCloud and Tegra118.

“Investors are expecting increasingly personalized financial services solutions where they can manage all their finances in one place, on devices that are convenient to them, and as a technology company, BetaNXT is consistently looking to build and update innovative solutions to meet the needs of brokers, advisors and investors,” said Stephen Daffron, BetaNXT Chairman and CEO.

5.  COMPLY Hires Veteran Tech Marketing Executive Gayle Nixon As CMO

Regtech firm COMPLY announced the appointment of Gayle Nixon as CMO. Nixon, who has over 15 years of experience in B2B marketing, marketing technology, growth-based strategies and team leadership, most recently served at legal technology service provider Litera as Senior VP of Marketing.

Gayle Nixon, CMO, COMPLY

COMPLY was launched in November 2022 as a corporate umbrella with unified leadership for its subsidiaries: ComplySci, National Regulatory Services (NRS), RIA in a Box and illumis. Nixon joins COMPLY’s newly integrated leadership as it works to accelerate the firm’s strategic growth initiatives.

“Adding Gayle and her deep marketing experience to our executive leadership team will further enable COMPLY to cement its place as the leading provider of compliance software, consulting and education resources for the financial services sector,” said the firm’s CEO, Amy Kadomatsu. “She will be integral in creating value-based marketing approaches that demonstrate COMPLY’s ability to solve complex compliance concerns across a range of financial firms.”

6. FMG Achieves 400% Growth In Enterprise Business Relationships

Scott White, CEO, FMG

FMG – which provides marketing content, automation and websites for financial advisors – achieved 400% growth of enterprise business relationships since 2021. Supporting more than 40,000 financial advisors and insurance agents, its relationships include Advisor Group, Cetera Financial Group, Atria Wealth Solutions, Baird, Kestra Financial and LPL Financial. The company’s integrations include Microsoft Dynamics CRM, Salesforce, Redtail, Wealthbox and Ebix. Earlier this year, FMG launched an AI-powered “one-click” personalization engine that helps financial advisors automatically generate original social media captions about shareable content in FMG’s library.

“The senior hires in enterprise technology, sales and relationship management have greatly enhanced our ability to infuse products and technology with enterprise know-how,” said Scott White, FMG’s Chief Executive Officer.

7.  Ritholtz Wealth Management Rolling Out ‘Good Advice’ Automated Platform

Barry Ritholtz, Chairman and CIO, Ritholtz Wealth Management

New York-based Ritholtz Wealth Management is preparing a new robo-advisor platform called Good Advice Automated Wealth Management, according to a recent filing with the Securities and Exchange Commission. The service encompasses asset management, financial planning and financial consulting.  Clients using Good Advice complete an online personal risk tolerance assessment and provide additional information about their financial goals. Based on the information provided, a model portfolio – generally of diversified investments – is selected for the client, according to the SEC filing. The automated platform also aims to conduct active tax-loss harvesting.

Earlier this year, Ritholtz Wealth Management, an RIA that currently oversees more than $2.9 billion in assets under management, agreed to acquire the book of business of BlackRock’s soon-to-be-shuttered FutureAdvisor robo platform, which has over $1.7 billion in assets. Blackrock acquired FutureAdvisor in 2015, initially positioning it as a way to meet the needs of banks, insurers, broker-dealers, 401(k) platforms and other firms.

Chris Latham, Managing Editor at Wealth Solutions Report, can be reached at clatham@wealthsolutionsreport.com

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