After what might be an exhausting courtship, nothing dampens the excitement of winning a new client like the onboarding process. But what advisors say can amount to days of back-and-forth with clients or custodians has been cut to less than two minutes by a new company.
Altruist, the new digital, commission-free custodian for RIAs, promised in September that it would save advisors up to 90% on technology and custody costs and drastically ease the task of opening new accounts.
Jason Wenk, Altruist’s founder who already started two successful RIAs, Retirement Wealth Advisors, and Formula Folios, which grew just shy of 14,000% over three years and now manages over $3.2 billion, has acknowledged that launching a new custodian is an undertaking that requires considerable capital and skill.
Observers wonder if any custodian other than Charles Schwab, Fidelity, TD Ameritrade and BNY Mellon’s Pershing will be a viable business in the future. Half of the $6 trillion managed by RIAs in need of caretakers is fragmented and largely serviced by sub-scale custodians that “cannot compete on product, service, or economics,” according to a September note from JMP Securities.
Still, Altruist has garnered a small, sort of cult following of fervent RIAs on social media and perhaps proved itself a little this week.
Early Wednesday evening, Wenk posted a video on YouTube of himself onboarding a new fictitious client – NBA star Lebron James – using Altruist.
From beginning to end, including an Automated Customer Account Transfer Service (ACATS) transfer of securities and all of the would-be advisor’s paperwork, such as a fee agreement and Form ADV Part II brochure, it took the founder under two minutes.
It can definitely be done in less time, too. Wenk spent 18 seconds finding the right industry and position to file James under. He eventually settled on “Arts, Entertainment, and Recreation” and “Athlete.”
Wenk didn’t just fly through the onboarding process because he was familiar with it, either. Donald Windle, the founder of Oklahoma City-based Windle Wealth and the first of 10 beta users of Altruist’s portal and said it took his colleague less than 30 minutes to integrate his entire book of business with his current custodian, TD Ameritrade.
“Here’s the crazy part. I pushed the billing onto one of my staff members. I just gave her a login and I didn’t even tell her how to do it. And she had it done it 30 minutes. There was no training, there was nothing, if that speaks to the simplicity of it,” he told RIA Intel.
Windle, who plans to custody his clients exclusively with Altruist next year, said the only negative was that his clients had to create new logins and passwords to view their accounts through Altruist, a small inconvenience in his mind. He tells every new client that he annually reviews his custodial relationship and the switch is going to save his firm an estimated $46,000 per year on software alone, he said.
The video made the client onboarding with Altruist seem ideal, but it is still subject to human error.
Wenk incorrectly typed that James was born Jan. 10, 1999. He was born Dec. 30, 1984.