In 2012, a family office had an idea to build a turnkey asset management platform (TAMP) for RIAs. It acquired one willing to embark on that quest and, after most of a decade in beta development, GeoWealth launched.
Three years ago, GeoWealth had no sales team and was growing slowly by word of mouth. Now, the TAMP, backed by J.P. Morgan and other investors, is managing almost $7 billion for more than 60 RIAs and is poised to grow even more. It just hired its fourth salesperson, is adding more features to its platform this fall, and raising a Series B round of funding expected to close and be announced later this year. (The company declined to share details about its fundraising.)
“Why not be aggressive? That’s really our approach,” Colin Falls, president at GeoWealth, told RIA Intel.
TAMP is a broad term but all of them provide a form of outsourced investment management services to financial advisors. Some provide research, strategies, and model portfolios, or even manage assets on behalf of advisors. Others provide portfolio management, reporting, billing, and other software services. Most do some combination of those things.
Falls says TAMPs of the future will do everything and the short list of giant TAMPs dominating the market already offer a lot. But the big TAMPs have historically focused on broker-dealers and GeoWealth is catering to the needs of RIAs. (At least one of the largest TAMPs, AssetMark, has also recognized this and created its own suite of services to better serve RIAs earlier this year.) GeoWealth has a similar look and feel to established broker-dealer platforms — and the scalability — except it was designed with RIAs in mind, according to Falls.
TAMPs generally charge clients anywhere between 35 and 50 basis points, a considerable fee because wealth managers typically charge clients about 1 percent. “That’s not going to get much traction in the RIA space,” Falls said.
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Among other ways GeoWealth caters to RIAs it is a hybrid between a software as a service (SaaS) model and a TAMP. The company charges wealth managers a fee per account to use its services and only a basis-points fee for assets managed in its model portfolios. Advisors could save 50 percent or more on fees relative to other TAMPs, Falls said.
“We really are a software platform and that gives us pricing power,” Falls said. “In a world of fee pressure, we think everyone will be coming to us.”
TAMPs believe wealth management firms facing pressure to grow and scale their business will increasingly turn to the platforms in the future. Meanwhile, asset managers recognize financial advisors are an important conduit for their funds and models, so they are eager to partner with TAMPs that provide them. GeoWealth’s third-party model marketplace participants include J.P. Morgan Asset Management, Fidelity Investments, Pimco, VanEck, Global X, and others.
GeoWealth recently improved what it calls the Advisor Service Center, which automates tasks like portfolio rebalancing that can then be approved with a couple clicks of a button. Features like that save advisors time. “We’ve eliminated many of the manual tasks that bog down advisors and their teams and now present a platform that eliminates complexities so that they’re free to invest more time serving the needs of clients,” Jack Hannah, chief operating officer at GeoWealth, said.
Alleviating back-office headaches of an advisory business is why small RIAs managing $50 million to $100 million are choosing GeoWealth. But larger, fast-growing RIAs are using it, too.
From 2017 to 2020, GeoWealth’s 10 biggest clients grew their aggregate assets under management to $9.47 billion at a 42% compound annual growth rate (CAGR). That growth included the market’s performance, but even with it stripped out, those firms grew faster than most RIAs. Those same 10 GeoWealth clients also doubled the number of accounts from 30,700 to 61,802 over the same three-year period.
GeoWealth has a total of more than 100,000 accounts affiliated with about 900 individual advisors using the platform.
In addition to raising another round of capital later this year, GeoWealth also plans to launch Manager Portal, a place where third-party asset managers can update and manage their product suites on the GeoWealth platform.
Although much smaller than other TAMPs in terms of assets (Envestnet had more than $263 billion under management at the end of 2020), GeoWealth views itself as a competitor today and expects RIAs and assets will come. Although, it is not resting on any laurels.
The platform will never be finished, Falls said.
Michael Thrasher (@Mike_Thrasher) is the editor at RIA Intel and based in New York City.
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