Altruist, the Los Angeles-based “modern custodian built exclusively for RIAs,” sent a shot across the bow of custodian market leaders Charles Schwab and Fidelity Investments this week by announcing it is taking aim at their dominance in the $128 trillion RIA market.
Altruist, which says its vertically integrated approach makes it the first company ever to combine clearing, custody, and a complete suite of advisory software into one solution, announced April 12 a new $112 million series D round of funding led by Insight Partners, new investor Adams Street Partners, and continued support from existing investors. Notable industry leaders ex-Vanguard CEO Bill McNabb, Carson Group founder and CEO Ron Carson, and Mariner Wealth president and CEO Marty Bicknell also participated in the round.
The announcement comes just weeks after Altruist’s acquisition of renowned custodial platform Shareholders Service Group (SSG), and the launch of a new brokerage offering that cemented Altruist as the third-largest custodian as measured by number of firms served, behind Fidelity and Schwab.
Altruist’s new funding adds to a previously undisclosed $110 million series C raised in November of 2021 and led by Declaration Partners with Venrock, Insight Partners, and Vanguard participating, bringing its total funding to more than $290 million.
After a year of unprecedented growth (Altruist said in a statement announcing the new funding that it nearly tripled assets under management in 2022 while growing revenue by over 1,700% year over year), the company plans to invest the funds to further develop and expand its service offerings to empower a broader segment of the RIA market, including mid-sized firms that manage between $100 million and $1 billion in total assets.
“We’re incredibly bullish on Altruist and the RIA market more broadly,” said Brian Stern, Partner and Co-Head of Growth Equity at Declaration Partners. “I have seen few investment opportunities in my career to back a team with this level of domain expertise and depth of vision, and applied to such a significant and compelling market need.”
“While the RIA industry has evolved rapidly over the past 20 years, the custodians serving them have not. Legacy custodians have little incentive to innovate and rebuild technology that would enable advisors to scale and reach as many people as possible.”
Altruist’s Jason Wenk
The registered investment advisor (RIA) market is booming with $128.4 trillion in assets under management and over 3,000 new firms launched annually. With their personalized service and fiduciary obligations to operate in clients’ best interests, RIAs are rapidly becoming the trusted choice for households seeking support in managing and building their wealth.
Altruist was created in 2018 by Jason Wenk, an industry veteran who has founded and led multiple billion plus dollar technology-enabled RIAs. As an advisor, he experienced first-hand the unique challenges that inhibit RIA growth and limit the reach of great, affordable financial advice.
“While the RIA industry has evolved rapidly over the past 20 years, the custodians serving them have not,” said Altruist CEO Jason Wenk. “Legacy custodians have little incentive to innovate and rebuild technology that would enable advisors to scale and reach as many people as possible.”
Altruist said in the statement it has taken a “fundamentally new approach to bridging the gap between financial services and technology with an exclusive focus on RIAs.” The company has rebuilt the advisor technology stack from the ground up, vertically integrating a clearinghouse, custody, and all-in-one software that offers account opening, trading, reporting, and billing.
Wenk said in a statement that in 2023 the company will be expanding the list of available account types, enhancing its direct indexing functionality, integrating new asset classes, onboarding more providers to its model marketplace, and deploying highly requested functionality around security exclusions and held-away accounts.
“Altruist has quietly invested an immense amount of time and resources building a truly modern custodian for RIAs,” said Jon Rosenbaum, Managing Director at Insight Partners. “A vertically integrated platform that puts clearing and custody at the core is a game-changer for advisors. It’s a deeply technical problem at every level that the team has solved with an intuitive user experience that’s unlike anything the RIA industry has ever seen.”
The statement also said Altruist expects to reach profitability this calendar year after less than 5 years of operating history.
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Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
