Altruist hopes fintech muscle will help it compete against custody giants

Financial technology provider Altruist has moved to the next level by developing its own custody and clearing business, which means the platform will cut ties with Apex Fintech Solutions, which had been providing Altruist custody and clearing services for the past three years.

Altruist Clearing is billed as a “self-destructive brokerage leading the movement away from legacy financial institutions with cumbersome processes and time-consuming service models.”

Mazi Bahadori, chief compliance officer and executive vice president of Altruist, said it is no coincidence that the fully digitized and integrated custody and technology platform is being rolled out in the final phase of the consolidation of the Schwab and TD Ameritrade custody businesses.

“Advisors are seeing the writing on the wall with what’s happening with TD and Schwab, and they want to look for other options,” he said.

Bahadori said that by blending a technology stack and custodial services under one roof, Altruist immediately moves past “legacy systems built on 30-, 40- or 50-year-old technology stacks that require repair and phone calls to trade bonds.”

As for the effect he expects the Altruist model to have on the registered investment advisor space, he drew parallels to the way Amazon has changed shopping.

“We wanted to be able to open an account and fund it digitally, where you can stay on the system and not have to go to six different providers,” Bahadori. “This technology does not exist anywhere else in the containment space.”

To differentiate itself in a custodian space already dominated by Fidelity, Pershing and the combined Schwab-TD unit, Altruist CEO Jason Wenk said it developed “the industry’s first all-in-one custodian” that is completely digital, vertically integrated and built. exclusively for RIA.

“From day one, we have always planned to become self-explanatory, as that is the best way to provide maximum value to advisors,” Wenk said in a statement. “With this step, we are able to build features tailored for RIAs and their clients, accelerating our goal of making financial advice better, more affordable and accessible to everyone.”

Chuck Failla, founder and CEO of Sovereign Financial Group, which went independent five years ago, described the Altruist model as “a great example of why I love the RIA space. In a word, competition.

“If you’re an advisor at a broker-dealer, you’re fully committed to that B-D ecosystem,” he said. “In contrast, as an RIA, we have the opportunity to be smarter about which solutions we can choose to best serve our clients.”

Failla compared Altruist’s “all-in-one” offering to Envestnet’s efforts to combine technology and custody services under one roof.

“While this is happening, we RIAs are in the enviable position of sitting back and waiting to see what’s best for us, knowing that we can choose what we want,” he said. – It is good to be independent.

These sentiments were echoed by Penny Phillips, president and co-founder of Journey Strategic Wealth.

“Innovation is great for our space, and I can only imagine that it will lead to greater service and choice for advisors of all shapes and sizes,” Phillips said. “Because choosing a custodian is very adviser-specific, it is critically important that advisers take the time to become knowledgeable and understand how a custodian partner best fits their business.”

Bahadori would not disclose the number of advisors on the Altruist platform or how many will move from Apex to the new custodial services, but said “more than 1,700 advisors have come onto the platform over the last couple of years.”

He confirmed there will be no asset minimums or custodian fees on the Altruist platform, but said there is a software fee of $1 per month, per client.

The Altruist technology platform was originally developed in 2019 and was formally brought to market in 2020.