Upstart Challenges the ‘Entire Fintech Complex’
A recent press release put out by Hanlon Investment Management hints at a potentially far-reaching development for wealth firms in search of comprehensive front-, middle- and back-office support.
The release tells us BlackRock’s iRetire “investment framework” is now available through Hanlon Investment Management, a so-called “tamp” — that’s for “turnkey asset-management program” — based in Egg Harbor Township, N.J.
The release further identifies Hanlon Investment Management as a 19-year-old firm that “serves the needs of over 20,000 individual investors, retirement plans, trusts and institutions” via roughly 1,700 “financial planners and advisors.”
The company also notes that in 2012 it bought Interactive Advisory Software, a “fully-integrated, cloud-based technology solution to operate a financial-planning and wealth-management practice” that powers the Hanlon Wealth Advisor Platform, which supports “130 firms that are collectively advising on more than $40 billion in assets.”
With $1.9 billion under management, Hanlon Investment Management is small for a tamp. Assetmark claims more than $30 billion, Envestnet more than $90 billion.
But the firm’s founder and top executive Sean Hanlon tells FA-IQ his firm AUM doesn’t provide a complete picture of an outfit that’s getting ready to take on “the entire fintech complex.”
Hanlon explains. “We are the only application we are aware of that, with a single code and in a single database, delivers CRM, financial planning, portfolio accounting, data download and reconciliation, reporting, model creation and management, trade preparation tax-sensitive rebalancing, aggregation, a client portal with document vaults, and an advisor portal and dashboard with every practice metric you can imagine and access to compliance tools.”
Hanlon says his firm provides services across such a broad front because wealth firms “these days have wide-ranging philosophies on how to operate their businesses and thus wide-ranging needs.”
The chief of Hanlon Investment Management says his practice-support business supports its offerings with a range of pricing permutations.
Access to the wealth practice platform, which includes its full technology bundle, asset management services, and a service offering “where we do more than 300 different tasks an advisors’ staff normally would” starts at 25 basis points a year on assets under management” — with no charges on brokerage and aggregation accounts, says Hanlon.
For distinct technology services, he says “there may be per-account fees monthly or a flat fee per month.”
Given this approach to the marketplace, might Dynasty Financial Partners, which bills itself as the “Intel Inside” the wealth management firms it supports, have a similar overall offering?
Hanlon thinks not. As he sees it, Dynasty aggregates third-party technologies for its customers. Hanlon’s homemade platform is — as Hanlon doesn’t mind repeating — “the entire technology package delivered with one password, in one relationship.”
Adds Hanlon: “It’s pretty well-known what the technology needs of firms are, and we touch them all. We are all an FA needs. We are their entire technology stack, and if they choose us, they never have to talk to their custodians again, ever.”
His point here is that “talking to custodians is not where advisors add value,” he says. “We talk with custodians all day long, and we trade with them in volume.”
Hanlon says adding a big name fund company like BlackRock — with Morningstar and Wilshire soon to follow — to Hanlon Investment Management’s in-house investment offerings will attract more firms, giving more exposure to its infrastructure offering.
Right now, Hanlon says his managed-account platform caters to independent RIAs “but leans more to” FAs on independent broker-dealer platforms. His infrastructure business, meanwhile, does about 80% of its business with RIAs.
In all, Hanlon Investment Management and Hanlon Wealth Advisor Platform have a combined staff of about 140, with about 60 focused on directly on technology development, 40 on middle-office functions like client service, reconciliation and trading, and the balance in support, sales, marketing, research and HR, according to Hanlon.
Ask why he’s getting aggressive about selling his firm’s technology platform now, and Hanlon says, “We’ve had a vision of the market” since before the purchase of Interactive Advisory Software eight years ago. “Now the market has come to share that vision,” he says. “We now have what we think is exactly what the market wants.”
Is all this just crazy talk?
Industry consultant Dan Kreuter doesn’t think so.
“What they’ve got that’s unique is a full-service model, a complete middle-office, back-office and front end that touches everything a financial advisor could use,” says Kreuter, who’s based in Plymouth Meeting, Pa. “Most advice firms — including rollups and OSJ groups — have contracts with an eMoney, an Orion, a Salesfore, an Envestnet — Hanlon is a boutique firm that covers all those bases.”
But can Hanlon become a leader in a field that includes established wealth-firm aggregators such as Focus Financial Partners and United Capital as well as real heavyweight platform providers like SEI?
“Do you mean is he going to be a market-share player?” asks Kreuter. “I don’t know if he needs to be. If he can capture 1.5% of the market, he’s got a great business.”