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Tamp Acquisition Arms Orion to Take on Envestnet

By Thomas Coyle April 13, 2018

Orion Advisor Services, a portfolio-accounting and technology provider to RIAs, says it’s getting ready to fight for “enterprise level” engagements thanks to its parent company’s plan to acquire FTJ FundChoice, a turnkey asset management program, or tamp, with about $10 billion under administration.

NorthStar Financial Services Group, owner of Omaha, Neb.-based Orion, has agreed to buy seventeen-year-old FTJ for an undisclosed amount in a transaction that’s expected to be finalized by the end of June.

FTJ has been a client of Orion since 2010. The two firms subsequently grew close enough to pursue enterprise business together as partners that could handle a financial firm’s technology and investment needs, Orion CEO Eric Clarke tells FA-IQ.

But that offering hit snags when the two firms took their show on the road.

“We’d go in and get RFPs” — requests for proposals — “and we’d be winning on the tech side,” says Clarke. “But when it came time to show what managers and strategies we had, the firms we were pitching to pretty soon saw they’d have to perform due diligence across” distinct entities instead of just one — as they would with, for instance, a big competitor like Envestnet, which provides investment platforms as well as portfolio-accounting services through its Tamarac division.

But with FTJ as part of Orion, the business units expect to be able to offer wealth firms to sand down that source of friction and provide prospects with “seamless buying opportunities,” says Clarke.

In turn, FTJ opens the way for Orion to expand beyond its independent-RIA base to chalk up wins with “independent broker-dealers, banks and insurance companies.” And, he adds, “That’s exactly where we want to go.”

The tie-in with FTJ also gives Orion direct access to a separately managed account platform — something Clarke says is vital to recruiting ex-wirehouse FAs, as many of the IBDs and RIAs it serves and plans to target are keen to do.

For Dean Cook, president of Hebron, Ky.-based FTJ, Orion — a service bureau encompassing portfolio accounting, billing, trade-order management, compliance, data services and client-interface technology — simply needed “the managed account platform” FTJ brings to the table to compete with Chicago-based Envestnet, the biggest tech and investments provider to independent firms.

Envestnet couldn’t be reached for a response to that assertion.

FTJ, which already has selling agreements with 150 broker-dealers and deals with many of Orion’s RIA clients, has been growing by about 30% through the past few years, according to Clarke. From that base, and with the ability to integrate with Orion to offer larger firms end-to-end services, Cook says FTJ is ready to grow even faster, within and outside Orion’s present footprint.

Lindsay Davis is a technology-industry analyst with CB Insights in New York. She agrees putting FTJ in the same stable with Orion gives them an Envestnet-like offering and the potential to change the tamp landscape.

Eric Clarke

“If we’ve learned anything, it’s that tech can upend any industry if it meets consumer demand and drives costs down,” say Davis.

In addition, Davis sees an opportunity for Orion and FTJ to push managed accounts downmarket to retirement-plan advisors as nimble, low-cost vehicles that allow for broad household asset allocation and tax-smart overlay to come to the fore.

In addition to Orion, Omaha-based NorthStar owns asset managers CLS Investments, pooled-investments solutions provider Gemini Companies, fund distribution and compliance firm Northern Lights, financial-document provider Blu Giant and RIA custodian Constellation Trust.

NorthStar is a portfolio company of the Boston-based private-equity firm TA Associates.