Wavvest launches in-house RIA

The economics of owning an RIA are vastly different from those of selling software. Software companies generally sell subscriptions at flat-fee rates rarely exceeding a few hundred dollars a month, and generally need multiple staff members for engineering, support, and sales, whereas an advisory firm can be run by a single advisor (with or without in-house support) and charge $10,000+ per client per year. And so while a SaaS company might need to sell hundreds of subscriptions to even get to a sustainable level of revenue, an advisory firm can be very comfortably profitable with just 50 clients.

These advisory firm economics, and the hope that they can be even more profitable with better technology for efficiencies, are what have caused venture capital firms to pour money into RIAs like Savvy, Farther, and Compound. Although built and heavily marketed around their own proprietary technology platforms, these firms at their core are run like any other RIA in growth mode, spending much of their startup capital not just on technology but on bonuses and other incentives to recruit financial advisors to bring in their existing books of business. Which on the one hand calls into question some of the multiples at which these VC firms are investing into the RIAs, which are higher even than what PE firms are paying to acquire more traditional advisory firms. But on the other hand, firms like Savvy are likely able to raise far more as a "digitally native" RIA built on a proprietary tech platform than they would if they were just selling the tech platform itself – because while better technology might allow an RIA to expand its margins through more efficiency (although 30 years of RIA benchmarking studies have failed to show any evidence of overall higher profitability for RIAs despite all the technological advances in that time), the real driver of profitability for advisory firms is the ability to provide expert advice and serve clients well, and charge accordingly high fees for that advice and service. Or viewed from another perspective, there's a lot more room to profit by participating in the typically-30% profit margins on 100% of an advisor's revenue, than to scale a technology-only solution competing for just 5% of the advisor's revenue typically spent on technology in the first place (and have to drive all the technology firm's profits from that small slice).

At the same time, though, we've recently seen the emergence of a number of new technology companies positioning themselves as all-in-one (increasingly "AI-native") "operating systems" for advisory firms, like Nevis, Wavvest, and StratiFi. Yet despite those platforms' promises to help advisors eliminate the inefficiencies created by the gaps between separate pieces of standalone software, the all-in-one concept has not really taken off among advisors, if only because switching would mean having to transfer client data and workflows from multiple different pieces of software all at once (and at some point, the switching costs are higher than the efficiency savings could ever be on the other side, anyway). And so it might be tempting for some of those all-in-one-operating-system software providers, who look at the growth and fundraising success of RIA platforms built around proprietary technology, to consider launching their own RIAs around the all-in-one technology that they've already built – in other words, effectively becoming the proprietary technology at the center of a new RIA (and capturing the resulting RIA economics) rather than continuing to be software companies (pursuing SaaS economics).

In this context, it's notable that Wavvest, one of the AI-native "operating systems" that have cropped up for advisors in the last few years, has announced the launch of its own in-house RIA, which it will run while continuing to sell its software on a standalone basis (alongside a more TAMP-like solution that also includes back-office support and tax filing).

The announcement comes at a point where it's become apparent that, even though it's easier than ever to build an all-in-one software solution (since AI makes it easier to pull together data from multiple components into a single interface), it's still stubbornly difficult to sell all-in-one solutions. Every advisor has their own processes, service models, client planning needs, and other individual nuances that make it really hard to build a software tool that does everything well for everyone who uses it. That combined with the difficulty of transitioning from one software to another means that if a firm likes the software that they use for one function, even if it's just a standalone tool, they're likely to stick with it unless they're really sure that another solution will do it better (and even then, they're wary not to have to deal with too many software changes at once).

But while it's difficult to build effective all-in-one software to sell to other firms, RIAs clearly see plenty of reasons to want to build software specific to their own firms that help their advisors do better work. Mega-RIAs like Mercer and Mariner have invested millions into overhauling their in-house technology, and the growth of firms like Farther and Savvy show that they're winning recruiting business at least in part on how they've differentiated through their proprietary technology platforms. As all-in-one software struggles to gain much adoption on its own, there's every reason to look at advisory firm economics and want to bolt an RIA onto the software you've already built.

The caveat, though, is that a big part of what has allowed firms like Farther and Savvy to grow is their ability to write checks to advisors to join their platform. In other words, it isn't an 'if you build it, they will come' situation: In addition to their technology, a firm like Wavvest will also need to pour resources into recruiting advisors from other platforms, offering various combinations of recruiting bonuses or better payouts than they can find elsewhere to compete in the crowded advisor recruiting marketplace.

Either way, in the long run, whether or not that approach proves successful will (like Farther and Savvy) depend on how much more efficient their technology will actually make their advisors: The more they pay upfront to recruit or increase their payouts to attract advisors to their platform, the more productivity they'll need to get out of those advisors just to remain comparably profitable to other firms, and yet there's no evidence yet that a slick proprietary operating system actually leads to higher productivity (or just allows advisors to take more time off, increasing their happiness but not their tech-enabled RIA platform's profitability). In fact, according to the most recent Kitces Research on Productivity, investing into supporting staff – not technology – to offload cumbersome administrative work is what's really correlated with greater productivity.

So it's an open question at this point as to whether RIA platforms built around proprietary technology – whether they started with the technology and then added an RIA like Wavvest, or whether they built the technology to go with the RIA, like Farther and Savvy – will see any material benefit from having their own in-house tech platform. But in the end, what's clear is that the opportunity of participating in RIA economics with bespoke technology is better – at least in the eyes of a growing number of tech providers and RIAs, and the VC and PE firms that invest into them – than selling subscriptions to all-in-one software to firms that don't necessarily want to go (or deal with the hassles of transitioning) to an all-in on one piece of technology.

This article first appeared on the Nerd’s Eye View at Kitces.com at https://kitc.es/advisortech-sep2026, and has been reprinted here with permission

Ben Henry-Moreland

Ben Henry-Moreland is a Senior Financial Planning Nerd at Kitces.com, where he specializes in writing and speaking on financial planning topics including tax, practice management, and technology. He also co-authors the monthly Kitces #AdvisorTech column. Drawing from his experience as a financial planner and a solo advisory firm owner, Ben is passionate about fulfilling the site’s mission of making financial advicers better and more successful.

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Michael Kitces

Michael Kitces is Head of Planning Strategy at Focus Partners Wealth, which provides an evidence-based approach to private wealth management for near- and current retirees, and Focus Partners Advisor Solutions, a turnkey wealth management services provider supporting thousands of independent financial advisors through the scaling phase of growth.

In addition, he is a co-founder of the XY Planning Network, AdvicePay, fpPathfinder, and New Planner Recruiting, the former Practitioner Editor of the Journal of Financial Planning, the host of the Financial Advisor Success podcast, and the publisher of the popular financial planning industry blog Nerd’s Eye View through his website Kitces.com, dedicated to advancing knowledge in financial planning. In 2010, Michael was recognized with one of the FPA’s “Heart of Financial Planning” awards for his dedication and work in advancing the profession.

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