Altruist hopes its fintech muscle helps it compete against custodial giants

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

Altruist Clearing is being touted as a “self-clearing 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 at Altruist, said it’s no accident that the fully digitized and integrated custodial and technology platform is rolling out during the final stages of the consolidation of the Schwab and TD Ameritrade custody businesses.

“Advisors see 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 tech stack and custodial services under one roof, Altruist immediately moves past “legacy systems build on 30-, 40- or 50-year-old tech stacks that require repapering and phone calls to trade bonds.”

In terms of the impact 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 fully digitally, where you can stay on the system and not have to go to six different vendors,” Bahadori. “That technology doesn’t exist anywhere else in the custodial space.”

In order to stand out in a custody space already dominated by Fidelity, Pershing and the combined Schwab-TD entity, Altruist Chief Executive Jason Wenk said it developed the “industry’s first all-in-one custodian” that’s fully digital, vertically integrated and built exclusively for RIAs.

“From day one we’ve always planned to become self-clearing, as it’s the best way to provide maximum value to advisors,” Wenk said in a statement. “With this step, we’re able to build features tailor-made for RIAs and their clients, which accelerates our mission of making financial advice better, more affordable and accessible to everyone.”

Chuck Failla, founder and chief executive of Sovereign Financial Group, who 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 are fully committed to that B-D’s ecosystem,” he said. “In contrast, as an RIA, we have the ability to be more nimble 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 custodial services under one roof.

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

Those 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 it will lead to greater service and optionality for advisors of all shapes and sizes,” Phillips said. “Because choosing a custodian is very advisor-specific, it’s critically important that advisors take the time to become knowledgeable and understand how a custodian partner aligns best with their business.”

Bahadori would not disclose the number of advisers on the Altruist platform or how many will be moving over 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 that there won’t be any asset minimums or custodial fees on the Altruist platform, but said there is a software charge of $1 per month, per client.

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

Related Topics: altruist, Fidelity, Pershing, Schwab, TD Ameritrade