'Shark Tank' for RIA fintech looking for new investments

Six RIA CEOs hosting third competition to root out the best fintech for advisers

Sep 4, 2019 @ 3:27 pm

By Ryan W. Neal

ScratchWorks, an accelerator for financial technology targeting the independent adviser market, is launching its third annual program to identify innovative startups worthy of investment.

Applications are being accepted from entrepreneurs to pitch their business models, products and platforms live on stage to the six RIA executives who make up the ScratchWorks' investment team — Marty Bicknell, CEO of Mariner Wealth Advisors; Dick Burridge, CEO of RMB Capital; John Eadie, CEO of Covenant; Jon Jones, CEO of Brighton Jones; Michael Nathanson, CEO of The Colony Group and Shannon Eusey, CEO of Beacon Pointe Advisors. The firms collectively manage more than $70 billion in assets.

The goal is to identify fintech that is best positioned to make a tangible difference in the independent advisory community and the clients they serve, Mr. Nathanson said.

[Video: Deploying fintech to improve the client experience and prevent fraud]

"I've been talking a lot about Darwinism lately," Mr. Nathanson told InvestmentNews. "[Charles] Darwin never talked about the survival of the fittest. Rather, what Darwin talked about was the survival of the species that can best adapt to changing circumstances in the environment."

And so it goes with the independent advisory space, he said: "We need to be constantly evolving if we want to remain important and remain relevant to our clients."

In the first edition of the program, which some describe as a sort of "Shark Tank" for adviser fintech, the group backed white-label digital adviser InvestmentPOD and marketing automation firm Snappy Kraken. In August, ScratchWorks made an additional $3.5 million investment in Snappy Kraken.

[Video: Advisers put digital marketing tools to work to generate new clients]

Snappy Kraken's technology helps smaller RIAs that don't have the resources for an internal marketing department, Mr. Nathanson said.

"It's just another example of fintech filling in the gaps to create greater efficiencies," he said. Mr. Nathanson also sees Snappy Kraken eventually expanding beyond the independent adviser market. "It has great utility in insurance, in the wirehouse world, and keep in mind that Snappy Kraken is not just digital marketing. It can also be utilized for engaging with existing clients."

"Season 2" featured AdvicePay, the digital billing service for financial planners developed by XY Planning Network founders Michael Kitces and Alan Moore. Though ScratchWorks offered $2 million for an equity stake in AdvicePay, a deal ultimately wasn't finalized.

This year, Mr. Nathanson is now most interested in integration and platforms that can help advisers bring their assorted digital tools together. He also believes there's significant opportunity to improve client onboarding.

[Video: Onboarding is just one of the top fintech challenges for executives]

Entrepreneurs interested in being a part of this third season can apply on the ScratchWorks website. With help from the University of Colorado Leeds School of Business, ScratchWorks will screen applications and cull the list down to a list of finalists.

The investment team will then narrow the list to three companies that will be invited to pitch on stage in March 2020.

Fintech accelerators and competitions like ScratchWorks are increasingly popular. The XY Planning Networks hosts its own annual fintech competition, and Ladenburg Thalmann has an innovation lab to identify next-generation technologies.

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