Custody newbie Altruist claims No. 3 spot with SSG acquisition

Less than two weeks after debuting its RIA custody business on top of its fintech platform, Altruist has announced the acquisition of Shareholder Services Group, a brokerage and custodial platform, in a deal that significantly boosts Altruist’s status in the competitive custodial business.

Altruist Chief Executive Jason Wenk said the SSG deal puts Altruist in the No. 3 spot in the industry, behind Fidelity and Schwab, in terms of the number of RIAs being served by the custody platform.

Adding the 1,600 RIAs using the SSG platform pushes Altruist’s total to over 3,000, according to Wenk, ranking the custody greenhorn as third largest in terms of RIA customers.

SSG’s custody business is technically defined as an introducing broker-dealer because it sits on top of the Pershing custody business, which means Altruist can now offer RIAs access to two different custody platforms, Wenk said.

But as the deal brings the two custody portals under one roof, at least one competitor wonders whether the acquisition represents another pain point for RIAs, similar to the unwieldy Schwab-TD Ameritrade consolidation, but on a much smaller scale.

“It’s another 1,600 advisors who will be going through some kind of transition, because Altruist is not going through an acquisition to not try and monetize it,” said Robb Baldwin, founder and chief executive of TradePMR.

“Nothing will be the same between Pershing and Altruist, and that’s very disruptive to the RIA,” he added.

Launched more than 20 years ago to provide custody services to smaller RIAs, SSG has become a leader in that particular niche. But it remains to be seen whether that niche can be profitable enough to keep a custodian above water.

“SSG was started for advisors without large and substantial books of business, and we also have the view that there’s a real need” for custodial services among smaller RIAs, Wenk said.

"This acquisition enhances our mission to make financial advice better, more affordable, and accessible to everyone," he added. "Our firms have strong alignment on the substantial value financial advisors add to their clients' lives and how we can empower them to reach more people."

Wenk has high hopes for the consolidation of the two firms, emphasizing that Altruist’s tech-heavy focus will envelope the combined entity.

“Our team has around 350 people, including more than 200 engineers, and SSG’s tech team is 30 people, with no engineers,” he said. “There’s this really cool melding. Their relationship with Pershing allows us to compete with any advisor of any size.”

Joel Bruckenstein, president of T3, said the deal “strategically makes a lot of sense.”

“Altruist is building out a modern RIA platform with self custody, and the one thing they were missing was scale,” he said. “SSG has a reputation as one of the best when it comes to client service, and now they’re getting a more modern, purpose-built platform. And Altruist is getting advisors and some very experienced people that have successfully run an RIA custodian.”

In a statement, SSG founder and CEO Peter Mangan described the deal as the next stage of evolution for SSG.

“Today we are very excited to be joining with Altruist in writing the next chapter in the RIA custody business as we empower advisors with the most cutting-edge technology and service platform,” Mangan said.