SEI acquires defunct adviser fintech platform Oranj

Turnkey asset management provider SEI announced Wednesday the acquisition of Oranj’s technology platform four months after the Chicago-based fintech notified its adviser clients it was shuttering operations.

Financial terms of the transaction were not disclosed. However, Oranj founder and CEO David Lyon will join SEI, along with 13 engineers, developers, cloud specialists and client service personnel, as part of the transaction.

For the advisers working with Independent Advisor Solutions by SEI, the acquisition is expected to offer up products that will enable tech-forward client engagement, including a new client portal that delivers the financial insights to investors, according to the announcement.

SEI is the second largest TAMP by assets — behind Envestnet — with $75.1 billion in managed assets and it works with 7,500 advisers.

SEI plans to incorporate Oranj’s technology into the SEI Wealth Platform, which is a single-infrastructure tech stack that offers custody services, model management and trading.

“The wealth management sector continues to undergo increased pressures to digitize the investor experience," Kevin Crowe, head of product development for Independent Advisor Solutions at SEI, said in the release. "We believe that Oranj’s technology integration with the SEI Wealth Platform will make a significant difference in the way advisors can engage and interact with their clients, as well as provide the transparency and insight investors need for their financial decision-making.”

The Oranj technology that SEI plans to incorporate includes its investor-facing portal, a messaging feature, rebalancing and trading for daily management of clients’ investments, and most notably, Oranj’s model marketplace.

Oranj’s model marketplace appeared to address the surge of advisers looking to gain an edge with the latest model portfolios that offer access to inexpensive and effective outsourced investment models.

Before the fintech shuttered its doors, the free technology allowed advisers to create investment strategies with funds from Oranj’s partner asset managers. The success of model marketplaces in recent years allowed the company to partner with at least 27 fund companies and launch partnerships with providers like Allianz Global Investors and Liberty One Investment Management last year, according to company announcements.

Oranj entered into partnerships to provide model marketplaces to advisers for free, essentially becoming a distribution arm for large fund families like BlackRock and Franklin Templeton. Ultimately, that relationship gave the fund providers some form of control over what would and would not be offered on the platform, according to some industry observers — a limitation that didn’t sit well with advisers interviewed by InvestmentNews.

Still, the ultimate problems with Oranj go deeper than just the limited selection of investments, according to financial planning expert Michael Kitces. The core issue was that the company couldn’t bring to the table a technology offering that advisers weren’t able to get elsewhere, he said.

When Oranj first confirmed its closure last year, analysts predicted that a sale post mortem might make sense for asset managers looking to imitate the strategy Goldman Sachs employed with its purchase of United Capital, said Alois Pirker, research director for Aite Group’s Wealth Management practice.

A similar situation occurred with Motif Investing when Charles Schwab announced it would purchased the technology and intellectual property a month after its closing in April.