Oranj adds individual equities to model marketplace

Wealth management platform Oranj announced Tuesday a new third-party asset manager will join its model marketplace and open up the ability for advisers to utilize individual equity allocation tools. 

Liberty One Investment Management offers model-based equities with direct investments into individual holdings — a new feature for advisors using the Oranj platform. Previously the fintech only had solutions that included mutual fund and ETF products, according to a company spokesperson.

“Liberty One has innovative asset allocation strategies that focus on individual equity positions,” Oranj CEO and Founder David Lyon said in an email. “[The] individual equity focus gives the advisor the ability to practically eliminate internal expense ratios while reducing the turnover ratio and on-going capital gain exposure inherent in many ETFs and mutual funds.”

Scalability is also top of mind for advisers and digital-based strategies can help advisers avoid a growth “plateau,” said Nick Ng, lead portfolio manager for Liberty One Investment Management. “Many advisors reach a ceiling of complexity while running their practice … simply put, the Oranj platform is designed to help advisors scale their practice.” 

The Chicago-based fintech has added multiple tech-driven platforms to its model marketplace this year. Last month, income-focused mutual funds asset manager Pacific Funds took to the platform. In April, Value Line Funds joined and in March Oranj added Allianz Global Investors. 

Oranj’s business model uses its software platform to distribute models from asset managers. Those asset managers sometimes pay to have their models included on such platforms. Financial planning expert Michael Kitces wrote in a June 2019 InvestmentNews column that the compensation models behind the marketplaces may jeopardize the quality of the investments.

“The caveat, though, is that when model marketplaces are driven by the economics of asset managers, the resulting models are not necessarily objective,” Kitces said. “What models are or are not available in a marketplace risks being driven more by which asset managers can pay the most, than necessarily which ones are the best.”

Lyon, a former financial advisor himself, said asset managers on the Oranj platform all pay similar prices to be included, and that advisers are also able to access the model marketplace free of charge. “The larger asset managers do not pay more than the smaller asset managers,” Lyon said of the platform. “Oranj has leveled the playing field by providing a diversified set of asset managers for advisors to choose from.”

This article has been updated to accurately reflect how the Oranj platform distributes models from asset managers and to include additional comment from the firm's CEO.