Advizent, the fledgling marketing cooperative for independent RIAs formed by Charles Goldman and Steve Lockshin, is shutting down.
The group couldn't raise the money it needed to fund a multi-million dollar consumer marketing effort, and is ending operations by the end of the month, according to an email Advizent sent to supporters Thursday morning.
“For the strategy we wanted to execute, the financing wasn't going to be there,” Mr. Goldman told InvestmentNews.
Launched nearly a year ago, Advizent had been trying to raise between $20 million and $50 million from advisers and vendors to pay for an ambitious advertising program. Mr. Goldman, an industry consultant, formerly ran the custody units at both the
Charles Schwab Corp. and Fidelity.
Mr. Lockshin is the founder of Convergent Wealth Advisors as well as investment provider Fortigent LLC.
The men are well-known in the advisory industry, and their vision of building a branding cooperative for RIAs garnered serious attention, if not money.
Advizent, a for-profit venture, was counting on support from custodians, asset managers and technology providers to help fund its efforts. But that's where things fell apart.
The firm was asking custodians for one basis point on Advizent-member assets, and two to five basis points on assets from money managers. Those contribution levels could've required major players to fork over millions of dollars. “We heard over and over again, from vendors … that they wanted to support us, but at a different level,” more like in the $10,000 to $100,000 range, Mr. Goldman said. “That made us reassess.”
Advizent could show prospective corporate supporters how it would grow the RIA space, Mr. Goldman added, but not what kind of return it would produce for a particular sponsor's investment. “In a corporate setting, you have to show that,” he said.
The Advizent partners considered a scaled-down version of the cooperative, but decided against it, Mr. Goldman said. “It's only worth it if you can reach out to consumers in a big way,” he said.
The group never did take any money from members or sponsors.
More than 140 RIA firms with $150 billion in assets signed on as potential partners, Mr. Goldman said.
Advizent had planned to set criteria for its members, such as having $250 million or more in assets (later lowered to $100 million), meeting certain technological capabilities, using outside custodians and passing regulatory and fiduciary screens. The firm also planned to match up its members with prospective clients gleaned from its advertising campaigns.
