RIA custodian Altruist weighs potential referral network

RIA custodian Altruist has ambitions to eventually offer a client referral network for advisors, executives for the company explained to InvestmentNews on Tuesday at the Altruist Academy NYC conference in Brooklyn, New York.

“That's something we aspire to do, to build out a referral network,” said Altruist CFO Marc Greenberg. “But at this point, we're providing other tools for our advisors to grow as opposed to providing them with potential leads.”

Since its founding in 2018, Altruist has positioned itself as the third-largest RIA custodian behind Schwab and Fidelity. More than 5,100 advisors now custody assets on Altruist, including the newly added Bone Fide Wealth, a New York City-based RIA with about $100 million in AUM. Bone Fide Wealth focuses on serving wealthy millennials, a client base that aligns with the technology-focused niche that Altruist seeks over legacy RIA custodians.

Altruist has introduced a beta-mode version of Hazel, an AI-powered assistant for advisors that the company built in part through its acquisition of the Y Combinator-backed startup, Thyme. Hazel syncs with an advisor’s calendar, email and CRM software to automate meeting prep, meeting summaries, note taking, and email follow-ups.

“Our hypothesis has been there are a lot of ways that you can solve a growth problem. One of them is referrals but other ways are, can you automate all the administrative work you have to do for your business so that you can spend more time figuring out how to grow your business,” said Mazi Bahadori, COO at Altruist.

“I think it's a space that's been sleepy. There's been no innovation for decades, the large two incumbents, 1946 and 1971 and then almost virtually nothing,” added Bahadori, referring to the years Fidelity and Schwab were founded.

Top client referral programs for RIAs include Fidelity Wealth Advisor Solutions (WAS) and Schwab's Advisor Network (SAN). Schwab recently attempted to message wealthy clients of RIAs to promote Schwab’s in-house retail investor services, but that plan was canceled after RIAs objected to the controversial outreach.

“We've certainly heard from advisors at various times that we've seen other custodians get more aggressive about pushing their retail side of the business, or their own advisor arms that come at a cost to the advisors on their custodial platform,” said Adam Grealish, Altruist’s head of investments. “So one thing that's really nice about Altruist is we're singularly focused on the RIA channel.”

Altruist raised $152 million in April via a Series F funding round led by Singapore’s sovereign wealth fund GIC, bringing the custodian’s valuation to roughly $1.9 billion. A potential referral program from Altruist would compete with other upcoming entrances into the RIA market, including Robinhood’s planned client referral program with TradePMR.

Financial content platform NerdWallet, which acquired an RIA in June, was described by Greenberg as being a potential fit for driving client referrals to Altruist advisors.

“Obviously NerdWallet gets a lot of eyeballs, so I think that's a potential opportunity for us at some point to be aligned with them on referring interested clients and users,” Greenberg said. He added that, “the most effective referrals are from an existing customer. When a customer has a great experience with the advisor, that referral is incredibly powerful, and you can convert at a much higher rate than you can from a random SEO or other random web referral.”