Two fintech firms providing tools for uber wealthy clients

The core idea behind a lot of adviser technology is to either improve service for current clients, or help a practice grow by making it more efficient. Often that means making it cost-effective to serve next-generation or mass affluent investors.

But that focus may have created a gap on the other end of the wealth spectrum. According to Eric Poirier, CEO of fintech firm Addepar, many of the most popular adviser tools fall short of the sophistication needed to serve the wealthiest investors.

“Solutions required to the solve the ultra-high net-worth end of the market are different than the typical RIA whose clients have portfolios that are more traditional, more vanilla,” Mr. Poirier said. “The composition of the portfolio just dramatically exceeds what a typical client of a typical adviser serves.”

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The wealthier a client is, the more an adviser has to manage elements beyond liquid assets, such as private equity, hedge funds and other alternatives.

For example, a client with $2 million in assets typically has a maximum of 5% of assets allocated to institutionalized hedge funds, said Bob Miller, CEO of Private Client Resources. A client with $20 million will have 5% to 10% in hedge funds, and another 10% to 15% in other alternatives.

A $200 million client could have as much as 70% of their wealth in non-liquid investments.

Beyond that, UHNW investors tend to work with several financial institutions and have multiple legal entities, complicating the ownership structure of their portfolios. They also have different goals related to legacy, lifestyle and philanthropy, Mr. Miller said.

“So many digital and other technology initiatives fall short because they do not consider these differences and the need to master a more comprehensive view of ‘total wealth’ across these complex requirements,” he added.

While the super rich may expect white glove service, many want the glove to be digital.

About 87% of wealthy people (defined as people with at least £1 million) accept technology as part of their investing experience, up from 74% in 2016, according to a Forbes and Temenos study.

“Wealthy individuals are willing to pay a steep premium for really smart and likable people, and they won’t walk away from that just because of technology,” says Gerd Leonhard, a futurist who advises wealth managers on their digital and service offerings. “But they will not be satisfied with an organization full of great people who are completely behind on everything else. They expect complete coverage of technology all the way to the cutting edge of things — applications and mobile, for example — and they value connectivity with people and relationships and opinions and wisdom.”

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Companies like Addepar and Private Client Resources are trying to fill that need.

Addepar has a new mobile app designed specifically for HNW and UHNW clients to see what is in their portfolio, how it’s allocated and how performance has changed over time. Advisers also can use the Addepar app to get a consolidated view of an UHNW client’s disparate assets, no matter how complex the portfolio may be.

Private Client Resources is similarly building data aggregation to provide comprehensive reporting on an UHNW client’s complex portfolio. The technology produces normalized transaction data across the assets to make it useable in an adviser’s reporting, analytics or accounting software.

“We eliminate the costly manual process of transcribing capital calls, distribution notices and valuation statements into spreadsheets, manually reconciling the information and then keying it into their portfolio and other systems,” Mr. Miller said in an email.

The company recently attracted a “major investment” from private equity firm Public Pension Capital, but did not disclose the amount.