Veritat Advisors, the brainchild of Wharton professor Kent Smetters, may have been the smartest advisory platform for serving the mass market but it was surely also the among the smallest.
Now, in a rare combination of brains and brawn, LPL’s newly created subsidiary NestWise has acquired Veritat Advisors and plans to scale up the startup’s robust financial planning platform to reach the underserved middle market.
NestWise, a newly formed and wholly owned subsidiary of LPL, on Tuesday announced plans to use Veritat as the chassis on which to build a vehicle that can reach an estimated 32 million middle-class households that have the financial ability to save.
In an interview with AdvisorOne, Smetters (left), who will serve the new venture as a consultant after completion of the sale in the third quarter, said LPL’s financial and personnel resources offered the key missing elements his startup lacked.
“The real advantage that the new platform’s going to have is a lot more marketing support for the advisors and a skilled group of people who are not coming in part time [as were a number of Veritat employees]; they’re all-in,” he said.
Smetters added he saw “very little overlap” in this marriage of LPL’s business acumen and Veritat’s unique automated yet personalized financial planning approach.
“What we bring to the table is technology and a lot of thought about what clients want and what advisors want,” Smetters said. “What NestWise brings to the table is lots of industry experience about what motivates advisors and lots of marketing to help them acquire clients.”
With Tuesday’s acquisition, the recently formed LPL New Venture officially becomes NestWise, which will operate Veritat under the new NestWise brand. Veteran LPL executive Esther Stearns will have day-to-day responsibility for the new venture, which rolls out in the fourth quarter.
Stearns, formerly president of LPL Investment Holdings, told AdvisorOne that NestWise’s essential mission of providing affordable personal financial advice for the mass market matches that of Veritat, and does not overlap with LPL, whose advisors target mass-affluent and high-net-worth investors.
“When I first met Kent, I was absolutely struck by how much his beliefs aligned with NestWise,” Stearns (left), one of AdvisorOne’s Top Women in Wealth, said. “Kent has built the tool that is really optimal for this market.”
Smetters’ platform, the subject of an extensive report by AdvisorOne earlier in the year, is based on using both technology and personal service to provide objective, transparent and comprehensive financial advice based on principles of academic finance.
“The academic side of it very much stays,” Smetters says, including helping middle-class investors prioritize through goals-based investing and modeling risk in a more sophisticated way than mere Monte Carlo analysis, he added.