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Oranj Adds Pimco, WisdomTree to ‘Free’ Investing Platform

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Oranj, the Chicago-based wealth management software firm, announced Thursday the latest enhancement to its platform through the addition of Pimco mutual funds and model portfolios and the full lineup of ETFs and models from WisdomTree Asset Management.

David Lyon, CEO, Oranj David Lyon, CEO of Oranj

David Lyon, founder and CEO of Oranj, said the addition reflects the “shared vision” of Oranj and the two asset management firms in “supporting the independent advisor” in reducing advisors’ overhead costs by providing access to top-drawer investment managers without the overlay fees often tacked on by some investing platforms.

With this latest addition, users of Oranj’s ‘freemium’ wealth management platform now have access to 56 model portfolios, 327 mutual funds and 215 ETFs, including offerings from BlackRock, Direxion, ETF Securities and other asset management firms.

Lyon argues that “over the last five years it’s become more expensive to be an advisor,” citing, for example, increased costs in technology and compliance. “If we can help the advisor reduce their overhead, that’s a good thing,” he said, particularly by “stripping out”  the extra fees that some tech and TAMP platforms tack on, which he claims “in many cases doubles the investing cost” to end clients.

“One size does not fit all” advisory firms, Lyon says, so “we wanted our marketplace, our platform, to be used by advisors without having to change the way they run their business.” That’s why Oranj users can use the platform’s investing models outright or customize them. They can choose to create their own asset allocation or rebalance along with the models or funds, or not rebalance. They can also totally outsource their investment management through Oranj partners like First Ascent Asset Management.

Lyon says that the “the underpinning of our strategy” is to reduce investing costs to clients and overhead costs to advisors, which Oranj illustrates in the charts from its white paper, The Shifting Economics of Adviser Technology.

However, Lyon says Oranj’s model also allows advisors to provide value to clients “outside the investing part,” to be more proactive in how they address the needs of their clients. So the Oranj platform provides “real-time oversight on what’s going on” in clients’ lives, including how clients are tracking to their goals. From a fiduciary perspective, “we want to help clients make smart decisions over time,” providing “better connectivity, better collaboration between advisor and client,” the better job the fiduciary advisor can do.

But what is that ‘freemium’ platform, and how can Oranj offer these strategies and funds for free? How does Oranj make money?

Lyon compares Oranj’s business model to that of Adobe, the software firm that is the creator of Acrobat Reader, the Adobe Creative Suite (now Creative Cloud) and other applications used by businesses worldwide.” Adobe, whose Reader application he calls the “Kleenex of PDF readers,” offers a suite of Acrobat add-ons to businesses that can choose to use the basic software or “unlock the features” they want by paying a subscription fee for those services. Similarly, Oranj provides a suite of services advisors can use for free, or they can pay subscription fees to use services like its “front-office-facing features,” such as the instant messaging feature which he called one of Oranj’s “most popular” services among advisors.

In addition to gaining revenue from subscription fees,  Oranj does have “agreements with our [investment management] partners” that provides revenue, but Lyon stresses that those agreements “do not increase the cost of investing for advisors and their clients.”

Which advisors are using Oranj’s platform? Lyon says that the “investing options we provide attract a diverse group” of independent advisors, most of whom are RIAs, though in the nine months since launching its ‘freemium’ service—formerly called OranjMAX—“we’re seeing more broker-dealer reps” from BDs that allow reps to choose their own investing options.

Oranj’s users are not characterized by “AUM or headcount” in their practices, he says, but rather by “their strategic direction-,” calling them “advisors who are looking to modernize their business.” Lyon, a former advisor himself, says Oranj advisors are responding to “our business model,” which shows that “we understand their business and their changing needs; we’re rethinking the economics that affect advisors.”


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