Most advisors have a core group of asset management firms whose products they use to build client portfolios. It can be a challenge to break into advisors’ most-favored-asset-management-firm fold, but it looks like Scott MacKillop’s First Ascent Asset Management is doing just that.
Using a unique approach to building and pricing its portfolios, and practicing what smart advisors preach in terms of being client-centered while outsourcing non-core operations, MacKillop said in an October interview that First Ascent is approaching its goal of reaching $300 million in assets by year-end 2018 and $1 billion by year-end 2019.
In addition to finding more traction among advisors, First Ascent is finding more backers for its business model. On November 15, the Denver-based company said it had received $1.5 million in series B funding led by a group of high-net-worth individuals and institutional investors.
With this most recent infusion of capital, First Ascent has now raised a total of $4.4 million. It said it will use the new funding to expand its technology development and hire more employees in its investment and operations groups.
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In a prepared statement, MacKillop, CEO of First Ascent, said “this fresh infusion of capital will enable us to do what we do best—build a business that serves advisors and clients, while providing a clear and better alternative to traditional TAMPs.”
In an October interview, MacKillop said the company has become the “fastest growing TAMP from scratch” in the industry’s history; last year it began offering its outsourced portfolio management strategies at an annual fee of $500 per account, or $1,000 per household. This flat fee approach turned the traditional TAMP pricing model of charging a fee based on a percentage of assets under management.
Eighty advisory firms now use First Ascent’s portfolios, and a recent win of a 401(k) plan “pushed us over the $220 million in assets” level, he said. The company serves as a sub-advisor to Oranj and VestMark and is now on Envestnet’s platform, relationships that should keep its growth on track. “Our direct business is good,” MacKillop said, but the “platform business is a huge opportunity.” Helped by the latest capital infusion, MacKillop expects to be profitable by the end of 2019.
In what is music to the ears of advisors, the seven full-time and two part-time employees at the company are all invested in First Ascent. And the company became even more efficient while focusing more on its core competency by outsourcing its back-office operations to Orion, a relationship that MacKillop said has also helped First Ascent reach out directly to RIAs.