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Ladenburg Thalmann Buys Stake in Impact Investing Robo-Advisor

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Ladenburg Thalmann Financial Services, which has more than 4,000 advisors across its independent broker-dealer network, has taken a stake in Newday Financial Technologies, an impact investing robo-advisor. Terms of the deal were not disclosed.

Ladenburg Thalmann made the investment through its Ladenburg Innovation Lab, which will be working with Newday to identify areas of collaboration “to drive even greater value for investors and for Ladenburg advisors,” Newday CEO Doug Heske tells ThinkAdvisor.

Dan Sachar, who heads the Ladenburg Innovation Lab, said in a statement the investment reflects the firm’s belief that “millennial and the generations that follow will continue to both seek out technology-enabled entry into the world of investing and prioritize cause- or mission-based investing that aligns with their values. Younger investors want to be engaged citizens of their communities and the world and Ladenburg and Newday want to help those clients meet this need.”

(Related: A Sustainable Robo-Advisor That Wants to Redefine Corporate Success)

Newday is the second investment for the Ladenburg Innovation Lab, which focuses on early-stage companies involved in “transformative social, economic and/or cultural trends” in order to adopt their tools for use by the firm’s independent advisor and brokerage firm subsidiaries: Securities America, Triad Advisors, Investacorp, KMS Financial Services and Securities Service Network. Last July the innovation lab invested in Track Technologies, a digital provider of tax automation for independent contractors, freelancers and other workers who generate self-employment income.

Ladenburg Thalmann’s investment in Newday could eventually expand its advisors’ options for sustainable investing, which has been growing in popularity among investors. Sustainable funds attracted an estimated $8.9 billion in net flows in the first half of this year – far more than the $5.5 billion in net flows for all of 2018, according to Morningstar data.

Currently Ladenburg Thalmann Asset Management (LTAM) offers a number of ESG-focused investment strategies, called Socially Responsible portfolios, which are available to all advisors across the enterprise, and many product sponsor that partner with its subsidiaries offer ESG portfolios, ESG mutual funds and other products.

The Newday deal could add another dimension to those offerings because unlike most robo-advisors and many sustainable or ESG-focused asset managers, Newday offers proprietary actively managed equity portfolios consisting of individual stocks (usually between 20 and 40), rather than external mutual funds or ETFs.

In its current B-to-C platform, Newday offers for a $5 minimum investment and 1% annual fee eight different thematic portfolios, most reflecting United Nations Sustainable Development Goals: Global Impact, Ocean Health, Climate Action, Animal Welfare, Fresh Water, Diversity and Inclusion, Sustainable Agriculture and Stakeholder Capitalism, which invests in companies that protect and promote the interests of employees, customers, suppliers and society.

Newday is in the process of developing mobile checking and savings accounts and a “bioplastic debit card” and is currently accepting sign-ups for all three, according to its website. The robo-advisor has “just north of $1 million” in assets under management, says Heske. Its deal with Ladenburg Thalmann is the robo’s “first strategic partnership with a firm in the financial advice space,” says Heske.

— Check out Ladenburg Rolling Out New Tax App for Indie Advisors on ThinkAdvisor.