FTV Capital has bought a majority interest in wealthtech firm Docupace. It also tapped David Knoch, the former president of wealth firm 1st Global, as its CEO.
Docupace plans to use FTV’s funding to expand its cloud-based product and services for RIAs and other clients, it said Tuesday. For FTV, which has raised some $3.7 billion, the move comes on the heels of investments made in Financial Engines, Riskalyze and other firms. Specific terms of the deal were not disclosed.
FTV remains “very excited about the innovation taking place across the wealth management landscape, and digitization has really gone from a consideration to a must-have,” said Robert Anderson, partner at FTV Capital, in an interview Monday ahead of the announcement. “This is now table stakes for companies large and small to be competitive.”
Digitization efforts are increasingly focused on the automation of back-office operations, Anderson explained. This trend is “being driven by a significant amount of paper-based manual workflows that are still prevalent today, as well as increasing advisor fee pressure and growing regulatory compliance requirements,” he told ThinkAdvisor.
On top of those trends comes the COVID-19 pandemic, according to Anderson, which “further emphasizes the need for organizations to be more flexible in enabling remote work and have the ability to be responsive to client needs in the face of a lot of market uncertainty.”
A ‘Growth Investment’
“This is a growth investment” and “we’re not looking to cut costs or reduce headcount,” Anderson explained.
“It’s quite the opposite; as growth investors, we’re actually excited about accelerating the investment in people, across product, technology, support — so that we can not only better serve our existing customers, but we can continue to grow and scale successfully with new customers,” he said.
Knoch became familiar with Docupace as a client over the past 10 years. With the FTV investment, “one of the specific things we’ll be delivering in 2020 is more insight and automation — more data, more business intelligence for our clients,” he said in an interview.
In addition, “one of the next major initiatives for us … is to expand the market we serve” starting this year, Knoch explained. Although RIAs are among its clients now, its focus has largely been on independent broker-dealers, insurance companies and clearing firms.
“There’s a big opportunity to be able to bring a lot of the automation that that part of the industry is receiving [and] bring it to the registered investment advisor space — particularly the mid- to large-size RIAs,” he said.
Docupace’s “intention is to make sure that we are ubiquitous across the wealth management landscape and [make] sure that everybody has access to great automated back-office experiences,” Knoch added.
Its platform aims to help clients with investor and advisor “onboarding, document management, standardized workflows, robust approval processes, and compliant storage as an integrated platform that eliminates the need for multiple vendors,” according to a statement.
FTV had been engaged in a “very long-standing dialogue with” Michael Pinsker, Docupace founder and president, “for more than five years,” Anderson said. “We’ve known this business for a very long time and have looked for ways to collaborate.”
“From the outset of our discussions, it was clear that FTV Capital offered the ideal combination of deep domain expertise and value-add,” according to Pinsker. “In the coming weeks and months, we have an exciting pipeline of near-term capabilities for our clients that we will be unveiling for the first time.”
Knoch is replacing Mark Tapling, who stepped down as CEO after leading Docupace for the past two years. Tapling will remain with the company for an unspecified interim period to “ensure a smooth and seamless transition of leadership,” the firms said.
Alongside existing board member Pinsker, who is staying on as the company’s president, Docupace’s board of directors now includes Knoch and, from FTV, Anderson, Brad Bernstein and Adam Hallquist.
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