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November 18, 2020 at 03:10 PM
News that fintech platform Oranj is “winding down operations” by year-end had industry tech experts voicing a mix of views on the consequences of the development.
They agree that the departure of Oranj from the fintech landscape should be a headache for at least some of the 500-plus advisors who use the firm’s platform. But how much of one?
Calling the news a “nasty surprise in a year of nasty surprises for advisors,” Ezra Group CEO Craig Iskowitz says his “initial reaction” is that the move is “incredulous, considering how much time I’ve spent talking to” CEO David Lyon, who founded the firm in 2014.
The news comes about seven months after Motif Investing abruptly closed down its trading platform.
“It seems to be a horrible dereliction of your responsibility to both clients and employees not to have seen this coming and drop the news the week before Thanksgiving,” according to Iskowitz.
Noting that a large part of his consulting business is about “helping enterprise wealth management firms evaluate and implement new tech platforms,” Iskowitz explained: “Even the smallest companies need at least two quarters running in parallel to validate billing cycles.
“Instead Oranj is forcing hundreds of small advisory firms to drop everything and cram six months (or more) of work into six weeks, and with the holidays smack in the middle, is just cruel, IMHO,” the tech consultant said via email.
What the Oranj exit “means is coal in the stockings of hundreds of mostly small RIAs,” he added. “They have to throw out all the work they planned to do between now and Dec. 31 and instead focus on finding a new vendor, signing a contract, notifying clients of the change, converting all their data and connectivity, and implementing a new wealth platform. Unbelievable!”
‘Not the End of the World’
But to Technology Tools for Today’s Joel Bruckenstein, the development “is not the end of the world,” since there are “plenty of other options out there” for advisors. This is especially true for those advisors who have been using the platform for free, he adds.
Still, it is “a hassle to have to transition your clients from one platform to another,” Bruckenstein conceded. Some advisors may opt to use Schwab’s platform for certain features, albeit at a cost of 10 basis points, he notes.
“It appears that” Oranj has “jettisoned a lot of clients — probably people who were paying them little or no fees for the platform, and it’s fair to say one scenario might be that [Oranj] would be looking to sell the technology” and not its client list, he added.
