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Josh Brown: How Ritholtz’s Growing Robo Fits Into Its Business

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What You Need to Know

  • Liftoff client assets have doubled since last November, from about $10 million to about $20 million.
  • There are now 300-400 clients on the platform.
  • Ritholtz Wealth Management expects the young Liftoff clients will become its comprehensive wealth management clients in the future.

Ritholtz Wealth Management’s Liftoff automated investment platform still represents a “very small part” of the company’s business, but it’s growing significantly and is “going to be a very important part of our business in the future,” according to Josh Brown, the firm’s CEO.

That is because Liftoff will serve as an internal lead generator for the firm, he said Tuesday during a webinar presented by Orion Advisor Technology.

“I very much believe that the few hundred clients that are currently on the Liftoff platform are our future comprehensive wealth management clients,” he said.

“It’s just a matter of time,” he explained, as those mostly young clients get older, their money starts compounding and the company’s staff keeps them “in the loop” and introduces themselves to those investors “every time they have a question or they call in.”

The firm is also using Liftoff to train the “young, early stage financial planners on staff … to speak with clients,” he noted. It makes sense that, “before they’re ready to get on the phone with a $7 million prospect, they should be speaking with people that are keeping $50,000 [to]  $80,000 with us and just getting more comfortable in answering questions about the firm,” he explained.

Liftoff client assets have “doubled since last November,” from about $10 million to about $20 million now, according to Nick Maggiulli, Ritholtz’s chief operating officer. There are now 300-400 clients on the platform, he said.

Despite that growth, the company doesn’t think that, with the 50 basis points it charges clients, Liftoff is going to be a huge revenue generator for the firm, according to Brown. Liftoff client assets are also still just a tiny percentage of the firm’s $1.8 billion in assets under management.

Liftoff is “really just a way that our young [investors] can start engaging with us early and we don’t have to send them somewhere else,” Brown explained.

Liftoff splits its fees with Betterment, who Brown said has been “handling all the regulatory stuff, the trading [and] the rebalancing” for Ritholtz since 2019. The firm turned to Betterment after software provider Upside was acquired by Envestnet and essentially “orphaned” Liftoff, as Brown told ThinkAdvisor at the time.

“We don’t have any personnel directly involved in buying and selling” for Liftoff clients, Brown pointed out on Tuesday. That is “very important obviously [because] if you’re doing something automated, then the idea is to scale it without throwing a lot of human resources at it.”

However, “every once in a while the people who are clients of the Liftoff service” will have a true financial planning question and “that’s when they’ll reach out to us and our young CFPs can field those calls and have those conversations and hopefully begin the process of building a human relationship” with them, Brown said.

Also discussed during the webinar was how the firm uses Orion’s software. For example, Ritholtz started using Orion’s Eclipse trading platform for RIAs recently and “we’re expanding our trading team to do more of that in the future,” Maggiulli said.

Asked how the firm’s productivity was affected after the pandemic started, Anna Chaiken, Ritholtz head of execution, said: “We were remote before it was cool.” The firm was “built on technology and we’ve always had advisors in offices all across the country,” she pointed out, noting she is based in Chicago even though the firm is based in New York.

“It was fairly easy for our whole firm to pick up their laptop and just move home and just start working — business as usual,” she said, adding: “Automating processes was a huge part of making everyone’s lives easier working remote.”

She and other company executives spent the past year “tweaking and making sure” automated processes were running “smoothly for advisors, client service reps” and  everybody else, and “that’s been key to our success,” she said.

Pictured: Josh Brown, CEO, Ritholtz Wealth Management