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Financial Planning > Behavioral Finance

New Deals, Other Efforts Lead Orion’s Platform Play

By Timothy Welsh

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What You Need to Know

  • Orion has capitalized on its momentum by making some of the industry’s most dramatic and game-changing acquisitions.
  • The firm announced several new product and platform enhancements, all under a behavioral finance overlay.
  • Ric Edelman believes that blockchain will transform the global financial system and advisors need to understand it better to fiduciarily advise clients.

After an 18-month pandemic-driven hiatus, the advisor conference season briefly opened in late August with the first major in-person event — Orion Advisor Solutions’ Ascent conference — held in Scottsdale, Arizona. A full-capacity event of over 800 attendees gathered in person, along with another 200 or so virtually.

“This is the most prosperous time to be a fiduciary advisor,” said Eric Clarke, CEO of Orion, in his welcoming remarks. “Assets with independent advisors have tripled over the last decade — the wind is at your back and Orion is at your side.”

For Clarke and Orion, it has been a busy couple of years despite the lingering pandemic. Orion has capitalized on its momentum by making some of the industry’s most dramatic and game-changing acquisitions. Beginning with the acquisition of Advizr, a financial planning software system, combined with the acquisitions and mergers of turnkey asset management programs, FTJ and Brinker, along with the risk analytics technology of HiddenLevers, Orion has been by far the most active M&A player in the industry.

With these acquisitions, Orion has methodically built out the components to make its portfolio management system a true, end-to-end, wealth management platform that includes all of the pieces advisors need to run their businesses.

Orion now serves over 2,200 firms, representing $1.7 trillion in assets, all supported by over 1,200 employees. In addition to being one of the industry’s leading technology providers, Orion, post-Brinker and FTJ mergers, is now the industry’s fourth-largest TAMP with over $55 billion in assets, serving over 10,000 advisors.

Behavioral Overlay

As a result of the integration work that Orion has been focused on, Clarke and his new president, Noreen Beaman, who joined Orion with the Brinker merger, announced several new product and platform enhancements, all under a behavioral finance overlay. These include a re-branding of Advizr as “Orion Planning” that will include behavioral finance workflows, along with a new “3D Risk Profile” assessment tool to better align clients’ objectives and goals with their preferences for risk to further connect investor assets with their priorities.

Orion’s new 3D Risk Profile will work hand-in-hand with the risk analytics engine of HiddenLevers, according to Clarke, to create a more complete picture of a client’s risk tolerance, capacity and composure. As a result, advisors can use HiddenLevers’ portfolio analysis capabilities to generate proposals and build portfolios that better resonate with the needs and proclivities of investors.

A major contributor to this new behavioral finance focus for Orion has been Daniel Crosby, its new chief behavior officer, who also joined Orion via the Brinker merger. Crosby led multiple sessions during the conference to showcase how a behavioral finance approach is needed to help advisors and investors work better together.

“The good news is that behavioral coaching adds tremendous value to your clients’ lives, however, the bad news is that no one wants behavioral coaching,” he said with an ironic twist.

Crosby pointed to multiple studies that quantified how much value advisors add to investor performance through behavioral coaching. “The average loss an investor incurs under stress is upwards of 5%, while those investors who used an advisor not only avoided those losses, they doubled results over 10 years, and tripled results over 15 years. However, according to Morningstar, behavioral coaching ranked last in what investors want from their advisor.”

What this means to Crosby and Orion is that advisors need new and better tools and technology to more efficiently deliver behavioral finance concepts when working with clients at the right point during the client journey. “Academic studies show that ‘just in time’ education can make a huge difference in outcomes, and why we are building out new technology and practice management tools to better support advisors and their clients,” Crosby said.

To bring all of these concepts, technology, investments and tools together, Orion introduced a fiduciary operating system called, “Prospect, Plan, Invest, Achieve.” Each of these “pillars” emphasizes the technology needed to streamline the entire client lifecycle workflows to empower advisors with a “more complete client experience” and where Orion has developed new capabilities.

Other Views

The balance of the conference agenda was filled with presentations from industry icons, including Ric Edelman, now retired from his massive RIA, Edelman Financial Engines, who regaled the crowd in a general session with his newest endeavor focused on digital assets and the blockchain.

Edelman has created the “Digital Assets Council of Financial Professionals,” a certifying organization for advisors to become educated and knowledgeable about the inner workings of digital assets, the blockchain and how advisors can effectively include this emerging asset class in portfolios.

“The four most important developments in commerce have been fire, the wheel, the Internet and the blockchain,” Edelman provocatively stated in his remarks. He believes that blockchain will transform the global financial system and advisors need to understand it better to fiduciarily advise clients, because like it or not, digital assets are in high demand.

“Seventeen percent of American adults now own bitcoin, and most importantly, 63% of American adults are ‘crypto curious,’” he said. Because of the massive growth, uncertainty and volatility that comes with this asset class, he is suggesting that advisors make a 1% allocation to digital assets and showed the math as to how a small allocation will improve portfolio performance, whether crypto crashes 84% or increases 1,500% — both of which have happened in recent months.

Noted compliance expert Brian Hamburger provided his take on the top regulatory and compliance issues facing advisors today, including his warnings about advisors selling minority stakes in their businesses that come with overbearing terms. According to Hamburger, these minority owners often include onerous conditions that can prevent the selling owners, without gaining the minority owner’s permission first, from being able to pick service providers, admit partners, retire executives as well as prevent the future sale of the firm. Ultimately, the minority owners end up with much more control of the business than their effective ownership percentages would suggest and cause potential future acquirers to avoid.

Technology guru Joel Bruckenstein also enlightened the crowd with his latest observations about advisor’s technology usage and key trends during the pandemic. “There were two groups of advisors during the pandemic — those who were prepared and those who weren’t,” he said. “Firms that had a flexible technology stack and were ­familiar with remote-working ­arrangements sailed through the transition, while those who didn’t really struggled to survive.”

One of Bruckenstein’s key focus areas is cybersecurity, as so many advisors are not prepared. The semi-good news, however, according to his T3 technology usage survey, is that the percentage of firms engaging with cybersecurity resources has gone up from 6% to 19% in the last two years.

Giving Back

The conference agenda finished with an inspiring keynote, a presentation from award-winning chef, restauranteur and humanitarian Jose Andres, founder of the World Central Kitchen (WCK) — an NGO that uses food to empower communities and strengthen economies. WCK has been an instrumental, on the ground, support organization following natural disasters. Andres Zoomed in for the conference live from New Orleans, where he was leading the efforts to feed the thousands of displaced residents after Hurricane Ida’s destruction in Louisiana.

Andres and the WCK have successfully used economic solutions through food by not just donating to communities, but rather to educating and training them on ways to create sustainable approaches. Andres provided some well-timed advice to attendees, with a counter-intuitive message for financial planners. “Don’t over plan — adapt,” he suggested, as from his experience most things don’t go according to plan.

To learn more about what went on at the 2021 Orion Ascent conference, check out the many tweets under the #OrionAscent hashtag on Twitter.

Timothy D. Welsh, CFP, is president, CEO and founder of Nexus Strategy, LLC, a consulting firm to the wealth management industry and can be reached at [email protected] or on Twitter @NexusStrategy.

Timothy Welsh

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