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Technology > Investment Platforms > Turnkey Asset Management

A New Year, and a New 'Advisor-Driven Experience' at Orion

By John Manganaro

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It was a little more than three months ago that Natalie Wolfsen took the helm at Orion as CEO, inheriting the reins from Eric Clarke, the firm’s founder and longtime chief executive officer, at a pivotal moment for the financial services technology company.

Under Clarke’s leadership, Orion completed seven major acquisitions between 2018 and 2022, including those of Brinker Capital and Redtail Technology.

The goal of the big-ticket acquisitions, Clarke has explained, was to enable thousands of advisors to achieve independence and “go out there as true fiduciaries, supported by the technology they need to serve a significant number of households at scale.”

Now, in a new interview with ThinkAdvisor, Wolfsen said that vision is quickly becoming a reality, with the firm’s developers and product team working to break down internal silos and create a unified platform that brings together all the aspects of a modern advisor’s practice — across investments, client relationship management, operations, compliance and more.

Wolfsen was joined in the conversation by her colleague Brian McLaughlin, president of Orion Advisor Technology. Before Orion’s acquisition in June 2022, McLaughlin was the CEO and co-founder of Redtail.

Ultimately, according to the duo, 2024 is an important and exciting year for the firm, one that will see the testing and rollout of significant advancements in the firm’s platform. It is also an important year for the advisory industry as a whole, they said, given rapid shifts in client expectations and broader changes in the economy and consumer landscape.

THINKADVISOR: So, how have the first few months on the job been? It’s a busy time at Orion, right?  

Natalie Wolfsen: It’s been really great so far here at Orion. I’m really enjoying the work, and it’s a fantastic team. We have an incredible selection of solutions that advisors can pick from to find the support that best fits their needs.

One of the best things about this firm is that we just have so many ways to serve and work with advisors.

On the one hand, we can be their fully outsourced turnkey asset management program, where the advisor outsources all of their investment management, their technology, their servicing and their custodial relationships to us. Then on the other side, advisors can elect to use individual pieces of technology to save them time and effort, and we can do everything in between.

One reason I came here is that I believe Orion has the opportunity to empower independent financial advisors and all the enterprises that serve them — both via technology that we own and by partnering with other organizations, so that we can partner with as many advisors as possible.

Right now, we are on an exciting journey to integrate everything we have brought together within Orion in a very advisor-centric way.

What was it like transitioning and taking on leadership of a team of the more than 1,300 people who work at Orion and cover all these areas?

Well, my prior firm, AssetMark, had about 1,000 or so associates, so it’s not like Orion is massively bigger in that sense. What is great about Orion, though, is that it is in so many lines of business, and it has been incredibly fun to work on all the pieces and work on building that integrated experience.

Something else to add is that Orion serves RIAs and broker-dealer affiliated advisors, as well as insurance-oriented advisors. For someone like me — who cares a lot about fiduciary advice and delivering great information to investors so that they can make great decisions — this is a fantastic place to be. The reach is just so significant.

What is your perspective on the general advisor landscape? Do you agree with some industry leaders who say that advisors are being asked to do more than ever before? Does that ring true from your perspective?

Absolutely. Investors are demanding so much more because they are experiencing incredible information access and incredible ease-of-use technology in all the other parts of their lives. They are used to having a wealth of real-time information at their fingertips and the ability to make decisions and changes instantly. That is porting over to the world of financial services.

Advisors are being asked to deliver their services in new channels and in new ways, and they are also being asked to deliver more services. It’s not just investment advice, but also financial planning, retirement planning, trust and estate work, taxes and more. They are expected to be able to bring it all together into a single, actionable financial picture.

It’s just a reflection of consumers driving advisors to change, and at the same time the industry is consolidating massively. That means the competitors out there are getting bigger, and they are able to invest more in technology, in services and support. Independent financial advisors find themselves fighting to keep up.

That’s where companies like Orion come in. We can be their technology extension and handle the R&D and development work so they can focus on being great advisors and connecting with clients.

Do you think the impressive pace of M&A in recent years will continue, and will it continue to move down market?

I think it absolutely will continue, and it’s actually already started to move down market significantly.

The deals did start at the large end of the market — with those impressive wirehouse corner office teams and the bigger independent RIAs. But the activity has absolutely moved to smaller advisors, and those advisors are either being rolled up or they are affiliating with one another.

Investors’ needs are changing, the industry is consolidating and many original founders of these smaller RIAs out there are themselves getting close to that traditional retirement age or even beyond it. So it’s very dynamic. In addition to that, the evolving regulation means this is an inflection point. It’s a great time to be helping financial advisors.

Do you see regulation as one of the bigger challenges for firms today?

It’s definitely something independent advisors need help with — and the larger ones, too, for that matter. Things are changing so quickly, both in terms of the written regulations but also in terms of interpretation and enforcement activity. That’s a big part of why we acquired, even before Redtail, a compliance consulting and technology company called BasisCode Compliance.

We did that because we know that RIAs need support here. They need to understand what’s happening with the regulations and how to prepare themselves for examinations. We want to be there to help them do that at a time when things are changing so fast.

What about the outlook facing small advisory shops with one or two advisors and a very traditional approach to the business that isn’t exactly tech-enabled. What does their future hold?

It’s interesting because we do still see the creation of lots of … traditional startup advisory shops, but their failure rate is pretty high. That’s one of the big reasons that the number of advisor shops hasn’t changed much in the last 10 years, even though many new firms were founded in that time.

They generally get to that point where they maybe approach that $100 million or $150 million point, and from there it just gets so overwhelming from an operational perspective that they have to make a decision. You can’t continue to grow from there and go it totally alone.

From our view at Orion, we think there will continue to be a lot of innovation in helping and supporting those independent advisors via tech, so that those advisors can succeed at a greater rate. This is a big reason why we have a real TAMP, not just a piecemeal approach.

When you think about the term TAMP, what is required to be a real TAMP as opposed to a provider of different tech pieces?

It’s a good question to spend some time on. Today, a modern TAMP must do three things, in my view.

First, it must provide technology that brings together portfolio analytics, proposal generation, ongoing client reporting, risk-return tradeoff analysis and investment selection.

Second, the tech must provide asset management services, and that can be open architecture or closed. You might see a lineup of third-party separately managed accounts and strategies, or you can have a single way that you invest, but a true TAMP must have the asset management built in.

Third, they must be supporting the servicing work in a big way. Typically, the true TAMP will take on the relationship with the custodian, and they will be taking on the client-directed activity processing in those accounts.

Those three pillars are the foundation of a modern TAMP, in my view. Of course, different TAMPs can do different things to differentiate themselves. At Orion, for example, we add in behavioral finance solutions and we feel that really differentiates us. We also have great custom indexing and customization of portfolios based on tax positioning, for example.

Can you say a bit more about the difference between open architecture and closed architecture?

My view is that competition is fundamentally important at all positions. You can’t just have one fixed income manager and one diversified fixed income portfolio, for example. I believe you need to have a least a few options for advisors to choose from.

Here at Orion we have kind of a hybrid approach. We have our own portfolios, and we have a portfolio management team with a 25-year track record of good performance. But we also have great third-party managers on the platform.

We have a very talented due diligence team with a lot of tenure that reviews and culls the universe of potential investments, so we’re bringing what we view as the best of all the options to our advisors.

So, internally, we view it as a curated open architecture approach, if you will. It’s all about serving the advisor and being flexible.

We hear a lot about direct indexing and the use of separately managed accounts to get tax-advantaged planning into the hands of clients. Is that growing in popularity?

Yes, definitely. To step back, customization is incredibly important today.

It’s important because consumers now expect customization across so many parts of their lives, and that is finally breaking through to financial services.

Orion has a competitive advantage here, I believe, because we are a technology company at heart. The work we are doing on customization flows from the work we have been doing for years to build a highly scalable and flexible platform.

As you reflect on your first three months in the job and big goals looking ahead at 2024, what are you thinking most about?

We’ve laid out our goals and priorities for 2024 and onwards into future years. In 2024, we are very much focused on continuing the great integration work we have been doing across all the different parts of Orion’s technology, bringing it into a seamless advisor-driven experience with client relationship management in the center.

If you look at the wider world of financial service tech today, you have a CRM that sits on one side, and then you have portfolio, accounting and trading sitting in another silo. Then compliance is in another silo and financial planning is in another, and they don’t necessarily talk to each other in a seamless way.

But, as we know, it is the same client that is being served and is benefiting from all of that ecosystem. So, we are fully committed in making sure we are bringing all the properties we have purchased and the integrated partners we work with into a single experience.

At this point, the firm is unified, and we have one development team, one product team, etc. We’ve broken down those silos internally. There’s so much opportunity, now that we have all the pieces in place. It’s about bringing them together intelligently, and that’s what we’re doing.

Because we are an advisor-focused company, we are bringing it all together in a way that helps advisors maximize their day. The CRM is at the center of it, but we are reimagining the CRM so that it has the financial plan directly connected within it, and it has the portfolio analysis and the comparison tools in there all together. We’re really excited about it.

Pictured: Natalie Wolfsen 

John Manganaro

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