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Takeaways from a New York Times article about Addepar

The Mountain View, Calif. start-up kept it close to the vest but revealed who they believe uses big data to good effect

Friday, August 8, 2014 – 3:25 AM by Brooke Southall
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Joe Lonsdale: Wealth management is designed for the 1950s, not this century.

Brooke’s Note: When you find yourself mystified by something, the natural question to ask is: is it me or them? Perhaps no company in the RIA business has elicited that question as often as Addepar. The company that swaps employees with Google and PayPal is promising not only that it will leapfrog existing portfolio management systems but hints strongly that it will go one better and reinvent wealth management in the bargain. As the string of comments on the end of this article suggests some of the better minds in the RIA technology world are asking that is-it-me? question about Addepar. Now, in an Aug. 3 article, The New York Times has taken a crack at Addepar. Apparently it has hit many of the same walls as other would-be observers but it at least attempted a new angle about what is going on here backed by at least one intriguing quote that sparked me to write this article.

The New York Times article started off in most intriguing fashion:

“Some of the engineers who used to help the Central Intelligence Agency solve problems have moved on to another challenge: determining the value of every conceivable investment in the world,” wrote the Manhattan-based publication about Addepar, the hot new software company that considers RIAs to be a core market. See: Addepar hits $50 billion of assets and turns its eyes to Advent-Black Diamond’s plump RIA market.

In other words, the software that saved the world’s greatest spy agency from some of its own inadequacies is now being applied to the question that dogs all financial advisors: What are client holdings worth? See: Macro-economic analysis comes to the everyday RIA, and is welcomed post-2008.

Spy and advise

But why exactly should a reporter believe that this lofty goal is being effectively tackled by Mountain View, Calif.-based Addepar is harder to discern from the article, which mostly revealed a set of facts already covered in press articles. See: Addepar means to be the only technology platform RIAs will ever need — and has MIT minds and PayPal money to back it up.

Addepar gets big press coverage but tips its hand little.
Addepar gets big press coverage but
tips its hand little.

One paragraph hints at where Addepar is coming from with its spy-and-advise connection, according to G. Michael Phillips, principal of MacroRisk Analytics of Los Angeles. His company uses research and modeling to predict how economic movement will influence the intrinsic value of client assets.

In the article Times reporter Quentin Hardy writes: “As a computer system learns the behavior of a certain asset, it begins to build a database of probable relationships, like what a bond market crisis might mean for European equities.”

He then quotes Joe Lonsdale, founder of Palantir Technologies in 2004 and founder of Addepar in 2009. “A lot of computer science, machine learning, can be applied to that [challenge of determining the value of assets],” Lonsdale said. “There are lessons from Palantir about how to do this.” See: Addepar hires an Advent talent to help head sales, an ex-Lehman exec as COO and an ex-Merrill Lynch strategist.

Lonsdale did not respond to a request for comment sent through LinkedIn.

Circa 1950

Phillips questions whether “machine learning” is something financial advisors should put much faith in.

“They might have the Rosetta Stone of investing but It’s not something I would want any of my RIA clients to use,” he says. “My experience with neural networks is that they produce results that don’t match with the time horizons of long-term investors.” See: MacroRisk Analytics makes Ph.D.-grade economic insight almost RIA-friendly.

Phillips is of the opinion that machine-learned knowledge about financial assets may have a shelf life of a week.

Citing young people in tech who could not make sense of what was happening to their money, Lonsdale adds in the Times article: “Wealth management is designed for the 1950s, not this century.”

Not dead yet

G.Michael Phillips: They might have the Rosetta Stone of investing but It's not something I would want any of my RIA clients to use.
G.Michael Phillips: They might have the
Rosetta Stone of investing but It’s
not something I would want any
of my RIA clients to use.

Phillips cautions that Lonsdale may be getting ahead of himself in presuming that Palantir’s technological approach is going to put existing wealth management into the post-war Stone Age.

“It’s the kind of thinking that’s snowballing in Silicon Valley right now,” he says, referring to using big data from social networks to determine what advertisements to run to whom.

Calls and e-mails placed to John Volkman, outside PR counsel for Addepar, got one return voicemail that elicited a return call from a reporter that then went unreturned. Volkman also did not respond to emails.

MRI-like scrutiny

Joseph Piazza, chief executive of San Francisco-based Robertson Stephens, says he believes there is good reason why the promising lead of the article never came around to a substantive connection.

“I think there’s nothing to be developed,” he says. “The implication was to take Palantir’s heritage and make the metaphor.”

Piazza says that his experience teaches him that there is one fundamental way that Addepar’s software differs from its competitors. While all players have portfolio accounting and performance reporting, Addepar’s is also loaded with the ability to give a portfolio an MRI and to make sense of the sensory images that it picks up.

He describes the technology as taking what seems one-dimensional on other advice software he has seen and gives a real sense of three dimensions — looking at assets unto themselves but also in relation to each other and with outside factors.

Joe Piazza: They make us look smarter.
Joe Piazza: They make us look

“In equal measure it’s a world class analytical system — at a time when we need it. At the same time it’s a world class reporting system” See: Why technology is vital for RIAs looking to steady client nerves in stormy markets.

3-D accounts

Piazza says the proof for him has been in the way he is able to use it both as a recruiting tool for attracting advisors and as a prospecting tool for luring in new investors as clients.

“They make us look smarter,” he says. Piazza allows that he is aided by the willingness of Addepar to send its own people to his offices to assist in the demonstrations, which is facilitated by geographical proximity and the fact that he is a de facto pilot account, as an early RIA user. See: Swatting aside 'doubters,’ Joe Piazza uses an improbable hook to nab Wells Fargo private bankers — pent-up Addepar lust.

Clients are taken by their ability to log in to the Addepar system and see their accounts in 3-D, Piazza adds.

Related Moves

Joe Lonsdale is prepping Lonsdale Investment Technologies for launch 13 years after founding Addepar -- with the new business model too cannibalistic for comfort, some say

The Austin, Texas, serial entrepreneur is still executive chair of, and a big stakeholder in, Addepar but may need a fresh start to manifest his hyped vision of creating high bandwidth financial flow between retail investors and vast private markets.

February 23, 2022 – 12:09 AM

Surfing a $15-billion-a-week asset growth meteor, Addepar CEO Eric Poirier hires an owner as president to achieve 'escape velocity' and keep operations from flaming out

Addepar is fast nearing $3 trillion, it says, after a 50% RIA asset spike in 2020. Now an Addepar owner through Valor Equity Partners is stepping in to safeguard or supercharge his investment depending on the point of view.

April 9, 2021 – 11:03 PM

Addepar hires Advent genius then launches 'Advent Converter' to court the RIAs still on Axys and APX ; PortfolioCenter 'easy button' comes next

The tactic by the Mountain View, Calif. firm and Advent co-founder and code avatar Steve Strand comes a decade after Orion, Black Diamond and Tamarac began feasting on the legacy corpses, but Addepar insists meat remains on the bone.

March 3, 2020 – 5:05 PM

Mentioned in this article:

MacroRisk Analytics
Tech: Other
Top Executive: G. Michael Phillips, Ph.D.

Portfolio Management System
Top Executive: Eric Poirier

Peter Giza

Peter Giza

August 8, 2014 — 3:27 PM


So what I think I read was:

Portfolio Accounting + WYSIWYG Reporting + Analytics = Addepar

Portfolio “MRI” tools such as Factset and platforms such as WealthSite which have those capabilities built-in already exist and have existed for some time. Whether a firm avails themselves of the technology is another thing.

Hiring lots of really bright engineers to build a revolutionary product is a great idea but will not guarantee success. Recall ill-fated LTCM of the 90’s. With two Nobel prize winners and many highly-qualified and talented quants ultimately failed at the prediction game.

The reality of using big data effectively is that it takes real genius to use it. Innovative minds with intimate industry knowledge, understanding and a solid plan are job one. Having brilliant developers, data engineers and yottabytes of storage will not guarantee anything except a hefty burn rate.

For what it’s worth, my opinion is I’m not so sure the Big Brother spin is all that endearing given the negative press in recent years. The connection is there and it may be desirable but firms may not like the idea of having their portfolios as part of an analytics dark pool.


Pete Giza

Pete Giza

August 11, 2014 — 5:21 PM


Bill said:

“This is but one of the more esoteric asset valuation problems Addepar is attempting to solve”

This and other combinations of public and private asset accounting and reporting “problems” are not esoteric to the UHNW market. These asset “problems” are life blood of WealthSite which has been providing solutions like the aforementioned to multi-generational UHNW clients for better than eight years now.

UNHW is a niche within the RIA market and overall a specialized market with risk averse clients who are ultra-sensitive to data privacy. RIAs are finding out captive platforms can present significant challenges if a move to another platform is desired. Things such historical pricing become “non-portable”.

The “I Spy” or MRI context can only make the consumer wonder how their private data is being combined, tested and analyzed in some common data warehouse to gather this trending information. It is one thing to use external trending resources to build a decision support engine. It is an entirely different thing to use your clients’ data to build those trends. The latter is what we sign off on when we join Facebook.

Big Data analysis requires open access to data in order to provide useful trends and therein lays the issues of data privacy. I am not singling out Addepar, the same could be at issue with Advent Direct, BlackDiamond, Envestnet or any other platform using a common database to collect this information.

WealthSite provides the so-called data MRI and other services to UHNW firms without exposing their private data to a shared dark pool of omnibus client data.

We can speculate all day long as to how Addepar is going to use its Palantir roots to benefit this industry. Time and real life experience of its clients will tell the story soon enough. Stephen Winks brings out a great point. If the advisor doesn’t know how to interpret or how to use the data presented then where is the value?


August 12, 2014 — 5:37 PM
Stephen Winks

Stephen Winks

August 8, 2014 — 8:16 PM

What ADDEPAR is missing is prudent process and judgment both aided by advanced technology but cannot be achieved without the interpretation of an advisor fully engaged client specific advice.


Bill Winterberg

Bill Winterberg

August 8, 2014 — 9:22 PM

Assume an RIA’s client likes to fund start up companies and makes a capital commitment to buy preferred shares of the company for five years at some specified annual coupon, but not all capital is to be disbursed upon closing.

Try to model the value of that asset in traditional portfolio management software. I think most advisors would choose to simply ignore the asset, for better or for worse.

This is but one of the more esoteric asset valuation problems Addepar is attempting to solve.

Peter Giza

Peter Giza

August 12, 2014 — 4:34 PM


:-D on the sarcasm. I think we’re all in agreement that this industry has been starved for innovation. From what I’ve experienced thus far over the past 9 years you either go for it with a lot of funding a la Addepar or you build a profitable business slowly that services a specific niche.

The idea of developing a product that you perceive has widespread market appeal and is in great need for improvement must be based on the reality of the market majority’s perception – not your own. The “if it’s not broken let’s not fix it” persuasion prevails and in some cases rightly so. A firm of 20-30 years of age has invested heavily in one or two portfolio management platforms. The thought of moving to another system even if there is real value can be unsurmountable. I personally don’t agree with that thought process but i understand it.

Here it is 2014, many years since the CRM boom, yet CRM is considered a new and important center of our industry’s technology universe yet we hear of implementation horror stories regularly. In fact firms are still struggling with the basics of document management and internal/external portal solutions at this late date.

Addepar is obviously going for something big otherwise there wouldn’t be $50MM in venture behind it. And we cannot expect it to give us the inside scoop otherwise they’d blow the wind out of their own marketing sails. As I’ve said developing a WYSIWYG reporting interface is in and of itself a major undertaking, one which I am dubious as to the long-term value once the wow factor is gone.

The Big Brother trending / predicitive analysis has yet to be vetted with success where data privacy is such a factor. The Big Data aspect is nothing new to this industry with the likes of Bloomberg, IDC and the myriad of data services providers, custodians and broker/dealers serving our industry.

Its fun to watch from the armchair and bet on the horses:)


Bill Winterberg

Bill Winterberg

August 11, 2014 — 10:40 PM

Great comments Peter.

Might as well build first, then figure out where the value is later (cue the Internet sarcasm)!

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