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The wary love affair between RIAs and Addepar and where it's headed

Silicon Valley Bank launches RIA, SVB Private Bank, to join Robertson Stephens and Iconiq Capital among Bay Area RIA devotees

Thursday, April 30, 2015 – 6:29 PM by Brooke Southall
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Jeff Schnitz (r.) sits shoulder to shoulder with Joe Piazza to tell prospects why Addepar is part of their hyper-ambitious RIA startup plan.

Brooke’s Note: Call this the third and final Addepar article in a series. The first one focused on the software startup’s debutante party in San Francisco, the second was Nevin Freeman’s review of its software. This one takes a look at just how Addepar software resonates with advisors. An off-record source helped frame the Addepar challenge, potential shortcomings, and Pershing’s Ben Harrison was a great source for getting a sense of what RIAs and family offices like about the software at ground level. The stars of this article are Joe Piazza and Jeff Schnitz, heads of the RIA efforts of Robertson Stephens and Silicon Valley Bank, respectively. They are users of Addepar who participated on a public panel at the aforementioned event.

Big money investors, major clients and prospects drank and made merry with Addepar Inc. employees and principals last week. Between drinks and dinner at San Francisco’s posh The Battery, three advisors described the mountains of expectations heaped on their shoulders.

First up was Joe Piazza, who chose Addepar as his firm’s second portfolio management system months after choosing a competitor. Piazza is in the process of getting Robertson Stephens Asset Management Inc. off the ground and his goal is to make the RIA bigger than the wealth management division of its namesake, the long-defunct Robertson Stephens investment bank.

“We want it to reach $40 billion of assets and $300 million of revenues,” he said. But only as measured in assets, not overhead. “We had 220 people and I don’t want that body count again.” See: As Joe Piazza’s 'Robertson Stephens’ venture gears up for '$40 billion,’ he adds Mercer, Addepar, Fidelity and Schwab and subtracts Fortigent.

In the family

The next speaker was Jeff Schnitz, managing director and president of wealth advisory SVB Wealth Advisory Inc. The RIA offspring of Silicon Valley Bank registered with the SEC in 2013 and has about $100 million of managed assets, according to its ADV. Silicon Valley Bank is a sort of community bank on steroids for Pinterest, LinkedIn and other fast risers along Rt. 101 between San Jose and San Mateo. SVB has managed assets before but this is its first RIA. Schnitz welcomed the startup because it allowed a fresh start with software. His broader firm has, for example, a $10 billion bond portfolio managed with help from Clearwater software. See: Two Silicon Valley RIAs marry their practices to lay the groundwork for succession.

The last speaker was the head of a classic family office. The advisor’s main client is his ultrahigh-net-worth wife and her sister. He manages more extensive accounts but only because the assets are plunked into various LLPs and LLCs. He recently moved from Black Diamond to Addepar and was pleased with its reports.

“I did more in two weeks than I did in four years with my other provider.”

Joe Piazza: We had 220 people and I don't want that body count again.
Joe Piazza: We had 220 people
and I don’t want that body
count again.

Keeping it positive

About an hour and a half into the evening, Poirer announced a demo of the Addepar technology, putting a damper on the frothy-first-glass-of-wine atmosphere.

With equal parts apology and bravado, Poirer defended the buzz-kill effect: “We are militant about leading with our technology.”

The software demo was fine but seemed like an old-school move for a company that is all about the invisible production of quality data. See: Review: Nevin Freeman pops the Addepar hood to see what $50 million of coding can do for RIA software.

Neatly balancing the three RIAs on the panel were three Addepar executives: founder and chairman Joe Lonsdale, chief executive Eric Poirier and marketing officer Barbara Holzapfel. The advisors were uniformly upbeat about the software and even threw glances in their hosts’ direction as if to affirm that they were trying to keep it all positive.

Here we had the interesting dynamic of young-buck, top-one-percent-of the-one-percent software entrepreneurs publicly schmoozing graying RIA principals with the RIAs working equally hard to show their worthy participation in a rarefied atmosphere. See: Addepar lays out world-fixing vision and rolls out upgrades at swanky The Battery event in San Francisco.

Conscious of this dynamic, Lonsdale quipped, “These guys are much more on message than me.”

He also contributed to the chorus of practical consumer concerns, relating what gets on his nerves and the nerves of his UHNW friends. “I don’t want to be spending time dealing with third parties.”

Pain and gain

Addepar purports to oversee $300 billion of assets from 100 clients that are mostly family offices but include a number of RIAs, which the company plans to up as it shows its vastly upgraded performance reporting capabilities. Still, Poirer is forthright that Addepar sees its market, long-term, as $120 trillion across the globe and RIAs for now have $4 trillion at best from 10,000 firms with few pursuing a strategy that involves investing heavily in hedge funds and private equity. See: A $6-billion multifamily office highlights its home-cooking approach to picking boutique managers with a star hire.

I spoke to executives from one mega-RIA at The Battery event who had just signed an Addepar contract and is in the process of switching providers. Addepar asked me not to reveal the identity of the RIA.

Those execs expressed the pain vs. gain equation inherent in switching providers. An executive from Iconiq Capital commiserated with his colleagues and did his best to soothe their fears but allowed that some trauma is inevitable. But the Iconiq exec also said that he was speaking from conjecture as his firm started with Addepar and never had to undergo the pain of transition. See: How the Facebook IPO is creating the mother of all RIAs, Iconiq, and what an in-your-face it is for Wall Street.

Rare RIA entrant

Eric Clarke, president of Orion Advisor Services LLC, one of the three or four high-flying software companies catering to RIAs, observes that it’s rare to see Addepar at the table as his firm vies to sign on RIA prospects. But he expects to see Addepar compete with greater frequency in the future. The one firm that mentions Addepar in conversation as an Orion competitor, Clarke adds, is RIA custodian Pershing Advisor Solutions.

Indeed, Addepar appeals to a certain niche of advisors that Pershing interacts with frequently, according to Ben Harrison, head of business development for Pershing Advisor Solutions LLC.

“We have been observing Addepar become an option for clients whether wealth managers or family offices when the client complexity and sophistication increases,” he says.

“This is especially true regarding reporting on non-traditional asset types and complex entity structures. We also see firms interested because there seems to be a desire to work on a modern, elegant, and different system from a user experience perspective. For example, you know right away if you are utilizing an Apple operating system versus a PC operating system. They seem to be attractive for those individuals and firms that are seeking a new look and feel and want to be on the cutting edge.” See: Why RIAs are shunning mobile apps and why Black Diamond, Orion, Fidelity and others are still placing their chips on an iPad future.

A technology executive opines that these comments reveal both Addepar’s advantages and its challenges. The executive adds that Addepar hazards the trap of applying 21st century solutions to 20th century problems, like getting information on a browser and making it prettier. These were things people wanted 20 years ago and to improve on them doesn’t necessarily create any real disruption.

Addepar is also making a potentially risky bet on the market. The software does not address the vast swath of managers, and certainly RIAs, who are heeding the research indicating that an indexed approach is a good way to keep your job. “They’re betting on the market splitting in two ways: an alpha form and an index approach.”

Fighting the last war

Ben Harrison: You know right away if you are utilizing an Apple operating system versus a PC operating system.
Ben Harrison: You know right away
if you are utilizing an Apple
operating system versus a PC operating

In placing its bet on sophisticated hedged management, Addepar is betting on that more advisors will focus on the very rich.

“There is also a natural trend for more and more companies to focus on the HNW and UHNW space,” Harrison says.

If the market splits, however, that’s another matter entirely. Mutual funds and SMAs account for tens of billion of assets. Hedge funds and ETFs are each at a relatively paltry $3 trillion each of assets. See: Chasing bad performance: Why investors can’t get enough of those increasingly lame hedge funds.

Still, Harrison says that many Pershing clients are impressed by Addepar’s offerings.

“From what we have heard and what my team has observed on demos, the items that they are focused on are highly desirable in the marketplace. For example, their new report writing feature is powerful — drag and drop report creation. The ability to customize data points, be flexible with data, and provide fast query capability. All of those items, which on the surface seem simple, are highly sought after because firms want to run more efficiently and provide customized client reports. In addition, it looks like they are enhancing their multi-currency abilities and also will provide multi-lingual statements. We see an overlap in client demand for those capabilities as our platform also provides multi-currently and multi-lingual capabilities. Sophisticated investors need access to global capabilities, even if not right this second, they want to option should an opportunity or defensive need arise.”

Despite these plusses, the technology executive says Addepar needs to prove itself on a nut and bolts level in addition to executing acts of engineering genius. For example, making data feeds work with custodians requires equal parts detective and programming skills.

“You have to be creative,” he says. “Good data is like a dial tone. You don’t appreciate it until it goes away.”

Swing vote

With the unknowns involved in purchasing software from a hyper-talented startup, Piazza acknowledged what he called a “Supreme Court”-style problem in the decision-making process to go with Addepar. When it came to a vote on the board of directors, four were for Addepar and four wanted to go with a more traditional competitor. Instead of exercising his prerogative to cast the swing vote, Piazza asked his board members to do some deeper research. The next vote came in at nine to zero. See: As Joe Piazza’s 'Robertson Stephens’ venture gears up for '$40 billion,’ he adds Mercer, Addepar, Fidelity and Schwab and subtracts Fortigent.

Schnitz, on the other hand, said his firm approved Addepar unreservedly. “The conversation has turned toward the future rather than a benchmark,” he said.

But the future can be a scary place where targets are fluid. “Clients don’t know what their goals are.”

Piazza, returning to the trenches after 10 years in retirement, says that the change in client expectations was particularly bracing.

“Clients are much more inquisitive,” he says. “There’s never been so much interest in generational planning.” See: A New York Times article gets real on the topic of marketing to millennials.

Multitasking visions

Lonsdale and Poirier are keenly aware of the need balance the big and small pictures. When deciding on where to focus Addepar’s energies — on managing the assets of RIAs, family offices, pension plans or the oil sultans of the Middle East —Addepar is taking a practical approach. Poirer says that for now, Addepar is focusing most of its marketing attention on family offices because they manage the most complex portfolios and have the added layer of vast and interweaving entities, including LLPs and LLC, which own the assets.

“We made that our problem to say for each that the value is X and the return is Y,” Poirier says. “Solving that technically is a very hard problem.”

Addepar is betting that both down-market RIAs mega-asset managers will want to solve this problem and that Addepar’s focus will shift accordingly.

'Not the first or last startup’

But plenty of software players can and will aggressively pursue a similar market strategy. See: How two ex-myCFO guys are winning big RIA clients by using a pilot fish strategy to win Advent clients without harming the host.

“The competitive landscape is strong which is actually healthy for the industry and for clients,” Harrison says. “There are number of formidable competitors in this space. At BNY Mellon and Pershing we are squarely focused on working with advisors, wealth managers, as well as single and multi-family offices who serve UHNW clients. So, we see a lot of overlap and shared client opportunities with technology providers that are courting sophisticated and complex clients.”

He adds: “This is not the first or last startup that we will see in the marketplace.” See: Why a disconnect between reporting software and advisors to UHNW assets persists — and what makes the problem so thorny.

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:

Portfolio Management System
Top Executive: Eric Poirier

Pete Giza

Pete Giza

April 30, 2015 — 7:56 PM


Interesting you bring up the point of RIAs and crunching numbers. This is not just an RIA phenomena and it remains the reason that the financial advisory industry will not stop hugging Excel. Simplicity is good especially in presentation. That is not to say to dummy down what is presented, rather less is more. The same holds true to effective and elegant interface design.

WYSIWYG report tools are cool, but is it what the industry wants? Only time will tell how really effective it is. As was stated in the article, it isn’t disruptive, it is what has been expected for over a decade in an industry that is a technology laggard. What could be disruptive is how Addepar leverages its technology to be innovative and where it directs that $50mm investment to turn it into a $1B+ multi-national organization. Technology on its own right isn’t going to make that happen in a million years – not here. We’ve all heard “the best technology rarely wins the market”.

At the end of the day RIAs need to be given the choice as to how much simplicity they want. Its as variable as what and how they present to each individual relationship. Firms such as those mentioned who have not had the pleasure of moving from one platform to another are jaded. Giving firms a choice as to how and when that transition is made has far more value. Most firms have invested heavily over the years in personnel training, understanding and integration of these applications into their personalized workflow, style and even culture. As I’ve commented in previous articles “change is scary”.

Here at WealthSite we see the world of private assets as a veritable frontier of opportunity. One which we are very happy to serve. This year alone has we have seen over 100% increase in focus on the private world by firms ranging from $200mm to $40B.

At the end of it all you either need to pick your niche and be the best at it or try to be all things to a global market and not necessarily the best because its about impossible. Take a lesson from the numerous failures of Apple, Advent, Microsoft and the list goes on.


Pete Giza | VP Bus Dev | WealthSite Inc | www.wealthsite.com

brooke southall

brooke southall

April 30, 2015 — 9:12 PM


It’s always a treat when you comment. You have a knack for picking up on points that get short
shrift in an article and filling gaps for the reader.

This is a great line(s) and use of 'jaded’:

Firms such as those mentioned who have not had the pleasure of moving from one platform to another are jaded. Giving firms a choice as to how and when that transition is made has far more value. Most firms have invested heavily over the years in personnel training, understanding and integration of these applications into their personalized workflow, style and even culture. As I’ve commented in previous articles “change is scary”.

Interesting the uptick you confirm in investments in private assets by advisors.

This year alone has we have seen over 100% increase in focus on the private world by firms ranging from $200mm to $40B.

Thank you,


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