Jeff Yabuki puts InvestCloud 'brand identity' under McKinsey & Co. review and signals that no job is safe as Pete Hess exits: report
The 64-year-old InvestCloud CEO got dragged out of the Motive boardroom to reclaim control of the private equity firm's ROI -- and he's proving that nothing is sacred.
5 min read
Brooke's Note: If 2010-2020 was the decade of software engineers and financial engineering in the RIA business, then 2020-2030 is rapidly shaping up to be the decade of fixing things that got broken in that land-grab. InvestCloud embodied much of that 2010-2020 spirit, and now seems to have a potentially incurable hangover from just how fast it moved – and how much was broken in the process. But that fearful diagnosis didn't account for the possibility that Motive could pull a rabbit out of its hat in the person of Jeff Yabuki. His success is far from assured after only two months on the job. But nobody will accuse him of trying to finesse the overhaul. Big actions are apparently underway and with that, it could make the company's revenues – currently about $360 million – fall more in line with the $6.5 trillion it reports as administered assets.
Jeff Yabuki just shed two big names, hired a big-name consultant and signaled that he may dump his own brand – InvestCloud – for one more in keeping with the firm's true identity.
The InvestCloud CEO – two months after taking the reins – let go of a true industry legend, Pete Hess, former CEO of Advent Software. See: Pete Hess steps down at Advent Software just as Axys gets whodathunkit fix
Frederick Duden, chief product officer of portfolio management unit APL, is also leaving.
Yabuki, 64, is apparently awarding a fat contract to McKinsey & Co. to introduce a third-party take on a typically first-party question: Who are we?
We are “reviewing our brand identity system and product nomenclature to understand the potential to refresh and extend the InvestCloud brand,” writes Yabuki, in a memo obtained and first reported on by Citywire. See: InvestCloud gets added to Tegra118.
Growth engine
McKinsey is first being asked to look at brass tacks – “to help clarify our product strategy, growth plans and ways to increase our operational effectiveness,” the memo says.
Pete Hess steps down at Advent Software just as Axys gets whodathunkit fix
Yabuki's hiring is already considered a brand counter-revolution.
He previously served as the CEO of Fiserv from 2005 to 2020 and, before that, as executive vice president and COO of H&R Block. In 2019, Forbes named him among the top 30 most innovative leaders in America.
InvestCloud had gained primacy as a portfolio management, trading, accounting and rebalancing platform over Tegra118 when it merged with the ex-Fiserv unit in 2021. See: Motive Partners goes owner-operator
Beauty is in the eye of the beholder, said Andrew Besheer, formerly of Datos Insights, in an prior RIABiz interview, in January.
“People view Tegra as unsexy, but with a bit of investment around it, that’s the engine that grows the business,” he explains.
Story Timeline
“My gut… legacy Tegra and Naviplan will be their near-term drivers as they sort through the other assets and better align them to move forward," he adds.
Cutting fat
InvestCloud -- long tagged an 'Envestnet killer' -- sold at $1-billion valuation level, gets added to Tegra118, but some say, not so fast
InvestCloud's cloud-oriented brand, however, has long had a kind of ephemeral sex appeal, even if it was always based on the promise of surging revenues tomorrow and the visionary, bootstrap culture of former CEO and co-founder John Wise.
At one time, analysts described the firm as "bleeding-edge," because its 2.0, merry mixer-online-software seemed to signal a potential leapfrog of older, yet dominant, software-makers like Envestnet or Orion.
Yabuki may see more promise in Tegra118's stodgy but rock-solid identity from his 15 years as Fiserv CEO. See: InvestCloud CEO John Wise and management team ousted.
Whether Yabuki takes the fluffiness out of the InvestCloud brand remains to be seen. But he is signaling loudly he is cutting fat up and down the organization to reduce the "whispeer-down-the-lane" effect.
“To achieve our potential — which includes delivering with excellence to every client, every time — I am aligning our organization structure to allow our leaders to be closer to the clients and markets we serve,” Yabuki wrote.
“We will also reduce the size of our Executive Leadership Team (ELT) to enhance coordination and streamline decision- making.”
Exit strategy
Motive Partners and Clearlake Capital bought 88% of InvestCloud for $1 billion at the end of 2021.
Yabuki's unsentimental approach back in the saddle reflects a very clear exit strategy, said Besheer.
“The driving motive behind putting someone like Yabuki into the seat is that the exit strategy for this business has always been to IPO it,” he said by email.
“It might not be a bad strategy – if one assumes that they’re looking to try and make an IPO happen in say the next 12- to 18-months – to put in an experienced public company CEO with a well known and successful track record from an investor and analyst perspective," he added.
“Yabuki fits that latter profile to a tee … I’m sure if the IPO is successful, there will be a significant wealth creation event for [him] that more than justifies his getting back on the horse."
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