Advyzon founder and CEO confirms receiving 'unsolicited' interest from M&A suitors and capital providers, and Charles Schwab Corp has emerged as potential suitor, driven by its RIA side, a source says

Charles Schwab Corp. has engaged in serious high-level discussions with executives at Advyzon about a combination of forces, according to a source familiar with the matter.

The Westlake, Texas RIA custody giant and the rising Chicago RIA software company have met on multiple occasions, attended by high-level executives on both sides, the source says.

Advyzon did not confirm or deny a Schwab meeting; rather, it declined comment, though it confirmed suitors often approach it about a sale or merger. 

“Advyzon often gets unsolicited investment queries and acquisition offers, but Advyzon is not for sale,” CEO Hailin Li stated right off the bat in the first sentence of a 535-word emailed statement from the company. 

“Unfortunately, there are a number of rumors floating around these days – misinformed people speculating and jealous competitors who may be planting misinformation.” 

“I feel it is important to clearly state our unwavering commitment to all our clients, potential clients, and partners regarding our ownership structure, service commitments, and platform’s security,” he continues. 

Schwab has not responded to two requests for comment.

Analysts see benefits

Yet, the source insists something is still "brewing" between Advyzon and Schwab.

Something “is happening, without a doubt … in the next one to two months, publicly," the source adds, describing any potential deal as “driven” by the RIA-side of Schwab's business.

Jon Beatty, head of Schwab Advisor Services runs the Schwab's RIA unit today. He replaced long-standing RIA chief Bernie Clark in May 2024. See: Jon Beatty uses his Schwab IMPACT coming out party to let RIAs know he is anti-disruption.

A leading software analyst in the RIA business says it only makes sense that Advyzon would listen to unsolicited interest but ultimately choose to stay independent.

“They're killing it,” he says. “They're growing like a weed. And they've done that without a big financial partner."

Analysts also praised the potential that a Schwab purchase of Advyzon would bring, labeling it "brilliant," "smart," and “low-risk.”

For one thing, it would replace Schwab's old performance reporting service, PortfolioCenter, which it sold in 2019. See: Schwab Advisor Services tosses its PortfolioCenter platform to Envestnet.

PortfolioCenter was built as desktop software that never fully made the leap to the cloud where Advyzon lives. Advyzon could also address Schwab's reputed need for upgraded unified management accounts (UMA) software.

An Advyzon competitor who also asked not to be named says digital-forward Advyzon might also give Schwab Advisor Services a stronger position against the new breed of “digital” custodians, including Altruist, Apex and TradePMR, which Robinhood Markets recently acquired and will soon overhaul.  

Low-risk brilliance?

“[An Advyzon-Schwab combination] is a really interesting idea," says investment product consultant Seth Adam Stuart, who spent 11-plus years at TD Ameritrade, including 17 months after Schwab's 2019 deal to buy the company. See: Schwab-TDA merger, when it happened.

"Schwab have been clamoring for a new UMA to get them eventually to a unified advisory platform ... they need to figure this out ... [so] it's a smart move.

“This would be the bones of the Schwab platform. Built out, [it] could work all the way to ultra-high-net-worth, serving $25,000 clients to $25 million clients – should they add private markets to the mix. It lets them go up-market and not give fees and control away,” he adds.

There may even be a cultural affinity between the David and the Goliath. 

Advyzon hired Kartik Srinivasan as president of its institutional business in February a year ago, after he'd spent seven-and-a-half years at Schwab. Most recently, he was managing director for digital advisor solutions. See: Kartik Srinivasan bounces back from highly publicized Schwab lay-off.

Advyzon has made other Schwab hires in addition to recruiting from Fidelity Investments, SS&C Black Diamond, Goldman Sachs, Envestnet and Morgan Stanley, according to the firm. See (Briefs): Advyzon gains off Goldman exodus.

Primetime problem?

Yet industry observers, some Schwab staff, and Stuart all see reasons the match might be imperfect.

At issue is whether Advyzon has the capacity, without major investment, to handle the trading, operations, client service and technology it would take to support several hundred billion dollars of Schwab-managed and dual-contract models and accounts.

"The [UMA] team is too small, at less than 15 people. They need Schwab resources and scale [to] further develop technology, product, research, sales," says Stuart, who, like Advyzon, is also based in Chicago.

“The current Advyzon platform cannot handle assets at scale with millions [of] accounts … They don't have the $100 million to develop a generation five-plus platform to handle the scale.”

Capable of scale

Not a problem for Advyzon, according to Doug Fritz, founder and chairman of F2 Strategy, a wealth management consulting firm. 

Advyzon is “exceptional,” Fritz says, in an email exchange. 

“We would expect their technology infrastructure is capable of managing ‘at-scale,' but we have not yet taken any of our larger clients onto their platform, so we cannot yet confirm it."

But their abilities go beyond mere capacity, Fritz adds.

"They follow the ‘right’ approach that allows portfolios to be modeled and implemented across multiple registration types (combining taxable and tax exempt).  

“They also enable enterprise controls for larger firms to adjust advisor ‘leashes’ for amount of customization [and] configuration to go off-model as needed," he continues.

Advyzon rejects the doubts over its ability to scale.

“Advyzon is built to serve advisory firms and financial services institutions of all sizes," says a company spokeswoman, via email.

“That’s why Advyzon has four brands established to serve every need, from small to large, in the financial services industry.”

Small is beautiful

Adyvzon is largely known to industry observers, analysts, and RIAs as a lower-priced software firm for around 2,100 smaller practices, although this is beginning to change – its August 2024 partnership with Fidelity to service ‘small’ RIAs notwithstanding. See: Fidelity Investments picks Advyzon for small RIAs.

In November 2024, Advyzon launched a new bundle of its CRM system, performance reporting, billing, trading-and- rebalancing, investment management, and onboarding software, Auria, developed specifically for large RIAs, financial institutions, and ultra-high-net-worth family offices.

Advyzon recently won the business of former head of Merrill Lynch Wealth Management, John Thiel's new RIA,  Indivisible Partners in Clearwater, Fla. See: 'Displaced' John Thiel uses RIA and Fidelity-Advyzon back-office.

Primed for growth

“Advyzon is [also] going to continue to win market share in the RIA space,” says Fritz.

“If they have any headwinds right now, it would be the fact that trading, rebalancing, tax optimization, [and] UMA[s] aren't on top of the priority list for most RIAs this year. The money [and] attention are focused on data, AI, workflow automation and growth marketing," he adds.

Li insists that his company is primed for major growth without external help.

“We continue to have significant growth ... we continue to stand on the strength of our products, people, and company commitments ... [and] we remain steadfast in our mission to transform the advisor experience through a single, secure platform,” he says.

* Schwab's hugely popular thinkorswim trading service was also founded in Chicago, before its acquisition, first by TDA in 2009, then as part of the sale of TDA in 2019.