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Exos’ bigger ambitions for smaller advisors

Axos Financial is on a mission to rejuvenate and revitalize technology originally developed by Trust Company of America (TCA) a decade ago — quietly grounded to bring assets between $50 million and $500 million to all advisors’ businesses. operate.

The changes come as the TCA is in “maintenance mode” amid a series of sales from 2018 to 2021, according to one of the architects behind the firm’s advisory platform. Under its latest owner, Axos, TCA’s Liberty platform is receiving overdue attention as its new owners aim to appeal to RIAs, especially those unaffected by the ongoing integration of TD Ameritrade, the financial services firm by Charles Schwab. after purchase.

Mike Watson, head of RIA custody at Exos, said the division is suitable for advisors with assets of $50 million to $500 million. He said more than 200 RIA firms using its custody platform have assets of around $25 billion. And some of those $15 billion in assets are held by firms that have more than $1 billion in AUM. The division also provides self-clearing for Exos and clearing services for approximately 75 independent broker-dealers.

In March 2021, Exos began building its own RIA custody platform – it wanted to buy E*Trade Advisor technology capabilities, but was touted by Morgan Stanley when the bank bought E*Trade in 2020. announced, Watson said.

Then things changed last year and Axos instead bought E*Trade Advisor Services from Morgan Stanley for $55 million.

Under Exos, the division is “focusing on smaller independent RIAs and helping them grow their businesses,” said Dave Curry, a software development manager at Axos Advisor Services and one of the platform’s original architects. “They are putting Liberty front and center in doing this. They are interested in investing in Liberty to take this forward.”

Curry said the technology that Exos Advisor Services provides to financial advisors dates back to 2011, when TCA merged the two technology platforms into a single Liberty platform. Liberty has been iterated and reformed since its introduction, with the latest improvements being tax-loss accumulation and self-service billing, he said.

Liberty provides rebalancing, portfolio management and self-service billing for advisors, while components such as financial planning still require contracts with third parties. Axos Financial is working to integrate its digital banking with its wealth management technology, according to officials, to give advisors easy access to debt solutions for both end clients and RIAs, who may be involved in acquisitions or succession planning. are considering financing.

Curry said consultants currently using the platform should expect to see new features deployed more frequently than before the Exos “conversion event.” “We’re focused again.”

Routine maintenance has never been neglected after E*Trade completed its $275 million acquisition of Trust Company of America in 2018 or Morgan Stanley’s 2020 purchase of E*Trade Advisor Services, which had TCA’s technology. But the enhancements became less important for the platform, Curry said.

“Under E*Trade and Morgan Stanley, to be honest, that effort was kind of sluggish,” he said. “The rate at which we were bringing in new RIAs decreased greatly during that three-year period.” Curry was reappointed by Exos in 2021 after leaving his role to work on TCA’s technology in October 2018.

Exos Advisor Services and its predecessors are about 200 RIA firms that have remained on the platform through acquisitions since at least 2018.

Under Axos, the Custody Division seeks to become a “one-stop shop” for consultants trying to set up their practices by those who are on a smaller budget or who work with more than one custodian. To diversify the service providers used, the company according to officials. “It’s about collaboration rather than competition,” Watson said.

To be sure, Exos isn’t the only custodian betting that advisors may find the grass greener with a new service provider. This will be considered for mentors departing from veterans like Schwab or mentors looking for a new mentor.

But Exos is competing with many existing small custodians and custodians service providers. These include Interactive Brokers, which supports clients and advisors in and outside the US, and had $41 billion in AUM among 5,570 advisors in its “Pro Advisors” segment. In addition to IB there is also the Shareholders Service Group (SSG), which backs some 1,600 RIA firms, as well as TradePMR and its 400 RIA firms, and Altruist (which has 1,000 advisors using its platform). None of the latter firms disclose the assets that pass through or remain on their platform.

And BNY Mellon’s Pershing unit is also looking to attract “Never Schwabers” from the big three patrons, and has revamped its minimum to appeal to new advisors.

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