Franklin Templeton announced Wednesday that it has acquired AdvisorEngine Inc., the digital wealth platform and technology provider. Terms of the deal were not disclosed.
Many advisors know AdvisorEngine, which works with 1,200 financial advisory firms in the U.S. and has more than $600 billion in assets under advisement on its platform, as the owner of popular RIA customer relationship management application Junxure. In addition to Junxure, the platform provides RIAs and broker/dealers with portfolio management, reporting, marketing, a turnkey robo advisor offering and billing technology, among other services.
While no terms of the deal have been disclosed, AdvisorEngine founder and CEO Rich Cancro confirmed that previous investor WisdomTree had sold its stake in the firm to Franklin Templeton. WisdomTree, in its fourth quarter earnings call, revealed it was looking for a buyer for its $58 million stake in AdvisorEngine, and would likely take a noncash impairment charge of $22 to $30 million on the transaction.
“This is a growth and investment story,” Cancro said when asked if the platform would stay in one piece or be broken up. “This is a great way for an asset management firm to evolve.”
Some asset management firms, which have struggled with pressure on fees thanks to lower-cost index investment funds, have turned to fintech companies as either a "value add" for investors and advisor clients, or as a means to entice advisors to bring assets to the firm's funds.
For example, Invesco purchased robo advisor Jemstep in January 2016. BlackRock got into the robo advice business with its purchase of FutureAdvisor in August 2015.
WisdomTree, an ETF provider, paid $20 million for a 36% equity stake in AdvisorEngine in 2016 in order to put its asset allocation models on the technology firm's platform and move AdvisorEngine into its network of advisor clients. Later they bought Kredible, a digital prospecting tool for advisors, for $5 million, and in 2018 WisdomTree put $30 million into AdvisorEngine's acquisition of Junxure.
“One of the things we have in common [with Franklin Templeton] is a shared outlook on developing the platform—I cannot tell you how excited I am because we will be focused on growing the technology and making it smarter with a very collaborative team,” Cancro said.
Cancro said that AdvisorEngine had hired investment bank Silver Lane Advisors, now part of Raymond James, months ago and that in the interim had met with dozens of prospective buyers.
Both Cancro and COO Craig Ramsey said that AdvisorEngine would operate as an independent subsidiary of Franklin Templeton, keeping its current branding, pricing, technology offerings and customer services teams.
Among joint projects that AdvisorEngine could discuss, though only in limited terms, was expansion of its goals-based financial planning tools to include technology and intellectual property from Franklin Templeton. Similarly, the two firms would also collaborate on advanced digital portfolio construction analytics and research.
“We’re in the midst of the fourth industrial revolution, and technological advances are reshaping how financial solutions are delivered,” said Jenny Johnson, president and CEO of Franklin Templeton in a statement.
“As a result, we continue to invest in technology and teams to enhance our offerings and enable us to innovate at the nexus of asset management, wealth management and technology. I’m excited to welcome the AdvisorEngine team to Franklin Templeton and look forward to what we will achieve together,” she said.
Also in the statement, Harshendu Bindal, head of digital strategy and wealth management at Franklin Templeton, said that the acquisition would enable U.S. advisors to access his firm’s “best thinking across portfolio construction and practice management.”
“This acquisition is an important part of our broader global initiative to enhance support for financial advisors via digital servicing capabilities,” he said.
