Independent advisors looking at custody platform options beyond the big three (Schwab, Fidelity and Pershing) should note the latest addition to Apex Fintech Solutions.
Apex announced the firm acquired AdvisorArch, a portfolio management company with its own rebalancer.
The custodian announced its integration with AdvisorArch in August 2023. In addition to simple portfolio rebalancing, AdvisorArch’s platform is meant to help advisors in supporting tax loss harvesting, direct indexing, fractional share trading and managing concentrated stock positions. AdvisorArch launched in 2022 and is the latest creation of RobustWealth co-founders Michael Kerins and Robert Cavallaro and a small team.
In January, Apex launched a new user interface for advisors called Astra, and more recently, it announced integrations with Advyzon in February. Apex has also recently built out new capabilities, including fractional trading, direct indexing, digital account opening, and digital funding using ACATS, among others.
In October 2023, Apex launched a new fixed-income investing platform.
Alois Pirker, founder and CEO of Pirker Partners, said the acquisition of AdvisorArch represented a change in direction for Apex, which was previously more focused on integrations than acquisitions.
“They are getting more into that advisor space where you need to have more functionality to deliver to them to win that business,” he said.
Apex will need to put in more work to build out AdvisorArch now that the purchase has taken place, Pirker said.
“(This) can be an advantage as … you can build into a direction that works … and make it more fitting to your environment,” he said. “It’s on the money. This is where this kind of platform should be going.”
Pirker said Apex’s acquisition reminded him of when TD Ameritrade acquired portfolio rebalancer iRebal in 2007.
“They own the piece,” he said. “That has an advantage. … It’s a similar strategy that TDA had back in the day.”
William Trout, director of securities and investments practices at Datos Insights, said with the custody business evolving, the needs of independent advisors are “much broader and deeper than they were even a few years ago.”
“Firms try to acquire that whole toolkit for the financial advisor to enable cradle-to-grave support for those advisors who are independent and those who are thinking of breaking away,” he said.
Consolidation among the big three has opened the door to custodians like Apex to offer a higher level of service to smaller advisors who may otherwise feel lost in the shuffle, said Trout.
“They just won’t get that type of attention from the larger custodians,” he said. “They won’t get the support for their growth trajectory that a smaller custodian can provide. There is an opening.”
Even though Apex wants to “spread its wings,” Trout said he didn’t see Apex putting any larger custodians out of business. Instead, this will provide more choice.
“For smaller practices that need end-to-end digital support, including for things like customization and rebalancing, it’s a great combination,” he said.
