GeoWealth, a Chicago-based turnkey asset management platform, raised $18 million in growth investment funding, with BlackRock as a new lead investor.
Kayne Anderson Growth Capital, who led GeoWealth’s 2021 Series B funding, and J.P. Morgan Asset Management also participated in this round (the latter also invested in 2018).
According to GeoWealth CEO Colin Falls, the funding will accelerate new product development at the firm, including developing unified managed account capabilities to offer typically siloed options like direct indexing, fixed-income SMAs or alternatives in a turnkey solution.
In an interview with WealthManagement.com, Falls said the firm hoped to boost its product and engineering staff by 20%-30% to expand the use of TAMPs and the outsourcing of model portfolios in the RIA channel from the mass affluent into high-net-worth sectors and from funds and ETFs into typically siloed products like alts.
“I think there’s been validation across the board that alternatives are very difficult to use for RIAs, specifically systematically in model portfolios,” he said. “I don’t think it’s a unique idea that it’s been a challenge for the entire ecosystem, which is why you’re seeing so much investment in alternatives and the infrastructure behind it.”
As of the end of last year, the GeoWealth platform supported more than $28 billion in assets, with nearly 200 RIAs managing more than 180,000 accounts with GeoWealth’s aid.
The firm was founded in 2010. Its technology option helped advisors access model portfolios while offloading mid- and back-office needs, including performance reporting, billing and portfolio accounting.
In 2018, the firm completed a Series A funding round supported by JP Morgan Asset Management, followed by JP Morgan and Kayne Anderson combining for 2021’s Series B round.
Last year, Geowealth acquired First Ascent, a flat-fee asset manager based in Denver. The acquisition boosted the combined firm’s assets above $21 billion. It also partnered with the Chicago-based firm Halo Investing, which helps advisors compare, buy and manage portfolios, including illiquid investments. This enabled GeoWealth to offer customizable structured portfolios as part of a UMA.
In addition to the product development boost, the new funding will help GeoWealth clean up its balance sheet and prior debt and supply it with “dry powder” that Falls says can be used on future opportunities. With BlackRock’s fastest-growing segment being custom model portfolios, he felt the partnership would be an “amplifier” for both firms.
Falls said GeoWealth didn’t feel some of the pressures other major players in the space felt by needing to consistently integrate inorganic growth into the business, allowing them to focus solely on RIAs.
“I think GeoWealth is still a relatively clean, earlier-stage business that’s growing very quickly in the channel we want to focus on,” he said.
