In today’s fourth quarter earnings call, WisdomTree revealed it is looking for a buyer for its $58 million stake in AdvisorEngine. The publicly traded asset manager said the process is ongoing and it expects to take a noncash impairment charge between $22 and $30 million related to the sale. Executives told shareholders that they wouldn’t be commenting on the proposed sale, beyond prepared remarks.
The decision to exit its stake in AdvisorEngine comes despite a record quarter-end AUM of $63.6 billion and net inflows of $368 million in the last quarter of 2019, said WisdomTree CFO Amit Muni. “Let me emphasize, we do not anticipate the exit of our investment will drive any asset attrition or change in our organic growth outlook,” he said on the call. “We hope to have a final [impairment charge] by the time we file our 10-K in March.”
WisdomTree made its first investment—$20 million—in AdvisorEngine in 2016. In addition to owning a stake of the digital wealth management platform, WisdomTree announced a strategic agreement that allowed for the asset manager to place its asset allocation models on AdvisorEngine’s platform. In exchange, AdvisorEngine would be introduced to the asset manager's "deep distribution network," according to materials provided by AdvisorEngine.
By 2018, WisdomTree had placed a portfolio analysis tool onto AdvisorEngine, as well as loaned the digital wealth management platform $30 million to buy customer relationship management firm Junxure. Less than a year ago, AdvisorEngine announced new integrations for Junxure. Those improvements at Junxure affected advisors using Orion, Constant Contact and MyRepChat.
WisdomTree’s decision to sell its portion of AdvisorEngine is consistent with its reinvestment plans, said Jarrett Lilien, president and COO of the asset manager. “These decisions are driven by our prioritization of resources to drive growth, and our commitment to remaining disciplined, focused and efficient,” he said. One of the areas of investment for the firm moving forward will be ESG. WisdomTree plans to launch a “differentiated ESG suite” in collaboration with financial markets tech firm Securrency.
