Page 15 - Investment Advisor June 2021

for Axos Bank, a nationwide bank that management tools, all built on “propri- + EAS tie-up, however, is about market-
provides consumer and business bank- etary web-based software.” ing, branding, and its position in the
ing products through its low-cost dis- advisor technology ecosystem. Will
tribution channels and affinity partners. WHAT’S NEXT? established advisors want to do busi-
With approximately $14.4 billion in What also made EAS particularly ness with an unknown entity in the near
assets Axos Bank provides financing for appealing to Axos is the newfound abil- term? Or will Axos/EAS need to focus
single and multifamily residential prop- ity to go after dissatisfied advisors leery on newer, smaller RIAs and those just
erties, small to medium size businesses of becoming just another number in the getting started?
in target sectors and selected specialty vast call centers and DIY websites of RIAs fundamentally care about the
finance receivables. Axos Financial’s the Schwabitrade goliath that will one name on the statements and account-
wholly owned non-bank subsidiaries, day merge together. The latest estimates opening forms their clients will see.
Axos Clearing LLC and Axos Invest, coming from the discount behemoth They don’t want to have to convince
Inc. provide comprehensive securities point to at least two or three more years clients that the institution where their
clearing services to introducing money will reside is a viable and
broker-dealers and registered trustworthy enterprise.
investment advisor correspon- Not only did Axos leapfrog And because most RIAs
dents and digital investment the smaller custodian already have multiple compo-
advisory services to retail inves- nents of their technology stack
tors, respectively.” marketplace, it also picked in place, how much investment
Before the EAS deal, Axos will Axos need to make to bring
did not appear in any competi- up a complete technology together and integrate those
tive searches for an RIA cus- popular advisor technology
todian. It was clear, however, solution, purpose-built for applications and components?
that it had an inkling of where These marketing, branding and
it wanted to go in late 2018, RIAs, at a staggering 80% technology decisions are very
with an early acquisition of the discount. Talk about the important. Axos/EAS will need
robo-advisor WiseBanyan — to make these expensive stra-
one of the first robos to offer its deal of the century. tegic investments to continue
services “free,” providing Axos the momentum and enter the
with an entrance into digital market successfully.
wealth management. before Schwabitrade begins to actually At the same time, the Axos/EAS ven-
According to Gregory Garrabrants, integrate systems. Things will start to ture will need to fend off competition from
president and CEO of Axos Financial: get really interesting then. the new crop of smaller, advisor-focused
“The addition of approximately 200 In the meantime, this extended peri- custodians, many of whom have recently
RIA custody relationships with $23 od in which Schwab and TDA technol- launched and will be messaging a similar
billion of combined assets under cus- ogy executives play a high-stakes game story of disruption to the Trust Company
tody significantly accelerates our time- of chicken as to whose technology will of America RIAs who are now on their
to-scale in this business. We intend prevail is creating lingering uncertainty third owners in less than five years.
to leverage EAS’ turnkey technology and keeping TDA advisors in the dark All of which goes to show that
platform and Axos Clearing’s capabili- regarding the fate of the award-winning things are about to get very interesting
ties to expand the service offerings Veo One workstation they admire so again in what many portray as a sleepy,
to independent registered investment much and depend upon. These signifi- slow-moving corner of the financial
advisors and turnkey asset management cant merger and integration delays are services industry.
program managers.” giving Axos ample time to bring all the
As part of the EAS deal, Axos picked pieces of EAS into its custody, clearing Timothy D. Welsh, CFP, is president, CEO and
up a comprehensive technology plat- and banking platforms to become an founder of Nexus Strategy, LLC, a consulting
Adobe Stock CRM, rebalancing, proposal genera- RIAs looking to diversify custody. firm to the wealth management industry. He can
instant competitor of size and scale for
form, Liberty, that includes reporting,
be reached at [email protected] or on
The bigger question for the new Axos
tion, e-signature, billing, UMAs and tax
Twitter @NexusStrategy.
JUNE 2021 INVESTMENT ADVISOR 13