Page 15 - Investment Advisor July/August 2021

At the same time, the short-lived cam- not by acquisition, but by adding new DON’T OFFEND PROSPECTS
paign promoted Riskalyze’s approach as capabilities for trading and rebalancing, As a result, the attack campaign
the preferred route for fiduciaries, and model marketplaces and even a white- becomes even more confounding given
anyone serious about advising clients labeled robo advisor to the platform. At Riskalyze’s precarious “boxed-in” posi-
needed to stop using Orion’s Hidden the same time, Riskalyze has pursued tion as an island in a sea of giants. The
Levers and Rixtrema immediately. an aggressive integration strategy with best it can come up with is to assault
What could possibly go wrong? Well, adjacent technology platforms, suc- smaller competitors, which it had to
just about everything. cessfully embedding itself in just about know had the real possibility of backfir-
everyone’s workflows. ing in a spectacular way.
OOPS! NEVER MIND As a result, it could be that This competitive message had no
Most notably, the thoughtful, high-road Riskalyze is running out of room to chance of propelling the brand forward,
response from Orion and Rixtrema was collaborate with the industry and now let alone persuading Hidden Levers and
quick and effective — so much so that needs to compete directly with the Rixtrema users to change their minds
it took less than 48 hours for Riskalyze consolidating giants. and buy Riskalyze licenses instead.
to realize the strategic error The particularly aggressive
it had made. The firm walked Consolidators and their PE message suggested that, as
back this communications an advisor, if you use these
disaster, took down the backers will argue that scale is platforms, then you are not
“unhiddenlevers.com” web- needed to continue to invest in worthy. I’m pretty sure that
site and deleted all references in the history of business,
to videos. These actions were wealthtech — and there is merit to deliberately offending pros-
followed by an even more that argument with commissions pects has never worked as a
public “mea culpa” due to marketing strategy.
all of the attention the attack and interest rates going to zero — As we look forward, the
campaign garnered, which question remains: Is this just
was humbly delivered via a but at what ultimate cost? a marketing blunder or the
Twitter thread from Klein start of an ongoing war, as
wishing he could take it all back and not Riskalyze’s evolution brings the prof- Riskalyze’s product development road
name competitors directly. itable basis points that TAMPs, trad- map brings it more into direct con-
What makes this whole incident even ing, rebalancing, reporting and portfolio flict with the consolidating giants and
more curious is that Riskalyze didn’t management systems deliver directly the rest of the wealthtech industry?
have to take on this level of brand risk, into Riskalyze’s competitive sights — Will others move to the dark side and
as it is by far the market leader in its all of which, by the way, make up the respond in kind?
category. By definition, market leaders majority of Orion’s revenue streams. Meantime, history has taught us that
do not need to engage in guerrilla mar- Thus, it is clear that Riskalyze and firms the more an industry consolidates, the
keting, as the only outcome will be to like Orion have been on a collision more opportunities are created for inno-
elevate competitors, damage their own course for some time. vators on the fringe. The good news is
brand and plant doubt in the indus- Complicating matters for Riskalyze is that all you have to do is take one look
try regarding the long-term viability of the capital raise of $20 million in insti- at Michael Kitces’ fintech landscape
the firm. Even more curious is that the tutional funding it received from FTV chart (https://www.kitces.com/fintech-
approach is so out of character for Klein, Capital back in 2016. Perhaps that equity map/) to see the light glowing from
as he is widely known, admired and needs to be replaced, as PE and VC fund- the emerging renaissance in technology
respected as a collegial, authentic and ing typically has a time frame of five innovation that is alive and well in the
positive leader. to seven years? These financing issues independent wealth space.
Which leaves the industry scratch- could be putting even more pressure on
ing its collective heads and wonder- Klein and Riskalyze to grow faster and Timothy D. Welsh, CFP, is president, CEO and
ing, why this approach? And why now? attract new investment as more large- founder of Nexus Strategy, LLC, a consulting
Adobe Stock ing strategy to venture further up the space, such as Orion with its purchase of firm to the wealth management industry and
scale competitors are entering the risk
One popular theory is Riskalyze’s evolv-
can be reached at [email protected] or on
Hidden Levers.
investment management supply chain,
Twitter @NexusStrategy.
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