Addepar marked a milestone Wednesday, announcing it now has more than $5 trillion in assets being managed, overseen and analyzed on its platform, double what the firm’s systems tracked in early 2021.
“Today, we are privileged to be in the position of having the market-leading platform,” wrote Eric Poirier, chief executive officer at Addepar, in an announcement.
During a meeting with Poirier at Addepar’s New York offices, he said RIA assets represent more than $2 trillion now on Addepar's platform.
“Independent RIAs were our first love because they share Addepar's commitment to client centricity and delivering truly the best outcomes to each client in a sustainable way,” he said, noting that the company had worked closely with a wide range of RIAs.
And while he said he could not break out the specific number of small and midsize advisory shops working with the firm—the range in AUM is wide, from RIAs with $100 million all the way to firms with more than $100 billion—investment advisory firms remained a growing and important constituent of Addepar’s customer base.
In total, Addepar said it works with more than 1,000 client firms, ranging from RIAs to multifamily offices, wealth managers, large banks and other global institutions. They represent more than 100,000 individual users on the platform.
Asked to explain why the firm shares the total amount of assets on its platform but not in the form of AUM, Poirier was direct, as he has answered this question many times.
“Addepar is not a TAMP; when we talk about assets on the platform, and I’m talking about more than a thousand firms now, from all the banks, to RIAs, to family offices and other firms, they are using us as their fundamental data platform—from reporting, to billing, client portals, mobile applications and what have you,” he said. They are not necessarily managing the assets from it.
“We more compare ourselves to the top tech companies like Stripe and Plaid that have mastered data at scale,” he said, less comparing the firm to large established legacy providers like Orion and Envestnet.
Over the years the firm has built integrations with many portfolio accounting, management and reporting applications and when it acquired the independent rebalancing platform AdvisorPeak in late 2021 the latter already had established integrations with nine of the top portfolio accounting systems, including Orion, PortfolioCenter and Black Diamond (and other SS&C Advent offerings), among others.
“We realized early on that we had to build our own integrations [for bringing in end client data], none of the legacy products [in the account aggregation business] were suitable in terms of their robustness and reliability at the time,” he said of the business circa 2009.
Addepar collaborated with custody banks and other institutions to create its own direct data feeds without relying on legacy accounts or aggregators, he said. Those feeds come in nightly having been worked on and reconciled, literally, by teams around the world.
“Follow the sun, and pass the book,” is the way he and others in the industry refer to the practice, meaning that teams around the world, whether in Pune, India or Edinburgh, Scotland (two locations where Addepar now has offices with technical staff) and other locations will work at reconciling the data coming in from client accounts across 40 countries and as they end their day in turn pass the ‘book’ on to colleagues where the sun has yet to set.
“From a research and development and innovation perspective we’ve gone far beyond what most wealth management, retail brokerages and banks spend and are investing $100 million annually on technology and R&D,” said Poirier.
“One of the things we are excited about is going from once-a-month rollouts to two weeks, going from a monthly to bi-weekly train of thought, is not an easy thing to do,” he said referring to the pace of the firm’s platform deployment updates and that it points to the robust nature of the technology ecosystem and partnerships the firm as forged.
Asked about layoffs, which have occurred at other large technology providers over the last few months, including Envestnet and Orion, Poirier said Addepar was continuing to hire.
“We’ve been growing and are working on our 2024 planning now—we’ve hired net new 150 people this year—now they are not all retained given the high performance culture but nonetheless,” he said, noting the firm had grown to 850 employees.
Co-founders Joe Lonsdale and Jason Mirra launched Addepar in 2009.
Lonsdale, a serial entrepreneur, co-founded Palantir five years earlier in 2004, with the idea of creating software that could find connections, patterns and trends in databases of seemingly unrelated information (the federal government today uses Palantir’s technology to sniff out irregularities, fraud and possible criminal activity).
It was data-related errors, unreliability, irregularities and other problems Lonsdale and Mirra sought to address with Addepar, things they noted when setting up Lonsdale’s own family office (and in speaking to others dissatisfied with available technology).
While Addepar focused on serving the ultra-high net-worth sector in aggregating illiquid assets for its first few years, Poirier said the platform today has comprehensive coverage of assets, pointing out that roughly 60% of the assets the company tracks are marketable securities (stocks, bonds and other liquid assets), while about 40% are in positions of illiquid alternative assets.
Addepar, which remains a private venture-driven company, announced a $150 million Series F financing round in June 2021, bringing it to a total of about $475 million in funding. Its previous $117 million Series E raise was announced in November 2020.