SkyView Partners, an investment bank and lender for registered investment advisory firms and independent broker/dealers, has launched a platform that lets advisors offer digital depository bank services to their clients.
SkyView 1 is a white-label technology platform advisors can use to access a marketplace of regional and community banks offering high-yield, FDIC-insured savings accounts. Currently, yields can be found on the platform up to an annual 3.51%. A loan and insurance hub connecting advisors with those providers, to meet a wider range of banking and insurance needs, is expected to become operational on the platform next year.
SkyView launched six years ago to finance growing independent advisory firms by funding mergers and acquisitions. Subsequently, the firm created an online M&A marketplace called Advisory Practice Board of Exchange and, in 2020, acquired an investment bank and broker/dealer. The firm expects to surpass $1 billion in funded loans this year.
SkyView CEO and co-founder Scott Wetzel said during that time he’s worked with an "ecosystem of pragmatic regional and community banks” and found they are often better at providing specialty services needed by wealthy investors, such as securities-based lines of credit.
“One has a specialty in yacht lending, one’s a great national mortgage provider,” said Wetzel. “Whereas the big banks may offer everything, they also do poorly at everything. The smaller regional and community banks offer more muted product sets, but they're very competitive in the product and loan types they do offer.”
It is often a lengthy and burdensome process to get established banking partners to implement new lending products, he said, and searching for the "right" bank can be a daunting task for an independent advisor.
SkyView set about solving for that problem with its ‘Banking-as-a-Service’ platform. With lending and credit facilities on the roadmap, the firm has started with cash-management and depository banking services. Skyview is working with an unnamed issuing bank to maintain client accounts and accept digital deposits. The bank, described by a SkyView spokesperson as "an FDIC member bank located in the Midwest," is tapping into the U.S. Federal Reserve's FedNow service, which facilitates instant money transfers through a network of banks, credit unions and service providers.
Those deposits go nightly to an also-unnamed 'sweep partner,' described as "one of the largest bank sweep providers in the nation," covering a consortium of about 3,000 banks to identify the highest-interest-rate accounts, then automatically sweeps the cash into the accounts up to the federally insured $250,000 each, with an aggregated protection of up to $125 million. The SkyView 1 dashboard monitors all deposits, including account performance and balance patterns, in addition to calculating and tracking overall rates the depositor is earning.
“We want people to be more fully informed about the rate they’re receiving, how competitive that rate is and to have complete transparency around bank fees,” said Wetzel. “The level of required disclosure for banks is not at the same level as wealth management and so we want to provide that clarity.”
The "deposit-spreading" service is similar, in some ways, to that provided by firms like StoneCapital, MaxMyInterest and Flourish.
But SkyView 1 comes with the client-facing services of a digital bank: physical and virtual debit cards, direct and mobile deposits, online bill paying, wire transfers, checks and sub-accounts for minors—along with a dedicated SkyView 1 banker, available via instant message, phone, text or email. The client portal, mobile app and physical debit cards are all white-labelled to showcase the advisory firm's name and branding.
“We take all the brand assets and utilize their logo and their dominant colors in their color palette as well as the location,” he said, “to provide a unique user experience that offers the wealth manager the ability to, in good conscience, go to their clients and say that their platform offers all the functionality that the big banks offer.”
Up next is a "fiduciary-friendly" matchmaking service connecting advisory firms with regional banks and insurance providers able to meet unique needs, planned to launch next year.
“Optionality is a key thing for a fiduciary,” Wetzel said. “The days of Dean Witter just pushing Dean Witter investments on clients is over. You have to provide clients with options, and they need to be competitive options from a myriad of providers.
End clients must currently be associated with SkyView 1 platform advisory firms, which receive a 0.25% compensatory fee on all deposits. While the service may be made available directly to consumers in the future, Wetzel said there are more immediate plans to leverage it to drive referrals for existing SkyView 1 partners.
According to SkyView, advisors tend to believe their clients only hold 1% to 2% in uninvested cash with custodians, yet “numerous studies,” such as Capgemini’s 2022 World Wealth Report, suggest that number is closer to 20%. Wetzel said the SkyView 1 platform has the added benefit of providing advisors with a clearer picture of their clients’ financial situation, enabling them to provide more insightful advice based on a fuller data set.
“We’re expecting our average account balance to be about $246,000,” he said, “versus average checking and savings account balances that are a lot lower than you would think.”
“With today’s higher interest rates, cash has become a much more important asset class for advisors to pay attention to,” said Tim Welsh, founder and CEO of Nexus Strategy, a consulting firm serving the financial services industry. “As a result, it does open up the opportunity for new digital platforms to make an entrance, however the key to Skyview’s success is how integrated their platform will be to advisor’s daily workflows and systems.
“There have been many cash and banking plays aimed at advisors through the years but most of them have met with a modicum of success due to lack of connectivity to the core custodians and software platforms they use,” Welsh said. “If they have immediate connectivity and integrations out of the box, they have an excellent chance—without those, they will just be another fringe app on the Kitces tech map.”
Wetzel said "strong demand" for the recently launched service has brought SkyView to marketing agreements with "several" IBDs and RIAs that have "well-established relationships" with custodians, data aggregators and larger financial services firms.
"Moving forward, we are focused on continually enhancing our technology, ensuring that SkyView 1 seamlessly integrates as an extension for any interested partner," he said.