Elements, the Salt Lake City-based financial monitoring platform, has unveiled a new RIA partnership model targeted at investors who do not currently meet the asset minimums at most firms.
When it debuts later this year, Elements Money will seek to be an RIA that partners and co-brands with advisors. The model will use the Elements scorecard and mobile app.
Elements Money will offer two membership tracks, a free basic one and another that charges a fee. The first track will be for those who have financial questions but aren’t ready to commit to a full one-on-one relationship with an advisor, while the second will be geared toward investors who are ready to take that next step.
William Trout, director of wealth management for Javelin Strategy and Research, said he saw Elements Money as representative of trends including the problem of turning prospects into clients and the need for innovation in pricing models.
Trout said while asset-based pricing remains prevalent across the industry, fee-for-service models have gained traction. Monthly subscription models and hourly charges align well with financial-planning-based delivery models and tend to resonate with younger investors. A “freemium model” can target investors with few assets, who can then be “graduated” into paying clients later.
“I like the concept,” said Trout. “But small RIAs tend to be reluctant to outsource much of the client experience. I hope Elements gains traction, as their sales-forward and flexible model aligns with the zeitgeist.”
Reese Harper, founder and CEO of Elements, said they are currently focused on co-branding Elements Money with advisors, as white labeling it “as a platform is not easy.” He said full white labeling, without branding, on a native iOS code base is “technically different than if we had built a web app.”
“We optimized for the consumer experience, maybe even a little too much,” he said.
For advisors who want Elements Money to manage their small accounts, Harper said they will be setting up revenue-sharing agreements. He said they have not released the full details of those arrangements yet.
Harper said with the so-called great wealth transfer on the horizon, Elements Money could offer a way to reach out to the next generation.
“If you don’t start offering them something before their parents die it’s unlikely that they’re going to stick around,” he said.
Wally Okby, strategic advisor of wealth management for Datos Insights (formerly the Aite-Novarica Group), said there is a “massive, underserved potential client base” among millennials and Generation X-ers “who need financial advice but don’t want it or can’t afford it.”
“Elements’ partnership model is a creative way to make sure that advice is accessible across different client segments in some capacity,” he said.
To be sure, there have been and continue to be many providers making advice accessible across different client segments. For example, digital-only robo advisor Betterment introduced new tiers of service that allowed access to a pool of certified financial planners in 2017, and Schwab Intelligent Portfolios, the giant custodian's own robo advisor, added its Premium service in 2019 to do the same (and added more than $1 billion in new assets within a few months). Indeed, the entire white-label robo advisor business model pursued by dozens of third-party providers, custodians, banks and credit unions all sought to roll out low-cost avenues for advice and automated investment portfolios, many of them having since been shuttered or acquired.
For his part, Harper in 2007 also founded Dentist Advisors, a boutique RIA providing financial planning to dentists in 45 of 50 states. Dentist Advisors now has around 400 clients and over $250 million in AUM. He also launched the podcast, “The Dentist Money Show,” and his latest podcast, “Elementality.” Harper said the choice in the early days of focusing on dentists specifically was “critical.”
“To this day I think that was the best business decision I ever made,” he said. “It took a long time, but it’s the reason it still grows: That relentless focus on a single type of customer. ... Very few advisors are willing to take that big of a risk.”
In September 2022, Elements announced the launch of its approach to the one-page financial plan. In January, it announced it had secured a $5 million seed extension round led by Flyover Capital, a Kansas-based firm joined by existing investors Kickstart Fund, Venture Capital, Grand Ventures, Forward VC, SaaS Venture Capital and angel investors. Wade Anderson, COO of Elements, said they started an equity raise at the end of 2022. This brought Elements’ total funds raised to more than $9 million.