Growth equity investment firm FTV Capital has acquired a majority interest in cloud-based document management provider Docupace, a sign that deals are still moving forward in the wealth management space. FTV has appointed David Knoch, former president of independent broker/dealer 1st Global, which was sold to Blucora about a year ago, and longtime client of Docupace, as the tech company’s new CEO.
Michael Pinsker, founder and president of Docupace, will continue to serve in his position. Former CEO Mark Tapling, who led the firm for the past two years, will stay on for an interim period and then step down to spend more time with his family, according to executives.
The deal went through despite the current crisis caused by the coronavirus pandemic. Robert Anderson, partner at FTV Capital, said Docupace’s business has not felt any negative impacts by the environment, with a business model reinforced by its blue-chip clientele. Further, he says such cloud-based automation technology is even more necessary in this environment, when many advisors and broker/dealers are working from home.
“When you think about this environment and the need for a platform that enables virtual working, particularly in the back office, they're actually seeing customers, new and existing, using the platform more and accelerating implementation processes for new customers to come on board,” he said.
Knoch agreed, saying the crisis is accelerating the use of digital tools and automation.
“There are legacy ways of doing business that financial advisors have; they're largely creatures of habit and experience, and there's been a need to have increasing automation and digitalization in the business,” he said. “And frankly, as bad as this pandemic is, it’s having an ancillary effect of sort of retraining a whole network of financial advisors to be more automated and more digitized.”
Docupace has traditionally been successful in the enterprise, hybrid wealth management space, with independent broker/dealers, clearing firms and insurance companies. The investment by FTV will help the company expand that client base, particularly to registered investment advisors, Knoch added.
“Docupace has a huge opportunity to bring a lot of that automation, a lot of that efficiency to the large and mid-sized RIA space,” he said. “I also think there’s a huge opportunity for Docupace to start to solve for back-office automation and processing across other sectors as well. Now, that will take time.”
Knoch says he brings client experience to the table, having been a longtime customer of Docupace in his role at 1st Global. After that b/d implemented Docupace, processing times in the back office went down by two-thirds, and advisor satisfaction with the firm’s back office was at 97%.
“I think there's a lot of competitive differentiation that's going to come from highly efficient, sort of scalable, repeatable, measurable quality back offices,” Knoch said. “It’s a point of pain for financial advisors. It's a reason for financial advisor transition. And we think over the long term it's something that Docupace can solve for. The more financial advisors can deliver on a good quality operating experience, I think it’s important. I think it’s good for the business. Clients get better advice and service because the operations process better.”
Docupace recently launched a new tool to help broker/dealers and advisors electronically deliver, store and automate Form CRS (customer relationship summary), mandated as part of the Securities and Exchange Commission's Regulation Best Interest, which goes into effect June 30.
FTV is a familiar name in the wealth management space, with current investments in Riskalyze, InvestCloud, Enfusion and ETF Securities. It previously owned a stake in Financial Engines.