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Riskalyze CEO Aaron Klein
Riskalyze CEO Aaron Klein

Riskalyze Shifts Resources to Focus on B/Ds, Large RIAs

The tech company sees increased interest from broker/dealers and large RIAs, so it’s shifting its manpower to accommodate that growth.

Riskalyze built its business seven years ago working primarily with individual advisors. But as broker/dealers and large registered investment advisory firms have realized the value of risk scoring and its documentation, the tech company’s mix of business has shifted dramatically. Two years ago, about 20 percent of new clients were enterprises; today, they account for about half of Riskalyze’s new clients, and the company has expanded its resources to accommodate that growth. Today, the company works with 22,000 advisors across its businesses. 

“It’s been a pronounced shift,” said CEO Aaron Klein. “Enterprises are now coming in and thinking about this as full-blown deployments across their firms.”

By enterprises, Klein means b/ds and large RIA firms. Two years ago, the company had two employees focused on the enterprise business; today it has 20. The latest additions to the team include Dana Rhodes, new managing director of enterprise solutions, who joins from Kestra Financial, and Justin Carapinha, director of demand generation, who joins from Amazon Web Services.

Rhodes is responsible for the development and design of enterprise advisory platforms for these large clients. Carapinha will build relationships with top executives at wealth management enterprises.

The firm is also shifting some of the profits from its individual advisor business and investing it into enterprise sales, platform development, implementation, relationship management and coaching for those advisors.

“We began to see a lot of demand from these growing enterprises who just have a different set of needs, a different set of requirements for how they want to roll the product out, how they buy it, how they want it managed, how they want it implemented for their advisors,” Klein said.

One trend driving the shift could be consolidation across the industry. A lot of RIAs are merging or buying individual advisor practices to gain more scale, so a lot of new enterprises are forming.

At the same time, there’s increasing pressure on b/ds to act in a fiduciary manner.

“It’s strategically important for them to make sure that they’ve documented that each advisor has acted in their client’s best interests, that each advisor really understands how much risk the client can handle and is matching that client up with the right amount of risk,” Klein said.

The shift towards enterprise clients could also signal the arrival of risk alignment as a technology category that b/ds are interested in.  

“Before b/ds used to handle this by simply distributing a little paper questionnaire that, as you know, largely stereotyped people based on age and then asked them nonsensical questions like ‘[d]o you get a thrill out of investing?’” Klein said.

TAGS: Industry
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