Future of Investing, Podcasts

How Addepar built an ecosystem around the ultra high net worth investment community with CEO Eric Poirier

  • To best service the UHNW investor, Addepar aggregates portfolio data and provides portfolio analytics.
  • CEO Eric Poirier joins us on the podcast to discuss his firms product and growth strategies.
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How Addepar built an ecosystem around the ultra high net worth investment community with CEO Eric Poirier

One of the hardest things in serving the ultra high net work community is providing them with the type of analytics we’ve become accustomed to in other parts of financial services and investing. It’s been a challenge to provide investors and their investment advisors with pricing and performance information on assets that sit across multiple institutions, many of which don’t price regularly.

This is the audience Addepar serves but when you listen to CEO Eric Poirier, it’s clear that his mission and his company’s is much broader in scope. On today’s show, we discuss why it was important to build an ecosystem around the ultra high net worth community and what it takes to do this successfully. Eric shares the challenges in serving this community and how Addepar has worked to overcome them. Lastly, we discuss the future of wealth management and how Eric aspires to continue to serve the underserved.

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The following excerpts were edited for clarity.

The mission

Addepar is bringing people, data, and technology together to help make better, more informed investment decisions. The wealth management platform we’ve built really specializes in data aggregation, analytics, and portfolio reporting.

This is all a means to an end. Our point of view is that capitalism isn’t working out as well as it could because the level of data-driven investment decisions has been held back. We’re proactively building technology so more people who have a responsibility to make investment decisions, especially for large portfolios, can do so in a more confident, data-driven way.

Investment managers were flying blind

If you study the financial crisis of 2007-2008, one of the things you see is that when market conditions deteriorated, investment managers didn’t have a good view into the 40 percent or so of their portfolios that included illiquid assets. At best, a lot of this information was stored in Excel — at worst, it was stored in filing cabinets.

Reflecting on this, Addepar was started in late 2009 with the goal of designing a data model that can encapsulate any type of assets and go deeply granular into positions and transaction history to accurately capture performance and risk. If you get this right, portfolio managers can see their entire portfolios in a single system in a unified way.

At the time Addepar was founded, I was running Palantir’s financial business and was meeting with people at hedge funds and banks that admitted they couldn’t really see everything they were responsible for managing. The unique point of view Addepar has is that this all starts with building purpose-built modern technology to bring together all the data and layering on the appropriate tools that wealth managers can use to ask complicated questions.

Taking an ecosystem approach

Financial services are vast and they have underinvested in strategic technology for decades. Now with fintech, financial services firms recognize how strategic technology can be. There’s so much work to be done — we’re still in the early innings. A lot of early fintech was on the consumer side. Addepar is very much an enterprise SaaS company working with large banks, RIAs, and family offices.

There’s no way we can build all the technology everyone needs. We’ve been very thoughtful in building our platform and products in an open way so that we have APIs that allow us to integrate well with best of breed providers. The ecosystem we’ve built is predicated on us partnering well with other technology and service providers to make sure our clients can make the best choices for each feature functionality for their firms.

The challenges in serving this community

Some of our clients are more advanced and mature in adopting new technology — others aren’t. Many family offices that use Addepar were using Excel before us. That’s because some of them are late adopters of technology but more common, there hadn’t been a suitable purpose-built technology offering for them to use to manage the complexity of their investments. Manual work was the only way they could capture the details and the nuances of their investment portfolios to support their decision making. We’ve been able to guide the clients we serve to become more savvy and sophisticated in the way they think about technology as part of their broader business strategy.

When we partner with other tech and services providers, we tend to be very selective and laser focused with those partners on delivering the client experience we’re trying to deliver. That requires a philosophy for us as a firm to really care a lot about our partners’ businesses — just as much as we care about our business and our clients’ businesses. How do we become exceptional partners? How do we build an offering we can scale?

Technology that’s really well-developed tends to fade into the background if you get it right.

Onboarding new clients

Before Addepar, our clients used fairly narrow systems glued together that made it very cumbersome to operate. Maybe it works when you’re small, but when you’re growing or clients start demanding more — this approach works until it doesn’t. When it doesn’t work, you hit a hard wall.

If Addepar knits together some of the underlying bits of technology, like CRMs and financial planning tools, our clients and their users can use Addepar as a single source of truth and system of record in their firms — there’s a common language around the data around the portfolios.

Reaching the end user

We think a lot about this: Addepar’s direct clients are RIAs, banks, and family offices, but their entire reason for adopting Addepar is to better serve their end clients. So, from a product strategy standpoint, Addepar has an experience — portal and mobile — that each firm that licenses our technology can curate and create their own views. They have a lot of ability to customize and tailor and tune their outputs to their clients.

The feedback we get from our clients is that their clients are deepening the trust they have in their investment advisors because they can self-serve when they want, making the time they spend with their advisors more strategic. The whole world of wealth management and financial advice is absolutely a human to human relationship. Now, the human who provides that advice has to be tech and data enabled, but we don’t see a world — especially on the high end of wealth management — where that human advisor gets replaced by technology. So, we’re making that advisor stronger, more resourceful.

The future for Addepar

We started at the high end of wealth management. We’ve invested massively in making our platform scaleable. We have 350 clients today. We hit a trillion dollars of assets last April and the growth in assets is off the charts. We’ve got that hockey stick. We have a lot more room to run. Even though we’re turning 10 years old as a company this year, I say internally that maybe we’re in the top or middle of the second inning.

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