April 30, 2015 | By Renee Caruthers
Tradier Brokerage Inc. announced a partnership with Apex Clearing Corp. this week aimed at creating a full-service API platform that registered investment advisors (RIAs) can use to build their own robo-advisory services on top of. The company says the partnership aims to further democratize the robo-advisory concept so that advisors can create customized robo-advisory platforms for their clients without having to do the heavy lifting of building a core brokerage and clearing platform.
Through the new partnership, Tradier offers a core brokerage and portfolio management system, including market connectivity and market data feeds and core trade processing, that is linked to Apex Clearing's technology for middle and back office trade processing, clearing and custody. Apex Clearing, formed in 2012 by Peak6 Investments, emphasizes modern, digitally focused clearing services and technology free of legacy infrastructure. The combined platform is API-based to serve as a foundation upon which RIAs can build digital or "robo" investment management systems targeted to their client base.
"The traditional model where large brokerage firms have been offering us complete packaged services that they think we need is fast collapsing to the new way where customers are asking for their own customized experience," says Dan Raju, CEO and co-founder of Tradier. "What the Tradier-Apex relationship does is remove that big friction point in the sense that you now have the capability to easily build those experiences without having to do any of the heavy lifting."
Raju sees the trend toward customization coupled with the demand for a low-cost product as the two key drives for the recent popularity of robo-advisory offerings.
Although the announcement marks the first full release of the services, a few clients from a select group that saw test versions of the combined platform are already starting to build solutions on top of it, according to Raju. As a cloud-based solution, the platform can scale up or down to suit any size advisory business.
Raju says he sees the recent popularity of robo-advisories as the first step of a movement toward more self-directed online asset management, similar to the transformation that the trading industry went through in the 80s and 90s with formation of firms like E-Trade and the growth of online self-directed trading. He expects an unbundling of asset management services similar to what has occurred in trading.
"People want to manage money themselves and get the value and cost benefits of managing money themselves," Raju says. "The greatest part of all this is that for investors, we have almost unlimited choice, and for new entrepreneurial companies and existing companies, they are able to offer new variations and combinations of products that they could never do before."