“Our prices for those types of services are typically 90% or more lower on the software side, and that’s because it’s not our only revenue source,” he added.
Altruist comprises both a broker-dealer and a registered investment advisor, along with its parent company, which builds all of the software and integrates the different pieces.
“We do make money in each of our products lines, but we try to compress each of those [fee] levels so that advisors and their clients can get as much of their returns as possible,” he added.
In May, Altruist raised $50 million in a funding round led by venture capital and private equity firm Insight Partners. In January, Altruist announced a funding round for an undisclosed amount led by its venture partner, Venrock, along with participation from others including personal investments from noted advisor Ron Carson of Carson Group and Bill McNabb, Vanguard’s former chairman and CEO. McNabb also sits on Altruist’s board of directors.
For Wenk, this all validates his vision for Altruist as a way to simplify how financial advisors do their job. He said that vision stems from the frustrations he has felt during his 21 years in financial services that the industry doesn’t always reach the people it needs to reach.
He began his career in 2000 as a system analyst with Morgan Stanley. “After a couple of years I realized the things I was doing, such as building software for automated investment management or productivity software, was never going to get into the hands of people I knew. So the average person wouldn’t benefit from this,” he said.
He later started Retirement Wealth Advisors, a financial planning firm, along with FormulaFolios, a quantitative investment research firm. Both have offices in Grand Rapids, Mich., and Costa Mesa, Calif. Wenk said he still owns about 10% of both firms, but he hasn’t been actively involved with them for a few years. He noted that while both companies are successful, their scale is limited by how much they’re able to grow their respective customer bases.
“I realized the dent I could make wouldn’t be as impactful as if we went right to the core and addressed what was limiting my own firms from growing,” he explained. “And a lot of that was the various solutions we’re creating at Altruist in terms of how we’re making it easier to open accounts and removing barriers like trading commissions. We need sweeping infrastructure changes to allow human financial advisors to do their best work.”
Wenk wouldn’t provide figures on how many financial advisors use Altruist’s platform, but he said they represent the industry spectrum.
“We have firms all over the map in terms of AUM and in age,” he said. “But we have a lot of what I call emerging advisors who are thinking innovatively about how to make the industry better. They want to compress their costs so they can pass on those savings to their clients so they get better returns. And they want to serve a more inclusive group of people rather than having to focus on people with more than $500,000 or $1 million.”