, which Emotomy is fully integrated with, means that accounts can be opened quickly and clients onboarded in a paperless and timely fashion.
“The reality is that pure robos have not been successful because the concept that a RIA puts up a website, some people are going to show up, create a portfolio, and send money, and that the advisor is not going to do any marketing – that they’re not going to spend money on marketing themselves, [and] they’re not going to talk to the investor – is an unrealistic business model. I have been in this business a couple of decades [and] I know that is not what investors want.”
Emotomy is a B2B2C (business-to-business-to-consumer) business model. According to Dr. Beaudan, approximately 90% of usage is hybrid, i.e. advisors helping clients while using Emotomy as a support tool in ways that suit the advisor’s business style. Emotomy offers many workflows to advisors to match their business style, and if you cannot find what you need, Emotomy can build it on demand.
“If you run your investment strategies as an advisor, you can replicate them on Emotomy or you can send us its trading signals or upload spreadsheets of trades daily. We don’t restrict you to any scheme. You can have hedge funds. You can have complex discretionary strategies on our system and, in fact, we do.”
Emotomy allows clients to build portfolios from any number of US and some non-US listed securities. Besides portfolio and position-level stop losses, it also lets clients design investment overlays using every standard technical indicator, such as RSI, dual momentum, crossover momentum. It offers in addition a number of point-and-click rebalancing schemes on any time schedule, such as minimum volatility rebalancing, fixed weight rebalancing or rebalancing based on deviation from target weights. The compounded combination of these features creates a powerful portfolio construction platform that can accommodate the vast majority of proprietary strategies used by wealth managers.
Visualizing complex sets of data is useful for understanding and tracking the historical profile of a strategy, and the ability given to users to visualize investment strategies, compare them to other custom strategies or any listed security is a strong differentiator for Emotomy.
APIs and integrations
Emotomy has approximately 13 integrations—including CRMs like Redtail—and also plans to integrate with Salesforce when the time is right. On the brokerage side, they are integrated with Interactive Brokers, TCA by E*TRADE, TD Ameritrade Institutional, Schwab, and Pershing Advisors.
Patrick remarked that he has received requests for non-US custodian integrations from European banks, which he says seem a lot more advanced on the API side:
“Historically, many European banks have businesses in Asia. … many of them are not in the US, and because they are in many emerging markets, they are really strong on technology because they have had to rely on technology to resolve issues and succeed in these markets. It’s similar or even more advanced than what we see here in the US, which is a huge market with high barriers to entry, where people are comfortable running their operations the way they have.”
Account aggregation has not been a top priority for Emotomy and not for technical reasons. The economic aspects are not convincing, especially considering that most clients want account integration at no added cost:
“We built our own financial planning tools and we may further integrate with other folks, but account aggregation hasn’t been the crux of what we’re doing. I know of Money Advisor and some other planning software that do account aggregation, but our focus is to prioritize our developments based on demand from our clients.”
The engine and the engineer
While most companies are using agile internal and external teams, Dr. Patrick Beaudan is the main developer at Emotomy supported by front-end, server-side, and back-end professionals, Emotomy uses a combination of standard
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