Advisors have been responsive, said Lyon, especially during the outbreak of Covid-19. In April, he said that Oranj had seen a 75% year-over-year growth of rebalancing activity on the platform.
While it has held to its goal of providing a low-cost, end-to-end tech stack for advisors, Oranj has also augmented its capabilities with integrations over the years, including integrations with CRM tools like Redtail; financial planning software like MoneyGuide Pro; intelligence, data and information providers like Zillow; and other trading and investment platforms like Vestmark.
Setting Technology Free
In 2017, Oranj launched a free-to-use wealth management platform that encompassed all of its onboarding, advisor dashboard and client portal tools as well as a portion of its rebalancing tools. An upgrade to a premium service included goal tracking, a document vault with unlimited storage, compliant messaging capabilities and reporting tools. The free service has since been rebranded as Oranj.
The traditional business model for fintech has involved layered fees – often a blend of onboarding costs and basis points for AUM administered via the technology platform or a monthly, quarterly or annual subscription and then additional fees or costs for certain products, enhancements or functionality. Oranj receives revenue from asset managers whose funds and ETFs are distributed via the platform’s model marketplace.
“When we initially launched our free platform three years ago, there was a bit of skepticism,” said Lyon. “Our industry is conditioned – meaning advisors are conditioned – to believe that everything has to come with a price tag, usually a very big price tag, and you have to give up a portion of your revenue to use software, and quite directly in terms of basis points.”
Lyon has spent the last two years explaining to advisors that cost and quality are not necessarily linked – and the industry may be getting the message.
Consumers have become acclimated to free or low-cost software that is often connected to more paid services, as that is the model that most social media, email and document storage companies have moved towards over the past decade. Lyon points out that consumers use free services from companies like Google, Adobe and Microsoft with few questions about quality or robustness.
To convince advisors, it’s been more a matter of engagement and continuously updating and upgrading the Oranj platform, said Lyon. The company releases new features on the platform every two weeks, so users can watch the technology evolve and improve over time.
Lyon also believes that freemium services could help more consumers access and engage with the financial services industry in general, as those consumers are already comfortable using free digital services in other areas of their lives.
Moving forward, small- and mid-sized advisory firms will begin to struggle to keep up with the technology offerings of larger competitors, said Lyon, but that also technology is a big differentiator when it comes to a firm’s ability to grow. Offering advisor software at free and low cost is, in part, Oranj’s way of leveling the playing field.