Former 1st Global president David Knoch returns as CEO of Docupace

When industry veteran David Knoch launched a consulting firm in February after stepping down as president of Blucora’s Tax Smart Institute, he said it was to keep himself occupied while seeking a permanent role where he could “make a meaningful difference” to wealth management.

That role turns out to be chief executive officer of Docupace, a back-office operations and document management technology vendor once owned by RCS Capital.

Knoch’s appointment, effective Tuesday, comes as part of an investment in Docupace from FTV Capital, a private equity firm focused on the financial technology, wealth management and payments sectors. Terms of the deal were not disclosed.

Between Knoch’s leadership and the influx of new capital, Docupace hopes to accelerate product development and expand its footprint among broker-dealers, RIAs and insurance companies.

Knoch says Docupace can help advisors digitize back-office workflows and ultimately drive better service for clients.

“Not enough financial advisors have made the choice to automate their processes. They are using patterns of behavior that they have used for years,” Knoch says.

The coronavirus pandemic, however, has accelerated changes in advisor behavior.

“I think it’s tragic the economic and health toll that the coronavirus is taking on the world, but I am grateful that Docupace has a solution for keeping financial services operating,” Knoch says.

Knoch spent more than 18 years with 1st Global, a tax-focused independent broker-dealer. He served as the firm’s president from 2008 until its sale to Blucora in 2019. Under his leadership, Knoch increased assets under management by 154% and grew revenue and profitability margins by more than 50%, according to a statement from Docupace. Knoch also served as the 2019 chairman for the Financial Services Institute.

1st Global used Docupace during Knoch’s time as CEO, giving him first-hand experience of how advisors use the technology.

RCS had acquired Docupace in 2014 but sold it in 2016 after filing for bankruptcy. RCS was part of a business empire run by Nicholas Schorsch which once included firms such as Cetera and American Realty Capital Properties. The latter firm was at the center of an accounting scandal in which its CFO, Brian Block, was found guilty of securities fraud in 2017. Last year, Schorsch, AR Capital, a firm he founded, and Block, settled with the SEC for $60 million over an alleged fraud involving a pair of REIT mergers.

Knoch says Docupace severed any ties to Schorsch and his companies in 2016 when it became an independently owned technology firm, and has since “accomplished a comprehensive turnaround plan.”

There are plenty of opportunities for Docupace to help advisors digitize back office functions — especially if FTV can leverage other advisor fintechs in its portfolio, such as Riskalyze and InvestCloud, says Joel Bruckenstein, a technology consultant and founder of the T3 Conference.

“Things are not as automated and as paperless as they could be. The workflow of digital documents is not what it could be,” Bruckenstein says. “I think FTV is positioned well to take advantage of it because they have an understanding of how advisory offices actually work.”

Knoch says that while there are no immediate plans to cross-sell or promote with other companies in FTV’s portfolio, he looks forward to exploring opportunities.

Meanwhile, Knoch doesn’t plan to close down his consulting firm, Preston Creek Capital, but says CEO of Docupace will be his full-time job.

XY Planning Network co-founder and Financial Planning contributor Michael Kitces called FTV Capital’s investment in Docupace an interesting development in an area of fintech, document management, that has been “pretty quiet and sleepy.”

“I think FTV is right about the business opportunity — back-office functions have been the last to get automated in the advisor world, as robo advisors created an undue focus on front-office digital onboarding in recent years. But it’s also the messiest area to standardize,” Kitces writes in an email. “So Docupace will have their work cut out for them!”