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Fintech referral platform eyes Gen X clients

Technology is now helping advisors find the perfect client.

The wealth management tech provider, Harness Wealth, opened its referral platform to RIAs seeking to connect with prospective clients looking for tax, legal or financial advice — and specifically for Generation X clients. The network extensively vets advisors and collects some 120 attributes, like the advisor’s age and what asset size they manage, before matching them to a client for either a long-term relationship or a one-time need, says CEO David Snider.

The matches are made through a proprietary algorithm, which takes into account the current and future needs of the client, says Snider. Founded in 2018, Harness Wealth also provides access to CPAs and attorneys focusing on trusts and estates for high-net-worth individuals, according to the firm.

The New York-based startup raised $4 million in its latest round of funding in December, from venture capitalists and angel investors including Bain Capital Ventures, Sinai Ventures, and Salesforce’s CEO Marc Benioff. Harness is currently serving 300 advisors on the platform, according to the firm.

Snider says that the financial industry has neglected Gen X and instead has prioritized other generations, specifically baby boomers and millennials. With the upcoming $30 trillion wealth transfer looming, advisors are missing a huge opportunity, he says.

Cerulli Associates data (2017) millenials, generation x, baby boomers, silent generaton

There are 33 million households led by Gen Xers, compared to 30 million millennial households, a 2019 Cerulli report found. Also, the investable asset base of Gen X is more than four times larger than millenials, $7.6 trillion compared to $1.8 trillion.

Gen Xers want a tech and human hybrid solution to fit their financial needs, Snider says.

“It's a great way to find next-generation clients. It’s utilizing technology to do it,” says Sarah Simon, an advisor for Coastal Bridge Advisors, adding that her firm has been using the platform for 6 months during a trial period. Her team onboarded two clients from the four introductions they received.

The network should help her firm access individuals with niche needs, Simon says, such as tax or pre-sale planning for those looking to sell their business.

Fintech firm, referral platform / network

Kenneth Nuttall, director of financial planning at BlackDiamond Wealth, is looking at Harness Wealth as an option, but cautions using networks as a long-term strategy for growing as the quality of the service tends to deteriorate.

“You kind of want to be the first mover,” he says, when client excitement about the product is high and the competition from other advisors is low.

Other networks Nuttall used became oversaturated after a few months as competition increased between advisors and the enthusiasm from clients died down, he says. Overtime, he onboarded fewer and fewer clients.

There may be other dangers, as well. While it may be too early to tell, a tech platform just might not create strong enough client relationships often produced through traditional methods of referrals, says Robert Schultz of Atlanta-based Rollins Financial in an email. “The prospective client already has some background on you and potentially feels a connection through the referral — someone in common,” he says.

Harness’ services would help advisors who left wirehouses for an independent broker-dealer or regional BD, Snider says. “In that transition, they’ve been very effective at bringing in their clients but don’t have that mega brand that attracts clients anymore,” he says.

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