As many financial services firms are looking for deeper inroads into digital wealth management, one fund provider is looking to sell.
The ETF giant WisdomTree has decided to sell its interest in advisor technology provider AdvisorEngine, according to its latest quarterly earnings report. Founded in 2014, AdvisorEngine offers an integrated client relationship management system and digital wealth management platform and has some 80 employees with offices in New York and Raleigh, North Carolina.
“We are currently pursuing an exit from our $58 million investment in AdvisorEngine,” according to the earnings report. In the release, the firm said it did not anticipate any asset attrition or changes to its overall growth outlook this year.
“As we look toward 2020, we are focused on capitalizing on the tailwinds that exist in our business, continuing to drive operating efficiencies and prudently investing to remain at the forefront of industry innovation," WisdomTree CEO Jonathan Steinberg said in a statement.
WisdomTree estimates taking a non-cash impairment charge of $22 million to $30 million in the fourth quarter as it exits the investment. The firm initially took a stake in the enterprise digital advice platform provider in 2016 and provided another $30 million infusion in 2018.
“WisdomTree is a good partner and continues to be a good partner and supports us,” says AdvisorEngine CEO Rich Cancro in an interview. “We’ve had great conversations with potential strategic partners who are aligned with us culturally and are excited to invest in the platform.”
WisdomTree is looking toward other technologies like blockchain for continued growth. This month, for example, WisdomTree announced a strategic investment in Securrency, a blockchain-based financial services infrastructure company.
"Blockchain has the potential to be revolutionary in financial services and we believe we have the right vision and the right partner to be a global leader in digital assets," Steinberg said in the release.
Robo advisors are expected to top more than $1.2 trillion in assets by 2023 as technology simplifies the process of managing investments online, according to an Aite Group study. However, just over one in 10 advisors uses a digital investment tool, according to Financial Planning’s 2020 Tech Survey.
“WisdomTree has reached an inflection point with top line and bottom line growth set to emerge,” Steinberg said. “There are reasons to be optimistic.”
