- July 1, 2019: Vol. 6, Number 7

Using the tech effect to supercharge AUM

by Brad Blazar

It should be no surprise that leading wealth advisers, including Charles Schwab, Vanguard and others, have taken their advisory platforms online. Betterment, an online robo-adviser, has only been in existence since 2008 but now manages $16.4 billion in assets. How can an online advisory provider such as Betterment attain considerably more AUM than many brick-and-mortar advisory firms that have been around for 50 years or more? The answer: Effective technology and a strong online presence.

The SEC reports there were 37,785 Regulation D offerings reported on Form D filings in 2017, related to the raising of $1.8 trillion in capital. Some online platforms (such as iCapital and Artivest) are raising considerably more capital online than some leading sponsors in the traditional broker/dealer and advisory space. What is it that these guys know about raising capital through Reg D that many sponsors do not? They use technology to get in front of a much larger audience and accelerate raising capital.

Sponsor syndication efforts can be made faster and more efficient by using subscription and syndicate management technology — the same tools a crowdfunding site uses to get in front of a high volume of suitable investors.

Greater diversity of broker/dealer and advisory firms. As technology platforms work on simplifying investing by making it faster and easier, they have managed to attract and retain a large audience of broker/dealers and advisory groups from across the country. Similar to traditional syndicate management in public markets, a technology-enabled private placement syndicate can leverage the investor networks of selling broker/dealer and RIA firms. Only by leveraging technology can an invitation be sent to hundreds of broker/dealer decision makers at once, and the recipients’ interest level can be tracked and reported to the sponsor in real time. By exposing offerings to a broader audience, the sponsor or manager may get introduced to new firms. New introductions lead to new selling relationships, and in today’s world of investment specialization, the process of general solicitation can help to create suitable channels for new products.

Greater diversity of products. A complement to the benefit to syndicate managers is that selling brokerages now have access to greater diversity and quantity of products to sell. Selling brokerage due diligence officers and executives can review a wide range of products by sorting through debt or equity, corporate structure, industry, geography, sponsor tract record, minimum investment size and more. As selling brokerage and RIA firms become more specialized to offer higher relational services to their specific clients, they look for products in line with their investment goals, whether they be high growth, income producing, ESG focused or regional.

Efficiency without sacrificing relationship-building activities. On the registered rep side, advisers can choose a deal they want to discuss with a client, evaluate offering materials and subscribe to the opportunity — and do it all online, 24/7. Traditional paper processing of subscription documents is eliminated, meaning client social security numbers and personal information is safely delivered and stored from one encrypted entry point. As a sponsor, you can expect a smoother, faster, safer process because technology can streamline both the fundraising and reporting aspects of your deal, not to mention long-term organized retention and retrieval in the event of litigation or audit.

Leveraging technology has undoubtedly changed the way sponsors can raise capital. By exposing an offering to selling broker/dealers and inviting them to view the due diligence materials in a virtual data room, sponsors can reduce administrative time, thereby lowering costs, accelerating the raise, and building a larger and more far-reaching selling group.


Brad Blazar is director of national accounts at

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