Wirehouses Becoming Workflow Vendors

This pricing shift shows that the real product inside big wirehouses is no longer just access to funds, it is outsourced operating infrastructure. When feeder funds are used, fees can be layered into the fund structure as basis points. But for registered products and direct subscriptions, iCapital is being paid more like a software and workflow vendor, with contracts tied to implementation, reporting, and the number of subscription events processed for the bank or asset manager.

• In the older feeder fund model, the economics are richer and more financial in nature. Administrative fees alone run around 15 to 30 basis points, before management fees, carry, and placement economics. That works because iCapital is helping create and operate the investment vehicle itself, not just the software layer.
  1 sacra
• In the wirehouse workflow model, the bank often pays, not the end investor. That matters because registered products like interval funds and direct fund subscriptions do not leave the same place to scrape basis point fees, so pricing shifts toward per subscription charges and broader enterprise agreements.
  1 sacra 2 sacra
• This also explains why wirehouses are so important and so hard to serve. These firms drove about $7 billion to $8 billion in annual feeder fund flows, plus another $6 billion to $8 billion in direct subscription workflows, but each bank wants deep customization, branded experiences, and process control. That pushes the business toward large negotiated contracts, not simple off the shelf pricing.
  1 sacra 4 sacra

The next leg of growth comes from turning this custom work into modular software that banks can run themselves. As feeder fund volume gives way to registered products, revenue will depend less on taking a cut of assets and more on owning the workflow, data pipes, and reporting layer that sits inside wirehouse operations.