What's Savvy's margin for their advisors & how do they balance service and tech for long-term margin trajectory?

This is a key part of the business. The way that we think about this is, “What does the margin bridge look like?” In other words, what does the P&L look like today and what will it look like in the future with Savvy’s products?

There are two levers here from a financial perspective: the revenue generated from clients, and the operating margin of the advisor, which combined produces EBITDA. The first lever is on client acquisition. We use sales and marketing automation that we have experience building at prior tech companies, establish and scale channel referral partners, and employ other growth tactics that today are missing in the traditional wealth management industry – or at least not being done well by anyone today. We think our investment here can dramatically improve client prospecting, acquisition, and conversion, impacting top-line revenue growth. 

The second lever related to revenue is “can we get additional revenue per existing client?” Typically the average share of wallet that an advisor holds is ~55% of a client’s net worth. A lot of client assets sit outside the advisor's purview because they’re at a different custodian, they're in a 401k or IRA account, or they’re locked up in private stock with a different custodian. We hope to use Savvy’s technology to help advisors both identify and manage these additional “held-away assets” over time. 

We’ve run the math and have a strong thesis that with these two levers working in hand-in-hand, we stand to ~4x a target advisor’s existing revenue. This is the thesis we’re working to prove out with our first set of early advisor partners. 

The third lever is operating margin. Typically when firms want to scale past a certain point, they need to hire other wealth managers, hire support staff, lease commercial building space, etc., and that's when you start incurring the real costs as a growing wealth manager. We find these growth oriented firms look at a typical operating margin in the 25%-30% range. Not bad, you might think – just the cost of doing business. But we believe we can get that number up to ~60% range by building the right technology that can reduce or automate away a lot of these costs that exist.