Wealth management platform Oranj announced Tuesday a new third-party asset manager will join its model marketplace and open up the ability for advisers to utilize individual equity allocations.
Liberty One Investment Management offers model-based equities with direct investments into individual holdings — a new feature for advisors using the Oranj platform. Previously the fintech only had solutions that included mutual fund and ETF products, according to a company spokesperson.
“Liberty One has innovative asset allocation strategies that focus on individual equity positions,” Oranj CEO and Founder David Lyon said in an email. “[The] individual equity focus gives the advisor the ability to practically eliminate internal expense ratios while reducing the turnover ratio and on-going capital gain exposure inherent in many ETFs and mutual funds.”
Scalability is also top of mind for advisers and digital-based strategies can help advisers avoid a growth “plateau,” said Nick Ng, lead portfolio manager for Liberty One Investment Management. “Many advisors reach a ceiling of complexity while running their practice … simply put, the Oranj platform is designed to help advisors scale their practice.”
The Chicago-based fintech has added multiple tech-driven platforms to its model marketplace this year. Last month, income-focused mutual funds asset manager Pacific Funds took to the platform. In April, Value Line Funds joined and in March Oranj added Allianz Global Investors.
Oranj’s business model uses rebalancing software to distribute models from asset managers — who traditionally pay to have their models included. However, the model marketplace has faced criticism. Financial planning expert Michael Kitces wrote in a June 2019 column that the compensation models behind the marketplaces may jeopardize the quality of the investments.
“The caveat, though, is that when model marketplaces are driven by the economics of asset managers, the resulting models are not necessarily objective,” Kitces said. “What models are or are not available in a marketplace risks being driven more by which asset managers can pay the most, than necessarily which ones are the best.”