Stephen C. Daffron serves as the chairman and chief executive officer of BetaNXT, a Motive Partners portfolio company, where he is also a member of the board of directors. In this role, he leads the company’s transformation and growth strategy.
Russ Alan Prince: You launched BetaNXT less than a year ago, can you please explain what BetaNXT is and your offerings?
Stephen Daffron: BetaNXT is a leading provider of frictionless wealth management enterprise solutions, real-time data capabilities, and an enhanced wealth advisor experience. We invest in platforms, products and partnerships to accelerate growth for the ecosystem we serve, providing a single-tech stack technology solution, savings clients time and money. Through our software-, data and operations-as-a-service approach, we empower our clients to deliver a comprehensive, end-to-end advisor and investor experience.
Currently, BetaNXT serves large wealth institutions, broker-dealers, and independent wealth management firms. With an operating history of over 40 years, the firm services more than 50 million retail accounts, and $6 trillion in assets on the platform, and processes more than 35 million securities-related transactions daily. In addition, we serve and support clearing platforms. With the recent acquisition of Mediant, BetaNXT also serves over 1,200 investment managers, RIAs and financial advisors as well as over a thousand corporate and fund issuers.
Prince: What are some of the challenges you are helping wealth advisors and investors solve?
Daffron: We see one of the biggest challenges for advisors as something called “technical debt.” It’s how to describe what’s happened since the financial crisis in 2008 in the wealth management space. Basically, the wealth industry has been layering legacy systems on top of legacy systems creating a technical nightmare for advisors that is costly, inefficient, and error-prone.
It’s a profound issue that hinders advisors’ productivity. For example, McKinsey released a study in 2022 that showed advisors are spending up to 70% of their time on “non-advisor” activities, citing a “lack of unified platforms” and a high degree of manual data processing among the top obstacles. The higher the demand for resources for operational needs, the lower the capacity advisors have to serve their clients’ needs, resulting in missed opportunities for optimization and higher investment returns.
Our large wealth clients understand this and are asking us to help them “pay down the technical debt” so advisors can spend 90%, not 30% of their time with clients, which is obviously the most productive use of their time.
The ultimate objective is to create an end-to-end holistic wealth management experience. Seems simple in theory, but it’s hard to paint the plane while you’re flying it. At BetaNXT, we’re doing this every day for 50 million investors who want to turn on their screens and talk to their advisors. Again, we’re talking about 35 million transactions a day, and every one of those investors can talk to their clients and get the data they need from BetaNXT to make it work however they want.
Prince: Is data the key then to solving the “technical debt” problem?
Daffron: Yes, without a doubt. If you want to solve this problem, you have to address the corruption of data that hurts the entire wealth management process. Data is what makes everything work or fail.
Consider there are about 60,000 different data elements that you’ll have for a wealth management client that makes them who they are and which inform investment decisions. That data must flow straight down through and be kept in line so it can be used all the way through the process without having to be recapitulated, broken, or refixed again and again. Why? Because every time that happens, you’re allowing that data to be corrupted in ways that cost money and prevent access to the information that benefits the user.
Prince: You recently acquired Mediant, why now, and how will these services better aid advisors?
Daffron: BetaNXT has a singular mission, which is to provide its clients with a frictionless, end-to-end wealth management solution that enhances their advisor experience and provides them with a clearer view into their customers’ profiles to help improve their outcomes. In order to deliver on this commitment, we examined our solutions to uncover opportunities to enhance our capabilities.
With this acquisition, we are positioned to be a leader in the next phase of investor communications, adding Mediant’s digital-forward communications capabilities, industry expertise and reliability to our extensive suite of wealth management services. Following a robust due diligence process, we were confident that Mediant offers a best-in-class set of services that will provide significant value to our clients.
Advisors will now be able to add technology-enabled investor communications and proxy services to their suite of offerings. Integrated data will provide a view of their clients and households that were not available before, offering a greater understanding of the investor communications in play at any given time. Our objective is to offer access to planning, trading, performance, onboarding, tax management and practice management in one integrated service. Connecting the supplementary, value-add capabilities of investor communications and proxy solutions to our existing offering is the next step in our evolution to become a more comprehensive provider.
Russ Alan Prince is the executive director of Private Wealth magazine and chief content officer for High-Net-Worth Genius. He consults with family offices, the wealthy, fast-tracking entrepreneurs and select professionals.