Ritik Malhotra told Citywire that Savvy Advisors' technology stack allows it to handle an amount of assets under management that can rival many of its larger RIA competitors.

Savvy Advisors, the technology-focused RIA arm of parent company Savvy Wealth, has sought to rapidly expand its presence in the wealth management world since its 2022 launch.

In doing so, Ritik Malhotra, Savvy’s co-founder and chief executive, has focused on building an integrated technology platform capable of easing the administrative workload for advisors while leveraging advances in artificial intelligence (AI). 

Malhotra hopes this unique lane will provide Savvy with an advantage among RIAs as it continues to recruit advisors from larger, more established firms. Savvy has also steadily 

raised funds from venture capital firms in its early stages, completing a $26.5m Series A round in August. 

As the firm approaches 40 advisors on its roster, Savvy is also poised to soon surpass $1bn in AUM. Ahead of that benchmark, Citywire caught up with Malhotra to discuss his company’s gameplan, growth strategy and capital structure. 

Both questions and answers have been edited for clarity and length. 

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Citywire: What does the upcoming milestone of $1bn in AUM represent for you and Savvy? 

Malhotra: It’s a testament on a number of things. No. 1, it’s validating on the thesis that we had

early on, which is that we think that there is a better way to build a wealth management firm using technology and better operational services. It’s also a testament on all the hard work that goes into building something. Everyone said the first $1bn is the hardest, and then it gets easier. But the amount of just grit and hard work that’s required when you’re really just pushing a boulder up a hill, that’s been No. 2. I think No. 3 also just reflects a lot of momentum given that the growth has been at the order of 5x year-over-year. That’s not going away — that momentum is still in our favor. So I’m already looking forward to when we get to $2bn, $5bn, $10bn onwards. And that, to me, is more interesting because the building of a flywheel to provide this more tech-enabled experience for advisors is exciting.

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What has been your pitch to bring these mid-career advisors on and instill a sense of common culture? 

There are three areas that continue to resonate with the advisors we’re targeting. First is how do we automate the middle and back office of practice management? So all that stuff that’s required to run the book of business, everything from compliance to summary note-taking to helping with some one-off requests. The second element is around investment management, which is obviously a core skillset of any advisor. What we have found is that advisors are the best people to understand the client’s risk profile, tendencies and what they want, and then go from there and convert that into a portfolio. But the actual execution of that portfolio is not something that is very high-value. So how do we construct a bunch of software and services there to help them automate that away?

And the third one is really around client marketing, which is, every financial advisor is a small to medium business owner. They’re running their own practice, whether it’s under the Savvy umbrella or not, and the ability for them to grow clients is also a critical part. How can we give them the tools and also help them with what we call internal marketing agency support to really help them find the clients that they work well with and bring them into the fold, into their book of business?

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With mega-RIAs continuing to broaden their service offerings coupled with advancements in new advisor tech and AI, where do you see Savvy’s place in the wealth management industry given that your firm is, in many ways, responding to those trends through your business model? 

What we have found is that many mega-RIAs, whether it’s partnered or in-house, generally, the experience of working with it almost feels like you’re going to a third party. It’s not an integrated experience. And oftentimes it’s not the best quality experience either.

Our view is to integrate those value-added services by doing a few things. One, having a specialist in-house. Two, building a technology product experience that facilitates it in an easy way, because the biggest hassle is the client having to do all of the work that they did with the first meeting of the financial advisor again with a tax specialist. But if you have all the data in one system as a financial advisor, you don’t need to treat these as two silos, and that’s how these larger institutions are treating them. We think that can be a much better experience.

What we found, especially in my past experience working at other fintechs and building these companies, is that if you’re able to provide a much more integrated, consolidated experience, clients actually really value that. That’s what we think is our differentiator. We’re tech-forward. We have an integrated experience, we have specialists on staff, but actually the bulk of the work is already done, because you won’t have to copy the same information over and over again. 

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Why have you so far chosen to raise capital for Savvy through tranches of venture capital funding rather than from private equity or other sources? 

When we thought about the different kinds of backers, what we centered around was that the venture capital folks, who are sophisticated in making these technology or tech-enabled investments, are going to be the right solution in the early days. And early could mean even reaching $50m to $100m of recurring revenue scale.

The venture folks are much more nuanced in understanding how to build early stage businesses. I know venture is a subset of private equity, but the more traditional private equity folks, they’re excellent at the growth play at the end of the day. And so it’s really just what we call tax-relevant maturity. As we continue to scale and potentially raise more capital, we’ll consider growth stage investors, which look more like traditional, different kinds of investors. 

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What have you learned from watching other RIAs across the industry scale up and through your recruitment of advisors across the wealth spectrum? 

There is quite a bit of activity in the M&A sector, but I think a lot of firms are using that as a short- term growth mechanism. The lasting value comes from making a platform that advisors are happy with. If you’re able to make them happy and continue to improve their experience, we think that that’s actually how you build a long-term platform.

It’s easy to make things that you can add into a slide deck or a web page or “here’s what we do,” but it’s very difficult to make that a seamless experience that the advisors are happy providing to their clients.

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