for Axos Bank, a nationwide bank that
provides consumer and business bank-
ing products through its low-cost dis-
tribution channels and affinity partners.
With approximately $14.4 billion in
assets Axos Bank provides financing for
single and multifamily residential prop-
erties, small to medium size businesses
in target sectors and selected specialty
finance receivables. Axos Financial’s
wholly owned non-bank subsidiaries,
Axos Clearing LLC and Axos Invest,
Inc. provide comprehensive securities
clearing services to introducing
broker-dealers and registered
investment advisor correspon-
dents and digital investment
advisory services to retail inves-
Before the EAS deal, Axos
did not appear in any competi-
tive searches for an RIA cus-
todian. It was clear, however,
that it had an inkling of where
it wanted to go in late 2018,
with an early acquisition of the
robo-advisor WiseBanyan —
one of the first robos to offer its
services “free,” providing Axos
with an entrance into digital
According to Gregory Garrabrants,
president and CEO of Axos Financial:
“The addition of approximately 200
RIA custody relationships with $23
billion of combined assets under cus-
tody significantly accelerates our time-
to-scale in this business. We intend
to leverage EAS’ turnkey technology
platform and Axos Clearing’s capabili-
ties to expand the service offerings
to independent registered investment
advisors and turnkey asset management
As part of the EAS deal, Axos picked
up a comprehensive technology plat-
form, Liberty, that includes reporting,
CRM, rebalancing, proposal genera-
tion, e-signature, billing, UMAs and tax
management tools, all built on “propri-
etary web-based software.”
What also made EAS particularlyappealing to Axos is the newfound ability to go after dissatisfied advisors leeryof becoming just another number in thevast call centers and DIY websites ofthe Schwabitrade goliath that will oneday merge together. The latest estimatescoming from the discount behemothpoint to at least two or three more yearsbefore Schwabitrade begins to actuallyintegrate systems. Things will start toget really interesting then.
In the meantime, this extended period in which Schwab and TDA technology executives play a high-stakes gameof chicken as to whose technology willprevail is creating lingering uncertaintyand keeping TDA advisors in the darkregarding the fate of the award-winningVeo One workstation they admire somuch and depend upon. These significant merger and integration delays aregiving Axos ample time to bring all thepieces of EAS into its custody, clearingand banking platforms to become aninstant competitor of size and scale forRIAs looking to diversify custody.
The bigger question for the new Axos
+ EAS tie-up, however, is about market-
ing, branding, and its position in the
advisor technology ecosystem. Will
established advisors want to do busi-
ness with an unknown entity in the near
term? Or will Axos/EAS need to focus
on newer, smaller RIAs and those just
RIAs fundamentally care about thename on the statements and account-opening forms their clients will see.
They don’t want to have to convinceclients that the institution where theirmoney will reside is a viable andtrustworthy enterprise.
And because most RIAsalready have multiple components of their technology stackin place, how much investmentwill Axos need to make to bringtogether and integrate thosepopular advisor technologyapplications and components?These marketing, branding andtechnology decisions are veryimportant. Axos/EAS will needto make these expensive strategic investments to continuethe momentum and enter themarket successfully.
At the same time, the Axos/EAS venture will need to fend off competition fromthe new crop of smaller, advisor-focusedcustodians, many of whom have recentlylaunched and will be messaging a similarstory of disruption to the Trust Companyof America RIAs who are now on theirthird owners in less than five years.
All of which goes to show thatthings are about to get very interestingagain in what many portray as a sleepy,slow-moving corner of the financialservices industry.
Timothy D. Welsh, CFP, is president, CEO andfounder of Nexus Strategy, LLC, a consultingfirm to the wealth management industry. He canbe reached at firstname.lastname@example.org or onTwitter @NexusStrategy.
Not only did Axos leapfrog
the smaller custodian
marketplace, it also picked
up a complete technology
solution, purpose-built for
RIAs, at a staggering 80%
discount. Talk about the
deal of the century.