Redtail CEO joins Riskalyze board, denies possible acquisition

As competing financial wealth management technology platforms expand their product offerings or get acquired by financial institutions, Riskalyze is adding a new board member to deepen connections with one of its closest partners.

Brian McLaughlin, CEO of Redtail, a client relationship management software tailored to financial advisors, is joining the board of directors at Riskalyze, an advisor technology platform built around client risk assessment.

While industry observers suggest a future merger or acquisition between the two companies could make sense, the companies maintain McLaughlin’s seat is simply about bringing new insight to the Riskalyze board.

“No discussions, plans or even thoughts of a merger,” said Riskalyze CEO Aaron Klein on Twitter, who declined previous requests for a comment.

The ties between the Riskalyze and Redtail run deep, starting with geographical proximity: both are based in the California capital city of Sacramento.

McLaughlin and Riskalyze CEO Aaron Klein often tweet about travelling together to industry conferences and pranking each other’s offices.

In a video posted to the Redtail blog in January, Klein discusses how a 2013 integration with Redtail was instrumental in getting Riskalyze on advisors’ radars.

“That was huge for us. We were barely on the map, and a company like Redtail gave us credibility. … we just shot up like a rocket,” Klein says in the video. “All of a sudden we had users, like, pouring in.”

Adding McLaughlin to Riskalyze’s board may be a way to formally thank the Redtail executive, says Kyle Van Pelt, a solutions manager with SSC Advent and former vice president of partnerships at Riskalyze.

“It’s an opportunity for Brian to potentially be compensated for some of his advice and the help that he provides,” Van Pelt says.

The two companies did not respond to a request for comment.

Redtail is a market leader among CRMs for advisors, according to Financial Planning’s 2020 Tech Survey, and named one of the best fintechs to work for. The company says it serves 40,000 advisory firms, but has been the subject of acquisition rumors and the victim of a data breach over the past year.
Meanwhile, Riskalyze has expanded its platform with an investment model marketplace, portfolio analytics, automated trading and compliance tools. In the wake of Orion Advisor Services expanding its investment management offering with Brinker Capital, could CRM be Risklayze’s way to offer a competitive, differentiated product?
A Riskalyze-Redtail combination wouldn’t surprise industry observers like Gavin Spitzner, president of Wealth Consulting Partners.

“These firms have been very close for a number of years. There are certainly some synergies there,” Spitzner says.

While Spitzner says he wouldn’t read too much into McLaughlin joining the Risklayze board — executives frequently join the boards of other companies — a merger could mirror AdvisorEngine’s purchase of Junxure CRM, a deal that paved the way for Franklin Templeton to acquire both in May.

“CRM on its own is probably not a huge money maker, but in combination with other capabilities offering a more integrated, end-to-end stack, one plus one could equal three,” Spitzner says.

Both Redtail and Riskalyze deny any future deal is in the works.

“The rumors are false. Redtail is not looking for acquisition partners and has no plans to be acquired,” McLaughlin said in an email.

Andy Swan, co-founder of social media analytics firm LikeFolio, and Ryan Shanks, CEO of advisor recruiting firm FA Match, are concluding their roles on the Riskalyze board after six years.

In a statement, Riskalyze Chairman Lori Hardwick said McLaughlin’s industry knowledge and experience will bring new insight to Riskalyze.

“Transitions such as these allow for an opportunity to bring new perspectives to the table,” Hardwick said in a statement.

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