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Rating:From Acquisitive Fund Firm to FinTech Startup Not Rated 0.0 Email Routing List Email & Route  Print Print
Tuesday, January 3, 2017

From Acquisitive Fund Firm to FinTech Startup

Reported by Neil Anderson, Managing Editor

Five years into the asset management business, a Tennessee shop is shifting to the financial technology space instead, under a new brand.

Jeremy Floyd
President and Chief Executive Officer
The Knoxville-based company once known as BPV Capital Management [profile] has liquidated its mutual funds, shut down its $2.4-billion asset management business, transformed, and relaunched as Finworx, an FA-focused fintech startup. And Finworx's leaders see asset managers as natural allies for the new business.

Former BPV CEO Mike West, now founder and chairman of Finworx and former dotcom entrepreneur, started family office North Shore Management in the early 2000s. He transformed it into BPV Wealth Management, an RIA, in 2009, and then he brought BPV into the mutual fund business in 2011 and rebranded the firm as BPV Capital Management in 2012. Over the next three years West was on the prowl for asset management deals. He expanded the BPV executive team and acquired a New Jersey-based mutual fund subadvisor and a Florida-based institutional asset manager.

Jeremy Floyd, the former chief marketing officer of BPV who now serves as president of Finworx, says that BPV had a strong focus on supporting financial advisors, especially RIAs and independent FAs. Floyd says he did "a lot of value-add digital marketing presentations" for BPV's FA allies, and that triggered the responses that led BPV to develop more software support for FAs.

"We found this interesting phenomenon: a lot of inbound calls from advisors about how to connect and engage with their clients," Floyd tells MFWire.

BPV also had a concentration issue. Nearly 80 percent of BPV's total AUM, which peaked at nearly $2.4 billion, was with a single institutional client.

"Part of this as well was de-risking that concentration risk," Floyd says.

Meanwhile, Floyd says, he had been following a marketing automation company called Fiveworx for a few years. Fiveworx specialized in helping large utilities get improved results from their consumer outreach efforts, yet Floyd saw applications in the wealth management space.

"There was so much crossover: known set of clients, you're in a regulated industry, and you're trying to improve the outcome of the recipient of the email," Floyd says. "I thought there was a direct and easy application into financial services."

BPV, Floyd adds, "really began courting [Fiveworx] about a year ago." By mid 2016, BPV parent Northshore bought a majority stake in Fiveworx, and BPV and Fiveworx teamed up.

As North Shore and BPV worked on the Fiveworx deal, Floyd says, they considered options for BPV's mutual fund and separate account business.

"In early June we decided to close the mutual funds," Floyd says. "It was a strategic decision from a cost standpoint. We saw the margins continuing to tighten in the industry."

BPV "had a few suitors" interested in its asset management business, Floyd confirms, but ultimately the timing was not fast enough.

"The terms of the transaction were not beneficial to us," Floyd says, describing the "extended and prolonged expense" that BPV would have to bear while working on a deal.

"What we had to do was focus on the essential future of the business," Floyd adds. "We just didn't have the time to keep the additional resources on staff for another year or however long it was going to take. Very few [suitors] wanted to move as quickly as we did."

Word in the industry is that one of BPV's suitors was Charlotte, North Carolina-based Sterling Capital Management [profile]. Alex McAllister, president of Sterling, did not immediately return a call for comment, and Floyd declined to comment on the identity of the suitors.

With the shift away from asset management and the Fiveworx deal, the BPV-Finworx team (now about 30 in total) has changed somewhat. All four Fiveworx folks came on board, and Finworx also "added six developers" to help adapt Fiveworx for financial services, Floyd says. (The old Fiveworx folks will continue to serve large utilities.) And a BPV PM has stayed on to run "a team of analysts providing key market updates" to Finworx's FA clients.

Meanwhile, Floyd confirms, Finworx has eliminated its asset management operations and distribution teams. Mutual fund and 401(k) industry veteran Frank Gregory, who declined to comment for this story, left BPV last May to start his own consulting company.

In October, Finworx unveiled its new, flagship offering for advisors, built on "persona-based communications," "large content libraries," and tracking investor responses. It's all about sending the "right content to the right person at the right team," Floyd says.

"It's continual learning of each of the advisor's clients," Floyd says. "It's refining that messaging to have a higher open rate."

Finworx's current focus is on RIAs.

"We've done so much work on the mutual fund side with RIAs, and we understand all that they are facing," Floyd says. "All of our early adopters are independents and RIAs."

"I want to create raving fans," Floyd adds. "Our primary focus is to build the very best tool for the advisor right now."

Finworx can also work with bigger offices and broker-dealers. And down the line, Floyd says, they anticipate helping asset managers looking for value adds to offer to FAs. Finworx could even customize its service to support an asset manager's existing communications and value-add content.

"Our plan is to block and tackle, to do the very best at serving the advisor first," Floyd says. 

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