Our CEO, Aaron Klein, talks business leader to business leader about the subjects of pricing and contracts in advisor technology. The following is the post on contracts; click here to read the post about pricing.
By Aaron Klein
CEO at Riskalyze
Most financial advisors wear two distinct hats.
On the one hand, they are very focused on the day-to-day work they do to guide their clients to make the right decisions, and help them achieve their financial dreams. That is their core of their mission.
And on the other hand, most of them are also engaged in the pursuit of building a business. Whether they are a solo practice with an employee or two, or on the way to building a billion-dollar team, or already have an enterprise on their hands with multiple offices and a lot of employees...they are entrepreneurs building something of lasting value.
As a fellow business leader, I thought I'd take a few moments and write about our philosophy on pricing and contracts for our services. We consider ourselves incredibly privileged to serve tens of thousands of financial advisors in the noble work that they do.
Those advisors have the duty to build a sustainable practice with solid technology to support their clients. So on the one hand, advisors want strong and growing technology partners that they can rely on; and on the other hand, advisors want the best possible deal so they can take the extra savings and invest in improving their own client experience and competitiveness.
We've tried our best to design our pricing and contract philosophy to live within that tension and satisfy both interests on behalf of the advisors that we are grateful to serve.
Let's talk about contracts. (Or click here to read my post about pricing.)
We're grateful to be the market leader in our space, with something around 30x the market share of any of our newer quasi-competitors. We've built up a tremendous lead in product advantage — in our features, capabilities, securities coverage, and risk methodology.
So from time to time, I'll have an advisor ask me, "if you're so great, why in the world do you make me sign a contract to buy your software?" It's a fair question, and I don't take offense at it!
We have tested and tried a lot of different approaches in our history, and there's a few things that we've learned.
First, we need some level of predictability as a company, so that we can invest in our client experience. We base our hiring decisions on the number of advisors who have joined, and we consistently add more people to our Customer Care, coaching, relationship management, product, and engineering teams to invest in supporting you and expanding the product's capabilities for you.
Our investors entrusted their capital to us to build Riskalyze so we could bring these powerful capabilities to your business. Our valuation is solely based on predictable, contracted revenue — we get little to no credit for one-off or month-to-month revenue. Our ability to build a long term, independent technology partner for you hinges on creating some level of predictability in our business.