Marstone and Interactive Brokers announced they are teaming up to provide an automated investing solution for institutions and banks. The new customizable turnkey wealth management platform will see Marstone deploying its client software, which can support a human-robo hybrid practice or function as a fully automated investing platform, while Interactive Brokers will take charge of clearing, custody and execution.
The partnership should bode well for both companies, analysts predicted. “We have a lot of partnering going on in the space,” said Alois Pirker, research director at Aite Group’s wealth management division. Marstone doesn’t have a back office, let alone a global back office, something Interactive Brokers is able to provide, he pointed out. Interactive Brokers also has a different client base than the client segment Marstone has worked with in the past.
For its part, Interactive Brokers will be able to use its partner as a distributor. In 2015, Interactive Brokers acquired Covestor, an investment management marketplace where customers could find and implement a wide variety of portfolios. The acquisition was renamed Interactive Brokers Asset Management in 2017, but it’s a portfolio-picker and -builder option that could see a broader market via Marstone, said Pirker. Interactive Brokers has been paying attention to the advisor business lately, beefing up its RIA offerings.
This integration follows a string of strategic partnerships at Marstone. Last year, the white label automated investing provider partnered with HSBC Bank USA to provide a digital advice offering. It also added passive ETF-based model portfolios from BlackRock to its platform. Nearly two years ago it made an even bigger splash by partnering with Fiserv to provide customers with a client portal, self-service robo-provision or a hybrid offering. Similar to this partnership, the rationale behind that agreement was a case of the complementary: Marstone’s front-end offering caught Fiserv’s attention, said Cheryl Nash, Fiserv’s president of investment services at the time.
For its part, Interactive Brokers serves more than 593,000 clients around the world, conducting broker/dealer business at more than 120 market destinations. Outside of scale, however, it was Interactive Brokers’ “aggressive pace of innovation” that stood out, according to Marstone’s CEO and founder, Margaret Hartigan.
“Pace of innovation” is a familiar refrain in partnerships like these, said Doug Fritz, CEO and founder of F2 Strategy, but it may be Marstone that’s doing the innovating. “You’re going to start seeing a lot more sleepy firms that aren’t known for digital, partnering up with digital, cool firms, like Marstone,” he said.
A lot of “cool” firms are coming from the robo space, attracted to companies that represent sizable targets, Fritz said. Marstone proves, with this partnership, that it is capable of winning larger clients, while Interactive Brokers gets a “planful advisor experience” from the partnership. “Everybody’s going to have to pick a digital dance partner,” he added.