Addepar CEO Eric Poirier on AI, Alts and the ‘Eternal Optimist’

Advisors spent the better part of two decades worrying whether new technologies would replace them. Sure, they escaped the robo-advisor revolution, but artificial intelligence tools promise to be much more transformative, and they’re just getting started.

Addepar CEO Eric Poirier, however, says new tech isn’t going to replace financial advisors nearly as fast as it reshapes the work they do behind the scenes. “The world of wealth management is fundamentally predicated on human-to-human trust,” he said. “We don’t see that changing.” That doesn’t mean the industry sidesteps disruption. Addepar, the wealth data platform used by more than 1,400 firms aggregating $9 trillion, recently launched an AI agent that allows advisors to query client and portfolio data while also providing aggregated data tools to benchmark private markets, arguably the industry’s most opaque asset class. The tech combines language models, but still keeps humans in the loop. “AI is just not good at calcs,” he said.  

We sat down with Poirier at Addepar’s annual meeting in New York City last week to talk artificial intelligence, held-away assets, private markets and why AI still can’t be trusted to do the math.

We can’t get out of here without talking about AI. What are the most significant tech developments coming in the next 12 to 24 months?

AI is coming up in every conversation. There’s simultaneously an acknowledgment that AI creates a lot of opportunity, but also people are still trying to figure it out. There’s this massive proliferation of new AI capabilities, whether it’s note-taking or everyone having agents now for various different things. Recently, firms are kind of reflexively adopting some of these capabilities only to find out that: “OK, it didn’t actually solve any problems. I just added more complexity. And by the way, the data that I put into these agents, I don’t really know where that data traveled from a governance, privacy and security standpoint.” 

If you play this the whole way through, though, every advisory firm basically has to deal with a lot of data. Oftentimes, they have people on staff who are data operations personnel to make sure that the data that goes into clients’ reports is accurate and reconciled. That’s one use case that lends itself very naturally to building an agent to do more of that work in a more automated fashion, but then keeping a human in the loop just to verify. It creates a lot of productivity benefits for the client. In that example, it does lend itself to actual tangible business objectives.

AI seems like a far more significant threat than the disruptors of the past. How does AI ultimately impact the wealth management business?

I definitely appreciate the fact that people are worried and nervous and scared with respect to jobs. I have a very fundamental belief, and this is completely unchanged, that the world of wealth management is predicated on human-to-human trust. We don’t see that changing. But that said, the human advisor now has way more capabilities, and this is just going to continue compounding in an increasingly accelerated way, where that human advisor is better equipped with not just data, but the right insights, and the right suggested actions. The clients feel a much, much higher quality of advice as a result of that. And then that advisor is able to serve more clients. 

The other point is around wealth inequality. That has been an increasing trend, of course. But if you take these two concepts together — allowing AI to do the needed work that frankly is not the strategic work, which then lets an advisor serve more clients — arguably, advisors can provide advice to more and more people. It kind of lowers that client threshold, and it brings more people into scope. Full disclosure: I’m an eternal optimist. I’m just wired that way. But for me, that’s a really important part of our mission.

Give us a brief history of Addepar.

As you know, we started out back in 2009, in the wake of the global financial crisis, and the problem that we set out to solve is really just giving clients a place to see their entire portfolio all in one place in a complete, timely, accurate way, and of course, housing that data safely from privacy, security, audit and compliance. These are all really fundamental requirements that if you don’t have a foundational platform, if you have a bunch of spreadsheets and a bunch of solutions and people shuttling data all around, you’re missing the point. That sounds like a boring, plumbing-and-piping problem. Frankly, it is … until it’s not. Now, the catalyst is artificial intelligence.

Data has become a commodity. Is cybersecurity ever a concern?

Building data feeds in the first place requires an important enough client of the custody bank for them to work with us. They need to send us the right type of data, and build the connectivity to automate the data flow on a regular basis. When we started the company in 2009, for the first couple years, it was about initiating the right connectivity with the big custody banks, and then over time, building incremental feeds to the long tail of custody banks. 

Generally speaking, it’s part of that client’s arrangement with the bank, and it’s actually the client’s data. So with the client’s letter of authorization, they’re instructing the bank to share their data. It’s a much more durable, much more resilient model than using some screen-scraping technology or other aggregation tools that frankly go around some of the terms. There’s a legitimate concern that custody banks have if you have a third-party data aggregator violating the terms of service in respect to your data. There’s a whole host of other techniques that other players have used that are absolutely in violation in terms of use and terms of service.

Addepar also provides data on private markets. How important are alternatives to advisors right now?

Over the last few years, there has been a different liquidity dynamic than before. Funds weren’t providing liquidity and were either recycling returns or just staying in positions because the valuation or multiples of some of their underlying private companies went way up in 2020 and 2021, and then caved. They didn’t want to re-mark them. As a consequence, a lot of these funds were distributing much less capital, and then investors in turn moved toward public markets and more liquid products. For the advisors who are generally more active in private markets, that’s a dynamic that they’ve been living through.

But, generally, the performance is worth the additional fee and is worth liquidity lockups. We’re not in the business of selling funds. More empirically, though, for clients who tend to have larger portfolios, they choose to deploy more of their capital into alternatives because they can see for themselves that performance matters.