After watching the stock market increase substantially in 2013, Bob Van Art, founder and Chairman of BovaMetrics, wasn't satisfied with the moderate growth of his investment account. He had sold his software company in 1995 and invested his profits for long-term growth with a wealth manager.
Van Art started doing some investment research and studied the management of investment risk versus reward. Through this process, he came up with an idea to design a process to manage a long-term portfolio actively, on a day-by-day basis.
The methodology follows the buy-low and sell-high strategy — e.g. buy something when it's cheap and sell it when it's expensive. So, within a portfolio, as an investment increases in value, the strategy is to sell some of the appreciated shares to buy shares of another under-appreciated investment.
This line of thinking isn't new by any means, but it's novel in the sense that the process would trigger the perfect time to execute the buying and selling of shares by utilizing a proprietary process that combines statistics with market and investment data. The core idea is that, over time, more shares in the portfolio will generate a higher return than a traditionally managed portfolio.
And the time for infusing technology into the world of wealth management appears to be right. In a recent study from global consulting firm Accenture, a majority of high-net-worth investors said they prefer a combination of wealth advisors with a robo-platform.
Van Art put his hypothesis to the test and built an algorithm. For almost three years, he researched, developed and tested the process. When he showed the tool to his advisors, they said, "If you're able to generate higher returns on a consistent basis, the wealth advisory industry is going to love this."
It came time to build a company around this tool, and since Van Art had been out of the startup world for 20 years, he sought out someone more familiar with the current tech landscape to lead the company.
That person was Curtis Watkins, now partner and CEO of Bovametrics. Watkins previously sold MobileHWY, a wireless and mobile solutions startup company, with his brother. He also founded CLT Joules, a local accelerator for startup energy companies, and most recently was the COO of Emgry, a tech company focused on the distributed energy market.
Watkins, Van Art and Michael Mason — Van Art's original partner — have packaged the algorithm into a product called Equilla.
"[Advisors] don't have the time — and sometimes not even the expertise — to go inside each individual portfolio every day [to] look for opportunities," says Watkins.
Equilla can do that for advisors in what the team calls "performance harvesting."
"We talk about AI being 'augmented intelligence,' so it's the combination of the human — the wealth advisor — with our advanced algorithm," says Watkins.
He doesn't think there will be a time when humans are completely removed from the financial advisory industry, although he does believe the algorithm could work in a pure robo-advisory setup as well.
"We want to make [advisors] better," he adds.
The BovaMetrics team validated the tool's benefits through a proof of concept with TD Ameritrade and a wealth management firm out of South Carolina on TD Ameritrade's Veo platform, which connects institutional wealth advisors with third-party, integrated solution technology companies. They not only confirmed their value proposition, but also received commitment from a potential first customer by way of a signed letter of intent.
As most founders know, signing that first customer is difficult.
With this validation, they raised a pre-seed round of funding to improve the platform and add needed capabilities — like an advisor and client communication user interface that is compatible with a large advisory institution. Additionally, they will use the funds to grow their distribution channels.
Watkins thinks big and would love to build BovaMetrics into the premier AI company when it comes to wealth tech.
He is passionate about the Charlotte entrepreneurial ecosystem and believes as more Charlotte-based startups achieve some early success, more founders and early-stage investors will contribute back into the ecosystem.
His advice for people interested in founding or joining a startup is to get connected within the entrepreneurial community.
"At the end of the day, what builds the most success is your network and the people that you know," he says. "There are lots of people out there who really want to help aspiring entrepreneurs — people who have good ideas that are willing to mentor and coach you. [And] that doesn't have to be through an [organized] program or incubator."
So get out there, and ask the questions that will help accomplish your goals. For Watkins, that builds into the whole ecosystem.
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