By Steve Garmhausen

If the name Joe Lonsdale doesn't ring a bell, maybe the name Addepar does. Lonsdale is the billionaire co-founder of the cloud-based investment management platform, which is used by 1,200 wealth management and financial firms, and the man behind many other successful tech companies. The Austin, Texas-based entrepreneur and venture capitalist is probably best known outside of wealth management as a co-founder of Palantir Technologies, a global data analytics company with huge defense and intelligence-agency contracts. But he still sees plenty of opportunity in the financial advisor marketplace.

Speaking with Barron's Advisor, Lonsdale discusses his automated-estate-planning start-up Luminary, and argues that Opto Investments, his five-year-old alts platform, deserves advisors' attention despite coming to market years after rivals like CAIS and iCapital. He shares his formula for identifying company concepts that are most likely to succeed. And he explains why he has no interest in investing directly in wealth management firms.

You've been both a business builder and investor. What do the two roles have in common? I've always been mostly an entrepreneur, but over the past 20 years, as I've gone on to help a lot of talented people who worked with me and for our companies, I've ended up becoming more of an investor. Both Palantir and Addepar were mission-driven companies that we started in response to things that were very clearly broken in our view. Entrepreneurship and venture investing both require two things in particular. One, if you want to make the biggest companies, you need the very top talent, technical and otherwise. Two, you need to be addressing something where there's a giant conceptual gap, where it's clear that the way it works now is much worse than the way it could work if you were to bring in the best technology, the best incentives, and fix whatever else is broken with the system.

Perhaps the biggest challenge for the wealth management industry is the

looming   shortage of human advisors -- as many as 100,000 in the coming years according to a recent study. To what extent do you think technology can help fill that gap? Something that Palantir and Addepar have in common is that they're both about augmenting human analysts and workers and leaders rather than replacing them. I think a lot of people in Silicon Valley have an oversimplified, naive approach to the world, where they say, we're going to build technology that's going to replace everyone and everything. That's never been the approach we've taken. The idea would be, how do you make advisors more productive? How do you help them serve their clients better? Addepar and Opto take the approach of, how do you let an advisor serve their client better and do more with the same resources? I think more advisors are still necessary and there's a great opportunity over the next decade for great advisors. But the goal of technology is to help those advisors do more with less, which hopefully is a good thing for everyone. 

Opto Investments' platform gives registered investment advisors streamlined access to alternative investments. How is Opto a better mousetrap than older rivals in the space such as CAIS or iCapital? I've gotten to know the world and alternative investing very well, because with Addepar we work with thousands of RIAs and family offices. I saw other companies that just had very bad incentives. I do a lot of nonpartisan work in government policy as well. And I get really offended when incentives and accountability are misaligned and are breaking things. In this case, the incentive for a lot of people was to stuff bad product down the throats of investors and get paid for it. You had a lot of people whose DNA was being a third-party broker, and they just get paid for moving stuff. They might take fourth-tier stuff, put lipstick on a pig, and make it look second tier, and that's good enough for them. They don't really care just as long as they're stuffing it down these channels, moving volume and getting paid. We thought we would redo the model, to realign incentives and sit on the same side of the table as the clients, with most of our upside tied to the success of these products. And by doing that we could be a trusted partner rather than be like a cheesy broker.

What else have you got cooking in the wealth management space in terms of investments or new companies? We've been working pretty hard on Luminary, [an automated trust and estate-planning solution]. That's an area where I think a lot of us were unhappy with the existing options. There's a funny situation right now where you have to know the very best lawyers, otherwise you're going to get the worst service. There's no reason RIAs shouldn't be able to do that out of the box rather than everyone knowing the same few top people.

There are a lot of ways AI and tech can help in trust and estate planning and bring best practices and make it cheaper and better for RIAs to provide to their clients. Again, we're partnering and augmenting with the RIAs. So that's a big area. And then both Opto and Addepar are building a huge amount on top of the platforms. Addepar, for example, has over 1,000 employees now and puts so much money each year into the platform. There are a lot of ways we're using AI to augment the advisor experience, to automate the client experience, to automatically handle all sorts of back-office things for the RIA. It's starting to roll out successfully. So I'm really bullish on both of those companies.

What are the biggest pain points you think AI can address within wealth management? Or another way to ask it is how do you think AI will have changed the industry five years from now? I think if it does things correctly, it will be sort of like a super high-end assistant who handles all the back-office and boring and detailed stuff and makes things much more perfect for the RIA relationship manager and the advisor. I think there's a human element that you're not really going to replace; people want someone they trust, someone they can call. They don't want to have a computer to talk to. Computers can't do everything, but they can really augment high-end advisors to basically make sure the data are a lot better, that there are not huge amounts of work or inaccuracies, which is what you're getting right now even at the very high-end places. If you invest in tons of alternatives, there's stuff that's stale, there's stuff that's marked wrong. It's just really hard. And I think AI is going to solve all of that.

So much focus is on AI today. Are there under-the-radar technologies that you think can disrupt the industry? Obviously AI is really important. But it's also the infrastructure that Addepar and Opto and others are rolling out. By virtue of having so much on these platforms and connecting everything, you're able to give people a more fully integrated view of everything out there and how it's all connected, and the ability to work across it all a lot more smoothly. There's no reason so much stuff still has to work by pen and paper and through disconnected systems. In general I think better technology is going to make people's lives much easier. That's my bias.

What do you see as the risks of all this technology that's become enmeshed in wealth management, from digitization to cloud storage and processing to AI? Well, you have to do security really well. That means investing a lot of money in it, which our companies do. Palantir supports 40 of the most important intelligence agencies in governments that are allied with the U.S. So I have a bit of a background in sensitive data and security, and we have to take it very seriously. Especially with AI these days, I think there's going to be lots of new types of fraud, with [wire transfers], with all sorts of things. AI is going to be able to pretend to be somebody trying to send money somewhere, and it's going to get a lot more clever in terms of how the fraud works.

What are your views on investing directly in wealth management firms, perhaps one of the big RIA aggregators? I think a lot of these are extraordinary businesses. Addepar happens to really own the high end of the market, so we work with a lot of those businesses. And as chairman and founder of Addepar, I got to see a lot of them up close, and I think they're doing a great job. I've been with Addepar for 15 years now, and we're still growing quickly. So I'm trying to play the role of supporting everyone versus competing with anyone. That's my hope for now.

There are so many cool business ideas out there that one can invest in. Do you have a rule of thumb for choosing which ones to back? The No. 1 thing is that it has to have a truly great technology culture. I'll give you an example. The company Cognition AI was co-founded by Scott Wu, a former Addepar employee who won three gold medals at the International Olympiad in Informatics (IOI) and is also recognized as a top math champion. He brought together 25 of his friends who are also global champions in math, physics, and computer science to build a new AI automatic programmer for all sorts of applications called Devin. If a random person told me that idea, I'd say, well that's an interesting idea, but it's really hard. If Scott Wu says he's doing that, and he has those kinds of people around him, it becomes a lot more compelling. I think people underestimate how the best talent in the world is the No. 1 thing. The other consideration for me is when we all agree something is broken and could be much better. The important questions are why is it broken and why is it possible to fix. If you can answer those questions, you have something really interesting.

Have you invested in fintech businesses, start-ups that you thought were sure things, and then they flopped? Well, whenever I'm investing in venture it's rarely a sure thing. We happen to have a pretty high hit rate. But there are definitely things that haven't worked out. Usually when something's not working out, it's because of a problem with the team and the culture, although in some cases there could be a new competitor that comes up. So not everything has worked, but when you back really talented teams going after big gaps, you're more likely to succeed. Addepar one year spent a lot of time bringing in eight math and physics champions, including Scott Wu, and six of the eight afterward went on to found what are called unicorns, or billion-dollar companies. So I'll emphasize again that when there's top talent, it often works out.

Any additional advice for entrepreneurs and technologists who are looking to innovate in the wealth management space today? The No. 1 thing is to find a real need where you're partnering with the dynamic, high-integrity wealth advisor who's smart and who wants to grow their business and serve their clients better and do things to make their job easier. I think people come up with all sorts of scams to try to sell things. Most of them don't work, because the real way to create giant, lasting platforms is to be on the side of the advisors and to actually fight for them and their clients.

Thanks, Joe.

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July 11, 2025 11:00 ET (15:00 GMT)

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