We develop application programming interfaces that bring institutional-quality portfolio optimization to registered investment advisers and financial planning platforms.
Advisory API Systems LLC is a California-registered investment adviser that develops specialized software tools for the financial advisory profession. Our mission is to make sophisticated portfolio optimization—previously available only to institutional investors—accessible to registered investment advisers serving the mass affluent market.
We deliver our technology through application programming interfaces, or APIs. An API is a standardized way for different software systems to communicate with each other. When you use an API, your software sends a structured request containing the data you want processed, and the API returns a structured response containing the results.
No programming required: For firms without technical staff, we provide a graphical web interface that offers the same functionality through an intuitive form-based experience. Both methods produce identical results and maintain complete audit trails for compliance purposes.
Why APIs matter for financial advisors: APIs allow financial planning software to access specialized calculations without building them from scratch. Your existing workflow tools—whether CRM systems, financial planning platforms, or custom applications—can send client data to our API and receive optimized portfolio recommendations in seconds. No new software to learn, no manual data entry, no disruption to your practice.
Our flagship product is the ALLOCATOR API—a portfolio optimization engine grounded in Nobel Prize-winning financial economics. Unlike traditional tools that rely on subjective questionnaires and arbitrary allocation rules, our API calculates mathematically optimal allocations based on rigorous economic theory.
The API solves the Merton portfolio problem for a household, determining the optimal allocation between the empirical global market portfolio and a risk-free asset. The optimization treats married couples as a single economic unit and incorporates comprehensive background wealth—assets the household treats as fixed and does not intend to reallocate.
Most planning tools either ignore background assets entirely or treat risk tolerance as a subjective score divorced from the optimization itself. Our API integrates both: a scientifically elicited risk aversion coefficient and the complete household balance sheet flow through a single continuous-time optimization framework. The result is an allocation that can be traced from inputs to output through documented mathematics.
Measures the coefficient of relative risk aversion using revealed preference methodology—not behavioral questionnaires subject to framing effects.
Incorporates Social Security, Medicare, pensions, real estate, human capital, and annuities into the optimization itself.
Treats couples as a single economic unit with proper handling of community property, joint ownership, and spousal benefits.
Performs iterative optimization considering federal and state taxes, capital gains, and tax-advantaged account placement.
Returns actionable ETF allocations with exact dollar amounts—not vague percentage ranges or generic advice.
All requests and responses are stored securely, providing documentation for compliance and client review.
The API optimizes portfolio allocation by considering the household's total wealth, which comprises two distinct components that together determine the optimal investment strategy.
Assets the household treats as fixed—either by choice or structural necessity—and that are not subject to reallocation. The API takes these values as given when computing optimal allocations.
Background wealth consists of, among other components, the expected present value of non-traded income and insurance streams—such as net Social Security benefits, Medicare insurance benefits net of premiums and expected out-of-pocket costs, defined benefit pension payments, annuity income, and human capital—as well as non-traded asset holdings, including owner-occupied housing equity, life insurance cash values, and retained business equity.
The portion of total wealth subject to optimization. The API determines what fraction to invest in the global market portfolio versus the risk-free asset.
This decision incorporates the household's measured risk tolerance, the covariance structure among background assets and between background assets and the market, and after-tax expected returns on all assets.
The household's coefficient of relative risk aversion is elicited via a willingness-to-pay framework grounded in revealed preference theory. Unlike conventional risk-attitude questionnaires, which are sensitive to verbal framing and to recency-driven distortions in perceived risk, the elicitation is based on a concrete monetary tradeoff: the maximum insurance premium the household would pay to avoid a specified portfolio loss.
The elicited response identifies the household's coefficient of relative risk aversion through an indifference condition implied by CRRA utility. The resulting parameter enters directly into the Merton-style portfolio optimization problem, with no intervening scoring or classification step. Optimal portfolio weights are determined analytically as functions of the estimated preference parameter.
The resulting allocation reflects two components derived from the Hamilton-Jacobi-Bellman equation: a speculative demand component driven by the risk-return tradeoff, and a hedging demand component that accounts for correlations between background assets and the market portfolio.
When background assets correlate positively with the market—as human capital often does for workers in cyclical industries—the optimal allocation to the market decreases to avoid concentration risk. Conversely, households with substantial bond-like background wealth (such as a government pension) should allocate more to the market than households without such assets, even at identical risk tolerance levels.
Complete technical documentation for programmatic integration, including authentication, endpoints, request formats, and response structures.
An intuitive graphical interface for constructing requests, submitting optimizations, and viewing formatted responses—no programming required.
The theoretical foundation underlying our methodology—academic research and mathematical frameworks grounded in Nobel Prize-winning financial economics.
The complete legal framework governing API use, including license grants, pricing, intellectual property, and liability provisions.
Advisory API Systems LLC offers a referral commission program. Participants earn ongoing commissions on California-registered investment advisers they refer who become API customers. Participation is open to anyone—whether you work in the financial services industry or simply know someone who does.
Because Advisory API Systems LLC is registered as an investment adviser only in California, referred customers must be investment advisers whose principal place of business is in California. RIA firms can participate immediately with no additional registration. Individual promoters must register as Investment Adviser Representatives through our sponsorship—no licensing exam required (exempt for solicitation-only activities), just a Form U4 filing with a $135 initial fee and $50 annual renewal. We guide you through the process.
Receive 20% of gross revenue from each customer you refer, paid quarterly for two full years following their first API usage.
Individual promoters register as Investment Adviser Representatives through our sponsorship—no Series 65 or 66 examination required.
Our streamlined agreement process is handled entirely via email—no complex paperwork or lengthy approval cycles.
Your role is making introductions—we handle product demonstrations, technical questions, and closing.
Interested in becoming a promoter? Contact us at api@ria.us to learn more about program requirements, compensation details, and how to get started.
We offer complimentary access for evaluation. Contact us to try the API with a few client scenarios and see how it can enhance your practice.
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