Latest / Masters in Business / Behavioral Finance and Leadership with Natalie Wolfsen from Orion

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Behavioral Finance and Leadership with Natalie Wolfsen from Orion · Masters in Business

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  Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
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  Speaker 2: This is Master's in Business with Baravorite Holds on Bloomberg Radio.
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  Speaker 2: This week on the podcast, I have an extra special guest.
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  Speaker 2: Natalie Wolfson is CEO of Orion. She has an absolutely
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  Speaker 2: comprehensive resume in the financial services industry, everything from AMEX
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  Speaker 2: to asset Mark to Charles Schwab. Not only has she
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  Speaker 2: been named to a number of one hundred most Influential
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  Speaker 2: Women in Finance, I don't know many people who have
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  Speaker 2: seen as much of this industry on the front lines
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  Speaker 2: as she has for as long as she has, and
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  Speaker 2: is now in a position to very much drive change
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  Speaker 2: within the industry as CEO at Orion. We know Orion,
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  Speaker 2: I know Orian as a performance reporting company. We've been
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  Speaker 2: using their their software for I don't know, almost a decade,
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  Speaker 2: and they're just a powerhouse in the space. There are
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  Speaker 2: few people who have her unique insights into the inside
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  Speaker 2: baseball of what drives change in actual wealth management. Not
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  Speaker 2: only working with finrun the SEC on the regulatory side
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  Speaker 2: and working on the technology side, but having some insight
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  Speaker 2: into behavioral finance and understanding what advisors need to help
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  Speaker 2: their clients obtain their goals. I thought this conversation was
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  Speaker 2: fascinating and I think you will also. With no further ado,
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  Speaker 2: my interview of Orian CEO Natalie Wolfson.
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  Speaker 1: Thank you so much for having me. It's great to
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  Speaker 1: be here.
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  Speaker 2: Well, it's great to have you. Full disclosure, my firm
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  Speaker 2: uses Orion as part of our tech stack in managing
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  Speaker 2: the four and a half or so billion dollars we have.
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  Speaker 2: But let's talk a little bit about you and your
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  Speaker 2: background from UC Berkeley undergrad and then an MBA from UCLA.
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  Speaker 2: What were the career plans?
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  Speaker 1: So I have to say I graduated Berkeley with a
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  Speaker 1: political science degree focusing on international relations and power politics,
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  Speaker 1: and so coming out of cal I had absolutely no
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  Speaker 1: idea what I wanted to do with my life other
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  Speaker 1: than move to New York and start my career.
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  Speaker 2: I'm always done when people in California say that, because
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  Speaker 2: every time I visit California, it's just so delightful. The
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  Speaker 2: weather is fantastic, even just the geography is fabulous. What
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  Speaker 2: was it like coming to New York?
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  Speaker 1: Oh, New York is fabulous. I mean, anyone who lives
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  Speaker 1: here knows this, but especially coming from the West Coast.
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  Speaker 1: I love San Francisco. I live in the San Francisco
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  Speaker 1: Bay area right now. But there's something just so twenty
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  Speaker 1: four to seven about New York City, and you know,
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  Speaker 1: I was interested in being part of that. And I thought,
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  Speaker 1: if you don't do it in your early twenties, why
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  Speaker 1: when would you do it? So I came to New
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  Speaker 1: York no job plans, no ideas.
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  Speaker 2: No kidding. Wow. So what was the first gig in
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  Speaker 2: New York? As a NBA graduate?
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  Speaker 1: So I wasn't an MBA yet. I was just a BA.
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  Speaker 1: And I was fortunate enough to have a marketing internship
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  Speaker 1: at Caesar's World, which is what I did to work
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  Speaker 1: myself through college.
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  Speaker 2: Caesar's World is what the casinos? Oh really, yes? And
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  Speaker 2: that was in New York City they were headquartered.
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  Speaker 1: No, the internship I did in Nevada, uh huh. And
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  Speaker 1: then because that internship was in marketing, I had some
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  Speaker 1: opportunities to do consulting work and then eventually found my
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  Speaker 1: way to American Express working in their marketing department.
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  Speaker 2: Got it. So you did get your New York experience.
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  Speaker 2: How long were you at AMEX for?
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  Speaker 1: I was at Amex for about three and a half years,
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  Speaker 1: and then I started a company in New York. It
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  Speaker 1: was the mid nineties or the late nineties. And who
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  Speaker 1: didn't start an internet company in the nineties, that's right.
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  Speaker 1: And then when that company quickly failed, I moved back
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  Speaker 1: to the Bay Area and started working at Charles Schwab.
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  Speaker 2: Ah. So you were Schwab for a while, right about
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  Speaker 2: ten years? And what was that experience like? You were
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  Speaker 2: in product development, strategy, segment management. Tell us about your
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  Speaker 2: various roles at Schwap.
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  Speaker 1: Schwab was a great place to spend ten years of
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  Speaker 1: my career. And one of the things that was so
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  Speaker 1: fantastic about it is most of the time I was there,
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  Speaker 1: it was growing really quickly, which created a lot of
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  Speaker 1: opportunities for me and other folks at Schwab to try
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  Speaker 1: different things. And so I started in marketing, active trader marketing,
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  Speaker 1: and then I fell in love with the active trader
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  Speaker 1: segment of the market. I had an idea that a
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  Speaker 1: group of us wanted to try out at Schwab, which
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  Speaker 1: was to build a mobile trading application for active traders.
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  Speaker 2: What year was that.
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  Speaker 1: That was nineteen ninety nine.
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  Speaker 2: So long before there was really any sort of smartphones.
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  Speaker 2: The BlackBerry was the closest thing, and even that there
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  Speaker 2: were no real apps or anything.
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  Speaker 1: That's right. I mean, I don't know if you remember this,
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  Speaker 1: but the mobile trading applications we built at at Schwab
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  Speaker 1: were on phones that had numbers, so if you wanted
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  Speaker 1: to enter in a you had to at one once
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  Speaker 1: be won twice. And then also pomp pilots. So we
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  Speaker 1: used both of those devices to build one of the
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  Speaker 1: first mobile trading applications ever and it was It was
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  Speaker 1: a great experience. And then I fell in love with
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  Speaker 1: technology and product development, moved from there to strategy, then
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  Speaker 1: moved from there to investment product development, worked on Schwab's
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  Speaker 1: first ETF offerings, their equity mutual funds, fixed income mutual funds,
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  Speaker 1: and then when I decided to leave Schwab, I went
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  Speaker 1: to Pershing and worked on investment platforms.
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  Speaker 2: Another very substantial custodian. Yes, what was your experience like
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  Speaker 2: at Pershing after Schwab, which is just such a unique
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  Speaker 2: animal in the investment world.
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  Speaker 1: You know, Pershing's is a different custodian. They have different emphasis,
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  Speaker 1: they serve a different clients.
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  Speaker 2: Site, little bit higher end.
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  Speaker 1: No, they tend to be or at least at the time,
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  Speaker 1: we're very much focused on clearing for the broker dealers
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  Speaker 1: versus Schwab that was more focused on the rias Pershing
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  Speaker 1: does both than When I was brought into, Pershing was
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  Speaker 1: hired to help the ra part of the business and
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  Speaker 1: the broker dealer part of the business. And they wanted
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  Speaker 1: to ensure that they had the investment platforms they needed
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  Speaker 1: to compete globally. So built in a retirement offering, an
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  Speaker 1: insurance offering, expanded their mutual fund offering, expanded their etf offering.
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  Speaker 1: It was great, great job.
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  Speaker 2: To choice is good. So Schwab to Pershing and then
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  Speaker 2: you end up at asset Mark for just about a
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  Speaker 2: decade and you had a lot of roles there, chief
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  Speaker 2: commercialization officer, chief solution officer. Tell us about your professional
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  Speaker 2: experience at asset Mark.
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  Speaker 1: Yeah. So at asset Mark when I was brought in,
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  Speaker 1: I was brought in to help transform the platform and
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  Speaker 1: grow it. And the reason the first role was chief
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  Speaker 1: Commercialization Officer was because my emphasis was bringing together all
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  Speaker 1: of the ps of marketing, promotion, place, price, and people
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  Speaker 1: segments into a unified offering. And then once that work
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  Speaker 1: was done and we had done that, it was time
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  Speaker 1: to expand our markets, expander segments, build a growth strategy,
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  Speaker 1: and so I did that as chief solutions officer, and
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  Speaker 1: then when my predecessor left Asset Mark, I was asked
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  Speaker 1: to join a CEO and was CEO there for about
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  Speaker 1: two and a half years.
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  Speaker 2: How was that experience and how different was being the
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  Speaker 2: top of the org chart from being a worker bee
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  Speaker 2: a little further down?
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  Speaker 1: You know, I love being a CEO. I don't know
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  Speaker 1: about you, but I love it. I love being able
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  Speaker 1: to lead the team. At Asset Mark I was a
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  Speaker 1: public company CEO. I enjoyed working with investors. I enjoyed
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  Speaker 1: that aspect of the role. And one thing about being
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  Speaker 1: a CEO versus you know, being a chief solutions officer,
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  Speaker 1: chief commercialization officer, you spend a lot of your time
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  Speaker 1: outside the company as well as inside the company. So
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  Speaker 1: we still spend a lot of time with your clients,
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  Speaker 1: which you do at every level of the organization. I
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  Speaker 1: believe you also spend time with investors, with other aspects
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  Speaker 1: of the industry, a little bit more time on strategy
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  Speaker 1: and innovation, and that's an exciting part of the role,
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  Speaker 1: representing your firm and its success to investors, to potential partners.
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  Speaker 2: And then from Asset Mark in October twenty twenty three,
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  Speaker 2: you're recruited to become CEO at O'rian tell us a
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  Speaker 2: little bit about what that process was, and let's delve
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  Speaker 2: a little bit into what Orian actually does.
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  Speaker 1: Yeah, so, I have been a long time admirer of Orian,
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  Speaker 1: just as a trendsetter and an innovator in the industry,
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  Speaker 1: both in technology and wealth services. When Eric announced that
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  Speaker 1: he was going to be departing, Eric being the previous
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  Speaker 1: CEO and founder, Eric Clark. When he announced in I
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  Speaker 1: guess it would have been last spring that he was
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  Speaker 1: leaving the firm, the executive chairman of the board, Charles Goldman,
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  Speaker 1: reached out to me asked if I would be interested.
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  Speaker 1: He and I had a few conversations before I decided
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  Speaker 1: that it was something I wanted to do, and I
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  Speaker 1: really believe that Orian has the potential to make a
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  Speaker 1: huge impact on the industry. You know, met the board
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  Speaker 1: really liked to what they had to say about plans
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  Speaker 1: for Orian, spent some time with Eric. Was very important
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  Speaker 1: to me that Eric was a big part of picking
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  Speaker 1: the future CEO, and it's been fantastic since then.
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  Speaker 2: So I know Orian for many years because from the
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  Speaker 2: RIA perspective, from a registered investment advisor perspective, clients want
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  Speaker 2: to know how their portfolios are doing, what their performances,
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  Speaker 2: both in absolute terms and relative to benchmarks, and you
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  Speaker 2: want an outside third party doing it as opposed to
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  Speaker 2: someone just telling the client yeah, yeah, you're doing great.
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  Speaker 2: You really want to see the numbers, and you want
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  Speaker 2: to know that a trusted objective third party is running that,
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  Speaker 2: not the person who you're trusting to manage the money.
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  Speaker 2: That's the core role I think of when I think
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  Speaker 2: of Orian, But there are a lot of other things
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  Speaker 2: the firm does tell us about the various roles and
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  Speaker 2: responsibilities Orian has within the RIA industry.
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  Speaker 1: You're right that the heritage of Orian is por ffolio counting,
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  Speaker 1: trading and reporting. That's kind of at the heart of
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  Speaker 1: what O, where Ryan came from, how it was built.
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  Speaker 1: Over the course of the last five years, though, Orian
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  Speaker 1: has added to that core capability a depth of services
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  Speaker 1: and wealth management, everything from portfolio customization through and indexing
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  Speaker 1: all the way through fully outsourced portfolios, and so Orian
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  Speaker 1: now has a wealth business and a tech business that
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  Speaker 1: work together to help financial advisors save time and effort
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  Speaker 1: and spend more time with their clients and then on
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  Speaker 1: the technology part of the business. Around what we've built
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  Speaker 1: around portfolio counting, trading and reporting is the entire advisor
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  Speaker 1: interaction with their investor.
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  Speaker 2: Meaning how they interface with both Orian and the client themselves.
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  Speaker 1: That's right.
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  Speaker 2: Tell us a little bit about that.
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  Speaker 1: So in the additive services that Orian offers now our
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  Speaker 1: financial planning, compliance, CRM services, risk and analysis, portfolio construction,
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  Speaker 1: and advisor portal, an investor portal, and clients can choose
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  Speaker 1: our clients can choose to use all of it in
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  Speaker 1: an integrated way, or they can choose to use a
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  Speaker 1: piece of what Orion offers and integrate that into their
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  Speaker 1: client experience.
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  Speaker 2: So CRM is customer relationship management for people we may
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  Speaker 2: not know the acronym. Tell us about the portal, that
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  Speaker 2: is the client's interface with their own assets and portfolios,
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  Speaker 2: regardless of what platform they're on. Tell us what comes
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  Speaker 2: through the portal to the client.
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  Speaker 1: Yeah, So for the investor client, what comes through the
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  Speaker 1: portal is their holdings, their connection between the portfolio and
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  Speaker 1: the financial plan, a variety of comparisons that advisors can
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  Speaker 1: walk through with the investor about how their portfolio, if
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  Speaker 1: the advisor's proposing a new portfolio, how the proposed portfolio
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  Speaker 1: compares to the portfolio the investors in. Now we have
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  Speaker 1: behavioral finance tools so that the investor can understand their
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  Speaker 1: relationship with wealth and their risk tolerance, their needs at
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  Speaker 1: a greater level of detail, and they can compare that
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  Speaker 1: to that of their spouse, and then also compare that
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  Speaker 1: to the portfolio that the advisor is recommending. The advisor's portal,
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  Speaker 1: in contrast, has portfolio construction tools, sophisticated reporting tools, workflow management,
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  Speaker 1: the dashboards that help the advisor understand the strength of
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  Speaker 1: their business and the strength of their relationships with their clients.
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  Speaker 1: And again, you can choose to just use Ryan for
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  Speaker 1: reporting that's great, or you can choose to use Oryan
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  Speaker 1: for more depending on the size of the advisor and
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  Speaker 1: the degree with which they want to control their clients experience.
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  Speaker 2: Huh, that's really intriguing. So you've been at the firm
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  Speaker 2: now for barely eight months. What changes have you begun
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  Speaker 2: implementing or have you just kind of started out with
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  Speaker 2: a little bit of a listening tour and picking up
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  Speaker 2: some surveillance about what's actually been going on before you
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  Speaker 2: join the company.
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  Speaker 1: In the first ninety days, I absolutely did a listening tour.
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  Speaker 1: I talked to as many financial advisor clients as I
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  Speaker 1: possibly could. In fact, in my very first day, I
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  Speaker 1: talked to our top twenty clients, reached out to them,
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  Speaker 1: wanted to let them know that I was interested in
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  Speaker 1: hearing from them. And then for that first ninety days,
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  Speaker 1: I made sure that I talked to as many clients
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  Speaker 1: as I could. I also want an internal listening tour.
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  Speaker 1: Wanted to get to know the team. You know, I'd
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  Speaker 1: been at my previous firm for ten years and so
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  Speaker 1: everyone knew me. I knew everyone in the firm. I
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  Speaker 1: knewho top performers were, how we were organized. I had
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  Speaker 1: to learned that about Orian. Get to know the team,
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  Speaker 1: Understand how we were organized, understand what they enjoyed about
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  Speaker 1: working with Oryan, if there are any opportunities. And so
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  Speaker 1: after that first ninety days, I started looking at things
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  Speaker 1: that we could prioritize a little differently. Eric Clark, the
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  Speaker 1: founder of Oriyan, you know, he's an incredible CEO. At
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  Speaker 1: the same time, you know, I personally felt that we
• 13:54
  Speaker 1: need to emphasize put a little bit more emphasis on
• 13:58
  Speaker 1: building a client service model, making sure that we were
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  Speaker 1: developing for scale, putting in place services that are highly
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  Speaker 1: flexible and integratable, and so pivoted just slightly to make
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  Speaker 1: sure that we were focusing on the information and the
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  Speaker 1: data and the accessibility to it, so that we could
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  Speaker 1: get to a place where whether clients wanted to use
• 14:19
  Speaker 1: us for micro services or want to use us for
• 14:20
  Speaker 1: holistic technology, we can integrate that into their client experience
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  Speaker 1: in a way that saves advisor's time.
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  Speaker 2: Let's talk a little bit about the transition that you undertook.
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  Speaker 2: You followed Eric Clark, who was not only a long
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  Speaker 2: standing CEO, he was the company founder. How challenging is
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  Speaker 2: it to take over from a founder?
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  Speaker 1: You know, the first thing I'll say about that is
• 14:44
  Speaker 1: it's a big change for the team and the clients.
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  Speaker 1: You know, anytime a founder decides to move on to
• 14:51
  Speaker 1: their next chapter, it just creates uncertainty, and both the
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  Speaker 1: team as well as clients just want to make sure
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  Speaker 1: that you're committed to the same purpose, that you're committed
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  Speaker 1: to the same level of service that they've come to
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  Speaker 1: expect from the predecessor. And the great news about Eric
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  Speaker 1: and me is because Eric was a part of the
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  Speaker 1: selection process for me. We knew going in that we
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  Speaker 1: were highly aligned on what we think about the market,
• 15:17
  Speaker 1: how we want to serve our clients, where we think
• 15:20
  Speaker 1: the future opportunities are in technology. And so while I've
• 15:23
  Speaker 1: absolutely adjusted the strategy slightly to focus more on integrations,
• 15:28
  Speaker 1: the heart of Orion remains the same.
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  Speaker 2: So Eric, Eric Clark has been called the legend in
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  Speaker 2: the RIA community. Tell us a little bit about what
• 15:38
  Speaker 2: makes him so legendary and a little bit about your
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  Speaker 2: relationship with him.
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  Speaker 1: Yeah, so there's no question that Eric is a legend
• 15:46
  Speaker 1: in the RAA community. The reason that he is a
• 15:49
  Speaker 1: legend is because his technology helped power the growth of
• 15:53
  Speaker 1: the industry. He was a visionary and that he saw
• 15:58
  Speaker 1: how much time advisors were on portfolio construction, performance reporting, reconciliation,
• 16:05
  Speaker 1: and how much the ria's interaction with their client could
• 16:08
  Speaker 1: be improved if that work was taken off the advisor's
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  Speaker 1: plate and if the advisor had the benefit of those
• 16:14
  Speaker 1: insights to deliver back to their clients. And he built
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  Speaker 1: it in a highly innovative way. You know, Eric was
• 16:20
  Speaker 1: very focused on ensuring that right after he built a solution,
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  Speaker 1: he started improving it as a result. Right now, Oryan
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  Speaker 1: serves about eighty percent of the top rias in the US,
• 16:32
  Speaker 1: and we have four point three trillion in assets that
• 16:35
  Speaker 1: we service. He also is a huge voice of the
• 16:39
  Speaker 1: importance of independent advice, and I am too. So we
• 16:44
  Speaker 1: both believe in independent advice. We both believe in powering
• 16:47
  Speaker 1: rias and the enterprises that serve them, and we both
• 16:51
  Speaker 1: believe that the more time we can give the advisor back,
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  Speaker 1: the better off the advisor the investor are. I talked
• 16:58
  Speaker 1: to Eric a couple times week. He's a great thought partner.
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  Speaker 1: He's a great person to bounce ideas off of. He
• 17:05
  Speaker 1: reaches out to me sometimes when he has questions. He's
• 17:08
  Speaker 1: still on our board and he's a really great board member,
• 17:12
  Speaker 1: so the relationship is strong and getting stronger every day
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  Speaker 1: as we continue to work together. He's a great advisor
• 17:17
  Speaker 1: and partner.
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  Speaker 2: So I just have to share a quick Orion story
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  Speaker 2: with you, and again, Riddhelts Wealth Management has been using
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  Speaker 2: Orion pretty much from day one, but fifteen years or
• 17:29
  Speaker 2: so ago. I just have this vivid recollection of what
• 17:33
  Speaker 2: we had to do every quarter when we weren't on
• 17:36
  Speaker 2: a platform like yours. First we had to get approval
• 17:39
  Speaker 2: for what the performance numbers were for the quarter. Then
• 17:42
  Speaker 2: we would print out documents, which were different for every client,
• 17:48
  Speaker 2: because not every portfolio is identical. Not everybody was in
• 17:51
  Speaker 2: the same set of funds or same set of investments,
• 17:55
  Speaker 2: And so you would print out the cover letter, you
• 17:57
  Speaker 2: would print out the performance letter, and this was quarterly,
• 18:01
  Speaker 2: and everything would get stuck in a Manila envelope and
• 18:04
  Speaker 2: get sent out. And you mentioned behavioral finance earlier. The
• 18:09
  Speaker 2: fascinating takeaway was it turned that quarterly number into a
• 18:16
  Speaker 2: big deal, both emotionally and intellectually. And you know, sometimes
• 18:22
  Speaker 2: the quarter ends strong, sometimes it ends weak, and in
• 18:25
  Speaker 2: the scheme of things, three months is not all that important.
• 18:29
  Speaker 2: And the surprising advantage of moving to a computerized always
• 18:35
  Speaker 2: on system like Orian was that we gave clients, you know,
• 18:39
  Speaker 2: the joke is, you could check your performance twenty four
• 18:43
  Speaker 2: to seven, but please don't check it occasionally, but don't
• 18:47
  Speaker 2: obsess about it. And once you move from that quarterly,
• 18:51
  Speaker 2: you know it was the culmination of three months, and
• 18:54
  Speaker 2: everybody was focused on that number. Suddenly the little squiggles
• 18:58
  Speaker 2: on the chart didn't make that all that big. Difference.
• 19:01
  Speaker 2: People went from freaking out over a quarterly number two, Hey,
• 19:06
  Speaker 2: I have access to this whenever I want. Surprisingly, it
• 19:10
  Speaker 2: becomes less meaningful on a day to day basis when
• 19:14
  Speaker 2: it isn't this big quarterly event.
• 19:17
  Speaker 1: It's true, It's very, very true. And the other interesting
• 19:20
  Speaker 1: thing that's happened more recently is the transition to more
• 19:25
  Speaker 1: personalization in financial services. I mean, we have personalization in
• 19:29
  Speaker 1: every aspect of our lives right now. You can create
• 19:32
  Speaker 1: your own clothing, you can create your own streaming, you
• 19:34
  Speaker 1: can create your own music. Like there's personalization in all
• 19:38
  Speaker 1: aspects of our life, and financial services is catching up,
• 19:41
  Speaker 1: and platforms like Oryan can bring that to the advisor.
• 19:44
  Speaker 1: We can innovate on their behalf. Whether it's through custom
• 19:47
  Speaker 1: portfolios and custom indexing, or it's through expressing values in
• 19:52
  Speaker 1: your portfolios, or it's in how you customize the investor
• 19:56
  Speaker 1: experience you want to create on your white labeled investor portal.
• 20:01
  Speaker 1: Drawing attention to behavioral finance and how you emotionally attached
• 20:06
  Speaker 1: to your wealth and your financial plan versus benchmark based
• 20:09
  Speaker 1: performance is a huge change in the industry and something
• 20:13
  Speaker 1: that orian's a big part of We're pushing the limits
• 20:15
  Speaker 1: of behavioral finance. We're pushing the industry in a direction
• 20:19
  Speaker 1: where it's not just about fulfilling your goals as it
• 20:22
  Speaker 1: relates to wealth, but finding true happiness and giving advisors
• 20:25
  Speaker 1: the tools that they need to have those conversations with
• 20:27
  Speaker 1: their client.
• 20:28
  Speaker 2: So, once you run people through this three or four
• 20:31
  Speaker 2: minute questionnaire the BFI twenty, what spits out the other end.
• 20:36
  Speaker 1: What spits out the other end is your behavioral finance profile.
• 20:40
  Speaker 1: You could be an optimist, maybe your conservative, maybe you're
• 20:45
  Speaker 1: curious about investing, And then you can contrast what makes
• 20:50
  Speaker 1: you that profile relative to your spouse or relative to
• 20:53
  Speaker 1: your children, so that if it's you and your spouse
• 20:57
  Speaker 1: who are making decisions about money, you understand why you
• 21:00
  Speaker 1: might be in conflict. And then we also give tools
• 21:03
  Speaker 1: to reconcile that conflict, to understand it and to reconcile
• 21:07
  Speaker 1: the conflict. And then we also use AI so that
• 21:10
  Speaker 1: the advisor can send communications first draft communications to clients
• 21:15
  Speaker 1: in different market environments and important parts of their financial
• 21:19
  Speaker 1: planning conversation with their client that understand their profile and
• 21:25
  Speaker 1: include optimal language related to their profile and their portfolio.
• 21:30
  Speaker 1: In those first draft communications.
• 21:32
  Speaker 2: That optimal language is in order to not cause people
• 21:36
  Speaker 2: to misinterpret things. Or we found calling portfolios conservative or
• 21:40
  Speaker 2: aggressive generated a negative response, and so we came up
• 21:44
  Speaker 2: with a different nomenclature for all of our different portfolios.
• 21:49
  Speaker 2: And I'm kind of a space geek, so I love
• 21:51
  Speaker 2: the concept when I first heard it is based on
• 21:53
  Speaker 2: different NASA missions depending on how far out they go,
• 21:57
  Speaker 2: and the Solo system, so left the Solar system that's
• 22:01
  Speaker 2: the most aggressive portfolio. Pioneer a little closer, a little less,
• 22:07
  Speaker 2: a little less aggressive manner the same. But you would
• 22:10
  Speaker 2: be surprised that merely saying to somebody, oh, we have
• 22:14
  Speaker 2: you in a conservative portfolio based on your risk tolerance
• 22:17
  Speaker 2: and goals. I'm not a conservative person. I understand that
• 22:21
  Speaker 2: it's just a loaded and the same thing with aggressive.
• 22:25
  Speaker 2: Hey I'm not an aggressive person. I'm not a big
• 22:27
  Speaker 2: risk taker. No, but you have forty years and you
• 22:30
  Speaker 2: have no other obligation like that conversation. It's so funny
• 22:33
  Speaker 2: how language can be misinterpreted, and behavioral finance really addresses that.
• 22:39
  Speaker 1: It's so true. I mean, words matter, and that's one
• 22:42
  Speaker 1: of the reasons that we don't use aggressive. We use
• 22:44
  Speaker 1: financial optimist because It's about the optimism and the point
• 22:48
  Speaker 1: of view and your willingness to endure draw downs and
• 22:51
  Speaker 1: market change. It's one of the reasons that bucketing is
• 22:53
  Speaker 1: so powerful in financial services. Investors can understand, oh, this
• 22:58
  Speaker 1: is the goals I have for my money for the
• 23:00
  Speaker 1: next one to two years, the goals I have for
• 23:03
  Speaker 1: three to seven, the goals I have for seven plus.
• 23:05
  Speaker 1: And you can have conversations with them about how common
• 23:09
  Speaker 1: drawdowns are and what they're willing to endure and how
• 23:12
  Speaker 1: likely it is that seven years from now based on
• 23:15
  Speaker 1: historical performance. You know they're aggressive. And I hate to
• 23:18
  Speaker 1: use the word aggressive, but there I should say. Equity
• 23:21
  Speaker 1: waiting pays off and it's really exciting work we're doing
• 23:25
  Speaker 1: at Orian, and I think it benefits advisors and helps
• 23:28
  Speaker 1: them bring these tools to their clients at scale.
• 23:31
  Speaker 2: So I'm glad you brought up the word scale. You
• 23:34
  Speaker 2: guys are well over four trillion dollars, well over six
• 23:37
  Speaker 2: million accounts. There has to be massive challenges with scaling
• 23:42
  Speaker 2: that up even larger as you continue to grow. What
• 23:47
  Speaker 2: are the challenges with this, especially as you get deeper
• 23:50
  Speaker 2: into customization where no two arias, no two clients really
• 23:55
  Speaker 2: look exactly alike.
• 23:57
  Speaker 1: You know, it's definitely a challenge, but one that Orion's
• 24:00
  Speaker 1: spends a lot of time and effort on so that
• 24:02
  Speaker 1: our clients, enterprises and oraas don't have to do that
• 24:05
  Speaker 1: on their own. The first is you need to make
• 24:07
  Speaker 1: sure that all the data that the advisors and the
• 24:10
  Speaker 1: enterprises need are accessible twenty four to seven. And to
• 24:14
  Speaker 1: do that we have to invest in data streaming capabilities.
• 24:17
  Speaker 1: And then also we partner with Redshift and Snowflake to
• 24:20
  Speaker 1: provide data access data access capabilities. We invest a lot
• 24:27
  Speaker 1: to make sure that as our clients grow and their
• 24:29
  Speaker 1: needs for information grows, that are tools, whether they be
• 24:32
  Speaker 1: reporting or trading or performance and orientation, meet their needs
• 24:38
  Speaker 1: at different sizes. You know this the industry's consolidating, the
• 24:42
  Speaker 1: industry scaling up everywhere, and Ryan, we need to be
• 24:45
  Speaker 1: part of that.
• 24:46
  Speaker 2: I have some consolidation questions for you a little later.
• 24:49
  Speaker 2: I want to stay with the concept of scale. How
• 24:53
  Speaker 2: do you accommodate everybody who wants this personalizations? Do you
• 24:57
  Speaker 2: get requests that are like, hey, that's just a little
• 25:00
  Speaker 2: bit of bridge too far. If we offer that degree
• 25:04
  Speaker 2: of customization, well then it's going to put other things
• 25:08
  Speaker 2: at risk. Where's the balance between some uniformity and the
• 25:12
  Speaker 2: ability to adapt to every customer desire.
• 25:17
  Speaker 1: You know, it's interesting in my view, you have to
• 25:20
  Speaker 1: build your technology or investment solutions with the goal to
• 25:26
  Speaker 1: be highly customized and highly personalized. If you don't do that,
• 25:30
  Speaker 1: then the foundation is shaky. And so we want to
• 25:34
  Speaker 1: make sure that our technology looks and feels like advisors
• 25:37
  Speaker 1: need it to to be consistent with what they offer,
• 25:40
  Speaker 1: either their advisors or their clients. We want to be
• 25:43
  Speaker 1: sure that our communications tools leverage large language models so
• 25:47
  Speaker 1: that can be highly personalized. Again, as a first draft
• 25:50
  Speaker 1: within advisor teams or between the advisor and the investor,
• 25:54
  Speaker 1: we need to make sure that the channels we're using
• 25:56
  Speaker 1: are highly custom You know, I was reading materials when
• 25:59
  Speaker 1: I joined to Ryan that ninety eight percent of text
• 26:02
  Speaker 1: messages are open and responded to in ninety seconds, versus
• 26:07
  Speaker 1: you know, less than thirty percent of emails that are
• 26:10
  Speaker 1: responded to within a week, if they're responded to at all.
• 26:13
  Speaker 1: And so you also have to customize your channels to
• 26:15
  Speaker 1: make sure that you're benefiting your advisor. You need to
• 26:18
  Speaker 1: customize look and feel, and if your systems are built
• 26:21
  Speaker 1: with that in mind, then you can be highly highly flexible.
• 26:24
  Speaker 2: You mentioned custom indexing before. We found custom indexing to
• 26:29
  Speaker 2: be one of the fastest growing parts of our business,
• 26:32
  Speaker 2: especially for people who and this was a little bit
• 26:35
  Speaker 2: of a surprise versus how we anticipated this going. People
• 26:40
  Speaker 2: who are deeply concerned about task loss harvesting. Either they're
• 26:44
  Speaker 2: selling a business, they have low cost stock or founder stock,
• 26:48
  Speaker 2: or some other capital gain. They're trying to manage through
• 26:51
  Speaker 2: highly concentrated position that they want to de risk but
• 26:55
  Speaker 2: not create a giant tax obligation. How are you finding
• 26:59
  Speaker 2: the growth of customer and indexing going.
• 27:01
  Speaker 1: Custom index is growing really fast. It's one of the
• 27:04
  Speaker 1: fastest growing part of our platform. We have over four
• 27:07
  Speaker 1: billion in portfolio customization today and when you look at
• 27:12
  Speaker 1: the growth rate of the adoption of it, it grows
• 27:15
  Speaker 1: each quarter that flows into those products grow in the
• 27:19
  Speaker 1: high double digits, and so we're very, very excited about
• 27:23
  Speaker 1: the growth of the platform. You mentioned the most important
• 27:27
  Speaker 1: use case, which is tax management, also tax transition if
• 27:31
  Speaker 1: you're moving from one provider to another and you want
• 27:34
  Speaker 1: to manage your tax in the transition. And then the
• 27:36
  Speaker 1: last is you know, different investors do have different values
• 27:40
  Speaker 1: and they want to make sure that their portfolios reflect that.
• 27:43
  Speaker 1: Some it's religious, you know, they want it to reflect
• 27:46
  Speaker 1: Catholic values or Islamic values. Other times they're very very
• 27:50
  Speaker 1: focused on governance, and that degree of customization for some
• 27:55
  Speaker 1: is incredibly important. Now, obviously the regulators are concerned about
• 27:57
  Speaker 1: that too, and so we need to make sure that
• 27:59
  Speaker 1: our rules are compliant, help our advisors comply, and so we.
• 28:04
  Speaker 2: Do that two questions. So first custom in next we
• 28:08
  Speaker 2: use as canvas. Speaking with them, they tell a couple
• 28:12
  Speaker 2: of really interesting stories. First, on the value side, the
• 28:16
  Speaker 2: single biggest requests they get no tobacco, no guns, which
• 28:20
  Speaker 2: kind of surprised me, but I guess it kind of
• 28:22
  Speaker 2: makes sense. It's a simple adjustment, and if you don't
• 28:25
  Speaker 2: think you want your capital going to those companies, it's
• 28:30
  Speaker 2: just a simple boxer check and that's it. It comes
• 28:33
  Speaker 2: out of the portfolio. They also tell a story about
• 28:36
  Speaker 2: the New York Catholic Bishop's investment and the ability to
• 28:41
  Speaker 2: say noah drugs related to abortion or anything that violates
• 28:48
  Speaker 2: their sense of their rules, their religious beliefs, and it's
• 28:52
  Speaker 2: easy to make those adjustments. What are you seeing in
• 28:56
  Speaker 2: terms of other use cases? So clearly, tax us harvecing
• 29:00
  Speaker 2: is a big one. The personalization on the value side
• 29:04
  Speaker 2: is the other issue. When you talk about governance, how
• 29:08
  Speaker 2: are people adjusting in that space?
• 29:10
  Speaker 1: You know, it's interesting there's all sorts of research that
• 29:15
  Speaker 1: boards that are diverse or boards that have certain controls
• 29:19
  Speaker 1: and processes in place are highly aligned to future success
• 29:23
  Speaker 1: of the companies. And so when people implement the g
• 29:26
  Speaker 1: of ESG, what they're really implementing.
• 29:29
  Speaker 2: Is that how good government How.
• 29:31
  Speaker 1: Effective is that board in delivering returns to the shareholder.
• 29:37
  Speaker 1: So that's a common use case. You know. The other
• 29:40
  Speaker 1: thing I would just mention is that transition where you're
• 29:43
  Speaker 1: moving from one advisor to another, or are you moving
• 29:46
  Speaker 1: from one portfolio to another, or in your examples, trying
• 29:48
  Speaker 1: to transition out of a concentrated position is extremely important
• 29:52
  Speaker 1: and when managed correctly, can deliver outsized alpha to the investor.
• 29:58
  Speaker 1: And it it's taxed alpha, tax alpha, and it puts
• 30:01
  Speaker 1: the advisor, the advisor in a different position with our
• 30:03
  Speaker 1: client because tax is confusing and complex at something that
• 30:08
  Speaker 1: most investors avoided all costs, and the advisors able to
• 30:13
  Speaker 1: talk to the investor about tracking error how close, how
• 30:16
  Speaker 1: closely you want to track a certain index or how
• 30:19
  Speaker 1: closely you want to manage that concentrated position relative to
• 30:23
  Speaker 1: the destination portfolio, and it raises the bar on the
• 30:27
  Speaker 1: conversation between the advisor and the investor.
• 30:29
  Speaker 2: You know, our experience has been it's not only complicated,
• 30:33
  Speaker 2: but tax preparation relative to somebody with a sophisticated set
• 30:38
  Speaker 2: of portfolio and investment needs is a very specialized niche.
• 30:43
  Speaker 2: When we launched a decade ago, I never thought we
• 30:46
  Speaker 2: would open a tax practice, but there were so many
• 30:50
  Speaker 2: requests for it, and anytime we would review a previous
• 30:53
  Speaker 2: tax file and we always found almost always found mistakes,
• 30:58
  Speaker 2: overlooked opportunities. Hey why did you pay thirty percent capital
• 31:01
  Speaker 2: gains here? You held this for five years? Why didn't
• 31:04
  Speaker 2: you check this? But hey, this was a qualified investment.
• 31:07
  Speaker 2: This should have been in a different category. And so
• 31:10
  Speaker 2: we had to build that out because the demand is there,
• 31:14
  Speaker 2: and very often the average accountant just doesn't have the
• 31:17
  Speaker 2: experience with capital markets. They're leaving a lot of tax
• 31:22
  Speaker 2: alfa on the table.
• 31:23
  Speaker 1: It's true, it's true. And the advisor that can deliver
• 31:26
  Speaker 1: those types of opportunities to the investor has a very
• 31:30
  Speaker 1: loyal client forever and custom indexing and portfolio customization, whether
• 31:35
  Speaker 1: it's related to values or hedging or other aspects, is
• 31:38
  Speaker 1: another way for the advisor to deliver services to the investor.
• 31:42
  Speaker 1: They have no hope of doing themselves, or no hope
• 31:44
  Speaker 1: of doing in a self directed way.
• 31:46
  Speaker 2: You know, it's amazing. You generate a good return for people,
• 31:49
  Speaker 2: and it's abstract and theoretical, well, eleven point two versus
• 31:53
  Speaker 2: ten point eight. You know, you can extrapolate it. You can,
• 31:56
  Speaker 2: but hey, here's one hundred thousand dollars in tax savings.
• 32:00
  Speaker 2: Suddenly it's real money. And even though it's less than
• 32:04
  Speaker 2: the performance of the portfolio, it doesn't matter. It's so
• 32:08
  Speaker 2: visceral and real people have such a funny response to taxes.
• 32:14
  Speaker 2: I guess we've all drank the kool aid that no
• 32:16
  Speaker 2: one wants to pay more taxes than they have to
• 32:19
  Speaker 2: save someone some money on taxes their client for life.
• 32:23
  Speaker 1: That's right, And they see it on the tax forms.
• 32:25
  Speaker 1: They can actually see it in real time that year
• 32:29
  Speaker 1: on those.
• 32:29
  Speaker 2: Tax forms, that quarter so makes a big difference.
• 32:32
  Speaker 1: It does, it does.
• 32:33
  Speaker 2: So let's talk a little bit about what's going on
• 32:36
  Speaker 2: in the industry. Now, there's a lot of flux. There's
• 32:40
  Speaker 2: a lot of challenges. What are the biggest events you
• 32:45
  Speaker 2: see coming up? What are the biggest adjustments people in
• 32:48
  Speaker 2: our industry should be thinking about.
• 32:50
  Speaker 1: I mean the first is definitely regulation. This is an
• 32:54
  Speaker 1: incredibly active and innovative as it relates to regulation. See
• 33:00
  Speaker 1: right now, the number of rules that are underway exceeds
• 33:05
  Speaker 1: recent memory and the reach. The reach of those rules
• 33:08
  Speaker 1: are extending the reach of the SEC. So you have
• 33:12
  Speaker 1: the cybersecurity rule, which is incredibly important. There's no one
• 33:15
  Speaker 1: in the industry that questions the need for this industry
• 33:17
  Speaker 1: to be very secure.
• 33:19
  Speaker 2: That's the nightmare scenario.
• 33:21
  Speaker 1: That's right, and we all need to be focused on
• 33:23
  Speaker 1: protecting client data and privacy. At Orian, we spend a
• 33:27
  Speaker 1: lot of time wornest compliant. We also are SOK two
• 33:30
  Speaker 1: Type two compliant. We have a large team that focuses
• 33:34
  Speaker 1: on cybersecurity and privacy to make sure that we're not
• 33:38
  Speaker 1: just understanding the rules that the SEC has in place,
• 33:41
  Speaker 1: but also what they're interested in and where they're going
• 33:44
  Speaker 1: with the rules.
• 33:45
  Speaker 2: Let me let me interrupt you sex. So the biggest
• 33:47
  Speaker 2: set of changes we've seen recently, have over the past
• 33:51
  Speaker 2: six months, have been the marketing rules what you can
• 33:54
  Speaker 2: and can say, even to existing clients, which every now
• 33:57
  Speaker 2: and then I'm kind of perplexed about, Hey, here's how
• 34:01
  Speaker 2: these indexes have done over the past couple of years,
• 34:05
  Speaker 2: and if we just take the past one hundred years average,
• 34:08
  Speaker 2: here's what we can Monte Carlo simulation, here's what we
• 34:11
  Speaker 2: can expect. Like that has kind of changed. You have
• 34:14
  Speaker 2: to be very wary of not showing hypothetical past performance.
• 34:19
  Speaker 2: I find some of it to be a little confusing,
• 34:22
  Speaker 2: Like I understand the rules, Hey, you can't make stuff up.
• 34:26
  Speaker 2: You can't say had you put money with us over
• 34:29
  Speaker 2: this period, you would have done this perfectly credible. It
• 34:33
  Speaker 2: seems like around the edges it just goes further than
• 34:37
  Speaker 2: you think is warranted. So that's been a set of rules.
• 34:40
  Speaker 2: What are the rule changes are you looking at?
• 34:42
  Speaker 1: Well, I mean you mentioned the marketing rule, and I
• 34:45
  Speaker 1: think that that's changed the way performance reporting is calculated
• 34:49
  Speaker 1: and distributed across the industry, and that clearly impacts around
• 34:51
  Speaker 1: doubt because performance reporting is a big part of what
• 34:55
  Speaker 1: we do. In addition to cybersecurity, there's also the third
• 34:58
  Speaker 1: party rule, which is rias and investment advisors that leverage
• 35:04
  Speaker 1: third party providers to provide services to their clients. The
• 35:08
  Speaker 1: proposal is they'll be held accountable to do deep diligence
• 35:11
  Speaker 1: on those third parties to make sure that their security,
• 35:15
  Speaker 1: their effectiveness is what the investor expects. And for Oryan,
• 35:20
  Speaker 1: we want to make sure that we're there to help
• 35:22
  Speaker 1: our advisors comply. We provide the advisors with the research
• 35:26
  Speaker 1: they need on us as a third party, and for
• 35:29
  Speaker 1: the third parties we use at Oriyan. We deliver that
• 35:31
  Speaker 1: to the advisors so that they can comply. And this
• 35:34
  Speaker 1: third party rule and the cybersecurity rule, both of those
• 35:37
  Speaker 1: are aimed at making sure our industry is secure, which
• 35:40
  Speaker 1: is a great thing, but they introduce a lot of
• 35:43
  Speaker 1: complexity for financial advisors, and we need to make sure
• 35:46
  Speaker 1: that we help financial advisors clear that complexity and comply.
• 35:50
  Speaker 2: We mentioned custom indexing earlier. You suggested there was some
• 35:55
  Speaker 2: more rule changes about that. When it comes to what
• 35:58
  Speaker 2: the SEC expects in terms of either value based investing
• 36:03
  Speaker 2: or governance, what are the changes there. I'm curious about that.
• 36:08
  Speaker 1: The SEC is incredibly concerned that financial performance is the
• 36:14
  Speaker 1: primary measure by which the advisor communicates to the investor
• 36:18
  Speaker 1: their success. They worry that with the introduction of different values,
• 36:24
  Speaker 1: it's getting in the way of the investor maximizing their
• 36:28
  Speaker 1: investor performance, their investment performance. And so when I say
• 36:32
  Speaker 1: that there's regulatory interest in this, it comes down to clarity.
• 36:37
  Speaker 1: Regulators want to be sure that the investor understands if
• 36:40
  Speaker 1: they're choosing to implement a particular value that can have
• 36:43
  Speaker 1: consequences for investment return. And I think that technology providers
• 36:48
  Speaker 1: like Orion can easily provide those trade offs if you
• 36:52
  Speaker 1: relax the tracking error constraint, because you don't want to
• 36:55
  Speaker 1: invest in tobacco, which is a common usage that you mentioned,
• 36:59
  Speaker 1: and tobacco is a successful part of mark which isn't
• 37:01
  Speaker 1: exactly true.
• 37:03
  Speaker 2: Well it was twenty years ago.
• 37:05
  Speaker 1: But isn't exactly true right now.
• 37:07
  Speaker 2: So it turns out killing your clients for decades is
• 37:10
  Speaker 2: a bad strategy.
• 37:11
  Speaker 1: It does turn out, right, that is true.
• 37:13
  Speaker 2: It worked for a while, but eventually they all die off.
• 37:16
  Speaker 1: Yeah, and eventually, you know, the new generation wants to
• 37:19
  Speaker 1: focus on other things. That said, you know, if you're,
• 37:23
  Speaker 1: as an example, concerned about oil and gas, well that's
• 37:27
  Speaker 1: been a great part of the market, and by avoiding
• 37:29
  Speaker 1: that part of the market has consequences for a return.
• 37:31
  Speaker 1: If you have issues with Tesla for one reason or another, right,
• 37:34
  Speaker 1: you know, if you eliminate that part of the portfolio,
• 37:38
  Speaker 1: well then there's consequences for returns. And we just need
• 37:42
  Speaker 1: to do a good job as an industry of explaining
• 37:45
  Speaker 1: to our clients that investing consistent with your values is
• 37:48
  Speaker 1: your choice. But it does relax tracking error. It does
• 37:53
  Speaker 1: have the potential to create a deviation from your portfolio.
• 37:56
  Speaker 1: In the benchmarkt right.
• 37:57
  Speaker 2: There's a couple of really interesting things related to that.
• 38:00
  Speaker 2: One is, check the box for no tobacco, no guns.
• 38:04
  Speaker 2: It's like a fraction of a percent. It really doesn't
• 38:07
  Speaker 2: move the needle. It doesn't make any difference. The other
• 38:10
  Speaker 2: thing is I never really understood if you're concerned about
• 38:14
  Speaker 2: the environment, if you're concerned about global warming, going low
• 38:18
  Speaker 2: carbon seems to be reminds me of the War on drugs,
• 38:22
  Speaker 2: where we were trying to interdict the supply, but we
• 38:25
  Speaker 2: just ignored the demand. And I love when you know,
• 38:29
  Speaker 2: Google and Apple and Microsoft are labeled green companies, they're
• 38:33
  Speaker 2: some of the biggest consumers of you know, carbon based
• 38:37
  Speaker 2: energy of anyone out there. Low carbon seems to miss
• 38:40
  Speaker 2: the concept if you want to reduce carbon consumption, you
• 38:44
  Speaker 2: have to not merely address the suppliers, but you have
• 38:47
  Speaker 2: to address the consumers also. The underlying philosophy of that
• 38:51
  Speaker 2: just seems fundamentally wrong from an economic standpoint. If you
• 38:56
  Speaker 2: don't reduce demand, you could do whatever you want with
• 38:59
  Speaker 2: you know, supplies, They'll find a way to get drugs
• 39:02
  Speaker 2: into the country as long as the demand is there.
• 39:04
  Speaker 1: Yeah, it is definitely true. And the other thing I'll
• 39:07
  Speaker 1: just say related to that, and this comes back to
• 39:09
  Speaker 1: the marketing rule and ESG. You also have to make
• 39:11
  Speaker 1: sure that the claims you're making are accurate. If you're
• 39:14
  Speaker 1: saying that your ETF or your investment vehicle is green,
• 39:19
  Speaker 1: it better be green. And I think that in some
• 39:21
  Speaker 1: instances the measurement was wrong.
• 39:24
  Speaker 2: The greenwashing was a big really has been a big issue.
• 39:27
  Speaker 2: That's right. And you'll we have seen this every time
• 39:32
  Speaker 2: a new trend comes out, whether it's AI or low
• 39:36
  Speaker 2: carbon or whatever it is. Do you remember for a
• 39:39
  Speaker 2: while everybody was trying to turn their companies into a
• 39:45
  Speaker 2: meta company or whatever the hot trend of the week was.
• 39:49
  Speaker 2: It finds its way into the quarterly reports regardless of
• 39:53
  Speaker 2: whether there's any truth to it or not.
• 39:56
  Speaker 1: Yes, it's true. And what it all comes back to
• 39:58
  Speaker 1: for me as it relates to values and customization is
• 40:02
  Speaker 1: the original The originator of these ideas were actually religions,
• 40:07
  Speaker 1: and if you're investing consistent with a Catholic faith, you
• 40:10
  Speaker 1: better be investing consistent with that religion. We should hold
• 40:15
  Speaker 1: all values based portfolios to the same standards.
• 40:18
  Speaker 2: Maybe it was Calvert was the first mutual fund that
• 40:21
  Speaker 2: had Catholic value based investing as its core, but they
• 40:25
  Speaker 2: were they were doing this because there was a demand
• 40:30
  Speaker 2: from those investors who said, we don't want a B
• 40:34
  Speaker 2: or C because it's not consistent with our belief system.
• 40:37
  Speaker 2: I would like to see the SEC make sure that
• 40:40
  Speaker 2: the management companies are true to the underlying belief system.
• 40:45
  Speaker 2: But I don't know how much further you can go.
• 40:47
  Speaker 2: If someone says I don't like Facebook or I don't
• 40:50
  Speaker 2: like Tesla as a client, and as long as the
• 40:55
  Speaker 2: advisor isn't making any promises about that, Hey, this has
• 40:58
  Speaker 2: had a giant run up and it's giant sell off
• 41:01
  Speaker 2: and it's at a partial recovery, and we can't tell
• 41:03
  Speaker 2: you what this is going to do in the future.
• 41:05
  Speaker 2: But if you don't want these. If you tell us
• 41:07
  Speaker 2: this is on your do not own list, I don't
• 41:10
  Speaker 2: care if the client wants that, they just have to recognize, hey,
• 41:13
  Speaker 2: it's a big company and it could impact their performance.
• 41:16
  Speaker 1: Yeah, you know. And the tools that the advisors use,
• 41:19
  Speaker 1: like oriyan should make it easy for them to communicate
• 41:23
  Speaker 1: to clients the percentage of total S and p returns
• 41:27
  Speaker 1: that have come from tech. And you never know exactly
• 41:30
  Speaker 1: which tech companies are going to deliver those returns. But
• 41:32
  Speaker 1: by ignoring Facebook or ignoring Tesla for reasons that are
• 41:36
  Speaker 1: personal to you, you may give up that kind of return.
• 41:39
  Speaker 2: Right, I mean, just up to the investor. That's exactly right.
• 41:43
  Speaker 2: So you mentioned large language models and we danced around AI.
• 41:47
  Speaker 2: Let's talk a little bit about that. How can you,
• 41:50
  Speaker 2: as a technology provider to the wealth management industry integrate
• 41:56
  Speaker 2: artificial intelligence into your offerings?
• 41:59
  Speaker 1: So at Orion, we've integrated it in two parts of
• 42:01
  Speaker 1: our offering. The first is our client relationship management system REDTAEL.
• 42:06
  Speaker 1: We have an offering called redtail Speak, and what redtail
• 42:09
  Speaker 1: Speak does is it delivers the advisors' messages both internally
• 42:13
  Speaker 1: and externally to investors and to teammates via text and
• 42:18
  Speaker 1: one of the things that the AI does as it
• 42:21
  Speaker 1: relates to redtail speak, is it creates text messages between
• 42:25
  Speaker 1: advisors and investors first drafts. The advisor has to take
• 42:28
  Speaker 1: a look at it and make sure that everything's accurate
• 42:31
  Speaker 1: based on the text based exchanges that the advisor and
• 42:34
  Speaker 1: the investor have had in the past, and we think
• 42:37
  Speaker 1: it has a lot of promise because it reduces the
• 42:41
  Speaker 1: amount of time it takes advisors to communicate with their
• 42:44
  Speaker 1: clients in a personalized way. The second area of orian
• 42:48
  Speaker 1: solution that we offer AI, and we've experimented with AI,
• 42:51
  Speaker 1: is in our portfolio comparison tool, where you bring in clients'
• 42:55
  Speaker 1: behavioral profile, bring in their risk tolerance and metrics around
• 42:59
  Speaker 1: their risk tolerance, and you compare the portfolio they have
• 43:02
  Speaker 1: today to the portfolio that the advisor is proposing. And
• 43:07
  Speaker 1: part of those conversations between the advisor and the investor,
• 43:09
  Speaker 1: you know, this is back and forth when the advisor
• 43:13
  Speaker 1: wants to ensure the investor understands something, the investor wants
• 43:16
  Speaker 1: to ask advisors questions, and so what we deliver is
• 43:19
  Speaker 1: first draft communications between the advisor and the investor at
• 43:22
  Speaker 1: the time of comparison and then also at specific market
• 43:26
  Speaker 1: events that the investor may find troubling if their risk averse,
• 43:30
  Speaker 1: or they might be opportunities if they're an optimistic investor.
• 43:35
  Speaker 1: We're also testing at Orion knowledge management systems for our
• 43:39
  Speaker 1: own service teams and for our own developers to see
• 43:42
  Speaker 1: if we can get more rapid speed to answer, more
• 43:45
  Speaker 1: accurate speed to answer in our service teams. What we
• 43:48
  Speaker 1: learn in those tests will want to share with financial
• 43:52
  Speaker 1: advisors because potentially the models that we're developing will have
• 43:56
  Speaker 1: application outside of Orion too. But that's work that's underway.
• 44:00
  Speaker 2: Mentioned Redtail speak, we briefly alluded to consolidation in the industry.
• 44:05
  Speaker 2: I know Redtail as a standalone CRM. Obviously you guys
• 44:09
  Speaker 2: acquired them a couple of years ago. What are you
• 44:12
  Speaker 2: seeing in terms of consolidation both within the RIA industry
• 44:17
  Speaker 2: itself and then with the universe of service providers that
• 44:21
  Speaker 2: are part of that ecosystem.
• 44:23
  Speaker 1: There has been a tremendous amount of consolidation among advisors.
• 44:30
  Speaker 1: Independence has been a winning model in the marketplace for
• 44:35
  Speaker 1: the last two decades.
• 44:36
  Speaker 2: Like tofine what you mean by independence as opposed to
• 44:39
  Speaker 2: being part of a big bulge bracket.
• 44:41
  Speaker 1: Farm financial advisors who are either affiliated in a ten
• 44:44
  Speaker 1: ninety nine relationship with a broker dealer or are purely
• 44:47
  Speaker 1: independent meeting their entrepreneurs. They have their own ria, and
• 44:51
  Speaker 1: they're regulated differently. Those two segments of the market are
• 44:54
  Speaker 1: the fastest growing advice models because investors value local, un
• 45:00
  Speaker 1: biased advice in their community.
• 45:02
  Speaker 2: Are we discussing fiduciary Are we just discussing fiduciary? Okay,
• 45:06
  Speaker 2: so that's a key challenge. I'm a fiduciary, A big
• 45:11
  Speaker 2: chunk of the industry is not, and I have been
• 45:15
  Speaker 2: utterly wrong thinking it would eventually dominate everything. Although there
• 45:21
  Speaker 2: are some trends that suggest we're moving in that direction.
• 45:24
  Speaker 1: I think we're moving in the direction a lot slower
• 45:27
  Speaker 1: than many of us thought.
• 45:28
  Speaker 2: Yes, it's like twenty years ago it should have been done,
• 45:31
  Speaker 2: and here we are in twenty twenty four and it's
• 45:33
  Speaker 2: still a subject of debate.
• 45:35
  Speaker 1: I do think though, that regulators are stepping their way
• 45:38
  Speaker 1: there with REGBI, with the form CRS. Tiptoeing into a
• 45:44
  Speaker 1: fiduciary model where investors understand any conflicts is where we
• 45:49
  Speaker 1: are now, where the SEC is now. It is my
• 45:53
  Speaker 1: hope and expectation that the industry will eventually get to
• 45:55
  Speaker 1: a fiduciary standard.
• 45:56
  Speaker 2: Right an on a related issue, you're on the board
• 46:00
  Speaker 2: of advisors for the CFP parent company, tell us a
• 46:05
  Speaker 2: little bit about what you do with them.
• 46:07
  Speaker 1: So I was until very recently on the board of
• 46:10
  Speaker 1: directors for the CFP board and what and.
• 46:14
  Speaker 2: This is a certified financial planner, that's right.
• 46:17
  Speaker 1: And I believe that the CFP, the certification for financial planners,
• 46:22
  Speaker 1: is a great indication of the quality and education advisors
• 46:27
  Speaker 1: have and can deliver to their clients. I'm also a
• 46:30
  Speaker 1: believer that we need to bring diversity into our industry.
• 46:33
  Speaker 1: We need to educate and attract talent to the industry
• 46:36
  Speaker 1: because it's inside colleges and universities. Financial planning isn't a
• 46:41
  Speaker 1: profession that's well known or well understood.
• 46:43
  Speaker 2: It is offered in a few schools, right it is?
• 46:46
  Speaker 1: It definitely is. And so while I was on the
• 46:48
  Speaker 1: CFP board board of Directors, the board was very focused
• 46:52
  Speaker 1: on raising the awareness of the CFP certification, raising the
• 46:58
  Speaker 1: entry rates of the industry for young professionals, and increasing
• 47:03
  Speaker 1: diversity either through mid career transfers or degree programs at universities.
• 47:08
  Speaker 1: And that was to feel really proud of what we
• 47:10
  Speaker 1: did at the CFP Board the four years I was there.
• 47:13
  Speaker 1: It's a great organization.
• 47:15
  Speaker 2: It's interesting because when you look at the average age
• 47:18
  Speaker 2: of the typical advisor and amongst the CFP community, it's
• 47:23
  Speaker 2: kind of a hole in the donut. You have lots
• 47:25
  Speaker 2: of folks sixty plus. I think the average age is
• 47:28
  Speaker 2: like sixty two, some crazy numbers. It is too and
• 47:30
  Speaker 2: while there's a new crop of cfps coming in in
• 47:33
  Speaker 2: their twenties and thirties, there's definitely that gap between those
• 47:37
  Speaker 2: two generations.
• 47:38
  Speaker 1: You know, it's really interesting. So my hypothesis about why
• 47:42
  Speaker 1: that donut exists is the big recruiting classes of the
• 47:46
  Speaker 1: wirehouses diminished over that time period. And so you know,
• 47:51
  Speaker 1: whether it's wirehouses or insurance companies, they used to be
• 47:55
  Speaker 1: the trainers of our industry, and they had segment strategies
• 47:59
  Speaker 1: that led them to the upper end of the market,
• 48:01
  Speaker 1: and it just wasn't as much new entry into the industry.
• 48:05
  Speaker 1: As it relates to the age of advisors, something that
• 48:08
  Speaker 1: I talk about at Orion all the time and publicly too,
• 48:11
  Speaker 1: is right now there's one hundred and six thousand or
• 48:16
  Speaker 1: so financial advisors that over the next ten years, in
• 48:20
  Speaker 1: one way or another, are likely to transition out of
• 48:24
  Speaker 1: the industry. One hundred and six.
• 48:26
  Speaker 2: Thousand, that's out of four hundred thousand or.
• 48:29
  Speaker 1: Something of three hundred thousand, really.
• 48:30
  Speaker 2: A third over the next decade. That's amazing, it is.
• 48:33
  Speaker 1: And the retirement of financial advisors something's been talked about
• 48:38
  Speaker 1: for many years. At the same time, there's great exit
• 48:44
  Speaker 1: ramps for advisors right now, either through consolidation and purchase
• 48:47
  Speaker 1: of their business or reducing their ownership of their revenue,
• 48:52
  Speaker 1: becoming part of bigger advisory firms, and then sunsetting their careers.
• 48:56
  Speaker 1: And so if you look at the assets controlled by
• 48:58
  Speaker 1: those one hundred and six thousand or so advisors, there's
• 49:00
  Speaker 1: about eleven point nine trillion, wow, which is more than
• 49:03
  Speaker 1: our whole industry serves today, meaning the independent advisors. And
• 49:08
  Speaker 1: so the opportunity to help advisors be consolidate orders to
• 49:13
  Speaker 1: benefit from these these trends in the industries right now,
• 49:16
  Speaker 1: and I think Orian's in a great place to do that.
• 49:18
  Speaker 2: Huh. Really quite fascinating. We talked about cybersecurity as a
• 49:24
  Speaker 2: large concern as the nightmare scenario, and we were just
• 49:28
  Speaker 2: talking about AI. The first question is how do you
• 49:32
  Speaker 2: keep your financial technology platform safe? And second, seems like
• 49:37
  Speaker 2: there's an arms race between the good guys and the
• 49:39
  Speaker 2: bad guys using AI to penetrate through cybersecurity defenses.
• 49:46
  Speaker 1: Absolutely, you know, and companies, all companies need to be
• 49:50
  Speaker 1: vigilant every single minute of every single day. We all
• 49:54
  Speaker 1: need to invest a lot in cybersecurity. We need to
• 49:56
  Speaker 1: learn from the innovation and the evolution of attacks and protocols,
• 50:01
  Speaker 1: and at Orian we have a large team doing that
• 50:04
  Speaker 1: every day. I mentioned earlier that we were NISSED compliant
• 50:07
  Speaker 1: and sock to type two. We use third party penetration
• 50:11
  Speaker 1: tests because the most vulnerable part of any system, the
• 50:14
  Speaker 1: most vulnerable part of any system is your team, and
• 50:18
  Speaker 1: so you need to make sure that you're educating them
• 50:20
  Speaker 1: along the way, which we are at Orion.
• 50:23
  Speaker 2: It's the human failure that's almost always the softest part
• 50:28
  Speaker 2: of the armor. And if you can engineer around a person,
• 50:34
  Speaker 2: you can penetrate almost anything. People surprisingly reveal, Like I
• 50:41
  Speaker 2: keep reading about these stories about someone will get a
• 50:44
  Speaker 2: phone call or an email, Hey I can't get in,
• 50:47
  Speaker 2: can you log me in? And it's not a person,
• 50:49
  Speaker 2: it's an AI generated voice, And you'd be surprised how
• 50:53
  Speaker 2: people kind of fall for that.
• 50:55
  Speaker 1: And you think about in our industry not so much,
• 50:58
  Speaker 1: but in other industries, how much of it is biometric?
• 51:02
  Speaker 1: Your face, your fingerprint, your voice, and all of that
• 51:07
  Speaker 1: is replicable by AI. So you need you need to
• 51:11
  Speaker 1: ensure that your protocols are ahead of that.
• 51:14
  Speaker 2: So the other thing we haven't talked about are alt's
• 51:18
  Speaker 2: venture capital, private equity, crypto. How does that fit into
• 51:22
  Speaker 2: your platform? How do these and other tradable or investable
• 51:26
  Speaker 2: assets work with the services you provide to the advisor community.
• 51:30
  Speaker 1: You know, as it relates to new investment types. Just
• 51:34
  Speaker 1: like we're investing in understanding new technologies, whether it's AI
• 51:39
  Speaker 1: or large language models or biometrics, we need to do
• 51:42
  Speaker 1: the same with investing. So right now, I think everyone
• 51:45
  Speaker 1: should be thinking a lot about tokenization. You can securitize anything.
• 51:50
  Speaker 1: We should be thinking a lot about accessibility and liquidity
• 51:57
  Speaker 1: of assets that are non standard, whether that's crypto or
• 52:01
  Speaker 1: alternative investments. We should be making these asset types more
• 52:05
  Speaker 1: easily accessible, more easy to evaluate, and easy to hold
• 52:08
  Speaker 1: in a portfolio. And that's all of those things are
• 52:12
  Speaker 1: things we're exploring a oryan right now.
• 52:14
  Speaker 2: So last big question before I get to my favorite
• 52:17
  Speaker 2: questions I ask all of my guests, is you obviously
• 52:20
  Speaker 2: have a big job ahead. You're kind of now got
• 52:24
  Speaker 2: your feet wet, You're sliding into the job, You're in
• 52:27
  Speaker 2: a comfortable place. What are the challenges you're looking at?
• 52:30
  Speaker 2: What do you want to do to take Oryan to
• 52:33
  Speaker 2: the next level.
• 52:34
  Speaker 1: There's so many things I want to do with Orian.
• 52:36
  Speaker 1: I think the most important one though, job number one
• 52:38
  Speaker 1: for me. To me, one of the biggest challenges we
• 52:41
  Speaker 1: faced in financial services is a fragmented offering that we
• 52:47
  Speaker 1: deliver to financial advisors and to investors. And the reasons
• 52:51
  Speaker 1: for that fragmentation is we're such a creative industry. People
• 52:54
  Speaker 1: have an idea, they build a technology, they have an idea,
• 52:57
  Speaker 1: they build an investment solution, and that fragmentation creates real
• 53:00
  Speaker 1: challenges for financial advisors, either challenges and ensuring that they're
• 53:05
  Speaker 1: diligencing and building optimal portfolios on the investment side of
• 53:08
  Speaker 1: the equation, or that they have technology they can actually
• 53:12
  Speaker 1: leverage on the technology side of the equation. My favorite statistic,
• 53:17
  Speaker 1: and I think the true opportunity for Oryan is that
• 53:20
  Speaker 1: if you look at Jdpower results ninety percent of advisors
• 53:25
  Speaker 1: know they need to use technology, only little less than
• 53:29
  Speaker 1: fifty percent actually find the technology they use useful, and
• 53:33
  Speaker 1: only ten percent of advisors is from our wealth Tech survey.
• 53:37
  Speaker 1: Less than ten percent feel the technology that they have
• 53:41
  Speaker 1: today is sufficient, and the reason for that is it's
• 53:46
  Speaker 1: very functionalized. You have your reporting system, and that reporting
• 53:50
  Speaker 1: system may or may not be integrated into your trading,
• 53:53
  Speaker 1: and that trading may or may not be integrated into
• 53:55
  Speaker 1: your portfolio construction, which may or may not be integrated
• 53:58
  Speaker 1: into your performance report or your investor portal. And so
• 54:02
  Speaker 1: I believe the biggest opportunity for ORYAN is to break
• 54:06
  Speaker 1: those barriers down, to integrate those solutions and save advisors
• 54:09
  Speaker 1: a lot of time and a lot of effort.
• 54:12
  Speaker 2: So I have to follow up with those stats. Half
• 54:16
  Speaker 2: of advisors or is it advisors say half of the
• 54:20
  Speaker 2: technology they use doesn't deliver.
• 54:23
  Speaker 1: Less than fifty percent of financial advisors say the technology
• 54:27
  Speaker 1: they use isn't as useful as it could be.
• 54:29
  Speaker 2: I mean, we live and die on technology. And while
• 54:33
  Speaker 2: you know, I personally hate typing on glass and I
• 54:36
  Speaker 2: could come up with show me a technology, I'll give you.
• 54:39
  Speaker 2: Here's what the downside of is. The upside is we're
• 54:43
  Speaker 2: so much more productive. We can do so many more things,
• 54:47
  Speaker 2: so much more quickly, so much more efficiently than we
• 54:50
  Speaker 2: used to it, while none of the tech we use
• 54:53
  Speaker 2: is perfect. I'm I guess it's the gray hair. I've
• 54:56
  Speaker 2: been doing it long enough that I can remember going
• 54:59
  Speaker 2: back to what we talked about earlier, the quarterly printing
• 55:03
  Speaker 2: out everybody's performance statement and then jamming them one by
• 55:07
  Speaker 2: one into Manila envelopes. I remember like five of us
• 55:11
  Speaker 2: sitting around six o'clock at night on whatever. The first
• 55:16
  Speaker 2: of the next quarter, first day of the next quarter
• 55:19
  Speaker 2: was just with everything laid out because you couldn't even
• 55:22
  Speaker 2: do it until the quarter ended, and at a certain
• 55:25
  Speaker 2: you had to generate everything and print it out. The
• 55:29
  Speaker 2: whole process took like three days, and it was literally
• 55:32
  Speaker 2: stuffing statements into envelopes. It was just horrific. So I
• 55:38
  Speaker 2: don't know. Is it a function of expectations. I'm surprised
• 55:42
  Speaker 2: that that many people find their technology not meaningful to them.
• 55:48
  Speaker 1: You know, it's it's interesting. I do think you're right
• 55:50
  Speaker 1: about if your benchmark is the paper quarterly reports that
• 55:56
  Speaker 1: used to go out six weeks after quarter end.
• 55:58
  Speaker 2: We were good. We were like two three weeks after, right,
• 56:01
  Speaker 2: not too bad then. And by the way, if we're late,
• 56:04
  Speaker 2: the phone is.
• 56:04
  Speaker 1: Ringing, that's right, then today's technology looks pretty good. If
• 56:08
  Speaker 1: your benchmark is your iPhone then and all the apps
• 56:11
  Speaker 1: and how integrated they are on the iPhone, then financial
• 56:15
  Speaker 1: services technology has a long way to go. And so
• 56:18
  Speaker 1: what I believe is because of advancements and data streaming
• 56:22
  Speaker 1: and data access, and because of advancements in how technologies
• 56:29
  Speaker 1: can work together. As an industry, we can be more
• 56:31
  Speaker 1: integrated where the client conversation between the advisor and the
• 56:35
  Speaker 1: investor is at the center of the client experience. We
• 56:39
  Speaker 1: offer versus the function you're trying to provoid perform trading, rebalancing, reporting,
• 56:47
  Speaker 1: which is where we're organized.
• 56:48
  Speaker 2: Right. So I see on a lot of people's phone
• 56:51
  Speaker 2: the Bloomberg app. There's a Schwab app. Tell us about
• 56:56
  Speaker 2: the Orion app.
• 56:57
  Speaker 1: So we offer an app to finances and investors where
• 57:02
  Speaker 1: they can see their investment performance, they can see communications
• 57:06
  Speaker 1: from the financial advisor, they can see the performance of
• 57:10
  Speaker 1: their portfolios, they can engage with their behavioral finance profile.
• 57:15
  Speaker 1: It's just incredibly important for investors to have access to
• 57:18
  Speaker 1: information about their accounts all day, every day.
• 57:21
  Speaker 2: Are you finding clients use those regularly or do they
• 57:24
  Speaker 2: wait for the next fifteen percent renown before they start
• 57:29
  Speaker 2: tapping the screen.
• 57:30
  Speaker 1: You know, you'll have to tell me what your experience
• 57:32
  Speaker 1: is on this. I'd be interested. What I find is
• 57:35
  Speaker 1: that investors interact with their portfolios more when things are
• 57:40
  Speaker 1: going well, and then they set the high water mark
• 57:43
  Speaker 1: of performance, and then as portfolios get more and more
• 57:47
  Speaker 1: distressed in a draw down environment, they look at it
• 57:50
  Speaker 1: less and less well.
• 57:51
  Speaker 2: The old joke is no one opened their statements during
• 57:53
  Speaker 2: the financial crisis. That's not that far from our experience.
• 58:00
  Speaker 2: I will tell you we spend an awful lot of
• 58:02
  Speaker 2: time before someone becomes a client. We were fortunate enough
• 58:07
  Speaker 2: to launch in twenty thirteen, which was a great you know,
• 58:10
  Speaker 2: start of a new bowl market and a great decade
• 58:12
  Speaker 2: ahead of it. But we spend a lot of time
• 58:15
  Speaker 2: warning clients, hey, thirteen percent of year is whatever the
• 58:18
  Speaker 2: average was for the twenty tens, thirteen fourteen percent, not
• 58:22
  Speaker 2: not our performance, but the SMP. We spend a lot
• 58:25
  Speaker 2: of time warning people this is aberrational. This is way
• 58:29
  Speaker 2: above eight nine percent historical average. You should your return
• 58:34
  Speaker 2: expectations should be ratcheted down. Take the wins when they
• 58:38
  Speaker 2: show up, but don't get too used to fourteen percent
• 58:41
  Speaker 2: a year. You're probably not going to see that. You know,
• 58:44
  Speaker 2: It's funny people freaked out during twenty twenty two stocks
• 58:47
  Speaker 2: and bonds both down. The following year you have the
• 58:51
  Speaker 2: SMP up double digits and the Nasdaq up big double digits.
• 58:55
  Speaker 2: I think it was twenty five and fifty respectively, some
• 58:58
  Speaker 2: crazy number like that. And you know, again, it's the
• 59:01
  Speaker 2: same conversation, lower your expectations. Don't think that this is usual.
• 59:07
  Speaker 2: So we really try to make sure clients know, hey,
• 59:11
  Speaker 2: eight nine percent is great, if you get that fantastic.
• 59:15
  Speaker 2: What I find during draw downs is that prospective clients
• 59:19
  Speaker 2: tend to reach out because when the tide goes out,
• 59:21
  Speaker 2: that's when people realize, hey, I'm not so thrilled with
• 59:24
  Speaker 2: my particular person, my guy or girl. I'm ready to
• 59:28
  Speaker 2: make a change. So suddenly things get busier. What do
• 59:32
  Speaker 2: you see money in motion during corrections or during the bull.
• 59:36
  Speaker 1: I think the work that financial advisors do during corrections,
• 59:39
  Speaker 1: focusing people on their goals versus short term performance, helping
• 59:43
  Speaker 1: them understand how common or uncommon drawdowns are like this,
• 59:47
  Speaker 1: and what typically happens or could happen after just aligning
• 59:52
  Speaker 1: the portfolio and the performance with what the client's expecting
• 59:56
  Speaker 1: of it. The work that you all do in dislocations
• 1:00:00
  Speaker 1: in a tough environments pays dividends for years after right,
• 1:00:04
  Speaker 1: and so like at Oryan, in any environment like that,
• 1:00:09
  Speaker 1: we are going to be investing in communications and support
• 1:00:12
  Speaker 1: and insights on our client's behalf, so they have those
• 1:00:15
  Speaker 1: conversations and they can benefit. As you say, the tide
• 1:00:18
  Speaker 1: goes out, right.
• 1:00:18
  Speaker 2: We say internally during dro down's corrections and crashes are
• 1:00:23
  Speaker 2: when advisors earn their keep greed, right, that's for sure,
• 1:00:27
  Speaker 2: all right? So I only have you for a couple
• 1:00:29
  Speaker 2: more minutes. Let's jump to our speed round, our favorite
• 1:00:33
  Speaker 2: five questions we ask all of our guests, starting with
• 1:00:36
  Speaker 2: what's been keeping you entertain these days? What are you streaming, watching,
• 1:00:40
  Speaker 2: listening to? Tell us? What's keeping you amused?
• 1:00:45
  Speaker 1: So I love podcasts and I love random podcasts. So
• 1:00:49
  Speaker 1: I listen to Broken Record, It's all about music. I
• 1:00:53
  Speaker 1: listen to Revisionist History with Malcolm Gladwell. I listen to History.
• 1:00:59
  Speaker 1: I love bag Man Rachel Maddow I thought so interesting
• 1:01:02
  Speaker 1: to listen.
• 1:01:03
  Speaker 2: To my wife's reading her most recent book.
• 1:01:06
  Speaker 1: Is she enjoying it?
• 1:01:07
  Speaker 2: She's loving it, she says. It's a little it's like
• 1:01:09
  Speaker 2: you have to read it, put it down for a
• 1:01:11
  Speaker 2: day or so, and then pick up the next show.
• 1:01:13
  Speaker 2: It's dense. Yes, And we'll talk about books in a minute. Okay,
• 1:01:18
  Speaker 2: if you like broken records, I have two things to recommend.
• 1:01:22
  Speaker 2: One is polyphonic. I don't know if you've ever seen that.
• 1:01:25
  Speaker 2: It's a YouTube podcast, if that's the right word. And
• 1:01:30
  Speaker 2: the other one is you can't unhear this. Okay, you
• 1:01:34
  Speaker 2: cannot hear this is also YouTube. They go into a
• 1:01:41
  Speaker 2: depth of recording of Beatles albums and songs, and it's
• 1:01:46
  Speaker 2: just the oddest, strangest little things about a change in
• 1:01:51
  Speaker 2: tempo halfway through the song, or someone cursing in the
• 1:01:55
  Speaker 2: background that slipped through and was broke gust on radio
• 1:01:58
  Speaker 2: and nobody knew about it on Just like the funniest, oddest,
• 1:02:04
  Speaker 2: quirkiest little things, but really significant elements in a song
• 1:02:08
  Speaker 2: that you just don't notice because it's all part of
• 1:02:11
  Speaker 2: the music, and once you hear it, it's sort of
• 1:02:14
  Speaker 2: you can't unhear it. It's really interesting.
• 1:02:17
  Speaker 1: I love that. I'm actually gonna look at that on
• 1:02:18
  Speaker 1: my way home. I spend a lot of time on planes.
• 1:02:20
  Speaker 2: And podcasts are great for that. Let's talk about your
• 1:02:24
  Speaker 2: mentors who helped shape your career so well.
• 1:02:27
  Speaker 1: Charles Goldman, who's the current executive chairman and my predecessor
• 1:02:31
  Speaker 1: CEO at ACIM Mark absolutely has been a mentor for
• 1:02:34
  Speaker 1: me since I started working with him at Asset Mark.
• 1:02:37
  Speaker 1: I mean started working with him at Schwab before I
• 1:02:40
  Speaker 1: joined him at Asset Mark. Debbie mcguinney, who's the former
• 1:02:44
  Speaker 1: president of Schwab Institutional, she was an incredible mentor to
• 1:02:48
  Speaker 1: me at a really important part of my career. Gave
• 1:02:50
  Speaker 1: me some great advice about leadership and changing the way
• 1:02:54
  Speaker 1: you think as you get more senior in an organization.
• 1:02:58
  Speaker 1: Those are probably the biggest two.
• 1:03:00
  Speaker 2: Let's talk about books. What are you reading now? What
• 1:03:02
  Speaker 2: are some of your favorites?
• 1:03:04
  Speaker 1: Oh my gosh, I love history, so anything. Doris Kern's
• 1:03:08
  Speaker 1: good one. Absolutely love Team of Rivals was fantastic. I
• 1:03:14
  Speaker 1: love financial services history, so smartest men in the room.
• 1:03:19
  Speaker 1: I love all the history about Enron and the financial crisis.
• 1:03:23
  Speaker 1: Devil take the hindmost which is all about the history
• 1:03:25
  Speaker 1: of speculation and the resulting consequences of speculation. Those are
• 1:03:30
  Speaker 1: all great books.
• 1:03:31
  Speaker 2: Along those same lines. Did you ever read When Genius Fail?
• 1:03:34
  Speaker 1: Yes, so loved it.
• 1:03:36
  Speaker 2: Right, so amazing about long term capital management. Yeah, the
• 1:03:41
  Speaker 2: smartest guys in the room, that's Bethany Frankel, amazing, right,
• 1:03:46
  Speaker 2: Like it's amazing what they got away with and for
• 1:03:49
  Speaker 2: so long. Yes, just steamrolling everybody.
• 1:03:52
  Speaker 1: It's so true. And you know the consequences of that.
• 1:03:56
  Speaker 1: A firm that had over one hundred years of history
• 1:03:58
  Speaker 1: just disappeared. And so I just think we all should
• 1:04:01
  Speaker 1: be students of the industry that we're in.
• 1:04:03
  Speaker 2: Just to say the very least. Yeah, our final two questions,
• 1:04:07
  Speaker 2: what sort of advice would you give a recent college
• 1:04:09
  Speaker 2: grad interested in a career in either financial technology or investing.
• 1:04:15
  Speaker 1: To go for it. It's a fantastic industry to be
• 1:04:18
  Speaker 1: part of. Lots of creativity, lots of growth, lots of innovation,
• 1:04:23
  Speaker 1: incredible amount of opportunity. You know, don't be overwhelmed by
• 1:04:26
  Speaker 1: the vocabulary or the math or things that frighten people
• 1:04:30
  Speaker 1: away from the industry. You'll have a great career.
• 1:04:33
  Speaker 2: You know. I meant to ask you the left brain
• 1:04:35
  Speaker 2: right brain question, what's more important creativity or the technical skills?
• 1:04:41
  Speaker 2: I might as well throw that out to you here.
• 1:04:43
  Speaker 1: Yeah, so myself, personally, I tend to lean more left
• 1:04:47
  Speaker 1: brain with the analytical, methodical, numbers focused approach. But I
• 1:04:55
  Speaker 1: don't believe you can be successful if you lean one
• 1:04:57
  Speaker 1: way or the other. When you're doing something that's truly
• 1:05:00
  Speaker 1: first time ever or new, you want to delight your
• 1:05:04
  Speaker 1: clients in an unexpected way, you have to be creative,
• 1:05:07
  Speaker 1: and so I try to exercise both muscles. When we
• 1:05:11
  Speaker 1: were building mobile trading, the creativity right side of the
• 1:05:14
  Speaker 1: brain needed to take over. When you're building a service model,
• 1:05:17
  Speaker 1: the creativity, I think right side of the brain needs
• 1:05:19
  Speaker 1: to take over. When you're building a new asset management vehicle,
• 1:05:22
  Speaker 1: or a new set of investments tools, or a new
• 1:05:24
  Speaker 1: business line, you better be analytical.
• 1:05:27
  Speaker 2: Really interesting. Our final question, what do you know about
• 1:05:30
  Speaker 2: the world of finance and investing today? You wish you
• 1:05:33
  Speaker 2: knew thirty or so years ago when you were first
• 1:05:35
  Speaker 2: starting out.
• 1:05:36
  Speaker 1: I wish I knew how fun it was. Really, I
• 1:05:39
  Speaker 1: really do, and by fun, I just mean you are
• 1:05:42
  Speaker 1: making a huge impact on people's dreams and goals and lives.
• 1:05:46
  Speaker 1: You know, if you're working with institutions, the investors in
• 1:05:49
  Speaker 1: those institutions are teachers and firemen through their pension plans
• 1:05:54
  Speaker 1: and their retirement plans. And when you build something that's
• 1:05:58
  Speaker 1: new and creative, seeing the impact it has on lives
• 1:06:01
  Speaker 1: is just incredibly fun and interesting. So I wish, I
• 1:06:05
  Speaker 1: wish I would have known that I would have sought
• 1:06:07
  Speaker 1: the industry out versus randomly finding it.
• 1:06:09
  Speaker 2: I don't know if I've ever heard that answer before,
• 1:06:11
  Speaker 2: that that's a great answer. Well, well, thank you Natalie
• 1:06:14
  Speaker 2: for being so generous with your time. We have been
• 1:06:17
  Speaker 2: speaking with Natalie Wolfson, CEO of Orion. They have over
• 1:06:20
  Speaker 2: four point three trillion dollars in advisor assets on their platform.
• 1:06:25
  Speaker 2: If you enjoy this conversation, well, be sure and check
• 1:06:28
  Speaker 2: out the five hundred previous discussions we've held over the
• 1:06:32
  Speaker 2: past ten years. You can find those at iTunes, Spotify, YouTube,
• 1:06:36
  Speaker 2: wherever you find your favorite podcasts, And be sure and
• 1:06:40
  Speaker 2: check out my newest podcast, at the Money, Conversations with
• 1:06:45
  Speaker 2: experts about your money, earning it, spending it, and most importantly,
• 1:06:49
  Speaker 2: investing it. You can find that in the Masters and
• 1:06:52
  Speaker 2: Business feed or wherever you find your favorite podcasts. I
• 1:06:56
  Speaker 2: would be remiss if I did not thank the crack
• 1:06:58
  Speaker 2: team that helps us put these conversastions together each week.
• 1:07:02
  Speaker 2: John Wasserman is my audio engineer at Tika. Valbrun is
• 1:07:06
  Speaker 2: my project manager. Sean Russo is my head of research.
• 1:07:11
  Speaker 2: Anna Luke is my producer. I'm very results you've been
• 1:07:15
  Speaker 2: listening to Master's Business on Bloomberg Radio