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Beat Direct-to-Consumer Technology: The Advisor’s Edge · Views from 6,230

• 0:12
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  Ryan Nauman Market Strategist Zephyr: Hello, everyone, and welcome to Zephyr's Adjusted for Risk podcast from the shores of Lake Tahoe.
• 0:24
  Ryan Nauman Market Strategist Zephyr: I'm Ryan Nauman, the market strategist here at Zephyr.
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  Ryan Nauman Market Strategist Zephyr: Client expectations within the wealth management space have evolved greatly over the years, and financial advisors are likely to be left behind if they don't understand and exceed those expectations.
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  Ryan Nauman Market Strategist Zephyr: I have on an industry expert to share his insights into exceeding client expectations.
• 0:50
  Ryan Nauman Market Strategist Zephyr: But first, today's episode is sponsored by the award-winning Zephyr, which helps investment professionals make more informed investment decisions on behalf of their clients.
• 1:00
  Ryan Nauman Market Strategist Zephyr: All right, enough from me.
• 1:02
  Ryan Nauman Market Strategist Zephyr: I have already talked enough.
• 1:03
  Ryan Nauman Market Strategist Zephyr: I've taken up too much time already.
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  Ryan Nauman Market Strategist Zephyr: Let's go ahead and bring on the star of the show.
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  Ryan Nauman Market Strategist Zephyr: I'd like to give a very warm welcome to Zach Conway.
• 1:13
  Ryan Nauman Market Strategist Zephyr: Zach is a CEO at Seeds.
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  Ryan Nauman Market Strategist Zephyr: Zach, thank you so much for coming on the podcast.
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  Ryan Nauman Market Strategist Zephyr: It's an honor to have you.
• 1:21
  Ryan Nauman Market Strategist Zephyr: I'm really excited about this conversation.
• 1:23
  Ryan Nauman Market Strategist Zephyr: It's gonna be a fun one.
• 1:24
  Ryan Nauman Market Strategist Zephyr: Can you please tell us a little bit more about yourself and Seeds?
• 1:30
  Zach Conway CEO Seeds: For sure.
• 1:31
  Zach Conway CEO Seeds: Thank you for having me.
• 1:32
  Zach Conway CEO Seeds: By the way, industry expert and star all in that intro, so my ego super boost there.
• 1:38
  Zach Conway CEO Seeds: I appreciate that.
• 1:39
  Zach Conway CEO Seeds: It's very nice.
• 1:40
  Zach Conway CEO Seeds: So yeah, a little bit about me.
• 1:42
  Zach Conway CEO Seeds: We were just talking about before we started recording.
• 1:44
  Zach Conway CEO Seeds: I I'm a dad.
• 1:45
  Zach Conway CEO Seeds: I have three daughters.
• 1:47
  Zach Conway CEO Seeds: A lot going on in our lives, raising an eight, five, and almost three-year-old.
• 1:53
  Zach Conway CEO Seeds: W- the time we're recording right now, summer has just started for us sports activities driving around.
• 1:59
  Zach Conway CEO Seeds: It's fun.
• 2:00
  Zach Conway CEO Seeds: It's exhausting, but but amazing.
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  Zach Conway CEO Seeds: So that's a big part of my life.
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  Zach Conway CEO Seeds: The other part is I'm a financial advisor by background.
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  Zach Conway CEO Seeds: As you said, I'm the founder and the CEO of a company called Seeds.
• 2:11
  Zach Conway CEO Seeds: And you can think of our platform as something that hopefully is enabling advisors to s- meet the expectations you started to allude to of investors, both in the experience of investing.
• 2:24
  Zach Conway CEO Seeds: So how does that happen, and how does an advisor interact with an end client around the process of investing?
• 2:31
  Zach Conway CEO Seeds: And the other layer being the operational layer.
• 2:34
  Zach Conway CEO Seeds: How does an advisor spend less time doing sort of the mechanical parts of portfolio operations?
• 2:41
  Zach Conway CEO Seeds: So things like trading, tax loss harvesting, tax transitions, cash management, rebalancing, et cetera, et cetera.
• 2:49
  Zach Conway CEO Seeds: A platform that's trying to help advisors solve both of those components.
• 2:54
  Ryan: Zach, an honor to have you on based on everything you have going on.
• 2:58
  Ryan: Y- your daughters and running a successful business.
• 3:02
  Ryan: I'm sure taking 30, 40 minutes out of your schedule is not easy.
• 3:06
  Ryan: So it's an honor and it's fun.
• 3:09
  Ryan: All those sports, all those activities, but nice to have some downtime too.
• 3:14
  Zach: Yeah, one day.
• 3:16
  Ryan: Yeah, exactly.
• 3:18
  Ryan: I always like these, startups, or not even startups, but founders like yourself and CEOs like yourself.
• 3:26
  Ryan: I always like to ask the question, why did you start Seeds?
• 3:31
  Ryan: W- what was it when you were like, "You know what?
• 3:33
  Ryan: There is a gap in this industry.
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  Ryan: There's a hole.
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  Ryan: We can fill this."
• 3:38
  Ryan: What was it and why did you start Seeds, and what hole were you trying, what gap were you trying to fill?
• 3:44
  Zach: Yeah, I didn't start in this industry, but grew up in it.
• 3:48
  Zach: My dad has been an advisor since 1984, runs a business in the, as an independent firm.
• 3:54
  Zach: And I ended up joining him for a bunch of reasons a little over a decade ago.
• 4:01
  Zach: And, growing up and then very early in the business with him, it was very clear to me that the reason people liked being his client and the value that they got out of that experience had everything to do
• 4:17
  Zach: with his ability to deeply understand them and ask the right questions and understand the nuances of their lives, and then match that understanding to logical solutions that reflected that understanding.
• 4:30
  Zach: So to be specific, all the sort of nuances of family dynamics and challenges and hopes, dreams, aspirations, what would be the best sort of personalized financial planning components to reflect that?
• 4:45
  Zach: And people s- really deeply value that connection, right?
• 4:49
  Zach: Not just the connection of having that deep human conversation, but that connected dot of, again, that understanding therefore equals this logical outcome.
• 4:58
  Zach: And the thing that was jarring to me in that context was how investment management, specifically within financial planning, within that experience, lacked that connectedness.
• 5:10
  Zach: And it seemed so both surface level and centered on the advisor's narrative rather than the client-cent- centric narrative.
• 5:20
  Zach: And to be specific there, rather than a deeper understanding of who someone was as an investor, it was, "Let us start with our talk track and sales pitch about how smart we are when it comes to investing and
• 5:34
  Zach: the products we use and the expertise we have and our, credentials and so on."
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  Zach: So as fresh eyes in the business, that seemed strange to me.
• 5:44
  Zach: And I actually spent some time trying to understand how we got here as an industry.
• 5:50
  Zach: How my dad, who knows intuitively that's not what people value, how of all people is he, y- in that paradigm?
• 5:58
  Zach: What is this paradigm?
• 5:59
  Zach: And I won't go too far down the rabbit hole on this, but there is a lot that got us to that point, right?
• 6:06
  Zach: In the history of the industry and stark-- starting out as essentially stockbrokers and this evolution of holistic financial planning and so on.
• 6:14
  Zach: But it's embedded in our DNA that's how we frame investment management to people and the experience that comes with it.
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  Zach: So that was part one.
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  Zach: Part two was the fact that the experience from my seat with the client around investing was not good, and they didn't value it.
• 6:30
  Zach: But simultaneously, the way we were bringing portfolios to life operationally was just a clunky nightmare.
• 6:37
  Zach: The fact that we had these disparate investment product solutions, third-party managers, home office models, third-party models, access to these SMEs through this email back-and-forth process and, then needing to build a portfolio for that client and pull all these
• 6:54
  Zach: things together, and then put a proposal together, and then do the proposal And then to actually press go was, again, all these different sort of operational pipes of we're emailing these people to trade this part, this account in
• 7:09
  Zach: a household, and we're emailing these people to trade this one, and then our team's trading the other one, and just seems bizarre.
• 7:16
  Zach: And all the recurring work.
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  Zach: So how do you raise cash?
• 7:19
  Zach: How do you make sure you rebalance the right way?
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  Zach: Tax loss harvest the right way, all these components.
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  Zach: So anyway, being fresh eyes in the business to-- it just seemed so paradoxical that both the experience and the operational components were so not good.
• 7:38
  Zach: And then, next step, looking across the industry are, has anyone solved this?
• 7:43
  Zach: Has anyone fundamentally solved this?
• 7:45
  Zach: And I spent a lot of time there 'cause, who wants to start a company from zero if it already exists, and I could solve our problems in the advisory business?
• 7:54
  Zach: And it didn't seem like it did.
• 7:56
  Zach: The technology available to us at the time was, as I always joke, it's e-everything like 1990 Excel experiences and kept things clunky and didn't help with that experience layer at the same time.
• 8:08
  Zach: Walked into my dad's office one day and said, "Unfortunately, we we're starting another separate company, and this is what that's gonna be and why," and, then I guess the rest is history.
• 8:19
  Ryan: That's awesome, Zach.
• 8:20
  Ryan: I love that story.
• 8:21
  Ryan: First of all, dad was ahead of his time from when he started, because when I started, Zach, 20 years ago, you were exactly right.
• 8:30
  Ryan: It was stockbrokers.
• 8:32
  Ryan: You're selling...
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  Ryan: It was so much more transactional than it is today, and it wasn't about, the values, what the client believes and knowing.
• 8:42
  Ryan: It was just like, let's, sell these stocks, get the best return, sh- hope for them to be 10 baggers and we're off and running.
• 8:51
  Ryan: Now it's completely different, and so your dad was way ahead of his time, really trying to understand the client more
• 8:58
  Zach: Yeah.
• 8:58
  Ryan: alignment.
• 8:59
  Zach: And
• 9:00
  Ryan: to him.
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  Ryan: That's awesome
• 9:01
  Zach: a great point.
• 9:02
  Zach: It's a great point, and even they were ahead of their time in 1984 when this, this business was started, and because it was meant to be a holistic financial planning business, right?
• 9:13
  Zach: The sort of leading edge of the value prop was, "We're gonna do this holistic planning," and at that point in the industry, that was not a mainstream idea.
• 9:21
  Zach: So to try to go to a prospect and say, "We're gonna deliver this sort of holistic advice, and this is what you're gonna get out of it, and these are the benefits," the consumer at the time was like,
• 9:31
  Zach: "Huh?
• 9:31
  Zach: What does that mean?"
• 9:32
  Zach: What is the point of that?"
• 9:33
  Zach: Even though the industry started well before 1984, the-- from a mainstream, articulating that to the customer base was just never, wasn't there yet.
• 9:42
  Zach: And so there was this sort of lean back into, "Here's a mutual fund company lineup that..."
• 9:48
  Zach: And now let's just start pitching why these products are special and what return they might get, and then okay, then we'll get them in the door, and then we'll do the financial planning.
• 9:57
  Zach: But that's the hook, and that's my point on like the DNA.
• 10:00
  Zach: It's the ship in the ocean.
• 10:02
  Zach: You start with that paradigm, and I think that's existed You know, it's improved, but that's ex- existed, since the beginning.
• 10:09
  Ryan: Yeah.
• 10:10
  Ryan: I completely agree, Zach.
• 10:11
  Ryan: And I'm glad you brought up SMAs.
• 10:14
  Ryan: We're gonna talk, about the expectations of investors and that gap that you and your team at Seeds, you're trying to fill there or you are filling.
• 10:22
  Ryan: SMAs, like you said, with Zephyr, we had a PSN separately managed account database, and there's a lot of complexities that go there, right?
• 10:31
  Ryan: And, there's growth within the direct indexing space and then also within, the UMAs to try and maybe bring it all together.
• 10:41
  Ryan: So huge gap there.
• 10:42
  Ryan: I'm glad you guys are there to fill it, to try and streamline it, like you said, because financial advisors, they see the benefits of SMAs, just the operational side is
• 10:52
  Zach: Yeah.
• 10:54
  Zach: Yeah, for sure.
• 10:55
  Zach: I think when you and I were talking last week the the SpaceX employee example had popped up, and we were unpacking.
• 11:02
  Zach: It, it's such a, I think, good example of where this is all headed, where you have these employees that are about to have this very significant monetary event and they're gonna have a lot of concentrated stock in a
• 11:15
  Zach: particular company called SpaceX, and they're unionizing to go look for financial advisors or maybe one firm in particular where they can, have reduced cost as competitive pricing.
• 11:28
  Zach: And but it's this moment of, what do they expect both in the experience and in the actual specific investment solutions that they'll have access to?
• 11:38
  Zach: So in their case, things like direct indexing, other lending opportunities, different components of what they'll need to solve their specific problems.
• 11:48
  Zach: Some of them in their Reddit and Slack channels talking about being able to screen companies in and out from a values perspective.
• 11:56
  Zach: So the idea...
• 11:58
  Zach: I think the takeaway for advisors with that is, if your menu of investment solutions historically is these four sort of ETF-based risk models, and the menu is therefore the story, is just breaking, right?
• 12:14
  Zach: You need to have access to these different solutions to meet these rising expectations.
• 12:19
  Zach: But you also, as you just pointed out, you need the operational platform to, to bring them to life, because you can have access to things and to use the sort of, on your UMA point, direct indexing to be
• 12:32
  Zach: specific.
• 12:33
  Zach: If you open a direct indexing account for taxable money for a SpaceX employee, but then y- the rest of the allocation is not direct indexing equities, maybe there's fixed income exposure or whatever else in the taxable money, and
• 12:47
  Zach: you're opening a separate account to actually bring that, part of the asset allocation into the portfolio now you have two accounts that shouldn't be two accounts.
• 12:56
  Zach: They should be one account.
• 12:58
  Zach: And so there's these, layers of the onion in meeting these new expectations, both in, what are the investment solutions, but how are they unified?
• 13:07
  Zach: And then how can you deliver them in a scalable way at the same time?
• 13:12
  Ryan: That, I'm so glad you brought that up and expectations because, you brought up such a really great example in SpaceX.
• 13:20
  Ryan: And there's other clients out there, the older generation, they're looking at potentially a, a monetary windfall too of selling businesses, selling out.
• 13:30
  Ryan: They might be liquidating something.
• 13:33
  Ryan: They're looking at this windfall also.
• 13:36
  Ryan: there other expectations or examples investors in how it's changed over the years from, let's say, when your dad started to today?
• 13:44
  Ryan: And what are those expectations, outside of maybe SpaceX, maybe the younger generation of investors?
• 13:51
  Zach: Yeah, I think the thing that stands out more, most broadly is the experience piece, right?
• 13:58
  Zach: Trying to have a 30-something-year-old person walk into your office and get pitched on why you're such a smart money manager and what your menu of product solutions is, and to talk about those products and put up a static
• 14:15
  Zach: proposal that everyone else gets effectively the same thing, just levered up and down for maybe risk tolerance as the singular input of understanding is not how we experience anything else in our lives in, in our generation from a,
• 14:30
  Zach: from an actual experience perspective, right?
• 14:32
  Zach: The experience is good because it's shaped around us and what our needs are and how we think and how we want to be- live the experience, whatever that experience is, including around investing.
• 14:46
  Zach: So the expectation shift is that, is just that, right?
• 14:51
  Zach: I expect to walk into the room and for this person to deeply understand me, not just in the, what advisors have, again, always been good at, which is deep discovery for the purposes typically of other financial planning components,
• 15:05
  Zach: but around this investing part.
• 15:07
  Zach: And by the way, quick aside, I think we also struggle as an industry with this idea of the value proposition around investing is either I'm gonna beat the market Or you have this other cohort that says it's actually
• 15:20
  Zach: so commoditized that we might as well let clients just do it themselves and do whatever they're gonna do, and then we'll try to do the financial planning elements, around it.
• 15:29
  Zach: And I think both of those ideas are, I'll just say faulty, and so there, there is, It's an important component of financial planning.
• 15:38
  Zach: It's also an expectation of the customer that's what an advisor is going to be doing, right?
• 15:43
  Zach: It's a table stakes component.
• 15:45
  Zach: And so we need to be effective at it from a, from an actual management standpoint.
• 15:50
  Zach: But again it's the experience piece.
• 15:52
  Zach: How do you shift to, "I'm gonna deeply understand this person from a goals perspective, from a tax perspective, from a concentrated stock position perspective as it relates to their personal values"?
• 16:06
  Zach: I think it is such a good sort of tangible example that it isn't table stakes for us as advisors to understand s- someone's motivation around their values about what they're actually gonna own in their portfolio, and the fact
• 16:21
  Zach: that we've just obscured that as an industry i- is, to me, bizarre, where our whole philosophy is, making sure we're doing what's in the best interest of clients.
• 16:31
  Zach: But again, all those layers, values, thematic interests, how do they think about the market, and what do they care to be invested in or not invested in?
• 16:39
  Zach: How involved in the process do they even wanna be?
• 16:42
  Zach: Do they want deep metrics of every component of how you're building the portfolio, or they wanna keep it high level and focus on how this allocation is driving to their short and long-term goals and everything in between.
• 16:54
  Zach: So any- anyway, that deep understanding is the expectation, so that, that experience is driven by that.
• 17:01
  Ryan: Yeah, that's ex- right, Zach, and it's interesting.
• 17:05
  Ryan: You talked about earlier, too, the wealth management space, I feel as if we're very slow.
• 17:12
  Ryan: We're getting better with with AI, but very slow in adapting the technology, right?
• 17:17
  Ryan: A lot of other industries use technology, adapt, innovate much quicker than the wealth management space.
• 17:24
  Ryan: We're doing better at that, but I do feel that we're taking things, like you said, client experience from other industries and how important the client experience is in other industries, and we're realizing that now over the years.
• 17:39
  Ryan: You w- like you said, you think this would've been front and center 20 years ago, but now it really has taken off, enhancing that client experience and how important it is.
• 17:50
  Ryan: 'Cause like you said, it's not just pitching a mutual fund to the same client or the same model portfolio to the same clie- all your book of business.
• 18:00
  Ryan: It's that client experience, transparency, customization, personalization, you name it.
• 18:05
  Ryan: We can go on and on.
• 18:06
  Ryan: But, like you said,
• 18:08
  Zach: Yeah
• 18:08
  Ryan: it's fiduciaries, right?
• 18:10
  Ryan: We're supposed to be doing this, so
• 18:13
  Zach: It the SpaceX employee example, I think what is very exciting and hopeful about how, what they're doing is if, it's obvious, but they're looking for a human, right?
• 18:27
  Zach: They're looking for a human advisor.
• 18:29
  Zach: So that's really good news, right?
• 18:32
  Zach: The fact that we're still in the running as the human people, and I, we are very much in the camp that will persist for all the reasons we talk about where we-- people want the human interface.
• 18:43
  Zach: They want that connection.
• 18:45
  Zach: They want the deep understanding to be through the eyes of, literal eyes of a human person.
• 18:53
  Zach: Again, maybe that changes in this last mile of AI.
• 18:56
  Zach: We'll see.
• 18:57
  Zach: But for now, that is a really hopeful thing that's how they're looking to solve their financial needs.
• 19:04
  Zach: On the other hand, to your point, there are apps where they can go open direct indexing portfolios in a seamless, beautiful digital interface with pretty solid support, probably some AI chat components to help answer questions and so on.
• 19:25
  Zach: And so that is really the gap that, Seeds is trying to solve.
• 19:29
  Zach: But I think as an industry, our technology, the B2B technology to support advisors is so dramatically behind what direct-to-consumer technology has been able to deliver to the market that i-if we don't chase that really quickly to support the
• 19:47
  Zach: human advisor so that they can do both, be the human advisor, but in, with the support of really compelling, helpful technology, that feels scary.
• 19:56
  Zach: Because at some point, there will be, in theory, a trade-off decision where if that d- direct-to-consumer version is so much more compelling than even the fact that I get the human interface over here, when do you say, "Screw
• 20:14
  Zach: it, I'm just gonna go log into the app"?
• 20:16
  Zach: And that is the, th- that's why, I wake up in the middle of the night sometimes thinking about as an industry, how do we chase that as, quickly as possible?
• 20:25
  Zach: Because again, humans want the human.
• 20:26
  Zach: They just need to have the right stuff behind the scenes helping them.
• 20:30
  Ryan: I love that you brought that up, that I completely agree that, investors, they want that human touch.
• 20:36
  Ryan: But if advisor, that human, isn't providing them what they can get or more than what, exceed those expectations that they can get t- from that business to bus- business con- to-consumer app then you're in trouble.
• 20:53
  Ryan: What how can advisors meet these new expectations?
• 20:57
  Ryan: Might be the million-dollar question here, but you just talked about how important it is.
• 21:03
  Ryan: How can they meet these new expectations?
• 21:08
  Zach: I think important underlying point is It is so hard to get all of this right.
• 21:17
  Zach: We talk to advisors all day, every day, and I don't think we give, in general, give advisors but really give ourselves in the industry enough credit for how hard it is to f- figure out all the puzzle pieces
• 21:33
  Zach: and then put the puzzle together.
• 21:34
  Zach: So what I mean by that is, if you're independent, you're a business owner, and that alone of what that means in figuring out hiring and how to organize your team and just function as a business.
• 21:48
  Zach: You're a practitioner, right?
• 21:51
  Zach: You need to know how to do financial planning and the underlying components or hire people who can fill those needs.
• 21:58
  Zach: You need some pretty decent level of a skill set on the EQ side, right?
• 22:06
  Zach: Being that human interface that people deeply value and a big part of why they're gonna walk in and be your customer as opposed to the direct-to-consumer app is that.
• 22:17
  Zach: So you have to get all of that and you need to figure out what technology is going to help support all of these things.
• 22:26
  Zach: So I think that's why there's no room for error here, right?
• 22:32
  Zach: The helping advisors across all of those areas.
• 22:35
  Zach: Now Seeds, this is not to say Seeds solves all of those pieces, but it is a lot of what we talk about, and I think what we need to be talking about as an industry, is all of that
• 22:46
  Zach: does need to be right and how they deliver that experience to the customer.
• 22:51
  Zach: So it's all of the above, to answer your question.
• 22:55
  Zach: There, there's a lot to to figure out.
• 22:57
  Zach: And I think in gen...
• 22:59
  Zach: The only other thing I'll say is I wish there was more of a drumbeat on those points broadly as an industry, and then also specifically around, we're biased but focused on this investment management part of calling out where
• 23:16
  Zach: the standard is not being met and where expectations are not being met because the other side of the coin is that the reputational risk, those SpaceX employees were really lucky and anyone like them that they're still saying, number
• 23:31
  Zach: one, human advi- human person, but this concept of a financial advisor that in general has not had a great reputation, especially among younger demographics.
• 23:43
  Zach: And so I think that needs to be a bigger focus for the industry.
• 23:48
  Zach: I, I was at a conference recently listening to an advisor explain to me how he builds a port-- every portfolio for every client is one stock position because he has such conviction in this one particular stock.
• 24:01
  Zach: That can't fly.
• 24:03
  Zach: We can't let that continue, right?
• 24:06
  Zach: Because that little drop in the ocean, that is so damaging to, what we're trying to do as an industry and make sure we can be relevant and have those types of customers wanna pick us.
• 24:20
  Zach: So anyway, that's my very long answer.
• 24:22
  Zach: I think, calling out where things are not meeting the standard is a big part of what we need to do
• 24:27
  Ryan: Yeah, it, think that's perfect.
• 24:29
  Ryan: I'm shocked that you just were at a conference and you heard that from a financial advisor.
• 24:34
  Ryan: That's interesting.
• 24:35
  Ryan: Not much diversification there, Not much diversification
• 24:41
  Zach: And think about it, it's not even like w-what is the standard?
• 24:46
  Zach: Step one is, as an advisor within investment management, are you building at least fundamentally client-driven portfolios, right?
• 24:55
  Zach: This is a portfolio that makes sense given this particular person's situation.
• 25:01
  Zach: In that example, w- again, real-life example, I'm not gonna say who it was, but real-life conversation in a major industry conferen- conference that has nothing to do...
• 25:11
  Zach: That portfolio has nothing to do with the client.
• 25:13
  Zach: It's literally he, he's like a single stock hedge fund manager with a financial advisor badge on.
• 25:19
  Zach: It's terrifying.
• 25:20
  Zach: But that's what I mean, like there's no...
• 25:24
  Zach: I don't think we do enough in s- in calling out when the standard is so being missed, and I think we need to more as an industry.
• 25:32
  Zach: So that's my rant.
• 25:34
  Ryan: No, I love that rant.
• 25:35
  Ryan: I think it's very important.
• 25:37
  Ryan: I think more people should probably rant about it to get that message out there too.
• 25:42
  Ryan: And I think is interesting too with AI and all this technology, and like you said, direct to consumer stuff, it's gonna put a bigger emphasis on relationship building, which is a good thing.
• 25:58
  Ryan: Building strong relationships with your clients, with other investors, because that's what, AI and these tools don't have empathy, right?
• 26:09
  Ryan: A human has empathy.
• 26:10
  Ryan: So I think that's a good thing.
• 26:12
  Ryan: I think, getting back to relationships and how important it is important.
• 26:17
  Ryan: Do you remember robo-advisors?
• 26:20
  Ryan: It wasn't that long ago, Zach, everyone was worried about robo-advisors.
• 26:23
  Ryan: Where are they today, right?
• 26:25
  Ryan: Because want that human touch.
• 26:27
  Ryan: What do you
• 26:28
  Zach: Yeah
• 26:29
  Ryan: financial advisor looks like today compared to 20 years ago?
• 26:33
  Ryan: Where there.
• 26:36
  Ryan: What is it that makes a financial advisor good?
• 26:41
  Zach: Yeah, I think it's all those, again, on the point of it's really hard to be.
• 26:46
  Zach: There's so many different pieces of of the puzzle.
• 26:49
  Zach: You need to be a good practitioner, and you need to know your stuff from a financial planning perspective, and you need to know how to run a business, and you need to know how to deliver an experience that
• 27:01
  Zach: the customer's gonna value, and that's built around who they are.
• 27:05
  Zach: Because again, like we talked about, that is the clear expectation of we say younger investors, but I think even, existing customers that are waking up to the fact that a lot more of this should be more shaped around
• 27:18
  Zach: them.
• 27:19
  Zach: The thing on AI an interesting thing that we've been talking a lot about is to, to your point about people want that human experience they want it to be personalized around them.
• 27:31
  Zach: Obviously, AI should be the thing behind the scenes that's supporting the advisor do that.
• 27:37
  Zach: So as we think about, how we think about it at Seeds, how can you support an advisor gathering more information about this human person in a deeper, more three-dimensional way rather than I'm just gonna ask their risk tolerance
• 27:51
  Zach: and then match them to one of four fixed models.
• 27:55
  Zach: What else could I understand about them?
• 27:57
  Zach: Therefore, what else-- what would that connect to in a more comprehensive lineup of investment solutions that most effectively match all of that?
• 28:07
  Zach: And then how do I talk about it?
• 28:09
  Zach: How do I specifically talk about it in a way that's gonna a- resonate with that real person based on all the things I just understood about them?
• 28:18
  Zach: And then how am I gonna talk about it forever?
• 28:19
  Zach: Review meetings, in between review meetings, how am I engaging this person?
• 28:23
  Zach: And I-- One other quick aside is part of the reason I think advisors, again, they intuitively know that this is the right approach.
• 28:30
  Zach: The problem has been if I ask more questions, I therefore have to deal with the answers to the questions.
• 28:36
  Zach: How do I...
• 28:36
  Zach: if someone cares about values, okay, now I have to go figure out how to screen portfolios.
• 28:41
  Zach: I don't have a mechanism for that.
• 28:43
  Zach: I have to go find a new solution there, and then I've got separate accounts, and all of a sudden, operationally, everything falls apart.
• 28:48
  Zach: So you need this connected chain.
• 28:51
  Zach: But the point on AI is I do think there's this threshold Where we need to be careful how much the advisor is ultimately in this new paradigm relying on AI to essentially help them remember in the moment who
• 29:10
  Zach: these human people are that they're interacting with.
• 29:13
  Zach: So in other words, the more you become reliant on, "Here's my write-up of the Smiths and what we talked about last week and what I should talk about now," your brain is not sifting through that information and reconnecting
• 29:29
  Zach: dots and remembering the nuance of the conversation about the, their dog died and they, had this vacation and what that meant to them and whatever.
• 29:38
  Zach: You see it in the writing, and you can read the writing, and maybe that's helping you do the conversation in the room next time, but you're also depleting the muscle, liter- the human brain of connecting those dots back
• 29:51
  Zach: from that actual human conversation you had two months ago or whatever.
• 29:55
  Zach: So anyway, I don't even know if that was even in the realm of an answer to what your last question was, but AI supporting advisors to be more human, to create these deeper experiences, but now there's this new
• 30:06
  Zach: threat of even if that's how you're using AI, we have to be careful of not getting to this sort of point of over-reliance where we lose the sort of our human abilities, if that makes sense.
• 30:19
  Ryan: Zack back to, and I agree with leveraging AI too much.
• 30:24
  Ryan: I don't know what the word is for it, but it, it can decrease the knowledge of the user, the human.
• 30:32
  Ryan: I go back to, I very rarely write anything.
• 30:36
  Ryan: I don't even have a pen on my desk.
• 30:38
  Ryan: But when I have to write something, my handwriting is absolutely terrible 'cause everything I do is typing.
• 30:44
  Ryan: It's almost the same with math too because I rely on a calculator, Excel, whatever so much.
• 30:49
  Ryan: It's like my skills have decreased in a lot of those.
• 30:53
  Ryan: back to kids, doing, helping with their homework.
• 30:56
  Ryan: It's
• 30:57
  Zach: it's impossible.
• 30:58
  Zach: Yeah
• 30:58
  Ryan: on it so much.
• 30:59
  Ryan: Everything you've learned from years
• 31:02
  Zach: Yeah.
• 31:02
  Ryan: it handwriting it's
• 31:05
  Zach: yeah.
• 31:05
  Zach: It i- it's a scary, it's a scary feeling where, okay, I'm going into a meeting, and listen, this is what we're building toward, but we are trying to figure out this balance and how to shape it exactly.
• 31:14
  Zach: Because, if you, if Seeds produces, here's the literal script of what to say given all of this context and all this information from 10 years, and here's what's happened in the portfolio, and here's what they ta- here's what
• 31:29
  Zach: we talked about last time, here's their top concerns, whatever.
• 31:32
  Zach: Here's the script.
• 31:33
  Zach: Here are the words to say.
• 31:35
  Zach: Obviously, that's compelling as just an idea, but the second your brain's "Okay, I'm gonna go into this meeting and I track these bullet points 'cause I'm already thinking about the next meeting and the next meeting and the next
• 31:45
  Zach: meeting," and you're not connecting, is the irony that could could happen.
• 31:53
  Zach: By the way, my daughter asked me, I guess they're teaching cursive again.
• 31:57
  Zach: I think they stopped and now they're back, or at least in where we are in New Jersey.
• 32:00
  Zach: My daughter asked me to write her name in cursive and my brain exploded.
• 32:04
  Zach: I actually did it, but it was, did not look great
• 32:08
  Ryan: Y- thankfully my son has not come up with that yet.
• 32:11
  Ryan: He's come up with a lot of questions.
• 32:13
  Ryan: Thankfully, otherwise
• 32:14
  Zach: Yeah.
• 32:14
  Ryan: like "I
• 32:15
  Zach: Yeah.
• 32:15
  Ryan: to tell you.
• 32:16
  Ryan: This one I
• 32:17
  Zach: Yeah,
• 32:17
  Ryan: with
• 32:18
  Zach: the math I'm essentially useless even with my second grader this year.
• 32:22
  Zach: It's I don't know, you need to teach me
• 32:24
  Ryan: I- it's fun.
• 32:25
  Ryan: It's f- it's fun until you they're like, "But Dad, you're supposed to know everything."
• 32:30
  Ryan: It's maybe not."
• 32:31
  Zach: Yeah,
• 32:32
  Ryan: So
• 32:32
  Zach: did.
• 32:32
  Zach: I did at one point
• 32:34
  Ryan: a lot, you talked, mentioned it earlier about expanding the services or expanding the investment management produ- products, that menu, just from mutual funds, ETFs, to, maybe private investments, private equity, offering Bitcoin.
• 32:50
  Ryan: You gotta be able to offer Bitcoin whether you like it or not, Bitcoin, private markets, real estate, to really separate yourself from maybe the direct to consumer or other financial advisors.
• 33:03
  Ryan: But the key is how can financial advisors do that at scale when you've got so many more products?
• 33:09
  Ryan: It's a lot easier th- just to enter in a couple tickers
• 33:14
  Zach: Yeah.
• 33:15
  Zach: It's just making a note for myself 'cause I think there's a couple levels to it to clarify.
• 33:23
  Zach: The first is I'm not saying, you need access to literally any investment solution that's ever existed on planet Earth, right?
• 33:30
  Zach: That it's not that.
• 33:32
  Zach: A- and I'll actually come back to that.
• 33:33
  Zach: The other point is client demographics.
• 33:36
  Zach: I understand the point that, hey, I don't work with SpaceX employees.
• 33:40
  Zach: I work with these types of clients, and their needs are maybe simpler, and my menu is therefore a bit more constrained.
• 33:45
  Zach: So I get that is-- can be part of the the structure or the reason behind what your menu is.
• 33:52
  Zach: But on the products themselves, I think if you are trying to solve, let's say the most common use cases of general demographics of younger investors, retirees, whatever combination, there's a reasonable set of stuff that will come up or
• 34:12
  Zach: should come up, and those things-- and there are things that have reasonable reasons to exist, right?
• 34:19
  Zach: Obviously, there's extreme random silly stuff that shouldn't and just exists because it's a product to sell.
• 34:25
  Zach: So I do think of, use direct indexing as an example.
• 34:29
  Zach: There is a legitimate rationale, multiple legitimate rationales for its use Alternatives, same thing in the context of, how to think about asset allocation.
• 34:43
  Zach: The big change though is not just, hey, how do you have access to these things?
• 34:49
  Zach: It's how do you know when to use them specifically?
• 34:52
  Zach: And I think that is what is broken in our process, and it goes back to the point about the inverted storytelling where you start with, let's go, use the alts example.
• 35:02
  Zach: I have access to these, five products because someone took our firm out to a state dinner and th- this is the lineup of investment solutions within alts.
• 35:12
  Zach: And if someone with a pulse walks in the door, I'm putting up a the PDF, nicely branded PDF, and walking through why they should put this in their portfolio.
• 35:22
  Zach: You can apply the same point to direct indexing.
• 35:25
  Zach: Here's a person with a pulse who ha- has a taxable account.
• 35:28
  Zach: Long-short is another one, that's exploded in the industry.
• 35:32
  Zach: Again, this isn't to say that these things don't have their place.
• 35:34
  Zach: They absolutely do.
• 35:35
  Zach: But if every person is a nail, right?
• 35:39
  Zach: Hammer, nail?
• 35:40
  Zach: Yeah, I think I got it right.
• 35:41
  Zach: And so you're starting with the product story rather than who is this person?
• 35:46
  Zach: What are their needs?
• 35:47
  Zach: What are they interested in?
• 35:49
  Zach: And therefore, here's what should come out the other side.
• 35:53
  Zach: So the products, you still have the products, you still have the solutions, but do you actually have a framework for who gets it and when and why, and how to talk about it?
• 36:02
  Zach: And then the operational piece you touched on, how do I make it how does it then get put into client accounts in a way that, from a trading perspective and operationally is even vaguely scalable?
• 36:14
  Ryan: Yeah, Zach.
• 36:15
  Ryan: It, with the alternatives, it feels if we, I've done a lot of re- everyone's done research in the benefits of alternatives.
• 36:23
  Ryan: That, that's very well known.
• 36:25
  Ryan: The efficient frontier, it moves the efficient frontier to the, northwest corner.
• 36:31
  Ryan: It's what you want, higher return, lower risk.
• 36:33
  Ryan: Fantastic.
• 36:34
  Ryan: Everyone knows that.
• 36:35
  Ryan: But as we're finding out now with private credit, the investment is great in the right hands, but it can be really bad in the wrong hands for the wrong investor and that misalignment with liquidity and the liquidity risks
• 36:49
  Ryan: there.
• 36:50
  Ryan: So you're exactly right.
• 36:52
  Ryan: It's not saying it's a bad investment, but if it's align- misaligned, it can be a bad investment and not work out for anyone that walks in, even though it can help them in portfolio diversification.
• 37:05
  Ryan: Spot on.
• 37:06
  Zach: It,
• 37:06
  Ryan: quickly,
• 37:07
  Zach: it go...
• 37:07
  Ryan: You
• 37:08
  Zach: sorry, go ahead
• 37:09
  Ryan: it earlier about the threat to advisors.
• 37:11
  Ryan: A lot of advisors in this space think AI is the biggest threat.
• 37:15
  Ryan: Do you think that's the biggest threat?
• 37:19
  Zach: No.
• 37:19
  Zach: I would say, th-this is I'll try to caveat this the right way, but I would say that from the points earlier, I think we are, I think our, we ourselves as an industry are our biggest threat for some
• 37:34
  Zach: of the reasons we've been talking about.
• 37:36
  Zach: The shooting ourselves in the foot aspect of our reputational damage is just very frustrating to witness.
• 37:44
  Zach: Because again, it goes back to the point, we have to get so much right to be effective and to attract new consumers.
• 37:52
  Zach: And so any of this stuff, my example of the guy with the single stock portfolio, alts and sort of product selling it's not the product selling of 1984, but it is product, a product selling paradigm.
• 38:07
  Zach: So to pick on the alts example, if as a firm you can't articulate like that efficient frontier point, if you as a firm don't have even that, and when you say alternatives, what do you even mean by alternatives?
• 38:23
  Zach: Do you mean private credit?
• 38:24
  Zach: Do you mean private equity?
• 38:25
  Zach: What combination within private equity?
• 38:28
  Zach: What stages of company?
• 38:29
  Zach: There are layers to this and if a firm is just saying, again, we have a thing that 'cause a guy knows so and so now it's going in everybody's portfolio, the indus- the consumer has sniffed this out, right?
• 38:42
  Zach: This is not news to consumers and it is just such a bummer because we're doing it to ourselves, right?
• 38:50
  Zach: If, but if you can articulate a framework, we've built it this way, it fits into portfolios in the efficient frontier for asset allocation purposes for these reasons, and the framework of these types of clients in these types of
• 39:05
  Zach: situations with these specific tax inputs and their goals get it, and I can articulate why That's great.
• 39:14
  Zach: That's golden.
• 39:15
  Zach: That's the whole thing, right?
• 39:16
  Zach: But any version that isn't that, and again like we talked about, you can apply that to any product I think is more damaging than we realize, right?
• 39:26
  Zach: I think it is a major thing that, a SpaceX employee looks at and rolls their eyes, right?
• 39:32
  Zach: And we just have accepted as, a thing we do sometimes.
• 39:36
  Zach: So yeah I think we have a lot of empathy for advisors and that's why we're doing what we're doing in trying to support really good advisors.
• 39:44
  Zach: But as much as everybody's hand-wringing around AI and the threat of direct to consumer, I think there's a little bit of hey, we need to really look in the mirror and that start there.
• 39:56
  Zach: It's not to say AI is not a threat, it's just an order of operations thing, right?
• 40:01
  Zach: If we don't solve this internally, the AI thing is a moot point, right?
• 40:06
  Zach: That we need to deal with that next, is the point.
• 40:09
  Ryan: Yeah, and AI, I do think, one of the benefits or the many benefits is it's forcing j- everyone, financial advisors to level up their game, be better.
• 40:19
  Ryan: So I think that's a good thing.
• 40:21
  Ryan: Lastly, Zach, fantastic conversation.
• 40:25
  Ryan: Talked about a lot.
• 40:26
  Ryan: Real quick, how does Seeds help address these challenges advisors face today and add value?
• 40:34
  Zach: Yeah.
• 40:34
  Zach: So bookending to the two layers of the experience around investing and the operational pieces of investment management.
• 40:43
  Zach: On the experience piece, advisors log into our system.
• 40:47
  Zach: We help them gather more complete information about investors.
• 40:51
  Zach: That information can logically connect to portfolio outcomes and the underlying investment solutions that best reflect that human person from that human conversation segues to proposal tools.
• 41:03
  Zach: So you're in the same system to say, "I understand you.
• 41:06
  Zach: Here's the portfolio that is right for you.
• 41:09
  Zach: I can show it to you."
• 41:11
  Zach: And then the operational piece, enabling advisors in the system to essentially press go, and then seeds us automating the implementation.
• 41:20
  Zach: So what I mean by that is here's, let's say a UMA and a taxable account for the Smiths with direct indexing within equities and this fixed income ETF-based model in the same account, and they have IRAs, and here's
• 41:35
  Zach: the household level allocation, and then press go, and we are implementing all of those sort of building blocks inside of the UMA structure, and then automating all the trading that would then happen thereafter.
• 41:47
  Zach: So back to the expectations point, if you're doing tax loss harvesting, for example, once a year manually, that's not, it's interesting doing tax loss harvesting in a systematic way in separate accounts was maybe even a couple of years
• 42:04
  Zach: ago thought as this specialized ad-advanced thing.
• 42:08
  Zach: Now the table stakes thing is that tax loss harvesting needs to be systematic across all taxable money, essentially.
• 42:14
  Zach: That's what, the consumer knows that's a thing that they can access.
• 42:17
  Zach: So tax loss harvesting, automated rebalancing, cash management and so on.
• 42:22
  Zach: And lifting advisors out of those weeds so they can go do the human stuff with the client.
• 42:28
  Ryan: Awesome, Zach.
• 42:30
  Ryan: Great conversation.
• 42:31
  Ryan: A lot of fun.
• 42:32
  Ryan: Great insight that our audience will take a lot from.
• 42:37
  Ryan: I know I did.
• 42:38
  Ryan: I'll go back, watch it again just to take it all in.
• 42:41
  Ryan: Great stuff.
• 42:42
  Ryan: Thank you so much for coming on the show.
• 42:44
  Ryan: It's been an honor.
• 42:45
  Ryan: Where can our audience get more information about Seeds?
• 42:50
  Zach: Find me on LinkedIn.
• 42:51
  Zach: Always happy to connect with advisors and chat one-on-one.
• 42:54
  Zach: And our website is www.useseeds.com, so come check it out
• 43:01
  Ryan: I love it.
• 43:02
  Ryan: Thank you, and thank you everyone for listening to this episode of Zephyr's Adjusted for Risk podcast.
• 43:08
  Ryan: You can watch all of our other episodes on the Zephyr YouTube channel and Spotify and wherever else you catch your podcasts.
• 43:15
  Ryan: Also, be sure to like and subscribe to those channels and give us a follow on LinkedIn.
• 43:20
  Ryan: Thank you very much and have a great rest of your week