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Mastering Independence: Data Aggregation and Client Management with Sam Kingston · RIA Collective

• 0:16
  Charlie Van Derven: Thank you for tuning into another episode of RIA Collective. I'm your host, as always, Charlie Van Derven. We're taking a little different angle today. We're going to talk about some family offices in that independent space, and I've got the perfect guest for that. My guest today is Sam Kingston. Amongst a whole bunch of other stuff, interesting things I learned about Sam, family business, all kinds of stuff we talked about, He's also an advisor at Arch. Now Arch is a SaaS platform and data aggregator amongst others, but really dominantly for family offices and RIAs. Sam, I'm going to let you tell me all about it. Sam Kingston, welcome to RIA Collective, and thank you so much for being my guest today. I appreciate you being here.
• 0:58
  Sam Kingston: Thanks for having me, Charlie. Good to be here. Yeah. So like you mentioned, I have a background in as a family business owner. My own family has been a multigenerational business owner in the area of agribusiness. I've worked at a family office for eleven years and working with Arch, as you mentioned, which is about 50% family office oriented and about 50% RIA oriented and focused, gathering data on alternative investments. So what that might mean to folks is that K One documents capital calls, capital distributions, audited financials, and a lot of times folks who are invested in alternative investments, which are increasingly in the RIA space and Family office space, they're having to go to multiple destinations to gather this data. So if you're invested in 50 different funds, you're going to 50 different places to get this information.
• 2:15
  Sam Kingston: And what Arch does is it centralizes it all in one source of truth for clients to gather this information, digest it, and then share it with tax preparers, professionals and whatnot that are involved in their kind of workflow.
• 2:34
  Charlie Van Derven: That's awesome. I can only imagine, right? You know that world a whole lot better than I do. But I can only imagine when you've got these large family offices that cater to an affluent client base, which becomes inevitably a much more complex client. If they're at a big firm, they're working within something of a framework, an established framework. But when they depart and go independent and become that Ria, I imagine you walk through the door and see some messes as far as what that data looks like. It's not aggregated at all. Probably a stupid expression, but clear as mud, right? As far as how those investments are playing together. Talk a little bit about that. What's that struggle for that large family office that might be at a large firm making that move to independence?
• 3:24
  Sam Kingston: Yeah. Like you said, the larger kind of wirehouses have preexisting, kind of self made solutions that handle this type of thing. Often it's built around a platform or menu of alternative options that the clients can select from. And so that feeds into kind of the data collection from those investments for the clients as well as the advisors. So for a lot of advisors who are thinking about going independent, that's a consideration, because the big wirehouses make it really easy to kind of handle that information. And so when they do go independent, solutions like Arch and Adipar, those come into play to kind of build the same type of feel to their business and interactions with their clients when they're in that spot. It's definitely something that today, when you look at independent advisors who are battling with this situation.
• 4:48
  Sam Kingston: A lot of it is specifically family offices. More so probably is they're using a lot of human capital to manage this data. And so it's spreadsheets, it's dropboxes, it's very prone to human error. And a lot of advisors, they've got people who are working with them and they'd rather have them doing other things than this. And so that's why Arch really came up with a really well designed niche solution to handle this. Because not all advisors have clients that are invested in alternatives, but increasingly they are right, because it's very much seen as a competitive differentiator for advisors to be able to offer these types of investment opportunities to clients as they increase in wealth, say, right, it's seen as more sophisticated. You have to be an accredited investor.
• 5:55
  Sam Kingston: And so that's kind of what a lot of investors aspire to be considered, and thus opens the door to a plethora of investment opportunities that aren't available to kind of normal, more retail oriented investors, shall we say?
• 6:14
  Charlie Van Derven: Yeah, no doubt. And especially as the market or as the economy changes as well, right? I mean, alternatives become just a better diversified portfolio. Now, again, most of the advisors that I work with are on a different level than what we're talking about as far as family office is concerned. But I had a real life example of what we're talking about two days ago. We're recording on a Wednesday at a coaching call with a good sized team at a large wirehouse. They are kicking the tires and considering making an independent move. Sam, they're not family office, and I don't want to give too much away because they retain their privacy while they're making these decisions. Their biggest problem is they know how much revenue they'll give up when they depart.
• 6:58
  Charlie Van Derven: That large wirehouse just based on the complexity of an investment strategy that they don't feel is available if they join an RA or start an RIA. Right. So I didn't even think about it at the time because you and I had our call to get together, meet and greet three weeks ago, a month ago, whatever it was. But now I got to go back to them and let them know about Arch. Right.
• 7:22
  Sam Kingston: Yeah. That's something that's interesting that you bring up, because a lot of the wirehouses, they do, like I said before, have these platforms, and they have the menu of funds, of alternative funds that their clients can. They bet these funds they're not going to put them on the platform unless they're fully vetted and they're confident that the fund's been around a certain amount of time and can deliver certain performance and whatnot. But disentangling a client from that type of structure, if a client is invested in a KKR fund or a Blackstone fund that's on a wirehouse platform, you have to get them out of that fund and then off that platform and then within the same fund independently. Right. And so you can use different platforms like I capital and case.
• 8:32
  Sam Kingston: And there are other platforms out there that cater to the RIA market, and those have their own kind of built in arch capabilities for the advisors. So it's really the brain damage of doing all the paperwork to kind of set it up and get the clients because signing all the partnership documents and whatnot, it's involved. Right. It's not just a one page mean. That's part of what's involved in a lot of advisors decisions, to stay at a wirehouse or that's a hurdle. That's a hurdle they're going to have to jump.
• 9:21
  Charlie Van Derven: What a great conversation, Sam, because we've done many, dozens of interviews on RIA Collective at this point, and I feel like maybe were scratching an itch for a lot of advisors with previous interviews, but it was high levels. You and I are getting deep. We've got some depth. I shouldn't say you and I, you are bringing some depth to the conversation because the example, a real life example, these guys on Monday that frankly want to be independent, know what they're going to give up in revenue because they don't feel like they can offer the same solutions in that framework of the A. Again, this is a different type of conversation than we typically have. Our mission is to help.
• 10:10
  Charlie Van Derven: I thought our mission was to help that five year Morgan Stanley, that seven year Merrill lynch, that four year UBS person who finds themselves in a position that they don't want to just isn't what they expected when they joined the industry. We're talking about 25 year advisors that have a complexity, that those younger advisors are younger by experience, I should say, because, of course, there's second career people in there. But we're talking about that 25, 30 year advisor that has built a complex book of business that feels like they have to stay with the status quo at the big firm, because again, they probably don't even know that at an RIA they've got this type offering to be able to put that status quo, that framework around a move.
• 11:02
  Sam Kingston: Well, the interesting thing also about this dynamic here around alternatives is that a lot of the bigger firms, bigger RIAs, I should say, are building plumbing and infrastructure that does mimic what the big wirehouses have. They're building stuff internally. They're outsourcing to solution providers like Arch and putting together an experience for the advisor such that it's really similar to moving a client from a big wirehouse to a schwab. It's moving the changing custodians and then with the alternatives, it's a similar type of exercise. But from what I, you know, I'm not, you know, I haven't worked at a wirehouse in many years. I'm not intimate with how the economics of alternatives and how the advisor gets compensated for clients who make alternative investments in their platforms. But I do know that they're incentivized.
• 12:31
  Sam Kingston: If the client is accredited and can invest in alternatives, then there's definitely attractive compensation for the advisor to make that happen for the client. But like I was saying, the larger firms have become pretty larger RIAs have become pretty sophisticated in how they've built platforms that offer similar types, type of alternative opportunities for clients. I'd say a lot's happened in the last, say, two to three years, kind of like pre COVID to, through COVID. A lot of these larger RIAs have been moving towards a really much more. They've got people who are diligencing funds, they've got more kind of automated back end and just more technology involved in client reporting that wasn't there previously or was just available to a really small subset of their client base. The smaller RIAs, though, they still are struggling with this.
• 13:58
  Sam Kingston: It's definitely something to consider, though, when looking at joining one firm. What do they have? What's the infrastructure look like? And so many RIAs are combining these days that the M A activity has slowed down a bit recently. BUT was like at a fever pitch the last several years. So these firms are all merging different technology platforms and whatnot. That getting everything to work together is definitely a challenge, but it's also raising the game that these larger firms now have by greater resources that they can allocate. They realize that they have to have the best kind of practices to attract advisors from other firms to join theirs. And so they've definitely gotten much more.
• 15:02
  Charlie Van Derven: Sophisticated, I would have to expect. Right. And you look back at the technology in this industry, and even if you just use simple technologies like CRMs or financial planning software, whatever that is, 15 years ago, maybe more than that, you work with a big firm because they've got the deep pockets to build that technology. But open market, of course, is race past big firms. In most cases. Wells Fargo launches a new software today, and it's going to be the best and the brightest next year. It's going to behind open market. Right. And I just use wells, an example. Could be any firm. I would imagine, though, it's a more sophisticated piece of technology. The same thing is happening in the independent space for these data aggregate softwares, where pretty soon they exceed the abilities of the large firms.
• 15:58
  Sam Kingston: Yeah, well, I think a lot of the large banks say they are just littered with kind of decade old applications, systems that are all kind of cobbled together, don't speak with each other, but back in the day, they were state of the art. But now, as newer stuff is layered on top, a lot of the bigger banks and wirehouses are having problems getting with the newer technology that's available. So the RIAs, to an extent, the bigger ones, having somewhat of an advantage with not having all that legacy technology that they're trying to kind of deal with, because these RIAs are starting to invest in these platforms now, which are newer and better and aren't held back by the legacy stuff that a lot of the banks were kind of putting into practice over a multi decade kind of period. Yeah.
• 17:21
  Charlie Van Derven: I want to ask you, Sam, I want to get your insight on, like, for these guys that I work with. Right. And again, two days ago, we had a coaching call. We do that a couple of times a month. And they're worried about these big, complex clients and finding a home for them outside of their current big. At what point would they engage a company like Arch? Do they need to make that leap of faith first and then engage Arch? Or could they be having a behind the scenes conversation as they're laying out their plans six months, three months in advance? What would be your recommendation to a team like that?
• 17:58
  Sam Kingston: Yeah, I'd say sooner the better. So you kind of understand what it is that how it would advantage them to use a platform like Arch, how it would fit into their existing client base. So, yeah, the earlier the better. Ideally, if they're going to a firm that already has arches installed within the firm, then they can have greater confidence that they're going to be getting the type of reporting that their clients would be used to at a larger firm. It's complex clients that invest in alternatives and other stuff. I think it's really important to think about it in terms of some of those clients are really not getting the attention that they would want at a larger firm.
• 19:13
  Sam Kingston: If they're at Goldman Sachs and they've got $20 million at Goldman, they might not be getting the attention that they would want at a firm like that because there's so many clients that kind of fall into that or way above that kind of asset threshold. So part of the thinking has to be, okay, we're basically going to out hustle and outperform what our competitors are doing at some of these larger wirehouses by just being super focused and really making the client offering them similar types of investment opportunities, but giving them the attention that they're probably not getting at a larger firm. But being confident that you can offer similar types of opportunities is a key aspect to that. And kind of arch falls into that area.
• 20:18
  Charlie Van Derven: Yeah. So listen, would you be a resource? And again, I'm just going to use these guys as an example. One of their struggles is where can we go and still retain these clients because of the complexity at this big firm. Right. So you've got an idea of which RIAs have technology like this in place already. If we've got any listeners out there that kind of fit that description of a large, maybe family office or aspiring to be a family office, do you mind being a resource? Because you could probably, I can't tell them which large RAs are going to have this type of technology in place. You could. Do you mind that phone call if we've got any teams that are listening that really just don't even know what the universe looks like as far as that availability in an independent space.
• 21:09
  Sam Kingston: Yeah, sure. I think we'd welcome that conversation. It's definitely something, I think we have definitely a view on kind of what firms are doing. And most of our clients are doing things that are pretty interesting outside of arch. And yeah, we definitely can give some insights as to making that type of transition and how we work. Although I think we don't want to be perceived as, like, guiding people in one direction or another or saying something about one firm or another. Sure. But we're happy to kind of have kind of landscape discussions as to kind of help them make a decision in terms of what they should be looking for in terms of best practices.
• 22:22
  Charlie Van Derven: Yeah. And I think that there's, like, I can tell you with this one example that I keep coming back to. Right. They are likely to stay in an environment that they know that they're not serving their clients in a purely fiduciary way. Right. Because they are subject to the products and the quotas and everything else that exists at one of those large firms. So they'd like to make that leap. But they look at, we expect these three or four clients wouldn't come with us because of the complexity of the relationship, and they don't know what that universe looks like. Right. They are blind to which ria firms they could be a part of because they just don't know the technologies there to support the client the way the large firm, the large captive firm they're currently at.
• 23:15
  Charlie Van Derven: Even just here's four or five you might want to look at. Right. Just because you know from your expertise, which of these independent firms might fit the bill well, for these complex clients that they feel like they might not make that move, in which case they'll be stuck in this position that they know isn't right for them. They know it's not right for their clients, but they can't give up the revenue that they expect would not come with them because of the complexity of the relationship. Yeah, that's awesome. What's the best way we got somebody that's listening, that is their struggle. Sam, what's the best way for them to reach out to you?
• 23:57
  Sam Kingston: So I'd say emailing is a good start. You can reach me at Sam@Arch.Co. And so that's a good way to kind of start a discussion. There's a lot of folks at Arch who we all wear a lot of different hats, but that know certain clients better than others. But I think getting an understanding of what they're looking for, and it definitely could add value by saying, okay, look, this seems similar to what some other folks are doing, but, yeah, I'm happy to kind of explore and educate as best I can.
• 24:56
  Charlie Van Derven: I don't want to compromise you in any way. I know you can only go so far with that conversation, so certainly don't feel like, honestly, I think there's a gap of knowledge out there. Right first off, I think the wirehouses want it to be that way. But I think there's a gap of knowledge for these large teams that are looking for an independent track but feel like they're giving up too much to do that the work that arch is doing, and I'm sure there's others in your segment, the work that arch is doing with large, you know, clear that path for them. So I don't want to compromise you in that conversation, Sam. That's not my intent.
• 25:42
  Sam Kingston: We definitely don't want to be seen, like, guiding people to one firm.
• 25:45
  Charlie Van Derven: Yeah, right.
• 25:47
  Sam Kingston: Our clients wouldn't be happy with that, clearly. But I think a lot of value can be added just by creating comfort as to capabilities, what someone can expect, making that decision to change, to kind of leave the mothership and go to another place, understanding a little bit more about kind of how things could work, I think that could help someone have more confidence in making that.
• 26:26
  Charlie Van Derven: Listen. This is a really valuable conversation, Sam. I thank you so much, man, for taking time out of your day and lending us some of your knowledge. A lot of our conversations, I'll say, are 3ft deep and a mile wide, and this one's narrow and much deeper. And I think it hits a segment that we really haven't chatted about before in that family office type space. You're doing cool stuff, man. Thank you for sharing that with us. Absolutely.
• 26:56
  Sam Kingston: Absolutely. Happy to do so.
• 26:57
  Charlie Van Derven: Awesome. So, on behalf of myself, Charlie Van Derven, your host, and my new friend, Sam Kingston, thank you for tuning into another episode of RIA Collective. Now, we are not a revenue generating podcast. I don't think we ever really want to be right? Because all of a sudden, that takes the purity out of what we're trying to accomplish. So the best way to grow is if you share this show with your friends, if you know another advisor out there who's looking to move to independence, I'd love for them to listen to a couple of our episodes from Breakaway attorneys, from knowledgeable guys like Sam, and a whole bunch of other interviews with head of RIAs that have made this move before. Share this. Give it a listen. Of course, leave us a review if you like what you listen to.
• 27:38
  Charlie Van Derven: And thank you once again for tuning into another episode of RIA Collective. And one more thank you to my guest, Sam Kingston, with Arch and Kingston energies and all kinds of other stuff you have going on in life. Sam, thank you for being here, man.