Episode 3: The Execution Project with Steve Gresham

Inside the Pod: Episode 3

I recently sat down with Steve Gresham to talk about our shared passion around the advice and wealth management business focused on helping organizations and their advisors serve more clients, more effectively and drive organic growth.  


We have galvanized our enterprise support around the combination of client segmentation, an integrated ecosystem of advice tech tools, the use of data and business intelligence and practice management through what we are calling The Execution Project.


The Execution Project


The financial advice and wealth management industry is at the crossroads of challenge and opportunity. A mature bull market and a mature clientele of aging Baby Boomers are pushing advisory firms to deliver better retirement solutions.


More clients are consolidating their assets spread across multiple relationships and there will soon be definite winners and losers. The losers are trapped by the inertia of their earlier success. The go-forward winners will break out, engaging the levers of better execution.


The Execution Project harnesses the four most impactful levers available to advice industry managers to improve asset retention and drive organic growth:


· Better Engagement with an Aging Clientele

· Advisor Practice Management

· Data, Artificial Intelligence and Business Intelligence

· Organizational Alignment


Show Notes


· Yes, It’s Been about the Boomers Since 1982 and That Ain’t Changing [06:30]


· The Execution Project: Four Levers of Execution – Getting Un-Stuck [11:33]


· Organic Growth: The Ugly Reality [17:50]


· Why Have Most Financial Planning and Aggregation Efforts Failed? [20:14]


· Advisors Aren’t Talking About What Clients Really Care About [22:30]


· Integration Key Execution Elements: Data, Tools, Practice Management [26:41]


· Lever #1: The Family Conversation [29:40]


· Deep Connection: The Key To Asset Consolidation [32:20]


· Lever #2: Longevity Planning Tools [33:14] (Eversafe, Whealthcare Planning, Lifeyield)


· He Wrote the Book: “The New Advisor for Life” by Steve Gresham [36:15]


· Lever #3: Grasshopper, Leveraging Data and BI to Accelerate Achievement of Business Objectives Including Asset Consolidation and Retention [37:30]


· Lever #4: Private Client 2020 – Organizational Redesign & Alignment [42:50]


· Sample Execution Plans: Pilot Programs and Success Metrics [45:40]


· What Gets Steve Up in the Morning and What Keeps Him Up at Night? [49:50]


· Steve’s Secret Talent [52:04]


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Wealth Management v2.0: The AdviceTech Revolution, Episode 3 

with Steve Gresham


PODCAST TRANSCRIPT [00:00-17:45]


Gavin: Hi, Gavin Spitzner here to talk about a new venture I'm engaged in with my very special guest, Steve Gresham. It's about helping wealth management enterprise firms address what has been the elephant hiding in the corner of the room and now it's the elephant sitting on your lap on the couch…the lack of true organic growth.


So I'll have Steve introduce himself and tell you a little bit about himself in a second but Steve and I crossed paths many, many years ago. Back in I guess the late '90s when I was at Prudential and we were taking our managed accounts platform and consulting practice if you will and capabilities out of just serving at the time about 10,000 captive advisors at Prudential Securities -- so a business like you'd see at Merrill Lynch, Morgan Stanley, Paine Webber at the time -- but unlike those firms, we said, "Hey, we think there's an opportunity." As the breakaway movement was beginning...the IBDs were beginning to grow… to take the platform out and basically give those independent advisors similar capabilities and support that they had at the wirehouses. And so, you came into the picture and we'll get into that to really provide a lot of great practice management support so that it wasn't just, "Here are some tools, here's some tech." But really how do you go out and engage clients and institutionalize a lot of best practices.


So we'll...I'll have you tell us a little bit about that and what you've been up to but after that, we went our separate ways for quite a few years and we reunited in 2019 over I guess what I'd call a shared bond and passion around the advice business and maybe a shared state of underwhelment…if that's a word…in terms of advisors actually taking full advantage of the tools that they have within their firms and that their firms have invested millions in, all the data that's out there and really not doing all that they need to do to scale their practices and engage clients.

So let's hear from you. I don't know really if this is a podcast, a video, a webinar. I don't know. But I guess the aesthetic that we're going after is we're going to have a little chat like we do all the time and we'll let our guests listen in and hopefully we'll entertain them to some degree. But Steve, why don't you tell our listeners and viewers a little bit about your journey and how we got to where we are today?


Steve: Well, Gavin, first of all, thanks for having me here. You know, we’re just a couple of old classicists, right. So the stuff that we wrote at the time probably still works, not so much because we were brilliant but because the ideas themselves were ones that we picked up on. And I just figure we're the kind of the method or the vessel of conveyance, so we're bringing those ideas, Advisor 2000 with Russ Prince back in Prudential. That was totally awesome. And would you do anything radically different today than what we talked about then? No. And that's one of the great things about the industry because there's a consistency to success. And that consistency is that people who have good insights are terrific but the people who have better process and persistency are the ones who seem to be the most successful. So that's probably a good place to start.


So that's basically what I've done almost all of my career. I've only been in the investment management, financial management, wealth management world. That's all I've ever done. So starting back in 1980 with a Canadian firm as an analyst and a portfolio manager. Then on to sales working with clients and then fee based accounts beginning in the mid '80s. My first headquarters job working for a regional brokerage firm, Advest which was later acquired by Merrill Lynch. Then I worked on the other side of the street, on the buy side for a long time and we've had probably two or three or four different tours of third-party distribution. The most meaningful was the one at Phoenix Investment Partners where we worked from the point of IPO, demutualization of Phoenix home life and then the public float of Phoenix Investment Partners and I think we were probably the second largest managed account firm at the time.

So a lot of stuff there that's consistent and then until 2000, the end of 2017, nine years working with the Fidelity clients, the retail business to drive that retail strategy which ended up propelling the assets under administration from a trillion to where it is now, about $3 trillion. So a really strong story. But again, process, persistency and it took a long time to make all those things happen. So here we are doing the same and just bringing it up to date, I think.


Gavin: Some better tools out there, some better ability, at least capability to access data in ways that weren't available then, it was all very manual back then but I agree. The process is the process. It's a question of how do you scale it and take full advantage of that and apply those best practices. There's just so much opportunity and so much need and I think that's something we're also united in. We just look at this...at least, at this point in my career it's, "How do we help more advisory firms and advisors help more people?" whether that's ultra-high net worth, high net worth, mass affluent, you name it, through a combination of human touch and digital tools.

I think on the tools side that's something you've been very heavily involved with over the past couple of years since leaving Fidelity. You want to talk about that and maybe that's a little bit of what led you on this journey and where we came together around what we're going to talk about today?


Steve: Sure. Well, if you look back to any transition that industries have had, especially the financial services business, it's really been a fairly consistent clientele. We have been working with people who are really creating the most demand. And so, it's really been...though it's trite and people turn around and their eyes glaze over but this has been a baby boomer story since 1982 when the market really started to move and Paul Volcker broke the back of inflation.

So there was a 52% return, total return in the long bond that year as interest rates broke. When I got started, it was just a little bit ahead of you because I'm a little bit older but, you know, 15% money market fund yields. If you had a million dollars you could put it in a money market fund and get a $150 grand a year. And now you're lucky if you can scrape 150 bucks out of that same account.


So it's been about transitioning as you said earlier. It's been about transitioning and it's always been about tools because tools allow you to build things, allow you to maintain process. And of course, the tools have evolved because when I got started, we didn't have a computer in the office. We actually had a rotary dial phone. So when you started working forward into the progression and how tools have changed, they've changed but they still do the same things because human nature and human behavior stay the same because they're pretty much evergreen.


And so if you think about the managed account business where you were a pioneer in the early to mid to late '80s, if you think about what made the managed account business go which arguably the most successful financial product in financial services...so that was the transition from stock brokers buying and selling stocks and bonds with you as the client and the transition to professional management, initially with mutual funds but then on to separately managed accounts and then all kinds of different arrays. And what was cool about it was that all these different managers were available but you couldn't really synthesize them easily into a solution for a client. So you had a tendency to buy one and you bought that one because a lot of other advisors you knew bought that one and a major wirehouse I remember at the time had a whole third of its program with one manager. Well, that wasn't the idea.


Gavin: Yeah, the Hot Dot?


Steve: Yeah. So the concept from there was, "Wait a minute. We're on to something but we have to refine it." And here came the investment policy questionnaire. And the investment policy questionnaire is a simple questionnaire of the client, recorded their preferences and helped them translate those preferences into instructions that could be followed by the investment world.


So that set the stage. Everything else after that has been a variation and I'd even extend that into financial planning which is just more of capturing your preferences, capturing your data and then we'll help interpret that into something we can do for you in the financial and investment world.


Gavin: Yeah. I think back to the '90s. It really...I think the Hot Dot craze helped lead us into a better institutionalization...institutionalizing of the process. And you talked about the investment policy statement, but it was the whole four step process. Managed money became inextricably linked to the institutional consulting process and that was the beauty and that's why.. for all the benefits of separate accounts and managed accounts and then later, what it evolved into around UMA, the real strength and power was around that four-step process. For some it's a five-step process but having that and supported by tools but having a process around really getting to know your clients, determining what the right mix is, monitoring, reporting, that hasn't gone out of style and it never will.


So let's get into a little bit about The Execution Project which is something that we've been working on now for a while. I was thinking about the name. You know, we get a few little snickers on the name because if you look it up, you'll often find some stuff about death row. But I was thinking about it last night. It is kind of apropos because for executives that don't deliver growth the way that we're taking about it, they might end up getting executed, at least from the career standpoint.


We're here to save them from that with this venture that we are calling the Execution Project. And let's see if I am technologically savvy enough to pull this up. And we'll take the folks through a little bit about what we are doing.


Just give the viewers and listeners a little bit of an overview. How we're looking at these...the four levers of execution and how they are intertwined with each other.


Steve: Sure. So first of all, why would you need an Execution Project? And the main reason is the work that we've done being operating executives with a track record is that whatever you have been working on for some reason the most common phrase that I hear back, I think it's the same for you which is, "Well, we're stuck. Something is stuck." because generally, most organizations are kinda like garages. They've got something in there that would actually help them with what they need to do right now. They just have to figure out how to find it and then figure out how to use it. So generally the stuff is there and what we found across our studies of companies and our experience over the years, decades of experience now is that there tend to be these four levers that you keep coming back to whenever there is any kind of significant transition and that significant transition I think is happening today as again driven by the baby boomers. I'll say it again because still the eyes glaze over. Oh, I've heard that before. Yeah, but you haven't actually taken action and that's what we'll challenge you on.


So as the boomers are rolling into now retirement where the median age of the boomer cohort is 64, you're right now at that peak of that bubble, what Craig Pfeiffer, the CEO of the Money Management Institute, calls that bulge in the distribution of the cohort. We're right at that point where 50% of the people are already past that retirement...classic retirement age and the other half are approaching. So we're right there at the...kinda sitting at the top of the bubble or the bell curve.


These are the four pieces. The first one is to understand better that the 55 plus clientele is with us for good. And I mean for the estimated useful life of almost anybody watching this video because that's your career, working with people over the age of 55. Because of the size of the cohort and the dominance of their assets, that is the margin for the financial advice business for the next 15 and possibly 20 years. So chew on that for a minute. We've gotta get better at that. To bring that down to the ground, we call that the family conversation.


The second part is process. Now we are both...a lot of practice management history but practice management has evolved to encompass the processes, not just of the human activity of the advisor but also the utility of digital capabilities that would be aligned with what an advisor is doing. So modern day practice management is that process of understanding better what you're trying to deliver for clients, having that be a repeatable process but then also being able to use new digital tools to help improve not only the quality of the execution but the consistency.

The third part is if you do have yourself automated which most of the industry still tragically is not, if you do have automation in place and that's primarily CRM, if you have that deeply embedded in the company, then you can begin to utilize the insights that data will give you. But again, if I were to pick anything that people have not gotten to yet and if somebody said, "Well, I really want to spend my career working on one of these four things," if you wanted to be at the top of the first inning, it's data and we think that that's where the leaping effect comes from so we call that grasshopper.


And then finally, if you think of these three areas and you think about putting them inside of a company and then trying to manage their interplay, what we do find is that especially because of the importance of digital tools, automation, at scale enterprise software, all of that, we find that a lot of companies are still organized as though they are only delivering through humans. And so, the organizational structure of the company does not make it very easy for the leadership to be able to determine how they should prioritize investment. So the organizational alignment needs to change. 


And we saw that at Fidelity when I was there where if we wanted to reinvest back into the business which was a big margin business, then where would we put the money? Should it go to the web? Should it go to the branch organization? Should it go to the phones? Should it go to marketing? You know, where should that be? And we'd have those arguments all the time because it's really hard to understand the contribution of each. And so organizational alignment, the way you make decisions, the way you prioritize investment is a huge, huge lever as well.

So those are the four for execution.


Gavin: Awesome. Thanks, Steve. That's a great overview. And it's segmentation, strategy…understanding who you're going after. I agree with you…boomers, that's where the assets and the revenue are. You know, I'm also passionate about helping younger folks and I think a lot of the same digital capabilities and processes can be applied at scale in hybrid solutions. So that's another area I'm focused on, but I would agree with you.


You talked about CRM…that's certainly the hub and that single pane of glass, the workflow engine, the understanding of clients, that's at the heart of most tech stacks. But there are so many other great tools now, specialized planning tools that help advisors, help clients with different needs around longevity planning, estate planning that can really integrate tightly into the CRM. So I think that's a big part of what we're doing whether it's helping firms that already have some of those tools that aren't taking full advantage of them today or bringing some insights around other tools that can help them, what I would call and I'm sure I'm stealing this from somebody, help make it...financial planning a verb versus a noun, a dynamic, ongoing process versus just the creation of a plan that's really...it's deeply embedded in a lot of what we're talking about here.


Steve: Sure. No doubt. No doubt.

Wealth Management v2.0: The AdviceTech Revolution, Episode 3 

with Steve Gresham


PODCAST TRANSCRIPT [17:45-53:01]


Gavin: Why don't we run through a few of these just to bring a little more depth to some key points? So this is a slide. I know you and I, when we saw these stats back in the fall courtesy of Mike Durbin and the Fidelity crew, this is an area where we've long had our suspicions that the long bull market and a lot of M&A was clouding up the real view of what was happening around growth or the lack thereof with wealth management firms. 


So this showed that... Maybe I can move this so we can see it all. This was a breakdown that Fidelity did showing that if you take out M&A, you take out the market and you actually look at net new assets or new assets from new clients, new assets from existing clients, taking out then assets withdrawn by departing clients or by existing clients that on average we're at...this was...the latest was as of year in 2018, 2.7% organic growth, pretty anemic. And you can see they traced it back to 2013, pretty much in the same range throughout that whole time.

And for the average to be 2.7%, that means a whole lot of us have been under that and underwater when you look at where the flows are going. Steve, anything you want to add to that, any color?


Steve: Well, I think the first thing that strikes me is I wonder what it looks like right now. And I wouldn't think it'd be great. The other thing is that the assets that are withdrawn is a very easy thing to see but what is sometimes harder to see especially when you have a shift in the markets is that it is possible that if the clients...even if they kept their money with you, but let's say they withdrew the money from their managed account, it changes the revenue picture for an awful lot of the assets that may still be in place with you. So, in other words, the story is probably significantly worse than what we're looking at here and when we talk about asset consolidation and its role in organic growth, we could probably punctuate that some more.


Gavin:  This is why most planning and aggregation efforts failed. And to Steve's point, I think over the years the average assets for a primary advisor in terms of shared wallet is somewhere mid-50s, maybe 60%. People spread their money out and high net worth, ultra-high net worth spread it out even more. And a lot of the efforts...even though the tools are there, some really great tools around planning aggregation in terms of revenue realization, around those efforts, it's been...it hasn't been stellar.


So we're positing that the reasons are we're using the wrong metrics of success. A lot of firms just focusing on the number of plans, they're managing results, not drivers. Activities are misaligned. Jumping to product too soon, I think we've seen this throughout our career, a lot of generic planning without the requisite specific segment-oriented planning conversations and tools, not demonstrating value creation for clients in exchange for their sharing of personal information. 

You can give somebody a great tool where they can go in and aggregate but they may...if they do, they might not want to share it with you unless you're demonstrating true value exchange for them or they're seeing, "Oh, by my advisor having access to this, they can actually be better advisors, more prescriptive to me."


We’re not creating client experiences that drive both retention and referral-based client acquisition. And we're not showing prospects what the client experience will feel like during the pre-sales process. That's something I'm particularly big on these days because there is so much great tech, you have an ability to show people, give them a little bit of a taste whether you want to call it a freemium model but a taste of that experience versus just a lot of talking. One of the keys across all this is anything that is focusing the conversation around advice and planning versus simply investment management.


Advisors having the wrong conversations…just a ton of great research... I think we all know this intuitively at this point that clients are looking for advice. They want guidance around lots and lots of topics that have nothing to do with beating a benchmark, how do we mix different asset classes to create a diversified portfolio…. They want to talk about taxes. They want to talk about estate planning, philanthropy, helping their children, helping heirs. And to this point on this research on the bottom left, they're much more comfortable having these conversations with an objective third-party expert oftentimes than they are with their own family and kids especially as it relates to legacy planning type issues.


Steve: Basically, what you're looking at is a classic gap analysis about what do I think is important for my clients if I'm an advisor versus what do the clients think is important. And the issue that you're stepping around here deftly, Gavin, is that up until recently health, longevity, life events, all of those, that was tricky territory for advisors to go into and for a lot of clients as well. Didn't really want to talk about it. It's sort of a...what I've always thought of as sort of an advisory co-conspiracy of ignorance. So I'm not going to ask you and I'm not going to tell. So it's the don't ask, don't tell financial advice. And because people just are not really sure that what they're going to hear is going to be good news. So it's sort of like going to your doctor knowing that you've got some habits that get you in trouble, knowing the doctor is going to say something but not really appreciating it when the doctor begins to volunteer a whole bunch of concepts around your better wellness. So you don't really want the lecture.


And so for most people who have sorta kinda a plan but they don't really have a very specific plan with specific dates and specific amounts, what will I be able to spend in the year 2025 kind of precision, when they don't have that, it's really difficult for them to have a lot of enthusiasm about digging in only to come back and find out that the assumption that they had will be wrong.

Now what's changed a lot of that of course with the coronavirus pandemic is that now everybody is talking about health and a lot of people are scared and legitimately scared. And so, they're very worried generally and they're seeing this information all the time about people less fortunate than them hoping it's not going to be them but it changes priorities. And every generation has something that happens that changes priorities. You and I were in New York at 9/11. It changes your priorities. Maybe some people that we knew moved out of the city because they say, "We just don't want to have that kind of anxiety anymore."


So now I think it's a very, very different environment in which to be able to have the kind of conversations that were already there. You know, crises accelerate trends that were already underway and people were beginning to talk and beginning to be concerned about these topics around longevity and their lives are changed by some of these things that happen. That's why they call them life events.


So I think most of the boomers are watching a preview of coming attractions with their aging parents and that's what's really changed the game but now it's, all of a sudden, it's in their face.


Gavin: Absolutely. And there is so much money emotion right now. When you look at what's going on with coronavirus and the lockdown and a lot of people rethinking a lot of things combined with these evergreen life events, it's...I keep saying to clients, "Get out and play in traffic but have the right conversation." It's not about leading with where are we in the market cycle and is this the right time to invest and is this the bottom. It's engaging on these topics. Find out where their pain is…address those elephants in the room and connect with them on a much more emotional level.


Key execution elements, and we've touched on this so just a little bit of a picture here around the combination of tools, data, practice management, emphasizing asset consolidation, and we'll talk more about that, longevity planning. Tools that simplify, clarify client engagement like the RTQ that Steve talked about. Data, facilitating client segmentation and informing this notion that we have a best play or sales play. 


It's really about packaging this up for the advisors in ways where it's not overly complicated. Why don't we touch on one thing here, Steve, that we've talked about that when we think about the advisors as a group that, yeah, you've got very, very successful advisors that are doing this already. You've got some that they're just never going to get there. They're stuck in their ways. They've had success doing things a certain way. And then the more growth oriented or movable middle, so that's certainly an area that we're very focused on working with wealth management firms how to figure out the right folks to engage that want to get better, want to operate this way and honing in and working with those advisors.


Steve: Yeah. I think it's very important especially for...the bigger the organization, the more important it is to focus on the median, so the median client, the median advisor. The people who are at the very top of the food chain in terms of skill level, those very best advisors, they don't really need the company as much as the company needs them. So they're really the people who are...in many ways they are the hardest to help because they've already figured it out. They're kind of...as you said, they are early adopters. You know, they stay ahead of the curve and they're just wired to be able to maintain their success and that's why they're successful.


So at the far end of the other end of the spectrum are the people who no matter what you give them are just having a tough time engaging…either it's a will issue or it's a skill issue. A good portion of the time it's both. So it's that group in the middle which tends to be by far the largest, and typically, much larger than the top group and the bottom group combined. That group is the group that you really focus on as an organization and if you can move the median performance up, that makes the biggest difference because as a percentage, there's a much bigger gain that's going to come from taking somebody especially with the introduction of technology and the leverage that comes from that, the ability to get that movable middle to shift up, that is a step function bigger than what you're going to be able to get out of either of the other two groups if they were to improve.


Gavin: One of the levers that Steve talked about up front was this notion of the family conversation. It's certainly focused on boomers but it's really a theme that extends across different segments. You want to spend a second on this, Steve?


Steve: Yeah, the family conversation just is actually a more friendly way of referring to the current business reality that we have gone from a sort of single decision-maker head of household service model that we've had in...mostly in investment management and wealth management for most of the last 50 years and the dynamic of the demographic has changed so the longevity is...greater longevity is holding the parents in place longer and it is allowing people to have children later and then all of a sudden you've got, as you're looking, you've got kids and parents and grandparents all pretty much in a state of potential earnings and participation in the economy and then looking at each other saying, "How can we help each other?" And so, the new client is really not a person but a household. And so, organizing... You mentioned the UMA earlier. The unified managed household is the beginning of the aggregation of the assets. And individual financial planning software programs create the ability to do aggregation as well so that you can get this kind of overall view.


The family conversation then says, "Well, let's take that overall view and then let's start talking about it. What are the implications?" And if you are a typical high net worth household with aging parents and adult children in this baby boomer cohort, it is quite possible that you are being asked by both of those cohorts on either side of you, older and younger to help participate financially to support them.


So, in the old days we called this the sandwich generation. Well, that was an abstract. Well, now we're here. And so how do we do that? How do you help a household allocate its assets appropriately? You don't want to deny the older folks but then also do you compromise the future success of the younger people. So how does that all work? Oh, by the way, take care of yourself at the same time in the middle.


So it's more about the aggregation, the collection, the management together and the conversation.


Gavin: Excellent. This is some data from CEB and Capgemini I really think it tells a great story that connects to this. That clients are twice as likely to consolidate assets with the advisor they feel a deep connection with and who motivate them to take action. So there are some great data points. They've done some really good research that shows for instance likeliness to add more flows. Basically, 2x for what they would consider connection leaders. Similar around moving at likeliness...likelihood to move assets, additional assets to the current advisors. So just some good data that backs up a lot of what we're talking about here.


Steve: Yeah. How many advisors would actually have you think about that in that way which is, "Well, what's a deep connection?"


We have a deep connection because we enjoy talking about the market together and we were able to create some great returns. So now how do you establish the connection? There are a lot of different tools to be able to take on the challenge of the family. And so, there are varying issues and so what we found is some really good partners in this world that are working in particular areas of specialty that we want to tap into. So Howard Tischler and Liz Loewy at EverSafe have got a really good approach to helping improve data security. You know, I use it myself with my family and it is guided in particular...it's particularly effective in support of seniors and helping them also to understand what the risks are.


When you think about the biggest challenge for advisors working with clients that are older, it is the ability to actually find that common ground. So, again, my comment about the prior slide. If you want to connect with the people, well, you have to do something to do...to connect. You can't just start talking about planning or financial products or the markets. And so, areas where just sort of common sense, day to day challenges of life and living, that's what we find with wealth care planning tools and so I think that's a stellar opportunity for advisors to improve engagement.


At the end of the day you still need to be able to solve some problems and do some real planning. The folks at LifeYield have a terrific social security calculator and then also great ways for you to be able to get better tax efficiency, managing the household on a tax efficient basis. They can actually even give you a score called the tax efficient score. So that's important.

And then a really big idea that I think is coming our way as you think about the fact that the largest asset class in America is residential real estate, I think we will make some progress here in the not too distant future in being able to incorporate the home in home equity into the whole financial planning, retirement, age and place calculus.


Gavin: That's really exciting. Yeah, I think these are great examples of tools in place today. And to the point before, ultimately we're going to work with firms and see what tools they have in place today, do a gap analysis, see what else might make sense whether it's these or others. There's just a host of really outstanding planning tools that change that conversation and help advisors have the right conversation. So part of our process is to work with firms, figure out what they have, what they might be missing and then how to integrate into a simple advisor workflow.


Steve: Right.


Gavin: "Advisor for Life," the new "Advisor for Life" written by Steve Gresham. Impressive.


Steve: Who knew, right?


Gavin: Actually, I've got it up there. I've got two versions, the new and "Advisor for Life". I'm giving you some free press. So that's got a lot of these themes really captured in long form for the readers out there.


Steve: Yeah. So my approach to practice management over the years having worked both in advisory firms and then in firms selling to advisory firms, I've always come up with the same thought which is trying to track what a particular advisor does. If you're a good advisor, you can listen to what other advisors have to say but you're not going to actually copy their practice. So instead of having those kinda difficult top advisor meetings where the top advisors talk about what they're doing, and I find a lot of advisors feel kind of a competitive issue with that, what I've tried to do instead is to go out and always capture what the clients are looking for and then talk to lots of different advisors to see how they would approach dealing with that client issue.

So "Advisor for Life" is a customer experience driven book because it is frankly just taking what clients think is important and then hearing lots of different ways that advisors would address those concerns.


Gavin: Outstanding. All right, let's spend.. a minute on Grasshopper. So this is the third lever that we talked about up front around using data much more effectively for optimizing client engagement to help with client segmentation and then to drive engagement, sales, service plays based on those different opportunities. Having that lead to a more stratified service model to make sure you're applying the right levels of service with different client segments profitably but in ways that those clients...it's really a meaningful experience for them the way that they want to be serviced and the experience that they want. It's implementation support. Steve talked about the centrality of CRM. Then other tools to help enable all this. And a simple...it's gotta be a simple user interface to facilitate adoption and management. I think those are lessons we've learned over our careers is you have to have that easy button to move that median the way you talked about. It can't be complicated. It can't be something people have to really work hard to figure out on their own.


And a picture tells a thousand words so this is something we put together basically trying to showcase what we're talking about around aligning data and business objectives. So key business objectives is we talk with you all about what you're trying to achieve. We think these would be consolidated down into six key buckets, asset retention, asset consolidation, financial wellness which means a lot of different things to different people so we'll talk about how we think about it. Risk management cannot be forgotten in all of this. Client engagement and practice management. So we look at those and we say, "From a data and a BI standpoint, what do those connect to and how do you use data effectively to help drive those objectives?"

So for instance, asset retention, using data...and there's a lot of great data out there enriched by AI to help show likelihood to attrite. Held away assets are obviously the key or one of the keys to asset consolidation and organic growth with the clients you have today. 


So there's amazing data out there now to help identify that and then identify within that insights to help have the right conversations whether there's actually a reason for those clients to consolidate with you. 


Life events, we touched on quite a bit as the gateway to understanding wellness, figuring out what life events people are going through or might be anticipating and figuring out the remediation to achieve wellness, whatever that means to that family or household. Client assessment tools, there are some great things. Steve touched on Whealthcare Planning, some outstanding tools there to help make sure that the clients you're dealing with have the capacity and make sure you don't have a ticking time bomb in terms of potential lawsuits as one example. Next best action, again, some terrific AI driven insights within CRMs and other capabilities to suggest client engagement, ideas and ways to engage. And also, I'd throw in there marketing automation again to help make it easy for advisors to do this at scale.


Advisor assessment, talent management, again, lots of great data available today to assess the effectiveness of your teams in delivering a solid practice management approach that takes advantage of these different capabilities.


Steve: Well, there are business objectives and as you said earlier, better and better tools every year to help businesses manage. But I think one of the most important things is that since companies are in most cases a fairly early stage adoption and frankly, willing to trust data as a management tool, it's still early stage but the potential is enormous to be able to get information specific to a group of people, a specific cohort and know how empowering that would be if you were able to look at it in isolation and then have a specific activity that is then...that leverages off of that data point.


And so, these are not necessarily gigantic things and ideas unto themselves. They've very common sense but again it's the consistency of the application and the ability to use automation especially running off of the CRM to be able to leverage that data point across a bigger group of people.


Gavin: Steve, you touched on this. None of this happens without the right organizational alignment and strategy. Spend a second on Private Client 2020.


Steve: So again, here this is organizational design and what we're talking about is that as the private client wealth management, financial advice business has evolved, it went from being a very hands-on, heavy lifting, basic kind of human enterprise and so much of the industry has been manual for years. So around us all other kinds of systems, especially in the investment world have become automated and there's a lot more data to crunch and a lot more consistency of result that comes from understanding how to align data and make it work for you. So we're in the process of now trying to deal with unprecedented scale with the baby boom generation being three times the size of the generation that it follows, the silent generation. And so now there's three times as many people that are available at minimum, probably more. And then in some cases, that is a significantly more complex client now as well.


So there's been a boost in the demand for advisory firm's time and capacity both from the increase and the sheer numbers of clients but then also because of their longevity, the complexity of the needs of those clients. So it wasn't bad enough that one of them is geometric times three but I can only imagine what the difference could be from a kind of a low maintenance savings and investment accumulation client who is in their 30s, 40s, 50s and then change that picture to look at somebody in their late 60s, 70s and 80s that you may be responsible for for another 15 or 20 years. If that service demand isn't at least a 3x, in some cases it would be 10. So we've got a 3x and a 10x. It sounds like 30x to me and that requires a different organization.

And so again, what I got a chance to see at Fidelity with almost unmatched scale anywhere in the industry was how you would have to be able to employ digital capabilities because the human simply couldn't get there.


Gavin: Right.


Steve: But I do like the way, at least one of the authors who is watching all of this develops the way he describes it, which is to first try to optimize the machines and leave whatever the machines cannot do, that's actually the stuff that should be given to the humans, which is another way of punctuating the importance of separating from the idea of, "Well, we'll use the machines if we run out of people." This is changing the polarity of that view which is to say we're going to automate everything and we're going to save the people for the things that machines cannot do. That resets the priority. That's the gamechanger.


Gavin: Great way to look at it. All right, let's bring this to a close. Let's give folks a sense of how we're thinking about this and how we're working with firms. And we can do this with folks offline, give them some use cases and case studies but overall the approach that we've landed on based on what we've seen work and not work is this notion of running pilots…not trying to boil the ocean and take on too much too soon but run some pilots with a group of advisors that this fits the profile for that we think we can, with sales management, with leadership at these firms, can determine what we can move the needle and then optimize it, fine tune it for broader use. But Steve, why don't you share a little bit about that process?


Steve: Yeah, first of all, I couldn't agree more with what you said. Obviously, that's what we do. It's to try to do something that is small because whenever you're trying to do something new with any organization, it is more important to be able to figure out how to get it to work for that organization. And if we don't find a way to do that in a way that the organization can then understand the potential, then we will never accomplish the objective because we'll never get through the first several stages. Most new initiatives die because they get too dispersed. It's sort of like an army going into battle. It's easier to defend a 100-mile area than it is to defend a 1,500-mile area. That's actually what led to the defeat of the Germans is they were battling in the Eastern Front with the Soviets.


So we're very interested in the thing that's driving most people's concern right now which is the basic life blood of the business which is organic growth. And organic growth is that asset retention, net of the withdrawals and then of course you've got flows but as you said earlier, Gavin, you can't count on the market for lift. And recruiting for advisory firms is okay but it tends to be a zero-sum game in the long run. So we're looking really for net new assets. We find that asset consolidation because people have a tendency to spread their assets out in the bull market, and they get older, they tend to consolidate. So we have two reasons for people to be consolidating. You know, the bearish or volatile market and then also the fact that they're getting older. So they're going to squeeze that down. People will lose. Organizations will lose. Organizations that have assets today that have a small share of the client don't realize the client is consolidating and they may lose that client entirely. So it's important to be a beneficiary, not a victim.


A lot of that action is then going to be driven by the success of the client interaction. So does somebody...as you said before, do they feel like they're engaged? Does somebody feel like that person's in touch with them? And so that's a function of attention. You'll be able to see that driver measured sometimes in metrics like the Net Promoter Score even before it shows up in the assets because that's more of a driver of those assets.


We spend a lot of time looking at the level of both the advisory engagement but also the client engagement to see what that looks like because really what we want to do more than anything else is to reduce the friction between the advisor and the client as they work together. So making the advisor's job easier becomes the priority of the company that is trying to do well by the client, if that makes sense.


Gavin: Absolutely.


Steve: So ultimately, we're looking for the potential to have that story get told by clients and also increasingly by employees and advisors as well because we're all into a talent challenge. So we want to have, for the firm, we want to have reasons why people would want to talk about their job so other people would come and join them. There are not a lot of young people naturally gravitating to the advice business. And then also if you actually are providing a good service, a good client experience…the clients will talk about it and that will bring the client referral.


Gavin: So I'm going to wrap it there but I will ask you one last question. Actually, two questions. It's what gets you up in the morning…what are you most passionate about that really gets you up and excited about the morning… and what keeps you up at night? And this is a family show so keep it clean.


Steve: Nice. Well, what gets me up in the morning is the opportunity to make a difference. My personal motto is to make progress every day. And so, I've got multiple interests. It's the main reason why I quit my very cool corporate job because I wanted to be able to have time for those interests. And right now, as you pointed out we're able to work with lots of different companies, not just one. We're able to talk about a lot of different topics, not just a couple. And so we're really having a great time, I think, you and I and some of our colleagues in the industry talking about all kinds of things but making a difference because for me, I'd like to make sure that my adult children, when they look back and say, "So dad, what did you do in the war? Did you make a difference for people or did you just make money?" The whole idea for me is to be able to work with people that I enjoy on topics that I think and work that is meaningful.


What keeps me up at night probably more than anything else is the difficulty of trying to get those projects working. And so we will get moving in the right direction and we think we've got all the parts and the pieces but then there's invariably some kind of a curve ball. And so, what keeps me up at night is always trying to think ahead. I don't like to be surprised and I don't like the people that I'm working with to be underfunded or taken by surprise by a particular twist in the market that we should've thought about. Even in the corporate world I was that person that Andy Grove talks about, only the paranoid survive.


You know, I'm an anxious person by nature and it's...I guess it's worked pretty well so far but it doesn't let you sleep a lot.


Gavin: Terrific. Steve, I've really enjoyed this. Thank you for the time. By the way, that’s a really interesting piece of woodwork in the background. What is that?


Steve: So as I said, I have a lot of interests. So one of them is to reclaim or otherwise salvage lumber from where I live in Connecticut near the shoreline where there is just an enormous amount of storm damage and regular drops of really cool hardwood trees. So what you see behind me is a slice that we cut off of a historical maple in my neighborhood and just got it dried, polished and then what else would you do with it except hang it on your wall, right?


Gavin: It's beautiful. Well, thank you so much for the time. Appreciate it. And that's it. That's a wrap.


Steve: Thanks, Gavin