In this episode we continue to profile high-performing wealth management firms leveraging advicetech, data and planning-centric practice management to deliver better advice and outcomes to more people.
I sat down with Anders Jones, CEO and Co-Founder of Facet Wealth, an innovative virtual financial advisory firm that seeks to build the "next great financial services company".
With that bold mission, the financial backing of Warburg Pincus and a very purpose-built business that combines a highly-customized technology stack and an organizational structure that helps their CFP staff do nothing but work with clients on their plans, Facet Wealth has accelerated growth during these challenging times.
They've doubled new business flow through a unique combination of direct-to-consumer marketing and partnering with RIAs for referrals and transfers of mass affluent clients that aren't a focus for the RIAs, but are the core focus of Facet.
Facet Wealth was recently awarded the title, "Digital Startup of the Year" by Aite Group. Join us on the video podcast and learn why.
· Facet Wealth Origin Story. [2:50]
· Virtual First, Since Inception. [8:18]
· Technology Stack Strategy. [9:28]
Beyond core capabilities including Box for secure file storage, Plaid for account aggregation/linking, Slack for communications, Vestmark for portfolio management and AWS for cloud data hosting, Facet Wealth took the highly unusual step of building out its own CRM and planning capabilities in order to use those tools to enable their very specific advisor and client experience and workflow.
· Data Management and CRM. [10:30]
· Facet Wealth client profile, subscription-based pricing model and onboarding process. [12:55]
· Success metrics. [17:42]
· Applying agile methodologies to the financial planning cx. [19:20]
· Giving Clients Permission. [21:42]
· Client Acquisition – How Facet Wealth doubled its new business run-rate since March. [24:10]
· How Facet Wealth is helping clients dealing with covid-related hardship. [26:50]
· Business development via RIA referrals, inbound traffic and employer workplace solutions. [27:58]
· Advisor recruiting and onboarding. [30:49]
· An Advisor "Day in the Life" and the use of data to derive "Next Best Step" to recommend to clients. [35:30]
· Client segmentation and specialization. [38:05]
· Asset management as ancillary to financial planning. [39:55]
· Personal Capital exit, Warburg Pincus backing and what the future holds for Facet Wealth. [42:14]
Wealth Management v2.0: The AdviceTech Revolution, Episode 5
with Anders Jones, Co-Founder and CEO, Facet Wealth
PODCAST TRANSCRIPT [00:00-12:33]
Gavin Spitzner (President, Wealth Consulting Partners, LLC):
Welcome to the "Wealth Management version 2.0: The AdviceTech Revolution" podcast, where I'm joined by Anders Jones, Co-Founder and CEO of Facet Wealth. And by way of background, there are a lot of podcasts out there focused on advisors helping advisors and fintech, which is awesome. This one's a little bit different.
Here, we're focused on the business of the business, the business of advice. And specifically, we study and celebrate firms that are leveraging the combination of technology and humanity, to deliver better advice to more people…better outcomes for more people through that combination. I call that the advice tech revolution and Anders is on the front lines of that revolution.
Since I stumbled upon Anders and Facet Wealth a few years back…I think Anders we met at an industry conference where you were with one of your RIA partners if I recall…and you had acquired the small end -- the mass affluent end -- of their book which was not a core focus as it is with many RIAs. And for you that was a way to acquire target clients in one fell swoop. I believe that has continued to be a way that you’ve continued to grow your business…we’ll get into that.
But why don't you give our listeners and viewers a little bit of your background? Give us the Facet Wealth origin story.
Anders Jones (Co-Founder and CEO, Facet Wealth):
Yeah, absolutely. Well, first of all, thanks for having me. A big fan of your weekly newsletter. I get a lot of insights out of that. I always think that the analysis that you do is pretty unique and interesting, so excited to be able to join you and talk a little bit about what we're up to.
As far as our origin story goes, so my quick background is I grew up in Boston, went to school in California, went to Stanford undergrad, graduated in 2009. So with the exception of then, probably the worst time to graduate in recent memory, although I think this year might've outdone us. And so, you know, what do you do when 75% of your class doesn't have a job? You join a startup.
So I was on the early team of a company called LiveRamp, which is in the advertising technology space. And we sold it to Acxiom in 2014, I think, and subsequently got spun out as a now public company. But after that I was doing some early stage angel and seed investing and got very interested in what was going on in the wealth management market. This was the 2015 time frame. So the robo advisors were starting to really get traction and raise really large venture capital rounds.
And the real sort of impetus for Facet was the DOL fiduciary role. It was clear from all the venture activity in FinTech, that there were some big changes and trends happening with a move towards more digital advice and in particular DIY advice. And then the DOL rule came out and the industry pushback was, if you have...if you pass this rule, you're going to have 8 million clients who would lose their advisor relationship because the advisor can't afford to both service them and act in their best interest at the same time.
So that was when the light bulb went off and we said, wow, so you have a bunch of people who have already opted into working with a human advisor, and they're not going to the sort of DIY robo solutions. But the cost of servicing them, the industry's cost of servicing those clients is too high unless you put really crazy fees on top of what you're doing for them. And so that was sort of the light bulb moment to start Facet, which was this industry has a cost problem. And if we can build technology to lower the cost of human-based advice, there's already a willing and ready market there that has opted in. And that seems like a very valuable company to build, not just in the purely economic sense, but in the sense that we could actually really help a lot of people who need the help.
And so that's kind of what we've done. That's what we've built. Our whole approach is that segment of people that have more complexity and nuance in their financial lives than a DIY solution is really built for, but at the same time don’t have the asset level that's interesting to a traditional advisor acting in a purely fiduciary capacity.
Fantastic. And I couldn't agree more. I'm a big fan of this space. I’ve been promoting it to a lot of my enterprise clients for a while. Now, unfortunately we had this catalyst, this inflection point around COVID and lockdown. And so now everyone is scrambling to build out what you've already done. We had, recently, we had Personal Capital, another firm, different model, but some similarities in terms of remote advisors leveraging technology. We had that sale for a billion dollars recently. So all eyes are on this, everyone's saying, how do I accelerate that?
You've been through it…we know it's not that easy. It's not just saying, okay, now you're conducting your business through Zoom and WebEx with clients. There's a whole business model around the model…specifically, you mentioned building out the technology. So that's one of the areas that is really interesting to me that you didn't...you've got some third party partners for areas that you decided didn't make sense for you to build out, but you did build out quite a bit organically. So talk to me about that whole process and that approach.
Sure. Let me start with a general observation about kind of where we are as an industry six months into 2020. And I think if you rewound to January and said, here's what the world's going to look like six months from now, I don't think anyone would've believed you. But the best way that I describe it is that the last six months has really accelerated the future of…five years from now is now today. And so I think that there were a lot of sort of nebulous ideas about, yeah, in the future, there's going to be a heavy focus on virtual client experience and enabling this idea of working from home or working from anywhere. And these are all sort of like great things that we will get to eventually. And now we're in a world where you have to be doing these things.
And I think it's interesting. I think there's kind of two sides to the same coin, especially in the virtual side of things. One is that clients are now looking across the industries for virtual delivery. That's become their default expectation. And I think the days of a brick and mortar office for a lot of the sort of knowledge work, which I would put our industry in are over from a client facing standpoint. At the same time, talent has always been a hot topic in this industry, and how do you tap into the next generation of talent. And companies that aren't equipped to enable a work from home or work from anywhere environment are really going to be left behind and are really going to struggle with recruiting talent.
And you asked about our starting point, and we've been doing this for a while…we started in 2016 and from day one, we were a virtual first company. We have an office in Baltimore. In total our company is about 150 people. We have maybe 35 work in the office in Baltimore and the rest are virtual and work from home. And in particular CFPs which has allowed us to hire out of the national labor pool of CFPs, which has been great for us and really allowed us to hire the best talent that's out there.
But we designed our culture and our sort of way of working from day one to support virtual work. And I think that companies that are now sort of scrambling to figure out how to do that, there are a lot of things to take into account that if you haven't optimized for it previously, there's going to be some growing pains. And I think that the world is sort of divided into two groups now. There's the people who are playing defense and trying to just tread water, and then there are people who are embracing this and saying, okay, we're going all virtual for the next, say, until there's a vaccine or whatever the… whatever that sort of point in the future is. And we're going to lean into this and really make it work.
I think there's going to be a lot of movement in the industry. I would imagine there's going to be a lot more M&A as companies sort of self-sort into who's virtual first, who's not, who can...who has the tech infrastructure to support virtual work and virtual service delivery. So it's going to be really interesting to see how that all shakes out..
Absolutely. So on the technology side, let's spend a couple minutes on that. Tell me about how as you were getting this up and running and figuring out your plan, how did you decide on what your tech stack had to look like, what you would outsource versus develop internally?
Sure. Going back to our kind of founding “aha moment” around the cost issue, our whole approach to the tech that we've built is how do we make our planners more efficient so it reduces the time per client and then reduces the cost to the end client? So that looks like basically increasing the number of clients that a planner can work with. And if you think about sort of, going a level deeper, what that looks like..today, if you're an average CFP, you're probably spending about three hours of prep time for every hour of client facing time. And a lot of that is very low value-added work. You're going into different systems. You're pulling a bunch of data. You're compiling it into some report or some deliverable for the client. You're taking notes, maybe on a yellow pad and then transcribing it.
There's a lot of stuff that goes on that really centers around the movement of data and the normalization of data between systems. So our whole approach is how do we get that three hours of non-client facing time as close to zero as possible? And so for us, it all starts with our database, right? We've constructed sort of our own CRM. And then we built tools on top of the CRM that basically make for very easy movement of data back and forth so the advisor doesn't even have to think about it. All the notes are taken in the app, all the plans are built in the app, all the recommendations that advisors make are prepopulated, and the agenda tools are in the app. And so the idea is that anything related to sort of the creation of deliverables or calculations on the app and the client lives in one place.
The stuff that we haven't built are things like account linking. We use a combination of Plaid and a couple others to link accounts and, those pipes are already built and so not something that...we don't need to reinvent the wheel there. Secure file storage, Box does that very well. We don't need to reinvent that. And that's basically it. We use sort of all the usual internet backbone stuff, like Google for all of our internal emails and internal drive, Slack for communication. AWS is where we host all our data.
But yeah, I mean, it's interesting when you're a tech company, you have to think about what are the things that you can do better than anyone else versus what are the things that you can rely on other people to do better than you. And then you always have to make these build/buy decisions. And while it's nominally sexy to own the whole stack, there are certain things that if you sort of double down on your own expertise and advantage, that's where real value gets created.
PODCAST TRANSCRIPT [12:34-27:52]
Right. So you gave me a thousand jumping off points. Let's talk about the client. Ultimately the aim, as you said, is to serve more clients that they've shown an affinity to getting advice somewhere. They don't want to be purely do it yourself. So what does that profile of a...sure, you've got more than one profile, but if you could generalize, what's an average Facet Wealth household look like?
I'll give you the non-obvious answer, which surprises people, which is that the median client that we have is 55 years old. So most people would think, oh, FinTech tech forward company, you're probably serving millennials. And we do have a fair share of those. I think one of the things we didn't talk about earlier is that our model, our pricing model is subscription-based. So we don't charge based on assets. We charge an annual subscription that's really tied to the complexity of the client's case. We look at how much time we're going to be spending with them, what level of resources they're going to require on our end and then we price it accordingly. We think that that really aligns value with cost in a very fair and transparent manner, and also it makes us unconflicted.
Let me interrupt you on that, how in that early discovery phase, how do you probe and get a sense of what it's going to take to manage that client?
We have a three-step onboarding process where we actually have three conversations with a client before we sign them. And one of those is we call it a goal review, but it's a deep dive into what are the client's goals and what are the things that are top of mind for the client. But then also we put our fiduciary lens on and say, okay, what are the things that you're probably not thinking about? I'd say the two biggest ones that people aren't thinking about are risk management, so various forms of insurance, and then also trust and estate things, the various sort of unsexy things...parts of financial planning. And we sort of look at combining those two points of view, and then that's how we inform what the level of services that the client's going to need. There's a lot more complexity to it than that, but that's the high level of how it works.
Do you find, if you look at some of your clients, the longest tenured clients that you monitor, that you might adjust it on an annual basis, or is it pretty...is that process pretty strong, where it follows that path?
We look at it and we're a very data-heavy company and analytics-heavy company as you might've imagined. So we look at on a unit level from a client standpoint, are we achieving what the client needs and how much time are we spending doing it, or are we way overshooting or way undershooting? And so occasionally we'll reprice the client and that can go in either direction. But I'd say for the most part, it's a fairly steady state.
I brought the pricing up to the comment on the millennial clients that we serve. We work with a lot of folks that don't have any significant asset base. And in some cases actually have negative net worth if they have student debt, but our high earners, the HENRYs, right, the “high earners, not rich yet” and can afford to pay an annual fee, and it definitely makes sense for them to do that, but a traditional advisor would be hard pressed to work with them because they don't have any assets.
But that being said, our median client is 55. If you think about it, if you have... And our median client has about $400,000 of investable net worth. And a lot of that is typically tied up in a 401K, so again, difficult for an advisor to feed off of. So if you think about it, a 55-year-old client has, at $400,000, it's just kind of...probably is fairly close to the peak in terms of what their asset level is going to be. For a traditional advisor, looking at it, that's not a great client to service because there's not a lot of upside left there for them.
But at the same time, arguably in the most complex time in their financial life, right, there's kids that are likely still dependents and might be going to college that the parents are on the hook to pay for. There could be parents that are still alive that the family is now starting to take care of. They're starting to think about retirement and what that looks like. There's all sorts of complexity in that space, which is...requires a lot of time and requires a lot of support. And that is a perfect client for us because that's what we have to give. And that's really our wheelhouse.
Anders whether you knew it or not, you're describing me. So we're going to have to have a conversation after this.
Great. We'd love to put you through the process and get your feedback and see what you think.
Let's stay on the client for a second then I want to turn to the advisor experience. In my view, there's not enough focus in this business around the ultimate measure of success, which is client outcomes. We talk about production and we talk about maybe the number of plans done, those types of things as firms try to move towards more of a planning approach. In your case, it's fully embedded in your DNA. Talk about that. As you look at your clients and the kind of the journey you're on with them, how do you measure success from the client perspective?
Anders: It's a great question. So I'll give you a culture first answer, and then I'll go deeper, but we actually have a channel, a Slack channel at our company called dreams made possible. And every time that one of our planners helps a client achieve a goal, they post it for the entire company to see. And we celebrate all of those as a team.
I love it.
It's really important, especially, and this actually goes back to the first point around building a virtual company, when you're not in the office together every day, you need to have something greater that ties you all together… that is really that connected tissue between you. And I think to a person, everyone who works at Facet is really fired up by our mission. And we genuinely in our heart of hearts, believe that if you can help someone with their financial life, if you can put them on a better footing from a financial life standpoint, they will live a better life in general.
Financial health is just as important as physical health. And so for us, we love to celebrate those small moments with our clients. The sort of more scientific answer is, are you familiar with like the agile development process?
So it's this idea that instead of doing a full project plan that maps out, here's the starting point, here's the end goal, here's every step to get there. And then 18 months from now, hopefully we achieve that -- which by the way, sounds very much like eMoney or MoneyGuidePro financial plan -- it's this idea that, okay, you have a start point, you have an end goal in mind, and then every week or two weeks you check in and say, okay, what's changed, and how should we adapt over time? And so we're really putting aside the whole business model change, putting aside the tech piece.
I think our core innovation around...is around a new kind of financial planning. We call it the best next step, but it really is rooted in this agile mentality, which is that your financial life is dynamic. It will change...where you are today and where you are a year from now are two very different places. Unexpected things happen. You make different decisions six months from now than you thought you would've made. I mean, COVID, and this whole pandemic is a great example. Like the world's get turned upside down more frequently than we would think. And so having the flexibility to adapt to that and thinking about your financial life in sort of bite sized chunks, that I think is actually a way better way to think about financial planning than the sort of existing traditional line.
So when you asked about how we measure success for our clients, we think about in terms of how many people are achieving their best next step and how many people understand the best next step. Have we done a good enough job of explaining like, hey, this is why insurance is really important right now for you. And that's actually more important than thinking about saving for a boat or whatever it might be, or the flip might be right, where it's like, hey, you've actually worked a lot harder at saving than you might think, and you're in a position to do something crazy or something to achieve some...or have some sort of splurge expenditure that you didn't think that you could have. So that's how we think about it is these smaller bite sized chunks that are really more tied to your everyday life, but ladder up to a much bigger financial picture.
Yeah, that makes a lot of sense. And I think advisors that can... assuming you've got a client that's in decent financial shape…they're not underwater…they're not spending more than they're making… I think there's an awful lot that just, they want somebody to give them permission, that's grounded in data, and people that look like them and what they've been through and the choices that they make and the tradeoffs that they make, but permission to do more.
We know so many people...I'm sure we both have lots of family members and acquaintances, friends that assuming they're not in the camp of just being, completely overspenders, they tend to not want to spend. They're just, they're scared to death they're not going to have enough in retirement and just to do the things they want and they don't enjoy life when they can. So I think advisors that they've got those kinds of tools and the way to explain things and guide...the value is off the charts.
Can I share a quick client story that I think really illustrates this point? So we had a client who is a woman in her mid-60s and she was working with one of our planners and she said, , this just kind of came up in casual conversation, "My happy place is the beach and I haven't been at the beach in 20 years and I would love to go, but I just don't feel like I am in a place where I can really justify that expense." And our planner looked at her cashflow and said, "No, actually you could go tomorrow if you wanted to." And three weeks later, they had another meeting and it turns out that she went to the beach with not only herself, but her two grandkids and shared that experience with them. And we have a call recording where they're both like crying on the phone together.
And I love that story because first of all, it really is making dreams possible. It's also something I think that a lot of people don't think about when they think about what your financial planner can help you with, right? I think everyone thinks about our retirement and long-term planning and long-term goals. And it's like, no, you can actually live a better life today. And I think you made the point exactly right around giving permission. When you have an expert that's in your corner and is enabled by a bunch of great tech and great data to help do this analysis very quickly and very efficiently, that's when you can make this magic happen.
Absolutely. So in terms of the client experience, you talked about this upfront process. Now, what's the volume looking like these days? Help your colleagues in the advice business that are trying to run businesses and grow businesses be altruistic for a minute. And in this environment, how do you do it effectively? And where are clients coming from? And maybe I want to...I did want to weave back into part of your origin around the partnerships with RIAs and what does the mix look like in terms of clients coming through that channel versus direct end client marketing that you're doing.
Yeah, absolutely. So let's start with the, sort of what volume's looking like. It's interesting. I think two quick points. One is from a servicing standpoint, when we had all the crazy volatility in March and April, we actually didn't see a huge uptick in terms of number of inbound client requests. And I would imagine that a lot of planning first advisors we're in the same boat, that if you do a good job of explaining to clients, here's what your financial life looks like, here's what your financial life looks like when the market's down 30% and here's how you're on track for some longer term, bigger picture stuff. You can actually get out ahead of it and train your clients. And I think we were in that camp, which has been great. We've actually doubled our onboarding rate in the last...basically since March. We were onboarding about 50 clients a week. Now we're about 100.
And that's how many advisors?
Right now we're at 47, I think. We're adding planners on a monthly basis. Sometimes I lose track, but I think we're going to...
I'll come back then to onboarding planners virtually. I'll come back to that, but...
Yeah, for sure.
But keep going. So that's...say that stat again about the 100.
So we've gone from onboarding about 50 clients a week to 100 clients a week. Yeah. And I think that there's two things there. One is that we have been, and there's a lot of content out there about us being a virtual first firm, so we have a leg up there, and I think when people are looking for a financial advisor, that really helps right now. And then I think the other thing is that the need for planning is really increasing and that there are a lot of people who need the help now more than ever. We're onboarding a lot of single income households, folks who had...that were dual income and now are a single income and they're trying to figure out how to navigate a job loss. And so some of our clients were affected by that as well.
We launched an internal program called Facet for Financial Hardship. And the idea was that if one of our clients lost a job or felt like they were no longer in a position where they could pay our fee, we basically reduced their fee by 95% for a 3 to 6-month period while we help them sort of navigate the job loss. And we built this whole module around, okay, you're unemployed, what does that mean? Like, what are the very practical, fast steps you can take to set yourself up for success there?
And so we had about 70 clients lose their jobs. And about half of them, we've put on this Facet Financial Hardship program. That's been a very small thing that we've done, but I think those are the people who actually need our help the most, right? So that's kind of where we are from how things have changed and what's going on in the industry.
How are they, those 100 a week, how are they finding you...and/or you're finding them?
PODCAST TRANSCRIPT [27:53-44:54]
We work with a number of advisory firms and basically, companies that are generating a lot of inbound interest. I'll give you a quick stat. There are about 5 million people who look for a new advisor every year just online. That's a combination of changing an existing relationship or entering the industry for the first time. Only about a million of those actually get placed. And the other 4 million, aren't a good fit. Typically they're too small for the traditional wealth management industry to be interested in. So we basically partnered with firms that are generating a lot of inbound prospects and 80% of them aren't a good fit for their business and they send those over to us. And so there's definitely been an uptick there.
We've started seeing a big uptick in organic traffic to our site just as our brand has gotten bigger and out there more. We’ll obviously continue to invest in that. And then the last thing that we've done, and this is a thing that I'm really excited about is we've actually launched an employer offering. We've launched a combination of individualized coaching sessions so employees can have one-on-one 30 minute coaching sessions with one of our CFPs. And then some percentage of them would like to become full planning clients as well.
And we actually...we've launched with four employers and I'm seeing really great engagement. And in fact, one employer in particular has...there's a large tech on the agenda around layoffs. I actually offered the coaching sessions as an employee...or a benefit or severance benefit. So we're working with a number of furloughed and laid off employees as well. And that's a channel I expect to grow pretty quickly.
A lot of synergy as well.
Yeah, financial wellness and employee wellness is a hot topic right now.
Gavin: Generally, what size firms are you focused on there?
Sort of, I would say anywhere between 500 and 5,000 employees, those are big enough where we can work... one of the things we do is we analyze the company's benefits stack, and that is a starting point for the coaching sessions. And so anything under 500 or under 250 maybe, there's a lot of upfront work that goes into that. And employee engagement is always a little tricky, right? So if you get 10%, is that really worth the employer's time with our time? So mid-size is where we target.
Got it. I did want to come back to advisor onboarding, I guess, recruiting and onboarding. So you're looking for...I would imagine like most aspects of your business, you're very disciplined and regimented, so there's got to be a pretty stringent profile of the planners you're bringing on. So talk to me about that. And then in a virtual environment, which we're all in now, how do you onboard them? How do you teach them the culture, teach them the Facet Wealth system and process?
Yeah those are great questions. So in terms of who we look to hire, we're really after folks who number one, got in the industry to serve people and to help people live a better life. And so we never ask our advisors to do any sales or business development. We have a totally separate onboarding team that's doing all of that work. And so we're really looking for folks who are in it to serve and in it for the planning of the sales aspect.
Also, we obviously are a high volume business, right? Each one of our planners works with about 250 clients when they're fully loaded. And what we found is that folks that come from places like a Vanguard or a Schwab, or call center heavy environments, where they might be answering an 800 number, they have their CFP, but they're very constrained in terms of the actual planning they can do. There's probably some asset allocation and maybe some retirement planning. But that's about it…any other topic is sort of off limits.
Those are the folks that we love, right? They're used to working with large numbers of clients. They understand the benefit of planning, but feel like they can't really flex their wings and they don't have the autonomy that we give them. And then of course they get to work from home, which three months ago was a big selling point, now less so. And so that's definitely a target. We actually do...we probably do more disqualifying. We spend more time trying to persuade people not to come and work for us than to come and work for us because it's a very specific profile of person.
We’ve definitely hired some people as we were learning that weren't a good fit. We hired a couple of people from like small independent shops that were more boutiquey and that's just a very different model than what we do. And so then this, sort of, this flows into your next question, which is how do we think about onboarding them? I mean, what I described to you earlier was a different way of thinking about financial planning. So it's not, let's get the full picture and develop a plan and get it all done, and then, you're off to the races and I'll talk to you next year. It's a very much ongoing collaborative, sort of iterative approach. So there's a lot of sort of unlearning that has to happen when someone comes and works for us.
And so we spend a lot of time. We actually really in the first couple of weeks go very deep with our product and technical teams who are rooted in the agile framework and have them explain why the way that we do things is actually much more conducive to a more successful outcome. We use a lot of different examples of bringing in the technical development methodology and really help people understand this is a different way of doing things. It's different than what you've been taught, but actually we believe this is the way of the future. So there's a fair amount of, for lack of a better word, indoctrination into the fastest way of doing things that has to happen.
And then in terms of the virtual aspects, we're still working at it and it's difficult. Before COVID, we started...the first...everyone's first week would be in our Baltimore office. And we hired in classes and in cohorts so you'd have this camaraderie that would happen organically because you'd have 10 or 15 people in the office at the same time, they're all starting on the same day. And that still happens in a virtual environment, but you don't have the happy hours. You don't have the, you know, going to the Orioles game or whatever we might have...or going bowling, or the sort of fun social activities.
And we try and recreate that as much as possible, but obviously you miss that in person component. But our curriculum has sort of stayed the same, and the way that we think about things has very much stayed the same. And we've now onboarded, I think two or three classes virtually, and it seems to be working just fine.
Fantastic. Let's take an advisor day-in-the-life. So advisor comes in, you talked about, I think you said, best next action.
Best next step. Yeah.
Gavin: Best next step. So I'm an advisor, I come in, I've got my dashboard. How prescribed is my day? What's that look like?
It's a good question. And it's actually a question that we go back and forth on a lot, which is I'm a big believer in guardrails, not prescription. And so on the one hand, you want to have a very clearly mapped and a clear set of standards for what your client experience looks like, right? Every client should have a minimum experience, both in terms of what the technical financial planning aspects are that they receive, but also the sort of relationship and what are the touch points that we have.
By the way, I'm also a big believer that you can give value to a client outside of a meeting with the CFP. And especially when you're charging someone monthly and it shows up as a charge on their credit card, you’ve got to figure out, okay, how are you showing that value even if they...maybe they didn't talk to their CFP that month, so we spend a lot of time thinking about that. So one, you want a just like clearly defined experience, on the other, you also... We're hiring people who have significant credentials and have spent a lot of time building expertise around their areas of focus.
And so we don't want to limit them, going back to the planner profile, we don't want to put them in a box and say you can only do these things. It’s a constant balance to try and figure out what the right...what that right level is. And, I'd say it's one that we're still experimenting with. And each plan is a little bit different and so we're still working out what that looks like at scale. And it's definitely not a one size fits all prescription for the planner.
Right. One thing I'm talking to some of my consulting enterprise clients about is, is getting away from traditional, especially in this environment, just geographically-based matching of advisors and clients. So you're set up to be obviously non-geographic. Do you have a matching process where you might have somebody on the team that specializes in people going through a divorce or corporate executives versus small business owners that have different types of planning needs, anything along those lines?
We do. Like everything, it's this constantly evolving process, but yeah, we do have certain folks who have different types of expertise. It's actually a hard sort of like linear programming problem to solve, right? If you have 100 new clients coming in a week, you have 50 planners, there's a calendar issue, which is how do you just match up who has availability, right? And then when you have 50 planners, it's a relatively small end, and you need to figure out, okay, like, how can you sort of map expertise to need, but also balance schedules and make sure that one person doesn't get absolutely slammed.
So again, it's an imperfect science, but yeah, we do think about that. And we're running some tests right now actually around how we sort of double down on that because when we look at clients that leave us, right, that we don't retain, there's definitely a category of folks who didn't get the expertise that they were looking for, or didn't feel like their planner was a good match for them. Typically we can save those folks and match them with another planner, which is great. But there is more science that needs to be developed in the onboarding process to make that happen.
One thing we didn't touch on as we bring this to a close, I want to spend a second is so you have some clients you're providing asset management as well, but within that overall subscription fee, I believe generally, but then others, you don't. Can you speak about what that mix looks like? And I guess if they're not managing their assets with you, what's that look like? Why wouldn't they? If it's part of the fee, how do you get visibility into that to help obviously have that drive lead the plan?
Sure. So right now it's probably a 50/50 split of clients that we manage money for and the clients that we don't manage money for. For those that we do manage money for, there's no additional cost. We just include that as part of their subscription and obviously the past fund fees through and that sort of thing. But, we're very, very focused on low cost, passive, globally diversified. So those aren't that significant.
To the extent that we don't manage people's money, I think there's a couple reasons. One is they don't have assets to manage. Going back to that millennial segment, they're folks that just don't have assets at all. And then there's also people who have assets tied up in 401Ks that we can't manage. And we can certainly help them think about the right way to allocate those and we actually manage some ourselves.
And then there are also, what's in the best interest of the client considerations. For instance, if someone is locked up in an annuity that might have a high fee associated with it, but breaking that annuity contract would actually cost more than the money they would save. You know, it's an unfortunate circumstance, but it's, we don't need to manage that money. And so we're not going to make the client do something that's not in their best interest. So that's kind of the three buckets of folks that wouldn't necessarily manage money with us.
Interesting. All right. I want to be respectful of your time and our viewers' times. I routinely knock these things that go on for hours. So I'm going to take my own medicine. As much as I'd love to talk to you for another hour, I'm going to bring us to a close. I mentioned upfront Personal Capital, so similarities, but differences also in terms of their model, they've got the free PFM tools, a couple million clients in that way, some percentage of which convert to an advised solution. I think they ended up somewhere 23-to-24,000 clients, $12 billion to $13 billion in AUM and all the other users, sold for a billion...$800 million something plus incentives to Empower Retirement. So obviously a lot of eyeballs on that. So I can't avoid asking you the question, with that freshly in the news and the similarities, what's the ultimate plan for Facet Wealth? What's the exit strategy? Is there an exit strategy?
Yeah, for sure. So first of all, I have a lot of respect for the Personal Capital team. I spent a fair amount of time with them over the years and I'm really happy for the outcome for them. And there are definitely some similarities there. I think there are also some pretty key differences. But without kind of going into that, what's our plan? I mean, we want to build the next great financial services company. That's sort of the rallying cry internally. We see this enormous opportunity of millions, tens of millions of households that don't have great solutions when it comes to thinking about their financial lives. And this is where applying innovation to an old solution can really lead to some amazing things. And so we're all in this for the long haul.
We didn't talk at all about sort of the capital that we've raised, but we've raised close to 40 million bucks and our primary backers are Warburg Pincus, and that's very patient capital and visionary capital that's in it to build something really extraordinary and really unique. So no plans to sell, no desire to sell. You know, hard to know if being a public company is really worth it these days, but certainly we'd love to be at that level and have that optionality. We're here to play in a big way.
Fantastic. Anders, thank you so much for the time today. Fascinating journey that you're on. We'll all be watching you and see what's next for you. So kudos on the success thus far and thanks for the time.
Anders: Thanks for having me. I really appreciate it.