I recently caught up with a friend and industry veteran, Tim Welsh. Tim shared his vision of the fast changing financial advisor landscape and how we need to be on our toes . . .
How did your career start?
Like everyone else, I started my career at Merrill Lynch in the mid-90’s. At the time, Wall Street was just beginning to focus on asset gathering and developing relationships with clients vs. transactional brokerage and I was lucky enough to be placed into a new, guerilla marketing outfit called the financial planning group. There, our mission was to evangelize the financial planning process among 17,000 financial “consultants” and 600 branch offices. We didn’t know what we were doing, so we looked to the then fledgling independent RIA industry, copied that model and found the secret to success. By the time I left for Schwab in 1999, we had over 3,000 Merrill CFP’s, and were doing over 150,000 financial plans a year, so I am proud of that legacy (I’m not sure the rest of the industry would agree with me, however!)
Not to offend any of your past employers, but where did you learn the most and why?
Definitely at Merrill – I was fortunate to be recruited into their management development program right out of business school and was able to sample all aspects of the business through a two-year management rotation in sales, trading, banking, brokerage, strategy, marketing, operations and even international. This was during the time of real corporate employee development (those days are gone) and I had several mentors that challenged me, gave me the reins to take on big projects, fail, and then figure out how to learn from those mistakes. I learned a great deal about how to best deliver financial advice to investors on a large scale.
What brought you to become an entrepreneur and start your own business?
After working with hundreds of independent RIAs at Schwab, I realized that the happiest people I knew were those advisors – because they owned their own businesses. It was this sense of ownership and personal freedom, combined with the vision I had for creating a consulting platform that led me to explore new opportunities on my own. I sensed that there were hundreds of organizations that supported advisors – the vendor community – that were evolving and full of new entrants that didn’t truly understand the nuances of the industry. Thus, Nexus Strategy, my consulting firm, was born in 2006.
What were some of the challenges?
The biggest challenge was to figure out how to approach these companies and help them understand the gaps in their strategy and marketing. Many of these firms, particularly the technology startups, didn’t come from the advisor industry and didn’t understand why they weren’t being successful. They also had a hard time accepting the fact that they needed marketing and strategy help – many were only focused on sales. However, once I had a few successes, those engagements opened the door to a thriving and growing consulting business.
Is it better out here?
Without a doubt! I think I am now certifiably unemployable, so much so that I can’t go back to a faceless and heartless corporation again, nor would I want to. Being able to partner closely with other entrepreneurs and CEOs and materially impact their businesses provides some of the most amazing career satisfaction. I think only in a consulting role do you get the chance to build those relationships, add a tremendous amount of value and get to do it over and over again with multiple firms. That experience just doesn’t exist in one single corporate role.
Talk about Nexus Strategy—how do you work with clients within the industry?
Today we work on a marketing and strategy level with some of the industry’s leading technology, wealth management and custodial platforms to help them best position and message their products and services to independent advisors. Some of this work involves content development, public relations and implementing go-to-market strategies, however the biggest piece is the ability to navigate organizations as their “agent” through the industry, make the right connections and leverage our many relationships with the movers and shakers in the industry. I call it the “Jerry Maguire” effect – not so much “show me the money!” – rather connecting the right people at the right time to the right opportunity. This isn’t so much quantifiable, but is absolutely what our clients appreciate the most.
How is financial services evolving in your opinion?
I think financial services are evolving too slowly. There are still way too many entrenched institutions, regulators and business practices that need to change. Due to the regulated nature of the industry and the fact that consumers are extremely confused about what they get and what they pay for, it is hard for change to manifest itself. The good news is that with the arrival of the Robo advisors, automation is finally landing in wealth management and advisors are going to have to up their game. These robo-innovators are not going to disrupt the industry outright, but will definitely make their mark in opening the door to the need for technology change. Finally, advisors are going to have to buy some software.
What’s great about it, and does that translate to the spectrum of investors?
What is great about the industry is that it is critical to the economy and the health and happiness of consumers. Never before has there been such a huge need as people are living longer, are not prepared, haven’t saved and there are now so many more variables to manage, such as healthcare costs, government deficits and global unrest. There is so much at stake that financial services will have to change, innovate and find a way to provide benefits to all consumers, despite its legacy.
Give us three companies to watch in the next 3 years?
I like Jemstep, Wealth Access, Finance Logix and if I can name four – eMoney. These are four of the most innovative technology companies with the most potential to alter the landscape of how financial advice is delivered. Jemstep is providing the best of robo technology for advisors to engage clients online, enable them to self-service and automate the onboarding process under the advisors’ brand. Wealth Access is aggregating client balance sheets in one, multi-generational wealth view, optimized for all mobile devices to facilitate the next generation of wealth transfer. Finance Logix has some of the most innovative financial planning and client engagement tools, and eMoney is redefining the advisor technology operating system through its eMX platform. Add them all up and you have a very powerful advisor technology platform built to scale and grow, adding needed capacity to capture the incredible opportunities heading advisors way.
On the flip side, are you willing to name three dinosaurs?
“Sadly, I think the wirehouses, including my former employer, are all stuck in the past.”
They continue to eat their young and wage war among themselves in poaching advisors, instead of investing in the next generation of advisor. They are all still clinging to old brokerage practices by resisting the fiduciary standard. Open architecture and transparency are the keys to future success, and none of them are heading in that direction.
What does the average Advisor need to be worried about?
Advisors need to be extremely worried about the unbundling of investment management services from AUM fees being driven by the Robos. Now, Schwab’s “free” Robo is being advertised everywhere and consumers are becoming educated to know that investment advice being priced on basis points on assets doesn’t work. How can you justify your 1% fee based on AUM, when it is now “free?” Advisors will need to find a way to charge a modest fee for running the money and charge the bulk of their fees on what they actually do for a living: financial planning and looking out for their clients’ best interests.
What are 3 things the average Advisor needs to do to be relevant?
Automate the client experience by deploying the best of Robo technology to enable clients to self-service on any mobile device, develop a systematic marketing capability, and deploy a career path so that the next generation advisor will want to work in their firms.
What do you enjoy most about what you do?
I enjoy making a difference for my clients in a very tangible and measurable way. They can point to the very specific deliverables we’ve provided that moved their businesses forward. I also enjoy the deep relationships I’ve developed throughout the industry over the years. It really is a tiny industry and being able to travel frequently keeps me in contact with the many friends that are scattered across the industry and country. No matter what city I am in, I can always tap my network to find the best place to meet, mingle and share a meal.
3 Favorite apps?
Twitter, United, Uber
How many conferences did you attend last year?
One Airline provider or more?
1,404,680 miles on United and counting.
What would you like to leave us with?
We are truly in an advisor technology renaissance – take advantage! Never before has there been this much activity, enhancements and new entrants all attracted by the overwhelming success of the RIA industry. Innovation is happening here in the independent space – grab onto it and hold tight, it’s going to be a great ride!
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