\n<\/p>\n
<\/iframe><\/p>\n<p><noscript><iframe style=\"width: 100%; max-width: 660px; overflow: hidden; border-radius: 10px;\" src=\"https:\/\/embed.podcasts.apple.com\/us\/podcast\/behavioral-finance-and-leadership-with-natalie\/id730188152?i=1000663362658\" height=\"175\" frameborder=\"0\" sandbox=\"allow-forms allow-popups allow-same-origin allow-scripts allow-storage-access-by-user-activation allow-top-navigation-by-user-activation\"><\/iframe><\/noscript><\/p>\n<p>\u00a0<\/p>\n<p>The transcript from this week\u2019s, <a href=\"https:\/\/ritholtz.com\/2024\/07\/mib-natalie-wolfson\/\" target=\"_blank\" rel=\"noopener\">MiB: Natalie Wolfson, Orion CEO<\/a>, is below.<\/p>\n<p>You can stream and download our full conversation, including any podcast extras, on <a href=\"https:\/\/podcasts.apple.com\/us\/podcast\/behavioral-finance-and-leadership-with-natalie\/id730188152?i=1000663362658\" target=\"_blank\" rel=\"noopener\">Apple Podcasts<\/a>, <a href=\"https:\/\/open.spotify.com\/episode\/3ZOSmMLuxP9RkNmLELt1mD?si=xTm_SRGEReue3q9yO6XBNw\" target=\"_blank\" rel=\"noopener\">Spotify<\/a>,\u00a0<a href=\"https:\/\/www.youtube.com\/playlist?list=PLe4PRejZgr0PzN7r8NikAnOqP70DHhoJ0\" target=\"_blank\" rel=\"noopener\">YouTube<\/a>, and <a href=\"https:\/\/www.bloomberg.com\/news\/audio\/2024-07-25\/masters-in-business-natalie-wolfsen-podcast\" target=\"_blank\" rel=\"noopener\">Bloomberg<\/a>. All of our earlier podcasts on your favorite pod hosts can be <a class=\"gtrackexternal\" href=\"https:\/\/plnk.to\/MIB?to=page\">found here<\/a>.<\/p>\n<p style=\"text-align: center;\">~~~<\/p>\n<p><em>00:00:08 [Speaker Changed] This is Masters in business with Barry Ritholtz on Bloomberg Radio.<\/em><\/p>\n<p><strong>Barry Ritholtz<\/strong>: This week on the podcast, I have an extra special guest. Natalie Wolfson is CEO of Orion. She has an absolutely comprehensive resume in the financial services industry. Everything from Amex to AssetMark to Charles Schwab. Not only has she been named to a number of hundred most influential women in finance, I don\u2019t know many people who have seen as much of this industry on the front lines as she has for as long as she has, and is now in a position to very much drive change within the industry as CEO. At Orion, we know Orion, I know Orion as a performance reporting company. We\u2019ve been using their, their software for, I don\u2019t know, almost a decade. And they\u2019re just a powerhouse in the space. There are few people who have her unique insights into the inside baseball of what drives change in actual wealth management, not only working with FINRA and the SEC on the regulatory side and working on the technology side, but having some insight into behavioral finance and understanding what advisors need to help their clients obtain their goals. I thought this conversation was fascinating, and I think you will also, with no further ado, my interview of Orion, CEO, Natalie Wolf.<\/p>\n<p><strong>Natalie Wolfsen<\/strong>: Thank You so much for having me. It\u2019s great to be here. Well,<\/p>\n<p>00:01:45 [Barry Ritholtz] It\u2019s great to have you. Full disclosure, my firm uses Orion as part of our tech stack and managing the four and a half or so billion dollars we have. But let\u2019s talk a little bit about you and your background. BA from uc, Berkeley undergrad, and then an MBA from UCLA. What were the career plan?<\/p>\n<p>00:02:06 [Natalie Wolfsen] So, I have to say, I graduated Berkeley with a political science degree focusing on international relations and power politics. And so coming out of Cal, I had absolutely no idea what I wanted to do with my life other than move to New York and start my career.<\/p>\n<p>00:02:22 [Barry Ritholtz] I\u2019m always stunned when people in California say that, because every time I visit California, it\u2019s just so delightful. The weather is fantastic. Even just the geography is fabulous. What was it like coming to New York?<\/p>\n<p>00:02:37 [Natalie Wolfsen] Oh, New York is fabulous. I mean, anyone who lives here knows this, but especially coming from the West coast, I love San Francisco. I live in the San Francisco Bay area right now, but there\u2019s something just so 24 7, right about New York City, and you know, I was interested in being part of that, and I thought, if you don\u2019t do it in your early twenties, why? When would you do it? So I came to New York, no job plans, no ideas.<\/p>\n<p>00:03:00 [Barry Ritholtz] No kidding. Wow. So what was the first gig in New York as a MBA graduate?<\/p>\n<p>00:03:06 [Natalie Wolfsen] So I wasn\u2019t an MBA yet. Ah, I was just a BA and I was fortunate enough to<br \/>have a marketing internship at Caesar\u2019s World, which is what I did to work myself through College<\/p>\n<p>00:03:17 [Barry Ritholtz] Caesars World is what?<\/p>\n<p>00:03:18 [Natalie Wolfsen] The casinos.<\/p>\n<p>00:03:19 [Speaker Changed] Oh, Really? Yes, I, and that was in New York City? They were headquartered,<\/p>\n<p>00:03:22 [Speaker Changed] No, the, the internship I did in Nevada. And then because that internship was in marketing, I had some opportunities to do consulting work and then eventually found my way to American Express working in their marketing department. Got it.<\/p>\n<p>00:03:34 [Speaker Changed] So you, you did get your, your New York experience. How long were you at Amex for?<\/p>\n<p>00:03:38 [Speaker Changed] I was at Amex for about three and a half years, and then I started a company in New York. It was the mid nineties or the late nineties. And who didn\u2019t start an internet company in the nineties. That\u2019s right. And then when that company quickly failed, I moved back to the Bay Area and started working at Charles Schwab.<\/p>\n<p>00:03:55 [Speaker Changed] Ah, so you were at Schwab for a while, right?<\/p>\n<p>00:03:57 [Speaker Changed] About 10 years.<\/p>\n<p>00:03:58 [Speaker Changed] And, and what was that experience like? You, you were in product development strategy, segment management. Tell us about your various roles at Schwab.<\/p>\n<p>00:04:06 [Speaker Changed] Schwab was a great place to spend 10 years of my career. And one of the things that was so fantastic about it is most of the time I was there, it was growing really quickly, which created a lot of opportunities for me and other folks at Schwab to try different things. And so I started in marketing, active trader marketing, and then I fell in love with the active trader segment of the market. I had a, an idea that a group of us wanted to try out at Schwab, which was to build a mobile trading application for active traders.<\/p>\n<p>00:04:37 [Speaker Changed] What year was that?<\/p>\n<p>00:04:38 [Speaker Changed] That was 1999.<\/p>\n<p>00:04:40 [Speaker Changed] So long before there was really any sort of smartphones, the Blackberry was the closest thing. And even that, there were no real apps or anything.<\/p>\n<p>00:04:49 [Speaker Changed] That\u2019s right. I mean, I don\u2019t know if you remember this, but the mobile trading applications we built at at Schwab were on phones that had numbers. So if you wanted to enter an A, you had to hit one once, B one twice, and then also palm pilots. So we used both of those devices to build one of the first mobile trading applications ever. And it was a, it was a great experience. And then I fell in love with technology and product development, moved from there to strategy, then moved from there to investment product development, worked on Schwab\u2019s first ETF offerings, their equity mutual funds, fixed income mutual funds. And then when I decided to leave Schwab, I went to Pershing and worked on investment platforms there.<\/p>\n<p>00:05:32 [Speaker Changed] Another very substantial custodian. Yes. What was your experience like at Pershing after Schwab, which is just such a unique animal in the investment world, you<\/p>\n<p>00:05:41 [Speaker Changed] Know, Pershing\u2019s is a different custodian. They have different emphasis. They serve a different client segment,<\/p>\n<p>00:05:46 [Speaker Changed] A little bit higher end.<\/p>\n<p>00:05:47 [Speaker Changed] No, they tend to be, or at least at the time, were very much focused on clearing for the broker dealers versus Schwab. That was more focused on the RIAs. Pershing does both. And when I was brought into Pershing, I was hired to help the RIA part of the business and the broker dealer part of the business. And they wanted to ensure that they had the investment platforms they needed to compete globally. So built in a retirement offering an insurance offering, expanded their mutual fund offering, expanded their ETF offering. It was great. Great job to have<\/p>\n<p>00:06:17 [Speaker Changed] Choice is good. So Schwab to Pershing and then you end up at AssetMark for just about a decade, and you had a lot of roles there, chief commercialization officer, chief Solution Officer. Tell us about your professional experience at AssetMark.<\/p>\n<p>00:06:33 [Speaker Changed] Yeah, so at AssetMark, when I was brought in, I was brought in to help transform the platform and grow it. And the reason, the first role was chief Commercialization Officer was because my emphasis was bringing together all of the PS of marketing, promotion, place, price, and you know, people segments into a unified offering. And then once that work was done, and we had done that, it was time to expand our markets, expand our segments, build a growth strategy. And so I did that as Chief Solutions officer. And then when my predecessor left AssetMark, I was asked to join as CEO and was CEO there for about two and a half years?<\/p>\n<p>00:07:11 [Speaker Changed] How was that experience and how different was being the top of the org chart from being a worker bee a little further down?<\/p>\n<p>00:07:20 [Speaker Changed] You know, I love being a CEO, I dunno about you, but I, I love it. I love being able to lead the team. At AssetMark. I was a public company, CEO, I enjoyed working with investors. I enjoyed that aspect of the role. And one thing about being a CEO versus, you know, being a chief solutions officer or chief commercialization officer, you spend a lot of your time outside the company as well as inside the company. So you still spend a lot of time with your clients, which you do at, at every level of the organization. I believe you also spend time with investors with other aspects of the industry, a little bit more time on strategy and innovation. And that\u2019s an exciting part of the role representing your firm and its success to investors and to potential partners.<\/p>\n<p>00:08:01 [Speaker Changed] And then from AssetMark, in October, 2023, you\u2019re recruited to become CEO at Orion. Tell us a little bit about what that process was, and let\u2019s delve a little bit into what Orion actually does.<\/p>\n<p>00:08:16 [Speaker Changed] Yeah, I, so I have been a long time admirer of Orion just as a trendsetter and an innovator in the industry, both in technology and wealth services. When Eric announced that he was going to be departing,<\/p>\n<p>00:08:31 [Speaker Changed] Eric being<\/p>\n<p>00:08:33 [Speaker Changed] The previous CEO and founder Eric Clark, when he announced in, I guess it would\u2019ve been last spring that he was leaving the firm, the executive chairman of the board, Charles Goldman reached out to me and asked if I would be interested. He and I had a, you know, a few conversations before I decided that it was something I wanted to do. And I really believe that Orion has the potential to make a huge impact on the industry. You know, met the board, really liked what they had to say about plans for Orion, spent some time with Eric. It was very important to me that Eric was a big part of picking the future CEO, and it\u2019s been fantastic since then. So<\/p>\n<p>00:09:10 [Speaker Changed] I know Orion for many years because from the RIA perspective, from a registered investment advisor perspective, clients want to know how their portfolios are doing, what their performance is, both in absolute terms and relative to benchmarks. And you want to outside third party doing it as opposed to someone just telling the client, yeah, yeah, you\u2019re doing great. You really wanna see the numbers, and you want to know that a trusted objective third party is running that, not the person who you\u2019re trusting to manage the money. That\u2019s the core role I think of when I think of Orion. But there are a lot of other things the firm does. Tell us about the various roles and responsibilities Orion has within the RIA industry.<\/p>\n<p>00:09:56 [Speaker Changed] You\u2019re right, that the, the heritage of Orion is portfolio counting, trading, and reporting. That\u2019s kind of at the heart of what Orion, where Orion came from, how it was built. Over the course of the last five years though, Orion has added to that core capability, a depth of services and wealth management, everything from portfolio customization through and indexing all the way through fully outsourced portfolios. And so Orion now has a wealth business and a tech business that work together to help financial advisors save time and effort and spend more time with their clients. And then on the technology part of the business around what we\u2019ve built around portfolio accounting, trading and reporting is the entire advisor interaction with their investor,<\/p>\n<p>00:10:41 [Speaker Changed] Meaning how they interface with both Orion and the client themselves. That\u2019s right. So tell us a little bit about that.<\/p>\n<p>00:10:47 [Speaker Changed] So in the additive services that Orion offers now are financial planning, compliance, CRM services, risk and analysis portfolio construction and advisor portal and investor portal. And clients can choose, or RA clients can choose to use all of it in an integrated way, or they can choose to use a piece of what Orion offers and integrate that into their client experience.<\/p>\n<p>00:11:12 [Speaker Changed] So CRM is customer relationship management. For people may who may not know the acronym, tell us about the portal that is the client\u2019s interface with their own assets and portfolios, regardless of what platform they\u2019re on. Tell us what comes through the portal to the client.<\/p>\n<p>00:11:30 [Speaker Changed] Yeah, so for the investor client, what comes through the portal is their holdings, their connection between the portfolio and the financial plan. A variety of comparisons that advisors can walk through with the investor about how their portfolio, if, if the advisor\u2019s proposing a new portfolio, how the proposed portfolio compares to the portfolio the investors is in now. We have be behavioral finance tools so that the investor can understand their relationship with wealth and their risk tolerance, their needs at a greater level of detail. And they can compare that to that of their spouse and then also compare that to the portfolio that the advisor is recommending. The advisors portal in contrast, has portfolio construction tools, sophisticated reporting tools, workflow management dashboards that help the advisor understand, you know, the strength of their business and the strength of their relationships with their clients. And again, you can choose to just choose Orion for reporting, that\u2019s great. Or you can choose to use Orion for more, depending on the size of the advisor and the degree with which they wanna control their client\u2019s experience.<\/p>\n<p>00:12:38 [Speaker Changed] Huh, that\u2019s really intriguing. So you\u2019ve been at the firm now for barely eight months. What changes have you begun implementing? Or have you just kind of started out with a little bit of a listening tour and picking up some surveillance about what\u2019s actually been going on before you joined the company?<\/p>\n<p>00:12:57 [Speaker Changed] In the first 90 days, I absolutely did a listening tour. I talked to as many financial advisor clients as I possibly could. In fact, in my very first day, I talked to our top, top 20 clients, reached out to them, wanted to let them know that I was interested in hearing from them. And then for that first 90 days, I made sure that I talked to as many clients as I could. I also went on an internal listening tour, wanted to get to know the team. You know, I\u2019d been at my previous firm for 10 years. And so everyone knew me. I knew everyone in the firm. I knew who top performers were, how we were organized. I, I had to learn that about Orion, get to know the team, understand how we were organized, understand what they enjoyed about working with Orion, if there were any opportunities.<\/p>\n<p>00:13:39 And so after that first 90 days, I started looking at things that we could prioritize a little differently. Eric Clark, the founder of Orion, you know, he\u2019s an incredible CEO At the same time, you know, I personally felt that we need to emphasize, put a little bit more emphasis on building a, a client service model, making sure that we were developing for scale, putting in place services that are highly flexible and integratable and so pivoted just slightly to make sure that we were focusing on the, the information and the data and the accessibility to it so that we could get to a place where whether clients wanted to use us for microservices or want to use us for holistic technology, we can integrate that into their client experience in a way that saves advisors time.<\/p>\n<p>00:14:26 [Speaker Changed] Let\u2019s talk a little bit about the transition that you undertook. You followed Eric Clark, who was not only a longstanding CEO, he was the company founder. How challenging is it to take over from a founder?<\/p>\n<p>00:14:42 [Speaker Changed] You know, the first thing I\u2019ll say about that is it\u2019s a big change for the team and the clients. You know, anytime a founder decides to move on, on to their next chapter, it just creates uncertainty. And both the team as well as clients just wanna make sure that you\u2019re committed to the same purpose, that you\u2019re committed to the same level of service that they\u2019ve come to expect from the predecessor. And the great news about Eric and me is because Eric was a part of the selection process for me, we knew going in that we were highly aligned on what we think about the market, how we wanna serve our clients, where we think the future opportunities are in technology. And so while I\u2019ve absolutely adjusted the strategy slightly to focus more on integrations that the heart of Orion remains the same.<\/p>\n<p>00:15:31 [Speaker Changed] So Eric, Eric Clark has been called the legend in the RIA community. Tell us a little bit about what makes him so legendary and a little bit about your relationship with him.<\/p>\n<p>00:15:42 [Speaker Changed] Yeah, so there\u2019s no question that Eric is a legend in the RAA community. The reason that he\u2019s a legend is because his technology helped power the growth of the industry. He was a visionary in that he saw how much time advisors were spending on portfolio construction, performance reporting reconciliation, and how much the RIAs interaction with their client could be improved if that work was taken off the advisor\u2019s plate. And if the advisor had the benefit of those insights to deliver back to their clients. And he built it in a highly innovative way. You know, Eric was very focused on ensuring that right after he built a solution, he started improving it as a result. Right now, Orion serves about 80% of the top RIAs in the US and we have 4.3 trillion in assets that we service. He also is a huge voice of the, the importance of independent advice, and I am too.<\/p>\n<p>00:16:43 So we both believe in independent advice. We both believe in powering RIAs and the enterprises that serve them. And we both believe that the more time we can give the advisor back, the better off the advisor and the investor are. I talk to Eric a couple times a week. He\u2019s a great thought partner, he\u2019s a great person to bounce ideas off of. He reaches out to me sometimes when he has questions. He\u2019s still on our board and he\u2019s a really great board member. So the relationship is strong and getting stronger every day as we continue to work together. He\u2019s a great advisor and partner. So<\/p>\n<p>00:17:18 [Speaker Changed] I just have to share a quick Orion story with you. And again, Riol Wealth Management has been using Orion pretty much from day one, but 15 years or so ago, I, I just have this vivid recollection of what we had to do every quarter when we weren\u2019t on a platform like yours. First we had to get approval for what the performance numbers were for the quarter, then we would print out documents, which were different for every client because not every portfolio is identical. Not everybody was in the same set of funds or same set of investments. And so you would print out the cover letter, you would print out the performance letter, and this was quarterly and everything would get stuck in a man manila envelope and get sent out. And you mentioned behavioral finance earlier. The fascinating takeaway was it, it turned that quarterly number into a big deal, both emotionally and intellectually.<\/p>\n<p>00:18:20 And you know, sometimes the quarter ends strong, sometimes it ends weak. And in the scheme of things, three months is not all that important. And the surprising advantage of moving to a computerized always on system like Orion was that we gave clients, you know, the joke is you could check your performance 24 7, but please don\u2019t check, check it occasionally, but don\u2019t obsess about it. And once you move from that quarterly, you know, it was the culmination of three months and everybody was focused on that number, suddenly the little squiggles on the chart didn\u2019t make all that big a difference. People went from freaking out over a quarterly number to, Hey, I have access to this whenever I want. Surprisingly, it becomes met less meaningful on a day-to-day basis when it isn\u2019t this big quarterly event.<\/p>\n<p>00:19:17 [Speaker Changed] It\u2019s true, it\u2019s very, very true. And the other interesting thing that\u2019s happened more recently is the, the transition to more personalization in financial services. I mean, we have personalization in every aspect of our lives right now. You can create your own clothing, you can create your own streaming, you can create your own music. Like there\u2019s personalization in all aspects of our life and financial services is catching up. And platforms like Orion can bring that to the advisor. We can innovate on their behalf, whether it\u2019s through custom portfolios and custom indexing, or it\u2019s through expressing values in your portfolios, or it\u2019s in how you customize the investor experience you want to create on your white labeled investor portal. You know, drawing attention to behavioral finance and how you emotionally attach to your wealth and your financial plan versus benchmark based performance is a huge change in the industry. And something that Orion\u2019s a big part of. We\u2019re pushing the limits of behavioral finance. We\u2019re pushing the industry in a direction where it\u2019s not just about fulfilling your, your goals as it relates to wealth, but finding true happiness and giving advisors the tools that they need to have those conversations with their client.<\/p>\n<p>00:20:28 [Speaker Changed] So once you run people through these, this three or four minute questionnaire, the BI 20, what spits out the other end,<\/p>\n<p>00:20:36 [Speaker Changed] What spits out the other end is your behavioral finance profile. You could be an optimist, maybe you\u2019re conservative, maybe you\u2019re, I\u2019m curious about investing. And then you can contrast what makes you that profile relative to your spouse or relative to your children. So that if, if it\u2019s you and your spouse who are making decisions about money, you understand why you might be in conflict. And then we also give tools to reconcile that conflict, to understand it and to reconcile the conflict. And then we also use AI so that the advisor can send communications, first draft communications to clients in different market environments and important parts of their financial planning conversation with their client that understand their profile and include optimal language related to their profile and their portfolio in those first draft communications.<\/p>\n<p>00:21:31 [Speaker Changed] That optimal language is in order to not cause people to misinterpret things or we found calling portfolios conservative or aggressive generated a negative response. And so we came up with a different nomenclature for all of our different portfolios. And I\u2019m kind of a space geek, so I, I love the concept when I first heard it is based on different NASA missions, depending on how far out they go and the solar system. So Voyager left the solar system, that\u2019s the most aggressive portfolio. You pioneer a little closer, a little less, a little less aggressive manner the same. But you would be surprised that merely saying to somebody, oh, we, we have you in a conservative portfolio based on your risk tolerance and goals. I\u2019m not a conservative person, I understand that. It\u2019s just a loaded, and the same thing with aggressive, Hey, I\u2019m not an aggressive person, I\u2019m not a big risk taker. No, but you have 40 years and you have no other obligation like that, that conversation. It\u2019s so funny how language can be misinterpreted and behavioral finance really addresses that.<\/p>\n<p>00:22:39 [Speaker Changed] It\u2019s so true. I mean, words matter. And that\u2019s one of the reasons that we don\u2019t use aggressive. We use financial optimist because it\u2019s about the optimism and the point of view and your willingness to endure drawdowns and market change. It\u2019s one of the reasons that bucketing is so powerful in financial services. Investors can understand, oh, this is the goals I have for my money for the next one to two years, the goals I have for three to seven, the goals I have for seven plus. And you can have conversations with them about how common drawdowns are and what they\u2019re willing to endure and how likely it is that seven years from now based on historical performance. You know, they\u2019re aggressive and I hate to use the word aggressive, but their, I should say equity weighting pays off. And it\u2019s, it\u2019s, it\u2019s really exciting work we\u2019re doing at Orion and I think it benefits advisors and helps them bring these tools to their clients at scale.<\/p>\n<p>00:23:31 [Speaker Changed] So I\u2019m glad you brought up the word scale. You guys are well over $4 trillion, well over 6 million accounts. There has to be massive challenges with scaling that up even larger as you continue to grow. What are the challenges with this? Especially as you get deeper into customization where no two RIAs, no two clients really look exactly alike?<\/p>\n<p>00:23:57 [Speaker Changed] You know, it\u2019s, it\u2019s definitely a challenge, but one that Orion spends a lot of time and effort on so that our clients, enterprises and RIAs don\u2019t have to do that on their own. The first is you need to make sure that all the data that the advisors and the enterprises need are accessible 24 7. And to do that, we have to invest in data streaming capabilities. And then also we partner with Redshift and Snowflake to provide data access, data access capabilities. We invest a lot to make sure that as our clients grow and their needs for information grows, that our tools, whether they be reporting or trading or performance and orientation, meet their needs at different sizes. And you know, this, the industry\u2019s consolidating, the industry\u2019s scaling up everywhere. And Ryan, we need to be part of that.<\/p>\n<p>00:24:46 [Speaker Changed] Hmm. I have some consolidation questions for you a little later. I wanna stay with the concept of scale. How do you accommodate everybody who wants this personalizations? Do you, do you get requests that are like, Hey, that\u2019s just a little bit a bridge too far. If we offer that degree of customization, well then it\u2019s going to put other things at risk. Where\u2019s the balance between some uniformity and the ability to adapt to every customer desire?<\/p>\n<p>00:25:16 [Speaker Changed] You know, it\u2019s interesting in my view, you have to build your technology or investment solutions with the goal to be highly customized and highly personalized. If you don\u2019t do that, then the foundation is, is shaky. And so we wanna make sure that our technology looks and feels like advisors need it to, to be consistent with what they offer, either their advisors or their clients. We wanna be sure that our communications tools leverage large language models so they can be highly personalized. Again, as a first draft with within advisor teams or between the advisor and the investor. We need to make sure that the channels we\u2019re using are highly custom. You know, I was reading materials when I joined Orion that 98% of text messages are open and responded to in 90 seconds versus, you know, less than 30% of emails that are responded to within a week if they\u2019re responded to at all. And so you also have to customize your channels to make sure that you\u2019re sure benefiting your advisor in a customized look and feel. And if your systems are built with that in mind, then you can be highly, highly flexible.<\/p>\n<p>00:26:24 [Speaker Changed] You mentioned custom indexing before we found custom indexing to be one of the fastest growing parts of our business, especially for people who, and this was a little bit of a surprise versus how we anticipated this going. People who were deeply concerned about task loss harvesting, either they\u2019re selling a business, they have low cost stock or founder stock, or some other capital gain they\u2019re trying to manage through highly concentrated position that they want to de-risk but not create a giant tax obligation. How are you finding the growth of custom in indexing going?<\/p>\n<p>00:27:01 [Speaker Changed] Custom indexing is growing really fast. It\u2019s one of the fastest growing part of our platform. We have over 4 billion in portfolio customization today. And when you look at the growth rate of the adoption of it, it grows each quarter. The flows into those products grow in the high double digits. And so we\u2019re very, very excited about the growth of the platform. You mentioned the most important use case, which is tax management, also tax transition if you\u2019re moving from one provider to another and you wanna manage your tax in the transition. And then the last is, you know, different investors do have different values and they wanna make sure that their portfolios reflect that. Some it\u2019s religious, you know, they want it to reflect Catholic values or Islamic values. Other times they\u2019re very, very focused on governance. And that degree of customization for some is incredibly important. Now obviously the regulators are concerned about that too. And so we need to make sure that our tools are compliant, help our advisors comply. And, and so we do that.<\/p>\n<p>00:28:05 [Speaker Changed] So two questions. So first custom index we use is Canvas. Speaking with them, the, they tell a couple of really interesting stories. First on the value side, the single biggest requests they get no tobacco, no guns, which kind of surprised me, but I guess it kind of makes sense. It\u2019s a simple adjustment. And if you don\u2019t think you want your capital going to those companies, it\u2019s just a simple box to check and that\u2019s it. It comes outta the portfolio. They also tell a story about the, the New York Catholic Bishop\u2019s Yeah. Investment and the ability to say no drugs related to abortion or anything that violates their sense of their rules, their religious beliefs. And it\u2019s easy to make those adjustments. What are you seeing in terms of other use cases? So clearly tax loss harvesting is a big one. The personalization on the value side is the other issue. When you talk about governance, how are people adjusting in that space?<\/p>\n<p>00:29:10 [Speaker Changed] You know, it\u2019s interesting, there\u2019s, there\u2019s all sorts of research that boards that are diverse or boards that have certain controls and and processes in place are highly aligned to future success of the companies. And so when people implement the G of ESG, what they\u2019re really implementing is that, how<\/p>\n<p>00:29:30 [Speaker Changed] Is good governance,<\/p>\n<p>00:29:30 [Speaker Changed] How effective is that board in delivering returns to the, to the shareholder? So that\u2019s a, a common use case. You know, the other thing I would just mention is that transition where you\u2019re moving from one advisor to another, or you\u2019re moving from one portfolio to another, or in your examples, trying to transition out of a concentrated position is extremely important. And when managed correctly can deliver outsized alpha to the investor and it if tax alpha, tax alpha and it puts the advisor, the advisor in a different position with their client because tax is confusing and complex, right? It\u2019s something that most investors avoid at all costs. And the advisor\u2019s able to, to talk to the investor about tracking error, how close, how closely you want to track a certain index or how closely you want to manage that concentrated position relative to the destination portfolio. And it, it raises the bar and the conversation between the advisor and the<\/p>\n<p>00:30:29 [Speaker Changed] Investor. You know, our experience has been, it\u2019s not only complicated, but tax preparation relative to somebody with a sophisticated set of portfolio and investment needs is a very specialized niche. When, when we launched a decade ago, I never thought we would open a tax practice. Yeah. But there were so many requests for it. And anytime we would review a previous tax filing, we always found, almost always found mistakes, overlooked opportunities. Hey, why did you pay 30% capital gains here? You held this for five years, why didn\u2019t you check this? But hey, this was a qualified investment, this should have been in a different category. And so we had to build that out because the demand is there and very often the average accountant just doesn\u2019t have the experience with capital markets. They\u2019re leaving a lot of tax alpha on the table.<\/p>\n<p>00:31:23 [Speaker Changed] It\u2019s true, it\u2019s true. And the advisor that can deliver those types of opportunities to the investor has a very loyal client forever. And custom indexing and portfolio customization, whether it\u2019s related to values or hedging or other aspects, is another way for the advisor to deliver services to the investor. They have no hope of doing themselves or no hope of doing in a self- directed<\/p>\n<p>00:31:45 [Speaker Changed] Way. You, you, you know, it\u2019s amazing. You generate a good return for people and it\u2019s abstract and theoretical. Well, 11.2 versus 10.8, you know, you can extrapolate it, you can, but hey, here\u2019s a hundred thousand dollars in tax savings. Suddenly it\u2019s real money. And even though it\u2019s less than the, per the performance of the portfolio, it doesn\u2019t matter. It\u2019s so visceral and real. People have such a funny response to taxes. I guess we\u2019ve all drank the Kool-Aid that no one wants to pay more taxes than they have to save someone some money on taxes their, their client for life. That\u2019s<\/p>\n<p>00:32:23 [Speaker Changed] Right. And they, they see it on the tax forms. They, they can actually see it in real time that year on those tax forms that quarter. So<\/p>\n<p>00:32:31 [Speaker Changed] Makes a big difference. It<\/p>\n<p>00:32:32 [Speaker Changed] Does, it does.<\/p>\n<p>00:32:33 [Speaker Changed] So let\u2019s talk a little bit about what\u2019s going on in the industry now. There\u2019s a lot of flux, there\u2019s a a lot of challenges. What, what are the biggest events you see coming up? What are the biggest adjustments people in our industry should be thinking about?<\/p>\n<p>00:32:50 [Speaker Changed] I mean, the first is definitely regulation. This is an incredibly active and and innovative in as it relates to regulation SEC right now, the number of rules that are underway exceeds recent memory. And the reach, the reach of those rules are extending the reach of the SEC. So you have the cybersecurity rule, which is incredibly important. There\u2019s no one in the industry that questions the need for this industry to be very secure.<\/p>\n<p>00:33:19 [Speaker Changed] That\u2019s the nightmare scenario. A hundred percent.<\/p>\n<p>00:33:21 [Speaker Changed] That\u2019s right. That\u2019s right. And we all need to be focused on protecting client data and privacy. At Orion, we spend a lot of time, we\u2019re NIST compliant. We also are SOC two type two compliant. We have a large team that focuses on cybersecurity and privacy to make sure that we\u2019re not just understanding the rules that the SEC has in place, but also what they\u2019re interested in and where they\u2019re going with the rules.<\/p>\n<p>00:33:45 [Speaker Changed] Let me, let me interrupt you a sec. Yeah. So the biggest set of changes we\u2019ve seen recently have over the past six months have been the marketing rules. Yeah. What you can and can\u2019t say even to existing clients, which every now and then I\u2019m kind of perplexed about, hey, here\u2019s how these indexes have done over the past couple of years. And if we just take the past a hundred years average, here\u2019s what we can Monte Carlo simulation, here\u2019s what we can expect. Like that has kind of changed. You have to be very wary of not showing hypothetical past performance. I find some of it to be a little confusing. Like I understand the rules. Hey, you can\u2019t make stuff up. You can\u2019t say, had you put money with us over this period, you would\u2019ve done this Perfectly credible. It, it seems like around the edges, it just goes further than you think is warranted. So that\u2019s been a set of rules. What, what other rule changes are you looking at? Well,<\/p>\n<p>00:34:43 [Speaker Changed] You, I mean you mentioned the marketing rule and I think that that\u2019s changed the way performance reporting is calculated and distributed across the industry. And that clearly impacts Orion no doubt, because performance reporting is a, is a big part of what we do. In addition to cybersecurity, there\u2019s also the third party rule, which is, which is RIAs and investment advisors that leverage third party providers to provide services to their clients. The proposal is they\u2019ll be held accountable to do deep diligence on those third parties to make sure that their security, their effectiveness is what the investor expects. And for Orion, we wanna make sure that we\u2019re there to help our advisors comply. We provide the advisors with the research they need on us as a third party. And for the third parties we use at Orion, we deliver that to the advisors so that they can comply. And this third party rule and the cybersecurity rule, both of those are aimed at making sure industry is secure, which is a great thing, but they introduce a lot of complexity for financial advisors and we need to make sure that we help financial advisors clear that complexity and comply<\/p>\n<p>00:35:50 [Speaker Changed] What we mentioned custom indexing Earlier you suggested there was some more rule changes about that when it comes to what the SEC expects in terms of either value-based investing or governance. What, what are the changes there? I\u2019m, I\u2019m, I\u2019m curious about that.<\/p>\n<p>00:36:07 [Speaker Changed] The, the SEC is incredibly concerned that financial performance is the primary measure by which the advisor communicates to the investor their success. They worry that with the introduction of different values, it\u2019s getting in the way of the investor maximizing their investor performance, their investment performance. And so when I say that there\u2019s regulatory interest in this, it comes down to clarity. Regulators wanna be sure that the investor understands if they\u2019re choosing to implement a particular value, that that can have consequences for investment return. And I think that technology providers like Orion can easily provide those trade-offs. You know, if you, if you relax the tracking error constraint because you don\u2019t wanna invest in tobacco, which is a common usage that you mentioned. And tobacco is a successful part of the market, which isn\u2019t exactly true at this.<\/p>\n<p>00:37:03 [Speaker Changed] Well, it was 20 years ago, but<\/p>\n<p>00:37:05 [Speaker Changed] Isn\u2019t exactly true right now. So<\/p>\n<p>00:37:07 [Speaker Changed] It turns out killing your clients for decades is a bad strategy.<\/p>\n<p>00:37:11 [Speaker Changed] It it does turn out right that that is true. Right.<\/p>\n<p>00:37:13 [Speaker Changed] It worked for a while, but eventually they\u2019ll die off.<\/p>\n<p>00:37:16 [Speaker Changed] Yeah. And eventually, you know, the new generation wants to focus on other things that said, you know, if you\u2019re as an example concerned about oil and gas, well that\u2019s been a great part of the market. And by avoiding that part of the market has consequences for return if you have issues with Tesla for one reason or another. Right. You know, if you eliminate that part of the portfolio, well then there\u2019s consequences for returns. And we just need to do a good job as an industry of explaining to our clients that investing consistent with your values is your choice. But it does relax tracking error. It, it does have the potential to create a deviation from your portfolio in the benchmark. Right.<\/p>\n<p>00:37:57 [Speaker Changed] There\u2019s a couple of really interesting things related to that. One is check the box for no tobacco, no guns. It\u2019s like a fraction of a percent. It, it really doesn\u2019t move the needle, it doesn\u2019t make any difference. The other thing is, I never really understood if your concerned about the environment, if you\u2019re concerned about global warming, going low carbon seems to be reminds me of the war on drugs where we were trying to indic the supply, but we just ignore the demand. And I love when, you know, Google and Apple and Microsoft are labeled green companies. They\u2019re some of the biggest consumers of, you know, carbon based energy of anyone out there. Low carbon seems to miss the concept. If you wanna reduce carbon consumption, you have to not merely address the suppliers, but you have to address the consumers. Also the, the underlying philosophy of that just seems fundamentally wrong from an an economic standpoint. If you don\u2019t reduce demand, you could do whatever you want with, you know, supplies. They\u2019ll find a way to get drugs into the country as long as the demand is there.<\/p>\n<p>00:39:04 [Speaker Changed] Yeah, it is definitely true. And the other thing I\u2019ll just say related to that, and this comes back to the marketing rule in ESG, you also have to make sure that the claims you\u2019re making are, are accurate. If you\u2019re saying that your ETF or your investment vehicle is green, it better be green. And I think that in some instances the measurement was wrong.<\/p>\n<p>00:39:24 [Speaker Changed] The greenwashing was a big, really has been a big issue. That\u2019s right. Like, and, and you\u2019ll, we have seen this every time a new trend comes out, whether it\u2019s AI or low carbon or whatever it is, do you remember for a while everybody was, you know, trying to, to turn their companies into a, a meta company or whatever the hot trend of the week was. It finds its way into the quarterly reports regardless of whether there\u2019s any truth to it or not.<\/p>\n<p>00:39:56 [Speaker Changed] Yes, it\u2019s true. And what it all comes back to for me as it relates to values and customization is the original, the originator of these ideas we\u2019re actually religions. And if you\u2019re investing consistent with the Catholic faith, you better be investing consistent with that religion. Right? We should hold all values-based portfolios to the same standards.<\/p>\n<p>00:40:17 [Speaker Changed] Maybe it was, Calvert was the first mutual fund that had Catholic value- based investing as its core. But they were, they were doing this because there was a demand from those investors who said, we don\u2019t want A, B, or C because it\u2019s not consistent with our belief system. I would like to see the SEC make sure that the, the management companies are true to the underlying belief system. But I don\u2019t know how much further you can go if someone says, I don\u2019t like Facebook or I don\u2019t like Tesla as a client. And, and as long as the advisor isn\u2019t making any promises about that, hey this has had a giant run up and it\u2019s had a giant sell off and it\u2019s had a partial recovery and we can\u2019t tell you what this is gonna do in the future. But if you don\u2019t want these, if you tell us this is on your do not own list, I, I don\u2019t care if the client wants that. They just have to recognize, hey, it\u2019s a big company and it could impact their, their performance.<\/p>\n<p>00:41:16 [Speaker Changed] Yeah. You know, and the tools that the advisors use, like Orion should make it easy for them to communicate to clients the percentage of total s and p returns that have come from tech. And you never know exactly which tech companies are gonna deliver those returns. But by ignoring Facebook or ignoring Tesla for reasons that are personal to you, you may give up that kind of return. Right. Us up to the investor<\/p>\n<p>00:41:41 [Speaker Changed] That, that\u2019s exactly right. So you mentioned large language models and we danced around ai. Let, let\u2019s talk a little bit about that. How can you as a technology provider to the wealth management industry integrate artificial intelligence into your offerings?<\/p>\n<p>00:41:59 [Speaker Changed] So at Orion we\u2019ve integrated it in two parts of our offering. The first is our client relationship management system. Redtail. We have an offering called Redtail speak. And what Redtail speak does is it delivers the advisor\u2019s messages both internally and externally to investors and to teammates via text. And one of the things that the AI does as it relates to Redtail speak is it creates text messages between advisors and investors. First drafts the advisor has to take a look at it and make sure that everything\u2019s accurate based on the text-based exchanges that the advisor and the investor have had in the past. Hmm. And we think it has a lot of promise because it reduces the amount of time it takes advisors to communicate with their clients in a personalized way. The second area of Orion\u2019s solution that we offer AI and we\u2019ve experimented with AI, is in our portfolio comparison tool where, you know, you bring in client\u2019s behavioral profile, bring in their risk tolerance and metrics around their risk tolerance.<\/p>\n<p>00:43:00 And you compare the portfolio they have today to the portfolio that the advisor is proposing. And part of those conversations between the advisor and the investor, you know, this is back and forth when the advisor wants to ensure the investor understands something, the investor wants to ask advisors questions. And so what we deliver is first draft communications between the advisor and the investor at the time of comparison and then also at specific market events that, you know, the investor may find troubling if they\u2019re risk averse or they might be opportunities if they\u2019re, if they\u2019re an optimistic investor. We\u2019re also testing at Orion knowledge management systems for our own service teams and for our own developers to see if we can get more rapid speed to answer more accurate speed to answer in our service teams. What we learn in those tests we\u2019ll wanna share with financial advisors because potentially the, the models that we\u2019re developing will have application outside of Orion too. But that\u2019s work that\u2019s underway. So<\/p>\n<p>00:43:59 [Speaker Changed] You mentioned Red Redtail speak, we briefly alluded to consolidation in the industry. I know Redtail as a standalone CRM, obviously you guys acquired them a couple of years ago. What are you seeing in terms of consolidation both within the RIA industry itself and then with the universe of service providers that are part of that ecosystem?<\/p>\n<p>00:44:23 [Speaker Changed] There\u2019s been a tremendous amount of consolidation among advisors. Independence has been a winning model in the marketplace for the last two decades.<\/p>\n<p>00:44:36 [Speaker Changed] Like define what you mean by independence as opposed to being part of a big bulge bracket firm.<\/p>\n<p>00:44:41 [Speaker Changed] Financial advisors who are either affiliated in a 10 99 relationship with a broker dealer or are purely independent meeting their entrepreneurs. They have their own RIA and they\u2019re regulated differently. Those two segments of the market are the fastest growing advice models because investors value local unbiased advice in their community.<\/p>\n<p>00:45:02 [Speaker Changed] Are we discussing fiduciary? Are we just discussing fiduciary? Okay. So so that\u2019s a, that\u2019s a key challenge. I\u2019m a fiduciary, a big chunk of the industry is not, and I have been utterly wrong thinking it would eventually dominate everything. Although there are some trends that suggest we\u2019re moving in that direction.<\/p>\n<p>00:45:24 [Speaker Changed] I think we\u2019re moving in the direction a lot slower than many of us thought. Yes.<\/p>\n<p>00:45:29 [Speaker Changed] Especially like 20 years ago it should have been done. And yeah, here we are in 2024 and it\u2019s still a subject of debate.<\/p>\n<p>00:45:36 [Speaker Changed] I do think though that regulators are stepping their way there with Reg bi, with the form CRS tiptoeing into a fiduciary model where investors understand any conflicts is where we are now. Where the SEC is now. It is my hope and expectation that the industry will eventually get to a fiduciary standard.<\/p>\n<p>00:45:56 [Speaker Changed] Right. And and on a related issue, you\u2019re on the board of advisors for the CFP parent company. Tell us a little bit about what you do with them.<\/p>\n<p>00:46:07 [Speaker Changed] So I was, until very recently on the board of directors for the CFP board and what I,<\/p>\n<p>00:46:14 [Speaker Changed] And this is certified financial planner. That\u2019s<\/p>\n<p>00:46:16 [Speaker Changed] Right. And I believe that the CFP, the certification for financial planners is a great indication of the quality and education advisors have and can deliver to their clients. I\u2019m also a believer that we need to bring diversity into our industry. We need to educate and attract talent to the industry. \u2019cause it\u2019s inside colleges and universities. Financial planning isn\u2019t a profession that\u2019s well known or well understood. Like it<\/p>\n<p>00:46:43 [Speaker Changed] Can, it is offered in a few schools, right?<\/p>\n<p>00:46:45 [Speaker Changed] It is. It definitely is. And so while I was on the CFP board board of directors I, that the board was very focused on raising the awareness of the CFP certification, raising the entry rates of the industry for young professionals and increasing diversity either through mid-career transfers or degree programs at universities. And that was a, I feel really proud of what we did at the CFP board the four years I was there. It\u2019s a great, it\u2019s a great organization. It,<\/p>\n<p>00:47:15 [Speaker Changed] It\u2019s interesting \u2019cause when you look at the average age of the typical advisor and, and amongst the CFP community, it\u2019s kind of a hole in the donut. You have lots of folks, 60 plus, I think the average age is like 62. Some crazy number I think it is too. And while there\u2019s a, a new crop of CFPs coming in in their twenties and thirties, there\u2019s definitely that gap between those two generations.<\/p>\n<p>00:47:38 [Speaker Changed] You know, it\u2019s really interesting. So my hypothesis about why that donut exists is the big recruiting classes of the wirehouses diminished over that time period. And so, you know, whether it\u2019s wirehouses or insurance companies, they used to be the trainers of our industry and they had segment strategies that led them to the upper end of the market and there just wasn\u2019t as much new entry into the industry as it relates to the age of advisors. Something that I talk about at Orion all the time and, and publicly too, is right now there\u2019s 106,000 or so financial advisors that over the next 10 years in one way or another are likely to transition out of the industry either because<\/p>\n<p>00:48:25 [Speaker Changed] How many, what\u2019s<\/p>\n<p>00:48:25 [Speaker Changed] That number? 106,000<\/p>\n<p>00:48:27 [Speaker Changed] That\u2019s out of 400,000 or so. Is<\/p>\n<p>00:48:29 [Speaker Changed] That out of 300,000<\/p>\n<p>00:48:30 [Speaker Changed] Really a third over the next decade? That\u2019s amazing. That\u2019s<\/p>\n<p>00:48:33 [Speaker Changed] It is. And, and the retirement of financial advisors, something that\u2019s been talked about for many years at the same time, there\u2019s great exit ramps for advisors right now, either through consolidation and purchase of their business or reducing their ownership of their revenue, becoming part of bigger advisory firms and then sunsetting their careers. Right. And so if you look at the assets controlled by those 106,000 or so advisors, there\u2019s about 11.9 trillion. Wow. Which is more than our whole industry serves today. Meaning the independent advisors. Right. And so the opportunity to help advisors be consolidate orders to benefit from these, these trends in the industry is right now. And I think Orion\u2019s in a great place to do that.<\/p>\n<p>00:49:18 [Speaker Changed] Huh. Really, really quite fascinating. We, we talked about cybersecurity as a, as a large concern as the nightmare scenario. And we were just talking about ai. The first question is how do you keep your financial technology platform safe? And second seems like there\u2019s an arms race between the good guys and the bad guys using AI to penetrate through cybersecurity defenses.<\/p>\n<p>00:49:46 [Speaker Changed] Absolutely. You know, and companies, all companies need to be vigilant every single minute of every single day. We all need to invest a lot in cybersecurity. We need to learn from the innovation and the evolution of attacks and protocols. And at Orion we have a large team doing that every day. I mentioned earlier that we were NIST compliant and SOC two type two, we use third party penetration tests because the most vulnerable part of any system, the most vulnerable part of any system is your team. And so you need to make sure that you\u2019re educating them all along the way. Which we are at Orion.<\/p>\n<p>00:50:22 [Speaker Changed] It it\u2019s the human failure that\u2019s almost always the softest part of, of the armor. And if you can engineer around a person, you can penetrate almost anything. People, people surprisingly reveal, like I, I keep reading about these stories about someone will get a phone call or an email, Hey I can\u2019t get in, can you log me in? And it\u2019s not a person, it\u2019s an AI generated voice. And you\u2019d be surprised how people kind of fall for<\/p>\n<p>00:50:55 [Speaker Changed] That. And you think about, in our industry, not so much, but in other industries how much of it is biometric? Your face, your fingerprint, your voice, your voice and all of that is replicable by ai. So you need to, you need to ensure that your protocols are ahead of that.<\/p>\n<p>00:51:14 [Speaker Changed] So the other thing we haven\u2019t talked about are alts, venture capital, private equity crypto. How does that fit into your platform? How do these and other tradable or investible assets work with the services you provide to the advisor community?<\/p>\n<p>00:51:30 [Speaker Changed] You know, as it relates to, to new investment types, just like we\u2019re investing in understanding new technologies, whether it\u2019s AI or large language models or biometrics, we need to do the same with investing. So right now I think everyone should be thinking a lot about tokenization. You can securitize anything. We should be thinking a lot about accessibility and liquidity of assets that are non-standard. Whether that\u2019s crypto or alternative investments. We should be making these asset types more easily accessible, more easy to evaluate and easy to hold in a portfolio. And that\u2019s all, all of those things are things we\u2019re exploring at Orion right now.<\/p>\n<p>00:52:14 [Speaker Changed] So last big question before I get to my favorite questions I ask all of my guests is, you obviously have a big job ahead. You\u2019re kind of now got your feet wet, you, you\u2019re sliding into the job, you\u2019re in a comfortable place. What are the challenges you\u2019re looking at? What do you wanna do to take Orion to the next level?<\/p>\n<p>00:52:33 [Speaker Changed] There\u2019s so many things I wanna do with Orion. I think the most important one though, job number one for me, to me, one of the biggest challenges we faced in financial services is a fragmented offering that we deliver to financial advisors and to investors. And the reasons for that fragmentation is we\u2019re such a creative industry. People have an idea, they build a technology, they have an idea, they build an investment solution. And that fragmentation creates real challenges for financial advisors. Either challenges in ensuring that they\u2019re diligencing and building optimal portfolios on the investment side of the equation. Or that they have technology they can actually leverage on the technology side of the equation. My favorite statistic, and I think the true opportunity for Orion is that if you look at JD Power results, 90% of advisors know they need to use technology. Only little less than 50% actually find the technology they use useful.<\/p>\n<p>00:53:33 And only 10% of advisors is from our wealth tech survey. Less than 10% feel the technology that they have today is sufficient. And the really, and the reason for that is it\u2019s very functionalized. You have your reporting system and that reporting system may or may not be integrated into your trading. And that trading may or may not be integrated into your portfolio construction, which may or may not be integrated into your performance reporting or your investor portal. And so I believe the, the biggest opportunity for Orion is to break those barriers down to integrate those solutions and save advisors a lot of time and a lot of effort.<\/p>\n<p>00:54:11 [Speaker Changed] So, so I have to follow up with the, those stats. Half of advisors, or is it advisors say half of the technology they use doesn\u2019t deliver<\/p>\n<p>00:54:23 [Speaker Changed] Less than 50% of financial advisors say the technology they use isn\u2019t as useful as it could be.<\/p>\n<p>00:54:29 [Speaker Changed] I, I mean we live and die on technology. Yes. And while, you know, I personally hate typing on glass and I could come up with, show me a technology, I\u2019ll give you, here\u2019s what\u2019s the downside of is. The upside is we\u2019re so much more productive. We can do so many more things so much more quickly, so much more efficiently than we used to it. While none of the tech we use is perfect. I, I\u2019m, I guess it\u2019s the gray hair. I\u2019ve been doing it long enough that I can remember going back to what we talked about earlier, the quarterly printing out everybody\u2019s performance statement and then jamming them one by one into manila envelopes. I remember like five of us sitting around six o\u2019clock at night on whatever the first of the next quarter, first day of the next quarter was just with everything laid out. \u2019cause you couldn\u2019t even do it until the quarter ended. And at a certain, you had to generate everything and print it out. The whole process took like three days and it was literally stuffing statements into envelopes. It was just horrific. So I don\u2019t know, is it a function of, of expectations? I\u2019m surprised that that many people find their technology not meaningful to them.<\/p>\n<p>00:55:48 [Speaker Changed] You know, it\u2019s, it\u2019s interesting. I do think you\u2019re right about if you\u2019re benchmark is the paper quarterly reports that used to go out six weeks after quarter end.<\/p>\n<p>00:55:58 [Speaker Changed] We were good. We were like two, three weeks after. Okay. Right. Not too bad then. And by the way, if we\u2019re late, the phone is ringing.<\/p>\n<p>00:56:04 [Speaker Changed] That\u2019s right. Then today\u2019s technology looks pretty good. If your benchmark is your iPhone right then and all the apps and how integrated they are on the iPhone, then financial services technology has a long way to go. And so what I believe is because of advancements in data streaming and data access and because of advancements in how technologies can work together as an industry, we can be more integrated where the client conversation between the advisor and the investor is at the center of the client experience we offer versus the function you\u2019re trying to prove. Perform trading, rebalancing, reporting, which is where we\u2019re organized right now.<\/p>\n<p>00:56:48 [Speaker Changed] So, so I, I see on a lot of people\u2019s phone, the Bloomberg app, there\u2019s a Schwab app. Tell us about the Orion app.<\/p>\n<p>00:56:57 [Speaker Changed] So we offer an app to financial advisors and investors where they can see their investment performance. They can see communications from the financial advisor, they can see the performance of their portfolios, they can engage with their behavioral finance profile. It\u2019s just incredibly important for investors to have access to information about their accounts all day, every day.<\/p>\n<p>00:57:21 [Speaker Changed] Are you finding clients use those regularly or do they wait for the next, you know, 15% draw down before they start tapping the screen?<\/p>\n<p>00:57:30 [Speaker Changed] You know, you\u2019ll have to tell me what your experience is on this because I\u2019d be interested. What I find is that investors interact with their portfolios more when things are going well and then they set the high watermark of performance. And then as portfolios get more and more distressed in a draw down environment, they look at it less and less. Well<\/p>\n<p>00:57:51 [Speaker Changed] The old joke is no one opened their statements during the financial crisis. Yeah. That, that\u2019s not that far from our experience. I, I will tell you, we spend an awful lot of time before someone becomes a client. We were fortunate enough to launch in 2013, which was a great, you know, start of a new bull market and a great decade ahead of it. But we spent a lot of time warning clients, hey, 13% a year is ab, whatever the average was for the 2010s, 13, 14%, not, not our performance, but the s and p we spent a lot of time warning people, this is aberrational, this is way above eight, 9% historical average. You should ex your, your return expectations should be ratcheted down. Take the wins when they show up. But don\u2019t get too used to 14% a year, you\u2019re probably not gonna see that.<\/p>\n<p>00:58:43 You know, it\u2019s funny, people freaked out during 2022 stocks and bonds both down the following year. You have the s and p up double digits and the NASDAQ up big double digits. I think it was 25 and 50 respectively. Some crazy number like that. And you know, again, it\u2019s the same conversation. Lower your expectations. Don\u2019t, don\u2019t think that this is usual. So we really try to make sure clients know, hey, eight 9% is great. If we get that fantastic. What I find during drawdowns is that prospective clients tend to reach out. \u2019cause when the tide goes out, that\u2019s when people realize, Hey, I\u2019m not so thrilled with my particular person, my guy or girl I, I\u2019m ready to make a change. So suddenly things get busier. I what, what do you see money in motion during corrections or during the bull?<\/p>\n<p>00:59:35 [Speaker Changed] I think the work that financial advisors do during corrections, focusing people on their goals versus short-term performance, helping them understand how common or uncommon drawdowns are like this and what typically happens or could happen after just aligning the portfolio and the performance with what the client\u2019s expecting of it. The work that you all do in dislocations or in tough environments pays dividends for years after. Right. And so, like at Orion, in any environment like that, we are gonna be investing in communications and support and insights on our client\u2019s behalf. So they have those conversations and they can benefit, as you say, the tide goes out,<\/p>\n<p>01:00:18 [Speaker Changed] Right? We, we say internally during drawdowns corrections and crashes are when advisors earn their keep agreed. Right. That, that\u2019s for sure. Alright, so I only have you for a couple more minutes. Let\u2019s jump to our speed round. Our favorite five questions we ask all of our guests, starting with what\u2019s been keeping you entertained these days? What are you streaming, watching, listening to? Tell us what, what\u2019s keeping you amused?<\/p>\n<p>01:00:45 [Speaker Changed] So, I love podcasts and I love random podcasts. So I listen to Broken Record. It\u2019s all about music. I listen to revisionist history with Malcolm Gladwell. I listened to History. I love Bagman. Rachel Maddow, I thought\u2019s. So interesting to listen to.<\/p>\n<p>01:01:03 [Speaker Changed] My wife\u2019s reading her most recent book.<\/p>\n<p>01:01:05 [Speaker Changed] Oh, is she enjoying it?<\/p>\n<p>01:01:07 [Speaker Changed] She\u2019s loving it. She says it\u2019s a little, it\u2019s like you have read it, put it down for a a day or so, and then pick up the next check. It\u2019s dense. Yes. And we\u2019ll talk about books in a minute. Okay. All right. If, if you like broken records, I have two things to recommend. All right. One is Polyphonic. I don\u2019t know if you\u2019ve ever seen that. It\u2019s a YouTube podcast if, if that\u2019s the right word. And the other one is, you can\u2019t unhear this. Okay. You can\u2019t unhear. This is also YouTube. They go into a depth of recording of Beatles albums and songs and it\u2019s just the oddest, strangest little things about a change in tempo halfway through the song or someone cursing in the background that slipped through and was broadcast on radio and nobody knew about it. On just like the funniest, oddest, quirkiest little things, but really significant elements in a song that you just don\u2019t notice because it\u2019s all part of the music. And once you hear it, it\u2019s sort of, you can\u2019t unhear it. It\u2019s really, it\u2019s really interesting.<\/p>\n<p>01:02:16 [Speaker Changed] Oh, I love that. I\u2019m actually gonna look at that on my way home. I spend a lot of time on planes<\/p>\n<p>01:02:20 [Speaker Changed] And stuff, so podcasts are great for that. Let\u2019s talk about your mentors who helped shape your career<\/p>\n<p>01:02:26 [Speaker Changed] So well. Charles Goldman, who\u2019s the current executive chairman and my predecessor, CEO at AssetMark absolutely has been a mentor for me since I started working with him at AssetMark. I mean, started working with him at Schwab before I joined him at AssetMark. Debbie McGinney, who\u2019s the former president of Schwab Institutional, she\u2019s been, she was an incredible mentor to me at a really important part of my career. Gave me some great advice about leadership and changing the way you think as you get more senior in an organization. Yeah, those are probably the biggest two.<\/p>\n<p>01:03:00 [Speaker Changed] Let\u2019s talk about books. What are you reading now? What are some of your favorites?<\/p>\n<p>01:03:04 [Speaker Changed] Oh my gosh, I love history. So anything. Doris Kearns Goodwin. Absolutely love team of rivals. Fantastic. I I love financial services history. So Smartest men in the Room. I love all the history about Enron and the financial crisis Devil take the Hind most, which is all about the history of speculation and the resulting consequences of speculation. Those are all great books.<\/p>\n<p>01:03:31 [Speaker Changed] Along those same lines, did you ever read When Genius failed? Yes.<\/p>\n<p>01:03:35 [Speaker Changed] We loved it.<\/p>\n<p>01:03:36 [Speaker Changed] So, right. So amazing about Long-term capital management. Yeah. The, the smartest guys in the room. That\u2019s Bethany Frankel. Yeah. Amazing. Right? Like it\u2019s amazing what they got away with and for so long. Yes. Just steamrolling everybody.<\/p>\n<p>01:03:52 [Speaker Changed] It\u2019s so true. And you know, the, the consequences of that, a firm that had over a hundred years of history just disappeared. And so I just think we all should be students of the industry that we\u2019re in<\/p>\n<p>01:04:03 [Speaker Changed] To, to say the very least. Yeah. Our final two questions. What sort of advice would you give a recent college grad interested in a career in either financial technology or investing<\/p>\n<p>01:04:15 [Speaker Changed] To go for it? It\u2019s a fantastic industry to be part of. Lots of creativity, lots of growth, lots of innovation. Incredible amount of opportunity. You know, don\u2019t be overwhelmed by the, the vocabulary or the math or things that frighten people away from the industry. You\u2019ll have a great career.<\/p>\n<p>01:04:33 [Speaker Changed] You know, I meant to ask you the left brain, right brain question, what\u2019s more important? Creativity or the technical skills? I might as well throw that out to you here. Yeah.<\/p>\n<p>01:04:44 [Speaker Changed] So myself personally, I tend to lean more left brain with the analytical, methodical numbers focused approach. But I don\u2019t believe you can be successful if you lean one way or the other. When you\u2019re doing something that\u2019s truly first time ever or new, you wanna delight your clients in an unexpected way. You have to be creative. And so I try to exercise both muscles. When we were building mobile trading, the creativity right side of the brain needed to take over. When you\u2019re building a service model, the creativity, I think right side of the brain needs to take over. When you\u2019re building a new asset management vehicle or a new set of investments, tools, or a new business line, you better be analytical.<\/p>\n<p>01:05:27 [Speaker Changed] Hmm. Really interesting. Our final question, what do you know about the world of finance and investing today? You wish you knew 30 or so years ago when you were first starting out?<\/p>\n<p>01:05:36 [Speaker Changed] I wish I knew how fun it was really. I really do. And, and, and by fun I just mean you are making a huge impact on people\u2019s dreams and goals and lives. You know, if you\u2019re working with institutions, the investors in those institutions are teachers and firemen through their pension plans and their retirement plans. And when you build something that\u2019s new and creative, seeing the impact it has on lives, it\u2019s just incredibly fun and interesting. So I wish, I wish I would\u2019ve known that, huh? I would\u2019ve sought the industry out versus randomly finding it. I don\u2019t know<\/p>\n<p>01:06:09 [Speaker Changed] If I\u2019ve ever heard that answer before that. That\u2019s a great answer. Well, well thank you Natalie, for being so generous with your time. We have been speaking with Natalie Wolfson, CEO of Orion. They have over $4.3 trillion in advisor assets on their platform. If you enjoy this conversation, well be sure and check out the 500 previous discussions we\u2019ve held over the past 10 years. You can find those at iTunes, Spotify, YouTube, wherever you find your favorite podcasts. And be sure and check out my newest podcast at the Money Conversations with experts about your money, earning it, spending it, and most importantly, investing it. You can find that in the Masters in Business Feed, or wherever you find your favorite podcasts. I would be remiss if I did not thank the correct team that helps us put these conversations together each week. John Wasserman is my audio engineer. ATT of Al Run is my project manager. Sean Russo is my head of research. Anna Luke is my producer. I am Barry Ritholtz. You\u2019ve been listening to Masters in Business on Bloomberg Radio.<\/p>\n<p>\u00a0<\/p>\n<p style=\"text-align: center;\">~~~<\/p>\n<p>\u00a0<\/p>\n<p><iframe class=\"lazy lazy-hidden\" style=\"width: 100%; max-width: 660px; overflow: hidden; background: transparent;\" data-lazy-type=\"iframe\" data-src=\"https:\/\/embed.podcasts.apple.com\/us\/podcast\/masters-in-business\/id730188152\" height=\"450\" frameborder=\"0\" sandbox=\"allow-forms allow-popups allow-same-origin allow-scripts allow-storage-access-by-user-activation allow-top-navigation-by-user-activation\" data-mce-fragment=\"1\"><\/iframe><\/p>\n<p><noscript><iframe style=\"width: 100%; max-width: 660px; overflow: hidden; background: transparent;\" src=\"https:\/\/embed.podcasts.apple.com\/us\/podcast\/masters-in-business\/id730188152\" height=\"450\" frameborder=\"0\" sandbox=\"allow-forms allow-popups allow-same-origin allow-scripts allow-storage-access-by-user-activation allow-top-navigation-by-user-activation\" data-mce-fragment=\"1\"><\/iframe><\/noscript><\/p>\n<p>\u00a0<\/p>\n<div class=\"printfriendly pf-button pf-button-content pf-alignleft\"><a href=\"#\" rel=\"nofollow\" onclick=\"window.print(); return false;\" title=\"Printer Friendly, PDF & Email\"><img decoding=\"async\" class=\"lazy lazy-hidden pf-button-img\" data-lazy-type=\"image\" src=\"https:\/\/cdn.printfriendly.com\/buttons\/printfriendly-button.png\" alt=\"Print Friendly, PDF & Email\" style=\"width: 112px;height: 24px;\"\/><img decoding=\"async\" class=\"pf-button-img\" src=\"https:\/\/cdn.printfriendly.com\/buttons\/printfriendly-button.png\" alt=\"Print Friendly, PDF & Email\" style=\"width: 112px;height: 24px;\"\/><\/a><\/div>\n<\/div>\n<p><br \/>\n<br \/><a href=\"https:\/\/ritholtz.com\/2024\/07\/transcript-natalie-wolfson\/\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>\u00a0 The transcript from this week\u2019s, MiB: Natalie Wolfson, Orion CEO, is below. You can stream and download our full conversation, including any podcast extras, on Apple Podcasts, Spotify,\u00a0YouTube, and Bloomberg. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~ 00:00:08 [Speaker Changed] This is Masters in business with […]<\/p>\n","protected":false},"author":1,"featured_media":12,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[3],"tags":[],"class_list":["post-151","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-ekonomika-finansai-bankininkyste"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/europaskolos.lt\/index.php\/wp-json\/wp\/v2\/posts\/151","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/europaskolos.lt\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/europaskolos.lt\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/europaskolos.lt\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/europaskolos.lt\/index.php\/wp-json\/wp\/v2\/comments?post=151"}],"version-history":[{"count":0,"href":"https:\/\/europaskolos.lt\/index.php\/wp-json\/wp\/v2\/posts\/151\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/europaskolos.lt\/index.php\/wp-json\/wp\/v2\/media\/12"}],"wp:attachment":[{"href":"https:\/\/europaskolos.lt\/index.php\/wp-json\/wp\/v2\/media?parent=151"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/europaskolos.lt\/index.php\/wp-json\/wp\/v2\/categories?post=151"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/europaskolos.lt\/index.php\/wp-json\/wp\/v2\/tags?post=151"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}