RIA Custodians

#ItzOnWealthTech Ep 15: How to Choose an RIA Custodian with Robb Baldwin, TradePMR

“I realized that custodians had all of this data, but they did nothing with it to enhance the advisor experience. So when we started TradePMR, our goal was to create technology that leveraged our data to provide advisors with superior tools to manage and grow their business.”

— Robb Baldwin

Robb Baldwin is the founder and CEO of custodian TradePMR. The firm provides technology, support and services to RIAs through its own innovative management platform. TradePMR was born out of Robb’s personal experience with a difficult transition in his own RIA firm during the merger of two major custodians. Since 1998, TradePMR has focused on combining exceptional service with a truly innovative technology platform. The objective is to improve workflow, increase margins and bring new levels of efficiency to the firm’s advisor clients, allowing them to focus more on their customers and less on back office infrastructure.

Robb has over 30 years of experience across the brokerage and RIA industries. Over the course of his career, he has helped individuals and institutions in virtually every aspect of the investment advisory business. Today, TradePMR continues to fulfill his original goal of helping advisors find their true independence by providing what he believes is the absolute highest and best technology and service in the industry.

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This episode of Wealth Management Today is brought to you by Ezra Group Consulting. If your firm is evaluating new technology or looking to improve your current wealth platform, you need to contact Ezra Group. Don’t spend another day using technology that doesn’t offer an elegant user experience. Your advisors and clients deserve better and you can deliver it to them with the help of Ezra Group.

Topics Covered in this Episode

  • How TradePMR chooses advisors, and how advisors choose them [04:02]
  • Conversions and multi-custodial issues around mergers [06:15]
  • When Robb saw tech as being a differentiator amongst firms [08:52]
  • Thoughts around Schwab’s move out of the tech business [10:53]
  • How mergers can change the technology needs of an RIA [13:35]
  • Robb’s take on the United Capital acquisition by Goldman Sachs [15:07]
  • Is Goldman now a bigger threat to the industry as a whole? [16:20]
  • How TradePMR’s relationship with First Clearing differentiates them from other custodians [17:54]
  • The driving force behind TradePMR’s recent announcement of a UX/Ui makeover [19:27]
  • Discussion around TradePMR’s rebalancer and its mobile capabilities [25:03]
  • TradePMR’s recent partnership with Black Diamond, and why they chose them to work with [30:10]
  • How TradePMR’s augmented reality offering will work [35:16]
  • Mergers in the industry and their potential effect on relationships with partners [38:21]
  • Wells Fargo launching an RIA channel in partnership with TraderPMR – what will this mean? [40:00]

Companies & People Mentioned:

Other Resources

If you are interested in more information about some of the topics Robb and I discussed, these blog posts would be useful:

wealth management consulting

Complete Episode Transcript:

Craig: Welcome to Planet Wealth Tech. This is your host, Craig Iskowitz. I’m a technology and business strategy consultant, focusing on wealth management solutions. Each week here on the Wealth Management Today podcast, I speak with people who are on the cutting edge of tech and pushing the envelope by bringing us new products and ideas that can help your firm stay one step ahead of the competition. On today’s episode, I had the opportunity to sit down with Robb Baldwin from RIA custodian TradePMR. I’ve always been interested in the more agile tier of firms that sit below the big four RIA custodians and how they thrive and adapt in this ever-changing industry we live in. We spoke about what makes this firm unique and I dove into their background with First Clearing, we also discussed some of the big changes in the roadmap of their own advisor platform. So without holding you back anymore, let’s get started

Craig: And welcome to this episode of Wealth Management Today. Today on the podcast I am very pleased to have as my guest the Founder and CEO of TradePMR, Robb Baldwin. Welcome Robb.

Robb: Thank you, it’s a pleasure to be here Craig.

Craig: It’s a pleasure to have you on. We see each other conferences all the time, I’m really a fan of what you guys are doing down there and I’m glad to be able to sit down and discuss some of the things you’re doing and some of the announcements and pre-announcements coming up before your big client conference.

Robb: Absolutely, yes. Next week, we all meet in West Palm Beach and have our annual conference with all of our advisors. We’re really excited to be able to get down there and meet a lot of people face-to-face that we talk to on the phone every day, and introduce them to some of the things that we’ve come out with. But mostly, the things we’ve come out with are driven by these advisors; they give us the input and we make the requests that they want after we prioritize them. So really, we’re going down there to say we’ve completed a lot of the tasks that they’ve asked us to complete.

Craig: That’s the best way to run a business — client-driven.

Robb: Absolutely. It’s a big focus of ours, it always has been. We have a lot of different ways that advisors can communicate to us to tell us how they think things could work better, how a workflow could be a little improved, different feature sets that they think they could utilize more. And they make those suggestions through talking to advisor services, they can make the request online with us; they can do all kinds of things that allow us to then analyze and prioritize that information and determine what is the best for the majority of our advisors, and get to work on it.

Why Do Advisors Choose TradePMR?

Craig: What’s interesting about your firm is the advisor mix. How do you pick advisors, how do they pick you? You seem to have an interesting mix of advisory firms as your clients.

Robb: I was an advisor (I started as an advisor 25 years ago) and trying to find a custodian, I really appreciated the firms who gave me a chance. And seeing that I was starting from not necessarily ground zero but not with a whole lot of assets, I wanted somebody who would allow me to grow. So I’ve always taken the approach that I want to give guys that are new a chance to grow, especially if they have experience and they have the ability to accumulate assets and improve, and they’ve done that in a prior life. Those kinds of guys, I really want to give a chance to. In most cases, if you’re a new startup and you don’t have any assets and you don’t have a proven track record, that’s probably not a good set for us, because we really want advisors who are focused on growth.RIA Custodians

Robb: So the majority of the assets and advisors that are moving to us today are fairly large (anywhere between the $250M-$2B range), and that’s really who we’re focused on serving. Because I believe that no matter what we try to do right now, we’re going to find that roll-ups are going to continue to occur, billion dollar firms are going to start recruiting smaller advisors, and we’re going to end up with a consolidated advisor workforce before too long. It may be three years from now, maybe five years from now, maybe 10 years now. I’m usually an early predictor of things and whether they come true or not, but I have a feeling that’s where we’re going. So all the tool feature set that we’re creating is not for a smaller set, it’s for the larger advisors. Because I feel like that’s where we need to focus all of our energy, because consolidation will occur and has already started to occur.

Craig: That’s an interesting question. My consulting firm, we work with a lot of larger firms in the same range where you’re talking about, and what I find is that with a lot of these mergers you want up having multi-custodial issues because two firms were merged with different custodians and they can’t move all the clients so they end up having to support multiple custodians. Do you see that being an issue or is that a problem for you guys? Do you do a lot of conversions?

Robb: We do a lot of conversions, but at the same time it’s not an issue. It’s something that we’ve really had to focus on, making sure that we provide deep as possible integrations with some of the major PMS systems that are out there. So the portfolio management systems that advisors use and integrate with us ,as well as other custodians, can be utilized no matter where the advisor does business, and that’s really a key. We have to have deep integrations and make sure that all of this matches up and we provide the same level of data to these advisors who choose to be multi-custody.

Robb: I think that’s one aspect that all of us are working towards, but at the same period of time there’s two levels of focus that we have here at TradePMR, two items we focus on every day we come to work. Number one is delivering great technology to our end advisors and teaching them that they do have a system whereby they can operate their entire business simply and easily, without having to go outside of us if necessary, but we do understand those who have multi-custody have that capability. The second is we work our rear end’s off to make sure we service our advisors every single day and solve their problems as quickly and efficiently as possible. We pick up the phone when it rings, they talk to a human, that’s something we take pride in. It’s something that I noticed as an advisor when I did business, that it was critical if I could talk to somebody I knew who could take my issue and make sure it got pushed through. And that’s really something I’ve always strived to continue to do and continue to build out, no matter how large we get. That’s really our goal. So we’ve got a lot of room still to grow left, but I’m not afraid to make sure that we keep this business model as-is, and be able to answer the phone and solve people’s problems.

Craig: So you could summarize your focus as great tech and great service.

Robb: Correct. Those are the two things every day we mention in every meeting – that’s our focus.

Technology as a Differentiator

Craig: So going back in time, you’re starting a broker-dealer.. and I liked on your website how you described it, a broker-dealer uniquely focused on providing extraordinary support and service to advisors. So when you started this firm (and you’re mostly known as a custodian), at what point did you see tech being a differentiator?RIA Custodians

Robb: I could go back to my days as an advisor, that’s when I realized the wreck that was involved in the tech of the custodial space; it was horrible. I spent a lot of my Sunday’s coming into the office, because I was multi-custodial only because I was trying to find a custodian that actually gave data to me, and none of them did. All I received was comma-limited format of data that I had to take and batch and then put into an MS DOS system and try to determine who had what and where at any given point in time.

Craig: Now for the young people out there, MS DOS is an operating system that us old people used to use because that’s all we had.

Robb: The only time people ever even know what MS DOS means is usually when I say, it’s a black screen with little green letters on it. Then they go, oh okay I remember.

Craig: Yes. And no mouse, just a keyboard.

Robb: So you take that data and you had to export it into Excel and culminate the data, it took Sunday afternoons to do this. You’re pulling all the data in, you’re creating it into a presentation, and you’re doing that so that you have a deliverable to your client to show them when you have your face-to-face meeting. And it was painful, and I realized at that juncture that custodians owned all this data, they had it all in their hands and they did nothing with it to enhance the advisor experience. So when we started TradePMR, that was our goal. We wanted to turn the tide and create technology with the data we had, and give advisors the day-to-day pieces they needed to grow and operate their business.

Craig: So if you don’t mind me asking, what do you think about Charles Schwab’s move to basically get out of the technology business, or most of it? When they sold off their portfolio center technology to Envestnet, they’re making a move in the opposite direction really. Do you think they’re right or they’re just doing very different business?

Robb: No, I think they were copycatting what really worked for TD Ameritrade. TD decided to go out and build out their TEO system, but they decided that they were going to do integrations really, really well and built a lot of integrations, and that was a good driver for them. Whereas Schwab decided to go back to Portfolio Center and continue to utilize that with all their advisors who are coming on board. Again, that’s a software system sitting on the desktop, downloading and uploading data that didn’t meet the needs of clients. So instead of going out and building a brand new interface that’s web-based that accomplishes all the things advisors need, I assume they decided it was easier to outsource that and have that accomplished with all the fintech startups that are out there. And I do think there’s a play both ways, there’s all the advisors with multi-custodial relationships everywhere. They’re going to have to have those systems and they’re not going to have to use a lot of technology from any custodian.

Robb: But then you have those advisors (and we get a lot of them) who come to us and say, “We are multi-custodial, but we recognize the fact that we could probably be a lot leaner and meaner with our P&L’s if we could narrow our custodial relationships down and start to utilize your technology.” So I think there’s a trend going in both directions, and people feel their way out as they continue to grow their business. I think it helps from our standpoint to have a deliverable that’s out of the box to our advisors, especially those that are coming from the wirehouse world and just need something out of the box and still need to learn about the technology that’s available in our space, but don’t want to make decisions right away. I think it’s really wise for them to come to a firm like TradePMR, have the systems in place, and then show up to a T3 for the next year or two and determine what CRMs are best and whether they need portfolio management systems, or systems to rebalance portfolios that we don’t offer.

How Do RIA Mergers Impact Technology?

Craig: Going back to what you said about more mergers, I see the same thing and we’ve seen the number of billion dollar firms is growing every year from the market being up, but also from mergers. How does that change the technology needs of an RIA, when they merge?RIA Custodians

Robb: I don’t think it really changes the needs to the RIA, but I do think that it’s going to allow the larger advisors who are pulling together the ability to go out and lower their overhead by choosing a different variation of a tech stack that they want to operate with, and using them together. And that’s the real magic to any of these merger systems, is literally putting four or five advisors under one umbrella, but all of them having their individual contracts, all of them having the ability to grow their business, but everybody sharing overhead and under one roof. It’s a real simple way to make sure that everyone has a system in place for continuity; that if something happens to them, there’s a team left to take over. They can have buyouts that are simple and easy to put in place, and they can continue to run their practice and build their own name and brand, but underneath one common umbrella that all four of them use. That’s a really good way to accomplish and build a larger scale business. And they can use the same systems, they can use the same portfolio management systems, the same CRMs, and it saves them all overhead.

Craig: So speaking of mergers and acquisitions, what is your take on the United Capital acquisition by Goldman?

Robb: It’s interesting that Goldman has decided to dip their toe in the water and examine what this looks like. And as always, when mergers and acquisitions happen, you wonder what will be the end move. It’s still out there and to be determined on a lot of mergers that have occurred, even the E-Trade TCA merger. We’re still looking at that and examining, what is E-Trade’s true motive? What do they plan on doing with this? Do they actually want to merge that to be on their books and records, or are they going to keep it separate and distinct? I think that we’ll continue to have to watch and see what Goldman does as well.

Craig: They’ve got a number of different properties or business lines in this space. They’ve got high-end, private wealth business, they’ve got a middle tier where they support executive wealth, and they’ve got their Goldman mass affluent lending. So this kind of fits somewhere in between all those, in getting into the wealth space. So do you see Goldman as being a threat to the rest of the industry in that they’ve got the half-than on the market wherewithal to really build out any capital into much bigger player?

Robb: Yeah, absolutely. Two years ago I spoke at our conference and I laid out something that I think people looked at and thought I was absolutely crazy, but it’s something I still believe in today. And that is, I believe one of these major firms will eventually roll out of mostly FINRA business and become the first national RIA firm with a brand name that used to be more or less a wirehouse; I think that’s still possible. It wouldn’t surprise me at all if that occurs somewhere in the next three to five years. And they’ll be able to take a lot of the momentum and a lot of the product sets that they’ve been able to deliver to their wealthy clients, and deliver that across the board. And that’s a differentiator compared to most custodians and the level of things that they typically produce. It’s also where TradePMR feels like we’ve been able to work really well with First Clearing, because they have all those systems in place and a lot of the items that allow our RIAs who do business with us a lot of the feature sets that they get to offer to their larger channels.

Why Choose First Clearing?

Craig: You beat me to the question, I was going to ask you about First Clearing. So tell me about that relationship, how that works, and how that differentiates TradePMR from other custodians.RIA Custodians

Robb: First Clearing brings a lot to the table for us. They are a $1.8 trillion asset firm, so they have a lot of systems and product in place that are also fed across the board to wirehouse brokers that they do business with and that they clear for, and all of those systems and products and services are also in our advisors hands to utilize as well. So banking, trust services, advice from the standpoint of legal and tax, training, business building, advisor coaching, all those things are offered for free for the RIAs who do business through TradePMR. That is a huge differentiator and something we’re really proud to be able to partner with a firm like First Clearing, who has put together those services. And they’ve worked incredibly close with us to deliver a lot of services that are catered just to the RIA market, and we continue to build out more and more items with them on a quarterly basis, to deepen our relationship and to make sure we bring those items to our advisors and provide a differentiator for them to grow their business with.

Craig: Thanks for explaining that. I wanted to talk about your EarnWise platform, that seems to really be the centerpiece of your technology infrastructure that you’re offering to advisors. You recently announced a UX/Ui makeover, what was the driver behind that?

Robb: Yes. Well truthfully, Fusion is our everyday platform that advisors use to run and manage their business. EarnWise right now is a mobile compliment, and provides a lot of practice management, client data to where advisors can see what’s going on with client accounts, advisors can make trades, rebalance their portfolios, etc. on EarnWise, on a mobile device.

Craig: So Fusion’s the desktop, and EarnWise is mobile?

Robb: Yes, that’s correct. And EarnWise is our future, we plan on making EarnWise equivalent to Fusion at first, and then expanding it ongoing. That’s another 24 month projects for us to accomplish that though, so in the meantime we’re still enhancing Fusion and we’re continuing to support EarnWise and the build it out as well.

Build Versus Buy Decisions

Craig: Regarding Fusion being built in-house, why not build it on top of something else? For example, pick another portfolio management tool and taking big pieces of it and using APIs?RIA Custodians

Robb: We looked at this years ago, and we’ve been at this for a very long time. We were the first to ever produce a real, live system where advisors can rebalance their client’s portfolios using basket systems and so forth, back in 2004 when we first released it. And I just learned at that time that it was better for us to use our experiences from being in the business and building what we felt worked best to create that. And of course, back then API’s weren’t very popular and everyone else was still using download and upload file formats to handle any kind of trade execution across the board for their customer accounts, and when it came to rebalancing, their portfolios.

Robb: So we had the chance at that time to build our own system, make it real-time, allow advisors to instantaneously, rebalance their accounts and have the accounts allocated literally within seconds after completing the order, and know that their task is completed and done, instead of playing with a software system that again rebalanced the accounts on their desktop, and then after they figured out that everything was correct they could upload it. Then the next day they could come in and make sure everything was completed. We just shrank that process down because we had the ability to do it real-time, since we own and control the data. So we chose that route and we did it early, so we’ve just continued to build on it ever since.

Craig: I want to take a little break from this episode to talk to you about one of my favorite sponsors, the Invest in Others Foundation. Invest in Others is a non-profit, you can find them at investinothers.org. They look to raise money and give out awards to charities that are sponsored by financial advisors, so it’s financial advisor’s favorite charities and charities that they spend a lot of time supporting. Invest in Others looks to get sponsorships from the industry and funnel that money to advisor’s favorite charities. I really like this non-profit, I think you should take a look at it. Again, that’s investinothers.org. They have a couple other programs: one is a Grants for Good program, delivering money to different needy organizations and needy groups. They’re also starting a corporate awards program, which is going to be a little bit different but still within the industry and another way for financial services and wealth management corporations to help donate money to people in need. I really like Invest in Others, I think you should take a look at them at investinothers.org.

Craig: It’s interesting that you’re talking about building this out in 2004, because I was doing the same thing. One of my clients was Standard and Poor’s, and they were in this business back in the same time where we were building out the same type of model basket rebalancing system. Unfortunately, they wound up building it, launching it, and then closing the business down, whereas you built it, launched it, and you’re still running. But that was a nursing time to be building out these kinds of tools, because as you said the technology was very nascent in maturity.

Robb: Yes, it was difficult. It’s still difficult to do with a lot of systems, because most of these systems that perform these rebalancing mechanics, they have to use and do this across the board for multi-custody outfits. That makes it really difficult, when you have multi-custodial relationships and you’re having to rebalance across many accounts, to have real-time feeds that can be handled quickly and easily. That still is not yet built out in our industry, it’s just not there yet.

Household Rebalancing

Craig: Does your rebalancer handle, can I set up models at the household level?

Robb: Yes you can.

Craig: That’s a pretty complicated task.

Robb: It is. It’s something that’s taken us quite a lot of time, but when we built Fusion we framed it out to be more household-centric than account-centric.

Craig: And as an advisor, I can rebalance on my mobile device?

Robb: You can, yes.

Craig: How many advisors do that? I feel like I need to see a really spreadsheet-like screen with lots of data before I click the rebalance button. Is there something special about the way you’ve built EarnWise that enables advisors to rebalance on their mobile device?

Robb: Yes. It’s not just EarnWise, it’s something we’ve done since inception. We create a lot of trade rules that keep advisors from making mistakes, and show them any issues ahead of time that could come up before the large trades go through. So if they’re trying to sell out of a position and two of the 100 clients don’t actually own the position anymore because your ops staff took a phone call from someone and decided to sell it to fund an ACH or a wire, we want to find those mistakes early, not the next day. So our system has real-time rules that it goes through with every rebalance, and it checks the client accounts to make sure there’s proper cash, the proper positions, whatever the advisor’s trying to do. The exceptions pop up, so all you do is exclude those exceptions and then you’re able to proceed, but you know that you’re making a trade that has already been real checked before it goes through. So yes, we encourage advisors to look at the entire system and usually create baskets in their offices, but those baskets sit there ready for them to execute at any point in time. So if they’re out and about and they hear the Fed makes a decision they can go execute any of the baskets they’ve created, and they can do it on their mobile device.

Craig: Nice. One thing before I forget, I wanted to congratulate you on your T3 award for your technology.

Robb: Well thank you, that was a real proud moment for me. After being in the business for 20 years and developing software that caters to the RIA community, it was a real important moment to be able to accomplish that and to get that award. Mostly from our clients and people who we have done business with for year, we really appreciated their vote of confidence. At the same period of time, to have that award meant that we were doing something right. It took a long time to get there, but we’re really proud of it and we really can’t wait to enhance it.

Craig: It really validates your decision to move from heavy investments into technology.

Robb: I think so, because we’ve been questioned by many industry experts of why we continue to build out an offering at all instead of just doing integrations and taking business from clients who have outside PMS’s. But we still see that even the large firms who do business with us will jump into Fusion and jump into EarnWise and do things on a routine basis, because it’s quick, simple, and has an easy UI for them to understand. So we’re proud of that and we want to continue to enhance it, and as we continue to enhance it I know we’re going to increase our percentage of usability from all different firms of all different sizes

Outsourcing Performance Reporting

Craig: And EarnWise/Fusion is a full portfolio management system?

Robb: Correct.

Craig: So it would fully replace whatever other technology they have, whether it’s Tamarac or Black Diamond or something like that. Fusion is a replacement for that?

Robb: It is, to some degree. I mean, we will never be able to keep up with some of the feature sets that our competitors have; it’s just not our forte to build out every single item that makes some trading very complex, which is of course why we do integrations and why we encourage advisors to kick the tires with all those different firms, to see if there’s a feature set out there that we don’t offer that that they could utilize. And if it’s a feature set that they come to us and say, “can you build this for us?” We’ll definitely look at it and see if it’s something we can add on to Fusion that enhances their experience with Fusion.

Robb: But at the same time, I’ll never build out a CRM that competes with some of the CRMs that are out there, the Salesforces, the Junxures, even the Redtails; that’s not our forte. Do we offer a CRM that’s a nice light version, that everyone can utilize if they’re not CRM centric? Then yes, we do. But at the same period of time, we’re never going to be at the level of having entire team’s working on PMS’ or CRMs full-time, to continue to enhance them. So we built out a good level of service platform that advisors can use, but at the same period of time we have integrations with everyone so that we can make sure that we field the needs of all the advisors.

Craig: Is there one particular portfolio management system that you integrate with more than others?

Robb: Well, that’s one of the things we’re going to announce next week. We built out our own performance reporting system since 2002, it was actually the first thing we ever did was create a performance reporting for our advisors, and we’ve been in the business ever since. And we’ve realized that it’s just too difficult to support it, and the prices have come down from some of these portfolio management system. So we are outsourcing all of our performance reporting, starting probably in the fourth quarter of this year, to Black Diamond. Our integration with them is fairly deep, and we still have deep integrations with the Tamaracs and the Orions of the world, but we are outsourcing all of our performance reporting to Black Diamond.

Craig: That is interesting news. What made you choose them over the other performance reporting vendors on the market?

Robb: We interviewed everyone and we had conversations with all of them, and Black Diamond just seemed to be a better mix. They took the effort to come into our office, look at our data, determine how they can help solve our problems, and figure out exactly what they would have to do to integrate with us and pull in all historical data as well as historical performance. It was really an extra effort on their part to come in and analyze things that won us over. And they’re right up the road from us, they’re in Jacksonville, Florida so they’re only a couple of hours drive, so it was a real easy, back and forth experience that we’ve been going through with them for the last six months. And I guess about six weeks ago, we decided you’re it.

Craig: So in this world where people are working remotely or where you work with people around the world and never meet them, a lot of it came down to geographic location, that they were close by.

Robb: That and the fact that they actually scheduled an appointment and made sure they were coming down here to determine whether this was going to work and whether it was a good fit. Everybody was willing to price it, everybody was willing to kick the tires and that, but it was really nice that they took the extra effort to say, “Can we schedule an appointment, come down and visit you, look at your data and determine what our processes would have to be in order to make that happen?”

Craig: And that’s how it works. Do you talk about how many accounts you’re moving over to Black Diamond for performance?

Robb: I’m not sure what that total would be. We’re actually still in some conversation about whether we do all of our advisors instantaneously and continue to work that, or whether we just do the set that uses our performance reports. We’ve always had the ability for advisors who decided to opt-in to performance reports, even after being here for two years, we had all the data from the prior two years and we could offer their performance from that data to them. And that’s something that I would love to be able to continue to do, I’m not sure we’re going to be able to do that. We may have to just have advisors from the day they say yes I want performance reports, start from that that day going forward. But we’re working to see if we can accomplish the ultra, which would be to be able to give them their entire history since they’ve been at TradePMR.

Craig: That is a great question. We have a lot of clients who are in the business of performance reporting as part of their wealth platforms, and that’s always a question with advisory firms and broker-dealers alike, is do we start fresh when we switch or do we move that performance over? If you can move it over, that’s a huge undertaking right?

Robb: Yes, yes. We’re definitely moving it all over from our current subscribers, it’s just a matter of whether we move it over for everyone and continue to pay extra to have all the performance being handled so that when advisors do subscribe, the data is there for the entire history of them being with TradePMR. That’s still a business decision to be made, and a technical decision to see if it can be accomplished.

Craig: It’s definitely a technical decision. There’s a lot behind the scenes of migrating performance data over, rather than just starting from scratch, as most firms do.

Robb: Very true.

Craig: So will that also lead to better connectivity to the rest of the Black Diamond suite? Because they built out their own rebalancer and other other tools as well.

Robb: Yes, it’s going to allow advisors to access those reports through Fusion, not through Black Diamond’s systems. But people who are happy with that experience or the performance reports and want to look into a deeper integration with Black Diamond, they’ll be able to go to Black Diamond to get the TradePMR pricing for the full-blown product.

Augmented Reality

Craig: That will be excellent. Speaking of the full blown product, you are adding some interesting functionality to your product. I saw a press release that you are offering augmented reality for advisors, to be able to understand the TradePMR technology and better visualize it. So how does that work?

Robb: Certainly. We did a test case and we’re experimenting with augmented reality to see whether advisors will actually utilize it. It’s a little gimmicky, I think at this phase to see what technology can do. And I think all things kind of start out a little gimmicky, but we’re going to see whether advisors actually utilize it. It’s real important for us to reach advisors and let them understand our value proposition, and there’s multiple ways you can do that. The past traditional ways of sending out brochures to everyone, all the way back to cold-calling to TV commercials, etc. They exist, but there’s other mediums that are coming out, and we’re really testing those mediums so we can determine what does hit advisors and what traction can we get from it?

Robb: Because with augmented reality, I’m able to actually present my case face-to-face with them, so that they understand who we are and what we’re about and can tuck that away for that day whenever they say I’m going to break away finally and I’m going to go independent – they may remember that they downloaded an augmented app and they were able to listen to me talk about our value prop. I think that’s going to work with some, and some are of course never going to download the app to watch the video. But again, it’s just another way to reach out and a medium whereby we can get our message out. And I think advisors are going to end up doing the same thing over time; they’re going to end up having to find ways that they can communicate with their client, and that’s going to be critically important. So it may be a way that they can do it in a secure method, whereby the client has the ability to see it and no one else does.

Craig: Yeah, a lot of technology starts out as a test to see how it works and see how clients are going to be using it. So you don’t really know how they might use it or what interesting ways augmented reality might improve the advisor experience or the client experience.

Robb: Absolutely.

Craig: Especially on mobile. When I think of augmented reality, I think of holding up your mobile phone to something and having an overlay of information.

Robb: Yes, and that’s something we’ve looked at is the ability through a client portal for advisors to be able to send messages that are custom just for our group of clients, and allowing that client to be able to log into their system and be able to see those messages and know that there’s a video message for them to watch.

Craig: Interesting. Going back to your integrations, I know you have integrations with FinMason and AdvisoryWorld. Have any of the mergers or AdvisoryWorld being purchased by LPL, does that affect your relationship with them at all?

Robb: No, not at all. AdvisoryWorld and FinMason were two of the different systems that we opted to contract with for risk scoring. We wanted to be able to provide our advisors a risk score on all the models they create, so that they understood the level of risk they were taking with each client portfolio. So as an advisor built a model out at TradePMR today, that model is scored as they continue to add positions. And that gives them an idea whether they’re taking too much risk or not enough risk for each individual client, but especially for that group of clients at the sight of that model. It also allows them to play around with and tweak, so they can try to get the right score to match the client’s risk profile, and make sure that client profile matches that score.

Robb: So that’s really the key driver for our integration with FinMason and AdvisoryWorld, and we’re real excited about it because we have advisors today that are thrilled to be able to sit down and say, “I looked at that model, it’s been there for two years, I didn’t adjust it and I didn’t rebalance it and it had gotten way out of the risk tolerance of my customer clients, or it had fallen under.” And they’re able to go in and adjust it and figure out exactly what they need to do to stay up on that model. So it’s something that’s right there available to them in Fusion that they can see every day when they log in.

Wells Fargo RIA Channel

Craig: That is awesome. Before we go, I wanted to talk about the announcement I read that Wells Fargo is launching an RIA channel in partnership with you guys. How is that going to work?

Robb: Well, it’s real simple right now. Wells Fargo is taking advisors that have normally been referred to First Clearing to try to see if there was a RIA match to where they could do business with First Clearing, and First Clearing has always used us for their RIA side. So we formalized the arrangement, so as they have had firms determine that it was the best element for them to go RIA, this is really just an additional channel for them. They end up sending the clients to us, we do due diligence on them and go through a process, and it’s a simple conversion where the client account numbers don’t have to change and the assets are able to be moved, as these guys have accomplished setting up and building out their RIAs. So it’s a wonderful transition for the client, they don’t have to do a whole lot of re-papering, and of course it’s a wonderful experience for the advisors as well.

Craig: It’s a very interesting relationship. I guess you’re re-selling of First Clearing was a key part of that, with Wells Fargo agreeing to this because it comes back to them in the end anyway.

Robb: To some degrees yes, because we do business with them so it’s a mutual benefit, but at the same time we’re just excited to support it. They’ve always had a desire to get in the RIA space and they’ve looked at it over and over again, we’ve been speaking with them about this for about eight years. John Polusa and myself have continued to meet and determine whether this was ever going to be able to be rolled out, but he was able to get it accomplished and get it started, and it’s been very successful so far.

Craig: That’s awesome. So how will the advisor experience differentiate? How would an advisor from finet see things differently than an advisor working through TradePMR?

Robb: Well, a finet advisor is more or less a hybrid; he’s still under the Wells Fargo umbrella, doing business under the finet channel. He’s independent from the standpoint that finet is an independent channel, but when you go RIA that’s the ultimate independence, so he would be setting up his own firm, running his own business, and he would be in custody of those assets with TradePMR/First Clearing, and that’s the true difference. It is a separate and distinct model, because he now owns controls his own destiny. He’s no longer affiliated with a finet or a broker-dealer in any way, shape, or form. He’s just starting his RIA and it’s going to be him only. So we’ve done that with some finet firms and some PCG firms.

Craig: So this is really allowing Wells to have another option for advisors; instead of them leaving totally to hang up their own shingle, they can still do that but kind of stay in the fold?

Robb: Correct, yes. I think it’s the 5th business channel that they’re offering to these advisors, and it allows them to complete the life cycle that some advisors walk down and walk the path of, from being totally captive in the wirehouse world to going into a hybrid world, to eventually going RIA. There’s been a lot of people who have gone through that transition route, and this allows Wells Fargo to stay in the mix throughout that process.

Craig: It seems like a good deal, it seems like a lot of these firms are trying to do that, so they can cover all their bases. They realize that they can’t be all things to all advisors, so they offer all these different ways. As long as the assets stay in their ecosystem somehow, they’re happy.

Robb: Yeah, absolutely, and I think that’s a true benefit. I congratulate First Clearing because they were really the first major firm to build this out and to accomplish it on a national level. And being a national firm, that was something that had never been done yet. A lot of other firms have been quizzed about it, whether they felt this was a route they would take, and so far the answer has been no. So I’m really excited that they were willing to take the step, and I’m real excited that TradePMR was able to help them take that step and be a partner with them.

Craig: Yeah, I mean there’s lots of different ways that these firms are doing these. Commonwealth and Cambridge got into the custody game year. Do you see that as being a similar type of deal to what you’re doing?

Robb: I’m sure there’s some similarities, but I differentiate from the custodial world that I’ve been a part of for the last 20 years to really what I see as hybrid firms trying to make sure that they stay in the mix with some of these firms who are going RIA. I don’t know how long that’ll last and how permanent those situations are going to end up to be, because there’s still so many situations where, if you’re RIA why would you want to be affiliated with a hybrid firm? Or maybe it will last, I don’t know, I’m not the expert there. I know from my experience in the past, when I went out on my own, I wanted to be on my own. I wanted to be able to pick my custodian, I wanted to be able to pick the firm that I thought would be the best for me. That’s what we offer and that’s what I believe is where most advisors end up going. They shop the market and they continue to learn as they grow their business, and they find the best solution that fits their needs. And maybe these smaller hybrid firms can deliver on that, but I think it’s more of a challenge than most of them realize.

Craig: That is certainly true, it’s definitely a challenge. It’s only when you get into it and start trying to sell it and support it that you realize how complicated it is.

Robb: Yes, yes. It continues to get more and more complicated and continues to grow, and I’m really happy I’ve had a 20-year head start of going down the road of building technology out and building all the forms and features that advisors need, because it’s a really complicated task.

Craig: It certainly is. I think we’re out of time, and Robb I wanted to thank you very much for taking the time to be on the podcast and sharing all of this information with myself and with my listeners.

Robb: Craig, it’s been a pleasure.



The Wealth Tech Today blog is published by Craig Iskowitz, founder and CEO of Ezra Group, a boutique consulting firm that caters to banks, broker-dealers, RIA’s, asset managers and the leading vendors in the surrounding #fintech space. He can be reached at craig@ezragroupllc.com