Come on in and sit back and relax. You’re listening to Episode 220 of the WealthTech Today podcast. I’m your host, Craig Iskowitz, founder of Ezra Group Consulting. This podcast features interviews, news and analysis on the trends and best practices, all about wealth management technology.
My guest for this episode is Matt Radgowski, CEO of Halo Investing. Happy to have Matt on the program, I’ve known him quite a while he’s been in the industry a while. He was appointed as CEO last June after coming on board as the COO. Matt came from about a decade at Morningstar, where he was Head of Advisor Solutions. Halo is an interesting company. We’ve been talking to them for a while as part of our research on alternative marketplaces. Matt has taken over from one of the co founders, Biju Kulathakal, who was the CEO since 2015. But when companies grow, they get successful, they get some money under their belt, they oftentimes need new management. So it’s the right person at the right time and Biju was the right person to lead them from startup to a successful company. They raised $100 million Series C round in October 2021 and they’ve been growing almost triple, quadruple a year, which is tremendous growth. So looks like they’re going to need someone with Matt’s skill set to take the company to the next level.
But before we get started, let’s talk about tech stacks. At Ezra Group, we’ve seen tech stacks of hundreds of RIAs and let me tell you, most of them are loaded down with tech debt. So you shouldn’t feel too bad about yours. But let’s face it tech debt is like a giant anchor, holding back your business growth. If you want to free your firm for exponential growth, you should run, not walk to our website EzraGroup.com and fill out the Contact Us form. Our experienced team can evaluate your current tech ecosystem, deliver targeted recommendations, optimize your existing systems and operations or run an RFP and help you implement new software to take your firm to the next level. You can take advantage of our free consultation offer by going to EzraGroup.com.
- Unlocking the Potential of Structured Notes
- Enhancing Structured Note Management
- Streamlining Advisor Workflows
- Partnership with GeoWealth
Matt: Thank you, Craig. I appreciate the opportunity to be here today.
Craig: I’m happy you could make it. Happy New Year!
Matt: Happy New Year!
Craig: I believe you can say Happy New Year until the end of January, so we’re all good. We’re covered.
Matt: We’re aligned.
Craig: Where are you calling from, Matt?
Matt: I’m in Chicago today—cold, snowy Chicago.
Craig: It’s okay. It’s a great place to be. It’s the people that matter; it’s not the weather.
Matt: That’s right. It builds character, as they say.
Craig: I’m normally in New Jersey, but I’m traveling at the moment. I’m in Florida, so I’m avoiding all that cold weather that’s in New Jersey and Chicago right now, thankfully. And here we are. So can you please give the audience the 30-second elevator pitch? In case they don’t know, what’s all this about, Halo Investing?
Matt: For sure. In its essence, Halo is a wealth technology platform that connects manufacturers of protective investments—structured notes, advisory fee-based annuities, buffered ETFs, and other protective investment products—with advisors who use them. We’ve automated those workflows that are required to source ideas around these products, purchase these products, and allocate them within your client portfolios. At the heart of it, that is what Halo is.
Craig: And, Matt, if I’m not mistaken, have you hit your six-month mark?
Matt: That is correct, yes. I joined Halo back in August of 2022, but I’m six months at the helm as CEO, so I’m excited to be here and excited about the future ahead for the firm.
Unlocking the Potential of Structured Notes
Craig: Congratulations! I’m happy you hit that milestone. Let’s talk about some of the work you guys are doing. Explain to me and the audience about guiding the buyer experience using technology. Why do we need to do that specifically around these types of products?
Matt: Yes, absolutely. There’s no question that with the products that I mentioned earlier—and we’ll key in on structured notes as one—there’s a complexity to them in terms of their design and deployment. When we talk about the guided buyer experience historically, typically with technology solutions, the advisor comes in and they pull and push a bunch of levers, explaining what they want. They hit a button and then hopefully, outside of that process behind the scenes, it returns some type of product guidance, recommendation, output analysis, etc.
Matt: When we think about the guided buyer experience, we’re trying to assist that advisor, understanding the objective that they’re trying to meet for their individual clients, and then helping them intelligently set defaults, intelligently sift through the product’s features and functionality that are available—product sourcing—but then also making sure that once they’ve made that decision, they can seamlessly buy that product, allocate it within their clients’ portfolios and then manage it on an ongoing basis. It’s about looking to streamline the way that they evaluate, source, and then integrate those products into their world.
Craig: That’s what it’s all about. It’s no good if you can’t integrate this stuff, right?
Matt: That’s it.
Craig: When we’re talking about some of the specific technology and some of the things you’re doing to facilitate a sub-advisor’s building strategies, how does that work?
Matt: Halo has launched a structured note SMA program. Two key elements of that are smart investment people to build allocations of notes based on an objective, whether it’s income or growth. But given the fact that you’re sourcing structured notes and you’re managing a portfolio of those notes as a sub-advisor or advisor to the strategy, you need tools and infrastructure to do that. Our technology allows the manager of the portfolio to go out and seek products from multiple issuers, price those products out, bring them in, and create that allocation of structured notes for that advisor. Then, on the buy side, the advisor can come to our platform and seek information around those SMA strategies, their bigger objectives around growth and/or income, specifics around what those objectives are, and how the portfolios are built then allocate it out to their individual investor clients.
Matt: For us, the whole thing is around accessibility. If you’re an advisor who is interested in the product but isn’t quite as proficient in building and managing portfolios of structured notes, you can hire a trusted third party.
Matt: We’ve recently announced a partnership with WisdomTree that we’re very excited about. They’re managing a growth and income strategy on the platform. And in addition to that, it’s a great complement to the ETF model portfolio strategies that they offer. It’s a great combination. It can be a good potential allocation to provide growth and protection, as well as income around it. That’s a technology we’ve built and launched recently that we’re excited about.
Craig: With sub-advisors, for example, an SMA manager, can they build a model of structured notes and then deliver that to advisors? How does that work?
Matt: That’s exactly correct. If you think about most of the wealth management platforms out there today, they have effectively what they would call a manager console where a model manager can come and build an allocation. Effectively, we’ve replicated that infrastructure. WisdomTree, for instance, can come to the platform and they can source notes and create an allocation of those notes on the platform itself. Let’s call that the manager console.
Matt: And then there’s the subscription process whereby the advisor says, “I’d like that strategy that’s being managed,” whether it’s by WisdomTree, PTON, NewEdge, or Invictus—those are the managers on the platform today. They can pick from one of those strategies and provide their allocation across their client book. I’d say the closest analogy would be the manager console that you see in many of the wealth management platforms that allow models to be built and managed there.
Craig: That’s something that’s been the holy grail—to be able to build these types of models. We used to call that characteristic-based modeling. With a fixed income, you can’t build a model because there are a million different bonds. You have to say, “Give me a bond that has this duration, this maturity, this risk level, and this rating.” And then the system is going to go and find it. But there are very few new programs or platforms that can do that.
Matt: That’s right. And that’s what’s super exciting to us, leading to hopefully a bigger market in general for the structured notes. The magic there is the strategy having a defined outcome. We’ll just stick with the big boulders: Income as a focus and core with some level of protection. And then, from there to your point, we can help that manager get to that product selection in an efficient way that creates an accessibility. And that’s what these strategies are all about: Providing access to product types that have a positive impact on the outcome but doing it in a way that doesn’t create too much operational burden for either the manager of the strategy itself or the advisor that’s looking to utilize it.
Craig: Nobody wants operational burdens. That’s not a feature. We don’t want that. Keep those away from us. We do not want operational burdens. What we do want, which I find interesting, is the ability to provide trade ideas, which I know your platform does. How does it suggest these?
Matt: It’s another piece of functionality that comes out in an update to the platform tomorrow, quite frankly, or the next day. At its essence, the structured note is a bond, so it has maturity. In some cases, they can be called. One of the things that we’ve done to improve the experience is that we have lifecycle. We show the advisor those events that could be happening, whether maturity, call, some other cap, or other event. In the past, they would have to come and source ideas on their own. What we’re doing is providing some guidance. If your objective has changed or if you define your new objective, it will provide some guidance in terms of what notes might be appropriate for you to use the proceeds of that maturity or call to find a new note to allocate to.
Matt: It reduces the burden on the advisor to come to the platform with a specific idea of what they want to do, when they want to do it, and how they want to do it. We’re providing that automated recommendation or guidance infrastructure to help them get to good ideas more quickly. And that’s what it’s all about: Making sure the right investments end up in the right portfolios. I’m excited about that for sure. And that will continue to improve the promise of AI. Given the data and the volume of transactions, we’re excited that we have a good framework in place for those recommendations today. But it’ll continue to improve over time as we have more data and can continue to innovate the technology.
Enhancing Structured Note Management
Craig: One question I have is: On your platform, if I’m an advisor, there are all these different providers of structured notes—Citigroup, BMO, Morgan Stanley, Wells Fargo, Credit Suisse, and on and on and on—how do I pick one? How do I get in contact with them? How does your platform help me communicate with these providers of different products?
Matt: A couple of things. I’ll say the technology and what it supports and then let’s call it good old-fashioned client engagement work. We certainly believe both are still very important. We’ve developed relationships with those issuers that you mentioned there. We’re in constant communication with them to try and understand: What are their views of the market? What are the best ideas that they have on the shelf? Where do they feel that they can fit into a portfolio? Where do they shine the most from the types of notes that they issue? We bring all that information and serve it up, whether it’s through our website or the sales ideas or note ideas that show up on the platform itself.
Matt: Within the platform, the whole idea is that you can search and select based on the credit rating of those issuers. But also, you can see similar notes and what the pricing is, what the benefits are, and the outputs that each of those issuers will provide. You can start to see based on credit quality: What is the income that can be generated? What’s the participation rate or what are the protection levels at a certain price? Whether it’s previous relationships, exposure to those firms or issuers, and then the facts and circumstances around the product, it’s a central place where you can see those things.
Matt: In addition to that, we are at the ready to connect the advisor directly with those issuers where it’s helpful and beneficial through more human interaction. We spend a lot of time trying to make sure that we understand new products that are evolving at the issuer level, etc. It’s data, it’s analysis, it’s access, and then engagement with those issuers. That’s the magic. And that’s what I think will help continue to grow the market with advisors who may not be as familiar with the product. There are tons of resources there. We’re at the ready. We have a field engagement team that’s at the ready to help educate, guide, and coach. And then the issuers are at the ready as well.
Craig: I like the feature that’s called “What Others Are Buying.” It shows you notes. How would you generate that list? Is it based on specific peers of what kind of advisory firm I am or based on my previous buying habits? How does it populate that list?
Matt: You keyed in on what will be an innovation on the platform. But today, with the feature “What Others Are Buying,” we’ll show a combination of both: The calendars—which are the regularly produced notes on a monthly basis from the issuers—and recent auctions. What I mean by an auction is that an advisor can come to us with an idea around what they want the note to look like and be. You mentioned those issuers—we’ll present that idea to those issuers, and they will bid on that note, and they’ll come back with their best offer around that note. What other advisors are offering—we present the latest list of what those are.
Matt: In addition to that, though, many of those auctions that are referenced are available for what we would call a tack on investment. An advisor for instance, here in Chicago, could build an auction on a note with, let’s call it, a million-dollar allocation targeted. We can then put that on the platform, where you can see what others are buying. We engage through email out to our network of advisors and say: An interesting note was put out to auction. Here’s the pricing. Would you like to tack on to that allocation? It’s almost a crowdsourcing of dollars there.
Matt: Future state—to your point around past buying habits. Today, I will just share that it’s a great tool. It presents what those notes are that are being bought. But future innovation will include setting your preferences in a more structured way, and we’ll return a more curated list. You can do that on the calendar page. You can preset the types of notes you’re looking for and that’ll stay. It’s persistent. But what advisors are purchasing—eventually, your profile will influence what you see on the platform.
Craig: That’s what I want. I want to see it know who I am and what I’m buying and make those advanced recommendations so that it saves me time and effort. I don’t want to have to do all the searching.
Matt: Absolutely. We’re literally in the midst of updating our advisor onboarding and then the ongoing engagement. We can see what they bought, so those habits are clear. But we want a combination of qualitative and quantitative in terms of both, asking them: What are the types of things you’re interested in? What does your profile look like? But we also then use that data that’s all there on the platform in terms of their previous buying habits.
Craig: Plus, they can show me what other advisors with similar portfolios are buying.
Matt: I totally agree. And it’s perfect for the advisor who may be new to the space or new to the product in that they can rest assured that this isn’t just Halo saying: “Here’s an idea we think is great. You should jump on board.” It’s peer-to-peer, effectively. And that’s ultimately the vision of the platform, which is to drive towards a community whereby information, insights, and education can be shared across that advisor base. But a good way to start that community experience is through that tack on process.
Craig: Yes. Matt, you were the former head of Advisor Solutions at Morningstar. That’s a great gig. Why did you leave and come to a small startup tech and vendor in a space of products that no one understands? What was the attraction here?
Matt: For sure. And I always start by saying I’m forever grateful to my family over there at Morningstar. It was a fantastic and incredible experience to see how advisors work and operate. What are the key trends and what are the solutions to technology investment that they’re bringing to bear? In that role, the things I consistently heard were personalization of portfolios, goal-based financial planning, driving toward defined outcome-based investment solutions, and building better portfolios to deliver better outcomes to investors. I’m so passionate about that.
Matt: I’ve been in the business of building these types of solutions for way too long, quite frankly, but I love it. I got connected with Halo and saw this structured note. I have experience in the annuity space. To feel the product plays a great role in the overall experience of the client. And then I became exposed to the note and just saw what it could do. It’s non-traditional so it’s not your typical stock or bond. It’s personalized, but it can deliver that defined outcome. I saw it as a great potential addition to the way advisors are building great portfolios today.
Matt: It’s a nascent market, for sure; you’re right. I got in early. But I’m very passionate around continuing to evolve the process of how advisors build and manage portfolios and feel that it should be a great addition, always in a measured way. You need to build portfolios that are good for purpose and fit with the advisors’ outcome. But as I got exposed to it and dug into the mechanics of it, I think it can drive towards better outcomes.
Craig: I think one of the biggest parts is being able to put structure notes into an SMA. That’s going to enable you to launch on almost any managed account platform, because they all understand what an SMA is. So if you can put these products inside an SMA, you can launch it anywhere.
Matt: That’s exactly right. Using that existing infrastructure is key. Sophistication happens in many different product scenarios. As the user’s experience and sophistication grow, they may continue to use that SMA. They may parrot it or complement it with specific individual notes that they select on their own. But I agree: In terms of your exposure to the product, accessibility, and integration, we’re certainly excited about the SMA and what it offers.
Streamlining Advisor Workflows
Craig: Matt, we covered guiding the buyer experience using technology, and now I’m going to move on to integrating it into the workflow. That’s a key aspect of any investment management product. You need to be able to integrate it into advisor workflows. They won’t use it as much if they have to test, switch, or swivel chair to other systems. What have you done to integrate the capabilities of buying and managing structured notes and other protection products into the way advisors do their business?
Matt: This is an absolute area of focus. In guiding the buyer experience, a critical pillar is integration. I agree with all you’ve said. If it’s hanging off the side of the desk, if it’s some different system, and if it becomes overly complex, then that friction creates a lack of adoption. We are very fully committed to integrating our solution into the bigger wealth management ecosystem.
Matt: The advance—quite frankly, I’m most excited about it at the moment—we are the structured note platform of choice within the Pershing NetX360 platform. If you’re an advisor or correspondent broker-dealer who uses that platform, you can directly access our structure note capabilities through that platform itself. It’s click to trade. It lives in the environment that the advisor is using and it makes certain that that note is purchased. The flow remains the same with the other investments that you’re engaging with on that NetX360 platform. It shows up within your custodial account and is visible within that account in a very simple way.
Matt: I’m super excited about that partnership. Pershing has been a great partner on that front. We understand that the same accessibility needs to be created across multiple custodians and multiple wealth management technology and platform solutions. We don’t need to get deep into the platform architecture, but API first is a focus to make sure that when, if, and how we’re going to be integrated into those systems, we do it in a way that’s as seamless as possible.
Matt: We do have a strong relationship with Nitrogen today as well. I’m not sure if we’ve talked about that at all in the past. But in terms of scoring the notes from a risk scoring perspective, we provide data and infrastructure around integrating into where and how that advisor works as well. But Pershing NetX360, Nitrogen, and others—those are great points of connectivity. And we’ll continue to focus in that area, as we know its importance.
Craig: With Nitrogen, you act as a data provider. You’re sending them data on the risk scoring of structured notes that they can then feed into their platform.
Matt: That’s exactly correct. That’s it.
Craig: When an advisor goes on to Nitrogen and goes to the risk tolerance section and says this client’s got an XYZ structured note, Nitrogen knows how to handle that. It pulls the data from what you sent them and assigns the rating.
Matt: That’s right. The predisposition of the firm, I think, from a strategic perspective, is that we know that we love our platform. Our platform is incredible. We want it to be a destination for sure. We also know that we need to collaborate with, partner with, and engage with different systems and work with them. It can’t be “our way or the highway.” We do understand the importance of collaborating with and getting to a good integrative solution.
Partnership with GeoWealth
Craig: Talk about something I saw in the news, your relationship with GeoWealth.
Matt: Yes. We’re excited. We’re both right here in Chicago. We have followed and engaged with the firm for quite some time. We announced a partnership that’s focused on making sure that as portfolios begin to incorporate structured notes, first of all, there’s an engagement just around education and onboarding. So it’s about making sure that the advisors who are looking to use these structures know what they are and how they’re used. And then it becomes the integration of that data and information into the GeoWealth system.
Matt: They are, I think, with a very similar mindset in terms of what I would describe as contextualization: What does the note do inside the portfolio itself? That’s a partnership we announced here, I’ll say, over the summer/fall. The depth of integration will continue to deepen for certain. But we’re excited about the capabilities and technology that they’ve built to serve the advisor. There’s certainly growing traction in terms of their exposure and use. And there’s a similar mindset. They understand the value of the note but they also understand there’s technology we both need to build to better show it.
Craig: They’re an up-and-coming TAMP, so it’s interesting to see how they’re going to incorporate your structured note SMAs into their platform.
Matt: You got it. Yes. We’re excited about that. And proximity is helpful as well. They’re right across the city from us here.
Craig: That’s important. You can go have lunch.
Matt: Yes, that’s right.
Craig: Going back to the guided recommendations: Something around when a note matures that you can automatically recommend something. How does that function and how does it integrate into the advisor’s workflow?
Matt: That’s right. Like a bond, the note has a specified maturity date. Historically speaking, if a note matured today, January 9, 2024, the first step in our process was to make sure that that advisor knew the note was maturing. They can see all the notes they hold within their client accounts at a macro level, household level, and individual account level. What they used to have to do is come and say: OK, that note is maturing. It had these characteristics. With our platform, you used to have to go back to the start and say: “Let me key in what that note looked like”—its features, its maturity, its duration, its protection, its income, or its participation. You would literally key back in all of those things.
Matt: Basically, what we’ve done is created a guidance or recommendation engine that says: This note is maturing; here are a few ideas around what you might do with that maturing capital. It’s a note that basically replicates the exact terms. Or maybe terms have improved in a certain element of it and we’ll serve up that recommendation to the advisor. And then they ultimately own that decision around what ends up in the client’s portfolio. But we’ve created a streamlined process to do that. We’re super excited about that. They don’t have to go back to the start. It allows them to pick up where they left off and truly manage it as an ongoing allocation portfolio in a way that’s easier, quite frankly, and with an eye towards driving towards better outcomes.
Craig: Make it easy, man. “Where’s my easy button for this stuff?”
Matt: That’s it.
Craig: Advisors getting more and more complicated. I want to differentiate my practice with these types of securities. I don’t want to spend a lot of time deciding which one’s the right one. I just want a recommendation and to be able to manage it and make sure I’m doing what’s best for my client.
Matt: That’s right. You mentioned that—diversification of the practice. It is a tool that’s still, I’d say, nascent in terms of adoption. About $100 billion of notes were issued in 2023 so there’s still a lot of room for growth. I see it as a good complement. I’m not one of those who implies it’s a hammer to every nail. It’s not. If you look about the ways you want to manage the risks within the portfolios, protect that portfolio, or drive income, to me, it’s another great tool in that toolkit.
Craig: Matt, you’ve said it all. We’ve run out of time. Can you please tell everyone where they can find more information about Halo Investing?
Matt: Absolutely. Please come and visit us at HaloInvesting.com. You’ll see our website there. There is the “Halo Journal” that’s on the website. It’s not behind a login. You can see a lot of great information and education around the products and ideas in terms of prospective use. But it’s all there at HaloInvesting.com.
Craig: Matt, thanks so much for being here! We appreciate it.
Matt: Thanks so much, Craig! It’s always great to connect with you. Enjoy the sundown there. And I look forward to connecting again here real soon.
Craig: All right, man. Thanks.
Matt: Thank you.