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WealthTech Insights #66 with Anders Jones. A Sneak Peek Into the Future of Finance and FinTech

Mass professionalization, Amazon, and how to keep a company running smoothly

Interview with Anders Jones,
Chief Executive Officer & Co-Founder of Facet Wealth

The professionalization of the advisory business

An early proponent of flat-fee, subscription-based financial planning services, Anders believes that the biggest trend in the finance industry is the shift to planning first for retail financial services rather than leading with asset management. Leading with assets is how it’s always been done, from old-school wealth managers to robo-advisers, he says. The rise of robo-advisers isn’t anything to laugh at, but Anders notes that they have done one thing very well—making low-cost investing easy. In Anders’ opinion, leading with an investment-first approach equals trouble. The move to a complete planning approach has been a long time coming and has recently started to take hold in the industry as a trend.

“Another big trend that I think is really important for us is specific to advisors and RIAs—the professionalization of the business and the consolidation of the industry.”

Twenty years ago, most investors dealt directly with individual stock brokers. At that time, independent RIAs were far and few between. But today, RIAs are the majority, and they offer their services as a business, not a practice. Moving forward, as consolidation and professionalization continue to take over, there will likely be more $5–10 billion advisory firms than there are firms managing $50 million a pop.

Amazon—the next big thing in FinTech?

A recent Forbes article discussed the possibility of Amazon displacing $100 billion in checking account bank deposits. The conclusion was that “Amazon isn’t a threat to banks—it’s a potential distribution channel and technology provider.”

Anders agrees with these conclusions. He states that the biggest challenge in financial services, regardless of who you are, is distribution. The market is crowded (though not overcrowded), and it’s not a winner-takes-all market. Every FinTech/finance firm has a different way of approaching the end client, resulting in a lot of noise and difficulty in deciding which companies with which to partner. On the same token, firms don’t have it easy, either, because they’re competing with the likes of Fidelity, Schwab, TD Ameritrade, and others, who spend enormous amounts of money on marketing and audience outreach.

Anders believes that although Amazon has the means to reach a wide audience very quickly, they haven’t yet ventured into wealth management. Although Amazon isn’t likely to become a threat to the industry any time soon, Anders is open to the possibility of working with them.

“If Jeff Bezos is reading this, I would love to partner with them on a wealth management offering. We could provide a service, and Amazon would be able to offer the distribution to their client base.”

A good idea is useless without the right people to manage it

Without smart business management and development, the future of FinTech will not reach its full potential. On the one hand, a company has to align its strategy and resources through proper planning and management processes. The key to this is transparency in communication. On the other hand, a company needs its handpicked team members to come up with amazing ideas. But as Anders says, you don’t want “groupthink,” either.

He suggests that the best option to move a business forward is having structured times for disagreement. Similar to a forum or debate, everyone gathers at a specified time and place, and anyone can put forth their ideas. It is a “safe space” where nothing is taken personally. Once an idea or topic is mulled over by the group, taking into account the best- and worst-case scenarios, the last piece of the management puzzle is posing the question, “Does anyone deeply disagree with this decision?”

“The last piece of the puzzle is to confirm that we’re not making a decision that one person or two people [will] drag their feet on and say, ‘Well, even though I debated about it, I’m really not on board with it.’”

This management strategy builds a framework that leverages the best of the company’s brainpower and creativity and parlays them into executing and succeeding. Anders used this strategy to great effect in the founding of Facet Wealth: his team identified a massive potential market of underserved, mass-affluent households, and brought their perspectives as a mix of industry outsiders and veterans to find a way to affordably and profitably serve these clients. What’s more, they arrived on a unique solution that partners with other RIAs, instead of competing with them, while delivering clarity and transparency to the end investor.

Takeaways

History provides an infinite number of examples wherein change leads to progress, and progress leads to success. Whether it functions on the individual level or the corporation/government level, openness and transparency should be any organization’s top priority. The finance industry might soon become more consolidated—and perhaps Amazon will join the party—but whatever happens, it won’t be possible without human ingenuity.

About

Anders Jones has been involved in the technology and financial services world since 2008. He has worked on a number of interesting projects including LiveRamp, an advertising tech company that was sold to Axiom in 2014. In early 2016, Anders saw an opportunity to use technology to offer high-quality financial advice to the mass affluent market and created Facet Wealth.

Anders Jones, Facet Wealth

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