The WealthTech Podcast Transcript

Host: Mark Wickersham

Guest: Michael Rose, Cerulli Associates

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Mark Wickersham: all right, Michael, welcome to The WealthTech Podcast. I am happy to have you on the show. I wonder if you wouldn't mind doing a brief introduction of yourself and Cerulli Associates.

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Michael Rose: Yeah, sure. So I guess to start with myself. So I started in

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Michael Rose: actually, I started my career as a market research and consultant

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Michael Rose: at a firm called IDC global market research firm. In that, I spent about 5 years there focused on infrastructure software. So operating systems, virtualization layers. From there I went back to school. I got a master's degree in tax and I worked in wealth management for about a decade. So I have a CFP. A master's in tax, and I worked mainly with the high net worth kind of ultra-high net worth client base

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Michael Rose: after doing that for about a decade. Kind of I knew of Cerulli. They're just being in the industry. And there was a role that opened up here is actually one block away from the firm that I was at the time.

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Michael Rose: And so I decide to make a transition, so I could better understand the industry kind of holistically in a way that you can't really understand it when you're in the weeds at a given firm working with clients.

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Michael Rose: And so my role here is the director of wealth management research. So I lead a research team about 15 people and in our vertical within Cerulli Associates. We're looking at

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Michael Rose: really wealth management from every conceivable angle. So we publish annual reports that our clients subscribe to about 7 reports on our team, and they are pretty comprehensive

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Michael Rose: studies looking at a particular aspect of the wealth management space. So we have a report on Rea firms, a report on broker dealers. We have a report on wealth management technology which I lead.

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Michael Rose: you know, more broadly, at Surly. We have a variety of research verticals. So surly is a market research and consulting firm specializing in the asset and wealth management industries.

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Michael Rose: you know, our primary product is the annual reports that we publish. We have about 50 people. At the firm here in Boston, and our research verticals outside of wealth management include managed accounts, product development and design retail investors.

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Michael Rose: In institutional investors. So we're really looking at kind of the asset and wealth management industry pretty comprehensively and in addition to our published reports that our clients subscribe to we're also involved in a lot of custom consulting management, consulting writing white papers and other forms of thought, leadership.

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Mark Wickersham: Well, I'm sure, having spent a decade on the other side of the desk, it helps to inform some of your research, or gives you a better insight into that.

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Mark Wickersham: One of the reports that you guys have is the state of wealth management technology. Just got a high picture big picture. What is the state of US wealth management? Maybe you could just maybe even back it up as a second. You could just define wealth management. It's obviously a big term. And who might be within that categorization. Then, if you could just talk to me about

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Mark Wickersham: what is the state of wealth management, technology in 2025.

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Michael Rose: Yeah, sure, it's a good question. So

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Michael Rose: when we discuss wealth management, we're really talking about retail investors. who look to a professional advisor to manage their investments, or, you know, beyond that, their personal financial affairs. And that encapsulates, you know, every advisor from

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Michael Rose: you know, the single family office, multifamily office to private banks, to, you know, all the various permutations of broker dealers through to independent and hybrid RIAs and independent broker dealers. So you know, we're when we talk about wealth management we're really talking about is retail investment management and financial planning.

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Michael Rose: Yeah, in terms of the general state of wealth management technology, I would say, you know, the industry is pretty mature. Right? Wealth management is an established business.

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Michael Rose: and you know, what we see in our research is that you know the utilization of technology to enable

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Michael Rose: the primary functions that that happen within a wealth management firm and an advisor practice on the investment side. Advisors are

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Michael Rose: pretty extensively using technology to deliver their services. Where we see, a little bit of a drop off is when when we look at some of the operational technology. So things like you know, fee billing or you know, client portal. You know, that's where we start to see a little drop off in terms of utilization. And I think, potential opportunity for vendors are offering solutions in that space.

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Michael Rose: You know.

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Mark Wickersham: It seems like that that back-end investment reporting back office functionality in terms of

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Mark Wickersham: getting portfolio management investment reporting has been in place for a while that the advisors kind of gone through that wave, and probably even gone through second and 3rd waves and replacing their back-office accounting systems. But you're saying that there's more room to be had on the front end in terms of client facing technology.

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Michael Rose: Yeah, client facing in in really technology, that's kind of enabling the practice of things like digital marketing.

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Michael Rose: CRM, even, you know, a lot of firms deploy CRM. But utilization and adoption is not is not as high as I think it potentially could be, and could really be an enabler of advisor practices instead of really just to check the box. Action.

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Michael Rose: And you know, we can talk about this in a little bit more detail later. But you know certainly the innovation that's happening in terms of AI, I think, is, you know.

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Michael Rose: top of the 1st inning.

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Michael Rose: There's a lot of room for AI to think to kind of enable advisors to do what they do more efficiently.

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Michael Rose: You know we've been.

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Michael Rose: It's been pretty slow to roll out so far. But you know, we think you know long term it, it is going to have an impact on what the advisor practice looks like in the future.

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Mark Wickersham: Certainly with the demographics going on, I mean the industry has struggled to be able to attract and retain talent. I think the average age of an advisor is

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Mark Wickersham: mid fifties or late fifties. So there's a need for succession planning and being able to bring in the next Gen. But hopefully, some of these technologies can kinda

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Mark Wickersham: mitigate that make that advisor certainly more productive. I want to kind of drill in on those 2 points that you talked about a little bit around CRM. Adoption and Martech in particular. I think a lot of times advisors kind of relied on the passive referral. Certainly markets have gone up, and that that has helped them revenue wise, but they've also kind of been more passive in terms of their growth strategy. You're seeing advisors now putting more focus on kind of

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Mark Wickersham: inbound marketing and being able to, enhance their organic growth beyond the referral.

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Michael Rose: Not yet. And I think that that's an area. If we look across, you know, advisors, operations.

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Michael Rose: You know, I think our perspective is that digital marketing tools, particularly leveraging AI to enable advisors to engage the marketplace more efficiently. We think there's a lot of potential upside to your point. Mark you know.

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Michael Rose: it's really interesting. So we so we run a survey. We've run a survey of advisors for well over a decade. We survey close to 2,000 advisors every year. One of the questions that we consistently ask them is, you know what the source of their new businesses and what the practices or what the challenges that they experience in their practice are.

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Michael Rose: The number one challenge consistently that we've heard from advisors is new business development.

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Michael Rose: And at the same at the same time, most new business for advisors. New assets coming in are referrals from existing clients. And so to your earlier point, bringing in that next generation of advisory talent has been a real challenge, right? Because it's a chicken and an egg problem like you can bring in a talented advisor. But if he doesn't have an existing book

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Michael Rose: in the vast majority of new advisor assets are coming from an existing book. It's a huge challenge. And that's why we see such huge failure rates in this industry failure rates of 75% and up

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Michael Rose: and so you know, I think the younger advisors coming into the industry are more

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Michael Rose: committed to leveraging social media and other digital marketing approaches. But the rest of the industry is still, I think, slower than they probably should be at adopting those tools, and there are a lot of impediments to doing it right. Compliance is a big challenge. To your point, Mark.

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Michael Rose: You know the average advisor is older and probably less familiar with social media than the younger. The next generation of advisors coming in. So there are a lot of you know, it's not an easy challenge to solve. But I think as technology

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Michael Rose: matures as tech vendors and home offices incorporate AI to enable advisors to more efficiently. You know.

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Michael Rose: market and engage with social media. I think that's going to be a

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Michael Rose: a win for advisors. Long term.

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Mark Wickersham: Yeah, I think there, there are some challenges that that are not to be, you know, minimize. I mean, compliance is certainly significant, and you need probably industry, specific tools that are that help you with that compliance. I think there are some great ones out there. Finny, for example, AI tool that it almost seems like magic what it does in terms of prospecting. But that's the that's the power that you can have with AI and be able to outreach at scale

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Mark Wickersham: with CRM adoption is, I mean, some of that is, is around

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Mark Wickersham: prospecting, but also some of the CRM is around client management. Certainly, when clients, their advisors, are not great at maintaining their CRM, then they don't trust it, and you end up in this cycle of doom. But what are some of the primary reasons for lack of adoption with CRM.

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Michael Rose: Yeah, man, I think you hit the nail on the head. I think the number one challenge is time. Right? So again, our advisor survey data demonstrates very clearly that advisors are very pressed for time. I think a a really important big picture trend

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Michael Rose: is that advisors are increasingly required to offer more services to their clients to maintain their fee.

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Michael Rose: You know what we what we refer to as margin compression

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Michael Rose: and as a result. You know, advisors just have less time to dedicate to non client facing and non-critical tasks.

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Michael Rose: And you know, CRM, and for many advisors. If you ask them. It's kind of a check, the box compliance requirements.

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Michael Rose: And to your point, like, if you're not investing the time and energy needed to kind of maintain in your CRM data set.

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Michael Rose: And you're not familiar with how to leverage that as effectively as possible. Then, you know, it's just it becomes a time suck for you. And that challenge is not unique to wealth management. I mean, tell me, a person who works at a large company is happy with CRM, but you know, I think

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Michael Rose: there's enormous opportunity to leverage the huge amount of data that exists in that CRM to empower advisors

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Michael Rose: to better engage with their clients. They just need to have

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Michael Rose: the tools deployed to them that can help them do that efficiently.

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Mark Wickersham: Yeah, I mean, that's a good point. I mean, if they really advisors want to spend time with their clients. And there's so many things that take them away from that maintaining some of these systems as part of that you are seeing AI, especially with note taking being one of those kind of early wins with adoption, and being able to help kind of propagate those CRMs. I want to kind of talk about the

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Mark Wickersham: advisor pricing for a little bit, especially the kind of the bps on AUM. It seems like

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Mark Wickersham: the pricing as you mentioned that they've had scope creep, and that's actually caused fee compression because they still have the same pricing model in terms of it's based on asset management based on bps on asset management. I'm a big believer in pricing should be tied to value. And certainly, I think, asset based pricing in terms of.

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Mark Wickersham: you know, in terms of investment management, that core function is great for that, but in terms of trying to

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Mark Wickersham: manipulate or extend that that pricing model beyond some of the family office services or additional services that advisor may have is their pricing model part of the problem on that? Or are there other issues.

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Michael Rose: I don't think it's the pricing model that's an issue. I think that the challenge is that. And so.

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Michael Rose: as I mentioned, we have a research vertical that looks at retail investors, and we have a large retail investor survey. We run every year. We survey over 4,000 retail investors, and we're able to track the extent to which investors expect services beyond just investment management from their advisor. So what we would call, you know, financial planning typical financial planning services that has

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Michael Rose: roughly doubled over the last 7 or so years

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Michael Rose: in terms of the number of investors that expect to receive financial planning related services. The investors perceived importance of having a financial plan in place has, you know, similarly increased significantly

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Michael Rose: over the last 7 plus years. And so what that means is, investors are looking to their advisors and expecting more services than they ever did before.

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Michael Rose: And you know, advisors, fees have stayed relatively stable, so unlike asset managers where we've seen fee compression right? And a lot of pressure on the need to bring down the fees that they're charging. Advisor fees have stayed pretty buoyant, surprisingly so actually, but at the same time the expectations of their clients in terms of the services that they should be receiving are going up

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Michael Rose: and that is really the challenge. It's not so much the pricing structure.

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Michael Rose: You know, there's been a lot of talk in the industry about maybe moving away from an AUM based pricing structure. You know, we just don't see that happening. It's still the vast majority of

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Michael Rose: of payments are structured in the form of an aum based fee. But I think you know, advisors really increasingly are and will increasingly need to be more efficient and productive in the way they deliver those services to maintain their profit margin. Otherwise they need to bring in. You know more people to do more work for the same fee, and that's not a sustainable long term business model.

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Mark Wickersham: Yeah, it seems like the

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Mark Wickersham: people are looking that the day of the mutual fund wrap has got a gotta over right that the clients are looking for more holistic wealth management, almost like a financial coach from there.

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Mark Wickersham: Advisors just kind of.

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Michael Rose: I'd also add to that market. We've seen a transition away from brokerage in terms of total advise.

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Mark Wickersham: Commission, Based.

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Michael Rose: Yeah, we've seen a massive shift away from brokerage and towards be based advisory. And so to your point, you know that that's a very different type of engagement. Right? That's an engagement where you have to be regularly in communication with the client. It's not you're selling a product and then maybe checking in a year. So you have to be consistently delivering value and engaging with your clients. And so that's also a pretty significant shift in the

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Michael Rose: the types of services that advisors are offering. So we've basically seen the share of

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Michael Rose: the assets across retail wealth management firms that are advisory versus brokerage. We've seen that it's share of advisory, basically double over the last 7 years.

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Mark Wickersham: Yeah, there's been a long term trend in terms of whether it be fee in lieu of commission or actually migration of

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Mark Wickersham: assets from the wire houses to the more independent model.

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Mark Wickersham: kind of swinging back on the technology front. You had one of the highlights in the in the Wealth Management Technology report.

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Mark Wickersham: 40% advisors report not being able to report on held away assets. Having worked at by all accounts a data aggregator for held away assets. And the technology has been around for a while. It certainly has operational challenges. Why is that number so high? I mean, there's so many benefits to it. Maybe you could talk about some of the benefits of being able to include those assets. But why is why is why are firms struggling be able to pull in those assets.

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Michael Rose: Yeah, I mean, the benefits are huge, right? Particularly as we talk about the shift away from investment management, more towards holistic wealth management and financial planning.

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Michael Rose: You know, it's a huge advantage to be able to see all the client assets, regardless of where they're custodied. So that could be a 5, 29 account that's not custodied at the custodian or broker dealer. Home Office could be a 401 k. Or a qualified retirement plan to be able to provide the client a single place where they can go and see everything in 1 1 plane of glass is, that is a huge advantage.

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Michael Rose: Not only in terms of delivering a high quality, client experience, but also in terms of potentially gathering more assets as well.

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Michael Rose: So there are a lot of advantages to it. I think the challenges associated are not really technological anymore. It's more compliance in firm policy. You know, there are a number of firms that just don't want their or will prohibit their advisors from truly managing, held away assets like a 401 k. Account

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Michael Rose: and you know, and won't allow them to report on it in client statements. And

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Michael Rose: so yeah, I think the challenge is that there's plenty of technological solutions out there. And they continue to get better. You know there's

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Michael Rose: there are challenges with some of the more legacy technologies out there for reporting held away assets. But

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Michael Rose: I think the challenge is less technological now than it is firm, firm policy.

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Mark Wickersham: Yeah, it certainly got better. I think. Credential based aggregation is, is. It certainly has its challenges. But you're starting to see the custodians finally got participating in the solution and helping out with that in terms of being able to streamline that the access to that information, another.

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Michael Rose: It could be a real.

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Mark Wickersham: Compliance.

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Michael Rose: I was. Gonna say, Mark, it can just be a real compliance challenge, right? Particularly 4. 1 k accounts.

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Michael Rose: You know, it's great. You can report on it, but actually managing that with the client is a real pain in the neck if you're

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Michael Rose: do it in a compliant, fat, compliant manner.

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Michael Rose: and so, yeah, it's just another challenge.

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Mark Wickersham: And obviously for a lot of

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Mark Wickersham: especially mass affluent. Right? That's the largest asset that they have.

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Michael Rose: Okay.

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Mark Wickersham: Able to manage.

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Michael Rose: Yep.

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Mark Wickersham: One of the areas that was also flagged in. The report was around integrations. 2 thirds of advisors identified lack of integration between tools as a challenge.

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Mark Wickersham: Certainly, I think there has been some progress made in that area, and there's certainly

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Mark Wickersham: 2 camps, I think, on the advisory side, in terms of best of breed versus all in one systems. Both have their kind of

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Mark Wickersham: pros and cons but there's still, I think, a ways to go in terms of the integrations and having that really be a more seamless experience. Can you talk to me about why firms are struggling to be able to integrate systems. And what kind of key systems are? Are they not being able to plug together.

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Michael Rose: Yeah. So we've definitely come a long way in regards to this. I think this is a little bit more of an issue in the Independent space.

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Michael Rose: And you know, it's kind of interesting.

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Michael Rose: so I started. You know, my career in in wealth management as an advisor in the Independent. I only ever worked in the independent Rea channel. And it's just amazing. So

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Michael Rose: I started that in 2011, and here we are in 2025. It's amazing how much the technology has matured and evolved over that period of time. And what we've seen is a lot of advisor practices really showing a preference for kind of integration over best of breed

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Michael Rose: and that was, that's, I think, is kind of interesting and a little bit surprising to me, but I think it speaks volumes to just the power of integration. Right? The need. You know, the requirement to enter data in the same data into multiple systems is a major frustration and pain point for advisors. So if I have a client

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Michael Rose: with a date of birth, you know social security number well, social security number is probably less relevant. But date of birth marital status dependents

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Michael Rose: all in my CRM, that. And then I have to go enter and maintain that in my financial planning system and in other places, it's just it's frustrating. It's inefficient. And there's really no excuse for it honestly.

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Michael Rose: And so what we've seen is advisors kind of talking with their wallets in in going more towards the integrated turnkey solutions instead of having kind of a best of breed. CRM, and a best of breed, financial planning software, and a best of breed. you know, trading and portfolio accounting and reporting system. Advisors really have, I think, demonstrated a significant preference for integration in efficiency over specialization.

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Mark Wickersham: Yeah, they just don't wanna stitch it together. And like you, said re keying that information that invites room for error. And now you're reconciling between systems, and that takes additional overhead. And I mean, I do think there is some advantages with best of breed. If you can get the vendors to coordinate, and the vendors are committed to those integrations. So

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Mark Wickersham: not every integration that vendor has is gonna be great. But if there are certain key ones that they're really focused on. They maintain and work out. Those use cases can be really beneficial. Where then, especially for, like a larger firm where the investment team can get the investment tool that they want versus the maybe the finance team has a different tool that they want. You know, it's really when you start to specialize, and you have different departments that they probably want different

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Mark Wickersham: specific applications for. That's kind of where the maybe the comprehensive doesn't quite match the operational needs of the firm. But there's still ways to go. There's a number. There's a lot of advantages to it, but there's still a lot of work to do, and I think advisors need to be conscious of when they go. That approach to there is.

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Mark Wickersham: There's additional overhead. There is an additional cost additional premium that they're gonna need the pay to make sure that those integrations are. It's not just paying for 2 systems. You're paying for two system, plus some sort of delta for that. That integration. To make sure it works great. But

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Mark Wickersham: The other thing is, is financial services tends to lag behind other products. When you take a look at, especially consumer technology, although you do see in some areas, especially with the with the big wire houses, with the Schwab and fidelity of the world having great, you know, online 24, 7, access real time updates. But in general on the advisory side. Customer experience has lag somewhat.

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Mark Wickersham: Why do you? Why do you see that? And how do you see technology coming to the forefront to be able to enhance the overall customer. Experience.

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Michael Rose: Yeah, I mean, honestly, I think one of the reasons we haven't seen the client experience.

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Michael Rose: Kind of improve at the rate we've seen it with other kind of

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Michael Rose: other aspects of technology, is probably just the demand from clients.

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Michael Rose: You know, we ask investors. You know what factors they consider when they're choosing an advisor, that the quality of the technology that they that they utilize is

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Michael Rose: at the bottom of the list, and so.

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Michael Rose: It's just not something that investors, when they're going out looking for an advisors are really focused on

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Michael Rose: and so as a result. I think firms just haven't been making the investments necessary to provide a a superior client experience. To your point. I think that's improving. Particularly. We've seen a significant increase in the adoption of client portals. There's still a long way to go to get to 100% utilization. But you know, as

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Michael Rose: as advisors continue to embrace planning. You know that client portal kind of that client vault that can be kind of a hub for the client

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Michael Rose: to store all their core documents, to be able to have that as a resource. If something happens to somebody that they can, you can pass on those credentials and give the person full access to their financial affairs.

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Michael Rose: You know we're you know that that's a huge win for the investor, particularly when you're dealing with the high-net-worth space. And so we, you know, we've seen significant improvements in terms of client portals. But you know the portfolio accounting and reporting capability, the experience in the investor perspective.

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Michael Rose: I think on average, it's okay.

00:26:55.788 --> 00:27:04.429

Michael Rose: But if a lot of advisors. They don't want their clients going to the portal and looking at performance. They want them talk. They want the client talking to them.

00:27:04.430 --> 00:27:06.620

Mark Wickersham: Yeah, they don't want 24, 7, access? Right?

00:27:06.620 --> 00:27:26.959

Michael Rose: Yeah, exactly. It could be bad thing, actually, for the for the client. If it if it encourages them to constantly looking at their portfolio. So yeah, I I think there's just hasn't been, is. It's just hasn't been an area of focus for a lot of firms. You know relative to other. Ask other elements of the tech stack.

00:27:28.430 --> 00:27:38.039

Mark Wickersham: Yeah, I think there are some advantages, even for the advisor. I think the ability to kind of share documents more securely right? You're gonna need certain information from

00:27:38.210 --> 00:28:07.769

Mark Wickersham: your clients. You certainly don't want them having emailing sensitive information to you, the ability to kind of have a secure portal client servicing. I think sometimes clients want to be able to kind of service themselves on some basic requests to be able to get the ball rolling on that but they have to add value to, or else I think they roll it out there, and there isn't that much value to the end client they look at. And they're like, Yeah, that's great. And then they don't log back in again. And that's the end of that, and the advisors like. What was the point of that exercise? Right.

00:28:07.860 --> 00:28:17.110

Michael Rose: Yeah, that's exactly right. Yeah. I mean, there, there are some really powerful tools. And we've spoken with another number of firms that you know they'll bring in

00:28:17.380 --> 00:28:29.669

Michael Rose: junior people. And one of the things those junior people do is engage with all their clients and show them all the tools that are available to them, and they still just, you know, they struggled to get adoption from the end investor.

00:28:30.149 --> 00:28:46.139

Michael Rose: Because I think in the mind of a lot of end. Investors are kind of. That's why they're hiring their advisors. They don't really want to be managing it. So some of the basic rudimentary capabilities. The performance reporting and portfolio reporting is good. The client wall is great.

00:28:46.643 --> 00:28:51.969

Michael Rose: But yeah, there just hasn't been a ton of innovation in other aspects of the client experience.

00:28:52.680 --> 00:28:53.450

Michael Rose: Well.

00:28:53.450 --> 00:28:54.870

Mark Wickersham: Renovation.

00:28:54.870 --> 00:29:04.189

Michael Rose: I was. Gonna say, Mark, just 1 1 other area from the client experience perspective that we have seen a transformation in is the way in which financial plans are delivered to their clients.

00:29:04.190 --> 00:29:04.530

Mark Wickersham: Sky.

00:29:04.530 --> 00:29:07.739

Michael Rose: The advisor that we've seen a monumental shift

00:29:08.267 --> 00:29:18.700

Michael Rose: over the last 7 or so years. We've seen a huge shift away from kind of paper financial plan delivery to real time and interactive

00:29:19.068 --> 00:29:41.099

Michael Rose: sharing of planning with the client like up on a computer screen or on an iPad or or some other visual format, and I think that is very transformative to the client experience, so that, you know, when the client is meeting with their financial Advisor. The advisor can throw the plan up on the screen. They can run some scenarios a lot of times. They can run those in real time. If the client has a particular question

00:29:41.558 --> 00:30:03.150

Michael Rose: and that is, that is really a much more immersive experience than just be handed this tome. That's just kind of in intimidating stack of paper that is their financial plan. And so so that is, that has shifted drastically. And that that's that's been a really important transformation for the industry.

00:30:03.830 --> 00:30:09.739

Mark Wickersham: This is ability and answer some questions on the fly. Right? So what if I did retire 2 years early? Right? What does that

00:30:09.790 --> 00:30:19.570

Mark Wickersham: impact my financial planning my plan. Can I do these things, you know? Answer those questions, real time with it with advisor? Yeah, I think that's very powerful.

00:30:19.590 --> 00:30:43.339

Mark Wickersham: I think one of the areas where you are seeing a lot of innovation is around AI, and it certainly wouldn't be a wealth tech. Podcast. We can talk about AI. I think one of the big areas you are seeing wide adoption on, although I almost expect it to be nearly 100%. We're nowhere close to that. But still it's high. It's like 50, 60%. I think I've seen it. And I've seen

00:30:43.340 --> 00:30:57.690

Mark Wickersham: it's saving, you know, 3, 4 HA week of an advisor, which is pretty significant, is around AI. Note taking, what trends are you seeing around AI adoption? And what's next?

00:30:58.660 --> 00:31:25.968

Michael Rose: Yeah, there's been a lot of obviously a lot of interest in the application of AI and wealth management. We haven't seen a ton of adoption. Yet outside of the AI note takers which you know, we've seen a lot of growth and utilization there, and that's a huge win for advisors in terms of making them more efficient, increasing their ability to be compliant and keep good records and notes of client conversations.

00:31:26.390 --> 00:31:29.680

Michael Rose: that's really where AI kind of

00:31:29.950 --> 00:31:47.060

Michael Rose: has stopped on the wealth management side. We see a lot of innovation, though in terms of vendors and wealth management firms investing in AI in a variety of different ways. You know, I think one of the most obvious applications of AI is

00:31:47.080 --> 00:32:04.830

Michael Rose: compliance right in the back office. Flagging trades that that don't match certain criteria or, or, you know, identify, you know, issues. I think the other. The other thing that's really interesting is the application of AI within the financial planning sphere.

00:32:05.688 --> 00:32:19.139

Michael Rose: and the ability to basically enable the analysis to be performed by AI and you know, once the data is entered into the system.

00:32:19.846 --> 00:32:24.930

Michael Rose: So, if you have a client fact pattern, you know age.

00:32:25.180 --> 00:32:29.760

Michael Rose: you know, marital status number of children. Income tax information.

00:32:29.970 --> 00:32:41.890

Michael Rose: really, that there's no reason. AI, if you even want to call it AI, it kind of verges the border of just an advanced algorithm versus what AI, you know, what? What I actually is, but

00:32:42.432 --> 00:32:58.017

Michael Rose: the ability to utilize technology to identify financial planning opportunities instead of really, I think, what the current state has been historically, is the advisors really involved in doing all that analysis and entering the

00:32:58.810 --> 00:33:05.440

Michael Rose: the recommendation into the financial planning software and modeling it out to show the value and to quantify the value.

00:33:06.192 --> 00:33:11.020

Michael Rose: But I think there's a huge opportunity to leverage

173

00:33:11.679 --> 00:33:29.600

Michael Rose: AI to do that work for the advisor which simplifies the financial planning process, streamlines the process, and, I think, improves the quality of the advice being delivered to the client. Because, you know, even the greatest financial advisor. They're just gonna miss some opportunities right?

00:33:30.153 --> 00:33:37.999

Michael Rose: And you know, I I think that that's a place where technology can really be transformative for advisors and clients.

00:33:39.160 --> 00:33:48.077

Mark Wickersham: Yeah, I mean, you don't need AI to be making decisions for your clients, but certainly to be able to go through vast amounts of information to be given. Give those initial recommendations even

00:33:48.450 --> 00:33:54.690

Mark Wickersham: kind of helping with communication. Hey? What happened with the portfolio over the past quarter? I mean, that's a lot of

00:33:55.110 --> 00:34:01.319

Mark Wickersham: events that may have happened that you might have forgotten about, especially early in the quarter that AI is going to

00:34:01.420 --> 00:34:28.709

Mark Wickersham: pick up on the note taking, and then the agentic AI to be able to launch these tasks based on the on the meeting with the client, is really powerful. I do think sometimes, too, that advisors are probably experiencing the benefits of AI without knowing it directly, because the vendors are starting to bake it into. You know, portfolio management. They're doing part of the reconciliation process. You know, these vendors should be employing AI to be able to do

00:34:28.710 --> 00:34:46.230

Mark Wickersham: kind of these massive data. Sifs, to be able to take a look at outliers, or when things are missing cost basis, or you know things that would have shown up at an error when you're running a client report are now getting catch so much earlier in the process, and and vendors are just baking that into their product, and

00:34:46.230 --> 00:35:02.450

Mark Wickersham: and some may be overhyping it. I think people love to put, you know AI in the end of the name, and think they're 10 x when it's really no different functionality than what it was the day before without AI. But there's certainly some big benefits around it around with, especially with big data.

00:35:02.490 --> 00:35:17.370

Mark Wickersham: What is the future of wealth that called what do you see? As the major trends 3 to 5 years, I know 5 just seems like things are changing so rapidly, that that's a big stretch to take a look at. But what's your what's your prediction? Over the next few years.

00:35:17.370 --> 00:35:24.040

Michael Rose: Yeah, I think AI is really the number one potential disruptor insurance, you know, kind of

00:35:24.610 --> 00:35:41.919

Michael Rose: an enabler of transformation in this space. To your point. Mark. With all the data that advisors deal with. You know, there's a huge opportunity to implement. And again, I'm not sure where you draw the line and say, you know what is AI versus a an advanced algorithm

00:35:42.456 --> 00:36:00.349

Michael Rose: but the ability to better and more effectively leverage the monumental amount of data that exists within advisor practices to improve, streamline their efficiency and to make them more productive. That's really what they need and so, you know, I

00:36:00.980 --> 00:36:05.689

Michael Rose: I expect to see over the next. You know, 36 months.

00:36:05.870 --> 00:36:28.089

Michael Rose: you know. Real kind of real-world application of AI in some of those areas we're talking about in digital marketing, in CRM, in financial planning, in, you know, kind of trading and rebalancing really, all oriented primarily around improving advisor efficiency and kind of as a bonus hopefully delivering a better client. Outcome.

00:36:29.420 --> 00:36:34.497

Michael Rose: You know, I think the biggest impediment is compliance. Right. It's

00:36:36.870 --> 00:36:52.126

Michael Rose: you know, it's just a very heavily regulated business, and there's a lot of risk. And you know, you have to be a hundred percent confident or close to that, that the outcome you're getting from your AI technology is accurate.

00:36:52.950 --> 00:37:11.730

Michael Rose: and you know. As a result, a lot of firms have been very hesitant. To deploy. AI. But I think I think the industry will figure it out. But as we look over the next 3 years. I think that's the number one. I think opportunity in this space. The other thing that I expect to see is

00:37:12.000 --> 00:37:26.229

Michael Rose: better tools for advisors to manage client portfolios. We've seen a lot of focus in the industry trying to move advisors out of the portfolio management business and to defer that into the Home Office

00:37:27.222 --> 00:37:38.870

Michael Rose: or into a tamp. You know we've seen progress there, but most advisors, you know, still want to have some level of control over their client portfolios. And you know, just.

00:37:38.870 --> 00:38:02.020

Michael Rose: you know, outsourcing to a model just won't work for them. So you know, we've seen firms increasingly investing in their advisory platforms to enable you know, better control of the investment, basically better control of the parameters around the investment. You know, investment, selection, portfolio construction, but utilizing kind of the Home Office, and then deploy those instructions.

00:38:02.438 --> 00:38:14.301

Michael Rose: And so that can be like, you know, tax optimization when you're bringing a new client on tax transition. It can be, you know, like I mentioned, kind of almost like a hybrid

00:38:15.170 --> 00:38:31.989

Michael Rose: kind of a hybridization of the Portfolio management process with the some of the functions happening in in the advisor practice, and some of it's happening in the in the Home Office. But the advisor doesn't have to give full discretion outside to the Home Office. So I think that's another area where we're gonna see continued innovation.

00:38:32.430 --> 00:38:38.989

Michael Rose: and really to empower advisors to kind of find the best of both worlds where they have control. But they're also more efficient.

00:38:39.550 --> 00:38:45.010

Michael Rose: So I think those are two areas that we're really kind of keeping an eye on in terms of innovation.

00:38:46.090 --> 00:39:12.159

Mark Wickersham: Yeah, I think those are all really good areas. I do think that that some of the staffing issues that advisors face today, I think AI is going to have a major impact. And helping with that, I think the other area that you see is, you know, alternative investments are going to continue to come down from the family office to the advisor, even talking about being able to have private markets and private investments within 401 K accounts.

00:39:12.300 --> 00:39:32.529

Mark Wickersham: Historically, there's been so much friction within the investment lifecycle for alternative investments that it's been difficult to get beyond the family offices. Family offices are choking on these investments because they're all document based that AI is having a big movement there. And I think you're going to see that democratization of that asset class and

00:39:32.830 --> 00:39:38.790

Mark Wickersham: broader distribution of that asset class due to AI. I think hopefully, the

00:39:39.090 --> 00:39:54.730

Mark Wickersham: the advisor will be able to spend more time with their client in meaningful ways, and that less those low value functions. 1st mile data, aggregation, those type of things are gonna go away and really make that truly that advisor truly productive.

00:39:54.830 --> 00:40:12.689

Mark Wickersham: The future is bright, though I think wealth, management, and especially the independent model. The multifamily office model in particular, is a winning model, seeing a lot of proliferation which I think is great. So I think you're going to see like a continued growth in that area as well.

00:40:13.440 --> 00:40:34.260

Michael Rose: Yeah, I agree. And certainly the democratization of alternatives is a really important theme. We actually sized the marketplace for the amount of retail investor assets held you know, through their advisor in Alts, and it's growing significantly. That's still a very small percentage, right? Because it's not applicable to everybody.

00:40:34.420 --> 00:40:38.430

Michael Rose: But to your point, mark, like the operational

00:40:39.131 --> 00:40:43.459

Michael Rose: aspect of managing illiquid alternatives, is really good.

00:40:43.630 --> 00:40:54.440

Michael Rose: cumbersome and there is a lot of technological innovation happening in that area that's enabling practices to utilize those solutions much more efficiently.

00:40:54.996 --> 00:41:01.849

Michael Rose: And that also provides a better outcome for the client, too. Greg, so it makes the whole process easier.

00:41:02.277 --> 00:41:05.879

Michael Rose: And we yeah, we have an entire team. That's looking at that.

00:41:07.690 --> 00:41:25.270

Mark Wickersham: All right. So I like to end the podcast on a personal note with 3 questions that have nothing to do with wealth tech. We're both Boston guys. So what? What is what has been your favorite Boston sports moment? We've had so many over the past 20 years. But what has been your favorite.

00:41:25.270 --> 00:41:29.030

Michael Rose: I know it's hard to choose. I'm curious to hear what yours is. I think

00:41:29.420 --> 00:41:35.119

Michael Rose: for me. It's gotta be 2004, the red Sox. You know. 80 year drought

00:41:36.330 --> 00:41:47.900

Michael Rose: and I'd say less, less, winning the championship and more beating the Yankees. And that that epic comeback from down 0-3, and winning that was that's something I'll never forget.

00:41:49.210 --> 00:42:01.550

Mark Wickersham: Yeah, I mean, I'd have to say there's two moments out there, and they are. They started early in that run 2004, like people even forget about the World Series, and the World Series was a sweep. It was. It was beating the Yankees. But

00:42:01.550 --> 00:42:20.340

Mark Wickersham: you know, more importantly, it's kind of that Greek tragedy where the year before, where Grady Little left Pedro on the mound for too long, and they lost in the traditional Boston fashion, and just that kind of whole redemption story certainly was one of the best, I think. Obviously the NE Patriots.

00:42:20.340 --> 00:42:33.099

Mark Wickersham: Their 1st win 2001. I think that the snow game against Oakland in that Vinatieri kick was fantastic. Certainly the Super bowl was a absolute nail biter against St. Louis.

00:42:33.533 --> 00:42:38.729

Mark Wickersham: You know I find this funny thinking about some of the old paths with it. There's a lot of

00:42:38.990 --> 00:42:54.679

Mark Wickersham: wins. This the Patriots had with the franchise that they beat was never the same again. Certainly that Oakland team you never heard from again. Atlanta. I'm sure people from that are not on from Boston, listen to their podcasts are like, okay, whatever we're so sick of the Pats.

00:42:54.690 --> 00:43:03.309

Michael Rose: Yeah, no. There's a lot of moments to choose from in sports history, which in in Boston sports history, which is great, because when I was growing up as a kid there. We didn't win anything, and then.

00:43:03.310 --> 00:43:19.170

Mark Wickersham: Oh, it was nothing but pain. Yeah, yeah, my my daughter doesn't understand, because my oldest is is 23 years old. She was literally born like when the when the run happens, so she knows nothing but the good times. But what's your favorite thing about Boston?

00:43:21.080 --> 00:43:30.229

Michael Rose: I'd say it's a history. I'm a big history nerd. So I just I just love that the colonial history of Boston. There's just so much of it. It's everywhere

00:43:30.768 --> 00:43:32.861

Michael Rose: and that that's pretty unique.

00:43:33.520 --> 00:43:37.590

Michael Rose: you know, everybody gets to experience that. So that's pretty special to me.

00:43:38.130 --> 00:43:50.866

Mark Wickersham: I do love the fact that when you're in the city in particular to the old versus new, dichotomy is is pretty cool. It's obviously great that we're on the water unless it's January, and then it's not so great but

00:43:51.872 --> 00:43:59.510

Mark Wickersham: I love the accent, too, which is unfortunately going away. But that Boston accent, the thing of beauty.

00:43:59.510 --> 00:44:00.200

Michael Rose: Boston weather.

00:44:00.200 --> 00:44:01.279

Michael Rose: I could do without.

00:44:03.550 --> 00:44:04.979

Mark Wickersham: Dunkins or Starbucks?

00:44:06.117 --> 00:44:10.280

Michael Rose: Boys people are gonna be upset about me about this, but I gotta go Starbucks.

00:44:10.490 --> 00:44:11.150

Mark Wickersham: Oh!

00:44:11.418 --> 00:44:20.829

Michael Rose: I love Dunkins. I just. I flew jetBlue home a couple of days ago, and I love the fact that they give you. Give you, Duncan, on the plane. It's a little taste of home.

00:44:21.120 --> 00:44:24.600

Michael Rose: right? Yeah, I'm a Starbucks guy.

00:44:25.200 --> 00:44:34.210

Mark Wickersham: Dunkin donuts, iced coffee all year long, like I I get back in the Logan 1st thing I do. There's Dunkin donuts right by the baggage carousel.

00:44:34.350 --> 00:44:45.580

Mark Wickersham: The other people, if you don't understand, is like Boston, like Dunkin doesn't seem to translate like when you go to like Chicago, and you go to Dunkins. You're like it's kind of blows right.

00:44:45.580 --> 00:44:53.370

Michael Rose: Well, the other question is, are you a hot coffee or an iced coffee guy? I do not drink iced coffee even down in the Caribbean. I'm still drinking hot coffee on the beach.

00:44:54.170 --> 00:45:04.750

Mark Wickersham: Like a donuts. Iced coffee is like unicorn blood. Don't no sugar, no cream, no, nothing perfect. All right, Michael, this has been great. I really appreciate you being on the podcast.

00:45:04.750 --> 00:45:07.299

Michael Rose: Yeah, I've enjoyed it, Mark. Thanks. I appreciate it.

00:45:07.710 --> 00:45:08.599

Mark Wickersham: Good stuff.

00:45:08.600 --> 00:45:09.340

Michael Rose: Alright, take care!