Jack Sharry: Hello, and welcome to WealthTech on Deck. Thanks for joining us today. As we do each week, our podcasts are a series of conversations with industry leaders on the confluence of human and digital advice. Today we’re talking to Paul Deer. Paul is the director of advisory service at Personal Capital, where he oversees a team of over 60 financial advisors and their clients. Personal Capital was the first advisory firm of any scale to conduct their business online, before the pandemic and also of course, over the phone. And this was well before the crazy Ness we’ve experienced over the past year or so. So they had some head start. We’ll talk a little bit about that. Now, Personal Capital is part of Empower retirement. What I found fascinating is Personal Capital started as a company that provides comprehensive services to investors, and now that empower and Personal Capital have merged. There’s some interesting things underway, I’m sure we will discuss. So Paul, thanks for joining us today. Welcome.

Paul Deer: Thanks for having me, Jack. I’m excited to be here.

Jack Sharry: So Paul, before we get started, I always like to hear a little bit about how people wind up doing what they do. So a future talk not so much about your Personal Capital role today, we’ll get to that. But what work you’ve done before you get Personal Capital, what led you to personal cap, I’ve found the Personal Capital story fascinating throughout. So at least give us some background on how you want up there. And then we’ll talk a little bit about what you’re doing there now and where you see things going.

Paul Deer: Okay, happy to do it. I’ve always enjoyed helping people and working with people. I’ve also had a real interest in business and kind of fell into the finance brokerage world. When I was in college, I kind of started my career off at a discount brokerage firm while I was still in college. And so I got to really learn about the financial industry and help educate others on the financial industry. And I kind of found a real passion for that. And I spent about three years at that discount brokerage firm where we were really just focused on educating clients so they could do it themselves. And that was great. I learned a lot. But I also saw some of the pitfalls of do it yourself investing. And so when I found Personal Capital, and the RAA, the registered investment advisor space, where you can be more advisory and less educational, I was really intrigued and kind of found that helping people goes beyond just educating them to make their own decisions, but also being a sounding board and helping people remove emotions from their decision making process. So about three years at this discount brokerage firm, and then I moved into an advisory role at Personal Capital when they were first moving out to Denver from California.

Jack Sharry: Gotcha. Two things maybe start by wanting to describe what Personal Capital does, I think it’s often is lumped into the some kind of Robo, which it’s not, it’s much more than that. Maybe describe Personal Capital, as you might describe it to a friend or family member or whatever. And then talking about your role, what do you do there? But I think it’s somehow you get lumped into betterments and well, fronts and others. I think you’re way beyond that. So but I’ll let you describe that.

Paul Deer: I’m glad to hear you say that because we would agree, I think we get lumped in with them, because we just have a lot of great technology. And that’s what people tend to focus on first. But the reality of what we do is we kind of really hybridize our technology with human interactions. I just mentioned the emotional aspect of investing. That’s a key component that you really can’t get from just technology. And so what Personal Capital does is we allow users and clients to aggregate all of their finances on our website, it’s totally free, you get this really great view into your financial situation. And for some people that makes sense to hire a financial advisor to work with. And so our business is predicated on helping clients manage their money, but also providing holistic financial advice using this awesome technology that both the clients and our advisors can see. To get this really detailed view. Ultimately, we’re just about taking the best worlds from technology and working with a human to help guide you and combining that and turning it into a very unique experience in the industry, where you really do have some very powerful technology at your disposal but that is not where the bus stops, we have some very awesome advisors who legitimately care about their clients and spend the time to understand their situations, assisted by the technology, which gives us a real, some real leverage on quickly assessing what’s going on in each client’s world to deliver better outcomes.

Jack Sharry: So expand on that if you would, Paul, because I’m, I’m familiar with what you all do, and impressed by how you’ve brought that human and digital elements together. If you would describe what that looks like if you’re an advisor, also maybe describe your role in terms of working with advisors and the technology because I you oversee all that. So talk a little bit about what does a typical advisor what’s at their disposal? How do they help clients? And then how do you enable the advisor to offer a premium service?

Paul Deer: Well, we empower our advisors to do right by their clients. First and foremost, we take our fiduciary standpoint very seriously, or responsibility very seriously. But when it comes to the technology, our advisors can see directly into their clients, dashboards, we call it the dashboard. And that’s looking at the client’s cash bank accounts, credit card balances, mortgages, home values, and investment accounts. So our advisors can see every client’s like exact circumstances as they’ve linked it to our tools. And with that glut of information, we empower our advisors by providing them with detailed reasons to engage with their clients based on the data that we’re seeing. So if a client, you know, links up a five to nine to their dashboard, there’s a good chance they’re going to get a call from their advisor to have a more robust conversation around education savings and what’s going on in their world, in PA.

Jack Sharry: If I can ask you a question on that. Yeah. Is the advisor looking at just what’s held at Personal Capital? Looking at what’s held, wherever it’s held? Describe that if you would, please.

Paul Deer: Yeah, we are as holistic as possible. So we’re looking at the entirety of the client’s finances as they choose to share it with us on their dashboard. So we’re looking at accounts outside of Personal Capital all the time.

Jack Sharry: So you’re really advising on the full household, essentially, yes, or to the degree that they make it available to.

Paul Deer: Yeah, that’s the best way we’re going to drive meaningful outcomes for clients is by seeing not just what they’ve put with us, but what they’ve got in the larger universe within their own world.

Jack Sharry: And let’s say I’m a client, and I’ve got a taxable account or two, I’ve got a IRA or 401k, you know, IRA rollover, or two sums with Personal Capital, some, some somewhere else got a 529, the usual sort of thing that I’m sure you guys see every day. So if I’m an advisor, how do I look at that? How do I advise on what’s at Personal Capital advice elsewhere? Talk about that dynamic and how you provide advice on the household?

Paul Deer: You see, yeah, when it comes to the assets at Personal Capital, we have an entire investment committee and an investment team that run our investment philosophy for clients. And we place trades at the client level. So every single client is getting their own personalized trades. But beyond that, when it comes to external accounts, our advisors can see what clients are invested in outside of us, and how that does or does not sync with the investment strategy we’ve implemented for them at Personal Capital. And so that provides a great foundation for having a conversation with clients about you know, hey, look, what are you really trying to do? And do you have a cohesive strategy in place? Are you doing a bunch of random things in a bunch of different places? And that can just provide a conversation that brings clients back to a center or a higher level of trying to reassess Okay, am I really moving in the direction of accomplishing my goals through what I’m doing? And all these various places? And where is or what is the best approach for me to get my goals accomplished?

Jack Sharry: So I’m probably going to anger some of our listeners who do it a different way. But my observation on Personal Capital is, you start with a plan and like to have you talked about that in the moment, you start with a plan, or at least you want to get to a point where you’re having a discussion about the full household, whether you manage it or not, in terms of their goals, and objectives, and risk tolerance, all that kind of stuff. I’ll have you describe all that in a moment. But the idea is you’re looking you’re trying to make provide guidance on what they will show you and hopefully, they show you all of it so you can give a better level of advice. I know our industry talks that way doesn’t always happen. Just the numbers I see suggest that roughly half the money people have is at one place and the other half is somewhere or a variety of other places. So it’s not all together. So how do you advise on something that’s not altogether? So talk about that planning, goal setting, really helping enable people to do the right thing over time?

Paul Deer: Yeah, I think we take an approach that focuses in on what the client’s really trying to accomplish and then focus on the big-ticket items that are going to help them Get there. Sometimes that’s going to involve looking at their other accounts, right? Maybe they’re doing some just crazy outside of Personal Capital that does not align at all with what their goals are. And that’s a big-ticket item for us to discuss. But sometimes clients have accounts at different institutions, because that’s just what they want to do they have a core and a satellite approach. And that’s okay. So what we can focus in on there is, you know, ultimately, what are some of the other financial items out there that will really drive a meaningful impact to their goals. So instead of focusing just on the investment side, what I’m getting at is, you know, maybe we need to talk to this client about what they’re going to do for their health care coverage from age 60, to 65. Until they’re at Medicare age, we need to talk pretty seriously about what they’re going to do with their Social Security, it really is pretty circumstantial and dependent upon the client’s situation. It’s not always about the investment accounts that they have at various institutions. But of course, we’d love to talk to them about that and make sure that what they’re doing does make sense.

Jack Sharry: There seems to be a sequence, which historically or industry has been starting with investments, and then getting the rest of it. And what I hear you saying, and I frankly, see the industry evolving in this direction is, what are they trying to achieve? What are some of the levers? What are some of the tools, and that that dictates what they do from an investment standpoint, but where they hold assets about what they do about security, about how they start to draw down? And all the all those are on your, on your list of things to discuss maybe to expand if you would, in terms of how does that play out in terms of the discussions between the advisor in the and the client, whether the assets are with you or not.

Paul Deer: It all starts with our own version of Monte Carlo simulations, we have our retirement planner, which allows us to clearly define what the client’s main goals and objectives are. And then from that, we can determine a lot like, is this client in great financial shape? Or are they not? And from that you can derive what kind of prioritization needs to be applied to someone’s planning runway, if you will, to then go out and start executing on high priority planning items that the client can actually get done that are in digestible bite sizes, to incrementally get closer to accomplishing their goals. So it all starts with the retirement planner, where we lay out what the client’s goals are. And then from there, we kind of define and prioritize what other topics would have a meaningful impact on their financial situation, and then start to pick away at those over time. Now, granted, for a lot of people, a major element of that is growing their nest egg so that it can support them in retirement. But that’s not necessarily always the case. We don’t have clients just simply hire us because of retirement, they have a lot of other reasons they may want to invest in work with a financial planner.

Jack Sharry: Gotcha. So I’m not sure to what degree you can talk about this. But earlier in our podcast series, we had Ed Murphy, the CEO of Empower Personal Capital. I think a very astute guy and a friend, we had a fascinating share highest response rate in terms of listenership was Ed’s podcast. So you got a tough act to follow. But I’m fascinated by the strategy. And I’ll lay it out, as I understand it, and correct me in common, if you will, or if you can, that empower, but a number of record keepers across the industry. And now the second largest, as I recall, in terms of record, keeping around a variety of different defined contribution plans, from places like the old Bear Stearns, which became JP Morgan, and Truist and Fifth Third Bank, they collected a bunch of retirement assets, and then recently also purchased Personal Capital that made a lot of news. And I gathered, the plan is to put those together. And I don’t know if you can comment on how that’s going. And where do you see that going? And how’s that working out? It seems like a brilliant strategy. From my standpoint, where you’ve got all the kinds of capabilities you’ve just described a Personal Capital, you’ve got a lot of people that are in need of guidance and direction and empower are coming in through empower. So talk a little bit about how that all comes together, if you can.

Paul Deer: Yeah, well, the natural synergy if you’ll allow, the word is for empower to put its users on a new website that basically leverages all of the tools that we’ve put together a Personal Capital over the last decade, and we’re getting close to, to launching that. And so, you know, just based on what I’ve shared, what that’s going to do is it’s just going to expand access to our kind of approach of showing a very dialed in holistic view of your finances. We’re going to just share that with a wider audience and give people a better and simpler picture. of their financial situation. And what that means is, you know, clearer information generally means better decisions. And so by giving more people access to that software, you know, hopefully we’re giving people a better understanding of their progress towards their goals, you know, preparing for retirement, paying off debt, establishing emergency savings, all of those things. I think that’s a major element of the synergy between Personal Capital and Empower.

Jack Sharry: So I’m gonna give my own two cents of what I see happening here, so not attributed to Paul, that’s not his role to make industry observations, I’m sure. But if you look at what Morgan Stanley is doing with its wealth management, business, and its, and its retirement business, if you look at what Financial Engines is doing with the purchase of Edelman, you look at what Empower and Personal Capital are doing, I often refer to what we’re describing here as the confluence of human digital advice. And part of the brilliance I think of the strategy that empower Personal Capital is put together as they took, in my estimation, the leading digital experience and Personal Capital, and they were already online, ready to go and then married it up with a lot of DC assets and a lot of folks that need help. So I’ll give you my editorial comment, I just want to my favorite strategies that this podcast is very much about strategy. So kudos to Ed and team at Empower Personal Capital, I think you guys are out front. And I know that there’s a lot of work being done to pull all this together. And no small undertaking by any means. I’m sure lots more to go. But anyway, I’ll add my editorial comment, and congratulations to the organization. I think you guys got this right.

Paul Deer: That’s great. That’s a great addition, we’re the industry as a whole seems to be moving more towards holistic and personalized advice. And this is going to allow us to really dial that in further.

Jack Sharry: Yeah. So let’s talk about your view on the future, whether it’s yours or personal capital’s, you can identify, but I’ll give you my two cents, the future is the household. It’s hard. There’s different accounts. And there’s different products held to different custodians, and whether it’s funds or ETFs, or advisory, or whatever it might be, the annuities, you name it, it’s all over the place. There’s lots of stuff going on. And for the typical investor, especially as we’re seeing a significant retirement wave underway right now post pandemic, where more people are retiring than ever, literally day by day. And that’s growing. Talk, if you would a little bit but where do you see the world going in terms of rendering this holistic advice, this more comprehensive view of what they have? And where do you see this leading?

Paul Deer: Yeah, I think, over the past several years, in particular, more and more focused on fiduciary standards, probably a major driving force to what any organization or any consumer is going to be looking for. I do think consumers are smarter and more informed than they’ve ever been. And that’s a really powerful and good thing. And so the industry needs to respond to that. To that end, technology is always the exciting element and a focus for many. But I think we have found that you can’t just do it with tech, you need to have humans to have a real conversation with where you can perceive emotions and kind of dig deeper than just the surface of what someone’s telling you. That combination is what’s going to help people really make the best possible financial decisions over and over again over the course of their lifetime, which is going to help them and you know, with the best possible outcome.

Jack Sharry: So one of the things I’m observing, and this is with clients across the board, and we work with Personal Capital, full disclosure on their security capabilities, and aware of some of the other capabilities you have around asset location and some things you’re working on around income generation, just observation that we’re seeing, pretty much wherever I go, I’m seeing on a daily basis, the conversation has shifted from an accumulation mindset, a single account or single product orientation, to that more holistic, unified managed household. UNH is a term that I’m seeing on a daily basis, where you’re looking at the whole of it, and then using tech tools to improve the key levers of improved outcome, which are cost risk tax and Social Security. If you’re going to improve outcome. Those are ways to do it. And increasingly, the industry is working at quantifying the benefit what a lot of people don’t fully recognize because you hear another buzzword around the industry about next best action, what’s the next best thing to do? Well, that would presume that you’ve quantified the benefit of potential actions and determine the next best thing to do. So it’s an industry that we’re starting to get at it. Personal Capital is doing some of what I just describe, or at least some exists some as I’m sure in motion, but how do you see that coming together that improving outcome that showing the client the next best thing to do and to your earlier point, We’ve made this point a few times. And I fully agree, you use tech to help get at some of the harder issues. But then ultimately, it’s a human conversation between the advisor and the client around what feels right around what, you know, helps them get where they’re going. So your comments on this trend toward a more unified managed household,

Paul Deer: I think it’s great. I mean, that’s what the industry should be moving towards. For us, it’s about really pinpointing the most meaningful items that we’re seeing within the data or our conversations with clients to drive engagement from those clients, we can tell that something may help move the needle for them. But that generally isn’t going to cut it in and of itself, we have to have a conversation to get their buy in on it. And sometimes that means showing it to them using our technology, sometimes that relies more on a conversation. But in in all cases, we really want to try and identify what will move the needle that we can also get the client to actually act on. And that’s an interesting dynamic, because you can tell somebody, Hey, cut your plan retirement spending by 50%. And you’ll be golden. But is that really a realistic objective to achieve? Probably not yet.

Jack Sharry: And there’s also that trade off discussion. Because you can always cut expenses. That’s one way to get there. But as you just identified, it’s not always the preferred way. Let’s say it that way. But the whole idea is to present an array of options, use technology to help you get at some numbers that make that real, or at least quantify what might happen one way or another. I know this for a fact maybe comment on this. That’s really what you’re doing with a client each time is you’re saying here are the trade-offs here. The here are the possibilities, here’s what we could do you want to take more risks, then, you know, here’s something to look out for. But rather than me tell you what you do you do it well. So what if you would just comment on that I know that’s part of the that dynamic,

Paul Deer: absolutely, like, the most simplistic version of that that we do, is within planning for someone’s retirement plan. When we look at the retirement planner, and we show a client, what their current trajectory is, we’ll talk to them about the major levers, they can move either individually, or in combination to have a better outcome for them. What I mean by that is, okay, if you want your money to last through your retirement, you can do basically one of three things, technically four, but we don’t like the fourth one, you can increase your savings today, you can delay your retirement or you can decrease your retirement spending. The fourth one is you can increase your risk, but that’s not quite as secure. And so between all four of those things, you can combine them all take one or two and do them. And so we can show clients the impact of doing any of those four things and any combination and say, This is what’s gonna get you the most bang for your buck. This is what’s going to have a minor impact. And what do you want to do, right? Because that’s the other thing is money is a very personal thing. So maybe the dollars and cents, or the numbers point to one thing you should do, but that doesn’t always equate to what the client is going to want to do.

Jack Sharry: Well, this has been great. But two more questions for you before we say farewell for now, if you would be kind enough to maybe share three takeaways keys that what we’ve covered the gamut here, but three key takeaways our audience might find useful as they apply what we’ve discussed in their day to day lives round, the consequence of human and digital advice.

Paul Deer: Sure. On the holistic front, I would say don’t make decisions in a vacuum, understand the holistic impact or make well informed decisions. Maybe that’s a better way to say it. For us, I think specialization equals effectiveness. And I mentioned that because what do you mean by specialization? What I mean by that our team of advisors has Financial Planning Specialists behind them that dig deep on particular topics. And they will leverage we use LifeYield. And that’s, that’s behind one of our Financial Planning Specialists who leverages the software to give clients a particularly personalized Social Security recommendation. But even broader than that, I think about it in that sense, but even broader than that, just working with an advisor, and having someone who is an expert in a particular field can really help you make better decisions and more informed decisions. So I would say that’s kind of maybe number two. And then I personally really believe in this one because my time from my broker’s days showed me the pitfalls of doing the opposite of this. But when it comes to investing, avoid fear, avoid greed. If you feel an urge to make a change in your investment portfolio, and it’s really like an emotional urge. That’s probably the last thing you want to do,

Jack Sharry: I completely concur. And as investors demonstrate on a daily basis, that doesn’t always happen. But you’re right to point that out because acting on fear or greed really turns out as hoped. We’ll leave it at that. So as we wrap up, one of the things we do with our guests, each time we do a podcast is we ask them to share with us something they do outside of work or something they’re particularly passionate about or have an interest in doing. So Paul, if you’d be kind enough, what do you do for fun or what’s what are you particularly excited about?

Paul Deer: Sure. I am an avid outdoor enthusiast here in Colorado. I was originally born in Hawaii, but found my way to Colorado in the mid 2000s. And I cross country ski, and I mountain bike relentlessly. So regardless of season, I’m a happy camper when I’m outside. But what about what about you, Jack?

Jack Sharry: I knew this was coming because you weren’t me. But you are the first guest to ask me what I’m particularly passionate about. So I am an art collector and an antique collector. And so I’m speaking from my home in Vermont, I live outside of Boston otherwise, it’s chock full of antiques and, and art regional artists. I’m a big fan of KPN painters, which are Gloucester and Rockport painters. And for those of you who see me on a zoom call, you’ll see a painting from one of those artists. So that’s my passion is that and of course, my family. I’m very fortunate to have four sons, two grandchildren all have wonderful partners, and my youngest son got married just this past weekend over the Fourth of July, as we record this, that following week, and my number three son celebrates his one year anniversary at our home here in Vermont, on the 21st of August where he had to get married at City Hall last year because of COVID. So we’re looking forward to that celebration as we did this past week and we’re all of our family came together. So those are some of my passions. Oh, and I have two of the sweetest grandchildren in the universe. One is six and a half the girl and the other is three and a half and a boy and they are the light of my life. So but thank you for asking me Paul, you are the first to do so. So for listening to us. If you’ve enjoyed our podcasts please rate review and or share what we’re doing here on WealthTech on Deck we’re available wherever you get your podcasts. Paul, this has been a lot of fun really enjoyed getting to know you via the podcast and thanks for sharing your views and that of Personal Capital. You guys have a tiger by the tail. I think it’s great work that you all are doing. So thanks for being on our show.

Paul Deer: Thanks for having me, Jack.