Jack Sharry: Hello, everyone. Welcome to WealthTech on Deck. Thanks for joining us. Each week, I have the privilege of speaking with industry leaders around issues that inform and advance financial advice, wealth and asset management, retirement, insurance and annuities, and technology. I talk with executives who are working on ways to help advisors, clients, participants, and firms enjoy better financial outcomes all around the confluence of digital and human advice. Our conversations center around what’s new and exciting today and where our industry is headed. My favorite episodes are with folks disrupting our industry in a good way. Today we are speaking with someone who has been busy doing just that, changing the game in enabling advisors to provide better advice and outcomes for their clients. Rich Cancro is CEO and founder of AdvisorEngine. Rich, welcome to WealthTech on Deck.

Rich Cancro: Jack, it’s a pleasure to be here. Thank you.

Jack Sharry: Terrific. So Rich, let’s start with you telling our audience about AdvisorEngine at a high level, about the role that you play and the firms and advisors you serve.

Rich Cancro: I started the firm, I’m the founder and CEO, back in 2014. We deliver a robust wealth management technology platform, it’s open architecture, so we like to play with a lot of the industry partners, whether it’s custodians, or whether it’s other fintechs. We typically will service advisors that are the core four custodians, so whether that be Schwab, TD, Fidelity, and Pershing. Our mission is to, is to help advisors connect with their prospects and clients. It’s to help them grow. And it’s also to help them scale their, truly scale their business. And with their smart automation and workflows.

Jack Sharry: That’s great. So, Rich, why don’t you fill our audience in on your background and how all this got started. I know AdvisorEngine is off to a, has been off to a great start for many years now. But I know you have a life before AdvisorEngine.

Rich Cancro: I did. I hate to say this, but this is actually my 30th year in the financial industry. I started in the early 90s. I was actually the third person at Waterhouse Securities in their advisor business, believe it or not, before Tom Bradley was there.

Jack Sharry: Yeah.

Rich Cancro: And what I learned there, pretty quickly, being one of the three people… So that meant I took all the client service calls, I placed trades, learned all about operations, I opened accounts, I helped move money… I pretty much did everything, other than sell. And you know what I learned from there was two things. One is I am absolutely passionate about fiduciary advisors, which I’ll talk a little bit more in my journey. But I love the fact that fiduciary advisors are fully aligned with their clients’ interests. The second thing I learned, and carry this also forward, is their small businesses, how they get service and how these service our clients, every moment matters. So how they open accounts, how they deliver performance reports, how they execute trades, all of it, all the details matters to them. After that, I moved on to what was PC Financial Network, that time was part of Pershing and it was a direct to consumer app back in the mid 90s. And then turned into DLJ Direct. DLJ Direct, at that time, owned Pershing. And it was a lot of fun, a lot of fun in my career. We are innovating and creating new capabilities. First out there. So the first real time balances, first real time P&L, first to stream quotes, first online IPO center, first institutional research. I actually signed the very first Dow Jones Newswire for real time news to hit consumer base. It’s the first time it was going to consumers versus professionals. So, learned a lot about building consumer apps at the time. And then, I transition from that point to building out what is today, NetX360, at the time was NetXPro and NetXClient. And what that charter was was to take the DLJ direct tech stack and make it work for Pershing’s clients, both their broker dealers and their RIAs clients. And my first client was actually Vanguard Brokerage Services, which was a great first client, you know, it really helped us learn the need for flexibility around brand, workflow, risk framework, investment framework, workflows, compliance, all those things when you’re building out and when you taking a retail out and making it work for an institutional client, you really have to build a ton of flexibility. So that was my first and I learned a lot from Jim Crowley and Brian Shea, who were, at the time, at Pershing and Jim is now the CEO of Pershing. And you know, I was a sponge with them learning all about that part of the business. After that, then built out DLJ Investment Advisor Services, which was the service independent advisor. So kind of getting back into my core passion. And there I brought on a partner Jeff Roush, who to this day is just, has amazing depth and knowledge of how advisors run their businesses from productivity to any type of pain point, to client onboarding, servicing clients, all the things that an advisor cares about and I was a sponge with him as well. And he just was a wealth of knowledge and really kind set me up for my future. From there, I went into Bear Stearns, and head of product development for the RIA custody business and built out whether it was tech, mutual fund platforms, separate account platforms for that business. Ultimately ran it as a transition to JP Morgan, and then transitioned into running the RIA business as a transition to JP Morgan. An interesting thing that I learned there and connecting dots from earlier in my career, you know, when we were trying to sell our… services and technology to advisors, their questions are always not about, how do I make money? They’re always about, how does this benefit my client? And that’s so resonated with me their every question was, how is this good for my client. So it just really connected those dots from earlier in my career to there, has driven my passion. Moving on to Merrill Lynch, where there headed up the RIA custody business there, as well as the planning, reporting across the Merrill Lynch franchise, and then transition to a founder, which was a big transition moment…

Jack Sharry: If I may, Rich. So how did you go from Merrill Lynch, arguably one of the best firms in our business, biggest firms, certainly, to wanting to do a startup? How did that happen?

Rich Cancro: Well, you know, it’s interesting. I come from a family of startups. So going all the way back to my grandmother, she actually started a business in the 30s, maybe in the 20s, I don’t know exactly the timeframe. She started a business, her entire career, she was an entrepreneur. And she had such a spirit to her and such passion. And just amazing, you know, the success that she had, and then my father ultimately was also a CEO, and ran businesses and things like that. So it was within my, I think my DNA. So even going back to the mid 2000s, I’ve always had this idea of wanting to do this, I guess I just, I would suggest I didn’t have the courage. And somehow I found that courage, when I had my first child. Which is a little crazy. Getting married, having a child, and deciding to become a founder. But I had that, you know, I really did have… since the mid 2000s, wanting to do this. And so when I did transition to founder… one is I can maybe even more relate to small businesses. You know, bigger companies, lot of support services, all those things, to just me and my cat basically looking out the window and coming up with a business plan. And, you know, when launching the company, it’s me and my cat looking out onto 27th Street here in New York City. And realize, like, I have to do everything, right. So I have to size… the business plan, and trying to, you know, win business and win clients, and so on and so forth and build a brand and all those things. You know, holy cow, the… going out, you know who’s gotta get that? I gotta get that. Right. Any little thing that you, “Oh, I have to open a bank account.” I… I have to start a corporation. All these things that take time, the small businesses, so it connected me even closer to I think a lot of the firms and, when I talk about small businesses, I think, whether it’s a $50 million advisor, a $5 billion advisor, a $10 billion, they’re still small businesses and every client,: Yeah.

Rich Cancro: So I actually had two ideas, and I normally don’t talk about it. But so I had two ideas. One was to create a national RIA business with a national brand. So I’m just, like I said, so passionate about the fiduciary model. In doing that, you know, I looked at a lot of technology solutions out there. And I realized that they weren’t, at that time, and they’ve made some really great progress since, they weren’t really built to connect advisors and clients. They’re really kind of oriented toward portfolio management, and advisor using tech, but not really connecting with clients. So that went into my second idea, which I was equally passionate about, which is to build the wealth platform, which has been something I’ve wanted to do for, for quite a while. And the goal of that was to connect advisors and clients. Instead of like, thinking about this way of an advisor using tech, and then talking to a client or connecting client, using the same thing to connect on, right. So in real time, collaboration, engagement, and the advisor and client were connecting. Now, it’s okay, then maybe the UI may be different. That’s okay. The data level may be different in terms of what you show an advisor versus a client, because you want to make it approachable for the audience. So you can build a more approachable UI, workflow, data, in the words you use for the client that may be a bit different than an advisor. And so it really wasn’t there at the time. And we also didn’t find, when I was looking at things, that it really kind of scaled the full set of activities for an advisor. So beyond performance reporting, trade rebalancing, and fee billing, which are all pain points, but also all the other parts, for client onboarding. So, opening accounts digitally, funding those accounts, moving assets. And then the third was communication. So the communication is… I think it is fundamentally, super important that an advisor owns the brand. So that means anything that they do, whether it’s an email, or if it’s online with their brand, all that should be in their brand. So creating an ecosystem, akin to how Apple thinks about their brand. Google thinks about their brand. Coca Cola thinks about their brand. You know, helping advisors deliver their brand to their clients. So, Rich, one of the things that we see and we’ve had conversations at other times along these lines is that there seems to be a movement toward what I am calling comprehensive advice platforms. You are all that. That’s… AdvisorEngine is a comprehensive advice platform. And when you started it, frankly, that was a relatively new idea. It was a few years ago, and things have changed rapidly over the past few, for sure. So talk a little bit about that. Because there’s some real challenges. It’s one thing to have all these discrete elements, all these discrete capabilities, it’s a whole ‘nother thing to have them all coordinate with one another. And I know you’ve spent a lot of time doing just that so that it looks easy, but I know it’s not easy to do. So why don’t you describe how you’ve gone about that, how you’ve coordinated all the various capabilities that you’ve put together? Yeah, you know, during the journey, I asked our team some pretty, pretty hard things to do. Right one was build one instance of the software, right, to have a true product. So when a client, for example, wants some new feature that we make it available to everyone through configuration. So a key to it is configuration. So one software instance that’s highly configurable. And that configurability kind of gets into that learning I had from an enterprise perspective. So… making configurable for brand, disclosures, risk, investment framework, workflows, client portal features and functions, all these things should be configurable at the firm level, and at the advisor level, and at the end client level, advisors claim. So that configuration, I think, is key to give, you know, offering a solution that really works for the advisor. So when you think about that, that’s personalization. So when people think typically about personalization, they think, at the end client level, for sure, right, you want to offer personalized portfolios, personalized experiences, and communication. But the key, the second part of that is offering personalization to the advisor. And how they run their business, how they want their workflows, how they want their brand, how they want their communication, that’s the true personalization and bringing it down at the firm level, advisor level, client level.

Jack Sharry: You started that way. You started the company with that in mind.

Rich Cancro: Yep.

Jack Sharry: And as I’m sure you’re observing, there’s a whole lot of other folks out there that are trying to do the same thing. Only, they didn’t start with that mind, they started just in the way most businesses start, and they start with whatever was current at the time. So you kind of have a head start and you have a unified experience, right? Whether you’re a client or an advisor, or you know, a larger RIA firm or broker dealer firm, what have you. Where are you in your journey? Have you pulled it all together? Is it still a work in progress? I know others are, frankly, chasing your dream and chasing what you all have put together. But talking about where you are in your journey, in pulling all this together and making it very usable, user friendly for both advisors and their clients?

Rich Cancro: Well, Jack, I’m sure you can relate to… it’s a, the journey never ends, right. So it’s a journey, you keep evolving. So when you think about where we are in the journey, part of that is building an approachable technology, right. So making an experience really good. And that’s just an ongoing component. And what’s really the theme of the past seven years, and you’ve seen this, the technology to support that has really changed as well, particularly in terms of the front end code base that’s out there now. So you can do a lot more on the front end to deliver that customization. So there’s the front end and the back end to it, right. So the back end had a lot of configuration with the front end also has to keep up with the back end as well. And so, you know, building out a tech stack that works that way is hard, and it’s evolving. And you can have continue to change. So where you… we started seven years ago, and where we are today, and where we’ll be seven years from now, or even three years from now, is going to be different. So we’ve been trying to make the hard decisions, not chasing the shiny ball, but making decisions that from a tech stack perspective, from a product perspective, that it will be enduring and that you can change it over time versus hard coding or customization that becomes spaghetti. Right? Yeah, really hard to change. The other thing, which is important to note too, because it’s not only those things, right, it’s also, so approachable technology, configuration, connecting advisors and clients. But it’s also something that’s secure, which is a something that’s incredibly important. And more important, every, every month, every year, right in terms of security, because that is changing all the time. So we have a heavy, heavy emphasis on all of the security and are continuing to evolve that. Another part is keeping it fast, right. So part of an experience making it approachable, you can build it, but if you have to wait more than seven seconds for something the show up, holy cow, right? That’s where studies show that people just drop off, right? And obviously our standard’s not seven seconds. But continuing to deliver more data, more configuration, but keeping it fast, right. So that’s a key component to it as well.

Jack Sharry: So where do you see this going over the next three to five years? You mentioned things have evolved rapidly and they’re going to continue to… what, what’s your view? I’ll give you my two cents. See if we agree, I have a hunch we might. That really it’s going to be a very interconnected, very coordinated set of capabilities in all the ways that you’re describing so that you ultimately, the client can get it more easily, meaning they understand it, it’s more intuitive. And that they also can see that their outcome is improved as a result of all the good work that you make available through, through the advisor. So talk a little bit about that, where do you see the world going?

Rich Cancro: Yeah, well, the first thing is, when I think about technology, I always think about that as solving problems, right? Solution based. And so from a business perspective, you know, kind of what I see happening is the competition in the independent channel RIA, the free issue channel is just becoming, every month is more competitive, whether it was a startup B2C that now is kind of morphing into adding an advisor component to it. And we see that happening. To the largest, most trusted brands, offering advice solutions. Because if you think about the 90s, for example, I’ve gone back to 90, sorry. Right, that’s where online brokerage completely disrupted the brokerage model, right. So it took down commissions, and even down in the… what it cost to do a trade, not just a commission, but the actual spreads and all those things, right, it really got compressed. Now that took 10 to 15 years to happen. But boy, now it’s like you get real time, for free trading, you get almost what a professional trader has. I think the difference between what the direct consumer models are and a hedge fund is probably the hedge fund may have a closer connectivity to the exchanges. But other than that, and some of their algorithms, all the other tools are pretty similar. I think of advice the same way where you have this competition, again, from the biggest, most trusted brands and startups and everything in between offering more advisor solutions, advisor solutions. So the competition is fundamentally changing. I personally think there’s gonna be pressures. I know people talking about, well, there hasn’t been. Well, it’s been a bull market for a decade. So there’s usually not a price pressure during a bull market. But I believe as the management’s disrupted, banking has been disrupted, insurance is now starting to get disrupted. I think the fee based model’s also going to get disrupted, and there’s gonna be lower fees. The second thing I see happening, and I don’t know if people talk about this enough, is we talk about the transition of wealth and the numbers of where depending on who you ask, it’s 30, 60, 90 trillion between real estate, insurance, 401ks, investment accounts, some sort of… There’s a massive transition, and it’s already started, which is one of the key points, it’s not waiting for 20 years from now, unfortunately, that transition is already started. But what that really means to an advisor, because we talk about, well, can you keep the next generation? Can you start relationships? Can you do it through tech so it’s scalable? The answer is yes, now you can, and that’s important. But the other point is you’re gonna be serving more clients. If you’re lucky, the kids will say, “Yes, I’m gonna work with you.” Here’s the news, though, that went from one household two, to three, four households. Benefit of that is those households may have their own wealth to begin with. So now you may be serving more wealth, which is great. But you’re serving two to four more households with the same set of assets for the most part. So how do you scale that? So I think scale is really going to be important. And going back to the first part and the competition, I think advisors really have to evolve from relationship… building their business, which is super important. I think they’re great at it. Right? That’s how they build their trust. But they have to pivot, from our perspective, into great marketers. I don’t want to be mean but I say, the vast, vast majority of independents are not great at marketing. I know that hurts you personally, Jack. But that’s my point.

Jack Sharry: No, I built a career on the fact that that’s true. I’ll share that in a moment.

Rich Cancro: So in that world, and this is how we think about it, we want to help advisors, and we think advisors really need scale. When we talk about scale, there’s two components, right? There’s the grow. And then can you do more? Right? Can you service more, do more things for the same set of costs? Right, so same set of resources. We think and advisors should be getting more efficient and using those additional dollars to actually put it into marketing.

Jack Sharry: Is that part of your platform? Or is that something they would go elsewhere for?

Rich Cancro: Right now, it’s a partnership. We have some really good prospecting marketing tools. So in other words, you can easily configure, each firm can easily configure a marketing page to collect prospect data, and then all of that will transition into the CRM and then if that, you win the business… transition right into the custodian. So it’s a great, it was really great, because this is a newer technology, it’s drag and drop. It’s modern, flexible, and all that stuff. But what’s really cool, one of our advisors said, it took us two minutes, and we created a whole new prospect page on our website. And that’s exciting. But then the second part is now all that data is automated. You don’t have to re intro. So it’s scale, and you’re not gonna have any data entry issues. And then it’s straight through, right, cradle to grave. So that’s exciting. So we help there, we help with integrations with third party marketing vendors, like Constant Contact, terrific integration with them, for example. We think about it, there’s a next layer above that, right, getting, starting to help advisors get eyeballs to their website and start thinking about their website is actually a great way to win business. And that’s the area that we’re going to start focusing a bit on is are you getting more eyeballs to the website. So once you get the website, we have everything you need to grow and scale most things with money… accounts, but it’s the top of the funnel, we’re going to focus on.

Jack Sharry: When I first started in this business, I was a wholesaler, and I called on advisors in the Northeast. And actually what I sold was, I was going to show them how to market themselves. And how I did that, this is back in another era, but did client seminars where I basically did a financial planning seminar for all intents and purposes. There was a little bit of a commercial for the product I represented, but it was really helping the advisor grow their business. And because what I found is advisors weren’t very good at that. They kind of, if someone called them or a friend introduced a friend, they weren’t good at asking for referrals, they weren’t good at articulating their value, they weren’t good at really telling their own story. Many frankly, just liked to manage money. They liked that part of the business. That’s why they got into it. Literally, I built the career just by showing them how to attract clients, and they liked it because they weren’t good at it. And they could get clients. It worked. I think in this electronic era. And we do a lot of that here at LifeYield, we actually work with our clients to help them grow their business. That’s just part of what we do. Because that’s where we live. We talk about that stuff all the time. We have technology, that’s wonderful and all that stuff. But if you can’t attract clients, what’s the point? So we’re spending an increasing amount of time on that topic. Just how do we help people grow their business, it’s, whether it’s a B2B relationship or a “B2Advisor,” if you will, or how to help the advisor reach the consumer, where we try to be active in that regard.

Rich Cancro: That’s great. And, you know, our first tagline for AdvisorEngine, maybe we should bring it back. And by the way, it used to be called Vanare. It used to be “wealth management technology for growth.” It’s kind of long.

Jack Sharry: Yeah.

Rich Cancro: So we kind of morphed a little bit from that. But that was our original tagline. But that’s actually one of the harder things we’re focused on right now, on the growth side.

Jack Sharry: I think that’s super smart. One of the things that, for those that may not be familiar with AdvisorEngine, you’ve collected a lot of capabilities, some of which you partner with, some of which you’ve actually purchased. So talk a little bit about the Junxure-AdvisorEngine deal and what that means for you and what you’re doing.

Rich Cancro: Sure, you know, we acquired Junxure four years ago, and we had done it for a few reasons. One is that the team is amazing, the service level, the clients absolutely love their service team. And so that’s the same team now that’s servicing all AdvisorEngine clients, and the feedback is just phenomenal. I mean, I literally I think almost on a weekly basis, we get an unsolicited, you know, thank you so much for doing something. And you know, one of the final decisions to, to acquire Junxure was, I went to the Junxure conference, and we’re literally watching advisors and operations staff hug their tech support person, hug their onboarding person, hug… And I’m like, is this financial services? Because I haven’t seen hugging like this before in financial services. It’s pretty validating of how people felt about it. And so there’s people’s… people in the office. The product is great. It’s clearly built by an advisor, for advisors to serve their clients in very unique ways, right. And a lot of automation around… really thoughtful workflows that are automated to serve and create service tiers and help clients. But we knew from day one that we replatform on the product. And that meant it, when I mentioned earlier that we kind of played the long ball. That means we did some of the heavy lifting up front, right. So that meant, you know, how it was hosted and doing the heavy work that no one would see, right? You’re not gonna see that as a client. But we, you know, we did a lot of work in the infrastructure. Now we need to spend time, and we’re continuing to… this is ongoing, is just doing any more integrations. The third part of it was creating a new experience. So we literally, our product design team, led by Rafal Czapski. And our product managers and designers literally looked at thousands of points of feedback. It littered, like a whole wall in our office, actually four walls technically, and categorized all that feedback. It’s not just to make it look better, right? It’s to have it operate better. So address all those pieces of feedback. And again, going back to you know, making it hard on the team is, it has to be beautiful. It has to be approachable. And it has to be fast, right, and easy to use. So they took all that information and built a beautiful product. And we’re still going through the process as we continue to replatform everything. Feedback has been fantastic. And as part of that, we rebranded from Junxure to AdvisorEngine CRM. And part of that is about bringing over you know, really making clear our ethos, that personal, scientific, and beautiful into all of our products and services, and harmonizing our offering. And then ultimately, where we can, you know, you asked me before about the future. What I would love to say is, I’ll bring up just a quick story, at a T3 Tech Summit, and Joel Bruckenstein hosts this, not recently because the pandemic but usually every year, and he brings in 10 advisors kind of from different sizes, different… They just broke away, to been in the business for 20 years, they manage 5 billion, 15 billion, and everything in between. And advisors asked questions. So where’s your data? Is it in the portfolio management system, or is it in the CRM? And the answer was… it took a moment and he’s like, I think it’s the portfolio management system. We would like the answer to be, “It’s the same thing.” I don’t think advisors come in and say I really want my data in three different systems. I think what they really want is that they have access to their data. And they shouldn’t care where it is. They care, of course, but they should just be able to do their work and do their things, their staff without having to think about where something is. So bringing the portfolio management, the trader balancing, fee billing, performance reporting, client portal workflows, document management, all those things together, so that it’s ubiquitous in terms of that question. And they are just doing their jobs really well. So that’s where we’re going with it.

Jack Sharry: So, Rich, this has been great really enjoyed our conversation, learned a ton. Knew a bunch, but learned a lot more. So as we do each week on our podcasts, one of the things we’d like to do is, as we bring this session to a close is, can you tell us something interesting or unique you do outside of work that people may not know about you and would find interesting or surprising?

Rich Cancro: You know, I have two young children. My son’s 27 and I have a nine year old. So I don’t know if there’s a lot of unique, exciting weekends, my weekends are playdates and you know scheduling the next play day for the next weekend. So I can’t say it’s so exciting. But I will say this, I do have opportunity to watch sports from time to time and I certainly had the pleasure of the Yankees taking two or three from the Boston Red Sox. And I’m curious, Jack, as a big Boston fan, how do you feel about that?

Jack Sharry: You got me.

Rich Cancro: Little wins from, since 2004. You know?

Jack Sharry: That’s right. That’s right. Enjoy watching the rivalry between us and you. So, Rich, thanks. This has been a very enjoyable conversation. I look forward to our next. For our audience, if you have enjoyed our podcast, please, review, subscribe, and share what we’re doing here on WealthTech on Deck. We’re available wherever you get your podcasts. Thanks again, Rich. It’s been a real pleasure. I look forward to the next one.

Rich Cancro: Jack, really enjoyed it and looking forward to seeing you in person soon.