Trading Tomorrow - Navigating Trends in Capital Markets

The Digital Shift in Financial Advisory: Insights with Jud Mackrill

• Numerix • Season 3 • Episode 31

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In this Trading Tomorrow – Navigating Trends in Capital Markets episode, Jud Mackrill, Co-Founder and Managing Partner at Milemarker, reveals how data integration and cloud solutions are revolutionizing the wealth management landscape. Judd discusses the transition from traditional tools like Excel to AI-driven platforms, enhancing profitability, decision-making, and client service for financial advisors. Learn about Milemarker's innovative approach to real-time data analytics and how their solutions tackle merger integration challenges, streamline processes, and improve client relationships. From cloud strategy to AI, this conversation sheds light on the future of wealth management.

Speaker 1:

Welcome to Trading Tomorrow Navigating Trends in Capital Markets the podcast where we deep dive into technologies reshaping the world of capital markets. I'm your host, jim Jockle, a veteran of the finance industry with a passion for the complexities of financial technologies and market trends. In each episode, we'll explore the cutting-edge trends, tools and strategies driving today's financial landscapes and paving the way for the future. With the finance industry at a pivotal point, influenced by groundbreaking innovations, it's more crucial than ever to understand how these technological advancements interact with market dynamics. Interact with market dynamics. Today, we're joined by Judd Mackerel, co-founder and managing partner of MileMarker, a groundbreaking fintech firm that empowers wealth management companies by unlocking the full potential of their technology stacks. Firm intelligence is revolutionizing how financial advisors integrate systems, automate processes and harness data to better deliver service to their clients. Judd's a thought leader in the space, and today we'll dive into how data is transforming the future of wealth management. So, judd, to start, can you share the inspiration behind MileMarker and how it addresses the challenges wealth management firms face with their technology stacks?

Speaker 2:

That's a great question.

Speaker 2:

I mean, for the reason we started mile marker.

Speaker 2:

Mile marker is my career in the making and, in a funny sort of way, because I grew up serving a lot of large wealth management firms, independent broker dealers, rias, trust companies, things like you know, entities like that that are working to make progress with their business using key pieces of technology, and the problem I kept seeing was the change in the industry was outpacing what they could actually do with the partners they had. They had to figure out a way forward to make better progress. And and that really inspired me to start mile marker um, because we fundamentally want to be a partner for progress for the firms that we serve. There's no reason to be stuck. Uh, there's, and there's so many opportunities to better compound the innovation, the data, the insights that your business has and then ultimately get to a place where your key systems are actually integrating with you, versus you having to try to finagle your way into making it work for you and so like really trying to change the posture and create more opportunity for the people we serve.

Speaker 1:

You know what are some of the biggest trends that you're seeing in the space and how are they reshaping how firms operate?

Speaker 2:

Yeah, I mean, I think fundamentally, people are starting to invest in data warehouses and data lakes and all kinds of things around that. We see a lot of people doing that but maybe aren't making the progress they'd hoped. Or, to the leadership of the company, it's more imaginary than actual. Those are key things. Being able to have data to be able to run LLMs and AI on top of it obviously a very important part of the future of our industry. A lot of places simply don't have the data to do that or the ability to add those layers on, so it's a really rich opportunity for our whole industry to get better, to mature, to really start to make progress in those categories and to have a key partner that makes that happen.

Speaker 1:

And so what do you see? Some of the biggest challenges, though, that these firms are facing when trying to leverage their data for better decision making.

Speaker 2:

Well, I think often it's getting out of the spreadsheets and getting into the cloud and then getting into a place where your organization can start to actually have a proactive posture. And I think a lot of times most businesses have like a 90-day cadence where we're going to look at our numbers every 90 days, we're going to make decisions, we're going to move forward and they're going to revisit that in 89 days or whatever, and you know that's a that's a broken model. Change is happening too frequently. Decisions need to be happening more often. There are a lot of things that are not actually looked at in the whole process and we see a massive opportunity to modernize and automate and forecast how businesses can be understanding their business themselves and be making better decisions and fundamentally transforming their value to their clients by better adoption, better empathy, better service. That's all driven by the data. That's the stories the data is telling them.

Speaker 1:

And with the launch of MileMarker's firm intelligence platform. What are some of the key features that set it apart from other fintech solutions in the wealth management space?

Speaker 2:

Yeah, it's uniquely built around some of the key components. We see that advisory firms and trust companies and banks and various financial institutions need to be able to understand how they're doing business and a lot of times you see basis points as kind of the currency of how everybody gets paid in one way or another. We're able to break down how that gross number is ultimately netting out and understanding how production and all these things happen inside of that. So you can be making really good decisions with the data, understanding that my business I may be making more money than I've ever made, but I'm certainly not saving that. Um, you know, maybe that's more going out the door or um, we have clients fidelity to study.

Speaker 2:

Last year that came out where it showed the majority of clients that that RIAs have are generally unprofitable, and helping them understand like, how do we fix this? How do we redesign our service models? How do we start to learn who we're really good with, who's a win-win scenario as a client and seeing data unlock that, and so our analytics and our engine are doing that on the regular for a lot of firms around the country and it's been really fun to see that behavior change for the CFOs of these firms to come in and say this is my favorite number. I want to see, like our forecasted revenue. I had that earlier this week.

Speaker 2:

You know one of the CFOs of an awesome firm. You know she's like I want to go check our end of quarter number to understand where we're at and be able to make decisions and be able to forecast and should we hire, Should we not? You know, all these things are really driven off these real numbers and I would say, fundamentally, a lot of firms don't actually know the real numbers, Like their systems have a lot of demo data, faux data, things like that, that are actually abstracting them from the truth, and we really help them get clear to the truth and have a very fine definition of what their numbers actually are so they can make real decisions and not be, you know, trying to sort it out in their own minds.

Speaker 1:

Yeah, that fidelity study, that that's. That's crazy. I I'm, I'm hoping the end clients don't read it.

Speaker 2:

Well, fidelity might have them go back to this being a retail client with them, and everybody would win, probably.

Speaker 1:

Yeah, there's motivations in every piece of research, I'm sure, but I've read things in the past where you've spoken about that. Mile marker acts, as you know quote unquote connective tissue for firms to harness their data insights, you know. Can you explain what that means, how it helps advisors and better manage their business?

Speaker 2:

A big part of our brand promise is that all of our customers own their data because of mile marker. We help you actually bring your data down into an environment that you own and control and then, with that, we help you connect that data to your truth, to understanding what it really is. When you look at your planning business, your insurance business, your wealth management business, how do you really look at that at an executive level? Because you already have this perspective. You probably just have to will it into existence For us. We actually bring that together proactively for you so you can really truly look at who you are and then define where you want to go and understand all of that in one single user interface, all branded to your firm on your domain, and also be able to drive that down to your affiliate offices or your advisors in the field under their identity and cascade the insight to them, which is that's where transformation happens.

Speaker 2:

We see a lot of advisors who join companies, an organization, whether as a member of a corporate, ria or a branch you know IAR, whatever that relationship is. They're looking for, obviously, the shared services, compliance, service technology, et cetera, but they're also really looking for somebody that's been there before them and can guide them to where they want to go, and what they're finding is those institutions actually can't really deliver, that they're not really in a proactive posture, and so we fundamentally change that. We give you back that ability to be proactive, make decisions, understand your truth and then drive that insight to all key stakeholders so they can fundamentally improve what they do.

Speaker 1:

The way you categorize digital transformation was more about the end user and the business user adding more value to their client, where I think the world thinks about digital transformation as process automation and things of that nature. I think that's a really fascinating way to look at it. Any additional thoughts around that?

Speaker 2:

That's a good observation. Yeah, I mean, transformation should be truly transformational. It shouldn't just be a bunch of business people check a box on a checklist and say, yeah, we have our data store and we're connecting it every day. We're transformed. No, you're not, you're just in like a different context. It's not until you actually apply truth that you can be transformed. And that becomes a cycle, too, where you start to improve, you identify new facts and things that need to improve, and then you get, you get stronger. It's the same as, like you know, any person's health and fitness routine, or even like habits like this allows you to actually focus on behavior change versus feeling this like restriction because all of your stuff is over here, in Never, neverland. You know, we're fundamentally changing that and it's so exciting.

Speaker 2:

When we get on the phone with our clients, we're talking to one of them. You know a guy that's growing fast. He's got a bunch of advisors, a bunch of clients, and he didn't have his truth of his firm and now he does, and now he's able to make better decisions and now he's able to, you know, give better transparency to his staff around their numbers, and it's transforming the posture of which they run and grow their firm and it's also transforming the value of their business, because now they own their data and they control their analytics and all that kind of stuff. So that's a big part of it. We believe that we pay for ourselves and the value we create for your business, which is a big part of our inspiration in doing this as well.

Speaker 1:

You know that's the one thing I love about doing this podcast is getting to chat with business leaders and sitting here and change the way I think about things too. So thank you for sharing that. That's awesome. So you know, data integration it's, you know. We can call it a significant challenge. We can call it painful, particularly in the context of mergers and acquisitions. Right, bringing systems together, different data schemas, you know different ways of data input, categorization, you name it. You know across the board, it's just painful. So how does MileMarker help firms manage that complexities of integrating different systems, especially post-acquisition?

Speaker 2:

Yeah, I think the biggest thing is we help you have a place to define everyone involved, like everybody that's, whether they're an office and they were formerly an RIA. In another state or time zone they come into MileMarker. Now you can kind of corral who they are and all the things that have mattered to them historically as well as now, the things that are going to matter to them in the new universe, and so we can be able to honor the past and define the future with the data that we have. And it's just so important. I mean, we just got off an engineering call where we're working on this deeper and deeper for our clients, wherein there's a high level of subjectivity that exists in all of these contexts and this is the trouble is we'd go to financial advisory firms and they have four different financial planning systems. They'd have a couple of different risk softwares. They might even have multiple CRMs.

Speaker 2:

No one can agree and everyone's trying to play this game of tug of war to say my system's better, we should all move to my system. Well, you all know, just from human behavior, that's never. If somebody's going to tell you what to do, it's never going to feel as good as if you had the idea, and so what we're able to do is honor the system plurality but then provide truth across those systems and also help with data hygiene and integrating other systems into this to help move, address changes from this system to that system or risk numbers from this system to that system. All that stuff needs to be leveled up. This system, that system, all that stuff needs to be leveled up. But it starts with definition of who they are and what systems they use, and then how those systems show up in the future and then how that gives access to the whole team on the corporate side to better oversee them, supervise, manage and hopefully transform how they work.

Speaker 1:

You know. It's funny that you say that because you know. So many times, like you know, I've had conversations with you know, programmers, it in the past where you know, certain things become religion, whether it's you know programming, languages, systems you know. So it almost seems like at some point, the biggest challenge of integration is actually the people themselves.

Speaker 2:

Yeah, I think we're. I mean, integration has obviously been a challenge and it's still a challenge because things change. But the real elephant in the room is adoption. As much as integration gets blamed for everything, it's truly adoption. And if we can help change that and drive adoption on all these different systems and helping them actually get to what they really want with that system, you know that's a big win for everyone involved and it cuts down on all this context switching. It helps them actually, you know, be more focused on the client and be more transformative to the client as well, and it's a win-win.

Speaker 1:

You know you mentioned cloud technology before right. Obviously, there's plenty of discussions around the cloud and willingness to adopt and whatnot you know. So how does cloud technology factor into, you know, my own market firm intelligence platform and what advantages does it provide for wealth management firms in terms of scalability, accessibility, elasticity, etc.

Speaker 2:

Yeah, I think when I got started my career, I'd go walk into an advisor's office and I'd walk past these rows of file cabinets that essentially represented that business. It was a folder for every client. You might still have that. It's not uncommon. Still Today we see more and more firms that have invested in data to some degree.

Speaker 2:

Maybe it's a server running in a closet, maybe it's a relationship with Azure or AWS or Google Cloud or something else. We have a mindset that essentially says we're going to meet you where you are, whatever system you have today. That's okay. Let's help you take that to the next level without you having to become a systems programmer or the company IT guy or whatever it is. That's not necessarily your core focus. Let's help you cut through the chase and put that data into a more transformative cloud context, but also still live there if you want it to be.

Speaker 2:

If you want to stay in Azure, you want to stay in your closet cool, we can figure that out.

Speaker 2:

But we're going to take that data and we're going to synthesize it with everything else that's already in the cloud and then give you that straight through comprehensive cloud environment that represents your business as a living, breathing thing that's constantly being updated and analyzed, and also adding in your unique logic Because you have this stuff right analyze and also adding in your unique logic because you have this stuff right.

Speaker 2:

The most creative application as much as we have designers and developers that I see in financial services is still Excel. There's still advisors running like in you know, cfos and leaders running really complex things in Excel that ultimately requires them to run it every time, even with macros and all these things. We help you really transform that into a much more application-based experience that is truly then adoptable by the people that need it, and that logic can run in the cloud. Even if it's running off, that data you still have in that closet. So it's a really fun thing for us to be able to help like that and meet people where they're at and then help them get where they want to go.

Speaker 1:

You know, I always joke about my career. I always say you know, the first 15 years I lived in Word, the last 15 years I live in Excel. And there's so much conversation about the end of Excel, operationalizing, you know, utilizing better, stronger tools like Python via cloud services. Do you have a prediction to the death of Excel?

Speaker 2:

I think it will outlive all of us. It's like a cockroach in a nuclear explosion. It's going to keep going because at the end of the day, I'm going to cut to the chase and I want to get this, I'm going to have it here. But it's even like BI tools, like Power BI and things like that. There's a lot of cool things happening there, but it's in isolation. I want this stuff to live and I actually want it to be driving automation in my business. I want AI to be influencing it and be building bots and agents and things like that that actually can go from there. So it has to get more mature, but it's that's still like foundational level. That is our whiteboard right. For many of us, it's like all right, open up spreadsheet, let's figure this out, let's go. I'm going to explain to somebody. It's going to go someplace. It might be the source of truth forever, it might just be there for a moment, but it's. It's that whiteboard that we all start with and I don't think it's going anywhere.

Speaker 1:

And, just for the record, a Microsoft man just pulled outside of my house. So you know, many firms are very still cautious about transitioning to cloud-based solutions due to concerns about security, data privacy, cost. You know things of that nature, you know. So how does MileMarker address these concerns and ensure security of sensitive financial data?

Speaker 2:

Yeah, we're fundamentally a fiduciary for our clients, doing what's in your best interest with how that works. I mean that means we use a lot of cloud technology that has massive adoption, that has global security. It's often used by governments and things like that Like the CIA, for example, is one of the top customers historically of AWS and we're using those sorts of tooling Because, fundamentally, I don't want to hire a thousand developers. I want a thousand developers that work for Amazon or Snowflake or AWS or Azure. Excuse me, you know, let's, let's, let's build upon the growth of the community and let's, let's take that transformation and fast forward it. And that's the way to do it versus reinventing the wheel.

Speaker 2:

The wheel is pretty darn good when it comes to computing. Everybody likes to demonize compute. There's a lot of ways to manage compute efficiently for people. You just have to think about it like you're spending your own money and a lot of times people don't they're spending somebody else's money Like, no, I'm spending my literally with our customers. I'm spending my own money on your compute. So I'm going to do it as shrewdly as possible to get you the results you need and to give you that benefit, and so we sit on the same side of the table with our clients when it comes to compute, comes to security, when it comes to all those sorts of things, because, at the end of the day, we're you know, these are people that we care about Like they're. They're big firms sometimes, but they're. They're people that we spend a lot, large portion of our life with and we're wanting to really transform the future together.

Speaker 1:

You know it's. It's an interesting philosophy to say think about, you know, spending your own dollar. I recently read an article how firms now are, you know, moving back to on-prem right because of cost, you know, but you have a different philosophical approach to that in terms of it's spending my own money, you know, with these tools, would it possibly suggest that firms are not thinking about that?

Speaker 2:

Yeah, I mean. So. I love David Hanna-Meyer Hansen, but I totally disagree with him on this shift back to local. If you don't, you're not familiar with David Hanna-Meyer Hansen. He also goes by DHH and so you know he's like one of the top guys in the history of the web. In my opinion.

Speaker 2:

Ruby on Rails powers a ton of applications in the world and is really transformative technology. We use something similar here to power a lot of our applications. But his shift is I want to stop spending $50,000 a month on AWS to power Basecamp and I want to bring that down locally. I think it's a very viable use case in that context. But for us like where every one of our customers is like a Basecamp plus another, you know, like we have to have infinite scale here as we grow and as we serve people. If we have 100,000 customers logging into one of these applications at any given moment, that's great. I'm sure Basecamp can do 20X that.

Speaker 2:

But when we show up, we need to be extremely performant. We need to be extremely secure. I need to not worry about a hurricane decimating my server or my server farm or dealing with redundant systems. We used to spend a lot of money back in my prior company with co-sentry and like redundant data farms and you know, running all of that stuff. It was a pain in the neck, it was so bad. A server would go down, we'd be spending a million dollars on buying new racks and it was just like why don't we just build upon the overall pace of evolution here in this industry by partnering with other people? And I think the other thing you have to think about is what is your actual core competency? Is your core competency managing servers or is your core competency fundamentally serving investors? And for us, our core competency is fundamentally helping transform businesses to unlock their potential, and so for that we're going to choose best in class, to give you the best in class experience on our side of the house.

Speaker 1:

Well, it brings up a great question in terms of are you a financial institution or are you an IT company? So what role, if any, do you see cloud computing playing in the future of wealth management? I mean particularly in the terms of data integration, automation and client service. Yeah, I mean, I think it's only the beginning of it. I mean particularly in the terms of the integration, automation and client service.

Speaker 2:

Yeah, I mean I think it's only the beginning of it. I mean, everybody always loves to to get to be a baseball expert and talk about what inning they're in or whatever when this comes up. But like we are early in the game of of building this and I think that cloud computing will evolve. I think compression is evolving. You're seeing that a lot with what's happening with open AI and things like that. Like you know, I think it's funny because that was kind of the core part of Silicon Valley. The HBO show was all about compute or compression Excuse me and so, but that compression ultimately is a real thing and how we do that and how that scales. I can tell you this If you're going to buy off the shelf and have something sitting somewhere, it is not going to benefit from that.

Speaker 2:

You're going to be installing packets. You're going to be in this like constant improvement of that. You're going to be focused on making that better versus everything else. That's getting better for you. You're getting the new releases. You're being able to go forward from there and transform your business and and I just think that's for almost everyone involved that's probably the best thing If you're doing something locally and you want to have the ability to go fast and keep the cost down.

Speaker 2:

Absolutely do that. It's not a binary thing. It really is just like what's the best thing for us to go and scale this business and to have complete certainty about our future and our overall cloud scale. As we go, I think we're going to see a lot more stuff happening with data sharing, wherein your analytics from different systems are going to be shared in a cloud computing engine versus via an API, and that's going to change how much data you're consuming and how much data you're going to need to actually report out as well. All that is a new economy that we're all starting to get more familiar with, and the potential with it's massive.

Speaker 1:

So you know, in the past few years we've seen an acceleration of kind of digital tools for client engagement. You know, how do you see technology shaping the future of the client advisor relationship with wealth management?

Speaker 2:

I think it's going to be all about adoption, and the fact is that most retail clients can do pretty darn well with a couple of different ETFs and just managing their budget and being able to be on the same page with their partner. There's a lot of things there that are fundamental and are pretty automatable. We see this from a lot of different investing tools. It used to be 12 years ago or so. We'd have the betterments and wealth fronts and things like that that people are afraid they're going to eat their lunch, and we realized that only 20% of that becomes relevant in a more holistic wealth management context. But what it did teach us is that the value isn't from those things. The value is from how do we help drive adoption on a state on tax. Tax is so multiple tax optimization and the way you trade to tax decisions you make and how you govern your finances and where you live and what that means and all of that. How you classify your taxes, how you structure your businesses. That's where advisors really should be deep diving with their clients to bring transformation. Technologies like direct indexing and things like that can be certainly valuable, especially for tax loss harvesting and things like that. Those are the things that are becoming more and more at the forefront of the advisor experience because of the ability to have a lot of these things more automated, more in the cloud, and we see that's only going to progress. The new solutions that are coming down the road in 10 years will make all this stuff that's today cutting edge look pretty antiquated, and that's what progress looks like. Edge look pretty, pretty antiquated, and that's that's what progress looks like. So we can either sit here and wait for the next thing or we can be part of today and build a meaningful business that will transform into the future, and we would see this to the time in which we're recording.

Speaker 2:

I never like to date a podcast too much because I think these are usually pretty good every every day. But just recently the firm Creative Planning, which is based in Kansas, serves about $250 billion in assets. I mean, that's a firm that is a great example here. They were valued this week at $16 billion and with that, probably the largest independent RIA valuation to date, and with that there really is a reflection of the deeper value add that they offer their industry and how they provide tax, how they provide legal, how they provide all these different services inside of their value prop, versus simply just providing model portfolios and keeping it on autopilot. They're truly driving deeper value and transformation for the people that they serve and that's being reflected now in their valuation. I think there's so much more to come. There's so many other firms that are doing something like that and that's just a testament to the focus and intensity they have toward the future and driving deeper adoption for the people they serve.

Speaker 1:

Judd, sadly we've made it to the last question of the pod and we call it the trend drop. It's like a desert island question. If you could only watch or track one technology trend in wealth management, what would it be? That's a great question.

Speaker 2:

I think the trend to follow is probably around what's happening with LLMs and what's happening with AI, simply because the possibilities with it are endless and I think I'd be captive any other direction. I think that will unlock a lot of the future here. Of what things are doing. I think a lot of it's still really early and it's getting too much credit, but there's so much more to go Well.

Speaker 1:

Judd, I want to thank you so much for joining us today. You know great conversation. Again, thank you so much for your time you bet.

Speaker 2:

Thanks, Jim.

Speaker 1:

Thanks so much for listening to today's episode and if you're enjoying Trading Tomorrow, navigating Trends and Capital Markets, be sure to like, subscribe and share, and we'll see you next time.