Trading Tomorrow - Navigating Trends in Capital Markets
Welcome to the fascinating world of 'Trading Tomorrow - Navigating Trends in Capital Markets,' where finance, cutting-edge technology, and foresight intersect. In each episode, we embark on a journey to unravel the latest trends propelling the finance industry into the future. Join us as we dissect how technological advancements and market trends unite, shaping the strategies that businesses, investors, and financial experts rely on.
From the inner workings of AI and ML to the transformative power of blockchain technology, our host, James Jockle of Numerix, will guide you through captivating conversations with visionaries who are not only observing the future but actively shaping it.
Trading Tomorrow - Navigating Trends in Capital Markets
How Technology is Driving Client Engagement in Financial Planning
In this episode of Trading Tomorrow - Navigating Trends in Capital Markets, host Jim Jockle is joined by Patrick Spencer, Managing Director of Moneytree Software, to discuss how emerging technologies can and are reshaping the financial planning landscape. Patrick shares insights into Moneytree's platform, emphasizing personalization, trust, and goal-based engagement between advisors and clients. Explore the transformative power of AI and UX/UI advancements and how they affect the financial industry in real-time.
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 thrilled to have Patrick Spencer, managing Director of MoneyTree Software, joining us.
Jim Jockle:Moneytree has been a pioneering force in financial planning technology for over 40 years, helping advisors grow their practices and build stronger relationships with their clients. Recently, moneytree unveiled an innovative financial planning solution to help advisors meet evolving client expectations and build deeper relationships. Patrick is here to discuss the game-changing features of this new platform, including its goal-based and cash flow planning modules, and how the client-advisor relationship is shifting towards a more personalized and trust-based engagement. We'll also dive deeper into broader technology trends that are influencing the future of financial planning.
Patrick Spencer:Well, Jim, thanks for having me Really appreciate it.
Jim Jockle:Why don't you tell us what prompted MoneyTree to develop this new financial planning solution?
Patrick Spencer:Yeah, great. Well, as you know, moneytree has been around since 1981, so four decades doing financial planning and also with a good reputation in terms of really understanding what the advisor is looking for from a more comprehensive perspective, but then also just from a support perspective of taking care of them, as they're calling in. So Accutech acquired MoneyTree in 2019 because they saw that and they also saw an opportunity to integrate that financial planning platform into their wealth management platform, of which they've been around since 1987. Wants to reinvest in the company that I'm managing and grow it, as well as integrate it into a tool foreshadowing what trust companies and wealth management firms are going to want in the future.
Patrick Spencer:So, all that said, when we got it, we started talking to our clients, our advisors, and really trying to hear okay, what is it that we really need to do? Some were very basic, blocking and tackling things we wanted to get done account aggregation, things like that but what we really wanted to do was lean into the conversation that takes place between the advisor and the client and allow our technology to really complement that process. So that's what really drove the innovation. It was time. It was time for a new interface, time for a new UX UI design. Time for a new real infrastructure level that could be sustainable and able to grow within an AWS environment. So kind of going technical on you there a little bit, jim, but from that standpoint it was time for us to advance our relationship with our advisors so they could advance their relationship with their clients with our advisors so they could advance their relationship with their clients.
Jim Jockle:So you know you've highlighted that client advisor relationships are shifting towards personalization, trust-based interactions. You know what's behind this change.
Patrick Spencer:Well, I think one major thing that we all know is COVID. So if you think about what COVID did, you know all of the trauma and some of the sacrifices that were just made by a lot of people. The great resignation was real. We saw people, mid-50s, that were saying you know what, enough's enough and I'm going to bring my retirement forward. I'm going to do what is in my family, or mine and my wife's or my spouse, my partner's best interest and what we saw.
Patrick Spencer:I think back to May of 2021, think about wanting to buy a bicycle, a kayak, an RV small purchase of recreation to a large purchases of recreation. You couldn't find them because people wanted out, and I think that transitioned into people also understanding I can do with my life what I choose in a good way. And so I think for advisors, that meant that people were looking at retirement differently. We have more businesses being started by baby boomers and Gen Xers than ever before from a retirement perspective, and that doesn't come without some type of planning, and so it's really the client that is driving this change in financial planning, and again, I think a lot of it is because of COVID.
Patrick Spencer:But I think the other part is just generational, that each generation is going to be a little bit different than the one before. I think the generation that is getting set to retire not just maybe some of the younger baby boomers, if you will are not looking at let's go to Florida, retire, play golf for the rest of my life. They're taking a look at well, where is my family? Maybe I'll travel and live where they are to have more engagement with them. Maybe I'll start doing my traveling before retirement while I'm a little bit younger and while I am still in a job where I've got larger amounts of cashflow coming in, or maybe it's that starting that business that I've always wanted to do. So it's a lot of factors, but I think it's generational. I also think it was a pandemic that really are leaning into the big changes.
Jim Jockle:It's interesting, I'm early 50s so I missed the bug not mid 50s and I still have the Florida golf dream. So I, I guess I, you know I need to read, I need to rethink that.
Patrick Spencer:Yeah, yeah, maybe not as much, though. You probably are going to do something else, uh, to supplement that golf game of yours.
Jim Jockle:Well, you know, it's a fascinating perspective. Uh, you know we do on this pod. We spend a lot of time on technology, but we never get into the human dynamic and factors. So that's a really interesting way to start thinking about just more than technology. Yeah, absolutely, but I'm going to bring it back to technology. So how does the platform support advisors in terms of adopting to this new trend you're seeing?
Patrick Spencer:Yeah. So what we wanted to focus in on was the conversation right, Because that's what it comes down to. It can't be about a client walking in, getting a three ring binder that's three inches thick with a 200 page plan in it, thinking that that's going to be ingested and digested by the client. And so what we're seeing advisors wanting is smaller sound bites, better visuals and a comprehensive system behind it that can give them clues and keys into what they should be talking about. So that's what kind of drove us to develop planning pages, interactive pages, the ability to do a customizable one pager enhancing our what if scenario so that it can actually accommodate up to three plan comparisons with a what if scenario underneath all of that and by what if scenario, I mean the ability to, for example I'm your advisor, Jim you step in.
Patrick Spencer:I'm like okay, Jim, here's your plan from last year, here's the plan we're proposing. But here's the plan I got a question mark on because we're going to talk about that Florida golf that you want to do, and so right in front of you, right in front of me, we can take a look and just do this comparison and, as you have things that come up, well, you might say, Pat, we're thinking about downsizing before we make the trip to Florida, or we think we're going to take some of those trips to Europe before we retire, and so it allows us to, kind of real time, say, okay, well, let's take a look at that, let's create the appropriate assets or liabilities or whatever the case might be, so that you can see upon reflection, both visually and in text, what is that going to look like from a retirement perspective.
Jim Jockle:You know it's funny. I'm going to share a conversation I had with a friend of mine the other day. I'll call him mid-50s, but we had this. The conversation was all around timing and it was when do we start using our 401k? When do you use Social Security? How do we manage taxes? Through those scenarios, not just what's my investment advice? Arguably people between programmatic investment and whatnot. That market's changed, programmatic investment and that market's changed. So it's more seems, especially as someone at my age. It's more about what is financial wellness. So where do you see the industry heading.
Patrick Spencer:Yes, so that's a great way to look at it. Financial wellness, because the plan is really the conduit. Right, that's a conduit, but it is all about the wellness of where you're at, and you kind of picked some great aspects of the conversation, right? So you've got to 401k, you've got social security. So within our solution there's a social security optimizer. So when do you start taking social security? Does it really benefit to wait two years, from 65 to 67 or possibly to 70? And so we start getting into the thought of well, what about your expenses? We know there's a 401k, jim, and we know there's a Social Security check that's waiting out there for you. But let's talk about your expenses. Are you going to be trying to downsize those expenses to offset the potential lower income that you'll have by leaving your job and so forth? And so all of these different factors there's tables, algorithms, charts and a lot of stuff that can be kind of boring to the client. What we try to do is give us the input and then let us give you the output visually, and then, if you want to take a look at the narrative or the text that's behind it, take a look at that as well, to be able to have those conversations Because, from a consumer perspective, what we want to really try to get out and what we've heard from our advisors say in terms of the conversation they're trying to have, is what is it that you want to do?
Patrick Spencer:What is it that you want to accomplish, to have, is what is it that you want to do? What is it that you want to accomplish? What type of legacy, both living and, obviously, past, do you want to leave or be a part of, with your family? And the consumer may not know that they need to optimize social security. They certainly won't know. If they've moved around to a couple of jobs, let's say, and they have a couple of 401ks, but then they have some self-directed IRAs, they've got multiple sources of where that income could come from. Well, what's the right order to draw from that? They don't put themselves in a tax liability situation. So now we're taking something pretty simple Most people do have a 401k, most people will have social security, most people probably have separate investments, but then how do we draw that down to make sure we don't get ourselves into a tax situation? So even that simplest scenario is going to lend itself towards.
Patrick Spencer:All right, let's start talking about taxes and how we want to withdraw these funds. And should we convert some to a Roth conversion, which is a very popular conversation going on right now, to a Roth conversion, which is a very popular conversation going on right now. So, to your point, lots of variables going into the scenario when all the client wants to know is when can I retire, how much will I have and will I be able to do these things I have laid out for my goals. And can I pay my greens fees? Yes, absolutely your greens fees, for sure. And if you're not as good of a golfer like I am, maybe some of the wages I have to pay my partners and friends I'm playing with.
Jim Jockle:You know it's funny. I love technology. I'm always blown away by what's available. I'm going to give a shout out to Microsoft, which I don't think anybody ever does. But I was looking up some equities individual equities on Bing the other day and it was the coolest thing. They had this new tab called projection and basically they were doing option prices, black-straw, model, money, color pass and saying where the equity price will most likely come out over the next six to eight months will most likely come out over the next six to eight months. And I was absolutely blown away because you know, unless you had quants and you know some sophisticated software tools, you never could get anything like that. But you know, I guess the argument is technology is becoming increasingly vital, especially in financial planning.
Patrick Spencer:So you know how is MoneyTree leveraging innovation to help these advisors work more effectively while maintaining that personal connection, are what I call specialized planning tools. So to your point, getting from point A to point B, here's what I make, here's what I'd like to retire with. That's some present value and some future value, type calculations and so forth. But once we start digging in, the innovation really comes in the education, the social security optimization, the Roth conversion, optimization and conversion and really these types of tools that can help drive the conversation to cover off in these areas. Tax planning is obviously a very complex process, and so having tools that mimic tax returns, that can then take that information so clients or advisors, I should say, can do tax loss harvesting and do some other things with regards to tax liability issues or concerns. Then you have estate planning, which is very complex, and so we have a module that does estate planning. It works best when the beneficiaries are humans, right? So there's a lot of estate planning tools that are out there and ours does well when the beneficiaries are humans. When it gets into beneficiaries being corporate entities or charities, things like that, that's where we would advise an advisor to take a look at other tools that might be on the market, but the point being is, we're trying to take the advisor as far as they can go and as comprehensive as they can go with a client. That goes all the way up to ultra high net worth. Because there's a lot of different tools taking place in the marketplace.
Patrick Spencer:Right, there's a lot of innovation. If we take a look at the Kitsiscom advisor tech map, for example, back from 2018 to today, we see a ton of innovation, a ton of innovation, and it's good innovation for the industry, because it's either solving a problem or it's creating competition for companies like us to make sure we're doing our best and making and putting our best foot forward on these things. But, as these tools come up, if they are siloed, if they are not talking to one another without integration, then that innovation also leads to tech bloat or it leads to an overwhelming tech stack that an advisor has to manage and a solo practitioner advisor has to manage just as many, if not more, applications than an advisor that works for an RIA that has 500 advisors and the tech stack is more or less there and made for them. So, that being said, advisors are deep into the tech, but they also are looking for efficiencies within that tech stack as well. So the innovation is incredible and AI is adding to that.
Patrick Spencer:I know we'll get that into a moment, but it's driving great innovation, solving great problems. But then we do have to take that step back and say, okay, where's that efficiency going to come in for the advisor as well. So I think it's two products I think it's innovation and I think it's efficiency.
Jim Jockle:So what would you say? The biggest threat is, though, to the traditional financial planning model. Is it competition? Is it technology? Is it changing client expectations, dealing with the millennials and beyond?
Patrick Spencer:Yeah, great question. I think it's a combination of technology with a main focus of AI, and then the competition and the technology and the AI. You know, I was just at FutureProof a few weeks ago and they had a demo drop, if you will, kind of like we're going to talk a little bit about the end where seven companies got up there and they talked about their products, how it can help the advisor, and what innovation and what AI is doing is incredible. They had tools that would help prospecting. They had tools that would help with presentations. They had tools that would help with combing through tax returns and understanding the right questions to ask. All of these things are helping advisors really generate the right conversation, having the right dialogue with their customers. So all of that is there.
Patrick Spencer:We've got to lean into it by we MoneyTree. We've got to lean into and assess this to say, okay, what's really bringing value, what is near and dear to our core, what's ancillary and what partners should we work with? So, as an example for financial planning, we need to make sure that we can help advisors with two categories. One is termed advice engagement and the other one is client data gathering. Basically, I meet with that client. How do I get the data I need into the financial planning tool as seamless and as efficient as possible? And then what I want to engage with the client.
Patrick Spencer:In addition to the digital and interactivity we're providing, are there any other tools that can make that meeting go really well? Partners that we work with on that On the presentation side, there's a company called the Meetings Hub, and then, when it comes to more or less the I'd say the client, some of the client data gathering and some of the knowledge integration that we've done with FP Pathfinder. So we're looking for those tools that we can best integrate with, that we can best partner with without necessarily leaving our core, because from a competitive perspective we know we've got to be able to provide these tools to our clients.
Jim Jockle:So, hoping that that answers your question, it's funny, I know my producer, emily, has been known to go down TikTok rabbit holes and I've stumbled across a couple on my own and I've stumbled across a couple on my own and I guess different generations think about money differently. They think about corporations differently. How do you see the role of financial advisors evolving in the next five to 10 years, or is it basically wait till they grow up, wait till they get enough net worth and they'll just fall in place?
Patrick Spencer:Yeah, no, no. So you know some of the research. For example, ycharts did a survey back in February of this year, but the data was from 2023. What they found is and it admittedly a small sample size I think it was between 700 and 800 respondents but I think the data showed some pretty incredible things. For example, 54% of the consumers that responded switched advisors in 2023.
Patrick Spencer:12% left robo-advising for a human advisor, and the essence of the why behind it had to do with lack of communication, lack of relevant content and lack of understanding the objectives of the client, and that's a little bit separate from communication. Communication had to do with frequency and then the engagement had to do with kind of the depth and true understanding of what the client wanted. So, even if those numbers are off 10, 20% there's something going on there to your point, and that is from a younger generation who we thought would be all about real world advising and do it yourself. They do want that, but what we're seeing more and more is they want experienced individuals helping them. Now, that doesn't mean that they're over forward. It just means they want to deal with people who can take them where they want to go.
Patrick Spencer:And so we're seeing at a younger age, that there's opportunity for more complex planning than what may have been originally thought, maybe five years ago. Exit, their needs, wants, desires, are different than what we thought they would have been maybe five or six years ago as well. All that's culminating into a great opportunity for advisors and we're actually seeing in terms of the advisor population. We're seeing new influx of new advisors that's now starting to match with the number of advisors that are retiring on the other side of it. So it's really an exciting time from our perspective because we've got really a client base from you know, say, mid twenties to upwards mid sixties, mid seventies that wants engagement, they want relevant content put in front of them, they want good communication and they want things that are relevant to what it is they're trying to do. So if I'm an advisor, I'm like all right, let's go. Let's try to separate myself from the pack with the type of experience I have and really drive my business forward.
Jim Jockle:So what impact do you see these technologies having on financial planning, and could AI-based advisors become a mainstream option?
Patrick Spencer:So, uh, ai is going to blow the socks off the financial planning world. It really is, and it will start with the prospecting. You know the AI. I saw it future-proof, with the ability to say, okay, I'm an advisor. Let's say, I'm a pilot and I come from a family that owns a business. So I now want to prospect those people who are pilots and own a business, or maybe there's an, or that are between 30 and 45, that live in a certain area and have a certain income.
Patrick Spencer:There are tools out there that can get close to what you're asking for, and now you've got your story down. So, instead of trying to come up with a more general story and cast a broader net to bring people in, you now can go directly to that crowd that you're like. I've got expertise here. So for advisors, it's a great chance for them to utilize AI technology on this prospecting side. On the analysis side, you think of Alexa and, yes, she just turned on because I said that being able to take a financial plan and upload it, if you will, into a secure environment where an individual would have the ability to ask questions of their plan, uh, all of which get recorded and then sent to the advisor so they know what the client is thinking about, while the client is asking questions about their plan that just got delivered to them Not there yet, but possibilities technology we know that that's, that's certainly there, yeah.
Patrick Spencer:Uh, folks that want to understand what to do in retirement Uh, we've come across advisors that are now dealing with individual and couples, uh, that are starting their own charities and and doing different things again than they thought they would have, and all of it was because they were able to kind of formulate a plan, an idea, research through AI.
Patrick Spencer:So I see AI permeating from the time the advisor says I want to target this prospect to bringing that prospect in building proposals, modeling portfolios, having the meeting, recording the meeting, summarizing the meeting, loading it up to CRM and then beyond that, on the analysis, on the planning side, if I'm putting all of this data in and I'm using my experience to know what questions to ask, what if I have a mini LLM that can learn my expertise, my questions, and start summarizing it for me so that I can then move to the next thing that I might want to be asking? So I see I really turning our world in a good way to have better conversations, deeper conversations, and truly meet clients where they're at, regardless of where they may think they're at as well as well.
Jim Jockle:You know, patrick, one of the things that has struck me in this conversation is your clients and their clients are clearly first in the way you speak about them. Is that a money tree, okr? Is it a?
Patrick Spencer:philosophy. You caught us. Yes, it absolutely is, in fact. But it starts I have to admit it starts at our parent company, accutech, and our owner, adam Unger, from the standpoint of our mission as a company is to make great things happen for other people, and that permeates our culture. And it's no better fit for wealth management software helping trust companies engage their clients. And it's no better fit for wealth management software helping trust companies engage their clients. It's no better fit for a financial planning company that's trying to help advisors grow their business, have better conversations and ensure their clients meet their financial objectives.
Patrick Spencer:We may not be talking necessarily specifically about Money Tree's future, but I'll kind of lean into that a little bit. We want to stay in and around financial planning and by in and around I mentioned we'll partner with advice engagement and we'll partner with client data gathering outside of what we'll do on our own. But when it comes to financial wellness, when it comes to budgeting, when it comes to understanding things you could do, start a business, we're definitely going to lean into what are tools that can help the advisor not just with the plan, the algorithms and calculations, but the results that they're seeing, that provide the opportunities for the customers that they're meeting with. So just a little glimpse in terms of our future.
Jim Jockle:Well, you know what, patrick, regardless of your insight of where the industry is and going and the changes I hope our listeners really take away, it's about putting the customer first and their clients right. I think you know. Key takeaway for me today. So sadly you know, we've reached the final question of the podcast. We call it the trend drop. It's like a desert island question. If you could only watch or track one trend in the financial planning market, what would that be?
Patrick Spencer:Well, it's going to line up with what we just talked about and it really I won't call it behavioral finance, but I will call it the consumer behavior, because I think, as you take a look at behavioral finance, well, first take a look at AI, right, and then take a look at behavioral finance, which is really trying to understand patterns of a consumer behavior. But one of the reasons why behavioral finance is becoming so popular is because advisors are challenging themselves to become better sales people in terms of understanding their clients. And so behavioral finances from my perspective, having 30 years in the industry and over 20 years in biz dev it really is about how can I have a better sales experience with my client without making them think they've been sold and they walk away realizing they've truly been helped. So I think AI with behavioral finance, across sociological patterns across our country and really understanding where are individual consumers wanting to go, how do they define legacy, how do they define dreams and goals and objectives, and then how are they motivated to actually achieve them, and it's going to be really interesting to see how the AI technology really tries to hone in on that.
Patrick Spencer:Again, I'll go back to FutureProof, just because it was the most recent conference, I went to A lot of things on behavioral finance and there's a lot of assessments, surveys, tests whatever you want to call them out there that the advisors are taking to understand who they are as they sell and how should they communicate and engage people. But the general population is starting to lean into that as well, like, why do certain things stress me out? Or when I have a bad day, well, why exactly is that? Were there certain things that took place, and so forth. So the consumers are leaning into that as well and I think it's all good for that self-discovery. But I think the AI and the technology and the ability to bring the advisor and the client together and have great conversations I think it's going to be pretty impressive here in the next few years.
Jim Jockle:Well, I hope my advisor listens to this today. Patrick, I want to thank you so much for your time, your insights, your knowledge, and thank you so much.
Patrick Spencer:Well, jim, thank you very much. It was a pleasure being on your show and look forward to coming back one day. Excellent, thank you.
Jim Jockle: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.