Leveraging APIs as a Strategic Advantage with Brian Ross

Jack Sharry: Everyone, thank you for joining us on WealthTech on Deck. Each week we talk with industry executives about their strategy regarding the future of financial advice, and we pay particular attention to what I call the confluence of digital and human advice. So today I’m pleased to be joined by Brian Ross. He’s the CEO of Flyer Financial Technologies. You may notice fix flyer, they recently did a little bit of rebranding, maybe we’ll hear about that flyer is the leader in trading technology that brings together major custodians and brokers and fintech firms through API’s, Brian will fill us in on that in a moment, I’ve had the pleasure of speaking with Brian at conferences over the years. And I’m very pleased he’s going to join us today to talk about his business and his team is built, they seem to be on a roll. So Brian, welcome. Good to have you on the show.

Brian Ross: Great to be here, Jack, I really appreciate it. And by the way, I love that LifeYield is helping families manage wealth. To me, this is really personal. My father, my grandfather, my great grandfather, all involved in banking, and investment management. And I care deeply about carrying on their legacy and providing value to families trying to create wealth.

Jack Sharry: That’s much appreciated for our audience. I did not pay Brian to say that. So Brian talked about your business when he explained what you do because I know you bring great efficiencies to the to the marketplace when you talk a little bit about you guys get you guys do.

Brian Ross: Yeah, great. So think your intro was pretty spot on API’s and partner integrations very important to us. integration to vendors and brokers and custodians, you know, we kind of in this regard aspire to be kind of like a plaid for wealth tech, rather than banking and payments. So we help partners like Tamarac, Orion Riskalyze, Morningstar, Envestnet, and others rapidly assemble, build and use sophisticated trading tools so managers can trade faster with their custodians and brokers. So in addition to these integrations and APIs, we have trading screens for portfolio trading and compliance. And these sit on top of our API’s and the fire training network that connects to hundreds of custodians, brokers and partners.

Jack Sharry: So talk a little bit if you would about this whole thing about API, that’s a term that our friends on the tech ops side have talked about it for years, but now people like us are talking about it. Why Why does that matter? Why are they important?

Brian Ross: Yeah, that’s a really good question. And really important. Listen, in the old days, you had these monolithic systems that were pretty closed. And they, you know, said they offered API’s, but it was locked in tight API’s and integrations were not easy. In today’s world API’s and open platforms are really important, so that you can assemble best to be providers. And the API’s for us can be rest API’s that are really fast to assemble on, you know, web screens, they can be, you know, API’s directly into our network through through either rest or web services, or dotnet, or FX, there’s lots of ways to leverage our trading expertise and our connectivity. So, you know, we consider it strategic to sort of the future of wealthtech. It’s certainly strategic to the future of banking and other industries you see with firms like Stripe and plaid and others. So, I mean, we’re all about API’s and the tech stack to facilitate API’s without this sort of monolithic toolset, I think those firms that still operate that need to be considering unbundling and offering services out via API’s, so you can get sort of best of breed, and they can, in fact, get a larger set of clients as well, if they do that.

Jack Sharry: Yep. Yep. For audience I’m gonna explain case you’re wondering what we’re talking about, around API’s, what does API stands for? Again, I’ve heard it a million times.

Brian Ross: Application Programming Interface.

Jack Sharry: Basically, it’s a way it’s the connectivity of all the capabilities of a wealth manager or a FinTech or whoever, it’s way to connect all the dots, it’s a way to to take the efficiency of what flyer does the efficiency of what LifeYield does, the efficiency of what Riskalyze does, or Orion or whatever their efficiencies are and makes it faster, better, cheaper. So who wins is the investor and the advisor in the firm? Right? Take get there, right?

Brian Ross: I think that’s right, you know, you know, when you can put best of breed providers together, people that specialize in a specific area, but easily integrate to each other that can be like LifeYield and Flyer financial tech, as well, you know, or some of the firms that have previously mentioned, then you can, as a manager, really sort of assemble a toolset or even as a technology provider. You can assemble a broader scope toolset very quickly. So that’s that becomes strategic.

Jack Sharry: Yeah, so our audience has heard a lot we talk a lot about the whole concept of the Unified manage house Hold where you’re taking multiple accounts, products holdings, multiple FinTech capabilities, what their capabilities, trading, accounting, and just all, there’s all these different elements that comprise your image, which basically is a way for a wealth management firm. I’ll use Morgan Stanley as an example. Many are familiar with what LifeYield and Morgan Stanley have done. Basically, what they do is they have usually for data aggregation, they had money guide Pro, and then they developed their own GPS, financial planning software, that’s another capability, they have their proposal system, which is an in house proposal system. LifeYield does the the tax optimization for asset location and down the road income, you guys do the trading, I keep going, there’s on and on of rebalancing and all the different elements around managing a household and that kind of activity occurs. And I’ll use a specific example, because I’m familiar, but I’d like to hear your version of it for flyer with us. Basically, we have no client identifying information, but they want to know when they’re looking at a set of numbers, they’re looking at an account with multiple accounts, they asked us a question called How do I get the best asset location? And how much more money will the client have as a result? So they have the user experience, they have the client interface, we just answer a question, sophisticated question, typically. And then we give an answer in a nanosecond, and it shows up with a client statement. So that’s, if you’re wondering what an API does, it’s that way where we can work with the firm, provide our secret sauce, they can provide greater value to the client. So talk a little about where does fixed fire or fire as it’s called now? Where does that all fit in?

Brian Ross: Yeah, so we’re all about trading smarter and providing tools to do that. So one of the things I would say is maybe by way of example of an API, look at what we did for Riskalyze. So Riskalyze, has got the Risk Number, they had a rebalancing tool that they assembled, and it could create lots of orders, those orders would be downloaded in a file and uploaded to a custodian site. And when the orders got executed, they’d be downloaded. And then, you know, the executions and the allocations will be sort of, again, loaded back into your platform. So, you know, it was a very manual process. And what what we did for them was we said, You know what, let’s use our API, use our trading API. And it took them less than a couple months, right, three months. In fact, it took them to actually roll out their own trading platform where we could take all those orders from all those accounts, block them up by side and symbol, get them executed, wherever they want. It could be multiple custodians or brokers, and then get the allocations back and get them, you know, out back into the platform. So that all happens, you know, in a matter of a second, as opposed to manually downloading and uploading files, and then manually getting those executions back and the allocations back, it’s a very manual process. So the API to do that is is our copilot API. And we were very proud of the fact that we helped Aaron and his team rule out trading in three months, which is sort of unheard of, it takes a long time to develop a trading platform. So that’s, that’s one example of how a vendor used our API to rapidly rollout, a tool that helps our clients. There’s a real problem, Jack, when you’re slow, with regard to you make your portfolio management decision that you want to rebalance or swap this for that. And now you’ve got to actually get the execution done. Are you going to actually take the time to download it? And then push it to a custodian, wait for an execution to come back? And then? Or can you just click a button and go, so this is a one click Get it done?

Jack Sharry: Yeah. So for those, I’m thinking of our audience that are what I refer to as the architect builders of platforms that major firms around our industry, all of whom are moving this UNH direction. And there’s lots of capabilities that we’ve already highlighted a few. But the idea is to make it all work better, faster, cheaper, smarter, and all to one that is improving outcome for the client, and the advisor and the firm. It’s that win win win, when you do it as efficiently and as cost effectively and as smart as you can. So what we’re talking about here really is each piece of this ecosystem, each element of that if it’s faster, cheaper, better, that translates into a couple of things, when you can quantify the benefit. least that’s what we do. And I know other risk sides with Riskalyze. And Aladdin as a version of this and in hidden levers has a version of this in terms of the risk piece. The idea is that if you make the risk, faster, better, smarter, if you make the tax, that’s what LifeYield does that faster, better smarter, if you do the trading, which way is what you’re talking about Brian faster, better, smarter, that starts to add up to real money. In other words, yeah, we’ll talk a little bit about that, because that’s clearly you’re part of that ecosystem when we’re all in it together, so to speak, but working collaboratively.

Brian Ross: Yeah, to me, there’s sort of three aspects to smart trading. One I kind of touched base on you want to shorten the time from your investment decision, to the implementation and actual tweet execution. That’s got to be down to like a second, right? That’s what it should be, right? Otherwise, you’re in a implementation shortfall situation where it takes a long time to get your, your strategy implemented in a volatile market that can really matter. So no more manual uploads to custodians and downloads of executions that shouldn’t be happening anymore. It’s 2021. For god sakes, it’s always 2022. So that’s one thing. There’s also we help identify opportunities to get better prices. So you might have less liquid stocks, you might want to trade them away for better pricing. You might want to leverage, you know, all those to do that algorithm like trading is something that might give you a better average price. Or, you know, there’s lots of different algos out there that brokers provide and taking advantage of them will get you a better price. You might want to avoid market orders, unless it’s a super liquid stock. And it’s just more important just get done really quickly. So all those things shortening the time from investment decision limitation to identifying opportunities with illiquid stocks, and sort of avoiding market orders and using sort of algos will lead to, you know, smarter trading and results for the client. That could be as much as 25 to 75 pips per trade, depending on how liquid, you know, the security isn’t depending on how volatile the market is.

Jack Sharry: So again, expanding on this and also making sure our audience is following along, which I’m sure you are, if you can add 50-75 bips is Brian just highlighted if you can add in our case, if you can improve overall outcome of accumulation income by a third over time, if you can improve the risk characteristics in such a way that you’re improving and can quantify the benefit, it leads to what I refer to many people use the expression of next best outcome or next best action, or next best trade or next best whatever. In other words, if you’re going to determine the next best thing to do, it’s a buzzword, it’s becoming like aI people just like to talk about it. I don’t know what it means exactly. But a next best action presumes you’ve quantified the benefit of all potential actions. So then you can determine the next best thing to do, which is to adjust risk is to address taxes to trade smarter, you know, whatever it might be to do a Roth conversion, what is the next best thing but that presumes qualification. And because of API connection, I’m trying to draw it all together. So people get this sort of ecosystem concept as more than just some buzzwords. But as you tie all this stuff together, you’re talking about real money, that in terms of improving outcome that you can quantify the benefit, and then setting up and telling the client, here’s the next best thing to do. And here’s how much more money you’re going to have as a result. That makes sense.

Brian Ross: That makes perfect sense to me. Yeah. And that’s what the smart vendors are trying to do for for the clients.

Jack Sharry: Yep. So we’ve talked about what collectively we’re working on in our industry now. Where do you see all this going? Where’s this headed? What does this look like down the road?

Brian Ross: Yeah, I mean, to me, listen, and blessings I learned at BlackRock, you know, Tech, Tech Tech, use it for strategic advantage to help your clients. So this can include everything from the cloud to API’s to personalization. And if you’re not doing these things, you know, you may be missing the next train, you know, to Clarksville, so it’s this, you gotta be old enough to know that one.

Jack Sharry: I know it.

Brian Ross: So, you know, tech and API’s personalization that affects all facets of our business, all facets of our industry, best of breed platforms should be easily able to integrate. We touched on this a little bit monolithic tech platforms need to transition to more modular dynamic tech platforms that are highly specialized unbundling these monolithic platforms and providing access to services via API’s is, is now strategic to our industry, the entire lifecycle wealth management is undergoing up people from Financial Planning and Investment guidelines to portfolio creation, on through trading, accounting reporting. So it’s really an interesting time. And we think, you know, tech leadership, from firms that really understand what can be more efficient, and what can help industry becomes really strategic.

Jack Sharry: Yeah, yeah. Well, that’s the thing we’re seeing around the industry, from where we sit, I’m sure you’re seeing the same. And that is firms have caught on, there’s a fair amount of confusion as to where to start and how to prioritize, or at least we find some mistaken notions about what what they should do. But as I was talking to a colleague, we will know who gets around the industry, he was highlighting says, you know, wherever I go, these days, I’m hearing this concept of unified manage household, which is really about managing it all together, which you couldn’t do, frankly, until very recently, just because it’s so complex. And as you described earlier, the upload the download the back load the front load, it’s just it was a lot of time going back and forth the data now it’s disappeared seconds.

Brian Ross: Yeah, that’s right. And I think when you look at sort of the direction of the industry, and you want to provide, you know, support for all workflows and asset classes, equity The options fixed income alternatives are these things, this sort of idea of ubiquitous portfolio trading that is highly personalized, is really important. So it requires multi asset toolset and features like maybe personalized direct indices, customized ESG sleeves, these things become important to households who want a more custom, you know, and personalized approach.

Jack Sharry: Yeah, yeah. Actually, you may not go back as far as I do. But I remember in the 80s, just a brief history for those who remember or care, or retail investing started with a CMA when interest rates were at 80%. And money poured out of banks into the brokerage firms. And then soon after 18% became 1769 down, they flowed into mutual funds, and mostly bond funds, if you remember way back when that’s kind of where it started to that bond crash who have we actually through the early 80s, it was it was mostly, especially government backed bond funds, because it sounded like it was guaranteed or something which that’s where savers became investors after they got smacked a few times on that. But the point is, there was a pretty simple stocks and bonds, cash stocks or bonds. And then if you remember this in the in the mid 80s, growth, and value is sort of a new concept, you know, and what you’re describing this sort of personalization, we’re down to print down into the minutus ways of, of personalizing a portfolio because of technology, how far in advance so and you can do that, from a risk standpoint, you can do it from a tax standpoint, you can do it from a cost standpoint. So you know, all the all the ways you improve outcome beyond beyond market performance, it’s pretty fascinating how far we’ve come from stocks, bonds, and cash to growth in value to Dow, you know, the minute is splitting of securities.

Brian Ross: Ya know, it’s interesting, it’s a, it’s a great time to be working hard on these on these changes.

Jack Sharry: So I heard you say BlackRock. Sounds like you spent some time there a little bit about your background I do to get into this business.

Brian Ross: Well, you know, I mean, there’s a little bit of history here. So I actually am it’s a little bit of an oddball in some ways I started at as an engineer, you know, I worked at JPL and NASA for almost 11 years, right on Voyager and Galileo and Hubble Space Telescope. And, you know, in 1995, I took my resume to BlackRock, and they actually loved that, you know, the interview, they love my maths and tech background. Yeah. So I started, I started a blog for you maybe five to 20 billion in AUM and 120 people on a single floor today, you know, they’ve got whenever 9,000,000,000,030 countries across 70 offices, I’ll tell you a couple of things real quick. You know, they always have strong emphasis on using technology for strategic advantage, on risk on everything that you do to become efficient. So I feel lucky that that was my first introduction to the industry and I’ve huge debt of gratitude to BlackRock and there, I learned a lot there. Yeah, that’s management’s and the importance of tech.

Jack Sharry: Yeah. And we’re still big proponents, as you know, around the whole tech, it’s, it gets harder as, as things go on, and you get bigger.

Brian Ross: It does. So credit to them for the changes in the way they’ve managed to they still have a lot of senior people there that I know from time ago. And it’s really, it’s really impressive what they’ve achieved. You know, the stock came out of 14. I don’t know what it’s trading at today. Eight hundred and 50.

Jack Sharry: Wow. Yeah. And I’m a fan of Larry Fink. I think he’s really done a brilliant job. Meet, we connect with them. Actually, at Morgan Stanley, the retail side, they use Latin and they use us for tax. And then there’s another firm we’re working with another big firm people would know they’re entertaining working with BlackRock and us because basically, when I look is anytime you make a risk adjustment, not only do you have to do a trade, but yeah, there’s a tax consequence, just what happens every time. So if you’re gonna trade for risk, which is smart, then you better be pretty smart about what you’re gonna do about tax. That’s just sort of how that I refer to this flip side of the same coin.

Brian Ross: Yeah, you know, it’s interesting you go back to when I left Blackrock around 2003. And I remember even at that time, right, this is I think, pre MLM, the Merrill Lynch and BGI deals and all the other deals I’ve done. Berkeley, Larry, Larry would be you know, he would have lunch with John Mack CEO of Morgan Stanley. He’s not there anymore. But yeah, he will come back and he tell a lot of the staff you know, how important wealth management was, yeah. And how we really need to focus on you know, what the direction of it and that’s what led to the emblem and the BG ideals is his belief in the in the future, and acceleration of wealth accumulation for Americans and internationally as well.

Jack Sharry: Yeah, yeah. No, very smart. Very smart. And so after you left BlackRock, how did you wind up at Flyer? Talk about your journey there?

Brian Ross: Well, I one of the things I did at Blackrock was build up a software company called trap that specializes in commercial mortgage Back securities and commercial loans and pipelining. And we had a big deal with Bloomberg at Blackrock had control and I built it up, I helped build it up with some very talented people a trap. And after three years, I left and after five years, I was back at BlackRock, and, you know, Trump was sold, and I had a nice little payday and, and I took that and decided to hit that hit the beach, or the golf course, or whatever. I discovered, I wasn’t a very good golfer. And one of the things, one of the things I one of the partners I was golfing with was my friend George, who had left Blackrock in 97 or eight, he started, the first electronic trading software company was called javelin, and he successfully exited for like 55 million. And so he was on the golf course with me, and we were horrible golfers he’s a better pilot than me, but I couldn’t drive it further. Anyways, you know, he said, Listen, let’s, let’s, let’s do this again. And let’s get started. And so George pulled in me and many Prager are very talented CTO, who came from Bloomberg and JP Morgan in 2005. You know, we started and our belief man is still our belief today. And as the technology is rapidly changing the landscape of our industry, tire ecosystem is shifting the way people have been taught to work, it’s perfectly suited to a world that no longer exists. So what can we do to kind of help them?

Jack Sharry: Look at us, I’m sitting in my house, I assume you’re in your house. And I joke, I have a home in Vermont, which I spend most of my time lately. And I, you know, I hang out with the guys that plow the streets. And I talk to people like you or I flyers at Black Rock and Wall Street. It’s just yeah.

Brian Ross: It’s wild. World has really changed, he shouldn’t have done that. Even 10.

Jack Sharry: Yeah, that’s great. As I refer to my home is on the Mad River. And we’re in Vermont. And I refer to it as World Headquarters. It’s just me and my kitchen table and looking at it the Mad River, which is pretty sanguine at the moment. But in any event, so this has been fun to chat where he tried to get our podcasts in and around a half hour or so. So as we start to wind down here, what maybe three takeaways in terms of what you’ve covered, you’ve covered a lot of ground here and doing a great job of flyer. So Ted would get three key takeaways. Well, today, and maybe tomorrow.

Brian Ross: So yeah, to me, three things that differentiate flyer, and that we believe in smart trading, which we talked about, shorten the time to investment decision annotation, no more manual uploads, and things like that. So get better pricing, right, get better results. And so in addition to sort of smart trading, I would say you should be able to do sophisticated portfolio trading quickly. And it should be a multi asset capability. So it’s important to be able to handle the workflows of other assets, other asset classes, whether it’s equity options, or fixed income. So we believe that ubiquitous trading in all asset classes is important. And alternatives should be included in that and personalization of portfolio should as well. So I also have this view that parts of the ecosystem are commoditizing faster than other parts. So it may be that portfolio reporting or accounting, which is often provided by custodians is starting to commoditize, maybe a little bit, but you also have a lot of investment, a lot of competition over the last five years and things like CRM, data risk and planning and model hubs. To me, this suggests a pretty crowded field that could start to commoditize as well. So you know, firms in these areas need to, I think, think about what they can do to differentiate and to lock in partnerships via API’s and longer term deals. So for any of these firms, or for flyer that, you know, it’s good to be paranoid, but I currently sense that we’re in a pretty good spot, our focus on multi asset portfolio trading and our multi asset trading network. And our emphasis on API’s is well positioned to create new partnerships, deepen existing partnerships, and events move up market and asset management.

Jack Sharry: Well, I’ve been impressed, observing from the sidelines. So good job. Thank you. So one of the things that I always enjoy about these podcast conversations is not only hearing about having a strategy discussion and just talking about the business at large and like finishing each other’s sentences and all but my favorite question is so what do you do outside of work for fun, or you’re particularly passionate about sounds like you’re lousy golfers so it’s maybe not Yeah. What do you do for fun or you’re particularly passionate about away from work?

Brian Ross: I mean, family is important to me. I’ve got two young adult kids as well, great wife and trying to you know, help all of them do as well as we can realize important but the one thing I would say that’s unusual, really unusual about me is I have a couple of dear friends In New York that we’ve taken on marathon swimming as sort of a pastime, so we call ourselves the machine men. And we’ve done seven of the biggest ocean swims in the world. So the English Channel as a relay swam from Ireland to Scotland as a relay. Honshu to Aikido in Japan from the North Island of New Zealand to the South Island. We’ve done seven of these great swims and, and more recently, we started doing some lakes swim. So we did Lake Tahoe, South Shore and incline village we did Lake Ontario, we did Loch Ness. So we still have a couple more that we have on our map, including Lake Taupo in New Zealand and a few others. So that’s a pretty unusual thing.

Jack Sharry: Well, you know, we’ve had 30 Plus episodes of the podcast. That’s the coolest one so far, I think. I can’t say the least the most unusual, but I have to ask all those all those bodies of water sound cold, is that you? Oh, God.

Brian Ross: So we’re talking, you know, listen to go through the North Sea from Ireland to Scotland. Wow, water temperatures like 40 or excuse me, 54 maybe degrees Fahrenheit.

Jack Sharry: Anywhere in a swimsuit or ever sweats. Everybody call it out?

Brian Ross: Well, I wear a swimsuit.

Jack Sharry: A wetsuit, or wetsuit or just.

Brian Ross: No, actually you can, but it puts you in a different category. So, you know, they it’s considered cheating, you know, because it helps you float you actually faster in a wetsuit. So we deal with just, you know, cap goggles and swim trunks on so.

Jack Sharry: It is cold, right?

Brian Ross: I might do very cold. So you know, so I mentioned the North Sea. We’re talking 1000s of Lion’s Mane jellyfish everywhere and hypothermic conditions. So my friend gets out of the water right from his swim or the fin goes in, I’m getting ready to go in next. And we had a medic on board. He puts like the thermometer, my fence mouth and after me, he says, Well, good news. Bad news. Good news, great swim. Bad news. You’re technically dead. Your body temperature is like 89 or something. So it was like, holy crap or so we were wrapping them up and hugging them and put them in sleeping bags and all this stuff. So yeah, it’s a little.

Jack Sharry: I have to ask, Where’s the fun? What’s the fun part of this? It’s a long swim in water where you could be considered dead to explain this to me.

Brian Ross: Well, listen, there’s a little bit of a number of things, you know, wanting to honor our fathers. My dad was a Olympic water polo player, those you’re wanting to inspire our kids. Our kids went to school together the three of us, you know, wanting to see the world and have a little adventure. 

Jack Sharry: So I like it. I like it. I’ll never do it. But I like it.

Brian Ross: Jack, you could, you could float it. Float it just right.

Jack Sharry: Well, this has been a lot of fun, Brian, I’ve really enjoyed our conversation and out to our audience as we looked at close here. Really enjoyed talking to Brian. And if you’ve enjoyed listening in to what we’ve been talking about here, please rate review and subscribe me and or share what we’re doing here at WealthTech on Deck, we’re available wherever you get your podcasts. Thanks again, Brian. It’s been a real pleasure. I can’t wait for our next conversation.

Brian Ross: Yeah, thank you, Jack.