Execution, Transformation, and Democratization of Wealth Management with Mike Lee

Jack Sharry: Hello, everyone. Welcome. Thanks for joining our conversation on this week’s edition of WealthTech on Deck. As a student of the business and as an industry observer, I have long admired EY, Ernst & Young, as we used to call it back in the day. I’ve enjoyed working with them as a client and with clients we share in common, and I’ve had the good fortune of getting to know some of their leaders over time. In fact, Nalika Nanayakkara and Charles Smith have both been on our podcast. There have been many others I’ve had the pleasure to work with at EY. This week, we are joined by another EY leader. His name is Mike Lee. Mike is the global leader of wealth and asset management at EY. Mike is responsible for the execution of EY’s strategy. He travels the world to help clients address new questions, devise and execute smart strategies, and optimize their capabilities as they navigate these times of exponential change. Mike has over 30 years of industry experience and has served as the lead client service partner to many large, well known traditional and alternative wealth and asset management firms. Today, we’re going to talk with Mike about what he sees from his unique vantage point. Mike, welcome to WealthTech on Deck. Glad you’re here.

Mike Lee: Jack, thank you. Happy to be here today.

Jack Sharry: So, Mike, let’s start with how this all this started. Please, if you would, share with your, our audience your background and career journey, how did you get started in this business, and tell us little bit about how your career has evolved?

Mike Lee: Well, thank you, Jack. And as you mentioned, I’ve been in the industry over 30 years. In fact, I’m in my 34th year now with EY so I’ve spent my entire career within the EY organization. But I’ve had numerous responsibilities and different types of roles over the you know, I’ll call it 33 plus years now. I started off I’m from the Midwest part of the US and started with the firm and spent about six, seven years in the Midwest. But then actually, in the late 90s moved out to New York on what at the time was intended to be a two year secondment. And well over 25 years later, I’m still based in New York. So it’s been a very interesting career. And I will tell you that it’s probably the best move I ever made was making that transition out to New York, it’s allowed me to do a number of different things, including traveling globally, as you mentioned upfront, getting to see a lot of different organizations, a lot of different cultures, a lot of different offices, and really have had that good fortune of being able to stay with an individual firm from which I truly and dearly loved the culture. But it’s allowed me to have 9, 10 rather significant career changes over this timeframe. I’ve spent most of my career in financial services, and specifically within wealth and asset management. But I continue to operate not only across wealth and asset management, but across broader financial services. Even more broadly, outside of financial services, as we’ve seen so much I’ll say elements of convergence that are happening in different parts of various sectors. So that’s a little bit of my background.

Jack Sharry: Gotcha. So obviously, we’re in a, in a moment, in a period of, as I said earlier, exponential change, it’s everywhere. I’d like to zero in on what you and your EY colleagues are focused on. I guess we could call it foci. There’s lots to be paying attention to right now. I know lots of clients and lots of issues are out there, they need your help, their clients need your help. So please tell us about some of the key themes that you are working on at EY.

Mike Lee: Sure. I’d say in no particular order, clearly over the past couple of years, in particular, a tremendous focus on the growth in private markets. As we’ve seen a number of macro trends impacting, I’ll say why that is, clearly a lot of the investment flows are going into the private markets versus public markets. In addition, what that also means is access to private markets historically has been the remit of, you know, institutions, and I’ll say, higher, you know, ultra high net worth type investors. So there’s a clear need, and we spend a lot of time focused on that whole concept around democratization of private markets or alternatives into a broader spectrum of potential clients. The second area, not surprisingly, is around the impact of AI. And really over probably the last five or six years, but really seeing it accelerated is that focus around data. And its impact into traditional, I’ll call it overall strategies. Historically, it’s always been a people process, technology type of focus, when it comes to evaluating operating models and overall transformation. But really, with the advent of so many disruptive technologies that we’ve seen accelerated adoption of really over the past three or four years, data has become part of that continuum. And as it should be, because you’re only as good as the data that you have, whether it’s your own or others’. So a third area and a kind of ties directly into that is around transformation. And that can mean a lot of things to a lot of different organizations. Clearly, we saw coming out of the pandemic an acceleration of the digitalization agenda, both for how organizations support their customers, their clients, but also how they operate their own internal functions. And again, kind of leveraging some of the disruptive tech that’s out there to help identify and create that more scalable transformation. And I say the the last area… and I could go on quite a long time, as you mentioned, Jack, there’s quite a few areas, so I’ll try to keep it to three or four… is really around client experience. Clearly a focus around the desire for greater personalization of the interaction with clients, whether you’re an asset manager, a wealth manager, an asset servicer. It’s that personalization agenda, and really trying to get closer to that end client. But those are four of several, you know, key areas that we’ve definitely been focused on across the broader wealth and asset management continuum.

Jack Sharry: So I want to dig in on what you’ve just shared. Obviously, you’re talking to leaders across the globe, and I’m assuming large financial services firms, asset, wealth and asset manager servicers, etc. What does the conversation look like? I mean, everything you just said, I’ve heard before. I know data is important. I know transformation is on the minds of everyone. AI is huge. But how does the conversation go? Because there’s so much that could be done? And I’m under the impression, correct me if I’m wrong, that in many ways, you’re talking about sort of the next big project or the next big thing to take on? And correct me if I’m wrong on that. But how does the conversation go? What are some of the things you’re hearing? What are some of the concerns that you’re hearing on the part of the leaders of the firms that you’re, that you’re talking to?

Mike Lee: Sure. So let’s take a step back too because like I said, I mean, obviously I spend a lot of my time in the wealth and asset management sector, but I look across all sectors. And what’s interesting is, and even professional services firms like ourselves, okay, you can look across any sector. And when it comes to, I’ll call it broad areas of focus from a strategic level of importance, it’s data, it’s technology, it’s distribution, it’s a number of there’s a lot of common themes, right. So to your point, some of this is not surprising. So where does differentiation provide itself and I would say, a lot of it comes down to execution, which again, is probably one of those, well no kidding. But it really is. When you see those that have had the greatest success, it’s around those that have been able to truly execute and stick with the strategy. Yes, short term things happen, and you need to make adjustments, that’s just part of doing business, that’s part of life. But it’s the ability to stay within the I’ll say the guardrails of the purpose of the strategy, as your kind of your guiding light, to actually be able to execute and to evaluate, do you have the change agents within your organization that can one, execute what needs to get done to advance whatever area it is, having a better data strategy, whether it’s around the adoption of certain technology, whether it is looking at new operating models, what’s offshore? What’s nearshore, etc? Do you have the agents within your organization to be able to affect the change? And do you have the culture within the organization to accept the change? You know, there’s, there’s, you know, a number of different examples, and I kind of use what I call the 20-60-20. And what I mean by that is, you’ve got 20% of your organization that will embrace the strategy, the change that is required without question. It’s just, it’s part of the DNA of those. You’ve got the other 20%, that’s probably on the other end that for whatever reason, no matter what you do, no matter what a great idea it is, there’s probably some resistance, because there’s probably a level of comfort in what is currently being done. So it’s that other 60% is going to really dictate, in that very rudimentary example, is going to dictate the success of the ability to execute that strategy. And so how do you engage with all, but clearly that 60% is going to move the needle when it comes to the success of what you’re able to execute in behind? So back to your original question, a lot of it is around, again, I’ll say that the the execution of what you’re doing, the ability to actually execute the change. That change management process, to make it digestible. I reference back you know, all the way back to like the financial crisis as an example. It used to be pre financial crisis, particularly in our industry, that which was most complex, which is was the most endearing. Right, you had kind of this black box, so to speak, that those who created it, understood it, but very few outside of it did. But it was desirable, because it was complex, and you’ve made it, you somehow made things work. Well coming out of the financial crisis. Considering all that happened, you know, back in, ’08, it was about transparency, openness, and understanding, and the ability to make things more digestible for a broader group because that’s what gathered and garnered the trust that you needed to then be able to do whatever it is that you do, whether you’re a wealth manager, whether you’re an asset manager, whether you’re a bank or an insurance company, it was you know, the idea of making things more understandable greater inclusion, greater access. And so it’s those kinds of common themes that I think are differentiating elements of the discussion today, Jack.

Jack Sharry: Gotcha, gotcha. I think I’ll pursue some things, some things you just shared in a moment. But I want to get to sort of my top questions I like to ask, what are you especially excited about now? I’m going to talk in a moment, come back to you on the, so how do you make this really happen? It’s one thing to set out the strategy and to agree all the elements but executing, really executing, is I’m sure a big part of the challenge. But before we do that, let me just talk about, let’s talk a little bit about what you’re especially excited about, some of the things that you’re seeing, and then we’ll come back to this execution question. Because at the end of the day, I’m sure you agree, it’s all about execution. But fundamentally, it’s about execution once you get your strategy set, but what are you excited about now?

Mike Lee: Well, fortunately, I’ll say I’m excited about many of those topics that I shared upfront. And what I mean by that is, there’s some common threads to pull on. Right? There’s all different analogies to use. But whether it’s around greater inclusion and access that’s being considered. I mentioned the idea of that the growing prominence of private markets, right? There’s some very macro issues out there today, right, there’s polarization, we’ve seen a lot of nationalization that’s happened globally, and, you know, even within individual countries, and that polarization is actually causing a greater divide. And using the private markets as an example, again, the general access to private markets is somewhat limited, again, depending on if you’re an institution or have a certain wealth level. But in order for more to be able to access that which is gaining prominence, you need to find new ways to be able to provide that access to a broader pool to advance a more inclusive and accessible opportunity for a greater preponderance of our population. The population is also having to take on more of its own responsibility. So you have a number of converging factors, right. I mean, you know, most governments nationally have three pillars to their pension or their retirement system, right. The government, the employer, and the employee. More responsibility in many markets is falling more and more on the employee. So if more responsibility falls on the individual, you need to be able to provide them greater access to other areas where growth is happening, and that they can also be able to participate in the upside. But then you have to balance that with fiduciary responsibility. And, again, I used the word earlier, but making things digestible and more understandable around what that access means. So there’s, what makes me you know, I’ll say get up each morning, so to speak, is helping deal with those intersections, you know, those second, third, fourth order impacts that are helping to hopefully solve some of the larger challenges that are out there, across our market and even society today. But it’s how you bring that interlock together in a way that more can understand, more can participate in and, you know, quite frankly, hopefully, you know, make it better for a much larger population, than probably what it is currently accessible today.

Jack Sharry: Gotcha, gotcha. I’m gonna dig in on the cultural aspect, if I might, because I’m sure you could draw out I’m sure you got PowerPoint slides to show exactly how things should be done to get, to effect change, to become more efficient, effective, to transform the organization. But you have these folks called people that are in between, and especially if you’re shifting as frankly, we seem to be shifting daily, as an industry, as an economy, as a, just across the world. And certainly in different markets. I imagine there’s variations on all this. But the point is, you got to get people to be rowing in the same direction, to be consistent. There’s something I’m sure a lot of behavioral, there’s a big behavioral aspect to all this. Why don’t you fill us in on, from where you sit, you’re sitting with a senior leader to… how do you make this happen from an execution standpoint, from a transformation standpoint, from a behavior change standpoint? How does that all come together?

Mike Lee: Well, I’ll start with the not surprisingly, it’s complicated, right? It’s not a one size, there’s not a one size fits all. But I really anchor around, not trying to do all things for all reasons or for all groups, you know, a big focus around targeted focus for those that I work with quite a bit, they probably get tired of me using those two words, but it’s targeted focus is focusing on the activities, not what you may what an organization may be called. But it’s the activities, find those commonalities around activities. Investing is a common activity, but it’s not all done the same way. Okay, advice is a common activity, but it’s not all done the same way. Segments are different. Just because you may be at one wealth level doesn’t mean necessarily that you’re more knowledgeable about something than at a different wealth level. And so a lot of it anchors back to kind of stepping into the shoes of the other party. And again, I know that may sound a little cliche, but I’m a firm believer in that because that dictates behavior. You need to understand others’ perspectives, to understand why they may behave the way that they do when they’re offered advice, a suggestion, whatever it may be. Because perspectives are different and yes, it’s you know the usual question is, well, how can I scale that? Well, scaling is difficult. It’s that polarization, everybody wants to scale because you need to scale to be able to manage cost to provide a a sensible profitability to the business that you’re running. But at the same time, the other extreme is all around greater personalization. Those are competing, polar opposite ideas or directions. And so it’s, again, that targeted focus of trying to be able to reevaluate in a different way and more around behavioral type ideas than it is I’ll call it quantitative measures, because so much of that is dictated based on you know, I’ll say where you’re coming from, what your experience has been, is going to drive how you behave, not necessarily what wealth level you are, or what part of the world that you necessarily operate within.

Jack Sharry: Gotcha. So I’m fascinated by this whole topic, because we’re in a period of significant change, in my estimation, in our industry, and lots of people are trying to figure out I see, we work with lots of different firms, many firms in common, and they struggle, they just, this is the nature of all that they’re trying to do, especially as they, I call the confluence of digital and human advice, things come together, as we see the, at least in the US, I’m sure the same is true overseas, but the convergence of workplace and wealth. So all this is coming together. And, again, my understanding is what you do is you help foment that change, you work with the senior leadership to figure out where you want to go, want to operate, what needs to be done, what are the priorities, what are the areas of focus. Talk a little bit more about that before we talk about where the world is going? And maybe this is all part of where the world is going. But how does that come to pass? How does that come to be where your help guiding them because I’m sure they go down a path and then there’s corrections, just fascinated by this whole topic of how you create change, foment change, make change happen?

Mike Lee: I think, you know, there’s all different I’ll call it consulting approaches that are out there, you know, Lean Six Sigma, etc. I mean, they’re all with terrific merit. But I think the idea is, I’ve used that phrase already about, you know, targeted focus in certain areas, stage gates that show success, the ability and the willingness to stop doing things. I think that is one of the biggest challenges that I see in organizations is letting go, okay. There’s all the phrases out there fast fail, etc. I think organizations are extremely challenged by it, because failure generally is not rewarded. Okay. Right. And so an element of this is how do you package that in the context of, we need to try new ideas, we don’t need to try grandiose ideas, but let’s move through stage gates through a more episodic advancement, and really be honest, and are we proceeding in the right direction, are we not? It’s okay to go left instead of right, even though we thought we were gonna go right, that’s okay. But it’s a challenge in the environment where especially, you know, in a time when so many, you know, I’ll say over the past three or four years, we’ve come out of events that we all experienced together, right. And that’s the first time in my memory that the whole world went through something together, okay, and not to bring it back to the pandemic time, but organizations are trying to, you know, manage profitability better. Technology is disrupting significantly, costs are going up, stakeholder requirements are going up, margins compress. So it’s not easy, you know, kind of coming back to the ability to recognize when an organization needs to stop, and when it needs to try something new. And that’s part of the culture of the organization. And I think that’s where some of these challenges are at, in the ability to actually, you know, I’ll say, stop doing things or where you need to divest, where you can’t be all things to all people or all organizations. The concept of ecosystems has been out there for quite some time. But the general premise of that is you do what you do best, you work with others that can do something better than you. You may actually have to engage with what has historically been a competitor. But at the end of the day, the organization will be in a better spot by doing it this way, versus the desire to build and own everything on your own. Things are moving so quickly these days, to do it on your own is, in my own view, my opinion, is not a strategy.

Jack Sharry: It’s a habit.

Mike Lee: Yeah.

Jack Sharry: So, where’s the world going? Where are we headed? What’s your crystal ball saying? What are some of the trends you see emerging or continuing? As you well stated that you’re highly focused and targeted in terms of what you’re recommending to your clients? Where do you see it all going?

Mike Lee: Wow. I think, I think we’ll know a lot more where the world is going in the next, I’ll call it six to eight months, right. In the context that, you know, to throw some numbers out there, I think half the world’s population is going through an election this year, 60% of the world’s GDP is part of that election process. And there’s a lot of uncertainty leading up to where things are going. And I think that’s going to continue until such time as we know where some of quite frankly, our leaders will be globally, you know, coming out of this election cycle. I think once we have that in place, there’ll be some level of greater certainty in the direction of travel, you know, whether it’s around sustainability, you know, particularly views in the US, or I’ll say actions being taken in the US. I think that there’s definitely a tremendous focus on retiremen, okay. In the context of, again, some of the comments I made earlier around the responsibility to the individual and what governments, employers, or individuals need to do, or what in our case, financial services firms need to do to help embolden individuals to be able to take better control of what their financial future is. We’ve talked about this for a long time, I think it will still be a slow, slow play. Our industry has historically been very product oriented, I think we’re beginning to recognize the need to go to outcome orientation versus product orientation, but it takes time. Okay, my own desire, this is not a prognostication, but my own desire and something that’s very near and dear to me, is greater education around financial literacy at earlier stages in life, okay, and how these things fit together to help inform what the right decisions are, because there’s a number of macro trends that are out there, but they all intersect eventually, in my opinion, okay. And the more that we can elevate with a consistent understanding that I think you’re going to see greater progress being made in some of those areas that I mentioned as key themes, whether it’s private markets, disruptive technology, ongoing transformation, and digitalization. But I think, you know, over again, to maybe conclude where I started, it’s going to be, I think, a relatively static next, call it six to eight months until elections happen. And then even after that, it’s going to take time for transition to begin to be able to see some of the I’ll call it guidance that is out there, what direction to travel it may look like for the next, you know, foreseeable future, the next three, four years, and that’s gonna then help drive where some of these other areas may or may not go.

Jack Sharry: Interesting. I love this. I’ll stay tuned to what’s next and appreciate your observations here, Mike. And as we look to wrap up, what are some key takeaways you’d like to share with our audience? And based on what we’ve talked about so far?

Mike Lee: It’s interesting, you said the word a few minutes ago about habits, okay. And I had authored something right at the turn of this calendar year around resolutions and turning resolutions into habits that stick. Okay, so it’s, it popped to mind when you said the word habit, okay. And I’m a big fan of kind of putting things in three, so I’ll leave it at this. Okay. One, it ties back to that inclusion and access comment is one. And the idea of trying to bring greater advice and insights and actually greater codevelopment of what outcomes can look like with a greater number of customers, let’s call it, in our business. Okay. And really, that codevelopment process, but it’s again, around inclusion and access. The second and I just mentioned it a minute ago is around education. You know, whether it is again, the comments that I referenced earlier on private markets or something that in listening to other of your podcasts, Jack, that is near and dear around tax loss harvesting. People really understanding what that means, what does asset location mean? What does non qualified versus qualified… But truly trying to elevate because as more individuals have to own this responsibility, they need to understand that, okay. And then, as a transition to the final point is around making things more digestible. Okay. And really embracing whether it’s new ideas or even new technology, right, I mean AI, we talked about it a little bit, it’s clearly out there in every conversation we have, but embrace it, don’t shy away from it, recognize the benefits that can come from it. And so that it’s again, making things more understandable to give the comfort to embrace going forward, I think is going to be incredibly important.

Jack Sharry: This is great. Mike, it’s been a pleasure to spend this time with you. I’ve enjoyed our conversation very much. Thank you. As we do on each of our podcasts, I have one last question. It’s always been my favorite. What do you do outside of work that you are excited or passionate about, that people might find interesting or surprising?

Mike Lee: Well, I don’t know if I’ll call it interesting or surprising. But I’ve always been a sports fan, a participant in my youth, a coach during different times. And now I’ll say more of an observer. But I won’t mention the teams but I own season tickets to three different sporting teams, a professional football team, and then a collegiate basketball and football team. I spend a lot of my weekends with my family and friends. I’ll say being able to go to these events, I just I love, it’s a great release, great to be able to be with friends and family and fortunately, the teams that I follow and again, I’m not going to mention because I don’t want to, I’ll say sound like I’m being a little braggadocious but fortunately my teams have had pretty good success over the last five or six years so people may be able to figure out who that is. But anyways, the avid, avid, avid sportsman.

Jack Sharry: That’s great. So, Mike, thanks so much. I really appreciate your perspective. I’ve learned some stuff that I didn’t know, I follow EY pretty closely. But it’s not only what you do in terms of the consistent message of EY, but also where you sit in terms of working with firms to help them, see the future and execute on that future. So, for our audience, if you’ve enjoyed our podcast, please rate, review, subscribe, and share what we do here at WealthTech on Deck. We’re available wherever you get your podcasts. Mike, thanks again. It’s been a real pleasure.

Mike Lee: Jack, it’s been my pleasure. Thanks again for the opportunity to join you today. Greatly appreciate it.