The Evolution of Goals-Based Investing with Robbie Cannon

Jack Sharry: Hello, everyone. Welcome to this week’s edition of WealthTech on Deck. Good to have you on board. Thanks for joining us. I mentioned on a recent podcast that I’ve been getting out to some conferences over the past few months. One I particularly enjoyed was the MMI Summit that I attended in Miami back in March, I have to give a side note here to our audience. I actually invented this conference 25 years ago, me and Chris Davis, but some others took credit there. So I just wanted to set the record straight. But it’s something we cooked up way back when. In any event, as our listeners know, I’ve been around the block a few times and much of what I know and where I learned it was at MMI meetings over the years. Specifically, I got a lot smarter hanging out and engaging in what I call hallway conversations with folks like our guest today. At the recent MMI meeting, I spent time with Robbie Cannon and a few others, we were at the back of the room causing trouble. But Robbie stood out among our conversations because of his smarts, energy, and enthusiasm for the business. Robbie is a founder of an asset management firm. He’s the founder of a new project called Thrive we’re going to hear about in a moment. He’s a fintech investor and board member and all around good guy. And in a moment, we’re going to learn a whole lot more about how to make things happen in our industry from someone who has done it before, who’s doing it again, and can’t help himself but do it all the time. So, Robbie, welcome, and thanks for joining us on WealthTech on Deck.

Robbie Cannon: It’s great to be here. And I’m glad you set the record straight.

Jack Sharry: Always, always. So Robbie, great to spend time with you again. It was good to get together back in March. Let’s start with you providing our audience with your backstory. I think it’s pretty fascinating. Take us back to how you got started in the business, how that led to creating a very successful emerging asset manager, Horizon Investments. And then in a little bit we’ll talk about where that has gone from there. But for now, let’s talk about your backstory up until you get a Horizon up and running.

Robbie Cannon: Yeah, absolutely. I mean, I was 27 when I started Horizon Investments, an asset management firm, as you mentioned, out of Charlotte, North Carolina. So I was pretty early in. So right out of college did a little stint at a wirehouse. And a really, very short stint at a family office and I went right into what I thought was the future of the business, which really at the time was more the proliferation of what we know today as quant finance, back then it was trying to get a name for itself. But I think you know, as we kind of started in the business, it was one of those things where everybody is talking about investments. And at some point, what I noticed is people started talking about planning. And that was the key pivot in my, from my perspective and just my time in the industry. So we took a small RIA, as you said, at that time, I would, I would say innovative strategies, but really formed, I think one of the first goals based investment firms in the country. So really excited to kind of see that whole journey start to finish. But it really started in Columbia, South Carolina and ended up in Charlotte, still there today. And a lot of the success that we had at Horizon and still have at Horizon is due to the people. It was one of those things where you surround yourself with three, you try to surround yourself with smart people with different backgrounds, and you see if you can’t solve real problems.

Jack Sharry: So tell me something about, what year are you talking about? Because you mentioned you had a goals based frame. So what year was that?

Robbie Cannon: So late 90s. What I started noticing is that there’s this transition between advisors and investors talking about investments themselves. So as you remember, 80s, 90s was really about investments. And then in the 2000s, it started evolving to planning and advisor language actually started to change. And they started to start referencing their planning tech and not necessarily like Morningstar or their what I would say investment tech. And when that started happening, the other thing that took place that was I think pivotal was between ’08 and ’09, Fidelity changed their entire brand, and went with a green line.

Jack Sharry: Right. Right.

Robbie Cannon: And so that was their whole green line campaign.: Yes.: I mean, the evolution was really, I mean, the way I kind of summarize it is it’s, it really is Cisco, Microsoft, and Intel.Those were the four letter words coming out of NASDAQ, and that was on every advisor’s mind, and hopefully, every investor’s portfolio at the time. But to your point, Morningstar really started to put together what was a diversified portfolio. So I, you know, we both remember when you can then start to invest in developed markets, or emerging markets, and you started to get these style boxes, as you’re saying, really, and all it was was exposures around the globe. And then you started building actual allocation models. But a lot of that had to do with this underlying just kind of advance in quantitative finance. So you have the Peter Lynches of the day, which were really stockbrokers, they really knew companies, they could go on earnings calls. To where you really had the statisticians and the engineers, then going, you know, what, we have too many component parts, what are the statistics behind these things? And so those evolutions kind of occurred together, which makes sense why it kind of ended in planning as well as, okay, so now that I have all this, what do I do with it?

Jack Sharry: Yep. Another piece I want to have you maybe expand on, when you talk about the green line, for those that may be younger in the business may not remember that specifically. But that basically was an advertising campaign. In my estimation, I’m bit of a follower of great advertising. And that was that. That was the best thing they’ve ever done. And they keep…

Robbie Cannon: Totally agree.

Jack Sharry: Doing other things. They should just go back to that. The green line is about retirement planning. It was planning for your retirement, but planning was the key. You know, remember Peter Lynch, way back in the day, whatever Peter Lynch bought, whatever he talked about as the next great thing, that’s what you wanted to own. It was just getting too complicated. And Peter Lynch lost a little bit of his, his, his strength, shall we say, along the way, and then toward the end of his career bowed out, Magellan got too big and he couldn’t do the kinds of things. And Fidelity caught on, you can’t just work on star managers, because they don’t last forever. And frankly, their funds get so big, they couldn’t be as effective. They became the index. So why not just have a lower cost? So but maybe you want to expand on that?

Robbie Cannon: Well, they’re almost bigger than the brand, right? So Peter Lynch had this following that was just incredible, maybe even larger than Fidelity. I think the pivotal thing that we saw, for those of you that don’t know what the green line is, is really just this change between advisors talking about returns with their customers, and that’s the Cisco, Intel, Microsoft kind of rise to power to where they started talking about outcomes. And so the green line really represented your path to the outcome that you wanted. So in essence, it was the start of personalization, too. I know, you’ve talked a lot about personalization, that kind of harkens back to kind of how they started that is your outcomes are your outcomes. And so you and I have, we might be in different demographics, we might have different portfolios. And so my path is going to be different from your path. And hence that green line is where you’re going, not where I’m going, necessarily.

Jack Sharry: Yeah. You know, I hadn’t thought about it until you just said it, Robbie, the, it was the start of personalization. Up to that point, everybody would want to know the same stuff, which you know, after a certain point just doesn’t make sense. But talk a little bit, if you would, about how you…. you’re seeing all this and you’re had been in a wirehouse, were in a family office, you’re seeing the world change. And then you came up with this crazy idea, which turned out to be not so crazy called Horizon. So talk about that. And how you got started and how you made things happen? Because I’m sure it wasn’t an easy road as you got it underway.

Robbie Cannon: No, not at all. I mean, remember, when we, if you start any business in the 90s, especially like 1999, I can say the worst is in front of you, not behind you. Because basically, you’re gonna run into 2001… 2008. So from an entrepreneurial standpoint, you’re just like, you’re gonna take it on the chin for a while. So Mike Tyson is going to punch you, you just cannot go down, right?

Jack Sharry: Yes, yes.

Robbie Cannon: And so it’s not every entrepreneur’s dream, that might be their nightmare. But it’s really about, you know, I think a lot of entrepreneurship is just about weathering the markets and being able to pivot and navigate and I would say this about Horizon, is that flexibility is built inside. And it really comes with smart individuals wrapped around a singular goal. And most of the time, and I would say hopefully, 100% of time, it’s on client outcomes. And I know that’s what Horizon is still focused on. You know, we were for the most part in the independent broker dealer community. So LPL, the Cambridges of the world and you know, just helping advisors navigate those markets between 2000, you know, when I left a few years ago was, it’s why we’re in the business.

Jack Sharry: Yep.

Robbie Cannon: And it’s, I think it’s why advisors are in the businesses is to help people. And certainly as asset managers, our job is to help advisors help their clients weather the market.

Jack Sharry: When I think of Horizon, I always think of you as sort of programmatic in a very positive way. In other words, you approach to things, still do, as I understand it, approach things in a way to help the advisor, my favorite term around this is do more and better business. In other words, have a path, have that green line for their business. And I think you guys did that particularly well, why don’t you talk a little bit about how that came about, and how that evolved.

Robbie Cannon: Again, it you know, it’s really nice to kind of frame it with the green line, because you can say, alright, so what, what are you guys after at Horizon? You know, we’re after client outcomes. And the way we frame that is in this idea of game protecting span, which is, what outcomes are clients looking for? Well, they’re actually looking to grow wealth. They’re looking to protect wealth, and they’re looking not to run out of it. And so if you focus on the client first, the solutions kind of take care of themselves, what solutions you need to supply to the market, take care of themselves. And so that’s where Horizon is today. And, again, the thousands of advisors that that firm represents, it’s really nice to have a framework for markets, as markets ebb and flow, as we have an election coming up, as we have different events sitting those market environments, you can kind of rely on okay, what’s the game plan? And Horizon offers that game plan.

Jack Sharry: Yeah, I want to underscore something. Robbie’s being a little bit unusually modest here. But having lived through that time, the firms that did well, and I consider Horizon among those. The firms that did well really provide guidance to advisors. In other words, they didn’t tell them what to do. They didn’t sell hot dots, which was also frankly, popular at the time until they became evident, you couldn’t rely on hot dots. But in any event, during that time, as markets went up and down, you were you really kind of showed them a core as to how to deal with it, how to talk to clients about it. Talk a little bit more about that, because you guys really provided good guidance and good fellowship.

Robbie Cannon: Yeah, I appreciate that. Because it reminds me of so how we left the advisor was this, the advisor was changing their language between investments themselves and planning. Well, asset managers never converted their language. So they continue to speak in Greek where maybe the advisors were speaking in French. And what I mean by that is, so okay, so I understand that you have an asset management solution, how do I use it in a planning environment, and that’s what goals based investments was there to do, that’s what Horizon was doing was going, hey, let me help translate it in your language, because ultimately, you’re going to talk that language to the customer. So my solution fits in your planning, tech in this way or that way to solve this or that type of outcome. So the technology really didn’t matter it was, if you’re using a planning technology, you probably want to use a goals based solution, because we can get to the outcome faster, and probably in a more understandable way. So that’s kind of what we were doing.

Jack Sharry: Yeah, again, I want to underscore for those that might miss this, that around that time, a lot of what… certainly before we hit the real rough, early 2000s, with the tech bubble and all the rest of that, before that it was really about the hot dot, the performance, who was the top of the heap, all that Morningstar style, Morningstar stars, all that kind of stuff was that was the driver. It started to shift in that that decade, that first decade of the 2000s, where it was more about the outcome. And you’re hearing all the words, by the way, these are more than words, this is what your focus in the field, you’re focused on the phones in the home office were preaching is let’s get a better outcome. And you guys also did, didn’t you do a fair amount with taxes, if I recall? Or at least talked about them as important.

Robbie Cannon: Look, I mean, I think whether you’re talking about taxes, or asset location, or any of those kind of component parts to a good financial plan, you have to talk about it if you’re in the outcome space, because the outcomes space really kind of blurs the line between where wealth is and where investments are. And that’s kind of what’s happening in the industry. You know, I, I wrote a book that I finished in, in 2022, really talking about where I thought the future was going. And the way I titled it was the Advice Age. And the reason why I titled it that way is because I think, with all of these innovations that we’re talking about, and with outcomes and with all of the integrations and software and the evolution of all of these things that we’re discussing, advice is going to be more important in the future. It’s going to be actually, it’s finally going to have its day in the sun. Because as you and I talked about the history as we go from investments to planning, it’s really going to be this idea of advice to elevate.

Jack Sharry: Yeah, truly. And I always add the word guidance because it’s advice that gets you started, guidance keeps you on track.

Robbie Cannon: I love that. I think that’s, I think that’s correct.

Jack Sharry: So that brings us up to date on Horizon. And we had one of your mentees, Danielle Learned on the podcast not long ago who’s just delightful. She and I did a little thing at the MMI for around leadership. And she’s all of that I know, you kind of plucked her out of a conference or somewhere you kind of encouraged her to join Horizon. She’s doing amazing things there, I know. But now that we’ve talked about Horizon, there’s lots more to do. We’re also going to have your successor there and friend, John Drahzal, on coming up in a podcast, sometime down the road. All that said, let’s talk about the stuff you’re doing now. Because I know you’re doing a lot of interesting stuff, saw the announcement on Thrive, saw it at the MMI and also seeing some other stuff online and what and what have you and we’ll talk about advice, but my understanding is that they kind of go together. Why don’t you tell us what you’re doing with Thrive? And where you are and where’s that going?

Robbie Cannon: Well, I mean, I would say with you, and that MMI was, for me, a huge synthetic scale, for me, just for my business, for the contacts, for understanding the industry, etc. And really excited about Thrive. Thrive is it’s, I would say the single destination for emerging asset managers. And emerging asset managers are really 25 billion and below which a lot of people that aren’t in the industry go 25 billion? And you’re like, well, there are managers that have trillions of dollars. So you have to kind of start cutting in somewhere, but 25 million and below and I would just say, it’s not like these managers have been forgotten. In fact, they really do have a home at MMI. And it’s really to connect them with content that really, they appreciate. But the MMI ecosystem is amazing for smaller managers, whether it’s education, I know Tim Williams does that, just in general, what Craig is doing with the entirety of MMI, or Joan, and Jackie, with sponsorships and programming. So again, MMI is a great home for smaller asset managers that look, they’re busy going to conferences, they’re busy raising a dollar in a very competitive, tough marketplace, and just to be able to sit and breathe, and talk to peers about their challenges, and the opportunities that they see. Again, there’s not another place like it in the industry.

Jack Sharry: So there’s one other friend of ours that I know you didn’t neglect on purpose, because everyone just assumes things get done, because he’s around. That’s Arlen Oransky. But talk a little bit about what you guys have cooked up. What is it? What is it doing? It looks like a place to come together. But tell us more? What’s it about?

Robbie Cannon: So there’s a lot of places to kind of jump in. But whether you’re an international manager, trying to figure out how to get invested, or an institutional manager trying to figure out retail or you’re just 25 billion and below, this community is for you in terms of how do we market, how do we grow in terms of our footprint, whether that’s digital, whether that’s technology? What are the gates now, you know, now that you have the Envestnets of the world and the Orions of the world, and you’ve got wires the way they’re configured, how do we navigate this marketplace? And you’re navigating as a Blackrock or a Vanguard, you’re navigating as an emerging manager, which is just different. And so this marketplace really gives market participants, I would say, not a bird’s eye view, like literally a seat on the field with participants that are literally playing in the same game.

Jack Sharry: Yep. My guess is in terms of what you have lived through, have… you understand in your bones, you’re really providing guidance to these newer entrants, or smaller entrants, in how to come together, how to share ideas. And that’s really what MMI has always been about. It’s sharing ideas, it’s best practices. It’s just lessons learned, all that kind of stuff.

Robbie Cannon: You know you compete against one another, but it’s more coopetition. And I think that’s where everybody grows, right, is you’re trying to work with each other vs. trying to take market share at the end of the day. You’re not big enough, that $25 billion. But you know, there’s so much market space out there for you and so much whitespace. And let’s figure it out together, because the markets are complex, navigating is not easy. And you have limited resources with limited time. And so when you talk about Thrive, we talk about trying to solve for all of those four points together.

Jack Sharry: Yep, yep. And I would imagine you figured it out, others would benefit from that understanding. But really, you got to pick your lane, you got to pick your… how are you going to differentiate? How are you going to be distinctive? I’m assuming that’s also part of the conversation.

Robbie Cannon: Well, and I love having sold an asset manager now that I can sit on this side of the table at MMI and be a resource.

Jack Sharry: Yep.

Robbie Cannon: You know, I love connecting people to opportunity. I love connecting with new ideas and different ideas on how to, again really kind of enjoy, not only be part of an industry but really enjoy being part of it.

Jack Sharry: Sure, sure. One final question before we start to look to wrap up. You mentioned earlier that you see as we’re moving into the advice area, you written a book on the topic. What’s your crystal ball say? Where are we headed, what’s the industry… what’s coming for the industry? Yeah, exciting times, for sure. Well, we could keep going for a long time, but we’re gonna try to keep these to a half an hour, two last questions. The first one is, tell our audience key takeaways you’d leave them with, and then we’ll talk about what you do outside of work. But let’s start with the key takeaways for now.

Robbie Cannon: Yeah, it’s it’s super interesting, I think, because I think as you pass from investments to planning, I actually think advice is going to really invite this idea of social, or what I call finsocial, or financial social. And so that’s what I think it’s going to invite. And really, it’s three… it’s these three things coming together. And what’s interesting about me, finishing my book, and really the manuscript in December of ’22, is Chat launched in November of 22. And so Chat is now a couple of years old. And so you’re looking back on wow, I was writing what I thought the future would look like and I didn’t even know about this, like groundbreaking technology that I know now. But I would say the three things that are kind of coming together to really push us into this social component of financial advice is the idea of AI, the idea of blockchain, and certainly quant finance. So quant finance gives the investor really an infinite set of possible solutions. AI can really dedicate to personalizing those solutions. And then blockchain can really facilitate being able to buy those solutions. So I really think those three are really going to drive kind of this renaissance in where things are. You know, when I think about the future, though, I also think about the changes just demographically. And so you go from a male kind of dominated world where an advisor is meeting one on one with a customer. And maybe it’s more Boomer centric, to maybe woman led, and more social context or group idea of planning. So you really think about the changes that are occurring. And it’s not just incremental anymore. And Jack, you and I shared about this, I don’t feel like we’re in a incremental change environment. I really think we’re in a transition period, according to the industry. And so that’s why I love listening to your podcast, because I hear you know, Vinay and and guys like him really talking about where the industry is headed, because it’s super important for all of us. I think the key takeaways is one, I think we hit it kind of at the end is we need to be aware of the transition and the amount of transition that we’re in. And so we talked about Fidelity moving from Peter Lynch to a green line, that was significant for the industry. The industry now is in a significant transition. The company that I’m part of now on trajectory is part of this idea of pushing out these newer solutions, as we talk about this idea of financial social, so finsocial, and companies need to be aware of that. Look, Gen Z and women and group dynamics are very different in terms of being male dominated one on one with a customer and Boomer oriented. So the solution sets, just by definition have to change. And I think customers, if I had to leave something with customers, I’d say I think you’re going to be better served because I think advice is going to be better because the technology is really going to take care of most of the other stuff.

Jack Sharry: For another hallway conversation at our next get together, at some meeting, we’ll have a conversation on some of the things I’m finding where as I talk to the people I talk to which are people like you, it’s far more social, but not in a haha, backslapping, drink them up, kind of way.

Robbie Cannon: That’s right.

Jack Sharry: But I’ve got three dinners with senior executives coming up in the next few weeks. And I’m mostly going to… I’m interested in their families. I’m interested in what matters to them. That’s what I’m curious about. Yeah, we’re going to talk some business, sure, that’ll happen. But we’re much more aligned, because we’re aligned. That’s really what it comes down to. So it’s a fascinating change. But we’ll, we’ll have to save that for another podcast. That’s a whole new thing that I’m just starting to get my head around. But I agree with you. The finsocial, I’d love to hear more about it. And maybe we’ll do that in another podcast. So, Robbie, this has been great. Really, really enjoyed the conversation. I had high expectations, this exceeded it for sure. So my favorite question always, at this point in the show, what do you do outside of work that you’re excited or passionate about that people might find interesting or surprising?

Robbie Cannon: I’ve got three boys. So my wife and my three boys are everything. So family really is first. You know, I’ve got two that are married now, which is crazy. I hate to say this, but I am looking forward to being a granddad.

Jack Sharry: That’s good.

Robbie Cannon: People are gonna laugh when they hear that. So that might be the surprise quotient for your audiences. Robbie thinking about being a granddad? Because they’re gonna be like he’s gonna make a crazy granddad. So yeah, I’m really looking forward to that. But I think like you, watching my kids grow and take interest with my family. That’s, that’s really what I enjoy doing outside of work. But I’ll say this, Jack, kind of like you, I love to work. I love to be part of this industry. The industry is amazing. The amount of things that are being done at different corners of the industry was just, it’s just fun to like, find out what’s going on. And from an industry perspective, see kind of the, the trends and how they’re developing. So that’s fun for me.

Jack Sharry: Yeah, I’m right there with you. Thanks, Robbie. Really have enjoyed the conversation. We’ll have many more I’m sure down the road as we bump into one another in various hallways at various conferences. 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. Thanks again, Robbie. A real pleasure.

Robbie Cannon: Always a pleasure.