Leveraging Innovation with Brian Moran

Jack Sharry: Welcome all thanks for joining us for this week’s edition of well, tech on deck. As our listeners know, a big fan of smart disruption, whether it’s product or technology, or how products and technologies are distributed, I love a good story of taking an age-old way of doing things and turning it on, it’s here. Today, we’re going to have a conversation with someone who has created a very smart distribution approach and system that is really catching on. It’s Brian Moran, who is the founder and CEO of FLX networks. It’s a unique distribution approach that we’re going to dive into today and examine. So Brian, welcome to WealthTech on Deck.

Brian Moran: Jack, thanks for having me. It’s great to be here.

Jack Sharry: So Brian, you are onto something distinctive. I grew up in the distribution business, as you may know, it’s not only distinctive, it’s effective, and in my opinion, pretty cool. So why don’t you provide some background on your career and the steps you’ve taken over the time to create flex networks. And then we’ll get into the story of the business as it stands today, after you kind of at least get the backstory, I think that contributed to where you are today.

Brian Moran: So he’s still terrific. And thank you for the kind remarks. It’s been quite a journey, my career has been mostly as an operator, right. And I think that’s an important distinction when thinking about FLX networks, when we go into what it is and how we got here. But at flex networks, what led to this moment, I should say is over the past 25 years, I’ve been everything from a you know, starting my career as an internal wholesaler working your way up through the system into divisional national and then head of sales and head of national accounts and ultimately head of distribution. It’s that experience, that operating experience that really led me to get to this point. But ultimately what launched this point, though, Jack was frustration and pain.

Jack Sharry: I understand that.

Brian Moran: If I think back and I look at it. So I mean, you could ask what is the frustration, right?

Jack Sharry: Yeah. Because that’s been my best teacher too.

Brian Moran: So tell me, and I’m sure you’ve seen this because you’re such a student of the business. And I’ve listened to your podcast, and they all sort of talk about the ways the business is evolving. Yes. The first point was, you know, I looked at the model of distribution today. And it was super expensive, right? It was fragmented, it was ambiguous. All of those things wrapped up into one caused frustration. Number two, the DOL? Well, it didn’t go through the DOL changed how wealth managers were perceiving their business models. In fact, it changed their business models to become more closed architecture. And that’s probably too strong of a word. But they consolidated relationships, they were looking at being fiduciaries versus suitability rule, right? They had a different mindset because of that rule, and what it meant to the potential their business models. And then the last thing was just simple industry trends. I think about think about this is over the past two decades, in the past decade, in particular, you’ve seen the top 25 mutual fund, ETF firms go from about almost 60% of market share, to now hovering almost 90%, right. So you’ve seen this consolidation at the top, and that’s happened in the wealth side for years. But on the asset management side, it accelerated over the past decade, then you take into account that most advisors no longer do transactional business. They’re more strategy or planning in terms of how they allocate their money. That changes how you think about deploying resources, the call on that market. And so it led me to that moment of frustration, that pain of like, what do you do in this evolving world? And that was my lightbulb moment was? Could I create something that use technology and outsource servicing and bring them into one?

Jack Sharry: I don’t know that you have a there’s one simple answer, because it sounds like what you came up with actually is fairly complex and sophisticated. But clearly, there’s the frustration and angst we all observe as we watch our business do what it does. So you had a moment. I’m curious what that moment was like and how that turned into it’s pretty bold move that you’ve made. So talk about that. And then if you would talk about how that turned into flex networks and what y’all do, because you have a really unusual model. I’ve tried to describe it, I oversimplify it. So I don’t want to want to do you a disservice by trying it. But talking about that kernel, that moment that they’d say, you know, I’m gonna, I’m gonna take a big bold step. And then what did you decide? I’m sure there was an evolution, where do you start? How did it evolve and love to hear where Flex is now? So that sort of transition from idea to implementation?

Brian Moran: Well, the moment the moment was actually it was January of 2019. You know, I have that light bulb that said, what if I could create a platform that was like Shopify, but for our industry, right, what if you could create something of outsource services, and then take into components of that you see and things like LinkedIn or any network platform out there, right? And take those together. Could you do that. And so like any, you know, anyone that gets an idea and you start running like a dog with a bone I was running, I was writing down ideas, thinking about ways that can work, talking to friends and talking to peers in the industry about what do you think of this, and just kept pursuing it. And, you know, I got to that moment where the opportunity to actually go launch it presented itself, and in December of 2019, launched it. And today, you know, I’m proud to say we are a dedicated network to asset managers, wealth managers, and financial advisors. And the whole premise, our vision is to simplify modernize, as we like to say, revolutionize how they come together, the heart of it, it’s really simple. I mean, one place to go get information, one place to go get business services and solutions, one place to go get investment ideas, one place to connect with peers, based upon your similar preferences, right, all of that to a community like feel. Yeah, and but through a central hub. I think what sometimes people anchor to, is that sometimes when they think of distribution, they think of just people, the human elements, a critical portion of it, don’t get me wrong, but what we were solving for was not necessarily just to have an outsourced distribution model, but to have a way that we could create omni channel presence for managers and advisors with one another in one location. Does that make sense?

Jack Sharry: So totally. So let me take a crack, I apologize in advance for the disservice I’m about to demonstrate. But because it’s an unusual model, and it’s in, I’m going to try to liken it to what people are familiar with the traditional wholesale model was, you work for a mutual fund company, or an annuity company and you sold their stuff. Your model is you select, you curate a list of companies of products, and you curate a list of places you distribute. And I’d love to hear that because there’s a fair amount of complexity and all that I just said. So you basically have wholesalers have key account managers have a sword, have people that are assuming our due diligence, and all the rest of that sort of stuff. So talk about how that comes together. Because what you’ve done to your Shopify example, you’re highly selective in who you represent, and where you represent them and how you represent them. So maybe talk about that, because it’s a different kind of model than I certainly have seen over the course of my career.

Brian Moran: I’ll flip this question around a little bit if it’s okay, because I think what you’re hitting on is the exact point to touch on is like, what is the model, right. And remember, I said, it’s going to be a combination of outsource services, and also platform network type of integration into one, right? Our membership, as we call it consists of advisors, whether they be RAS or big broker, dealers, asset managers, and we call wealth management firms, the enterprises themselves, they all come to flex for different reasons. But those reasons are similar enough, just from a different perspective that they’re trying to pursue that. So when you come to flex, there’s three exchanges that every member leverages. There’s the investment exchange, there’s a solutions exchange, and there’s the intelligence exchange. These three exchanges, as we refer to them are wrapped with the community aspect that you see within any social media platform, right. And the whole concept was when you came here as a manager, or wealth management firm, that you begin that journey in our solutions exchange, where there you will go in and you’ll find the ability to modularly implement how you want to build a strategy, whether it be distribution strategy for an asset manager, or for wealth management firm or the financial advisor, a way for them to build a marketing strategy to attract new households, or a way to help educate their clients. Right, so both parties come and they begin that journey at our solutions exchange. And to your point, we curate the solutions exchange, we’ve actually curated in more than 30 different relationships today, that come to flex. And also in some cases, we’re developing the solutions and the solutions Exchange, or we actually own the solutions and the solutions exchange. So you can come here and you can find categories like video content, marketing, or shared personnel to what you’re referring to earlier. So one of the services that we do offer up to an asset manager is the ability for them to select shared personnel, whether it be national accounts or wholesaling. But it’s one of the 30 plus categories that we have in our solutions exchange that they can leverage today.

Jack Sharry: And each is priced accordingly. In terms of the exchange of value that you all determine what you think and think about this.

Brian Moran: You asked earlier about where do we sit today? So we have 65 asset managers who represent about $3 trillion. So it’s all different sizes. And they all come here for different reasons. Right? Some come from the shared personnel because they need access to that, where they want to experiment with that. But others come for sales infrastructure, they come for the ability to do branding and marketing campaigns, they come for the use of flex media. So there’s a whole set of if you looked at a curve that goes from digital to services to, you know, ultimately even shared personality.

Jack Sharry: And so when you come in, and those various services you just described, when you come in on that, there’s a pricing structure for that. And then people are on your side are designated to support that and talk a little bit about how that dynamic plays out.

Brian Moran: The goal that we have is to try to ensure that any member that comes in is being aligned with the right level of service and your product. Right, the last thing that we really want to do is bring somebody in have a big subscription. And it’s premature, because then you end up having a negative outcome. Right, right. And so the goal that we do have an onboarding, especially in the asset management membership, the goal there is very simple. It’s make sure we align the level of service and or product recommendations with where that firm is in their lifecycle, or where their product is in the lifecycle. And that you sort of build along the way. But it’s also anchored with the belief that if you think just hiring a person is all you need to get your product from the manufacturing side, over to the wealth manager side, you’re really mistaken. Because relationships of one individual are not enough. In fact, it’s almost a disservice to your business to just bet on a single person, in some cases, because of how the market has evolved due to things like the DOL and the trends we were talking about earlier.

Jack Sharry: And how does that work? Do you I’m firm XYZ, asset manager, I like the story I’m let’s say, I’m an emerging manager, I’m smaller, doer, whatever. And I contract with you, what does that start to look like just to give our audience a sense of, you know, it sounds like you evolve over time, you don’t try to boil the ocean upfront, but assume you develop a strategy together, and then you start working on the strategy. And as you find out what works and what doesn’t, you modify and adjust. So talk us through an example. that’s specific to a firm, but it’s sort of a common example of some.

Brian Moran: Every manager that comes to flex goes through a what we call a distribution speedometer. It’s a proprietary tool, that gauges where you are in your firm’s like firm or product lifecycle, that tool then spits out a proprietary scoring system where we go through and we measure what are the services that typically equate to where you are at this stage, we have that discussion, it’s a consultant discussion, because candidly, our view was a business model, whether it’s talking with an advisor, or talking to an asset manager, is that it’s all about being consultative in this type of day and age. So we go through that process. If they select, say they are at the highest level of the scoring system where they can, it makes sense for them to go everything and a full turnkey solution, then they would actually have everything from marketing content, to social media, to video, to PR, to actual data, sales, reporting, infrastructure, product development materials, all of that comes in a turnkey solution that looks and feels from our perspective, like it should be an INSOURCE distribution team and program.

Jack Sharry: That’s fascinating. I think I’ve understood this. But essentially, what you’re doing is you’re really to use your term appropriately. So it’s a consultative approach to find out where their issues are their pain points, their gaps, their whatever, developing a strategy together, and then working on the strategy. That’s that fair to say?

Brian Moran: Yeah, correct. If you’ve been a veteran in this business for years, especially about your manufacturing side, the portfolio management side, is that you probably are anchored in a belief that people are doing steak dinners or going out for golf or doing walking the offices and they have a friend that they can go show the fact sheet to or get them to just do you a solid and get you to buy a product, right? And I think you know this right?

Jack Sharry: The problem is that I’m sure that’s what I grew up with that model.

Brian Moran: Well, I’m not saying it’s completely gone, it’s very, very, it’s been minimized compared to where it was. So the problem you have as a manager today, calling on the wealth management space, is that you got to think of a way that you can play the long game. And then the short term of the long game may actually be minimal results at times, and but you got to sustain it, because you don’t know when the product will be in the right position. You don’t know when your firm will be in the right position, your brand will be in a position. But you got to sustain the game and you’ve got to be visible because two things that matter more than ever, are your brand and your shelf space. And if you don’t have those, it’s really hard to participate in the wealth management channel.

Jack Sharry: So I don’t know if you know this, and I’m not sure how familiar you are with Phoenix Investment Partners is now Virtus investment partners. So way back when there was a an aggregator as it was called the United asset management, and we took that model, Phoenix Investment Partners copied it and then added distribution, they just basically had a collection of managers and you could come get it and didn’t really work out all that well. And our crazy notion was that if we had applied good wholesaling to it, this is way back in the late 90s, I think is when we started. And we hired a collection of managers were the first ones to come up with a, remember they complimentary investment analysis. And actually bar spin a way back, when was that region, I think he actually came to our offices and trained our sales desk. That’s where all of those proposals were done, it was off our sales, because we had seven different national sales managers come to our office to train our internal wholesalers on how to incorporate their managers. But it’s a precursor, you’re far down the road from wherever we are, but I’m quite familiar with what you’re doing. Because we went in with the idea we’d have multiple managers, multiple products. And then we would just basically say, what’s your gap? What are you missing? And we frankly, enjoyed enormous success for your tiny little firm to start, because we weren’t trying to just tell them how great our latest greatest product was, or your SMA or what have you. What I find fascinating what you’ve done is you’ve taken it far further, where you’re doing a lot of this upfront, where you’re deciding, determining with the whoever it is massive manager, wealth manager, what have you, where you’re sorting out, where’s the best path forward for everyone to win?

Brian Moran: I get that, right. It should be a win-win proposition. But I think it’s a different perspective, because I do think, for years, the industry has been an own versus lease mentality. And I do think what you see now is that it’s not always a bad financial outcome to lease, right. In fact, I think many cases can be made from our perspective, which is obviously slightly biased. But I do believe the access to a solutions exchange like we built does deliver that, that ability for managers to, as we like to talk about get synthetic scale, fine. You don’t need scale all the time. You just need it. You need it when it’s most appropriate for you to drive the power of your brand, your intellectual capital and your products.

Jack Sharry: Fascinating. So you started three and a half years ago, was it? Yeah, just Yeah, almost. And I have a hunch having started a few businesses in my day, you’ve probably learned a few things. Tell me a little bit about what you learned over the past three and a half years as you kick this wonderful idea off, and I’m sure it evolved and changed. But what are some of the things you learned along the way?

Brian Moran: You, you hit it on the head, I now know why there’s everyone that says they’re an entrepreneur is 22 are just really, really wealthy. And in between, it’s really tough. All joking aside, I think the thing I’ve learned is that you’ve got to just be so tenacious and persistent and passionate and confident in what you’re building is going to help others and the pain points are helped people capitalize on opportunities. You can’t ever let that down. Because our model if you think about it, Jack, which is maybe one of the most proudest moments in my career, is we launched December of 19. Right, it was myself and then shortly after that I bamboozled Mark Spina to join our advisory board. I got Eric Nastri to join us our first team member and began to build a team. But that happened in April of 2020, which at that time was when COVID was happening. So we’ve had to build this company, this entire network through the entire COVID. And workforce experiment that occurred as a result of it. I think it’s been extremely rewarding, because you got to see that your value prop did resonate. And there’s lots of things that we can continue to improve on. But I think what really does make us different. And what has made us successful is we’re operators, we’re not academics, we’re not technologists at first, which I think we need to have all of those were operators, which understand this space.

Jack Sharry: Curious, do you think that was during the pandemic was tough on all of us? For all the reasons we know? Do you think it helped or hurt that you started in a pandemic?

Brian Moran: It’s I noticed that sort of a cop out answer, but it’s both. Right, it helps because it leveled the playing field and made people think outside the box. However, from a brand building and an engagement model, for firms that didn’t have brand, or traditional engagement access, that was much harder. So you had both ends of the spectrum play out.

Jack Sharry: And no recently you get some investments from some name brand firms, some of which we now, talk a little bit about that. And what you’re going to do with all that money, you got to deploy and assume it’s all about growth from here. So tell me.

Brian Moran: We were very fortunate in November of last year to execute our first institutional investment round ever, which was anchored by bearings, and then co invested alongside bearings was broad reach and Allianz Global Life ventures, a firm that I know you know very well as well. Yes. The three of them have been incredible partners, both strategically and financially. They have been unbelievably supportive in what we’re trying to accomplish. I think it was a moment of in some ways for us validation to that what we’re pursuing does have not only legs but has significant merit to what we’re going to achieve And so to your point that that investment round was to help us propel key hires, invest in the brand of the business, but also begin to pursue the wealth management experience even more. And that’s one of the things I’m really excited about as an outcome of this investment round, is, in the coming months, you will hear of a few different wealth firms that are going to suggest that firms asset management firms become members of flex networks, and leverage our community to better access their advisors in their home office team members.

Jack Sharry: And I’m assuming that has a lot to do with your ability to pinpoint and be less sharp and throw up and more accurate in terms of how you target how you go to market, how you inspire, or encourage people to join what you’re doing.

Brian Moran: Well, I don’t use this term, often. I think you’re right, I think it’s more about concierge selling. Right? It’s the way I would look at it is, and right in our model, the ultimate goal is that you’re not forcing a product, you’re not forcing a conversation, you’re actually helping position the end result, though, in a way that’s much more effective because the buyer doesn’t longer needs you to source the idea. They actually need you to help position why the idea makes sense.

Jack Sharry: Yep. Yep. And I would imagine if I’m a wealth manager, frankly, a lot of wholesalers running around my offices not being all that targeted is probably something I would like less of as opposed to someone who’s more pinpointed as a strategy and execute on the strategy.

Brian Moran: It’s interesting. I don’t, I agree, right? Running around just dropping fact sheets off knocking on windows that’s purely disruptive and interruptive. And it’s not truly value add. But I don’t think we want to remove people from the engagement model only because I do think in our business, you can probably get 90% of the way through your transaction. But if your option at the end is to talk to a bot or talk to a person, and have the positioning provided to you in a way that relates to your experiences and your background, and what they know about you. I think people want to have those wholesalers there, it’s just going to be a different look and feel.

Jack Sharry: Yeah. And more efficient on all sides. Right? Totally. Yeah, totally. Yeah. That’s great. Well, this has been wonderful, I really have been a fan of what you and Mark and the team have been doing works a longtime friend, and we’ve had him on our show. And we should have both of you back as their story continues to emerge. It’s always fun to watch people smart ideas, doing smart things in smart ways. So thank you for the conversation. It’s really been wonderful. As we look to wrap up, one of the things that we’d like to do at this point is what are three key takeaways you want to share with our audience that they can maybe apply in their lives,

Brian Moran: I think, number one, similar to health, don’t let pain points and linger. Look for solutions collaborate and try to find partners that you can do them with to leverage innovation, right don’t run from it leverages to that. Similar to how the calculator replaced long division on paper, leverage innovation so that you can become more productive with your time. And three, don’t let legacy models be the reason for not adopting new approaches. If you can do those three things in today’s environment, regardless of what age you are, and demographic you may be, you have a really good chance of having and seeing the fruits of your labor pay off.

Jack Sharry: I’m curious, have you started see people copy you that started to happen?

Brian Moran: Yeah, absolutely. And I think it’s the greatest form of flattery.

Jack Sharry: Sure, right.

Brian Moran: It’s industry needs innovation. And we’re happy to sort of set the table,

Jack Sharry: I think we would probably both agree that the old wholesaler model is a thing of the past. So it needs to be replaced by cool stuff that you people like you’re doing. So congratulations, this has really been an enjoyable conversation. And our final question of each of our shows is always the same and always our favorite. And that is that. What do you do outside of work that you are excited or passionate about? People might find interesting or surprising?

Brian Moran: Well, I would as a startup founder and a CEO, there’s the time outside of work is less than less these days. But that time that there is it really is about my kids and my family. Right? It’s and so I coach both my sons in the sports that they do. And that’s probably candidly, it’s the most rewarding experience I’ve had, maybe in my life just to watch the impact on the kids, the watch the impact on their development, watch the impact on progress. It’s worth its weight in gold, and I feel really fortunate to be able to do it. So that’s probably the most passionate thing I have in my life outside of FLX.

Jack Sharry: That’s true, Brian, thanks. This has really been wonderful for our audience. If you’ve enjoyed our podcast, please rate review, subscribe and share what we’re doing here at WealthTech on Deck. We’re available wherever you get your podcasts. Right, thanks again. It’s been a real pleasure.

Brian Moran: Thanks, Jack. Great to spend time and appreciate it. Great show. Thanks.