The Dynamics of Innovation in Wealth Management Technology with Reed Colley

Jack Sharry: Hello, everyone. Thanks for joining us on this week’s edition of WealthTech on Deck. We have a special edition for you this week. I had the opportunity to speak with Reed Colley. Reed is the CEO and co founder of Summit Wealth Systems. We talked in depth about the topic of innovation. This discussion was part of the Next Chapter Innovation Summit, which was launched on January 25, 2024, and which you can find online through going to Advisorpedia or the MMI. It’s a free conference, you can check it out, or you can listen to it right here on our podcast. So I found this conversation to be an extraordinary and interesting discussion. Hope you enjoy it too. Enjoy!  Hello, everyone. Thanks for joining me and Reed Colley, CEO and co founder of Summit Wealth Systems for a conversation on the dynamics of innovation. I have the privilege of speaking and working with the best and brightest in our industry on my WealthTech on Deck podcast. We talk about a lot… about innovation and disruption and all that. So Reed has been a guest on my podcast and stands out as someone who knows more and has done more than just about anyone in our space on the topic of innovation, platform innovation in particular. So I invited Reed to speak on this as we look at his significant track record around innovation. And also he’s rather articulate on the topic. So he has great passion for what he does. And so it’s really going to be a fun conversation talking about that, and about the difference he’s making in advisors’ and clients, lives. So, Reed, his first notable success, he may sound familiar to you, took place when he founded Black Diamond in 2003, and created a new standard for supporting advisor operations. Black Diamond later merged with Advent SS&C in 2011. Reed is doing it again with Summit Wealth Systems, which he started in 2019. Reed, welcome to the Next Chapter Innovation Summit. Thanks for being here.

Reed Colley: Great. Thank you so much, Jack, great to, great to see you again and talk again. I do love talking about innovation, and really how we can help advisors and their clients. And that’s the passion of ours.

Jack Sharry: Yep, I’m right there with you. So to set the stage, if you’d give our audience a high level view of the innovations you and your colleagues have developed, first at Black Diamond, and even moreso what you’re doing at that Summit Wealth?

Reed Colley: Yeah, no, it’s been an arc in my career in this space, and really spanning 20+ years. When I built Black Diamond in 2003, and really launched it within, after the next year or so after that, this space was really around how do I drive better views and understandings of the investments and the investment advice that I’m giving clients, the IA of the RIA, and really at the time, they were using kind of systems that were more around the accounting, the back office numbers, as opposed to like being able to tell their story. So we saw this opportunity to create something, leverage the web as a delivery vehicle, and make it really user interface driven, very graphical reports that really spoke to the advisor, the first one to do truly customized reports at scale. And clearly, that’s, you know, been the standard ever since, you know, we got into the market. And you know, what we saw over time was advisors were able to do more. They were able to leverage, you know, their existing internal people. One of my biggest fears when I started BlackDiamond was we’re automating a lot of processes, we’re outsourcing a lot of the data management from that time. And I remember talking to our early clients and just saying, “Hey, I’m, you know, a little bit concerned that if we automate this, that people might not have a job anymore.” That was really important for me, from a human perspective. And every advisor we talked to said, “Oh, no, no, no, I’ve got way more important things to do than to be worrying about the data side.” So, what we saw is it just was a big unlock, you know, of what they could do for their clients, what could they do, they could do in their practice. And I think, you know, without over attributing too much to us, it started to give rise to advisors being able to do more, and to be more holistic wealth managers, with the additions of different technologies that came around after that, and really led to kind of a technology explosion, which leads us back to where we are today, which is advisors are trying to do a lot of things, you know, back when I started Black Diamond, they were using a lot of manual processes, or workarounds, or Excel, we call it kind of the Excel hacks, or Excel… that you put in place. We’re seeing more of that because they’re trying to do that disparate pieces of technologies that are out there. So for Summit, we’re really trying to unlock that great client experience for advisors and for the client, you know, in their interactions with their clients, and then also for them and internal processes. So they have that again.

Jack Sharry: Yeah, we’ll get into some more in a little bit because I’m quite impressed seeing your software in, in action. It’s, it’s really beautifully designed for the user, but I’m getting ahead of myself. So I think we can both agree that innovation is rare. There’s a lot of chatter on the topic. I mean, you can’t pick up anything these days without someone talking about disruption or innovation. So let’s explore how and why you do it. Where does your inspiration come from? And once you land on an idea, what does your process look like? Going from an idea to the actual build, the real world of making it useful? So how does that go? What is that like?

Reed Colley: Yeah, no, it’s a great question. And, you know, I wish I could just snap my fingers and have innovation whenever I wanted to. But I think ultimately, for me, you know, and for us, and my co founder, Anthony Sperling, and I, so much of it starts with really understanding where this space has come from so you have context of what advisors are doing, you know, for us specifically, what the data is doing, what the calculations are doing. But it’s kind of this nice convergence of things that I have that applies this space, well, where its data and its calculations. And it’s understanding how advisors are trying to serve their clients. And then any other application of not anywhere in this space, some other industry, it would be worthless, it would kind of just be useless data sitting around. But here it works, because it allows us to unlock things in the right way. So for me, the biggest innovation is just around context of the space, but then really talking to people, talking to advisors, talking about what’s hard for them in their life. And that, for me, my passion and our passion really lies around just helping people solve their problems and doing it with technology, doing it with context, and doing it with a lens on, did we solve it for you? Did we make sure we had impact? And if you know, for us, we know how advisors work with their clients, advisors are happiest when they can efficiently help their clients solve things that the clients need solved in their lives or want solved in their lives, that even sometimes maybe they didn’t even know that the advisor could help them… And that’s when the best advisors are the most fulfilled. And we love that mantra. And that’s how we are when our firms and our advisors feel that same way, that we’re helping them solve things for their clients, for themselves. That’s when we’re the most fulfilled. So I just love the virtuous cycle. But so much of it just goes back to conversations with the advisors, what’s meaningful for them, what’s meaningful for their clients, and then kind of going back and putting our problem-solving hat on that can lead to some innovation. And so much of that, for me, in my mind is I kind of think of the various things that are firing and, you know, whatever the neurons and synapses. For me, I kind of have to whiteboard everything, to see the connections because it’s about connecting these pieces of information and data together. And then ideally, coming up with something that visually distills it down to what I’ve kind of always referred to as a simple, elegant solution. So it’s approachable, it’s human, it’s design thinking, it’s growth mindset. And it has an impact. And that’s where we kind of start all of our innovation anytime we’re talking to our advisors today, we’re just listening for things that we can help and continuing to connect these pieces together just to make their lives better and unlock more and more of what’s gonna be better for their practice long term.

Jack Sharry: So you and I are just getting to know each other, we’ve spent a little time on podcasts and what have you. But I have a bit of a track record around innovation over the course of my career, I even have a patent on a financial… making an SMA and a guarantee on an SMA. We’re using an annuity structure… for another time, we’ll talk. But the idea is we were… what I did there, and I’ve done over the course of my career, what I’m hearing here and I want to dig in a little bit, it’s about listening and listening to what it is that I’m assuming at least that’s it’s true for me, it sounds like it’s true for you. But listening to what they’re trying to achieve, what their obstacles are, what their challenges are. What’s in the way, what works, what doesn’t work? Talk a little bit about that dynamic. What is it that you’re doing? Because I think it’s in the listening, it’s in the questioning. Yeah, you can whiteboard it, but you gotta listen first.

Reed Colley: Yeah, it’s all about listening. And it’s about digging in. And it’s funny, it’s about asking the next question. About and asking the extra question. And one of the things that we’ve done, that we really think is powerful in the space is we’ve created this new functionality feature called our Wealth Journey. Wealth Journey is really just a way to articulate and visualize what’s most important to a client and having advisors talk through it and memorialize it. Like so many advisors are asking questions, they’re talking about things, they’re trying to find out what really is important to their clients, but they’re doing it with tools around maybe you’re looking at kind of your your goals, and you know, some kind of goal planning software, financial planning software, or they’re doing it looking at pie graphs and line graphs and tables. Really don’t get you there. But they’re all writing tons of notes, copious notes, and they put them into CRM or they keep them manually. You know, some people refer to their CRMs as kind of a black hole where the data goes in and doesn’t come out. But the reality is that information is gold, and it becomes, can become trapped in there. So a big part of it is, is really around listening and memorializing, you know, what’s most important to the person you’re talking about. And for us, it’s when we’re on a call, when we’re talking about the workflows that an advisor is going through, or what they’re trying to do for the client. It’s listening but digging in, like, tell me more. You know, I hear you talking about this, is that frustrating? Is that hard for you? What would you like to be doing? And one of the things I do when I get on most of my calls with either existing advisors, which we’ve already done, or I just continue to ask questions over time with them, or, you know, we’ve signed a bunch of advisor firms in Q4, and you know, coming from all legacy platforms, I keep asking them, “Hey, if you could snap your fingers and change one to three things about how your platform is working today, how your platform… how your processes are working, what are they?” And they immediately just, they just go right to their pain point, right to their pain point, immediately. I kind of, I laugh about it. It’s like these, you know, they’ve got these like, theragun kind of percussion, like, therapy things that you can put on your muscles and things. And you’ll have one of these things sitting around and somebody will go, what is that, if they haven’t heard of it before? And the first time they grab it, they put it right where they need it. So it’s kind of like, you ask that question, it’s going right through the heart of “God, I really have got to get my hands around all this data that’s flowing around, that we’re doing swivel chairs and trying to put manual processes to make it all sync, but it never does. And it’s hard for us to do meeting prep, and it’s hard for us to really get to that next level question with our clients.” They tell you right away. So I think it’s really asking the key questions, like, what’s most important to you? And then making sure we’re hitting those and we would come back and say, “Hey, this is what you said is most important, are we solving that for you?”

Jack Sharry: So I’d like to, I mean, new startup, new idea, no one had ever done anything like that before and you… however you figured it out, you figured it out. Worked out. Took a break came back a few years ago, and you’re back at it. How’s it different? What’s happening now, I would assume you’re a little wiser, a little older, little, little savvier in terms of that listening thing, about sort of checking it out in terms of what you need to know, what you need to do. Tell us about what that’s like, as you’ve now had a little more experience in this innovation game?

Reed Colley: Yeah, well, I’m definitely older. And my knee can attest to that, as I still try to do young things like soccer, and tennis, and snowboarding. But at the end of the day, you know, it’s kind of the old adage, you know, they say, if you, if you built one platform, built one company, you built one company. So, every time it’s different. And for us, I think the best thing is, we’re sitting in this environment of so much opportunity for advisors and their clients that you can do so much more. And what’s really interesting to me, though, is the mindset that a lot of clients find themselves in today is kind of reflective of… this is getting a little broader, but more societal pressure. So increasingly, we’re finding more clients coming to their advisors, and kind of wincing and asking the question like, “Am I okay? Am I going to be okay?” They’re coming at it from that scarcity mindset.

Jack Sharry: Yeah.

Reed Colley: And at the end of the day, most of the clients with advisors are in good hands already with their advisors. But the best advisors are saying, “Listen, I’m going to make sure you’re focused on what you have.” And this, and moving in more to an abundance mindset too. We talk about what’s most important to you in your life, and I will make sure we get there. And when they do that, and they have that conversation, you actually have the opportunity for getting into what’s what’s most important to the client and helping them take a step back to understand more about, you know, their opportunity, you know, to do the things in life, that’s, that’s most meaningful for them. And for us, we call that connecting, you know, their wealth to their value. So advisors, being able to do that is a huge part of making sure you have that connection around the listening, around the innovation. But I think at the end of the day, you’re solving things based on what the current environment is, and I think that’s the biggest thing and doing it again. I think the tenants you take are, continue to help, continue to make it simple, but no simpler, simpler, as needed. And you continue to make sure you know, it has a a lens of driving a solution and helping the advisors with what they’re trying to achieve at the end of the day. So a lot of similarities. But really, you’re in any given context on how you’re doing.

Jack Sharry: So this I’m sure it’s never happened to you, but innovators, as I understand it, run into obstacles from time to time, particularly when you’re challenging norms and disrupting how business is conducted. What are some of the obstacles you’ve encountered? What have you done about it? How have you sort of kept on? I would assume they’re sort of fodder or, or food for for innovation, actually, when you have the obstacle because you got to figure out how to overcome it, it’s in the way. But talk a little bit about that, if you would, is how do you overcome obstacles? How do you use them as food for thought, food for advancement?

Reed Colley: Yeah, no, it’s a great question. And I think, you know, there are definitely entrepreneurs and innovators that find the rosy path and are able to stick on it. And to continue to have success in that way. I haven’t met many of them. But I think, you know, the reason that I’m even where I am today, and where we started even you know from having built Black Diamond years ago was actually as a result of obstacles of where I was, I was at a company where, you know, it was what was available in the market and, you know, an opportunity to go build wasn’t what they wanted to do. And they had a lot of dysfunction in how they were, you know, working internally. So that led to me leaving and what I always kind of attributed a lot of what I do is, you’re running down your path or you’re walking down your path, some of us… sometimes we’re sprinting, sometimes we’re jogging But you run on your path, and invariably, you’re going to trip. And you’re going to trip on something. And you know, I think so many times, it’s easy to pick up that rock that you tripped on, look at it, get pissed and kind of chuck it off the side of the road. I feel like I’ve done that a number of times. But I think the real opportunity is, ultimately I pick up the rock. And I said, wonder why this was here? What can we do with it? And so when I’m at my best, I can do that. And I remember being at a, taking a flight from back from years and years ago from I think it was from San Francisco to Florida. And we had a connection in Atlanta. And of course, our flight was late coming into Atlanta and trying to make that flight to get home. There were a couple other flights that night. But I had a couple of people with and we’re just crushing in, trying to get to the front of line to get on standby on that next flight. And I said, there’s like one seat and like, 20 people ahead of us, I’m gonna go over to the bar, I’m gonna grab a beer, and I’m just gonna sit here and and it turned out, I met somebody. And we just had this amazing conversation for the next hour and a half, you know, he’s talking about kind of his business, his life, what they’re doing, we were like, it was just a great kind of connection and it would have never happened. So it’s kind of looking for, you know, what am I supposed to learn? What am I supposed to do in this? But it’s really hard. And I think ultimately, it’s really around understanding what’s in your purview, like what you can have an impact on, versus what you’re trying to control from an outside world. And there’s a lot of Zen and Buddhism to that. But ultimately, I think the biggest thing is, you know these things are gonna come at you, and how are you going to respond to them. And I talk to my kids, as much as they listen or don’t listen to me, about life is 10% of what happens and 90% of how you react to it. So there are certain things that are awful that happen in life. And there are certain things that are amazing. But a lot of it is around what you do with it and recognizing kind of what’s in your… what’s in your grasp, what’s in front of you that you can have an impact on. So a ton of obstacles, for sure. But I think at the end of the day, we continue to have a growth mindset and, when I’m at my best I can, I can do that pretty well. You’re, you’re listening and learning for clues on what to do better.

Jack Sharry: You know, the word that pops to mind as I’m hearing all this, tracking really moment by moment, and just right there with you, is the term nimble. That what I’m hearing you’ve uncovered/discovered/do is you’re nimble, and nimble is about whatever comes your way, you deal with it however you deal with it. In the context of what you do at Summit Wealth, I’m curious, because a lot of what I’m seeing and hearing is you’re building this platform, it’s really it’s kind of a new way to look at things, it seems to me and it’s a lot about nimble. Sounds like it’s a lot about listening to pain points, and so on. Talk a little bit about that. And this’ll be our final question before we close. How do you make nimble happen? And how does that aid in the cause of trying to make for better systems?

Reed Colley: Yeah, that’s a great question. And ultimately, you know, we probably say nimble and we talk about it as agile, you know, it’s kind of a reason the development patterns and software practices were called Agile. And I, I’ll never forget in this was 2007, we hired our VP of engineering at that time. And I asked him, I said, you know, we’ve got this development methodology, which is not waterfall, but it’s kind of, you know, we kind of called it rapid application development, we just kind of came up with a word for it. It was about being nimble, we were releasing things, you know, early on in Black Diamond, and, you know, sometimes multiple times a day, you know, just to get solutions out to clients. It was all it was a tight team, quality was high, but we kept continuing to release and then we were moving into more cycles, weekly, bi weekly. But I said to him, I said, you know, how would you describe what we’re doing? He goes, well, what’s Agile? And Agile at the time was was coming on, it was scrums, and it was sprint, and it was all these things that are happening in development world. And I said, well, we don’t do anything. He goes, no, no, you’re you’re doing all the principles. You’re just not doing a capital A, you’re doing lowercase A. But I think agility is really, ultimately what really matters, you know, for us and for us to really try to humanize how we’re doing these things for advisors and their clients, you have to be agile. You have to be, I’d say, agile and responsive. And then speed to… we talk about all the time internally, speed to solution, you know, time to impact, all of those things is key. Because most of the time, that’s what the best advisors are, they’re looking for solutions and looking for solutions quickly that can help them so, you know, for us, having this agile mindset and having this growth opportunity and just being being responsive, and that’s one of the biggest, biggest keys we can do because ultimately, we’re building this foundation for what they’re doing. So we get rid of the Excel hacks, we get rid of the gorilla glue or duct tape that’s been put in place or you know, the kind of the swivel chairing that happens between them. And we’re putting a foundation in place that’s really around you know, we call our Summit Wealth OS like a real operating system that can connect their CRM, connects planning, connects their individual data items they have internally, they… excel spreadsheets are great as an input, but they shouldn’t be the processing and output engine. That’s what we do. Ultimately, we bring all this together and have this incredible client experience as you described. We, we’re so maniacal about having just a really elegant, really human based, you know, really appealing UI for clients, because this is what they see of you, and what they know of you. And really, we want to accentuate all those things. So being able to be agile, building a system that, in that view is responsive to the advisor and exactly what they want it to be that agility, kind of as you describe it, it’s the core foundation of what we’ve done. Because ultimately, that’s what a great advisor is for their clients, agile. And we want to mirror that and be just like them.

Jack Sharry: So one of the things that we talk about on our WealthTech on Deck podcast is the confluence of digital and human advice. And really, what you’re describing is that because if, and this is more for our audience, if you… and I urge you to check Summit Wealth Systems online, see what they do, check out a demo, see what it looks like on the other side, it’s one thing to talk about it, another thing to see it and feel it and kind of get it. But it is that combination of that tech, ops, all that back office stuff that has to happen, but also has to have a human connection, a human element, a human way of communicating. So talk about that, if you would, for just briefly because we’re probably over time by now, how do you do that? I mean, that seems to be at the heart of it, is you’ve got both sides working for you in terms of the, the human and digital aspect and what…

Reed Colley: You nailed it. And I think that’s where, if you go back, you know, 20 years, what you saw was, you know, the advisors spending most of their time trying to understand how their investments can, can benefit their clients. And how they can find those investments and put them into the right vehicles to drive what they said they’d do for their clients. And then as you started to get broader, managing more of the holistic wealth and, and helping the client from a human perspective, you start wearing a lot more hats. You put down the investment hat a little bit or you, or you might functionalize it into a part of the firm or even to processor or asset management, you know, back end. But at the end of the day, this convergence of we call it kind of the technology or the digital with the human side, that’s what wins. When you have the efficient, you have the appropriate technology foundation that interfaces well with the humans inside the organization to then deliver the right outcomes for the humans that are your clients. That is absolutely the mix that’s needed for, you know, understanding what a modern practice looks like, you have to have both. And we know, and I’ve talked about this, and a few years ago, and you know you when we first connected with LifeYield was at a… when we first announced we were doing this at T3 conference in February of 2020. And it turned out it was the last conference any of us went to for a while. And so we did things and we had obstacles and there were obstacles that came out of that. But you know, first talking about that, but, you know, we talked about the advent of, you know, kind of the robo advisor and what that would look like. The robo advisor has a place, 100%. And it’s gonna continue to evolve. But it is not going to replace what a human does for a client, what a human advisor does for a client, but it’s all about empowering and the best firms know that continuing to try to have a substandard UI and a client experience and then have back office processes that are manual and hacky on the back end. None of that scales and they’re all feeling the pains. So ultimately, it has to be that right platform with the right delivery by the human advisor talking to their clients. And that’s, that’s why we do this. We love it. That’s exactly what we love to do. We love using technology to empower the humans.

Jack Sharry: Well, Reed, this has been great. I had very high expectations, once again, you’ve exceeded them. So thanks for this. We’ll, we’ll get you back on our podcast where we can explore some of these ideas further. I’ve got about 100 more questions for you. But for now, I just want to say thanks on behalf of Next Chapter Innovation Summit. Thanks for joining us today.

Reed Colley: Thank you and I kind of feel like I’m a patent behind at this point. I’ve never had a patent, so I’m impressed.

Jack Sharry: I see and feel one in your future. So thanks so much.

Reed Colley: All right. Thanks so much for having me, Jack. Take care.

Jack Sharry: Thanks, everyone for tuning into this discussion. I really enjoyed my conversation with Reed. Great energy, super smart. He’s really making positive change, all good for his company and more importantly for our industry, consumers and advisors. For our audience, if you’ve enjoyed this special Next Chapter Innovation Summit conversation as we’ve applied it to our WealthTech on Deck podcast, please rate, review, subscribe, and share what we’re doing here at WealthTech on Deck. We’re available wherever you get your podcasts. Thank you again, everyone. Please be sure to tune into the conversations on the Next Chapter Innovation Summit. I think it’s worth your while.