The Legends of WealthTech with Arlen Oransky

Jack Sharry: Hello, everyone. Thanks for joining our weekly WealthTech on Deck conversation on the future of financial advice. As we always do, we will look at what’s coming our way regarding the confluence of digital and human advice, but before we get to the future, this episode will be more about how our industry got started in the first place. We will look at some of the people and events that have shaped and propelled the dramatic growth of advisory assets over the past few decades. From time to time, we do a special WealthTech on Deck edition we call Legends of WealthTech, and I have a very special guest. I would call him the unsung hero of our industry. More about that in a moment. Fittingly for today’s discussion, the idea of the Legends of WealthTech series came about at an MMI meeting. About three years ago, I spoke on an MMI panel in Nashville on retirement technology. And as I tend to do, I made a series of historical references about the advisory business. I’ve been around for a while, as you all know. Afterward, a person who was early in his career asked me how he could learn more about the history and evolution of the advisory business, and it struck me that we need to share the story of our business more broadly. In fact, I talked about it immediately after with our friend Frank Campanale, who I pointed to as a good example of how you could learn more about the industry. So that question and many conversations with industry folks turned into this Legends of WealthTech series. Our Legends guests today have included John Thiel, who’s the former head of Merrill, Noreen Beaman, former CEO of Brinker Capital, Cheryl Nash of InvestCloud, Lori Hardwick, who’s currently chairperson of a bunch of firms, Len Reinhart and Jim Seuffert who founded Lockwood Advisors, Roger Paradiso, now a senior leader at Franklin Templeton, and a bunch of others. These are all folks who have made a significant mark on our industry. Today, we’re going to hear from someone who played a vital role in our industry from the start, largely behind the scenes. I’ve known and worked closely with Arlen Oransky over the past 30 years. As we have with so many leaders, he is just someone that is a go to on getting stuff done. Often, his role is in the background, but it can’t be denied the significant impact he has made on our industry as he’s brought us all together. Arlen is the executive vice president and chief membership officer at the Money Management Institute, good old MMI. I noticed on LinkedIn that he was celebrating his 20th anniversary. I’ve known him for far longer, and I thought, we should get him on, he’s a Legend. So Arlen is talking with MMI leaders every day. He has the pulse on the industry and a storehouse of knowledge and experience regarding all the changes and growth in the advisory business over decades. And today we’re gonna have a little chat about all that. So Arlen, my good friend, welcome to WealthTech on Deck, Legends of WealthTech edition.

Arlen Oransky: Jack, thank you so much. It is a pleasure and an honor to spend some time with you today. I look forward to sharing stories.

Jack Sharry: Yes, let’s hopefully most of them are true. So Arlen, you joined MMI in its infancy. If I’m not mistaken, I think you might have been like the first staff member at MMI. Correct me if I’m wrong. In the early days, it was a small group of MMI board members who were promoting this newfangled thing called a separately managed account,an SMA, way back when. Of course, there’s about 100 people that have identified themselves as at that founding, but we know there’s a handful at least. So please tell us about how you worked with these handful of rebels. And I say that with great admiration and affection, I know them all, and built the membership and the MMI to where it is today.

Arlen Oransky: Well, thanks again, Jack. And it’s really a terrific story. If you dial the clock back, you’re on point. There were just a few of us involved with MMI when I was invited to come on board. That’s another story we could talk about. But back in the day, you’re right. It was all around this new thing, separately managed accounts. The technology was not where it is today. The transparency was not where it is today. And we had a handful of firms, luminaries who launched MMI and recognized there was a void in the industry to bring together leaders to talk about products and platforms and processes. And so when I came on board MMI, I was tasked to broaden the membership, and again, there were just a handful of firms that were engaged. And so it was a new opportunity for me, after working for the other 20 plus years of my career at the asset management side, to get the word out not only about MMI, but about managed account products more broadly. And so that was the mandate. Hit the road, knock on doors, and educate people on the significance of the product and of the institute.

Jack Sharry: You also, in addition to knocking on doors, talking to those of us that as soon as we heard about, we wanted to sign up, but you also ran all the programs. I know that’s evolved from there. Maybe talk a little bit about that, because it was one thing to have them sign up, but what were they signing up for? So maybe talk in the early days of putting the programs together. You were kind of, you were doing it all, shall we say, way back when.

Arlen Oransky: Yeah, back at the time, the focus was really not only around capturing members, but also around building committees, which we now call communities, and running various events. Some things new to the SMA space, like our alternative investments forum. And one event, Jack, which really points back to you and its beginnings, was the summit where we would bring together industry leaders in a very closely knit group. A lot of conversations off the record, hallway conversations, if you will, to talk about the industry. Where has it been? Where is it going? And so I think the summit was one of the premier events that we all built that put MMI on the forefront.

Jack Sharry: Yeah, I remember, if I recall, was it in Miami that we did that?: Yes.: Yeah, one of the things that I found fascinating, I was sort of at the scene of the crime, if you will. No crime here. But as things evolve, one of the things that I think a hallmark of your leadership, and certainly Craig’s and that is that you kept listening to the marketplace. I’ve spoken at a variety of these conferences, the legal and compliance, insurance and annuity along the way, you kept, sort of picking up different aspects of the advisory experience. Early on, I remember this whole conversation in the early days of, is this an SMA organization, or is this more than that? And clearly it is more than that, has become more than that. Talk about that, how that evolution occurred, because early days was just SMA period, and it’s so much more than that. But how’d that occur?

Arlen Oransky: No question about it, we, for many, many years, were looked at as the SMA folks, and it took us a little while to move out of that runway. And so focusing on all things in the advisory solutions market, and that really, Jack, was a function of the firms that were coming on board. How can we better deliver thought leadership, discussion, conversation around all things delivered through the intermediary channel? So to your point, SMAs, UMAs, ETFs, mutual fund advisory, alternatives, annuity and insurance solutions, and more recently, having conversations in the institutional arena, as certain products in the institutional space, like private equity, are moving downstream into the high net worth arena. So MMI went through this evolution of just being the three letters, the SMAs, into all things now, and it’s worked out extraordinarily well.

Jack Sharry: You know, I think about this. One things you reminded me here, Arlen, is that way back in the day, in the early 90s, I was at Putnam, I was a national sales manager, and I attended ICI meetings, because that’s what you did. ICI, for those that may not know, since MMI has really eclipsed them in many ways, early days, ICI would have five to seven thousand people attend their meeting in Washington. And I remember I was active in ICI, and then later became active in the MMI in the early days, on the board, etc. And I remember seeing Matt Fink at an ICI meeting, I was still attending both at the time. And he, I think he called me a trader, because I had gone from the mutual fund world, which was dominant in the 80s and early 90s, and I had moved over to this newfangled thing called SMA. So it just occurred to me, as we were talking about that, that was part of that. And of course, it’s so much more than the SMA. But I don’t know if you remember some of those early days when SMA, we were just trying to get some attention around a new way to own investment assets.

Arlen Oransky: Nope, no question about it. I too, remember my days at ICI being in various committees with the organization, when I was on the asset management side of the business. And you’re right, we had to kind of break the glacier up a little bit and explain to individuals, I remember many conversations with Roger Paradiso about separately managed accounts. And then how do you define, you know… or a UMH? You were involved in those discussions as well. And so it was a challenge, but we made some great inroads with some very bright people who had the vernacular the right way to make it resonate.

Jack Sharry: Yeah, yeah. Of course. We’ve had Roger Paradiso on our show a few times, and Roger’s a one of the, I credit him, from everything I hear from everybody else, as the person that invented UMA way back when. I also, a funny story. Our good friend John Coyne, who at the time, was vice chairman at Brinker Capital, invited me to speak. This was way early on in my days at Phoenix Investment Partners. We were barely in the business of SMA. We were in it, but we were just forming it. We started to talk about this concept of UMH, another good friend in common, Len Reinhart, had written a white paper on, it was sort of the buzz. And actually, Noreen Beamon and I have chuckled about this, but I was invited to speak at a Brinker conference to advisors, and I was the keynote, and the title of the talk was, “UMH, It’s Here.” Of course, it was still not here, but this is probably, I’m gonna guess, 15 years ago or so, maybe more. But the point is that our industry was trying to figure out how to create fee based business that did, was more comprehensive. Was better for consumers, better for advisors, better for firms, ultimately. And I don’t know if you know the percentage, but what is the percentage these days, of fee based assets, advisory assets across the industry? Do you know?

Arlen Oransky: I don’t know the number off hand, but it is, it is significant. And what’s been interesting along the way is how, back at the time, the focus was almost solely on your commission, on your book, and how that has evolved and migrated, you know, for the benefit of the individual investor, you know, looking at it from both sides of the table, rather than just one. We can talk about how it was back in the early 80s, when interest rates on money market funds were 18.5%, and the whole mindset was very different. That whole evolution of the chain link fence between the manufacturer, the distributor, the wholesaler, the advisor, and the investor, was nothing like what it is today.

Jack Sharry: Yep, much more collaborative over time. So let’s talk about today. By the way, for our audience, I believe that the percentage of of assets, retail assets, is somewhere in the 60% neighborhood. I’m basing that on on just clients that we work with. That’s their number. So I’m assuming that’s representative of the industry, some of the larger players. But be that as it may well, we’ll correct it if this is not accurate. Talk about today. What are some of the things you’re working on? What are you excited about? What’s happening at MMI? Fill us in.

Arlen Oransky: I’m extremely excited about a couple of things that MMI has evolved into. One key focus for us right now is broadening the level of engagement within the industry and a very important initiative that Craig and myself, and in fact, Robbie Cannon, former CEO of Horizon, have been working on is a program called Thrive. And Thrive is really designed to engage smaller, growing asset managers in the space. Firms typically $25 billion and less, to give them an opportunity to engage with colleagues, to hear stories about how firms are matriculating, how they’re going through that life cycle. These could be institutional firms that have moved into the retail space, newly launched boutique firms, various minority firms. And so MMI has a very specific program to engage these colleagues using technology, using education, to broaden our mandate, and most importantly, benefit these firms and their investors. That’s one key area. The second, and I know you’ve had some conversations with Tim Williams about this, is education, career learning, as we say, at every stage to facilitate growth in the industry, making sure that individuals represented across all sleeves are recognizing the importance and significance of advice, and that’s the runway that we’re focusing on right now to grow this organization.

Jack Sharry: So, Arlen, as we talk about the present, I can’t help myself but go back, just because you’ve been around so many of the huge and important changes in the industry. We have a good friend in common, Steve Gresham, who’s been on the show a few times. You and Steve wrote a book. In fact, I dare say, as I recall, you kind of wrote the book on advisory way back. So why don’t you fill us in on what you and Steve did? I know, in your classic way of being behind the scenes, Steve may have been the front person on it, but I’m sure the work was done by you. But fill us in.

Arlen Oransky: Well, you know, Steve and I know each other forever, as you will. We met back in the day where we both were at Weiss, Peck, & Greer, boutique asset manager on Wall Street. And so I had the pleasure of working with Steve as he developed a series of target date funds there. And when we both moved on, I went onto TIAA-CREF, but Steve and I had an idea around putting together a book that focused on separately managed accounts. And so we pitched our story to Wiley, and they found it very resonating, if you will. And so we published the new managed account solutions handbook, which was a compendium of interviews, stories of luminaries of the industry, and importantly, how advisors could use tools to advance their practice. And so we couldn’t focus on the royalty checks, which were very smallish, but it was an important piece that went a long way, and you could still buy it on Amazon. It was a great, a great exercise, and actually, all kidding around aside, an important book that still has shelf life. And so there were tools in there that are certainly relevant to today, Jack. So that was a great accomplishment. I value it to this day.

Jack Sharry: Yeah, one of the things I’d underscore is the fact that when SMAs come on, this is really more for our younger folks that weren’t there at the time, but certainly people that have been around a little while, like you and I. What happened was simply managed accounts was sort of more than a product. It was always sort of viewed that way. It was fee based, same side of the table as the client, really looking, trying to look at the full picture for the client, what their issues were, challenges. And while financial planning was around throughout, frankly, that fee based approach, as it was often called, was a financial planning approach. Maybe advisors didn’t do the full financial plan. There’s, they still have a reluctance, I observe, on that. They all agree it’s it’s the right thing to do. But when you do a separately managed account, you start to put together a portfolio, you start to build models, you start to make things happen. So one of the things that came along with it is sort of the practice and if I may toot Arlen’s horn, when the conferences, the many, the vast variety of conferences that MMI has hosted over the years, he was always the person behind the scenes, working with committees, working with staff, working with a bunch of folks, speakers, to really start to train the industry on where it was going. Talk a little bit about that, because you really were, in the early days… Joan Lensing is leading that now, along with many others. But talk a little bit about that, about, basically, you were developing the curriculum, and it wound up, frankly, the book you and Steve did that was sort of put it on paper, maybe talk about that evolution of training the industry about how to do business in a more comprehensive way.

Arlen Oransky: That’s exactly right. I mean, the effort was to bring together individuals at all levels, including CEOs, to educate themselves, educate others in the industry. And these events, these conferences, these committees, actually did just that, because there was uncharted territory. There was a lot of information out there. The nomenclature was getting extremely confusing. We had more acronyms than we knew what to do with and so we really needed individuals who could explain in an understandable way how this business needs to evolve. And so bringing… and I’ve been very fortunate, and over these 20 years, have met thousands of people at MMI events and in MMI committees to help broaden developments in the industry. We’ve had some fabulous people speak at our events. We’ll continue to do that, but the education focus has been been critical, and has created some tremendous waves in a good way, Jack.

Jack Sharry: So way back when it was you and Chris Davis, I think was maybe the staff. Was that, do I have that right?

Arlen Oransky: Myself, Chris Davis, and a couple of others in DC.

Jack Sharry: Yeah. And he was based in DC. How many on staff at MMI today?

Arlen Oransky: We have 20 people on staff today, and it’s been a great building block over the years, over the last 10 years, since Craig came on board.

Jack Sharry: Yeah, and as part of that, so marketing people, training people, we just had training folks. We had Tim Williams on recently, has done a fabulous job from what I can see and tell. In terms of the programs that have been developed, your content, in terms of the conferences, continues to move forward. There’s some great mentoring programs, there’s great marketing programs, lots of good stuff. I guess the question is, where does MMI go from here?

Arlen Oransky: Well, we’re always thinking about what’s around the corner, who’s going to be involved in MMI going forward, when we’re all off doing other cool things, and so who are the next industry leaders, who will be at the MMI table, who will be at other firms over the course of the next 5 to 20+ years. So we want to help create a legacy, not only for the Money Management Institute, but just as important, if not more important, individuals who are going to carry this industry forward, how they’re going to advance advisory solutions. We have some tremendous talent within this organization and others Jack outside of the organization that we haven’t brought in yet, and I know we’re going to represent our industry on so many fronts, so I’m very excited about that and where we’re going over the course of the next several years.

Jack Sharry: Yeah, it’s fun to watch. It’s, having been there from early days, I wasn’t at the founding, but I was close and really have enjoyed watching the organization grow and prosper and really serve, serve the industry, I think, in a very important way. And of course, you’ve been a critical part of that story from day one. So, Arlen, as we look to wrap up, this has been a great conversation. You and I catch up from time to time to talk about what’s going on in the industry. It’s really been a lot of fun to have this conversation more publicly with everyone, so thanks for doing that. So as we do on each of our… two last questions, first question is, any key takeaways you want to share, and then also, what do you do for fun? So we’ll talk about both. Why don’t you start with any key takeaways you’d like to share with our audience?

Arlen Oransky: I would just say, focus on, to individuals involved in MMI and outside of MMI. Stay educated. Feel free to get outside your comfort zone. That’s an important thing that I’ve learned over the years through my various mentors. It’s always good to take a look at what’s around the corner, it may be a little scary. I know this sounds very high level, but that’s really the only way that you’re going to advance and learn. There’ll certainly be some bumps and grinds along the way. I’ve had mine, but think forward and take chances, frankly, because you don’t know where you’re going to to end up, and then on the what do you do outside of work? This is an important area for me and and my wife, I’ll share something very personal here. My wife, Isabelle, lost her sister during COVID, and one of the things that my wife and I decided to do was to carry on a legacy that her sister started in the chocolate business to help underprivileged individuals in Venezuela and Jamaica, underprivileged families. And so we’re carrying that legacy forward through this chocolate company, which is small, woman owned business called Adri Chocolates. And so we’ve been devoting a lot of our time to help build that business. It’s been a lot of fun, and so that takes up a significant portion of our personal time. So that’s been a great opportunity outside of the work field.

Jack Sharry: If someone wants to learn more about that group, how would they contact you?

Arlen Oransky: They can go right on the the website, adrichocolates.com, and learn more about the story. And it’s important meaning.

Jack Sharry: That’s great. That’s great. So, Arlen, as always, great conversation, great to get caught up with you. For our audience, thank you for tuning in. If you’ve enjoyed our podcast, please rate, review, subscribe, and/or share what we’re doing here at WealthTech on Deck. We’re available wherever you get your podcasts. You should also check us out at our new dedicated website, wealthtechondeck.com. All of our episodes are there, along with blogs and curated content from many folks around the industry, especially folks that have been guests on our show. Arlen, thank you. It’s been a real pleasure, my friend.

Arlen Oransky: Jack, thank you so much.