The Shopify of Investing: How Apex Is Rebuilding Wealth Infrastructure with Connor Coughlin

Jack Sharry: Hello everyone and welcome. Thank you for joining us for this week’s edition of WealthTech on Deck. I follow a lot of smart, disruptive firms and the people who make them go. One firm that has caught my attention over the past many years is Apex Fintech Solutions. They have a bunch of smart people doing a bunch of smart stuff. I’m a big fan of Bill Capuzzi, the Apex CEO, and he’s been on our show. I’ll probably have to have him back soon enough because he has a lot of smart things to say. Bill has put together a very strong team and is a very impressive set of offerings. I’ve had the opportunity to meet some of the execs there like Olivia Eisinger and our guest today, Connor Coughlin. Connor is the chief commercial officer at Apex and has spent most of his short but incredibly accomplished career there. Connor leads the company’s retail business line focusing on fintech brokerage services and wealth management. As I read up on Apex and what Connor is driving, Apex Fintech Solutions is positioning itself as a technology first innovator aiming to democratize access to investment products, accelerate digital transformation for financial institutions, and deliver highly personalized, efficient solutions for both businesses and individual investors. We’re going to get into all this. Connor, my friend, welcome to WealthTech on Deck.

Connor Coughlin: Great to finally be here. I’ve been waiting through many conversations. I’m excited to be here. Thanks for having me.

Jack Sharry: Yeah, we have had many at various conferences and the like. Now we get to do it in front of others. So good to have you on board. So let’s start with talking about Apex. How long has Apex been in business? What do you guys do? Who do you do it for and with? And talk about your role around all this. So fill us in.

Connor Coughlin: Great. Yeah. Apex actually is about 13 years old this summer and really cool origin story. I don’t think enough people know about hopefully, you know, if Michael Lewis is listening, hopefully he picks it up and writes a book and makes a movie one day. So we’re, we’re wholly owned by Peak 6 investments, which is an investment firm based out of Chicago, not a traditional fund. It’s only internal employees, founded by Matt Hulsizer and Jenny Just. And they, one of the many businesses that they’ve started was a firm called Options House, early online retail options brokerage. And they cleared through a firm called Penson. To make a really long story short, the SEC calls them one day and says, Penson, your custodian, your clearing firm has run into some trouble. Banks have pulled the lines. They’re in a capital tailspin. You’re one of their largest customers. You operate many businesses, you’re probably one of the few customers that could step in and actually operate this. And for anyone out there that uses a custodian, you know it’s no small feat to move from one to another. So over the course of about 10 days, they had to step in and acquire the assets of Penson. They’ve rebranded at Apex and it was all about just saving Options House. 13 years later, they no longer have Options House. It’s obviously become a whole lot more, which we’ll get into, but that’s the origin story going on 13 years now, really, really incredible journey that they and others have taken the business on. In terms of what Apex does, I like to, at a very simple level, describe Apex as the Shopify of investing. So if you know Shopify, the basic premise, or if you don’t know Shopify, the basic premise is you want to sell something on the internet. Let’s say you are an artist and you want to sell your sculptures. You don’t really know anything about building a website. You don’t know anything about payment rails, authentication, shipping networks, logistics, warehouses, return centers, any of those things you need to have a successful e-commerce store. And what Shopify does is in a modular capacity lets you plug and play, what do you need? Do you need a website? Do you want to build your own? Do you need payment rails? Do you want to insert your own? Do you need a warehouse? Do you need a shipping network? Apex is that if you want to launch a wealth management firm or brokerage firm, you show up, we say, what do you want to build for your customers? What do you want to offer out there? How do you want to offer it? And we’re really the how behind the scenes. So it starts with instant account opening. It goes to funding rails, it’s market access, it’s portfolio construction, it’s clearing, it’s settlement, it’s custody, tax reporting, cost basis, statements, comp firms, proxy voting, anything that you need behind the scenes that you don’t really think about too much when you interact with your advisor, with your wealth management firm, with your brokerage firm. Apex is doing that on the background. We do it for over 200 clients today. We have over 20 million brokerage accounts on the platform. And we’re inching towards that 200 billion in AUC assets under custody number. So it’s been a heck of a journey. We do all that both via API for people that want to build their own, build their own platforms. We also do it via UI now. We can embed experiences right into our customers’ existing digital footprints, which is more recent for us, but really gives us a lot more optionality as we sell into the bigger wealth management space.

Jack Sharry: Connor, as I read up on Apex, some of the key initiatives I see that you’re working on, modular and API driven platforms, you just described that. Go deeper as you will. Strategic partnerships, curious about that. Enhancing digital investor and advisor experiences through web and mobile platforms. So some of the things you’ve described, a little more detail around it and retirement and wealth management innovation. That’s just what caught my eye, it was a much longer list. So why don’t you fill us in on your priorities? What are some of the key things that you’re working on?

Connor Coughlin: So if I were to sum up the key things in one big industry trend, it’s what I would call convergence. So if you think about the history of Apex, know, back around the time I joined Apex around eight years ago, we referred to ourselves as the FinTech for FinTechs. And we were supporting at that time only the early robo advisors, the brokerage firms. Robinhood was famously a longtime customer of ours. Firms like Stash and SoFi, Betterment, and these other early movers within that digital wealth management space. And if you think about that customer today, right, they opened their first account 10, 15 years ago, they put $250 in it. What they really needed was quite basic. But if you think about that person today, they’re now 30, 35, 40, they’re entering prime earning years, they’re getting married, they’re buying houses. Those customers that we supported 10 years ago are still on our platform. They’re 10 years older and they have far more sophisticated needs. And so where we’ve really been running downhill in terms of product development is making sure that the long-time customers of Apex and the new entrants have the breadth, the arsenal of product that they need to compete and help to continue to move the needle for higher net worth accounts and more sophisticated needs. But these are still millennials, and they’re still demanding digital tools and they’re still demanding cutting edge the same way they did 10 years ago when they opened that first account, they just have more sophisticated needs now. So that’s one end of the spectrum when it comes to this convergence trend. The other end of the spectrum is the massive, I don’t want to say old school in a negative sense, but the incumbents within the wealth management industry and what they’re slowly starting to see, but the pace is accelerating based on the number of people showing up and working with Apex from this space is the kids of their customers of these massive RIA and independent broker dealer firms, the kids are firing the advisor and they’re demanding more digital tools and they’re finding it harder to keep up. And you’re seeing entrants like a Robinhood launching wealth management and acquiring a custodian. They’re pushing the envelope and these incumbents that have had the bigger, wealthier accounts for a long time but have missed the next generation or are starting to see the next generation slip away from them, they need to react as well. And so what both of those need is on one end of the spectrum, we’re helping to take the sophisticated firms and helping to digitize them, which is what we’ve always done best. And on the other end of the spectrum, we’re taking the digital firms and we’re helping give them the arsenal to compete upstream as well. And so that convergence, anything around that to help us to compete is what’s a priority today. How does that play out from a product standpoint? If you look at the last two years, Apex has launched new portfolio construction and management tools, model marketplace, rebalancer, direct indexing. We’ve launched an alternative investment platform this year, high yield savings account tools, different ways of lending, our advisor workstation and our end advisor experiences. So really a lot of stuff going on to help us drive the industry forward in that regard.

Jack Sharry: And all digital first, right?

Connor Coughlin: 100% digital first. It’s not about cutting out the human when I say digital first. It’s about how do you make the platform as important as the human? So we like to use the term augmented advice. You think about the metaverse, where the world’s going, augmented reality. It’s augmented advice. How do you use technology to make the advice better?

Jack Sharry: So let’s take a step back and talk about your career journey. You’re a digital native. You’ve accomplished a great deal and you’re not yet 30 years old. Could you fill us in and how you got started and take us through your very rapid career evolution? So fill us in.

Connor Coughlin: I appreciate you asking this because there’s actually, I think, two really funny stories I was thinking about before we spoke today around this question in particular. So I started at Peak 6 in my career right out of school. I moved out to Chicago. And funny enough, the job offer they gave me, this perfectly encapsulates all things Peak 6 for anyone that knows the firm is we don’t know where you’re going to live, what company that we have that you’re going to work for or what your job there is going to be, but we’d love for you to come join. And I said, great, I love it, let’s go. So I moved out to Chicago and my first two jobs there couldn’t have been more opposite of where I am today. So the first is they owned a dating conglomerate called Spark networks, they’re a large investor. And so I spent, I had a computer science background. I spent the first summer at Peak 6, working to consolidate databases between the various dating apps, right? It was Farmers Only and Christian Mingle. And they had all these niche dating communities. And so really it speaks to the diverse portfolio at Peak 6, but also the types of experiences. I really, I thought I was going to end up living in LA and working within the dating app space. The other one, when I started with them, they were invested in a marble mine in Italy and they had this warehouse full of extra marble in the West Loop in Chicago. And I was the young person that was still kind of figuring out what he was going to do there. So they were trying to get rid of this marble and I would get sent over there with the keys. And I knew how to work the little machine to show people the different slabs of marble. And anytime an employee or friend wanted to redo their kitchen, I was getting sent to the marble warehouse a couple miles from the office in Chicago and I was the marble show person. So, those are my first two jobs at Peak6. Really, you know, we’re, we talk about box moving, doing whatever’s asked of you. And I thought that those are two really good analogies to what it’s like here.

Jack Sharry: So how did you shift from box moving and marble slab movement to what you’re doing now? How did that come about?

Connor Coughlin: Yep. So as I mentioned, you know, I had a little bit of a computer science background and Apex was really starting to take off. This was about eight years ago. And I went down to Dallas and I was supposed to be in Dallas for a couple of months to really help with the business intelligence effort to start to get our arms around all of the data, how it relates to P&Ls around clients, how we think about what products are being used and really start to build that growth muscle, right? Cause the first couple of years were spent cleaning things up, exploring different potential business models. And so my first job there was to build up this business intelligence and data science work. And after doing that, I got roped into some corporate development stuff. It brought me closer to Bill Capuzzi, our CEO. Three months became six months, became 12 months, became 24 months. And I was still at Apex doing more and more and more. And around that time, dove head first into all things Apex, became a full-time employee of Apex proper. And since then I’ve really moved around to a whole bunch of parts of the organization. So corporate development, some time with the operations team, played a chief of staff role. It kicked and screamed. I never thought I wanted to do business development and sales, but definitely got pushed into that direction as well. And so now kind of oversee anything growth oriented, sales, relationship management, marketing, partnerships. But really, you know, I like to joke that in about eight years here, we tend to fit 16 years of experience into that. And definitely, you know, if you’re a young person looking for a great opportunity and to be trusted and to be within a high growth company, Apex is going to give people those opportunities. And, I’m definitely an evangelist to that trust that, that we put into people.

Jack Sharry: So I know Bill well enough to know, I don’t know him as well as I’d like to, but he and I had a podcast conversation that we really connected quickly and I since followed him closely at the news and what have you. He’s got an eye for talent. He’s got a significant history of success over time. He was at DLJ way back and later that became Pershing and back in New York and so on. So he’s been around the horn a few times in a variety of ways and certainly the stuff that’s been built at Apex is pretty extraordinary. So he identified you, it sounds like you kind of were at the right place at the right time and had the kind of skills that he was looking for and then he just kept throwing stuff at you. Is that about right? Is that, you got to learn by trial by fire as you try to figure things out or help him figure things out?

Connor Coughlin: Yeah, I think the key there is right place, right time. There’s a lot of luck involved. Apex is an incredible place. And so I sort of buckled in and fell in love with it.

Jack Sharry: So, Connor, tell me a little bit about that because clearly something clicked. We have a good listenership of folks that are trying to figure things out in their career. What would you say, what was it that got Bill’s attention that he was giving you these kind of challenges that you were able to figure out how to do it? Is it just, it’s more than little luck, I would say. It’s probably lot of hard work and some smarts and just a whole lot of perseverance. So fill our younger audience in terms of how you took advantage of that opportunity, that right place, right time stuff.

Connor Coughlin: I think there’s three things I’d probably point to. The first is Apex has been high growth, right? And that brings a lot of ambiguity. And so there’s just a bit of, I don’t want to say blind trust, but trust like as Apex continues to grow, opportunities are going to open. If you lift your hand up and say, you know, I can help with this gap that’s opened up here. Oftentimes when a gap needs to be filled, the person that raised their hand is going to get an opportunity to do it. So, living in bit of ambiguity as to when that next gap is going to open is definitely part of it. The second thing I would say is go back to the marble and the Spark networks is, you know, I wasn’t really questioning like, what am I doing here? I was just saying, great, like this is going to make this firm better. I really like the people. I really like the culture. And if, if this is something I should be doing, this is the thing that I’m going to do. And I think carrying that box moving mentality, if there’s a box that needs to be moved, you should just pick it up is something that is really important. And the third piece, and I’ll give Bill a ton of credit for pushing this across all of Apex is don’t pretend you know something. You know, the moment that you start to BS people and the moment that they get the sense that you’re full of it, the house of cards starts to crumble, right? So just being really open to being vulnerable, admitting what you don’t know, admitting that you need help is something that’s super open and welcomed inside of Apex. The willingness to do that, I credit the most.

Jack Sharry: Yeah, I like it a lot. So what are you excited about now? You got a ton of stuff going on, stuff flying all over the place. Any particular projects that you’re excited about more than others? It sounds like you have lots of stuff going on, but any that stand out?

Connor Coughlin: I would say there’s a trend that just got catalyzed, mixed with a long-term product roadmap that fits it perfectly. And so seeing that come together and really start to form is what I’m most excited about. So the trend I saw just get massively moved forward is a pin getting pulled on the industry. Robinhood coming out and saying that they’re going to launch a robo, that they bought a custodian. I think people’s initial reaction to that could be a little bit of fear. Here’s another competitor. I actually, what I believe it does is it finally is going to break some of the inertia and pull a pin, so to speak, within the digitization and wealth management. So we, for a long time have been saying, hey, you got to build, you’ve got to think differently, you have to become a fintech if you want to be a fintech. I know that sounds silly, but for a long time, people have come to us and basically said, oh yeah, we just want you to do exactly what all the other custodians do, but just do it cheaper because you you’re digital. That’s how it works, right? And that’s not the reality. Like we’re trying to arm the competitors to a Robinhood, the firms that are going to build that are going to push the envelope and them getting into this space is going to wake up the behemoths in the wealth management market and have them really start to think about how do we get to the next frontier? How do we get to that next platform? How do we make something that’s going to be really competitive five, 10, 15 years from now? And what’s amazing about that and the reason I’m so excited and not worried about competing is we’ve been building this roadmap for a long time. I went through a bunch of the stuff that we’ve launched in the last six, 12 months. We’ve been working on that for a really long time. And so to have all that coming together, to have the Ascend platform we’ve made a bunch of noise about in the market, which was pretty much a total rebuild of all the technology that Peak 6 inherited when they took over Penson and made it Apex. All this coming together right now at a time when I think the market evolution is about to accelerate. We’re in a really cool spot. And if there’s anyone out there that’s listening and worried, we’ll definitely be your guiding hands to get to the next phase of the market here.

Jack Sharry: Tell me about AI. I don’t know if you’ve heard anything about that, but it seems to be everywhere and no podcast would be complete without a little conversation on AI. How does that fit into your plans and your development roadmap?

Connor Coughlin: Yep, so AI definitely, as to be expected, very central theme inside of Apex every day. There’s three areas, the first super obvious one, is just get more efficient. How do we use it to help us write more code, better code, faster code, write fewer emails, write better emails, educate our employees better, educate our customers better, get better tooling around our marketing stack or sales stack, any sort of vendor that we use. So that’s the obvious one. And we have a whole team around it constantly asking us, how did we use AI today? And unless you beat that drum constantly, it’s not gonna happen. The second one, I mentioned the Ascend platform. Our custodial platform comes with a private data lake for every single one of our customers. So when you use another custodian, let’s say you’re getting standard annual audit from the SEC, you need to go submit a ticket and ask for them to pull your data to respond to the SEC. And you can’t actually see or own that data. We give every single one of our customers a custom data lake that they can build on. They can query on demand. They have business intelligence tools that come with it. AI is only as good as the data behind it. We have real time data. As your customers take action, your data lake is updated and you can run with it. And so part of it is just empowering our customers to do more with AI because we can give them much more accessible data than other custodians. And the third one, we just put out a newswire around this, but we launched what we call Ask Ascend, which is our AI bot. We’ve continued to expand outside of the wealth management space, but also international brokerage is a big business line of ours. So we have customers all over the world, Australia, Hong Kong, Korea, to name a few, when those firms have hundreds of developers building against us at two o’clock in the morning New York time, I don’t have a staff necessarily answering troubleshooting questions around why they’re getting a certain error from the way they call an API. And so now we’ve taken all of our best practices, all of our frequently asked questions, all of our service center tutorials, all of our developer docs and put it into a chat bot and our clients can use that to ask us questions 24/7. And so the ability to be more responsive, to give our clients a better experience, to help them build faster and use our tools better. That’s the first product we’ve truly rolled out that’s client facing and we’re super excited about.

Jack Sharry: Cool. So I’m looking to wrap up here and lots of other questions I’d love to ask, but I’ll just end with this one. Anything we missed, anything important that we haven’t covered in terms of the stuff you’re working on.

Connor Coughlin: I think the biggest thing I’d hit on, we kind of talked about it, is this augmented advice thing. The next generation of advice is going to look different. AI is going to play a big role. The role of the human advisor is going to change. The way tools and what tools are offered and the self-service around those platforms is going to change. And I think it’s about to be accelerated. And the big thing is I think there’s a bunch of firms that are going to miss, right? Because there’s a bunch of amazing leaders out there we speak to and we have great conversations and then often the true modernization is a next year problem. There’s too many other things going on right now. And I think we’re getting to the end of that road and there’s a number of firms that, I think the time to act is now is what I would say. And I think that’s the biggest call to action I have for the industry is there’s a tidal wave coming of change and you need good partners to help you surf that wave instead of getting knocked out by it.

Jack Sharry: So, Connor, this has been a great conversation, I really have enjoyed it. It’s fun to have this recorded online conversation around the future of financial advice and how it’s delivered and how it’s used. Let’s go to the more personal. My favorite question always when we get to this stage of our podcast conversation, what do you do outside of work that you’re excited or passionate about that people might find to be interesting or surprising?

Connor Coughlin: This may be a little bit bland, but the truth, my number one hobby outside of work is cooking. I absolutely love cooking. I have way too many appliances for my New York City apartment and worked in restaurants for a long time. I think if I wasn’t doing this or maybe while I am doing this, I would love to own a restaurant one day. So definitely a passion area that gets my mind off of custody and clearing from time to time.

Jack Sharry: Cool. That’s quite a switch. Any particular type of food or any and all?

Connor Coughlin: Any and all, definitely pizza. A lot of pizza gets made at home, that’s for sure.

Jack Sharry: Yes, we did that ourselves earlier this week. So, Connor, thanks very much for the conversation. This has been wonderful. For our audience, thank you for tuning in. 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. You should also check us out at our dedicated website, wealthtechondeck.com. All of our episodes are there along with blogs and curated content from many folks around the industry. Connor, thanks a lot. It was a lot of fun. I really enjoyed it.

Connor Coughlin: Thanks for having me.