Unlocking AI’s Potential in Wealth Management with Rob Pettman

Jack Sharry: Welcome all. Happy to have you join us for this week’s edition of WealthTech on Deck. It seems that wherever I turn, I get to hear about, read about, talk about artificial intelligence, AI. And while AI is talked about at great length, it does not seem to be well understood. Maybe our guest today can educate us a little bit. I’m pleased to have Rob Pettman make a return visit to our show. Last time Rob and I spoke on our podcast was when he was executive vice president of wealth management solutions at LPL. From his 19 years at LPL in a variety of roles, Rob understands our business, both broadly and deeply. He was named chief revenue officer and president at TIFIN in April, where he is responsible for TIFIN’s AI centric platforms at leading wealth management and wealth enterprise firms. Today Rob and I are going to unpack AI and how it applies to the many firms TIFIN now works with. So, Rob, welcome back. Good to have you on board. Now you’re a FinTech guru. Welcome.

Rob Pettman: Well, thanks, although you know what, the whole AI thing is a little challenging, because coming from wealth management, I used to see AI as in reference to alternative investments, and I have to use “alt” instead.

Jack Sharry: Yeah. I get it. I get it. Lots of lingo that we’re getting familiar with that’s all new and cool. So Rob, let’s start with you telling us about your role. Tell us what you’re doing it at TIFIN, and we’ll talk in a little bit about what you’re excited about and where you see the world going.

Rob Pettman: Yeah, sure. So you know, as you, as you mentioned, I’m president and chief revenue officer at TIFIN, and probably I should just even start with who TIFIN is. We, you know, we’ve certainly been making a lot of headlines. And I think probably the easiest way to explain it is, this is a company that’s seeking to own the AI sort of vertical for wealth management. And as you look across the company, there are a host of different solutions specialized within the wealth management universe, with the goal of really just trying to use AI to help deliver better advice to more people. And we play in the either in the workplace, we play in the financially advised markets or even in direct to consumer and work across asset managers, insurance companies, wealth managers, you name it. So if you’re in wealth management and looking for an AI partner, you want to think about TIFIN in that way of just essentially being one of those firms that just specializes in AI for wealth. And so within that context, I do a couple of things. First, if you’re going to be an AI company specializing in wealth management, you need to have people who are experts in wealth management. And so what I do in from that respect, is share my knowledge and help with the various different CEOs on making sure that we’re structuring the product roadmaps and solving the problems that need to be solved for in wealth management overall, and helping to transform the business. The other thing that I’ve seen, just in general from being on the other side of the table is, you know, I met with a lot of technology firms, and everybody will come and tell you what the technology does, but very rarely does anybody actually really help you understand the business problems that the technology could solve for you. So another thing that we’re doing is also shifting the landscape, because, as you mentioned, Jack, this is, this is technical. It can be hard for people to wrap their arms around. So we’re helping them understand the pragmatic applications, and really from the wealth management landscape, what business problems and commercial outcomes can come out of leveraging some of the solutions the company has on offer.

Jack Sharry: So you sound a little bit like me, which is to explain what the heck the technology does and how it helps grow revenue. Is that kind of, if we were to boil it down…

Rob Pettman: That’s it, I could be the technology-wealth management translator.

Jack Sharry: The whisperer, that’s great. So Rob, tell our audience about what you’re excited about at TIFIN, there’s a whole bunch of things that you guys, I know have going on. There’s areas of focus, but maybe at a high level, what are some of the areas? Just to kind of maybe break it down so people get their heads around what those are, and then, and then you take it a little bit further, what are you really excited about? Because I know you have a lot going on there.

Rob Pettman: So, I mean, look, first, I think it’s probably even helpful to just frame out, if you’re looking at AI, how you should think about the world. And you know, I recently wrote a white paper that you can look at to go deeper on this. But for me, it was really easy to just break it down into two different buckets of types of AI and then try to relate to the problems that you can solve with it. So those two buckets, the first one would be what we call supervised AI, and that would be, you take a data set, and that would be sort of, you’re just looking back in history, and you’re going to train an algorithm on that, and it’s essentially going to help you make predictions on new data that you bring in based upon the past learnings that it has, and it’ll gradually learn over time. So if you think about some of the commercial applications for that. It can help with predictive growth. It can help with predictive risk management, whether in a portfolio context or a compliance context. We have massive sums of data in wealth management, and so the ability to be able to train these algorithms on them and then essentially leverage them to get additional horsepower that creates operational efficiency in a decision making process, that’s how you need to think about supervised AI. The second one is Gen AI. And think about this as the way in which machines can communicate to humans. And probably one of the best ways I describe it would be it really helps people traverse complex products and platforms more efficiently and effectively. And you know, when you think about that, just think about your day to day lives and how you go about searching for things or getting you know, answers to questions that are personal to you. Typically speaking, if you’re searching or if you go on some kind of website, you’re going through somebody’s taxonomy or way in which they’ve designed to structure the information in the world for you, and you have to sort of figure that out and navigate it through. Easier in a lot of the retail senses, there’s a lot of technology, Google, to optimize searches and things like that, but you still have to go through some of those pieces. In wealth management, it’s a whole heck of a lot harder. If you think about even like wealth management firms will have an intranet that stores all of the things, and that would have compliance, operations, investment products, sort of, you name it, and many… you know, financial advisors would have to navigate through however the firm has organized all of that to get to the answers that are specific to what they’re looking for. And instead, what we’re talking about is a way in which you can leverage AI as a way of actually navigating through some of that.

Jack Sharry: So first of all, Rob, thank you for explaining. That’s the first time… That’s the clearest explanation I’ve had because I’ve been studying up on AI. I’m no, I’m no techie, really, I just happen to work for a tech company. But I’m trying to understand what it does and where it fits. But now I get the two buckets that you just described. So let’s go a little deeper. What is it that you guys are working on? What are you excited about? Where do you take that? How does that apply? How does that convert into what ultimately everyone is interested in, how do you generate assets and revenue?

Rob Pettman: Yeah, sure. So first, I know this is a topic that’s near and dear to your heart, because I think you did an episode on this not too long ago, which would be organic growth.

Jack Sharry: Oh, yeah, how about that?

Rob Pettman: I might contend that organic growth is not dead and that you can actually use supervised AI to supercharge organic growth.

Jack Sharry: I got you to pay attention, didn’t I? But I knew you would. You get it. You understand it.

Rob Pettman: That’s right. So I mean, look, TIFIN has a company called AG, and this is a way in which we take, again, data sets and then train them to be able to help wealth management firms grow. We do that in three big buckets, when you think about any wealth firm’s organic growth formula. So that would be the ability to get net new clients in, right, and the growth of prospect marketing. The second one would be the sort of expansion of a relationship or share of wallet, and then the last one would be around retention and identifying signals where you may want to try to save a relationship. So there’s a host of different solutions within that, but I can tell you that the company’s experiencing some tremendous results. And through our clients, we’ve seen clients that have added half a billion dollars in a quarter in net new assets utilizing supervised AI. And, you know, even as we think about just some really interesting use cases, even in the acquisition front of, you know, I’m looking at a book of business, and I have the assets that are there, right? But then what are, sort of the untapped opportunities that may even exist within the book of business that I’m buying, and how I measure that. So, really interesting ways in which firms can leverage AI to really put themselves out of the passenger seat. I think some wealth, well, not all of them are there, but I think some of them might say that they’re in the passenger seat when it comes to organic growth, and putting them more in the driver’s seat of actually being able to surface these opportunities and then connecting this to a repeatable process to go about harvesting and growing their business. Because, as you and I both know the unorganic growth well, if you will, will eventually run dry. And that is that moment in time where you’re either going to survive or you are not. And so I think that’s the first one. The second one is, I think about that Gen AI category and how you navigate complex products and platforms more easily. I mean, wealth management is just the perfect space for that. And there are probably two examples that I’m most excited about. One of them is a company we call Sage, which is an OCIO co pilot. So think about this in a host of different use cases, whether you are an asset manager who’s offering portfolio construction services to financial advisors and you’re looking to increase your coverage ratio, whereby you’re offering more bespoke guidance to advisors, but you’re also able to service them on a repeatable basis when they’re asking for rationalization as to why you may have made changes within your model. They could have use cases for any model marketplace, or a wealth management firm that has a model marketplace where they’re seeking for advisors to outsource portfolio management, but one of the barriers being, again, that understanding in how changes have happened, and the ability to generate portfolio commentary on demand so they can relay that to the client and explain to them what’s exactly happening within the portfolio, which they’ve outsourced management to. And then, last but not least, if you’re in the rep as PM context, the ability to build and manage models and do so in a way that’s a little bit more scalable, but adding layers of customization inside of that, and so depending upon wherever you are, there’s a host of different efficiencies that come in there, even including bringing a lot of the views that the CIO office may have, or even just your favorite asset managers may have, all together in a convenient fashion that you can access versus, again, we think about like, how complex it can be, thinking about the taxonomy, or going out to a website, right? All this can be delivered to you in a personalized fashion. So I think that’s early stage, but I think that’s one of the ones that I think was probably a blockbuster for TIFIN. The other one is, I know this is probably a near and dear place for you as well, Jack is the @Work business. We actually have the first AI co pilot in the sort of at work marketplace for companies. So this would allow employees to be able to better navigate the benefits that their company is offering to them, but then also be able to surface up a lot of questions and things that they have that are specific to them with their financial needs, and it has the ability to even generate custom goals. And I’m going to use this as an example, because this is literally what somebody did recently. You could have a goal of retiring. You know, we’re used to the, “I’d like to retire in seven years. How much money do I need?” We can get to, “I’d like to retire in seven years and live in Costa Rica and start a surf shop.” That’s how specific, you know, we get in there. And so the level of engagement, obviously, is going to help enrich the employee experience and help satisfy what the employer is looking for. But then also, for a wealth management firm and the financial advisor, this level of engagement, it also helps to facilitate those that, yes, they’re getting benefits, but they may need more help or more access and even the help of a financial advisor. There’s also the ability to actually schedule an appointment with the advisor within certain parameters that can be structured to go about creating those types of connections. So again, as you’re thinking about growth of your business, if you have a retirement plan business, here’s something where you can do a great job for the companies that you’re serving and their employees. You can also extend your wealth management services in different ways and more efficient ways, using AI. And then, if I were to give it, sort of the one, two combo, if you sort of tack on the AG component that I mentioned first, that just is a growth multiplier across all of your wealth management services. So I think those, those are probably the ones I’m most excited about. But it’s just like picking your favorite children, there’s a lot of different solutions at the company.

Jack Sharry: So by the way, I appreciate your clarity. This is… we’ve had a number of guests on for this discussion around AI, and you, far and away, are there clearest in terms of describing what it is and what it can be. Help me understand and clarify something about where you fit. And I say that because most of our listeners are like you used to be. They’re sitting in the home office trying to figure out the next cool thing to do, and AI is on their to do list, probably pretty high up there, if not top of the list. How do you apply all that you just described? In other words, how do you engage with firms, with the folks running the show? How do you work with them? How do you sort out what’s their priorities? Talk a little bit about just how you implement at a firm level, because I assume this, most of this stuff is really done as an enterprise undertaking.

Rob Pettman: It is. And so what we typically do is firms will bring us in and they’ll say, “Hey, I’d like to learn all of the things that are TIFIN.” Honestly, rarely do I actually go through all of them, because I’ll know the firms pretty well and know that the problems that from a hierarchy of needs are going to be the ones that are most important to them to solve. I’ll certainly ask the question as well, just to make sure that we’re focusing on the right one. Because, you know, again, if you try to focus, if you try to go through all of it, it can be overwhelming.

Jack Sharry: Sure.

Rob Pettman: So it’s really just about, you know, especially getting started, it’s just finding the one or two things that are most important to you, committing to it and going with it.

Jack Sharry: Yes.

Rob Pettman: And I do think that we’re in this really exciting phase of experimentation in wealth management, and everybody is sort of thinking through the different applications. The one thing or piece of advice that I would give is there is a material difference in business performance between the leaders and the laggards. And that will be experienced in gross profit and in growth. And even as we talk about those concepts, about things like supervised AI as an example, that’s an algorithm that learns over time, right? The sooner I start, the smarter it is over time. So if I start earlier than my competitors, my stuff’s going to be a lot smarter than their stuff is when they start late. And so that applies across a number of different places. And so I would say, focus on the things that matter most, but make sure you’re starting and actually taking action and committing because, you know, just sort of admiring the space right now, it may not, may not, result in the type of, you know, business outcomes that you’re looking for.

Jack Sharry: So talk a little bit about this, this is sort of a… I’ve been in the enterprise sales business for a bit. You are now fully engaged in the same or a variation on that. Who do you call on? Who makes these decisions? Is it a committee? Just talk about the dynamics of decision making, because I got to believe there’s hands, fingerprints all over the AI game. And so I’m talking a little bit about that. What works best, and what do you often find? There’s probably a difference between the two.

Rob Pettman: Yeah. I mean, so first off, we work with all parties within the wealth management ecosystem. So it can be asset managers, insurance companies, wealth managers, RIAs, and so you’re going to find different dynamics of decision makers within each of those different types of companies. Typically speaking, it will start by a business owner who has a business problem to solve and a commercial outcome that they are seeking. And so that is usually the place where it starts. It’s often supported by technology and by the data team as well. And you know, there’s, with any firm, depending upon the size, you’re going to run into varying different layers of individuals that need to be included within the process. Having come from a large firm, there is a need for governance, and you should have it. And there’s a number of different companies that have started up AI committees to go about reviewing and approving these solutions. And you should. You should understand the things that you’re employing, and everybody should go in on, “Hey, what, what might be risks that are associated? Let me do the diligence on the company and things like that.” Frankly, that’s a space that we welcome because, you know, we have a host of different solutions. It’s way more convenient to do diligence on TIFIN and get access to ten than it is to do on, you know, 10 different point solution companies. But you know, for me, I think it really does start with the business owner. We do have some cases where it starts within technology, or it starts within the data team that’s looking for sort of additional leverage, because they might be oversubscribed within the company, and thinking, hey, how do we actually create more capacity for ourselves? But more often than not, it’ll be, if I’m thinking about asset management, it might be head of distribution. If I’m thinking about wealth management, it would be president, head of wealth management, CEO type, sort of places. In the RIA world, most likely CEO/partner.

Jack Sharry: So what does your crystal ball tell you about where we’re headed?

Rob Pettman: Every time I get this question, and I’ve heard other people answer this question, what’s always remarkable to me, and I’m not sure if you see it too Jack, more often than not, the first part of that response is some kind of defensive measure statement about the world not being about machines and financial advisors and advice still being relevant, you know? And I always find that funny, because I just, I mean, I’ve never really believed that. I mean, shoot, I’ve run wealth management, I’ve run a research organization. You think I would know all of the things to be, make all the smart, proven decisions, and I still will make ridiculous decisions with my own money, you know? And…

Jack Sharry: Oh yeah, we’ve all been there.

Rob Pettman: I lived that long, and understand the value of advice. And so look, I don’t, I guess I might sort of conform here and just maybe check that box. But I think more importantly, as I look in the crystal ball, I see this really as an efficiency play growth multiplier in helping us solve our material problem in wealth management, because look, more people actually do need advice. And when you get the ability through AI to be able to scale advice and get better advice to more people, which also happens to be the mission of my company. We’re very alike from that perspective, in our belief system, but, but look, that’s going to be the outcome in really helping to get more advice to more people, because you’re not seeing more financial advisors into the space. But in the short term, as you mentioned it before, Jack, there’s a ton of really unique things here that can help wealth enterprises, RIAs, asset managers, just do business more efficiently and effectively, and that’s going to be then an outcome for those that, again, are the leaders and not the laggards.

Jack Sharry: I’m with you. So this is a great conversation, Rob, I had high expectations. You’ve exceeded them once again. So as we look to wrap up, what are a few key takeaways you’d like to share with our audience?

Rob Pettman: I think, first off, understanding the landscape and the problems that you seek to solve and focusing in on just one or two things just to get started. I’ve seen a number of firms just get paralyzed with an overwhelming set of decisions. And it’s really just best to just pick something and go and learn. That would be one, the second one, sort of adjacent to that, would be the leaders or laggards component. There is something here, and it’s going to accelerate very quickly. The rate of speed and development here in the space is unbelievable, and there’s a material benefit in experiencing it now versus waiting. I think last but not least is look for help, look for partners, inventory the space, see what’s possible. My firm’s out there. I’m sure there’s a number of other firms out there that can help, but the resources are available. It is a complex space, but it doesn’t have to be if you sort of lean on trusted relationships and can see what might be applicable within your business.

Jack Sharry: So, Rob, great conversation. Appreciate it very much. Our last question, trying to remember what you said last time, something about surfing, but I’ll let you answer it. So what do you do outside of work that you are excited or passionate about that people might find interesting or surprising?

Rob Pettman: Oh, gosh, well, I’ve already given you one, so I’ll probably give you another one.

Jack Sharry: Did I have it right? Is that what you… seemed like it was surfing?

Rob Pettman: Yeah, yeah, well I used to. I used to compete wakeboarding back in the day, but now my knees don’t work as well as they used to. I’m what they call a MAMIL, a middle aged man in lycra.

Jack Sharry: Anyway. But what do you do outside of work, besides being a MAMIL and no longer wake boarding.

Rob Pettman: Well, you know, I have now, I’ve sort of traversed into that, that life stage where my kids’ sports actually dominate the majority of my time. And so I have, I’ve fallen into the travel sport net and spend most of my time on the roads, either following my son playing ice hockey or my daughter playing soccer. But I will tell you what, it is my. over watching any sports game on TV, it is my favorite thing in the world to do.

Jack Sharry: So Rob, thanks. This has been a blast. Always fun to catch up with you. Excited for your new opportunity and new venture, I think you’re going to crush it. So congratulations on all that. For our audience, if you’ve enjoyed our podcast, please rate, review, subscribe, and share what we do here at WealthTech on Deck. We’re available wherever you get your podcasts. So also check us out on the new and dedicated website at WealthTechonDeck.com where you have lots of content, including these podcasts and much more. All of our episodes are there along with blogs and curated content from many folks from the industry. Thanks again, Rob, it’s been a real pleasure. Really enjoyed it.

Rob Pettman: All right. Thanks, Jack.