WealthTech in the Weeds with Rose Palazzo and Mark Hoffman

Jack Sharry: Hello, everyone. Thank you for joining us on this week’s very special edition of WealthTech on Deck. The financial services industry finds itself in the middle of a vitally important transition. The focus of so many firms is on building comprehensive and coordinated advice platforms. This is where all the elements of providing advice work together to improve financial outcomes. And when done right, investors, advisors, and firms all benefit. This has been underway for some time, but the number of firms, the level of investment being made are growing and have never been higher. Having worked with many of the leaders in this movement, this transition, the most accomplished person that I know of in making this trend real is our friend Rose Palazzo. But before introducing Rose and getting into it with her and my colleague, Mark Hoffman, let’s define what we mean when we talk about financial planning and comprehensive advice. Over the course of the history of financial services, wealth managers built systems focused on managing single investor accounts: a brokerage account, an IRA, a 401k, all managed independently. As the industry evolved, financial planning came to the front of the stage. Advisors promoted and investors embraced the notion that everyone needs a financial plan establishing goals, like buying a home, paying tuition, retirement income, and investing ways that have the greatest likelihood of helping them achieve those goals. A badly kept secret is this, financial Advisors mostly didn’t have systems that allowed them to implement a financial plan across all the client’s taxable and tax advantaged accounts and holdings. Yet, it’s only through multi account management that advisors can minimize tax drag, and that an advisor’s assets and when a client is ready for retirement can efficiently transform those assets into an income stream. Systems are now being developed to incorporate the entire scope of an investor’s or household’s accounts, and then identify and implement strategies to minimize tax drag and produce better outcomes. Rose Palazzo was the first person in our industry to successfully lead a team as, at a wealth manager to accomplish this. We’re very pleased to have Rose join us for our series of what we’re calling WealthTech in the Weeds, which is a subset of our three year old WealthTech on Deck podcast series. Today, and over the coming months, we’ll be getting into the weeds around what it takes to build an effective, productive, and comprehensive advice platform. I’m excited to have our longtime friend and colleague, Rose with us today on our show. Rose is the group president of Envestnet MoneyGuide. Prior to that, Rose headed up financial planning at Morgan Stanley. Also joining the conversation is my colleague, Mark Hoffman. Mark is the CEO and co founder of LifeYield. Mark and the product team at LifeYield have more experience than anyone in our industry in enabling clients to build comprehensive platforms. So for today’s conversation, we’re going to focus on the critical role financial planning plays, and the challenges of converting the plan’s guidance into actions that improve results. Rose and Mark, welcome to WealthTech in the Weeds.

Mark Hoffman: Great to be here, Jack.

Rose Palazzo: Yeah. Thanks so much, Jack. It’s great to be here.

Jack Sharry: So, Rose, you led the build of what is considered to be the industry leader in comprehensive advice platforms at Morgan Stanley. You’ve been at Envestnet for a couple of years now and are working with client firms to help them do the same. Please describe at a high level what you’ve been addressing and changing in building the platforms you’ve been involved with?

Rose Palazzo: Yeah, absolutely. So I think some of the things that I see a focus on right now, that actually started in my previous role, sort of, as head of planning at Morgan Stanley, where we saw a focus, first and foremost on personalized advice. And I think that actually starts with planning and getting an understanding of what a client, what their personal objectives are, and aligning the advice that you’re providing to that. So I think that trend sort of continues, and we see more and more firms very, very focused on that in all of the ways that personal advice gets executed. But I will say the starting point for many people is getting that true understanding of what a client’s objectives are. And tying that advice to those personalized objectives. I think the second thing that I would say is a focus on planning in general, but in new ways. So we don’t see planning any more as sort of this one time event that advisors engage in or a firm will engage with clients. It really is a more ongoing planning as a verb experience, where you’re having that initial conversation, understanding a client’s goals, but connecting that to all of the conversation that folks are having. And what that means sort of more on the ground is we see deeper levels of integration and coordination between those planning conversations and the technology that supports them. And the rest is sort of the process of wealth management, right. So a plan to invest for proposals to execution. And that coordination is not just coordination of platforms. But like I said, those conversations that clients are seeing, so they truly get an understanding of how the advice that is being provided and being executed is aligned with their personal objectives. And then lastly, I think just even starting with those planning conversations, and the focus on planning lends itself to people really thinking more comprehensively about advice, and providing more and better advice, actually, and sort of enhanced advice. And part of that is a need to be more comprehensive. And another piece of that is, I think the technology has gotten to a place where advisors are able to provide more enhanced advice than they were maybe in the past.

Jack Sharry: Mark, you’ve been involved with Rose on this for many, many years now. Why don’t you weigh in with your thoughts and amplify what Rose has shared?

Mark Hoffman: Certainly. I completely agree with Rose. The tools, in particular financial planning, are now providing solutions. And I think that’s what Rose means by it’s not a one and done, it’s providing a solution that needs to be continually it’s, it’s a dynamic solution that… clients’ lives change, their goals change. But the point is that, you know, these financial tools are allowing advisors to help their clients to reach goals. Tools, in particular, financial planning, are holistic. So what that means is that they need a view of all the client’s assets, all the client’s accounts, in order to help that client reach the goals that they have. There’s a metaphor, I hope Rose doesn’t mind me bringing it up. But we’ve often used it together, that taking a client through and defining their goals is kind of like playing a game of golf. A financial plan is like using your driver, you just want to get to that distant flag. But once you get up on the tee, the driver doesn’t work so well. So I think that’s what Rose means by implementing the solutions, you have to use a putter to get to the tee. It’s a different tool. It’s in the toolbox. And it needs to be fully supportive of what you’ve put together in the financial plan to reach that client’s goals.

Jack Sharry: Does that all make sense, Rose? I think it does. But why don’t you weigh in?

Rose Palazzo: I think it does, that’s actually a metaphor that Mark and I have used in the past to sort of describe how, you know, there are a lot of tools in the arsenal, I think more than ever before. And it’s important to take kind of that strategic view, but that strategic view without execution really doesn’t get… isn’t providing any value to a client. And so one of the biggest challenges that I think, having spent my entire career in planning, is that sort of getting from that strategic plan to the actual execution of it, and that revisiting of it, and the technology and the tools that we have today have made that, that possible, right. That I think the one thing that I didn’t mention and the reason that a lot of this requires some of the coordination and the tools that we’re going to, you know, that we’ve been talking about, and that we’ll talk more about is that in addition to being more comprehensive, clients’ the lives are more complex and their financial situations are more complex, right? There are more products, more diversity around sort of the platforms, that is from an investment perspective that advisors and clients are using. And so getting from that sort of strategy, and the plan that you have with a plan to execution is complex. And it’s important to leverage tools that will help to execute that for, for clients.

Jack Sharry: So let’s get into those details, those dynamics, because I think we’re all in agreement, we all understand, going from the plan to the implementation is critical. But I want to get into what that implementation looks like. So as we all know, the biggest challenge is converting a financial plan into a sequence of steps across multiple accounts, products, holdings, and then ultimately, that results in outcomes, all the way out to trading. So it’s that level of detail. I want to see if we can maybe examine a little bit and I’m going to start with you, Rose. So can you explain those dynamics, the step by step, if you will. Remember, this is WealthTech in the Weeds, so we can get as geeked out as we want to. But if you would, describe the dynamics of going from our plan to a multi account management process, because I know you spent, you and Mark spent a lot, and the LifeYield team and the Morgan Stanley team, spent a lot of time working that through. In fact, as you were blazing new trails, you had to kind of figure it out on the fly. So why don’t you, if you would, maybe break that down? What does that look like? You’ve got the plan. You got the portfolio. How do you put it in order, shall we say to make it cause a better outcome?

Rose Palazzo: Yeah. So I think one of the things, the very first thing that I thought was the biggest challenge when we were talking to advisors about executing their plans, was that, at a high level, plans take into account sort of the types of accounts and the ownerships of those accounts, but it really doesn’t get into specific products. And plans typically are comprehensive and so they do not, they don’t just take a look at those things that maybe an advisor’s managing, or that might be helpful. So those are kind of two of the big things that we were trying to tackle, which is this, I’ve got a, an asset allocation for a set of accounts, or for a goal, that’s a subset of accounts, right? So multiple accounts. And those accounts are either individual because of ownership or the type of account or the type of product that they’re supporting. And two, that portfolio may include accounts that are either held away, right, a client’s 401k, those sorts of things, or it might be things that you’re managing directly, it might be things that the client’s managing on their own, right? So all of those things that you need to take into account. So that first step was giving advisors a workspace to say, here are the things that I might need to lock and work around, or here are the things that I’d like to make a recommendation on so that I can actually recommend on the other side of that, and how do you give them an easy way to have sort of that strategic direction that you’ve established through your plan, and kind of turn the knobs so that it all actually, the execution supporting that I think that was kind of the first step in how do we get from strategic comprehensive financial plan to helping an advisor execute advice on specifically those components that they’re managing, but taking into account those components that they’re not. And that is complex, because many times those platforms are on, or those accounts are on separate platforms, have different constraints. And so you’re taking into account all of that sort of product, platform specific information to help with that execution.

Jack Sharry: So, Mark, as you well know, what Rose described sounded pretty easy, relatively easy in the description, but I know you and she have spent many years sorting that through because you are blazing new trails, breaking new ground. Why don’t you, if you would, amplify what Rose has talked about, some of the details of what’s involved in doing what she’s described, which is converting the plan into step by step, trade by trade actions on all these different products, on all these different accounts held here, held away, wherever they might be held, all that. Why don’t you, maybe if you would, describe how you guys figured out how to make it work, so they’re well coordinated and ultimately produce a, an improved outcome?

Mark Hoffman: Certainly. I mean, I don’t know, my experience was getting yelled at by advisors. And that’s because when you take a plan that has goals, and you want to then execute it, putt it into the hole, so to speak, if you don’t take the combination of all those things, once they produce trades, and figure out what the tax bill is going to be for your client, you might get yelled at, because it’s one of the biggest reasons advisors get fired, their clients leave them because they hadn’t considered how much in taxes, a withdrawal, or a rebalance or doing it together could be. And in fact, many of the tools out there, including most financial plans are not tax aware. So in order to do execution properly, in order to implement the plan and to adjust the accounts and to make trades, if you’re not aware of the taxes, you’re costing your client anywhere from 30 to 100 basis points in after tax return, and that’s when they get angry, because it’s money on the table that they will lose.

Rose Palazzo: There’s two things in the execution of the plan, right. One is when Mark says the plans are typically not tax aware, I think I’ve spent a lot of time thinking through that. And some of the decisions that you’re making that are tax aware and that may provide some additional benefit for a client are those near term decisions that you’re making based on the holdings and the client’s portfolio at that moment, right. So they’re very sort of execution focused today. And the plan is really trying to extrapolate and sort of look at a strategy. So they, they really are things that maybe don’t necessarily belong in the plan, but can add a lot of value and benefits to a client, right, by just executing in a smarter way, right, so you’re adding sort of that additional value to the client there. And then the other piece is, is that when you… that at execution, you can unwind some of the benefit of the recommendations that you’re making, right. So if you provide clients with a recommendation, that sort of strategic plan, and you go in, and you just execute all on one day, and you’ve got all of that sort of tax impact there, then really you’re eating into sort of the value of the recommendations that you’re making. So, on both fronts, that’s sort of taking… that’s as a really good example that Mark was talking about is sort of taking that, where’s the magic between the strategic plan and the execution is being really smart about how you’re doing it, one so that you don’t unwind some of the benefit in that advice that you’re providing and two so that you’re adding additional value on top of the advice that you’re providing. And that really just comes down to executing in a way that looks across the portfolio, and then is just smarter adding that additional after tax, sort of, return to client.

Mark Hoffman: I completely agree with Rose. She wasn’t yelled at like I was. But that’s because she’s much nicer.

Jack Sharry: Well, as always when you’re breaking new ground, and people don’t fully understand, and that’s a lot of why we’re doing this WealthTech in the Weeds so people can understand. It’s understandable that people are concerned and it’s real money. Taxes are the single biggest cost investors incur period, nothing comes close, other than maybe the cost of the investment, but that’s being addressed in other ways. And other parts of our industry, or all parts of our industry. That all said, Rose, I would like to have you explain some of the dynamics of tax alpha. And the biggest one, the biggest impact is asset location. So if you get the assets in the right place, so that’s that combination, where the plan determines… through the plan is determined what the asset allocation is. And then, then it’s a matter of and this is where Mark and team come in, then where do we suggest to locate the assets? Maybe describe that dynamic? That’s kind of fundamental, certainly during accumulation, and then when you go to decumulation, when you make withdrawals, it’s throughout, that’s the single biggest factor. So maybe talk about those dynamics, just so people can understand. Because it’s, I’m finding people are using the word but I’m not sure they always know what that means for asset location.

Rose Palazzo: Yeah, absolutely. I think I’ve had an opportunity just in my current role to see, I think the different ways that people sort of view that, right. And you’re right, not everybody looks at it the same way, I’ll talk about the way that I’ve looked at it and partly working with Mark over the, over the years, is that it’s exactly what I just talked about, which is you’re taking a strategic recommendation around where your assets should be invested in a portfolio overall, and then making very smart decisions as to where to hold specific things based on the account types that you have available to you, that really provide an enhancement on what a client will receive after tax. That’s what I mean by executing in a smarter way. So you’ve got an overall strategy for your client. And based on the accounts that they’re holding, you’ve got a view on where they might end up, right, through through the planning process. And you can provide a lot of additional value to the client, which for a client, what does that mean, just additional, after tax return, that means more income during retirement, that means growing a portfolio to a greater amount, and just giving them sort of better outcomes overall, right. And that really goes to that sort of what I was saying, just holding the assets that we set from an investment perspective, and a strategy perspective are right for you. And there’s another metaphor that Mark and I would talk, right, like would say is that the tax tail doesn’t wag the investment dog, right, like so you really are establishing the strategy, but you’re executing it in a smarter way to provide better outcomes to a client, and you’re taking a look at everything that they have in a portfolio. So not being tax aware in a particular account, but actually looking at the strategy across the portfolio, and leveraging everything that you have in that portfolio to execute in the best way possible.

Jack Sharry: So Mark, you and the team at LifeYield have spent a lot of time on asset location, you’ve studied it, you’ve built systems that address it. Not only is it vitally important, it’s hard to do. And we’ll talk about operationalizing all this in a little bit. But for now, maybe weigh in on the dynamic. And, also, I know that we wound up developing an ability to quantify the benefit and how important that is to explain just what, what’s happening in that exercise.

Mark Hoffman: Yes, to Rose’s point, the tax tail can’t wag the investment dog. And we’ve done, my partner, Paul Samuelson, who’s our chief investment officer, has run a lot of simulations on client scenarios and potential client scenarios. You know, generally, in investor scenarios where the client has between half a million and seven million of investable assets, where the client’s transitioning into retirement and then using their investment assets to support probably the largest part of the retirement income. We found that asset location increases the aftertax portfolio balance by over 10% year over year, in both good and in average market conditions. And in poor market conditions, you get almost an additional two years in portfolio balance over just providing tax loss harvesting alone in a taxable portion of the portfolio. So that’s what you know, is a subtle thing, as Rose was saying, being smart about where you place the different assets. Most investors in that range of wealth have saved in their 401k’s or 403b’s, they have a lot of qualified money. And what we’re talking about is leveraging that qualified money even more by locating the most tax efficient assets in the taxable accounts and the least taxes efficient assets, and there is quite a range into those qualified accounts so that the overall balance is larger, in large part to less taxes being paid.

Jack Sharry: So, Rose, the… it’s one thing to talk about what we’re talking about, and you guys know it as well as anybody, it’s another thing to do it and to operationalize it. That’s where the fun begins. I say that in jest. So why don’t you fill us in on what that’s like, because you’ve been at a very large firm that has done this well over many years. It’s not for the faint of heart, there’s lots of different legacy issues or challenges along the way, as every firm has. That’s just how systems were built. They were not built for multi account optimization, they were built for single account management, that’s what they’re built for. So why don’t you fill us in a little bit on some of those dynamics? What lessons learned along the way? We get a lot of folks out there trying to figure out how to deal with their systems as they are, and our experience is they are what they are. So how are you going to operationalize them around the fact that they are what they are, and probably not going to just be able to throw them out? That would actually be easy, relatively speaking, but in any event, why don’t you what fill in, fill us in a bit on operationalizing this whole exercise?

Rose Palazzo: Yeah, I think that’s, that is really the biggest piece of it is that it would be easy if you could start from scratch, and build a platform that addressed and didn’t kind of create hurdles from the, from the get go. But I think the first thing that we did was just to take an inventory of all of the places where our clients were executing and understand, as I mentioned, sort of the roles and the dynamics of those platforms and what they were providing, and make decisions around sort of the integration of the advice that you’re providing, that could account for sort of the elements of each of those platforms. So the inventory is really important, right? And going in and say, okay, what is, what are the either the constraints or the rules around this product and kind of getting that inventory and saying, alright, this is what we’re working with, and having an understanding of that. There were… you’re going to absolutely make decisions about prioritizing some things. So you know, taking a look at where most of, especially in firms that have sort of really broad offerings and a lot of sort of products that, legacy products and things that are out there, make some decisions about prioritizing sort of where maybe most of our clients’ assets are sitting, or most of the sort of models for advisors look like this. And so there’s definitely sort of the inventory, and then the prioritization of what you’re going to tackle first. And we made some real decisions about where the lines between these platforms would be: we are going to take this on, we’re actually going to leave this kind of the way that it is. So, kind of close prioritization of what you want to tackle, then you’re really looking into the weeds of how much will a single platform… it’s a coordination between platforms. And we talk about this, the difference between sort of integration of platforms and coordination of platforms. It feels nuanced, but it actually is pretty distinct, right? And so when you’re trying to get platforms to coordinate with each other, there are those decisions about sort of, what will one platform take on? Or what will another platform take on and trying to be smart about those elements as well.

Jack Sharry: I’m going to come back to you and talk about the politics of it all. So stay tuned, everybody. That’s the fun part. So, Mark, why don’t you talk a little bit about the mechanics of what Rose has described, because you’re, you’ve been in there, shoulder to shoulder trying to make all this stuff work?

Mark Hoffman: Well, Rose is absolutely right. What firms need to realize is that there are many, there’s multiple starting points to be able to do this to choose from, and that’s what Rose was saying. And they have to do that. Because tactically speaking, they’ve got short term goals, like making this year’s sales numbers, benefiting this set of clients that we want to benefit with multiple systems and multiple complexities, these are usually multiple year projects. But what I would say is that one of the better ways to look at it is that it’s like putting together a puzzle. It doesn’t really matter where you start in the puzzle, what pieces you find that go together, initially, it’s all going to be complimentary to the end goal. So what I mean by that is, you can start tying your multiple accounts together, right from your financial planning process, like we talked about. So that could be the first step to show a client what the benefit would be, and how you’re going to approach it in years to come. But we have had other clients that have decided to, you know, they’ve got a lot of clients in distribution. They’re doing withdrawals, they need to attach these accounts from the custodial data so that they can start doing tax smart withdrawals today. Because when someone’s retiring or thinking about retiring, that’s when they usually consolidate their assets to a primary advisor. So it really, as Rose has said, reflecting that, depending on the goals that the firm has, that can define the starting point. But any work you’ve done, regardless of where you’ve started, can then be used for the next project. I mean, once you’ve marshaled the data and made the connections, there’s nothing wasted,

Jack Sharry: Yeah. Rose, you want to weigh in on that? Because I know that’s, this is a cumulative project and you start where you start, you make incremental, you make, usually this first step is the pretty big leap from where you were. But then each incremental step beyond gets better and better and stronger and kind of builds that puzzle as Mark described it, where it really starts to look like something and starts to work. But why don’t you talk a little about that, and I don’t want to put you on the spot on the politics, it’s, politics are everywhere, in case anyone missed that. But still, you’ve got to work with other departments that are, frankly, tend to be, their P&L suggest that they should only focus on what they’re doing, as opposed to what’s what’s good for the greater good.

Rose Palazzo: Yeah, so those conversations are, I think, tied together. So, could not agree with Mark more. You know, when I talked about prioritization, that’s about picking your starting point and picking your starting point where you think you’ll have the most impact, but that actually has your end goal in mind, right, so that you can build upon what you built on the foundation to get to sort of where you strategically want to be. And that’s where I think in my past, that was the approach that we had, we had a view of where we were going, that was pretty well thought out in terms of what we wanted to deliver. And then we prioritized and picked our starting point and picked our place to actually go out where we thought we would have the most impact and the most engagement with our advisors, to get feedback and to give us some time to build sort of the next pieces. And so to Mark’s point, what you start with, you’ll make those decisions depending on the objectives of your firm or your business, and then also where you think you’ll have the biggest impact there. But you want to build it in a way where what you’re doing is the foundation for the next step. Because these are typically multi year and multi initiative, individual initiative projects. Now the… or multi project initiatives. The one thing that I would say is, in terms of you mentioned, kind of tackling politics, I’m a big fan of the proof of concept and getting engagement early. And I know, Mark was such a great partner in that. So before we started building, we were able to kind of give advisors a taste of what might be possible with actual clients. And that really helped us with the prioritization, right, where they thought they needed the most help, and where they got most excited about the conversations that they’d be able to have with a client. So that that helped us with the prioritization process. And if you can do that, I highly suggest that because, one, that not just, it doesn’t just help you with the building of platform and prioritizing your own work, but it helps you communicate internally, sort of with multiple groups that you’re working with, sort of with real evidence, right, and real advisors that you’re working with, sort of here’s the value. And so it has multiple benefits, in terms of if you’re embarking on this exercise as a good starting point to have those.

Jack Sharry: So I remember when we did that, Mark, and I know it’s enormously beneficial as a, as a software firm trying to help clients to incorporate our capabilities. Why don’t you weigh in on that, because I know it really benefited the build of what we were trying to do, because we heard from the users what mattered and what didn’t matter and kind of set the roadmap. So, weigh in on that, if you would.

Mark Hoffman: To Rose’s point, it, if… that’s the best way to start, in all cases, I think. At Morgan Stanley, we had, there was a group of their senior advisors that volunteered to spend some of their time helping to find the direction of the technology platform at Morgan Stanley. Some fantastic folks willing to do that. And they had complex portfolios in a wide diverse, the diversity of them. And Rose’s team encouraged them to give us I think, up to 10 different households of accounts. And then we ran five or six different use cases on them and different advisors were interested in, more interested in some of the use cases than others. But, if I remember, every single advisor, not one said, “Don’t do this.” They all said, “Why isn’t… why aren’t we doing this now?” And, to the whole point of this conversation, you are trying to tease out, you know, the complexity and the what did we learn to make that easier. And that’s a terrific point, that, that’s… nothing makes a firm pay attention, than somebody’s dealing with their most important clients. And I wholeheartedly recommend doing a proof of concept every single time.

Jack Sharry: So, we’re getting close to wrapping up here but there’s a couple more things I want to cover. Rose, who is as humble as they come, but as capable as they come as well, as her final act at Morgan Stanley developed something called intelligent withdrawals. Intelligent withdrawals is the first and only multi account tax optimized retirement income program on the street. It’s been enormously successful, percentage of embraced by the part of the advisors, they use it, they love it. It’s growing in terms of its utilization. So it’s a real success story, real coded to what we’ve been talking about here, but why don’t you describe the program, Rose, because I think it launched like the day that you moved on. So you didn’t get to enjoy the full fruits of those labors, but you did at least by curiously from afar, talk a little about what is intelligent withdrawals? Why do you think it works so well? What are some of the key lessons learned about how to make something happen, because it didn’t happen overnight, it happened over time. But maybe talk a little bit about that. And I know it’s something of which you’re quite proud and you should be, but maybe fill folks in, because it’s really an industry leading capability that Morgan Stanley knows… not so excited about sharing that with others, but they know, they know, it’s really an exceptional program.

Rose Palazzo: I would say intelligent withdrawals was the foundational sort of component that we put out. And I think it, you know, if we talk, if I talk about what we did on that sort of day one, I wasn’t there for the sort of national launch. But I was there for the pilot launch, so we were there for a lot of the sort of feedback that we had gotten. It was an exercise in what we prioritized, right. So we really, were going after helping make that sort of liquidation decision to generate income for clients in the best way. And we were very focused on taking on the entire portfolio and managing across the accounts. So there were a lot of sort of internal conversations about how to address the complexity of an overall portfolio coming from a plan. So you would start a plan, that strategy, a strategy would move over to this platform, the advisor could say, here’s the amount that I need to liquidate from a portfolio and then this, the platform would look across that and provide tax lot level recommendations for an advisor that were tax aware, and that actually integrated with our executions. And for us, that meant accounting for all of the different ways portfolios could be executed, because you were looking across a whole host of accounts, it was being aware of the external accounts, not providing advice on them, necessarily, but being very aware of them, and connecting to that strategic sort of recommendation that advisors were making through that planning process. So it was truly that, I provided a strategy, I now need to execute for a client. And how do I do that? And how do I provide a platform that’s efficient enough to go right through to execution? But it definitely was a labor of love, because a lot of time and partnership, because, as I just mentioned, looking across all of those different products that might, might be part of a client’s portfolio. And looking at the different ways that advisors were managing those portfolios and the different platforms that we needed to integrate with in order to get that button execution across platforms, not in a single product, but across platforms was really, was complex. But what we did for advisors in terms of being able to hit that easy button is allowed them to provide that type of advice for clients that probably would not have gotten that type of advice previously, which was probably the most exciting part of all of that was that we were able to provide better advice to more people that may not have gotten it before.

Jack Sharry: That’s great. Mark, you want to weigh in? I know it’s a proud accomplishment on your end too.

Mark Hoffman: Absolutely. And while I, I can’t go into any of the details, what I can say at a high level in terms of success. If I was the CEO of Morgan Stanley, it was a multi year project that was very complex, as Rose says, but the payback was in less than a year in terms of benefit back to the client as measured. So that’s a big deal. You have to be committed to such a large project. But if the payback is quick, once you turn the thing on and turn that easy button on, as Rose says. And then organically speaking, the growth continues. Because it’s saving so much time, it’s measuring the benefit that the client is getting back. And the advisor can explain and justify their fees because they really are getting the client back more, even paying fees. They’re getting them back more. That’s kind of what we’ve been discussing, is operationally squeezing all the inefficiencies out, and then being able to quantify it to the client, just makes the advice easier to implement, because, you know, it’s the right advice to implement.

Jack Sharry: So, as we look to wrap up, this has been a wonderful conversation, any key takeaways, Rose? We’ll start with you and then hear from Mark in a moment.

Rose Palazzo: Just, I’d say that there, I’ll just reiterate that there is this increased focus on personalized advice and really started with the clients’ objectives. The transition from integration to coordination is one that I would just say, to focus on, right. Basic integration and just passing data is actually not what we’ve been discussing today. It’s actually the coordination between, between platforms. And that’s really what’s required in order to kind of get to that next level of advice for people.

Jack Sharry: Coordination is the key. And a fancier word I’ve been hearing lately is interoperability, which is a fancy way to say get everything to work together. Because it’s, there’s all sorts of systems. And you may have integrations, many integrations across the board, but you gotta coordinate all those integrations. Mark, you want weigh in on key takeaways?

Mark Hoffman: Sure, so much in the industry with regard to tax savings for clients on investments is all about taxable accounts and tax loss harvesting. But what Rose is pointing out is that if you’re coordinating, you know, all the client’s accounts and assets and focused on understanding that client’s goals, then you get to do asset location. And asset location is a dominant part of tax alpha for the bulk, the bulk of clients out there with investment assets, and wealth management firms get more net new assets. James Gorman recognized that years ago and, and that was the strategy that was implemented. And then advisors, like I said before, advisors can show the value that they’re providing in managing multiple accounts, because they’re following the plan that was agreed to, and their fees are paid for by the savings that the client gets from paying less in taxes.

Jack Sharry: That’s great. So, Rose and Mark, it’s been a real pleasure to spend this time with you. I’m fortunate enough to spend time with both folks here. But fun to talk about what we’re, we’ve been uncovering in this WealthTech in the Weeds podcast. There’s going to be more, we have a bunch of these lined up. We’re going to be doing this over the coming months. So you’ll be hearing from a variety of voices who are, have that practical, pragmatic, actual experience in doing this sort of stuff. So, Rose, thanks for being here with us. And, Mark, again, thanks for being with us as well. We hope you’ll share this podcast and this series with your colleagues. This is very useful stuff from, from folks that have been there and done that. So if you’ve enjoyed this podcast and others, please rate, review, subscribe, and share what we’re doing here at WealthTech on Deck. We’re available wherever you get your podcasts. Rose and Mark, thanks so much. This has been a lot of fun. I’ve really enjoyed it. Thank you.

Mark Hoffman: Thank you, Jack.

Rose Palazzo: Thanks so much, Jack.