My trip spanned Midtown (Envestnet), the Flatiron District (Betterment) and Wall Street (periphery of the Tiburon CEO Summit)

April 13, 2015 — 7:48 PM UTC by Brooke Southall


Brooke’s Note: New York holds an equivocal position in RIA business. It is both a hub and ripe to be relegated to the pages of history by new business models that don’t require an atmosphere of fraternity row in skyscraper form. With something of a smirking sense of humor about that dualism, the Tiburon CEO Summit comes to Wall Street each year to pay homage and mock the environs in equal measure. (It’s also an attempt to bridge the gap to East Coasters; I was amazed how many people made it from the West Coast.) As I made my rounds in Battery Park, Betterment chief Jon Stein’s name came up most often as a prince of the robo-movement. His office in New York’s Flatiron District is an effective-but-safe 25-block distance from Wall Street and its rogue-ish rule. This is reminiscent of the conference producer, Chip Roame, whose own Tiburon, Calif. firm can taunt San Francisco’s financial establishment from a shark-infested swim across the Bay away. What struck me most at this event was the way the attendees treated every moment as precious when they gathered in nooks around the lobby, in hallways, bars and coffee shops. It’s the collegial but unremitting sense of urgency that is perhaps most affirming for the observer. See: Why the slow-evolving metro New York area is still on course to be the capital of the RIA business.

The Ritz-Carlton hotel in the Wall Street district, a briefcase throw away from the Hudson River, is a gloomy affair. Its pedestrian exterior is exceeded in utilitarianism only by its interior. Its front door, located in a corner of the building, was, I presumed, a side door.

No matter.

The Tiburon CEO Summit 2015 did what it has done best in other venues — namely the more ornate and regal San Francisco Ritz-Carlton — attracting top executives in the RIA business. See: Why the San Francisco Bay area is almost certainly the capitol of the RIA business.

The New York Summit did have one plus: its proximity to the beating heart of high finance that made it a Wall Street fantasy camp complete with dinner at Delmonico’s Restaurant, where the ghost of James Pierpont Morgan is palpable.

For an unofficial but oft-cited $25,000 price of admission, the elite of the RIA business hobnob among themselves even as their firms work to dismantle, supplant or modify Wall Street’s own culture and machinery. Most, if not all, attending executives are technically clients of Roame’s consultancy and research firm and many are heads of their companies.

Top-dog roll call

The enthusiasm of most attendees was unbridled.

“The Tiburon conference is fantastic,” said Charles Goldman, chief executive of AssetMark. “It is the best and only place to spend quality time with so many CEOs and senior execs to better understand the trends impacting our companies.” See: Charles Goldman speaks from the CEO Summit hotel about what he didn’t see coming at AssetMark and how it changed his life.

Other enthused industry lights I was able to greet included Ric Edelman of Edelman Financial; Stuart DePina of Envestnet | Tamarac Ron Cordes, founder of AssetMark; Mike Alfred of BrightScope Inc.; Gail Graham, chief marketing officer of United Capital Financial Advisers; Mike Durbin of Fidelity Investments; Skip Schweiss of TD Ameritrade; the brothers Clarke: Eric (Orion Advisor Services LLC) and Todd (CLS Investment Firm LLC); Sanjiv Mirchandani of National Financial; Marty Bicknell of Mariner Wealth Advisors; Steve Lockshin of Betterment Institutional; and Scott Hanson of Hanson McClain.

Robo thoughts

Bicknell was there, in part, to spread the word about his ambitious effort to become the mass affluent offering of choice among a vast swath of fellow RIAs. See: Marty Bicknell and Fidelity enter into the mother of all cross-RIA referral deals.

Edelman gave me a couple of skeptical thoughts about robo-advisors — namely that they aren’t as automated as they claim. His proof point is that if you plunk in the same data to the various sites, you come out with differing allocations. Edelman has his own robo-advisor, Edelman Online, and he wryly allows that his site, too, will impose its own personality on the data and produce management that differs from other robo sites. It is notable that Edelman has, if anything, pushed harder into human delivered advice since first introducing a web version a few years ago. See: Ric Edelman is looking to add a $1-billion RIA elephant even as he unveils an online consumer strategy aimed at the chipmunks.

Gazing north from Battery Park -- a tableau simultaneously grim and energizing.
Gazing north from Battery Park —
a tableau simultaneously grim and energizing.

Asset attrition

After a pause of few years I got the chance to sit down again with Tom Bradley in the Ritz coffee shop. The ‎president of retail distribution at TD Ameritrade had just shared a stage with Betterment Jon Stein, SigFig’s chief Mike Sha and NextCapital’s chief executive John Patterson.

Bradley, one of the first RIA business executives that I met (in 2001) when I started covering advisors, reminded me that he taught me all that I know. He added that his orientation has changed drastically since our introduction in San Diego when he was with TD Waterhouse Institutional and oversaw less than $10 billion of RIA assets. “My mindset back then was to double assets every year, and we did for years,” says Bradley.

Now his job is to oversee solid growth, a task he says is made especially challenging by the obvious but little-cited phenomenon of “asset attrition.” Bradley explained how big assets — his firm’s total assets sit around $700 billion — naturally take a hit as people spend some of their money each year making growth rates ever-harder to hit.

Bradley says that that while the robo session didn’t boast any big reveals, there was plenty of energy in the audience and he and his fellow panelists were “peppered” with questions. See: How one 'robo-advisor’ got $25 billion on its platform with a mindset, 401(k) friendliness, a merger and 16 years of work.

Media infiltrator

Media was again not admitted to sessions by order of chief executive Summit producer Chip Roame, which meant I was mostly meeting people in the coffee shop and other public spaces of the hotel. The managing principal of Tiburon Strategic Advisors did not object to my partial invasion of the event. (I’m not sure I would have lurked in the lobby under adversarial circumstances. Thank you, Chip.)

There were two attendees who could be labeled “media” — Sterling Shea of Barron’s and David Smith, principal of Financial Advisor, attended and I was able to greet them. Presumably, neither was writing articles about the event’s content. See: Getting inside Barron’s Top-100-Advisor lists with some help from Sterling Shea.

I met for the first time with John Scott Wotowicz, chairman and chief executive of inStream Solutions and his predecessor Alex Murguia. I shared a cab with John Sweeney, executive vice president of retirement and investing strategies (think chief rollover officer) at Fidelity Investments, who returned my forgotten umbrella when I exited the taxi and then continued to a Midtown location.

Another person I met for the first time was Babu Sivadasan, group president, Envestnet Retirement Solutions. He is the one charged with the outsourcer’s mega-effort to do on the 401(k) side of the business what Envestnet has accomplished in providing a turnkey way to offer managed accounts to financial advisors for non-retirement assets. Broker-dealers, currently with a combined 40,000 advisors, will be able to private label the 401(k) offering. Sivadasan came to Envestnet in a merger in 2000 with NetAssets. He is also the company’s liaison to its big technology center in Trivandrum, India.

Underdog attitude

When I ran into Envestnet chairman Jud Bergman, he made gracious comments about RIABiz’s journalistic efforts but tempered his praise saying that we may be overzealous in getting countering views at times.

Bergman also took exception to RIABiz calling his firm a “behemoth” or any other noun portraying Envestnet is a big company. He still sees Envestnet as a small entrepreneurial firm taking on the big guys, even in its post-IPO phase where the company is fairly dominant in certain segments. I reminded him that Envestnet is relatively big noise in the world of independent advisors, but it was good to see Bergman still channeling the energy of an underdog. See: How Envestnet may use its IPO to speed growth.

Talkin’ 401(k)s

The day before I met with Bill Crager, president of Envestnet, at his company’s New York headquarters near Grand Central Station. Like Sivadasan, he emphasized firm’s push forward on 401(K)s. See: Envestnet turns its guns on the 401(k) business.

Crager explained that many IBD reps are positioned well to provide 401(k) services to a handful of the clients who own small businesses with 25 to 100 employees. “There’s hundreds of billions of dollars,” he says. “[Those advisors] are going to use an Envestnet [as the 401(k) platform provider].”

Crager adds that Envestnet’s market position is strong because it can aid advisors in selling a non-401(k) savings plan alongside retirement plans. See: Wealthfront’s advice is now an employee benefit for Google employees’ non-401(k) savings.

Mentioned in this article:

Tiburon Strategic Advisors
Consulting Firm
Top Executive: Charles Roame

Envestnet Inc.
Top Executive: Jud Bergman

Betterment Holdings Inc.
Financial Planning Software
Top Executive: Jon Stein

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