The WealthStack Podcast
00:19:08 · Mark Swan
[00:19:08] S2: Yeah. Great question. So on Ledra, it's an incredible AI company, two... Founded by two smartest people. You can even imagine former Google DeepMind, highly published in in several AI journals and papers, just, like, incredible, incredibly smart people. And so just first and foremost, it's been incredible to have them also join the team and be part of the nevus' journey. The second thing on the ledger acquisition was really actually around our core thesis that we believe voice is going to be even more important in the frontier of how work actually gets done. How do I get work done today? I speak to people, right? Like, how are we having this conversation? We've been for a play chat to each other. I think it's the most natural. It's also where the most context really is. Even in my own personal use case, I use what's called whisper flow, right? It's like a... It was embedded in my keyboard. Now, when I'm hopping between meetings, what am I doing? I like literally between them, I'm dictating, if you like, you know, how the meeting went, right? This submitted, so forth. These are the follow ups I want to do. And then I have this like pipeline that then reviews that and then creates these tasks and so on. We just wanted to bring that functionality to advisors, right? And advisors can now go on to Nevis, they go into our assistant product, they press voice, and they just can talk to Nevis, they can ask for anything that they want, right, or anything that they would ask for a CSA. I've just had a meeting with Mark. And these are the three follow ups, assign one to Jane, the other to James, the other to Kevin, the date at the twenty ninth of the month. And you're able to like do all of that type of work in a way that's natural to advisors and how they would assign tasks today. Now, I actually think that it's called an uncanny valley, but basically where things feel a little bit weird, but then it just becomes normal. I think that note taking is currently in that valley, right? Some people are like, oh, like I feel like I'm do I like it? Do I not? We wouldn't be talking about note taking in two years time. Right? It's a default on, in my opinion, because the benefits are so good. And I think the voice will actually be very similar, right? And our kind of experience or thought process of voices like using Siri or Alexa and it sucks, right?
00:21:09 · Mark Swan, Shannon Rosic
Like LMs are getting exceptionally good voice now, right? Understanding, following up, being able to actually converse with you in a way that feels much more natural. And I think as a result, it'll just feel much more natural to basically be talking to a system like Nevis to actually complete work and get things done. And so it's a large part of what we are building out, and voice will be a large component of that. [00:21:32] S1: And one of the more interesting ideas in that announcement too was the shift from software, people clicking through to switch to software, and people can simply tell what they want done. So how close are we really to advisers being able to operate more by intent, maybe more so than by just workflow?
00:21:50 · Mark Swan
[00:21:50] S2: Yeah. So this is where I think, like, the distinction to the two products really matters. So there are certain processes where actually having a distinct operational process that's repeatable all the time is very important. Right? And that's where our workflows agent builders really important, right? You want to onboard a client almost the same way every single time, right? You want to do a trade every typically the same way every time. But there are certain things, particularly on the advisor workflow productivity side, where actually you want the interface to constantly change. So I think one of the best examples of this is actually business analytics, right, or business intelligence. As an advisor, I want to know things like, in the last three months, you show me all of the clients that I had a initial sales call with, what's their eight and plot that in a chart like where they are in the pipeline, right? Like today, you might have to go in onto a business intelligence tool, connect it to your CRM, you know, click 20 buttons to set up. Most people won't do it, right? Things change all the time. And what you actually want as an advisor is you want that simple question and you want the response straight back, right? And so I think we're going to move towards a much bigger shift away from like rigid user interfaces, where there's like more like kind of CRM, like this is like how it looks to much more dynamic interfaces, build me a dashboard, which shows me everything I need to know about sales. And in that moment, Nevis will actually go and look at okay, what does a good sales pipeline look for an advisor? Okay, is goes these five metrics, okay, and then I'll chat back to the advisor. Do you want these five metrics to show them it should be a line chart? Should it be a dashboard? Yep, that's looks great. And you're like, you're literally interacting with Nevis and building the front end as you speak. And then you have your dashboard, which you can then save. And so a process that might have taken a week or consultant to go and do, you're able to do in a couple of minutes by interacting with Nevis. And I think that we're gonna move much more toward that where the actual front end user interface is much much more dynamic. I think analytics is probably the best example of that, but then there's others as well.
00:23:49 · Shannon Rosic
[00:23:49] S1: And something that stood out to me when I was just doing some research on Nevis and things like that was really the origin story behind it because you talked about growing up without access to a financial adviser because of cost and how that actually shaped your thinking. So if Nevis actually succeeds at reducing cost to serve and increasing adviser capacity, does this industry start to look fundamentally different, and do we move toward a world where high quality advice becomes accessible to millions more people? I think that's really always been the hope and mission in wealth management.
00:24:20 · Mark Swan
[00:24:20] S2: Yeah. So this is, like, the the meta goal of Nevis. Right? Ultimately, we believe that you can democratize access to professional financial advice. I think it's actually already happening. There's a transition happening where I think people who are high net worth, let's call them between 1,000,000 and 5,000,000 of assets from client side are now getting essentially family office services. And I think that has already happened or is in the process of happening. What it means for RIAs is they need to be offering a lot more basically services for the same fee. Now, the way that is actually happening today is it's largely mega enterprise RIAs offering those services, they get economies of scale. So like the reason why you go to creative planning might be over smaller firms, just because you have all this access of services, and it's going to create more and more pressure. But the end client, it's great for them, because they're getting more for their fee, right? But the question is, what on the lower end? So there's like a tipping point that happens, right? And it might be a 500,000 of assets might be slightly lower than that. There's a tipping point where you go from self serve to actually wanting an advisor, right? And the question is like, where is that line? And the line is actually not necessarily determined by the client. The line is determined by the cost to serve on the advisory side, right? When does it actually make sense, right, for me to from a cost side to actually get the revenue? Where's the breakeven, right? At point where I'm started making money as an advisor to services. And again, you just look at where is the cost today of an RIA, right? A typical RIA is spending somewhere between 3035% of revenue every single year on admin and operational cost. And that is like all the blocking and tackling in around the advisor. And again, if you're a small firm, and it's just you and one other that maybe you're running a completely different profile, but like, on average, your mid market firms are running somewhere there, right? And they're maybe running a 25% EBITDA margin kind of company. But the big cost is this admin part. And so the question is, if you can reduce the administrative cost, you can then actually drop the cost to serve.
00:26:22 · Mark Swan
And then you can actually start serving clients who are much less assets for the same for the same breakeven. And the way I think that you'll actually reduce that administrative cost is not necessarily through headcount reduction, though I think that might happen, but just through scale, being able to double the number of clients that you serve for the same team that you have, it has the equivalent essentially scale basis, right? And you got this operational leverage, and so your 30% will start to shrink. And I think that's actually how firms will start to realize that can profit loss. It really reduces the administrative costs that lowers the cost to serve. That means more people get access to professional financial advice. And that means that you're able to scale. The last thing I'd say is I actually think that the way I think I was the forecast ahead five years, right? What do I actually think the kind of midpoint will actually be is I think there will be there's always a need for the human financial advisor, you know, always be there. But I actually think that a lot of what client might want to ask for can actually be serviced, full pass through with AI. For instance, I want to know what's the performance of my portfolio in the last six months, but exclude my wife's stuff, just my stuff. And that should be honestly in like a mobile app where, you know, you're getting that request and then you have your quarterly touchpoint with your advisor where you're going through more complex financial planning and so on. So I think that also AI will help service a lot more kind of long tail requests so that the adviser is doing more high level strategic work with the client as well. And so I think that will also reduce the cost of service.