From the December 2007 issue of Investment Advisor • Subscribe!

Catching up with... Adrian Nazari

The last time Adrian Nazari's name appeared here, it was January 2004, when we reported that LPL Financial was rolling out Nazari's MoneyFind liability management and mortgage origination software to some 500 of its reps. Since then, LPL acquired Nazari's firm, FinancialCircuit, allowing him to further explore ways of helping advisors manage their clients' liabilities. Nazari spoke to editor Jamie Green in early November.

What have you been doing?

You may remember that we were advocating the financial advisory market approach their clients' liability side the same way they approached their assets. Debt products were proliferating and getting complex, consumers were getting into massive debt, but they didn't have the tools to tell them what debt was good and what was bad. So we built some neat tools to do that. LPL was one of our top customers.

It turns out that LPL bought FinancialCircuit [in mid-2004]. We had built tools and software up front and tied it to services on the back end, and LPL acquired the entire entity, including our service group, and brought it inside LPL, with products including mortgages.

So we exited the FinancialCircuit model, but I was, and still am, convinced that there is this whole world of liability management that makes sense for investors and advisors to be better equipped to handle. We learned a great deal from [advisors]. One thing we learned is that anyone who wants to be really good at managing these debts and liabilities needs better analytical tools, better market intelligence, better product and customer intelligence to make sense of all these options and what they mean now and what their impact and behavior will be in the future, just like assets.

So I searched to find scientists who had done work in that space, and I was fortunate to partner with some scientists at Stanford and Berkeley [Dr. Ken Singleton and Dr. Richard Stanton], and we put together a good team to go after it. I'm glad to report that a lot of hard development and working with a number of financial institutions has brought us to the point where we have a compelling third-generation solution.

Your new company, Financial Crossing, is a private firm?

Yes. Don Putnam of Putnam Lovell has invested in the company [through his Grail Partners VC firm], and raised millions of dollars so far; we're very well backed.

What's the new product?

It's called Liability Manager, and while it's a platform that could be built across a number of channels, we're specifically focusing on the advisor market. AIG is our customer and we'll be rolling it out to all four of the AIG broker/dealers, [in concert] with AIG Bank. It allows advisors to advise clients about their liabilities--is the debt in their portfolio in line with their risks, with their long term objectives?--and do an analysis that allows you to make recommendations.

The subprime fiasco has significantly helped us because it has highlighted that fact that consumers are not knowledgeable and that even banks don't have the tools to evaluate these [debt and mortgage] options.

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