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‘Antiquated’ Financial Industry Leaves Millions of Americans Behind: Jason Wenk

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People of ordinary means — 75% of Americans — are in need of quality financial advisors, but the financial services industry has largely snubbed them, argues Jason Wenk, founder and CEO of Altruist, in an interview with ThinkAdvisor.

“Great advice has gotten more exclusive, not more inclusive,” he says. “What we’ve seen in the last couple of decades is a, kind of, race to the top of the market. The industry has to do a lot better job.”

Altruist, an integrated fintech firm directed at RIAs, offers custodian services, portfolio management, financial planning and billing, among other functions, at lower cost, which brings advisors better outcomes, Wenk maintains.

For the last 22 of his 41 years, the entrepreneur’s mission has been to make financial advisory both more affordable and inclusive. He wants great advice to be easily available to people no matter how much money they have.

This can happen with increased advisor efficiency, which allows them to help folks for less cost. But the challenge to reach that goal persists since “legacy institutions are reluctant to change because it’s too disruptive to their status quo,” Wenk contends.

In the interview, he is notably candid about his view of the financial services industry, which he calls “pretty antiquated” and which “has done a pretty poor job of making it easier for [advisors] to start new firms” to serve those with modest assets and net worth. 

“There aren’t enough financial advisors and certainly not enough fiduciaries to broadly serve all the people who need help,” he says.

Wenk aims to improve the efficiency of RIAs, many of whom are not — yet — in the AUM super-star category. 

A self-described “math geek” and former one-year Morgan Stanley system analyst, Wenk went on, in 2005, to open his own RIA, Retirement Wealth Advisors.

He then founded FormulaFolios to produce model quantitative investment portfolios to help remove emotion from investing. He sold the company in 2018, the year he founded Altruist.

Under RWA, Wenk has retained nine longtime clients from his advisory days. This helps him understand client concerns, which in turn helps him to better relate to his Altruist RIA clients.

ThinkAdvisor recently interviewed Wenk, who was speaking by phone from Los Angeles, where Altruist is based.

Big plans for this and next year include ways to help individuals connect with a “great-fit advisor” so that, he says, “when people are looking for [one], it doesn’t feel like a crapshoot.”

Here are highlights of our interview:

THINKADVISOR: What drives you professionally?

JASON WENK: I’ve spent more than 20 years trying to solve the problem of how to make it easy for regular people to get great help with their money and how to increase efficiency so that advisors can help more people.

When I got into the financial services space as a computer-science engineer 22 years ago, I recognized very quickly that nobody I’d ever met in the rural Michigan community where I grew up — the vast majority of people are without significant wealth — would have access to the type of advice I was programming.

The same could be said of 75% of the United States. I wanted to change that.

Why has this been such a challenge?

It seems that there are legacy institutions that don’t really want to see a whole lot of change. People are reluctant to change because it’s too disruptive to their status quo.

Is it the wirehouses that have a legacy mindset?

Partially. It’s even the old technology companies that advisors use. There’s a lot of one company scratching another company’s back.

There are an awful lot of companies that have had great opportunities to create change; but if they did that, it might disrupt one of their key vendors or key partners. 

Nobody wants to [upset] the applecart. 

What’s the top concern in the RIA space right now?

One of the really big challenges is that there aren’t enough financial advisors and certainly not enough fiduciaries to broadly serve all the people who need help.

The industry has done a pretty poor job of making it easier for people to start new firms and serve [those who are less than high net worth].

Great advice has gotten more exclusive, not more inclusive. And that’s a bummer. The industry has to do a lot better job.

What we’ve seen in the last couple of decades is, kind of, a race to the top of the market: People want to serve wealthier and wealthier clients.

The minimums went from $100,000 to $250,000 to $500,000, to $1 million.

What’s happening at the other end of the spectrum?

Over 100 million Americans don’t even have access to a human financial advisor. Many would like to; but they just don’t have enough money, or for other reasons, they aren’t able to easily access that professional help. 

And for those who do have an advisor, the industry is pretty antiquated.

How does your service help financial advisors have better outcomes, as you say on your website? 

Most of the tools that the industry has built for people to directly manage their money in many ways encourage behaviors that are great for the company but not great for the investor — things like gamifying and trading.

If we can help clients feel more connected to their money, they’re more likely to stay committed to their financial plan and not change it so frequently. 

If we can keep people committed to a plan, they’re more likely to do well versus getting emotionally involved and buying high and sell low, and things like that.

How do you help advisors who have good ideas about change but who don’t have the clout to be heard?

Many of the advisors that we work with oftentimes don’t have much of a voice in the industry. If you don’t have billions of dollars in AUM on your platform, rarely are you going to have much influence. 

But we really listen and engage with our advisors. 

Most of them would have close to a zero percent chance of influencing anything with a traditional custodian.

What’s upcoming for Altruist?

The future for us is being able to broadly serve more advisors, and the tools we’re building make that a lot easier. They’re around the idea of making advice better, tools that automate decision-making at scale for advisors.

We also have some really cool plans for 2022 about making it easier for the consumer to find and connect with a great advisor.

Advisors aren’t always [outstanding] at getting new clients, and it’s very confusing for clients to figure out what [makes] a good advisor. 

There’s a lot of opportunity for [us] and the advisor community to make it easier so that when people are looking for that great-fit advisor, it doesn’t feel like a crapshoot.

In sum, what’s your far-reaching goal?

I want it to be really easy for anybody, no matter where they are or how much money they have, to be able to improve their financial life by connecting with someone that can help them do that.

If we can make financial advice far more inclusive so there’s a lot less difference between the access the wealthiest people in the world have and the rest of the world has, that would be pretty rewarding.

It would also close the wealth gap that’s been expanding during my entire lifetime. 

One of the best ways to do that is making really dedicated financial advisors far more accessible to the entire population, not just wealthy people and not only in metropolitan areas.

Pictured: Jason Wenk