April Rudin
Global Wealth Marketing Strategist
April is a founder and president of The Rudin Group. She is a consultant to global financial services firms in North America, Asia, and the Middle East. April specializes in creating solutions for multi-family offices, wealth management firms, RIA’s, hedge funds, private banks, private equity groups, and other financial service firms.
In this interview, April shares her ideas about three pillars of success in financial business, and why the term “robo-advisor” is inappropriate. We discuss what the robo-advisor of the future will look like, and where competition is likely to come from.
Q: Through the WealthTech Club, we want to share knowledge and different opinions about what’s going on in wealth management, technologies, and so on.
April: That sounds great. Just to quickly give you my background. Basically, I grew up in technology. Even though I am a boomer, I’m very millennially minded. One of the big issues in wealth management and in wealth generally is that most of the advisors are around my age, but they’re thinking about retirement instead of thinking about growing their book of business or understanding change of any kind. They’ve been really riding this wave, inputs and gathering AUM for a long time without any real regard for what’s happening around the three pillars I identified when I started my business in 2008: next generation, wealth, and technology.
I could see we were going to collide and when that happened, it was going to be seismic. That’s where we are now, there’s the wealth transfer, so huge amounts—30 trillion dollars—of money in play. There’s technology, as you mentioned, which most people don’t understand, but I happen to understand very well. There’s the next gen; being the lucky mother of two millennials makes me a subject matter expert in millennials. It was those three sorts of factors.
I began my career working for Kelly Services, the temporary help company, at their headquarters, when word processing and PCs first came into the office and they only had a typing test in all their branches. So that was like not working at all. People around the world were placing orders from Lotus, for Wang, for whatever, they couldn’t control it, and their whole business relied on coming up with solutions.
In the 80s, maybe it was at CES where I met Bill Gates and from there I helped Kelly to create partnerships with Microsoft, with IBM, all the big players at the time. I relied heavily on technology. My friends used to call me a “man” because I was the first one with a Blackberry.
I took some time off to raise my family and returned to work. That was when I got into financial services. I went back to work in financial services for a family that was credited with “inventing” the family office. They had many global holdings. It was a very interesting introduction into financial services, from commercial banking to private banking, to private equity, hedge funds, wealth management, everything.
I could not believe how old and moldy most of their marketing materials were, most of their thinking in terms of client acquisition. Their innocence in terms of technology, I thought, was going to be a tsunami. Wealth management sort of operates in this bubble.
I started my business in 2008, basically we do end-to-end financial services marketing. Very few firms do that. We start from branding, messaging, architecture, really the sort of nuts and bolts of what a product is, who the audience is, what the value props are. Then all the way up through creating content in the form of blogs, white papers, tweets, posts, media, social media, events, webinars—all the methods we can use today to attract more brand visibility, product visibility, and personal value, which has become essential. As for myself, I also speak and write on the intersection of those three pillars—again, wealth, next gen, and technology. That’s really my passion.
FinTech in my mind is a very broad term. It is also sometimes useless because it can mean payments, it can mean wealth, it can mean blockchain, it can mean so many different things and they’re sometimes—but not always—related. So, I think wealth deserves its own WealthTech.
“Advisors don’t realize that technology is actually a revenue generator, it would free them up from some of their mundane and routine activities as advisors.”
Q: Thank you very much for the introduction and for detailing your background. What changes have you observed in the wealth management niche during recent years?
April: The changes really go back to the three pillars we spoke about.
$30 trillion is being transferred right now. The importance of next gen, and also women as inheritors, and as drivers of wealth, cannot be underestimated.
Number two, technology, the impact of technology, whether it’s a robo-advisor, which is a horrible term—that’s probably the worst term I’ve ever heard. The impact of technology is being seen in so many ways, from digital interfaces, the UX that your bank might offer you, to your wealth management firm, portfolio, robo-advisor—technology also cannot be underestimated.
Next gen-ers behave quite differently and they have themselves eliminated, something that’s been pervasive in wealth management, sort of a “one-size-fits-all product” and “one-size-fits-all marketing.” That’s what I think is the most important underlying change.
Q: You mentioned that “robo-advisor” is an awful term. Why do you think so, and why do you think robo-advisors are emerging so quickly in wealth management at the moment?
April: Well first of all, nothing has really emerged quickly in wealth management, let’s just stack up to that. It seems like robo-advisors and other technologies are gaining speed, but due to the other factors that I mentioned, people are realizing that there are other opportunities in the marketplace, and that unless they can come up with a hybrid, meaning not the one-size-fits-all approach, they’re going to lose market share and lose AUM to come.
“Robo-advisor” is a horrible term because robots don’t actually do any advising. It’s not a term that consumers in the B2C market understand. In the B2B market, which is where it originated, it seems like a few advisors sitting in a corner saying “What are we going to do? Robo-advisors are coming!” So they see it as more of a threat than a help. They don’t realize that technology is actually a revenue generator, it would free them up from some of their mundane and routine activities as advisors.
What robo-advising really means to me is that some people would like to control their own investments, so they want to be more hands on. So the term should better reflect those people, which is the market that these firms are going to, and it’s really product focused instead of consumer focused. From a marketing standpoint, if people were really positioning their firms and their offerings well, it would be to offer those people who want to have more hands-on involvement with their portfolios, the opportunity to do so at a lower cost, but also at a greater benefit. Maybe some are very interested in improving their financial literacy, or their involvement in their portfolios.
That’s why I think it’s a poor term. Robo-advising seems like it’s taking off because consumers are pushing up and demanding it. Most other industries innovate and then push down to consumers—consumer-packaged goods and luxury brands. They lead and tell you what is the next best Louis Vuitton purse or something like that. It’s only in financial services that consumers are really pushing up, saying “we don’t want to pay these high fees, we don’t want this lack of transparency,” so I feel like this is a product of 2008.
“One of the things about wealth management that they need to know is that the competition can come from unexpected places.”
Q: Do you think that B2C products in the wealth management area will replace B2B products completely?
April: There can never be one size fits all. Whatever you like and whatever I like, we should each be able to have an offering that’s customized to us. That’s what digital really offers people, that’s the promise of WealthTech and FinTech—a marketplace where I can pick and choose the interface, my products, and have an offering that’s customized for me, instead of the same cookie-cutter approach that Wall Street has had in the past.
Q: BlackRock have replaced something like 60% of their financial analysts with some robo-advising algorithms they have developed. Do you think this is a trend in the B2B space as well?
April: What I think the trend is, what it does is when applied correctly, is that technology will remove the mundane and routine tasks that can be better performed by an algorithm, or using artificial intelligence if you bring that in as well. It’s not a matter of displacing talents working in the B2B space. It’s a matter of future, of work changing, of what the skills are.
I grew up in Detroit; it’s as simple as people thinking that the automotive jobs of the past are going to come back. We’re not going to “make America great again” by doing that. That’s not happening. There’s not going to be people standing out on an assembly line putting together a car, that can’t happen. The very same thing applies here: technology can be used from an analytic standpoint. I don’t know the job function of the people you’re talking about but I think, based on my experience, it’s the future of work that’s changing.
Q: The wealth management industry was traditionally mainly associated with the chance to secure one’s retirement, and players in the niche used to be 40 years old, maybe older. Today, we are observing the potential audience becoming younger. Why do you think this is happening?
April: The truth is that there’s a wealth transfer happening. Baby boomers were inheritors and creators; now, with the new entrepreneur and gig economy, you have people creating wealth at a much younger age. Those people are also more global and mobile than my generation. They have different needs and wants in terms of how they’re serviced, or their investment-management needs. That’s why different things have popped up.
I work globally; one of the most interesting things I just looked at it at few years ago was that WeChat has announced that it is launching wealth management services. They have a huge installed base and it’s a brand that is trusted by millennials and by people who are digitally connected. So they believe that if you can have secure messaging, you can have investment management. One of the things about wealth management that they need to know is that the competition can come from unexpected places.
It’s not just UBS, Merrill Lynch; not the warehouses, not even the RIAs; these investment services and banking can come from Amazon, Google, some of the brands that millennials know and trust. And not just millennials. I think the segmentation can go a little bit too far. I was talking to a guy who said he missed being a millennial by 23 days. I said to myself: “Oh my god, that’s such a literal segmentation.” That’s just ridiculous.
They’re missing the whole point. It’s coming up with an offering that you and I might both use because of our digital appetite, even though we have no other segments that would make us similar if you look at us. That’s the problem with categorizing millennials into one big box too. If you think about the Chinese New Year, how can everybody born in one year have the same qualities?
Or robo-advisors for women. All women do not have the same needs. No. What if there was a robo-advisor for men? No.
“Financial services are gonna be dependent on FinTech firms and those driven by software engineers, coming up with innovative technologies.”
Q: Do you think the new technologies and possibilities provided by robo-advising startups could raise the investment? Do you think they could promote the investment culture among younger generations?
April: I think the problem is that we’re on robo-advisor 1.0 and the promise is really robo-advisor 10.0.
Robo-advisor 1.0 looks quite different from robo-advisor 10.0. Looking at robo-advisor 10.0 I don’t think about an isolated app that is used for investment—that’s never going to fly. That’s the stage we’re in right now. Your question holds a lot of promise that there will be greater financial literacy, more investing, on the part of everyone. Just because it’s easy to use or on an app, this doesn’t mean that it just goes to millennials. I always tell people that robo-advisors have inaccurate marketing because they’re thinking their target is millennials, and that’s wrong.
I participate in the Capgemini World Wealth Report, and we can see from that that something like 42% of ultra-high net worth users will change advisors if they don’t have the right digital UX or digital offerings. It’s not just millennials. I think that in robo-advisor version 10.0 it’s going to be integrated. If you click on something and you don’t know what it is, a box pops up and defines it. It’s connected to your philanthropy so you can make a donation. It’s connected to your grocery store, it’s IoT, it has artificial intelligence. It’s going to be all of those things and we’ll be activating it via voice. I think that’s the promise, but we’re in such early stages of understanding the potential.
Q: So if we talk about different WealthTech solutions, if we look at people who are from this area: on one side we have financial advisors, and on the other we have technology guys who can develop the software. Do you see any gaps right now that should be filled between these two groups of people?
April: Well, one of the problems is that you have banks spec-ing out projects and you have software engineers responding to those specs, that’s number one. That’s wrong. I think that’s part of FinTech companies, somebody such as yourself would spec out things and take them to the bank. And would be thinking about robo-advisor 1.0, 2.0, 3.0, 4.0, all that gap that I mentioned to you, and not just robo-advisor but digital wealth 1.0 to 10.0.
That’s the gap. The real imaginative thinking should come from the software technology. It only comes from really understanding and being a subject-matter expert in wealth management, because you should understand what can be digitized and what is routine, what can be eliminated, what changes can you make to enhance the role of the wealth manager, to enhance the role of the private banker. That’s where technology holds promise, it’s giving them a new offering, making them smarter through predictive analytics or collective intelligence, through artificial intelligence.
These are the things that FinTech companies can bring to the table. That is the gap because you can’t rely on banks and other unimaginative people and their “left-brain wants” to come up with breaking ideas, and that’s why robo-advisors look like a breaking idea. But it’s only because it’s like an unrealized demand, it finally burst open with some sort of technology. Then it gets stamped with some negative term that makes it ridiculous.
Financial services are going to be dependent on FinTech firms and those driven by software engineers, coming up with innovative technologies. That’s why having another robo-advisor 1.0, 2.0 is not an innovation now—we’ve already passed that. I’m looking for a 3.0, 5.0, for those greater enhancements, and the only way that’s going to come about is through FinTech companies and software engineers, who can use their imagination because they are, in those jobs, more right-brain, creative thinkers than a typical Wall Street analyst. An analyst is never going to come up with a good program.
Q: If we imagine robo-advisor 10.0, what features will it have compared to current solutions?
April: It’s powered with my Amazon system and it wakes me up in the morning with an alarm and it says “April, I’m paying three bills for you today, you’ve made this much money in interest; yesterday you spent this much money on lunch and dinner, and today you have these activities planned. You’re going to an event tonight, would you like to donate something to that event?”
Investment management becomes embedded in your everyday life, and it doesn’t become this once-a-month or once-a-year task where people go to their financial advisor for some kind of dressing down or analysis or reporting. It’s more real time and it’s more integrated. That’s my version of a robo-advisor 10.0; it’s not a robo-advisor at all. All of my financial life is really embedded in my real life. I don’t have to exit something to go and make a payment.
Q: In that case it will not be just a wealth management solution, but will be integrated with all the other financial services that you use. If we talk about WeChat, we see a very good example of how they integrate different services into one platform. They have a huge user base and can integrate many different things using this platform, and have many different financial services that are used by people every day.
April: That’s because of the integration, not due to coming from financial services. That’s what I think most people miss. That is the gap and the opportunity that needs to be leveraged. What’s wrong is that many small companies also have no budget for marketing, so they don’t even understand marketing. They come up with an idea that they think is a great software solution, but they have no market.
Every single functional task needs to not be siloed and needs to be integrated into some larger framework. That’s really what I’m talking about here, that’s the vision for investment services, robo-advisor 10.0.
“Everybody’s doing something and they’ve moved the needle, but there’s much more that needs to be done or can be done.”
Q: What companies in the WealthTech area do you like most, and why?
April: They’re all in the infancy stage, so there’s no reason to hang my hat on any of them right now. They all look like babies to me, and most companies don’t do a good job when they first come to market, especially small companies. They don’t understand the market, they don’t know how to get any penetration. So the best solutions might not even be known to us, because they’re developed by software engineers who didn’t know how to market them. So they’re sitting somewhere trying to figure out who we partner with, without understanding how to actually formulate a go-to-market strategy. I don’t feel like anyone’s really moving far enough or fast enough at a pace to get this robo-advisor, or this WealthTech. Let’s call it WealthTech 10.0. That’s really a much better term for what we’re talking about.
That sounds like a pessimistic view and everybody’s doing a little something to move the needle, but I think there’s so much more that needs to be done or can be done.
Q: So do you think Betterment or WeathFront are not doing a good job right now?
April: No, I didn’t say that. You asked me who I’m impressed with. I like what they’re both doing very much. They’re doing something and they’ve moved the needle, but there’s much more that needs to be done and can be done. The amount that they’re actually impacting AUM relative to the market opportunity is quite small—relative to the global market opportunity it’s not even in the conversation.
I work on a global basis and I look at regions like Asia that are so wealthy. These firms need to enter some of these markets and really attack them, because that’s where the banks are really developing their own technology. They can’t get it fast enough.
Q: In recent years, banks started to establish so-called “innovation labs,” which are departments that are separate from IT supporting daily operations. What will the cooperation look like between banks and their innovation labs, and independent WealthTech companies who are focused on the B2C market? What kind of partnership and cooperation do you think they will have?
April: Well I think there’s going to be everything, the problem is that everything is going to be up for change. So it’s the same three pillars: wealth, next gen, and technology.
I know I sound repetitive. Mainly, it should be wealth as the driver, because everyone needs to capture AUM. So if your product doesn’t capture AUM, your product doesn’t really matter. Some of these innovation labs could be developing I don’t know what; they’re being held to a certain standard. Outside companies could certainly have a good idea, but there’s not a very efficient marketplace for firms to find FinTech; I should go back to that—it’s a really important gap that needs to be filled, and I have some ideas about it. There is no marketplace. If you’re a bank and you want to find a FinTech solution for anything, how do you find it? Google? I mean, it’s not right. There is not an efficient marketplace to fill.
Q: Have you seen Denovo from PVC? It’s the database for all the FinTech companies in the area, I think. We can promote our company through the database, but it’s not only the database, they’re trying to build a community.
April: The database is like a list. That was developed by engineers. No, that’s not the right way to do it. You have to have a portal for product demonstrations, or it has to be video, there has to be so much more to it then just a database. I’ll look at it but if it’s a list, and then it’s a category like sorting robo-advisors, then that is so siloed again. It really doesn’t solve the problem. How do they find people to put on the list? I have so many questions and that’s not efficient. And that’s what makes a great opportunity for FinTech.
“Software engineers and financial services need to be more forward thinking.”
Q: In terms of recommendations to software people, what would you suggest in terms of books to read, resources from which to gain knowledge about portfolio management, about wealth management?
April: There’s no book to read, because if there was a book to read it would be out of date. The best advice I give to people is to have practical knowledge. So open accounts with these different software companies, self-serve, see what they look like. Go open an account with an investment advisor, go in person, understand what these processes are that you’re looking to automate before you can ever figure out what it is that you’re going to do. You as an individual will then know what it is you like or don’t like, or what your habits are, or all of those things. That’s where I think some of the best learning comes from. There isn’t a book about it, it’s the practice. Certainly you need some subject-matter expertise, but I think what’s more important is the actual experience. You are the target market.
Q: That’s a perfect answer. I think that we should observe the challenges we’re facing and think about how we will solve them, rather than just talking about trends.
April: Forget about the players that are in the space. I think it’s like in the U.S. when you had a car, the first cars are nothing like a car today. Look at a Tesla versus a Model T, they asked was I excited about the Model T before—yeah, I was really excited about it.
25 years ago we thought gas prices were too high, the problem solved on it rather than taking a look at whatever was in the marketplace then and analyzing that. That is never forward thinking. That’s what these two groups need to do: software engineers and financial services need to be more forward thinking.
Interviewed by Vasyl Soloshchuk, CEO and co-owner at INSART, FinTech & Java engineering company. Vasyl is also author of the WealthTech Club blog, which conducts research into Fortune and Startup Robo-advisor and Wealth Management companies in terms of the technology ecosystem.
