December 5, 2024 • 29 mins
In this episode of Trading Tomorrow - Navigating Trends in Capital Markets, host Jim Jockle is joined by Patrick Spencer, Managing Director of Moneytree Software, to discuss how emerging technologies can and are reshaping the financial planning landscape. Patrick shares insights into Moneytree's platform, emphasizing personalization, trust, and goal-based engagement between advisors and clients. Explore the transformative power of AI and UX/UI advancements and how they affect the financial industry in real-time.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Jim Jockle (00:06):
Welcome to Trading Tomorrow Navigating Trends in
Capital Markets the podcastwhere we deep dive into
technologies reshaping the worldof capital markets.
I'm your host, jim Jockle, aveteran of the finance industry
with a passion for thecomplexities of financial
technologies and market trends.
In each episode, we'll explorethe cutting-edge trends, tools
and strategies driving today'sfinancial landscapes and paving
(00:29):
the way for the future.
With the finance industry at apivotal point, influenced by
groundbreaking innovations, it'smore crucial than ever to
understand how thesetechnological advancements
interact with market dynamicsinteract with market dynamics.
Today, we're thrilled to havePatrick Spencer, managing
(00:52):
Director of MoneyTree Software,joining us.
Moneytree has been a pioneeringforce in financial planning
technology for over 40 years,helping advisors grow their
practices and build strongerrelationships with their clients
.
Recently, moneytree unveiled aninnovative financial planning
solution to help advisors meetevolving client expectations and
build deeper relationships.
(01:12):
Patrick is here to discuss thegame-changing features of this
new platform, including itsgoal-based and cash flow
planning modules, and how theclient-advisor relationship is
shifting towards a morepersonalized and trust-based
engagement.
We'll also dive deeper intobroader technology trends that
are influencing the future offinancial planning.
Patrick Spencer (01:31):
Well, Jim, thanks for having me Really
appreciate it.
Jim Jockle (01:33):
Why don't you tell us what prompted MoneyTree to
develop this new financialplanning solution?
Patrick Spencer (01:37):
Yeah, great.
Well, as you know, moneytreehas been around since 1981, so
four decades doing financialplanning and also with a good
reputation in terms of reallyunderstanding what the advisor
is looking for from a morecomprehensive perspective, but
then also just from a supportperspective of taking care of
(01:58):
them, as they're calling in.
So Accutech acquired MoneyTreein 2019 because they saw that
and they also saw an opportunityto integrate that financial
planning platform into theirwealth management platform, of
which they've been around since1987.
Wants to reinvest in thecompany that I'm managing and
(02:28):
grow it, as well as integrate itinto a tool foreshadowing what
trust companies and wealthmanagement firms are going to
want in the future.
So, all that said, when we gotit, we started talking to our
clients, our advisors, andreally trying to hear okay, what
is it that we really need to do?
Some were very basic, blockingand tackling things we wanted to
get done account aggregation,things like that but what we
really wanted to do was leaninto the conversation that takes
(02:50):
place between the advisor andthe client and allow our
technology to really complementthat process.
So that's what really drove theinnovation.
It was time.
It was time for a new interface, time for a new UX UI design.
Time for a new realinfrastructure level that could
be sustainable and able to growwithin an AWS environment.
(03:13):
So kind of going technical onyou there a little bit, jim, but
from that standpoint it wastime for us to advance our
relationship with our advisorsso they could advance their
relationship with their clientswith our advisors so they could
advance their relationship withtheir clients.
Jim Jockle (03:25):
So you know you've highlighted that client advisor
relationships are shiftingtowards personalization,
trust-based interactions.
You know what's behind thischange.
Patrick Spencer (03:34):
Well, I think one major thing that we all know
is COVID.
So if you think about whatCOVID did, you know all of the
trauma and some of thesacrifices that were just made
by a lot of people.
The great resignation was real.
We saw people, mid-50s, thatwere saying you know what,
(03:54):
enough's enough and I'm going tobring my retirement forward.
I'm going to do what is in myfamily, or mine and my wife's or
my spouse, my partner's bestinterest and what we saw.
I think back to May of 2021,think about wanting to buy a
bicycle, a kayak, an RV smallpurchase of recreation to a
(04:18):
large purchases of recreation.
You couldn't find them becausepeople wanted out, and I think
that transitioned into peoplealso understanding I can do with
my life what I choose in a goodway.
And so I think for advisors,that meant that people were
looking at retirementdifferently.
We have more businesses beingstarted by baby boomers and Gen
(04:39):
Xers than ever before from aretirement perspective, and that
doesn't come without some typeof planning, and so it's really
the client that is driving thischange in financial planning,
and again, I think a lot of itis because of COVID.
But I think the other part isjust generational, that each
generation is going to be alittle bit different than the
one before.
I think the generation that isgetting set to retire not just
(05:04):
maybe some of the younger babyboomers, if you will are not
looking at let's go to Florida,retire, play golf for the rest
of my life.
They're taking a look at well,where is my family?
Maybe I'll travel and livewhere they are to have more
engagement with them.
Maybe I'll start doing mytraveling before retirement
while I'm a little bit youngerand while I am still in a job
(05:24):
where I've got larger amounts ofcashflow coming in, or maybe
it's that starting that businessthat I've always wanted to do.
So it's a lot of factors, but Ithink it's generational.
I also think it was a pandemicthat really are leaning into the
big changes.
Jim Jockle (05:38):
It's interesting, I'm early 50s so I missed the
bug not mid 50s and I still havethe Florida golf dream.
So I, I guess I, you know Ineed to read, I need to rethink
that.
Patrick Spencer (05:49):
Yeah, yeah, maybe not as much, though.
You probably are going to dosomething else, uh, to
supplement that golf game ofyours.
Jim Jockle (05:56):
Well, you know, it's a fascinating perspective.
Uh, you know we do on this pod.
We spend a lot of time ontechnology, but we never get
into the human dynamic andfactors.
So that's a really interestingway to start thinking about just
more than technology.
Yeah, absolutely, but I'm goingto bring it back to technology.
So how does the platformsupport advisors in terms of
(06:21):
adopting to this new trendyou're seeing?
Patrick Spencer (06:24):
Yeah.
So what we wanted to focus inon was the conversation right,
Because that's what it comesdown to.
It can't be about a clientwalking in, getting a three ring
binder that's three inchesthick with a 200 page plan in it
, thinking that that's going tobe ingested and digested by the
client.
And so what we're seeingadvisors wanting is smaller
(06:48):
sound bites, better visuals anda comprehensive system behind it
that can give them clues andkeys into what they should be
talking about.
So that's what kind of drove usto develop planning pages,
interactive pages, the abilityto do a customizable one pager
(07:08):
enhancing our what if scenarioso that it can actually
accommodate up to three plancomparisons with a what if
scenario underneath all of thatand by what if scenario, I mean
the ability to, for example I'myour advisor, Jim you step in.
I'm like okay, Jim, here's yourplan from last year, here's the
plan we're proposing.
(07:29):
But here's the plan I got aquestion mark on because we're
going to talk about that Floridagolf that you want to do, and
so right in front of you, rightin front of me, we can take a
look and just do this comparisonand, as you have things that
come up, well, you might say,Pat, we're thinking about
downsizing before we make thetrip to Florida, or we think
(07:49):
we're going to take some ofthose trips to Europe before we
retire, and so it allows us to,kind of real time, say, okay,
well, let's take a look at that,let's create the appropriate
assets or liabilities orwhatever the case might be, so
that you can see upon reflection, both visually and in text,
what is that going to look likefrom a retirement perspective.
Jim Jockle (08:10):
You know it's funny.
I'm going to share aconversation I had with a friend
of mine the other day.
I'll call him mid-50s, but wehad this.
The conversation was all aroundtiming and it was when do we
start using our 401k?
When do you use Social Security?
How do we manage taxes?
(08:31):
Through those scenarios, notjust what's my investment advice
?
Arguably people betweenprogrammatic investment and
whatnot.
That market's changed,programmatic investment and that
market's changed.
So it's more seems, especiallyas someone at my age.
It's more about what isfinancial wellness.
(08:51):
So where do you see theindustry heading.
Patrick Spencer (08:54):
Yes, so that's a great way to look at it.
Financial wellness, because theplan is really the conduit.
Right, that's a conduit, but itis all about the wellness of
where you're at, and you kind ofpicked some great aspects of
the conversation, right?
So you've got to 401k, you'vegot social security.
(09:16):
So within our solution there'sa social security optimizer.
So when do you start takingsocial security?
Does it really benefit to waittwo years, from 65 to 67 or
possibly to 70?
And so we start getting intothe thought of well, what about
your expenses?
We know there's a 401k, jim,and we know there's a Social
(09:38):
Security check that's waitingout there for you.
But let's talk about yourexpenses.
Are you going to be trying todownsize those expenses to
offset the potential lowerincome that you'll have by
leaving your job and so forth?
And so all of these differentfactors there's tables,
algorithms, charts and a lot ofstuff that can be kind of boring
(09:58):
to the client.
What we try to do is give usthe input and then let us give
you the output visually, andthen, if you want to take a look
at the narrative or the textthat's behind it, take a look at
that as well, to be able tohave those conversations Because
, from a consumer perspective,what we want to really try to
get out and what we've heardfrom our advisors say in terms
of the conversation they'retrying to have, is what is it
(10:21):
that you want to do?
What is it that you want toaccomplish, to have, is what is
it that you want to do?
What is it that you want toaccomplish?
What type of legacy, bothliving and, obviously, past, do
you want to leave or be a partof, with your family?
And the consumer may not knowthat they need to optimize
social security.
They certainly won't know.
If they've moved around to acouple of jobs, let's say, and
(10:43):
they have a couple of 401ks, butthen they have some
self-directed IRAs, they've gotmultiple sources of where that
income could come from.
Well, what's the right order todraw from that?
They don't put themselves in atax liability situation.
So now we're taking somethingpretty simple Most people do
have a 401k, most people willhave social security, most
(11:04):
people probably have separateinvestments, but then how do we
draw that down to make sure wedon't get ourselves into a tax
situation?
So even that simplest scenariois going to lend itself towards.
All right, let's start talkingabout taxes and how we want to
withdraw these funds.
And should we convert some to aRoth conversion, which is a
very popular conversation goingon right now, to a Roth
conversion, which is a verypopular conversation going on
(11:26):
right now.
So, to your point, lots ofvariables going into the
scenario when all the clientwants to know is when can I
retire, how much will I have andwill I be able to do these
things I have laid out for mygoals.
And can I pay my greens fees?
Yes, absolutely your greensfees, for sure.
And if you're not as good of agolfer like I am, maybe some of
(11:50):
the wages I have to pay mypartners and friends I'm playing
with.
Jim Jockle (11:52):
You know it's funny.
I love technology.
I'm always blown away by what'savailable.
I'm going to give a shout outto Microsoft, which I don't
think anybody ever does.
But I was looking up someequities individual equities on
Bing the other day and it wasthe coolest thing.
They had this new tab calledprojection and basically they
(12:13):
were doing option prices,black-straw, model, money, color
pass and saying where theequity price will most likely
come out over the next six toeight months will most likely
come out over the next six toeight months.
And I was absolutely blown awaybecause you know, unless you
had quants and you know somesophisticated software tools,
you never could get anythinglike that.
But you know, I guess theargument is technology is
(12:37):
becoming increasingly vital,especially in financial planning
.
Patrick Spencer (12:55):
So you know how is MoneyTree leveraging
innovation to help theseadvisors work more effectively
while maintaining that personalconnection, are what I call
specialized planning tools.
So to your point, getting frompoint A to point B, here's what
I make, here's what I'd like toretire with.
That's some present value andsome future value, type
calculations and so forth.
But once we start digging in,the innovation really comes in
(13:17):
the education, the socialsecurity optimization, the Roth
conversion, optimization andconversion and really these
types of tools that can helpdrive the conversation to cover
off in these areas.
Tax planning is obviously avery complex process, and so
having tools that mimic taxreturns, that can then take that
(13:38):
information so clients oradvisors, I should say, can do
tax loss harvesting and do someother things with regards to tax
liability issues or concerns.
Then you have estate planning,which is very complex, and so we
have a module that does estateplanning.
It works best when thebeneficiaries are humans, right?
(13:58):
So there's a lot of estateplanning tools that are out
there and ours does well whenthe beneficiaries are humans.
When it gets into beneficiariesbeing corporate entities or
charities, things like that,that's where we would advise an
advisor to take a look at othertools that might be on the
market, but the point being is,we're trying to take the advisor
as far as they can go and ascomprehensive as they can go
(14:20):
with a client.
That goes all the way up toultra high net worth.
Because there's a lot ofdifferent tools taking place in
the marketplace.
Right, there's a lot ofinnovation.
If we take a look at theKitsiscom advisor tech map, for
example, back from 2018 to today, we see a ton of innovation, a
(14:43):
ton of innovation, and it's goodinnovation for the industry,
because it's either solving aproblem or it's creating
competition for companies likeus to make sure we're doing our
best and making and putting ourbest foot forward on these
things.
But, as these tools come up, ifthey are siloed, if they are
not talking to one anotherwithout integration, then that
(15:04):
innovation also leads to techbloat or it leads to an
overwhelming tech stack that anadvisor has to manage and a solo
practitioner advisor has tomanage just as many, if not more
, applications than an advisorthat works for an RIA that has
500 advisors and the tech stackis more or less there and made
(15:24):
for them.
So, that being said, advisorsare deep into the tech, but they
also are looking forefficiencies within that tech
stack as well.
So the innovation is incredibleand AI is adding to that.
I know we'll get that into amoment, but it's driving great
innovation, solving greatproblems.
But then we do have to takethat step back and say, okay,
(15:45):
where's that efficiency going tocome in for the advisor as well
.
So I think it's two products Ithink it's innovation and I
think it's efficiency.
Jim Jockle (15:51):
So what would you say?
The biggest threat is, though,to the traditional financial
planning model.
Is it competition?
Is it technology?
Is it changing clientexpectations, dealing with the
millennials and beyond?
Patrick Spencer (16:06):
Yeah, great question.
I think it's a combination oftechnology with a main focus of
AI, and then the competition andthe technology and the AI.
You know, I was just atFutureProof a few weeks ago and
they had a demo drop, if youwill, kind of like we're going
to talk a little bit about theend where seven companies got up
(16:27):
there and they talked abouttheir products, how it can help
the advisor, and what innovationand what AI is doing is
incredible.
They had tools that would helpprospecting.
They had tools that would helpwith presentations.
They had tools that would helpwith combing through tax returns
and understanding the rightquestions to ask.
All of these things are helpingadvisors really generate the
(16:50):
right conversation, having theright dialogue with their
customers.
So all of that is there.
We've got to lean into it by weMoneyTree.
We've got to lean into andassess this to say, okay, what's
really bringing value, what isnear and dear to our core,
what's ancillary and whatpartners should we work with?
So, as an example for financialplanning, we need to make sure
(17:15):
that we can help advisors withtwo categories.
One is termed advice engagementand the other one is client
data gathering.
Basically, I meet with thatclient.
How do I get the data I needinto the financial planning tool
as seamless and as efficient aspossible?
And then what I want to engagewith the client.
In addition to the digital andinteractivity we're providing,
(17:36):
are there any other tools thatcan make that meeting go really
well?
Partners that we work with onthat On the presentation side,
there's a company called theMeetings Hub, and then, when it
comes to more or less the I'dsay the client, some of the
client data gathering and someof the knowledge integration
that we've done with FPPathfinder.
So we're looking for thosetools that we can best integrate
(18:02):
with, that we can best partnerwith without necessarily leaving
our core, because from acompetitive perspective we know
we've got to be able to providethese tools to our clients.
Jim Jockle (18:10):
So, hoping that that answers your question, it's
funny, I know my producer, emily, has been known to go down
TikTok rabbit holes and I'vestumbled across a couple on my
own and I've stumbled across acouple on my own and I guess
different generations thinkabout money differently.
They think about corporationsdifferently.
(18:31):
How do you see the role offinancial advisors evolving in
the next five to 10 years, or isit basically wait till they
grow up, wait till they getenough net worth and they'll
just fall in place?
Patrick Spencer (18:50):
Yeah, no, no.
So you know some of theresearch.
For example, ycharts did asurvey back in February of this
year, but the data was from 2023.
What they found is and itadmittedly a small sample size I
think it was between 700 and800 respondents but I think the
data showed some prettyincredible things.
For example, 54% of theconsumers that responded
(19:11):
switched advisors in 2023.
12% left robo-advising for ahuman advisor, and the essence
of the why behind it had to dowith lack of communication, lack
of relevant content and lack ofunderstanding the objectives of
the client, and that's a littlebit separate from communication
(19:34):
.
Communication had to do withfrequency and then the
engagement had to do with kindof the depth and true
understanding of what the clientwanted.
So, even if those numbers areoff 10, 20% there's something
going on there to your point,and that is from a younger
generation who we thought wouldbe all about real world advising
and do it yourself.
They do want that, but whatwe're seeing more and more is
(19:56):
they want experiencedindividuals helping them.
Now, that doesn't mean thatthey're over forward.
It just means they want to dealwith people who can take them
where they want to go.
And so we're seeing at a youngerage, that there's opportunity
for more complex planning thanwhat may have been originally
thought, maybe five years ago.
Exit, their needs, wants,desires, are different than what
(20:27):
we thought they would have beenmaybe five or six years ago as
well.
All that's culminating into agreat opportunity for advisors
and we're actually seeing interms of the advisor population.
We're seeing new influx of newadvisors that's now starting to
match with the number ofadvisors that are retiring on
the other side of it.
So it's really an exciting timefrom our perspective because
(20:48):
we've got really a client basefrom you know, say, mid twenties
to upwards mid sixties, midseventies that wants engagement,
they want relevant content putin front of them, they want good
communication and they wantthings that are relevant to what
it is they're trying to do.
So if I'm an advisor, I'm likeall right, let's go.
Let's try to separate myselffrom the pack with the type of
(21:12):
experience I have and reallydrive my business forward.
Jim Jockle (21:17):
So what impact do you see these technologies
having on financial planning,and could AI-based advisors
become a mainstream option?
Patrick Spencer (21:27):
So, uh, ai is going to blow the socks off the
financial planning world.
It really is, and it will startwith the prospecting.
You know the AI.
I saw it future-proof, with theability to say, okay, I'm an
advisor.
Let's say, I'm a pilot and Icome from a family that owns a
(21:51):
business.
So I now want to prospect thosepeople who are pilots and own a
business, or maybe there's an,or that are between 30 and 45,
that live in a certain area andhave a certain income.
There are tools out there thatcan get close to what you're
asking for, and now you've gotyour story down.
(22:15):
So, instead of trying to comeup with a more general story and
cast a broader net to bringpeople in, you now can go
directly to that crowd thatyou're like.
I've got expertise here.
So for advisors, it's a greatchance for them to utilize AI
technology on this prospectingside.
On the analysis side, you thinkof Alexa and, yes, she just
(22:38):
turned on because I said thatbeing able to take a financial
plan and upload it, if you will,into a secure environment where
an individual would have theability to ask questions of
their plan, uh, all of which getrecorded and then sent to the
advisor so they know what theclient is thinking about, while
(23:00):
the client is asking questionsabout their plan that just got
delivered to them Not there yet,but possibilities technology we
know that that's, that'scertainly there, yeah.
Uh, folks that want tounderstand what to do in
retirement Uh, we've come acrossadvisors that are now dealing
with individual and couples, uh,that are starting their own
(23:20):
charities and and doingdifferent things again than they
thought they would have, andall of it was because they were
able to kind of formulate a plan, an idea, research through AI.
So I see AI permeating from thetime the advisor says I want to
target this prospect to bringingthat prospect in building
(23:42):
proposals, modeling portfolios,having the meeting, recording
the meeting, summarizing themeeting, loading it up to CRM
and then beyond that, on theanalysis, on the planning side,
if I'm putting all of this datain and I'm using my experience
to know what questions to ask,what if I have a mini LLM that
(24:06):
can learn my expertise, myquestions, and start summarizing
it for me so that I can thenmove to the next thing that I
might want to be asking?
So I see I really turning ourworld in a good way to have
better conversations, deeperconversations, and truly meet
clients where they're at,regardless of where they may
(24:28):
think they're at as well as well.
Jim Jockle (24:37):
You know, patrick, one of the things that has
struck me in this conversationis your clients and their
clients are clearly first in theway you speak about them.
Is that a money tree, okr?
Is it a?
Patrick Spencer (24:48):
philosophy.
You caught us.
Yes, it absolutely is, in fact.
But it starts I have to admitit starts at our parent company,
accutech, and our owner, adamUnger, from the standpoint of
our mission as a company is tomake great things happen for
other people, and that permeatesour culture.
And it's no better fit forwealth management software
(25:12):
helping trust companies engagetheir clients.
And it's no better fit forwealth management software
helping trust companies engagetheir clients.
It's no better fit for afinancial planning company
that's trying to help advisorsgrow their business, have better
conversations and ensure theirclients meet their financial
objectives.
We may not be talkingnecessarily specifically about
Money Tree's future, but I'llkind of lean into that a little
(25:34):
bit.
We want to stay in and aroundfinancial planning and by in and
around I mentioned we'llpartner with advice engagement
and we'll partner with clientdata gathering outside of what
we'll do on our own.
But when it comes to financialwellness, when it comes to
budgeting, when it comes tounderstanding things you could
(25:55):
do, start a business, we'redefinitely going to lean into
what are tools that can help theadvisor not just with the plan,
the algorithms and calculations, but the results that they're
seeing, that provide theopportunities for the customers
that they're meeting with.
So just a little glimpse interms of our future.
Jim Jockle (26:13):
Well, you know what, patrick, regardless of your
insight of where the industry isand going and the changes I
hope our listeners really takeaway, it's about putting the
customer first and their clientsright.
I think you know.
Key takeaway for me today.
So sadly you know, we'vereached the final question of
(26:35):
the podcast.
We call it the trend drop.
It's like a desert islandquestion.
If you could only watch ortrack one trend in the financial
planning market, what wouldthat be?
Patrick Spencer (26:47):
Well, it's going to line up with what we
just talked about and it reallyI won't call it behavioral
finance, but I will call it theconsumer behavior, because I
think, as you take a look atbehavioral finance, well, first
take a look at AI, right, andthen take a look at behavioral
(27:07):
finance, which is really tryingto understand patterns of a
consumer behavior.
But one of the reasons whybehavioral finance is becoming
so popular is because advisorsare challenging themselves to
become better sales people interms of understanding their
clients.
And so behavioral finances frommy perspective, having 30 years
(27:29):
in the industry and over 20years in biz dev it really is
about how can I have a bettersales experience with my client
without making them thinkthey've been sold and they walk
away realizing they've trulybeen helped.
So I think AI with behavioralfinance, across sociological
patterns across our country andreally understanding where are
(27:51):
individual consumers wanting togo, how do they define legacy,
how do they define dreams andgoals and objectives, and then
how are they motivated toactually achieve them, and it's
going to be really interestingto see how the AI technology
really tries to hone in on that.
(28:12):
Again, I'll go back toFutureProof, just because it was
the most recent conference, Iwent to A lot of things on
behavioral finance and there's alot of assessments, surveys,
tests whatever you want to callthem out there that the advisors
are taking to understand whothey are as they sell and how
should they communicate andengage people.
But the general population isstarting to lean into that as
well, like, why do certainthings stress me out?
(28:36):
Or when I have a bad day, well,why exactly is that?
Were there certain things thattook place, and so forth.
So the consumers are leaninginto that as well and I think
it's all good for thatself-discovery.
But I think the AI and thetechnology and the ability to
bring the advisor and the clienttogether and have great
conversations I think it's goingto be pretty impressive here in
the next few years.
Jim Jockle (28:56):
Well, I hope my advisor listens to this today.
Patrick, I want to thank you somuch for your time, your
insights, your knowledge, andthank you so much.
Patrick Spencer (29:07):
Well, jim, thank you very much.
It was a pleasure being on yourshow and look forward to coming
back one day.
Excellent, thank you.
Jim Jockle (29:20):
Thanks so much for listening to today's episode and
if you're enjoying TradingTomorrow, navigating trends and
capital markets, be sure to like, subscribe and share, and we'll
see you next time.
Welcome to Trading Tomorrow Navigating Trends in
Capital Markets the podcastwhere we deep dive into
technologies reshaping the worldof capital markets.
I'm your host, jim Jockle, aveteran of the finance industry
with a passion for thecomplexities of financial
technologies and market trends.
In each episode, we'll explorethe cutting-edge trends, tools
and strategies driving today'sfinancial landscapes and paving
(00:29):
the way for the future.
With the finance industry at apivotal point, influenced by
groundbreaking innovations, it'smore crucial than ever to
understand how thesetechnological advancements
interact with market dynamicsinteract with market dynamics.
Today, we're thrilled to havePatrick Spencer, managing
(00:52):
Director of MoneyTree Software,joining us.
Moneytree has been a pioneeringforce in financial planning
technology for over 40 years,helping advisors grow their
practices and build strongerrelationships with their clients
.
Recently, moneytree unveiled aninnovative financial planning
solution to help advisors meetevolving client expectations and
build deeper relationships.
(01:12):
Patrick is here to discuss thegame-changing features of this
new platform, including itsgoal-based and cash flow
planning modules, and how theclient-advisor relationship is
shifting towards a morepersonalized and trust-based
engagement.
We'll also dive deeper intobroader technology trends that
are influencing the future offinancial planning.
Patrick Spencer (01:31):
Well, Jim, thanks for having me Really
appreciate it.
Jim Jockle (01:33):
Why don't you tell us what prompted MoneyTree to
develop this new financialplanning solution?
Patrick Spencer (01:37):
Yeah, great.
Well, as you know, moneytreehas been around since 1981, so
four decades doing financialplanning and also with a good
reputation in terms of reallyunderstanding what the advisor
is looking for from a morecomprehensive perspective, but
then also just from a supportperspective of taking care of
(01:58):
them, as they're calling in.
So Accutech acquired MoneyTreein 2019 because they saw that
and they also saw an opportunityto integrate that financial
planning platform into theirwealth management platform, of
which they've been around since1987.
Wants to reinvest in thecompany that I'm managing and
(02:28):
grow it, as well as integrate itinto a tool foreshadowing what
trust companies and wealthmanagement firms are going to
want in the future.
So, all that said, when we gotit, we started talking to our
clients, our advisors, andreally trying to hear okay, what
is it that we really need to do?
Some were very basic, blockingand tackling things we wanted to
get done account aggregation,things like that but what we
really wanted to do was leaninto the conversation that takes
(02:50):
place between the advisor andthe client and allow our
technology to really complementthat process.
So that's what really drove theinnovation.
It was time.
It was time for a new interface, time for a new UX UI design.
Time for a new realinfrastructure level that could
be sustainable and able to growwithin an AWS environment.
(03:13):
So kind of going technical onyou there a little bit, jim, but
from that standpoint it wastime for us to advance our
relationship with our advisorsso they could advance their
relationship with their clientswith our advisors so they could
advance their relationship withtheir clients.
Jim Jockle (03:25):
So you know you've highlighted that client advisor
relationships are shiftingtowards personalization,
trust-based interactions.
You know what's behind thischange.
Patrick Spencer (03:34):
Well, I think one major thing that we all know
is COVID.
So if you think about whatCOVID did, you know all of the
trauma and some of thesacrifices that were just made
by a lot of people.
The great resignation was real.
We saw people, mid-50s, thatwere saying you know what,
(03:54):
enough's enough and I'm going tobring my retirement forward.
I'm going to do what is in myfamily, or mine and my wife's or
my spouse, my partner's bestinterest and what we saw.
I think back to May of 2021,think about wanting to buy a
bicycle, a kayak, an RV smallpurchase of recreation to a
(04:18):
large purchases of recreation.
You couldn't find them becausepeople wanted out, and I think
that transitioned into peoplealso understanding I can do with
my life what I choose in a goodway.
And so I think for advisors,that meant that people were
looking at retirementdifferently.
We have more businesses beingstarted by baby boomers and Gen
(04:39):
Xers than ever before from aretirement perspective, and that
doesn't come without some typeof planning, and so it's really
the client that is driving thischange in financial planning,
and again, I think a lot of itis because of COVID.
But I think the other part isjust generational, that each
generation is going to be alittle bit different than the
one before.
I think the generation that isgetting set to retire not just
(05:04):
maybe some of the younger babyboomers, if you will are not
looking at let's go to Florida,retire, play golf for the rest
of my life.
They're taking a look at well,where is my family?
Maybe I'll travel and livewhere they are to have more
engagement with them.
Maybe I'll start doing mytraveling before retirement
while I'm a little bit youngerand while I am still in a job
(05:24):
where I've got larger amounts ofcashflow coming in, or maybe
it's that starting that businessthat I've always wanted to do.
So it's a lot of factors, but Ithink it's generational.
I also think it was a pandemicthat really are leaning into the
big changes.
Jim Jockle (05:38):
It's interesting, I'm early 50s so I missed the
bug not mid 50s and I still havethe Florida golf dream.
So I, I guess I, you know Ineed to read, I need to rethink
that.
Patrick Spencer (05:49):
Yeah, yeah, maybe not as much, though.
You probably are going to dosomething else, uh, to
supplement that golf game ofyours.
Jim Jockle (05:56):
Well, you know, it's a fascinating perspective.
Uh, you know we do on this pod.
We spend a lot of time ontechnology, but we never get
into the human dynamic andfactors.
So that's a really interestingway to start thinking about just
more than technology.
Yeah, absolutely, but I'm goingto bring it back to technology.
So how does the platformsupport advisors in terms of
(06:21):
adopting to this new trendyou're seeing?
Patrick Spencer (06:24):
Yeah.
So what we wanted to focus inon was the conversation right,
Because that's what it comesdown to.
It can't be about a clientwalking in, getting a three ring
binder that's three inchesthick with a 200 page plan in it
, thinking that that's going tobe ingested and digested by the
client.
And so what we're seeingadvisors wanting is smaller
(06:48):
sound bites, better visuals anda comprehensive system behind it
that can give them clues andkeys into what they should be
talking about.
So that's what kind of drove usto develop planning pages,
interactive pages, the abilityto do a customizable one pager
(07:08):
enhancing our what if scenarioso that it can actually
accommodate up to three plancomparisons with a what if
scenario underneath all of thatand by what if scenario, I mean
the ability to, for example I'myour advisor, Jim you step in.
I'm like okay, Jim, here's yourplan from last year, here's the
plan we're proposing.
(07:29):
But here's the plan I got aquestion mark on because we're
going to talk about that Floridagolf that you want to do, and
so right in front of you, rightin front of me, we can take a
look and just do this comparisonand, as you have things that
come up, well, you might say,Pat, we're thinking about
downsizing before we make thetrip to Florida, or we think
(07:49):
we're going to take some ofthose trips to Europe before we
retire, and so it allows us to,kind of real time, say, okay,
well, let's take a look at that,let's create the appropriate
assets or liabilities orwhatever the case might be, so
that you can see upon reflection, both visually and in text,
what is that going to look likefrom a retirement perspective.
Jim Jockle (08:10):
You know it's funny.
I'm going to share aconversation I had with a friend
of mine the other day.
I'll call him mid-50s, but wehad this.
The conversation was all aroundtiming and it was when do we
start using our 401k?
When do you use Social Security?
How do we manage taxes?
(08:31):
Through those scenarios, notjust what's my investment advice
?
Arguably people betweenprogrammatic investment and
whatnot.
That market's changed,programmatic investment and that
market's changed.
So it's more seems, especiallyas someone at my age.
It's more about what isfinancial wellness.
(08:51):
So where do you see theindustry heading.
Patrick Spencer (08:54):
Yes, so that's a great way to look at it.
Financial wellness, because theplan is really the conduit.
Right, that's a conduit, but itis all about the wellness of
where you're at, and you kind ofpicked some great aspects of
the conversation, right?
So you've got to 401k, you'vegot social security.
(09:16):
So within our solution there'sa social security optimizer.
So when do you start takingsocial security?
Does it really benefit to waittwo years, from 65 to 67 or
possibly to 70?
And so we start getting intothe thought of well, what about
your expenses?
We know there's a 401k, jim,and we know there's a Social
(09:38):
Security check that's waitingout there for you.
But let's talk about yourexpenses.
Are you going to be trying todownsize those expenses to
offset the potential lowerincome that you'll have by
leaving your job and so forth?
And so all of these differentfactors there's tables,
algorithms, charts and a lot ofstuff that can be kind of boring
(09:58):
to the client.
What we try to do is give usthe input and then let us give
you the output visually, andthen, if you want to take a look
at the narrative or the textthat's behind it, take a look at
that as well, to be able tohave those conversations Because
, from a consumer perspective,what we want to really try to
get out and what we've heardfrom our advisors say in terms
of the conversation they'retrying to have, is what is it
(10:21):
that you want to do?
What is it that you want toaccomplish, to have, is what is
it that you want to do?
What is it that you want toaccomplish?
What type of legacy, bothliving and, obviously, past, do
you want to leave or be a partof, with your family?
And the consumer may not knowthat they need to optimize
social security.
They certainly won't know.
If they've moved around to acouple of jobs, let's say, and
(10:43):
they have a couple of 401ks, butthen they have some
self-directed IRAs, they've gotmultiple sources of where that
income could come from.
Well, what's the right order todraw from that?
They don't put themselves in atax liability situation.
So now we're taking somethingpretty simple Most people do
have a 401k, most people willhave social security, most
(11:04):
people probably have separateinvestments, but then how do we
draw that down to make sure wedon't get ourselves into a tax
situation?
So even that simplest scenariois going to lend itself towards.
All right, let's start talkingabout taxes and how we want to
withdraw these funds.
And should we convert some to aRoth conversion, which is a
very popular conversation goingon right now, to a Roth
conversion, which is a verypopular conversation going on
(11:26):
right now.
So, to your point, lots ofvariables going into the
scenario when all the clientwants to know is when can I
retire, how much will I have andwill I be able to do these
things I have laid out for mygoals.
And can I pay my greens fees?
Yes, absolutely your greensfees, for sure.
And if you're not as good of agolfer like I am, maybe some of
(11:50):
the wages I have to pay mypartners and friends I'm playing
with.
Jim Jockle (11:52):
You know it's funny.
I love technology.
I'm always blown away by what'savailable.
I'm going to give a shout outto Microsoft, which I don't
think anybody ever does.
But I was looking up someequities individual equities on
Bing the other day and it wasthe coolest thing.
They had this new tab calledprojection and basically they
(12:13):
were doing option prices,black-straw, model, money, color
pass and saying where theequity price will most likely
come out over the next six toeight months will most likely
come out over the next six toeight months.
And I was absolutely blown awaybecause you know, unless you
had quants and you know somesophisticated software tools,
you never could get anythinglike that.
But you know, I guess theargument is technology is
(12:37):
becoming increasingly vital,especially in financial planning
.
Patrick Spencer (12:55):
So you know how is MoneyTree leveraging
innovation to help theseadvisors work more effectively
while maintaining that personalconnection, are what I call
specialized planning tools.
So to your point, getting frompoint A to point B, here's what
I make, here's what I'd like toretire with.
That's some present value andsome future value, type
calculations and so forth.
But once we start digging in,the innovation really comes in
(13:17):
the education, the socialsecurity optimization, the Roth
conversion, optimization andconversion and really these
types of tools that can helpdrive the conversation to cover
off in these areas.
Tax planning is obviously avery complex process, and so
having tools that mimic taxreturns, that can then take that
(13:38):
information so clients oradvisors, I should say, can do
tax loss harvesting and do someother things with regards to tax
liability issues or concerns.
Then you have estate planning,which is very complex, and so we
have a module that does estateplanning.
It works best when thebeneficiaries are humans, right?
(13:58):
So there's a lot of estateplanning tools that are out
there and ours does well whenthe beneficiaries are humans.
When it gets into beneficiariesbeing corporate entities or
charities, things like that,that's where we would advise an
advisor to take a look at othertools that might be on the
market, but the point being is,we're trying to take the advisor
as far as they can go and ascomprehensive as they can go
(14:20):
with a client.
That goes all the way up toultra high net worth.
Because there's a lot ofdifferent tools taking place in
the marketplace.
Right, there's a lot ofinnovation.
If we take a look at theKitsiscom advisor tech map, for
example, back from 2018 to today, we see a ton of innovation, a
(14:43):
ton of innovation, and it's goodinnovation for the industry,
because it's either solving aproblem or it's creating
competition for companies likeus to make sure we're doing our
best and making and putting ourbest foot forward on these
things.
But, as these tools come up, ifthey are siloed, if they are
not talking to one anotherwithout integration, then that
(15:04):
innovation also leads to techbloat or it leads to an
overwhelming tech stack that anadvisor has to manage and a solo
practitioner advisor has tomanage just as many, if not more
, applications than an advisorthat works for an RIA that has
500 advisors and the tech stackis more or less there and made
(15:24):
for them.
So, that being said, advisorsare deep into the tech, but they
also are looking forefficiencies within that tech
stack as well.
So the innovation is incredibleand AI is adding to that.
I know we'll get that into amoment, but it's driving great
innovation, solving greatproblems.
But then we do have to takethat step back and say, okay,
(15:45):
where's that efficiency going tocome in for the advisor as well
.
So I think it's two products Ithink it's innovation and I
think it's efficiency.
Jim Jockle (15:51):
So what would you say?
The biggest threat is, though,to the traditional financial
planning model.
Is it competition?
Is it technology?
Is it changing clientexpectations, dealing with the
millennials and beyond?
Patrick Spencer (16:06):
Yeah, great question.
I think it's a combination oftechnology with a main focus of
AI, and then the competition andthe technology and the AI.
You know, I was just atFutureProof a few weeks ago and
they had a demo drop, if youwill, kind of like we're going
to talk a little bit about theend where seven companies got up
(16:27):
there and they talked abouttheir products, how it can help
the advisor, and what innovationand what AI is doing is
incredible.
They had tools that would helpprospecting.
They had tools that would helpwith presentations.
They had tools that would helpwith combing through tax returns
and understanding the rightquestions to ask.
All of these things are helpingadvisors really generate the
(16:50):
right conversation, having theright dialogue with their
customers.
So all of that is there.
We've got to lean into it by weMoneyTree.
We've got to lean into andassess this to say, okay, what's
really bringing value, what isnear and dear to our core,
what's ancillary and whatpartners should we work with?
So, as an example for financialplanning, we need to make sure
(17:15):
that we can help advisors withtwo categories.
One is termed advice engagementand the other one is client
data gathering.
Basically, I meet with thatclient.
How do I get the data I needinto the financial planning tool
as seamless and as efficient aspossible?
And then what I want to engagewith the client.
In addition to the digital andinteractivity we're providing,
(17:36):
are there any other tools thatcan make that meeting go really
well?
Partners that we work with onthat On the presentation side,
there's a company called theMeetings Hub, and then, when it
comes to more or less the I'dsay the client, some of the
client data gathering and someof the knowledge integration
that we've done with FPPathfinder.
So we're looking for thosetools that we can best integrate
(18:02):
with, that we can best partnerwith without necessarily leaving
our core, because from acompetitive perspective we know
we've got to be able to providethese tools to our clients.
Jim Jockle (18:10):
So, hoping that that answers your question, it's
funny, I know my producer, emily, has been known to go down
TikTok rabbit holes and I'vestumbled across a couple on my
own and I've stumbled across acouple on my own and I guess
different generations thinkabout money differently.
They think about corporationsdifferently.
(18:31):
How do you see the role offinancial advisors evolving in
the next five to 10 years, or isit basically wait till they
grow up, wait till they getenough net worth and they'll
just fall in place?
Patrick Spencer (18:50):
Yeah, no, no.
So you know some of theresearch.
For example, ycharts did asurvey back in February of this
year, but the data was from 2023.
What they found is and itadmittedly a small sample size I
think it was between 700 and800 respondents but I think the
data showed some prettyincredible things.
For example, 54% of theconsumers that responded
(19:11):
switched advisors in 2023.
12% left robo-advising for ahuman advisor, and the essence
of the why behind it had to dowith lack of communication, lack
of relevant content and lack ofunderstanding the objectives of
the client, and that's a littlebit separate from communication
(19:34):
.
Communication had to do withfrequency and then the
engagement had to do with kindof the depth and true
understanding of what the clientwanted.
So, even if those numbers areoff 10, 20% there's something
going on there to your point,and that is from a younger
generation who we thought wouldbe all about real world advising
and do it yourself.
They do want that, but whatwe're seeing more and more is
(19:56):
they want experiencedindividuals helping them.
Now, that doesn't mean thatthey're over forward.
It just means they want to dealwith people who can take them
where they want to go.
And so we're seeing at a youngerage, that there's opportunity
for more complex planning thanwhat may have been originally
thought, maybe five years ago.
Exit, their needs, wants,desires, are different than what
(20:27):
we thought they would have beenmaybe five or six years ago as
well.
All that's culminating into agreat opportunity for advisors
and we're actually seeing interms of the advisor population.
We're seeing new influx of newadvisors that's now starting to
match with the number ofadvisors that are retiring on
the other side of it.
So it's really an exciting timefrom our perspective because
(20:48):
we've got really a client basefrom you know, say, mid twenties
to upwards mid sixties, midseventies that wants engagement,
they want relevant content putin front of them, they want good
communication and they wantthings that are relevant to what
it is they're trying to do.
So if I'm an advisor, I'm likeall right, let's go.
Let's try to separate myselffrom the pack with the type of
(21:12):
experience I have and reallydrive my business forward.
Jim Jockle (21:17):
So what impact do you see these technologies
having on financial planning,and could AI-based advisors
become a mainstream option?
Patrick Spencer (21:27):
So, uh, ai is going to blow the socks off the
financial planning world.
It really is, and it will startwith the prospecting.
You know the AI.
I saw it future-proof, with theability to say, okay, I'm an
advisor.
Let's say, I'm a pilot and Icome from a family that owns a
(21:51):
business.
So I now want to prospect thosepeople who are pilots and own a
business, or maybe there's an,or that are between 30 and 45,
that live in a certain area andhave a certain income.
There are tools out there thatcan get close to what you're
asking for, and now you've gotyour story down.
(22:15):
So, instead of trying to comeup with a more general story and
cast a broader net to bringpeople in, you now can go
directly to that crowd thatyou're like.
I've got expertise here.
So for advisors, it's a greatchance for them to utilize AI
technology on this prospectingside.
On the analysis side, you thinkof Alexa and, yes, she just
(22:38):
turned on because I said thatbeing able to take a financial
plan and upload it, if you will,into a secure environment where
an individual would have theability to ask questions of
their plan, uh, all of which getrecorded and then sent to the
advisor so they know what theclient is thinking about, while
(23:00):
the client is asking questionsabout their plan that just got
delivered to them Not there yet,but possibilities technology we
know that that's, that'scertainly there, yeah.
Uh, folks that want tounderstand what to do in
retirement Uh, we've come acrossadvisors that are now dealing
with individual and couples, uh,that are starting their own
(23:20):
charities and and doingdifferent things again than they
thought they would have, andall of it was because they were
able to kind of formulate a plan, an idea, research through AI.
So I see AI permeating from thetime the advisor says I want to
target this prospect to bringingthat prospect in building
(23:42):
proposals, modeling portfolios,having the meeting, recording
the meeting, summarizing themeeting, loading it up to CRM
and then beyond that, on theanalysis, on the planning side,
if I'm putting all of this datain and I'm using my experience
to know what questions to ask,what if I have a mini LLM that
(24:06):
can learn my expertise, myquestions, and start summarizing
it for me so that I can thenmove to the next thing that I
might want to be asking?
So I see I really turning ourworld in a good way to have
better conversations, deeperconversations, and truly meet
clients where they're at,regardless of where they may
(24:28):
think they're at as well as well.
Jim Jockle (24:37):
You know, patrick, one of the things that has
struck me in this conversationis your clients and their
clients are clearly first in theway you speak about them.
Is that a money tree, okr?
Is it a?
Patrick Spencer (24:48):
philosophy.
You caught us.
Yes, it absolutely is, in fact.
But it starts I have to admitit starts at our parent company,
accutech, and our owner, adamUnger, from the standpoint of
our mission as a company is tomake great things happen for
other people, and that permeatesour culture.
And it's no better fit forwealth management software
(25:12):
helping trust companies engagetheir clients.
And it's no better fit forwealth management software
helping trust companies engagetheir clients.
It's no better fit for afinancial planning company
that's trying to help advisorsgrow their business, have better
conversations and ensure theirclients meet their financial
objectives.
We may not be talkingnecessarily specifically about
Money Tree's future, but I'llkind of lean into that a little
(25:34):
bit.
We want to stay in and aroundfinancial planning and by in and
around I mentioned we'llpartner with advice engagement
and we'll partner with clientdata gathering outside of what
we'll do on our own.
But when it comes to financialwellness, when it comes to
budgeting, when it comes tounderstanding things you could
(25:55):
do, start a business, we'redefinitely going to lean into
what are tools that can help theadvisor not just with the plan,
the algorithms and calculations, but the results that they're
seeing, that provide theopportunities for the customers
that they're meeting with.
So just a little glimpse interms of our future.
Jim Jockle (26:13):
Well, you know what, patrick, regardless of your
insight of where the industry isand going and the changes I
hope our listeners really takeaway, it's about putting the
customer first and their clientsright.
I think you know.
Key takeaway for me today.
So sadly you know, we'vereached the final question of
(26:35):
the podcast.
We call it the trend drop.
It's like a desert islandquestion.
If you could only watch ortrack one trend in the financial
planning market, what wouldthat be?
Patrick Spencer (26:47):
Well, it's going to line up with what we
just talked about and it reallyI won't call it behavioral
finance, but I will call it theconsumer behavior, because I
think, as you take a look atbehavioral finance, well, first
take a look at AI, right, andthen take a look at behavioral
(27:07):
finance, which is really tryingto understand patterns of a
consumer behavior.
But one of the reasons whybehavioral finance is becoming
so popular is because advisorsare challenging themselves to
become better sales people interms of understanding their
clients.
And so behavioral finances frommy perspective, having 30 years
(27:29):
in the industry and over 20years in biz dev it really is
about how can I have a bettersales experience with my client
without making them thinkthey've been sold and they walk
away realizing they've trulybeen helped.
So I think AI with behavioralfinance, across sociological
patterns across our country andreally understanding where are
(27:51):
individual consumers wanting togo, how do they define legacy,
how do they define dreams andgoals and objectives, and then
how are they motivated toactually achieve them, and it's
going to be really interestingto see how the AI technology
really tries to hone in on that.
(28:12):
Again, I'll go back toFutureProof, just because it was
the most recent conference, Iwent to A lot of things on
behavioral finance and there's alot of assessments, surveys,
tests whatever you want to callthem out there that the advisors
are taking to understand whothey are as they sell and how
should they communicate andengage people.
But the general population isstarting to lean into that as
well, like, why do certainthings stress me out?
(28:36):
Or when I have a bad day, well,why exactly is that?
Were there certain things thattook place, and so forth.
So the consumers are leaninginto that as well and I think
it's all good for thatself-discovery.
But I think the AI and thetechnology and the ability to
bring the advisor and the clienttogether and have great
conversations I think it's goingto be pretty impressive here in
the next few years.
Jim Jockle (28:56):
Well, I hope my advisor listens to this today.
Patrick, I want to thank you somuch for your time, your
insights, your knowledge, andthank you so much.
Patrick Spencer (29:07):
Well, jim, thank you very much.
It was a pleasure being on yourshow and look forward to coming
back one day.
Excellent, thank you.
Jim Jockle (29:20):
Thanks so much for listening to today's episode and
if you're enjoying TradingTomorrow, navigating trends and
capital markets, be sure to like, subscribe and share, and we'll
see you next time.
Popular Podcasts
24/7 News: The Latest
The latest news in 4 minutes updated every hour, every day.
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com