The Rep

Some free advice to all of the entrepreneurs working on wealth management technology and solutions…

My dad explained something about business a long time ago that stuck with me. So much so that it’s become part of the philosophy within Ritholtz Wealth Management…

In the 80’s and 90’s, he was making foot care products like insoles and heel cups and the like for sale in both mail order catalogs as well as retail chains. If you walked into the foot care aisle of a drug store, you would see all the Dr. Scholl’s stuff on one rack and my dad’s stuff on the next rack, probably for a few dollars less, sometimes white-labeled. It was a good business. The catalog was a great business before the internet came along and changed everything. But one of the things he taught me was that there are some customers who can make you a better company.

It took time for his company to break in with Walmart, but once they did, it forced them to transform in order to fulfill the orders. The logistical powerhouse that is Walmart doesn’t become accustomed to doing business with you – you become accustomed to doing business with them. Or you’re out. They want their suppliers to do things the Walmart Way and it’s not a negotiation. If you’re selling to / through Walmart and your systems for invoicing, billing, shipping, ordering, inventory, re-supply, tracking, etc are not on point, you’re done. Having to level up in order to hang with the Walmarts of the world forces you to become a better-run company, because if they’re going to be your customer, there’s no other option. And you’re going to get bigger in the process. The chops you develop in learning to service Walmart will make you a better servicer of every other customer you have.

Now, leveling up is not easy. It may require some hiring. It may require some firing! But that’s the price of admission. Your other choice is to stay out of that game and remain small. Less pressure. A “lifestyle” business. Set your own hours, do just enough to get by, wear a lot of hats, take it easy. You can do that if you want. I’m from a place called Long Island where nobody in business has that mentality. I can’t relate to it. We’re all the grandchildren or great grandchildren of immigrants who arrived here by the skin of their teeth. We stare across the water at the Manhattan skyline from the time we’re born and whisper to ourselves “One day, that city will be mine. I will belong there.” We have no chill. It’s insane, but in a good way. That’s in the the DNA of our firm, running through the veins of our four founders. So leveling up is the baseline.

Internally, I impart this philosophy to my partners and colleagues as often as possible. It’s the reputation I want us to cultivate within our industry. I want it to be established that if you’re working with us as a vendor or a provider – whether on the technology side or the asset management side – you’re going to have to level up in order to keep up with what we need. We’re a high octane, full throttle organization. We’re shooting for maximum client satisfaction and a near-zero churn rate. Our net promotor score keeps rising, according to the internal survey we run each year. It better stay that way. We are consumed with this idea. I haven’t played a round of golf on a weekday in eight years. I will eat your golf clubs and spit them into a water hazard.

This is not a lifestyle business for anyone around me. It’s a calling.

I get hundreds of emails, DMs and pitches in person every year from people who want to provide this or that thing to our firm. I tell people who want to work with us the following:

If you’re an established fintech player providing software to us, we will make you a better company. Our people will be on the phone with your engineers, telling you all of the inside stuff you need to hear in order to make the best software possible. We will help you figure out the roadmap by showing you the direction where our firm, your ideal customer, is headed. We have improved the products and services of numerous companies in the wealthtech / fintech space through this sort of collaboration. We continue to do so. We know exactly what a fast-growing, high-powered firm in our business requires and we will make sure you get your product there. Ask our current software providers, they will tell you this is the case. They will tell you that we are not playing games. All of our most crucial providers are better companies for having dealt with us. If you can keep up with us, servicing a typical RIA becomes a piece of cake.

If you’re a start-up or relatively new company to the RIA industry, we will make you a better entrant. We will show you exactly what our ecosystem looks like, who we are currently working with, how the mousetrap operates and tell you point blank whether or not there is a need for you in the stack. If you’re developing something new and novel for the wealth management industry, the earlier we see it, the better. I can’t promise a meeting or a conference call to everyone, but landing one should be an action item for your team. You will come face to face with our operations people, our compliance people, our research people, our financial planning people. It’s a gauntlet, we don’t make snap decisions via webinar. Well informed founders know this, which is why we see so much stuff earlier than most firms. It’s why the products and services you’re going to see at Future Proof will be so cutting edge.

We have a long track record of being among the first beta testers for some of the most important software in our industry – We started using Riskalyze in beta back in 2012 and have worked with their team for nine years, honing and shaping their products. Riskalyze just sold for $300 million this summer. We were among the first five firms using O’Shaughnessy Asset Management’s custom indexing technology, known as Canvas. We are also by far the largest user currently. The process of iteration at Canvas was strongly influenced by the real-time feedback my people were providing as we onboarded hundreds of millions of dollars to the platform. O’Shaughnessy got acquired last month by Franklin Investments. Canvas is the thing they are most excited about, and we’ve been instrumental in getting it to this point.

From the founding of the firm, we have always believed that our ability to harness the power of technology would be an important characteristic of what we do. The current generation of wealthy households we serve has high expectations for the user interface and technological capabilities we bring to the table. These expectations will go even higher as the demographic of wealthy households gets younger. I believe that we speak to a more tech-savvy audience than the typical RIA. I know statistically that our advisor force is significantly younger than the average financial advisor industrywide.

We want the rap on us to be this: If you’re working with Ritholtz Wealth, you’re going to jump through some hoops and get a lot of feedback – some good, some not so good. It’s a firehose, and it’s brutally honest, but it’s what you need to hear. And it will make you a better company.

Being technologically savvy and staying ahead of the curve is not an option for us, it’s a prerogative. And if we have to level up, then all of the vendors who sell to us and service us have to level up as well. And we can all improve what we’re doing together. This is not a request. It’s the price of admission.

That’s the rep.

Read this next.