Host: You are listening to Wealth Tech on Deck, a podcast about the future of wealth management technology, brought to you by SEI. Here's your host, Jack Sherry.
Jack Sharry: Hello all, welcome to another episode of Wealth Tech on Deck. We love to explore the ideas, technologies, and trends shaping the future of wealth management on this program. as so many of Today's guest is Jim Patrick. Jim is a senior strategist and advisor with more than 25 years of experience across wealth management, asset management, institutional investing, and family office advisory services. He previously served as a group president at Invest Net, has run a family office, and today works with McKinsey and other wealth management and asset management organizations in a strategic advisor role. He helps firms address growth strategy, operating model transformation, product development, distribution, regulation, AI enablement, advisor productivity, alternatives, and the evolving expectations of affluent and ultra high net worth clients. Jim is a longtime friend in the business, and I welcome you, Jim, to this program. Thanks for joining us.
Jim Patrick: Thanks for having me, Jack. Batter to be included in the long list of folks you have done engagements with.
Jack Sharry: Well, not to put too much pressure on you, Jim, but you're about as bright and bulb as I know in this business, so I'm kind of not need to come through and talk about all those 25 years or so of wealth management that you've spent. So I'm looking forward to our conversation.
Jim Patrick: Great.
Jack Sharry: When you entered the business, and I remember you way back when Nicholas Applegate, I think the first time you and I met, advisors largely went because they controlled access to information, research, products, managers, and opportunities. Today, investors can access almost anything from their smartphone at any time. How does that change the advisor's value proposition? Love to hear your perspective on that.
Jim Patrick: Yeah, and I'll correct you. I actually met you in 1997. It's been almost 30 years, sad to admit, but amazingly enough, I think the biggest shift over the last 29 years that I've been in the business, always engaging end clients at the core is it's not about access to product products or services or solutions or asset allocation anymore, as those things have become more ubiquitous, it's about decision making and decision making consistency. Because as consumers have engaged with more and more and more information, almost too much with so much choice, they become paralyzed with all of the solutions that are out there. And unfortunately, as we've seen time and again, human behavior with too much choice doesn't always end up with the best choice. They get completely overwhelmed.
Jack Sharry: Yeah, I think we all can relate to that. Too much opportunity, too many choices, too much complexity, and you kind of like don't know what to do, so you kind of don't do necessarily the right thing, certainly, but you're not sure what to do at all. So we've heard that predictions of technology would eliminate financial advisors. As we've watched over the years, discount brokers, online trading, ETFs, robo-advisors, FemTech, direct indexing, and now AI, advisors seem more relevant than ever is what I observed. What say you about that?
Jim Patrick: Well, I have two thoughts on that. One is, of course, I think advisors are more relevant than ever. All of the innovations you just mentioned are on the J curve in terms of what they're bringing to clients, in terms of transparency, in terms of access. There have been a thousand ETFs created year to date in 2026. It's just astonishing. If you think back to when we started in the business, Louis Rukeiser was an important show to watch on Sundays, and Barron's was a big deal to spend $9 on on a Saturday. Now you have just ubiquitous information flow. You've got Robinhood sending out stock ideas. You've got Reddit screens telling you what to buy and what to sell. And that all seems like it's incredibly engaging, except when you add a zero or another zero to your net worth and you realize this stuff could go down 50, 60, 70%. I'm really nervous about it. So while innovation and technology have increased transparency and removed friction, it used to be a lot harder to do a trade or to access some services. Advisors remove mistakes. And my concern is that advisors are getting the productivity lift they need, but it's not enough to overcome the real need by end clients. And that is for better and more consistent decision making.
Jack Sharry: Yep. So I know you believe the next major challenge facing wealth management isn't technological disruption, but capacity. Fill us in on what you mean by that.
Jim Patrick: Yeah, so I'm doing some senior advising to McKinsey and some of their clients. And as we engage with various challenges in the industry, one of the most striking ones, having lived through, as you have, Jack, the end of the advisor three or four times now over the last 30 years, one of the most challenging and striking things that we find that McKinsey published is there's expected to be 100,000 too few financial advisors by 2030. So this creates an incredible paradox, right? So wealth transfers accelerating, more households are requiring guidance, there are more and more choices than ever. is becoming cheaper and more accessible and more ubiquitous, all these things are happening at a time when I need more advice and counsel and account minimums are going up and advisors aren't able to serve everyone that they'd like to at a profitable and scaled way with customization. So I am hopeful that technology will help advisors become more productive because the psychiatric element of advice is really important and one that end clients are going to need more than ever. So essentially what you're saying
Jack Sharry: Jim, is that things are getting a lot more complex. And that's really the advisor's role to somehow alleviate that complexity and really make clarity out of what seems to be increasingly complex every single day. So many firms still position portfolio construction and investment selection as the primary source of value. I know you view it differently. I've looked at years more.
I think that the dirty secret in terms of behavioral alpha was that end clients need help managing their expectations, their goals, and the activities that they complete to achieve results. And they fail because they panic. They fail because they chase performance. They fail because they get focused on a shiny new lure that goes by. And I think you saw that in Vanguard's advisor alpha research that has been pointing in this direction for years. I think the most valuable trade advisors make, if you ask them many times, is the trade that they never really happened. But that complexity you talked about is multifaceted. It's complexity with products. It's complexity with regulations. It's complexity with jurisdictions. And that complexity is perplexing to the end client because they don't understand. They just think investments are investments.
So let's dig a little bit deeper on this complexity thing. So I think it's at the heart of it all is so much to understand in terms of the advisor value proposition, so critical to help folks just wade through all that. So today's investment menu has become incredibly broad. Does greater access to diminish advisor value or enhance it?
I think it enhances it and I think that this is where technology is going to bring down friction points and AI is really going to help because when an advisor is able to look at this menu of indexing, ETFs, tax strategies, defined outcome strategies, private credit, private equity, interval funds, venture funds, not to mention all the gambling, literally betting and gambling that has been infused into these platforms.
Prediction markets, yeah.
Levered ETFs. I think the advisor becomes the interpreter and really is able to anchor the client back to that financial plan, back to their goals, and help them focus on outcomes and hue to those outcomes, not hue to, hey, this is an unbelievable 3x levered ETF opportunity tomorrow for you to double your money.
Yeah. Speaking of complexity, let's talk about alternatives. They've gone from being highly institutional to increasingly available to affluent investors. What should advisors be thinking about as they educate their clients and as the client tends to buy more of this stuff? And back to our earlier conversation around complexity, these are more complex. They're harder to understand and a little less transparent, shall we say.
I totally agree. It's funny if you remember, I remember a very important president of a mutual fund company when I was a young buck in the business. He walked into a huge warehouse president and CEO and said, all I want my guys to be able to do is drop a ticket. Well, that's the anathema of what you've got with alternative investments. You've got to be a qualified purchaser. You've got to have all kinds of paperwork and access, and iCapital and Case and others have brought the walls down and made access to alternatives easier. Clients are asking the wrong question. They're asking, should I own alternatives? What kinds of alternatives should I own? And I think back to the point of the importance of the advisor, they should be asking the question, what am I trying to solve for? What am I trying to achieve? And how do the unbelievable number of alternatives with liquidity constraints and lockups and all the other things that come with them, how do those work within the context of my unified managed household, for example, or my UMA to get the results that I'm actually looking to achieve as opposed to I'm buying what's in the front page of the Wall Street Journal today are they seeking additional return current income inflation protection diversity tax efficiency all of these things are ingredients in this alternative Universe
I want to talk a little bit about UMA UMH in a little bit but first there's another issue challenge around the topic of complexity and that is regulation so Clients experience wealth management as a single relationship, yet the regulatory environment is anything but simple. So talk about that. What does that all mean for the advisor in particular and certainly the client, the end of that trail and the firms that they work with need to figure out? So talk about that if you would.
Yeah, I'll start with a little anecdote. I'm actually the chairman of a pension committee for a very large hospital in upstate New York. It's really rewarding, but I sit down with really smart people. I had breakfast this morning with the head of cardiology for this organization. He's got a heavy seven figure 403 plan, and he just doesn't understand why the funds that he has to buy in the 403 mutual funds are different than the ETFs that he's allowed to buy in his brokerage account and different than the insurance policy he's engaged with through his financial advisor. And I was trying to explain to him the difference between the SEC FINRA state and insurance rules, ERISA, the Department of Labor, IRS, and he just said, my head hurts, Jim. What are you talking about? Right? And why can't I have one advisor that can cross all of these jurisdictions, if you will? And I put it right back at him. I said, why can't I have one doctor that understands to call you about heart issues or to call you to call my nutritionist because of my cholesterol or whatever? It's a really big challenge. And keep with the analogy in the same way that this heart surgeon was so encouraged by AI and note taking and the ability to have him look patients in the eye when he talks about their situation. I think the same things are infusing the financial services business and the complexity that we've been living with shockingly for 30 years plus. is actually starting to become diminished because the walls of those regulatory fiefdoms are starting to come down and technology's allowing you to cross those various arenas and access the different products and solutions within them. And there's real greenfield there for client-focused success and product consolidation.
Gotcha. So let's talk a little bit about that UMH thing, as you know. I've been an advocate for that topic for, I guess, going on decades at this point. What's your take? Where are we in that process? Certainly regulatory issues are a part of that, although given all that's transpired and the fact that all the reports indicate that if you manage the household as a household, you actually have more money if you're the client. So if that's good for the client, I'm not sure how it could be bad for the client. But anyway, I'd love to get your views on the UMA, UMH conundrum. UMAs are rampant. great. They're wonderful. But I think we'd all agree that if we could be as the full household in a coordinated and tax efficient way, you got to have more money. It's just all the studies indicate that. So talk about that. I'd love to hear what you think about that.
Yeah, I think it goes back to that analogy I just made with the doctor. I mean, the UMH is the general practitioner. You have got to be able to have a trusted partner that views your household in aggregate. And that means that you may have an insurance policy sitting with an insurance company. You may have a banking relationship with a local small bank to do your local checking. You may have alternative investments at a wirehouse, and you may also have a wonderful RIA relationship if you want to be your quarterback. All of those things are starting to consolidate. This is where technology and AI can really infuse a level of consistency. And not to get too wonky, I spent 12 years at Allianz PIMCO where I learned a lot about an asset management, but I spent another 13 years at Investnet where I had to learn all the vagaries of custodian transaction files and security masters. The notion that this UMH really can be adopted and engaged because of a consistent security master is where technology and AI can come together and allow that general practitioner to practice appropriately for that end client.
That's great. Love it. So let's talk about coaching. I know you have some thoughts on that because a lot of what we're describing here is all the complexity you've outlined, I think, pretty clearly. But it comes down to helping people do the right thing at the right time for the right reasons. So behavior coaching is where advisors create the greatest value. I think we would both agree. Should firms be pricing things differently?
I think this is where I think some of the complexity of the alternatives world could really be impactful for the traditional advice world. Are there success fees? Are there coaching fees? Are there retainers or AUM fees? I know there are some RAs that have experimented with this the way asset managers have, because increasingly the value is coming from acting as that quarterback around a UMH, behavioral coaching, decision support, family governance, accounting engagement, right? Taxes. We haven't spent a lot of time talking about taxes, but that's critical piece too, right? If you're going to engage the UMH, you've got to have tax expertise. You've got to understand these various jurisdictions. So I could see a time In short order, where progressive RIAs and even some of the institutional firms are able to start to price with a family like yours, Jack. Hey, Jack, we're going to provide you 60 to 100 basis points in alpha over a static benchmark, and we're going to participate in those fees as we save them for you. We're not going to charge you on AUM, we're going to charge you on the incremental savings that we provide from tax or from others. is there. I believe that the industry is becoming ripe as things like UMH get adopted to engage there.
Love it. So let's talk about AI. No podcast is complete without a discussion of AI. I think like you, because we chatted a little bit about this, the hype is big, the opportunity is big, the understanding is not so big. So talk a little bit about all that. What's the real value of AI versus the hype of it all?
I will look back to my healthcare example for where I think there's unbelievable productivity enhancement to help solve the advisor gap. And that is meeting preparation, note taking, CRM updates, proposal generation, what I would call normalization of data. If I'm an advisor and I've got to think about dealing with the Sherry family and the five institutions they work with, I can upload that data and normalize it so that the client will understand this is a long only position in gold. This is a short position or a long short position, right? Being able to normalize all that data. I also think that AI will help to personalize and customize communication at scale. So I'm going to need to segment my book better if I'm going to increase my productivity in an advisor. I'm going to need to be able to model scenarios. I'm going to need to be normalize data for the Sherry family and then talk about what ifs and help manage your behavior and help manage your decisions ahead of time, knowing what your end goals are. So I think AI will help with that. And I finally think that AI, I've already seen it, it helps not only with documentation and surveillance, but review processes. In fact, I've experienced a firm in New Zealand called Capital Preferences, and they have a tool that looks at revealed preferences and your propensity to answer questions consistently so that they can capture and start to flag Alzheimer's or dementia in aged clients, right? A compliance issue for sure. So AI has really begun to infuse advisor productivity and allow them to do what they do best, which is engage with their clients.
You've touched on it a few times, and I know you think of it and speak of it in the same way I do, which is trust is fundamental to all this. Everything we're trying to do is win people's trust, earn people's trust. And one of the challenges is as complexity only grows, what to trust becomes harder to figure, especially since we live in an online world. So all of our information is coming online. So if it's trustworthy, a lot of it isn't, to be honest. So how do we figure all that out? But I think at the end of the day, it comes back to trust and earning trust and winning trust and AI tools and many other kind of capabilities, technological capabilities are all going to infuse the opportunity to win trust if you know how to use those tools. So we're moving toward the finish line here, Jim. This is a great conversation. Let's finish with a big picture question. 25 years ago, clients hired advisors advisors, new things, signs. Today, information is everywhere, yet demand for advice continues to rise. So what say we've kind of covered it, but I want to hear it from the horse's mouth.
Yeah, I think your point is critical. We just ended with it, right? In the end, in a post-truth world, right, where advice is ubiquitous, it's free, everybody wants to give it to you, information has become free and overabundant, clients are struggling to find trust, and they find trust in those human connections, they find trust in their community, So while they're trying to determine what matters and find clarity and perspective and discipline and confidence, they're going to find that with an advisor, I believe. Certainly some, like our children perhaps, will go on Robinhood and they'll go on Kalshi and they'll bet on a soccer game while they short a stock where they buy a 2X ETF. But as I said to my son, not oversharing, you've got $25,000 and you're 26 years old. What happens if you put another zero on the end of that? Are you still going to go and trade that way? Oh no, I would never do that. I would need to get serious then. So I think the migration of these tools to trust and having an advisor that has garnered that trust is most critical. And I'll leave you with my favorite quote from my grandfather who was a ranger on D-Day and an amazing man. He said to me, Son, trust is a bank from which you can never make a withdrawal.
Love it. So fundamental. Always has been, always will be, certainly is now more than ever. So Jim, this has been a great conversation. I love your perspective and insights. Really wonderful. The key takeaway is technology may have democratized access, but it hasn't democratized judgment. What say you about that?
I think that's exactly right. And you compound that statement with the lack of advisor growth that we're seeing. And I keep hearing about the job apocalypse. There's a real opportunity for people here to help others out. And I think people should feel really motivated by that.
Yeah, I agree. So we always end our podcast with a personal note. You spend your days thinking about the future of wealth management. You advise senior level firms and clients about what the future might hold. But when you step back and aren't doing your day job, what do you do for fun outside?
So I love my wife and children. I spend a lot of time with them actively outdoors. I've been a ski patroller for 15 years and I'm on the volunteer fire department. And those are two places where your senses definitely come alive with some very challenging situations. And no one ever has asked me about an alpha or a beta question in either of those arenas. So I like to spend time giving back to my community and helping out. It's really rewarding and I will end with one thought, which is in the same way that I think our nation has of civics education so that we can be an educated pool of voters. When I engage with people, the kinds of questions that I get asked when they find out I know a little something about financial services are so dispiriting. We need real home ec and financial training in schools because it is a huge gap in the world. Yeah.
I agree. I have one more question before we close. I'm told when I go to conferences, which I don't go to as many as I once did, but when I do, especially younger folks that listen to our podcast, people that are new in the business. I recall meeting you, I think, I don't know that it was your rookie year, but it was pretty early on. It was you and Jeffrey Applegate, you guys were. I think going out to San Diego, we happen to be on the same flight, something like that. I can't remember exactly. You were pretty new at that point, as I recall, and you've come a long way since and now advising leading firms across our industry. Any words of wisdom for our up and comers in our industry, those that will follow us as we exit?
One of the best things I ever did, and I've never stopped it. In fact, I did it last Wednesday for lunch. I go and try to sit down with an advisor. I did this my first week on the job. I said, if I'm going to advise financial So somebody at Nicholas Applegate knew an advisor, and I went and spent a full day in their office. I learned how they opened accounts. I learned how they traded. I learned how they talked to clients. I watched how they used our products and services, and I've done that probably every month my whole life. And I just did it last week with a large RAA in upstate New York. I said, Hey, let me sit down with you. Let me spend a half a day, and I understand what a day in their life is like, and it has served me so well because I've stayed rubber is hitting the road because you find yourself in these conferences or in these meetings and people say, well, all we need is more product. No, we don't. I've been there. In the last week, we don't need more product.
I couldn't agree with you more. My two cents on that topic because when asked, I give a variation on that. I love that. Which is ask whoever you meet, ask them why they got into the business and what they love about it. If you were me, what would you do? In other words, as you're building a career, That's how I got started. I didn't know anything about anything. And found myself talking to people that did. I did find that when I asked that question, it was their favorite time to talk, really talk about their business and to give back. And I always learned something. And I made a friend. Just how did you get into it? Why did you get into it? What do you love about it? What are some of the challenges? What are you doing about it? What would you do if you were me? How would you pursue it? Just like we just did. So I'll add my two cents for that. So Jim, this has been great. I had high expectations and you exceeded them as you do. So thank you for that. You give me and our guests a lot to think about and certainly you energize me and others about what the future holds. I think it's very positive, albeit not without its challenges. Our audience, thank you for tuning in today. If you've enjoyed our podcast, please rate, review, subscribe, and share what we're doing here at Wealth Tech on Deck. We're available wherever you get your podcasts. You can also find us all of our episodes on the Wealth Tech on Deck website. Thanks again for joining us. Jim, thanks. This was a wonderful conversation. Really enjoyed it. Appreciate it, Jack. Be well.
Thanks for listening to this episode of Wealth Tech on Deck, our ongoing conversation about improving financial outcomes for all. This podcast is brought to you by SEI and produced by Turncast. Subscribe to future episodes in Apple Podcasts, Spotify, or wherever you listen to podcasts. You can connect with our host, Jack Sherry, on LinkedIn. For more information about our perspective on the future of financial advice, visit our website at wealthtechondeck.com.
