GeoWealth President Colin Falls was interviewed last week about the criteria and processes advisors use to find the right TAMP partner. You can watch the video here or read the rough transcript we've provided below.
JAY COULTER, THE RESILIENT ADVISOR: We've had folks from TAMPs on the show in the past, but what I thought was very interesting in preparing for this interview is that you guys have put out a nice piece on the 7 Keys to Partnering with the Right TAMP. Why don't we start off just adding value to the audience by walking through what you guys found. We're not going to run through all of them. At a high level, let's talk about what's most important for the advisor. who is just now today starting the process of considering a TAMP.
COLIN FALLS, GEOWEALTH: I think at the core of really anything in financial services is how technology is digitizing the way advisors operate, but also how they interact with clients. And so, I think, when you think about the kind of history of technology in the advisory space, really there's been waves of innovators in the space. At first it was the TAMPs and they did this primarily in the broker dealer channel. And then as we've seen the explosive growth in the RIA channel, more SaaS platforms. And so I think at the forefront of all of this is the software that underlies it. If we think about, you know, the kind of the first capability or the foundational piece in this business, it's the underlying software. And I think in the RIA space specifically, there's going to be a big focus on modern software that's flexible and scalable from an architectural perspective.
COULTER: One thing I found from helping advisors break away from broker dealers is the tech stack is just overwhelming. And I want to get into what you guys offer at GeoWealth, but let's talk about that after we walk through the rest of the value proposition and just as important, in my opinion, is the cost associated with the tech stack and how a tamp can help. What have you guys found?
FALLS: Again, think about the RIA and the advisor that's gone fully independent and not just from a warehouse, but outside of the broker dealer channel. Oftentimes, why they're doing that is for control of their business, but also of their own economics inside of the business. You know, traditionally RIAs charge less than a broker dealer in terms of all-in costs. And so as we built out our platform, we realized that that focusing on the technology and owning the technology from soup to nuts was gonna allow us to create a pricing model that was RIA specific, um, that maybe a little bit differentiated from the broker dealer space. It has to be in terms of flexibility and custom pricing that happens in the RIA channel.
COULTER: All right. So two things that I think are really interchangeable to a degree are flexibility and scalability with the TAMP space. If you wouldn't mind speaking to this for the lens of somebody that is new to the TAMP space and they're vetting whether it makes sense for their business?
FALLS: They're interchangeable, but I think they're different as well. From the flexibility standpoint, what a traditional TAMP has a lineup of a model marketplace of options that an advisor can go through some type of work flow and access. Oftentimes there's a risk capability. And then there's a set of models and there's ultimately a finite set of models. The way we built it is highly flexible, not just from an architecture standpoint where you can build your own models. You could have basically advisor managed models and a new suite of models. You can bring in third-party models. We have our own marketplaces, third parties, but you can also can combine them in any way you'd like.
And that starts with the portfolio architecture and so a good TAMP, again, is flexible. The ability for an advisor to build a model portfolios in multiple ways, maybe a holistic model, a model of models, UMA models . . . but the whole concept around it is allowing the advisor to maintain control of how they want to build their portfolios, and then allowing them to do it as efficiently and flexibly as possible. The next part of that is scaling that is not always the simplest aspect. Using other software. That's the element where using a TAMP that has professional architecture allows for bulk trading block trading and really doing that model portfolios at scale is really important.
COULTER: Yeah. And when you think about the longevity of a practice, somebody considering breaking away . . . you guys serve more than breakaway advisors, but for the folks that are, that are vetting out tamps as part of this process, you have to think long-term. You have to think whether your service providers are going to be there with you and whether there is going to be long-term benefits to the technology that you're implementing. And here's where most advisors get overwhelmed. They've been inside this ecosphere where everything's all in one nice bundle for them and taken care of. And when you go out and you build your own tech stack, you start adding all the technologies, it gets overwhelming and starts taking away from enterprise value. I think one of the true advantages of leveraging a TAMP for the right advisory firm is that, that negates that whole distraction and detraction from the balance sheet. What are your thoughts?
FALLS: I couldn't agree more. I think, you know, if you think about the advisor that's coming out of there from a warehouse or a broker dealer, they've had the luxury of having all of these capabilities and integrated proprietary technology, internal to them. So they get to log into one system on a daily basis typically and run their business from the beginning of the day, to the end, across all spectrums of model portfolios, trading, client service in one place. And I think it's actually a lot of the fear that comes with going independent is how do you replace not just compliance, but that element of it. Ten years ago when we got into the space that wasn't solved, I think that that is solved in the RIA market at this point and so firms that do this well, do this in a fully integrated ecosystem and they do it with flexibility. And so I think that's where the TAMP is really going to start to gain more traction in the RIA space because many RIAs have gone at it by themselves with a SaaS platform where they're trying to integrate four or five different softwares with APIs. And I don't know that those have always held up to expectations. Our view was to build this all in one place, with an intuitive simple system and interface, You couldn't do all of this without having to connect everything through API.
COULTER: So let me give you the easiest softball question you could ever be pitched. Tell me why should advisors consider using a TAMP?
FALLS: I think it's about scalability and growth, you know, it's, we just did a capital raise and we have to do soul searching ourselves on how do we scale our own business while maintaining growth rates. And I think for RIAs, it's the same thing, right? What's an advisor best at: being in front of their clients and giving financial advice and mentoring and coaching and helping with the behavioral financing and estate planning, et cetera. Our client firms are very quick, fast growers. I think it's because they realize what they're good at. They're good at being in front of clients as advisors. They're good at putting in marketing and growth plans and doing things like, you know, cobbling together technologies and trying to eke out a basis point or two on bringing these economies of scale in house.
As a reminder, GeoWealth has packaged this insight into an electronic book. You can download it HERE.
