Jack Sharry: Hello everyone, welcome. Thanks for joining us for this week’s edition of WealthTech on Deck. As an observer of our business for a few decades and a dedicated advocate for improving financial outcomes for investors, advisors, and firms, I’ve enjoyed watching people like our guest today keep upping the ante. Some of you may know Mike Capelle from his days as part of the team along with Joe Duran that co-founded, scaled, and sold United Capital to Goldman Sachs a few years back. Mike was the chief platform officer at United Capital. Two years ago, Mike co-founded and is the co-CEO of Modern Wealth Management. We’re going to get an update from Mike today on what he’s been up to and what he’s doing. And we’re going to talk about what he’s building and where he sees the advice business headed. Mike, thanks for joining us on this edition of WealthTech on Deck.

Mike Capelle: Great. Thanks a lot, Jack. Thanks for having me.

Jack Sharry: Mike, before we get into what you’re doing at Modern Wealth, please share with our audience about what you built at United Capital. That was a game changer as far as I could tell from days gone by. So tell us about that and what you did and what you built and, love to hear an update on that.

Mike Capelle: Appreciate that, Jack. That goes a while back, we’re talking the early 2000s here. And, you know, United Capital was starting in a period, this is back in 2004, 2005, back when you still had a lot of advisors moving from commissions to fees. It was the kind of this beginning of the shift into moving from solely focused on investment to getting into the financial planning more broadly. And that’s where we saw kind of the need in the market and the opportunity because we really felt there was a shift there from kind of going to investments to going to planning where there was much more alignment between the advisors and the clients. And especially within the segment that we focus in on, kind of the millionaire next door, just a great opportunity to really impact people’s lives. They don’t have all the resources to do everything they want to do. You got to help them kind of understand what do they want their future to look like, what things are important, and what trade-offs make sense to them. And so, you know, we really leaned into that, and we were all about really helping advisors kind of evolve that relationship with their clients and move into the planning realm. And for me, that kind of evolved, my background’s high tech. My first career was at Intel for a decade and I shifted over to wealth management. And at United Capital, I basically got into kind of building out our platform and our client experience. And we ended up developing some proprietary tools to kind of help with that conversation that advisors are having with clients about the future and what’s important to them. Put some little behavioral things in there as well. You know, we developed a solution that we were using for our own advisors, but ultimately, we found there was a lot of demand from external advisors, they wanted to tap into that client experience. So we ended up actually commercializing that solution out and having some independent advisors that were tapping into what we had built as well. So it was quite a journey. It was a fun ride.

Jack Sharry: Yeah, well, I remember, because I watched you guys closely as you were doing that, a couple other strains that you touched on, but I just want to amplify a bit. There’s also the breakaway advisor that was leaving the wirehouses. That was part of that trend. There was the move toward independence in general, move away from commission-based to fee-based. You’ve touched on all these. And then there was the advent of technology that could put it all together, which is a lot of what you worked on, is how do you create a platform where a lot of this can be managed, held, operated from leverage. So talk about that a little bit because I want to make sure our audience, some of whom may have forgotten those dark ages, but that’s where the kind of the beginning of what we’re seeing… I see, beginning of what we’re seeing today.

Mike Capelle: I mean, I just wish I had some of the things we have available today back then. I mean, we had to build… Something that’s much easier to deal with than it was back then was simply getting systems to talk to one another, right? And so there was the whole kind of how do we integrate these different kind of pieces of the puzzle, right? We’re kind of doing a best of breed and finding great solutions for different parts of what we need, what different functions we have, right? And how do get them to talk to one another? And, I think we made a really great decision early on to center our technology around Salesforce. I mean, remember, this was 2005, I think our contract was 2006 with Salesforce. But, so early in the day, Salesforce was a very different firm way back then. But using that and taking a CRM centric approach to how we built out our technology, knowing that our advisors and their teams, they’re in the CRM constantly, right? They’re working with clients, that’s where all the client information is. How do we make sure that continues to be the hub? And let’s bring all this information in there. And so there was a lot of work we did on integrations with other systems and things today that you just press a button and it happens. Well, those were things we had to build out. We were the first one to use when eMoney finally made an API available. We’re the ones that tapped into that. We had a number of different firms where we were helping kind of push the envelope there on shuttling data around and getting it to where we needed.

Jack Sharry: Actually, in my recollection, correct me if I’m wrong, but I don’t think I am. You were really among the first, if not the first, to really create a platform that was designed to be a platform.

Mike Capelle: Could be. It was certainly early days and yeah, we were, if we weren’t the only one, we were one of a few.

Jack Sharry: Yes, I remember that clearly because you took a platform approach, before that it was a product approach whether it was tech product like like eMoney or MoneyGuide or what are the product du jour of whatever you’re trying to solve but the idea of connecting that was, you guys were among the first if not the first. So, thanks for doing that. We’re still struggling with that as an industry and I know we’ll get to what you’re doing the modern wealth I’m sure this has it’s underpinnings way back when. In fact, I know it does. So why don’t you tell our audience about Modern Wealth? Who are you? What do you do? Talk about that if you would.

Mike Capelle: Sure, yeah. So we launched almost two years ago now. We certainly recognize the opportunity with the industry. And not only do you have really an underserved market of people across the country that are developing wealth, but needing help in how they manage it, how do they kind of use it as the engine to get to the outcome that they want to have. And for us, we recognize the leading edge of the independent space continues to broaden the scope of services that clients need and demand and want. And for us, that’s going obviously well beyond kind of just the investment services that you offer and a financial plan, but really getting into all the different areas of definitely tax in particular. Doing deep tax planning work, offering tax preparation services as part of the firm, getting much deeper into estate planning with clients, ensuring that we’ve got a way to deliver the estate documents to them. And even go beyond that, though, how do we, know, it’s always that last step that gets forgotten. You need to actually fund the vehicle. You need to fund the trust and move things, right? So how do we take, like, let’s make sure all of that happens. Let’s make sure they have an insurance plan and strategically, is there anything that that can do to help them achieve what they’re trying to achieve and help with the fulfillment of those policies. So it’s really, we see that as the leading edge of the industry. And for us, that was part of our business plan and the opportunities that we saw, right? We want to make sure we’ve got a national firm that can really surround clients with a wealth of different service offerings. A couple of other elements to touch on with Modern Wealth Management, we’re focused on a couple of different opportunities of growth. One, we obviously have experience at United Capital around acquiring firms integrating them into a single company, building a national a national firm. And so that’s how we’ve launched Modern Wealth Management. We did five acquisitions in 2023, we did eight acquisitions in 2024. We’re building out a national footprint. That is definitely part of the model of kind of identifying and finding like-minded advisors that really want to bring this service offering to their clients, excited about being part of, I’ll call it an early stage firm, but with pretty experienced folks leading and managing the company. And then the other avenue of growth is on the organic side. I think we learned a while ago, we’ve got to have a clear investment in a centralized organic growth engine, partner with different lead gen partners that are available these days. You know, we’ve got a radio show podcast, just having a, you know, a portfolio of different lead gen programs, have that go into a centralized team that’s really nurturing those leads, qualifying them, doing some of the initial data gathering and so on, and ultimately matching them with an advisor at one of our offices around the country and getting that appointment on the advisor’s calendar. But I mean, that’s what, I think those are kind of the major tenants of driving the business is what we’re doing to expand the service offering out to clients and then growing both organically and through acquisition to get a national presence, national footprint that has organic growth behind it.

Jack Sharry: You know, that sounds terrific by the way. You and I chatted before, so I had a sense of that. That was a little deeper version of our discussion before. Given your background as a platform guy, I’m assuming all this is on a platform. I’m looking for you to comment on this in a moment. But essentially creating a platform that is, I don’t want to call it modular, that doesn’t get to it. But you’re creating a replicable model, how about that? Not only identifying clients, bringing them in as you do, developing an organic growth engine and then putting them through the system whereby they get more services beyond the norm because you highlighted basically estate planning as an example and some of the other issues that are more challenging for many or don’t get full service. So it sounds to me like you’re putting together a real soup to nuts platform, program? Am I getting that right?

Mike Capelle: Yeah, that’s absolutely correct. I mean, just like in the past, we still have our challenges, right? So what do you run into now as you try and expand services into these other areas that weren’t really intimate to the client experience? Well, now you’ve got another challenge on, okay, how do we bring in, on the tax side, we’re doing tax prep for them. That’s a whole other system and ecosystem, right? And so how do we bring that information into the client experience and make it easy for advisors and service teams to be able to kind of get a full picture of the client situation, right? And you can go down the path, right, well, what does that mean for estate and doing deeper work there? How do you surface that? Insurance, how do you make sure you’re pulling that in? And so, you know, one aspect is you’re still dealing with kind of the integration challenges that are out there, right, pulling this stuff together. And then you still need to figure out like what does that, what’s that final mile look like to the client and to the advisor on how you’re positioning the value that the firm’s bringing across this multi-dimensional approach with them, right? And so what are the artifacts? What’s the report look like? And how do you make it not overwhelming? Simple to understand, easy for them to extract the value from, right? So it’s still like, still the common, you’ve got kind of same goals, but now the challenges are a little bit different in how you get there given the service offering that you’re working with.

Jack Sharry: So first of all, congratulations on taking that on. It’s no small thing that you just described, as you well know. So thanks for doing that, because our industry needs that. And I also can’t help but note that this is what the consumer wants. I am one. I am a consumer. I want what, in fact, I just am in the midst of the exact process you described. The soup to nuts, I don’t have the marketing piece, but in terms of at least personally what I’m doing with estate planning and all the rest of it, you know the whole nine yards of what you described. So the question then, it’s admirable to take that on, no small feat to take that on. How’s it going? How’s that working out? Because there’s just a lot of integration, a lot of data flying around, a lot of stuff to capture. And then also we haven’t even gotten to the training part, the technology interface, all to make it easier for the advisor to capture and operate from all this.

Mike Capelle: Right, right. Well, it’s going well. I mean, the good news is we knew where we wanted to head from day one. And so, strategically, we made it a priority that our initial acquisition would be aligned with the long-term vision. And so, when we launched, we toyed with the idea of just starting organically, but we’re like, life’s too short, we gotta move a little more quickly.

Jack Sharry: That’s hard. That’s really hard.

Mike Capelle: And so, you we started out by identifying an acquisition that was, again, strategically aligned with where we wanted to take the company nationally, right? It had the bones, it had the infrastructure in place. We needed to basically scale it up and refine it a bit. But we were trying to obviously avoid any wholesale changes, like do an acquisition and have to tear everything apart, right? And so, we acquire a firm, they’re on Salesforce, they’re on Orion, they’re using common financial planning tools, they’re on the common tax prep system, right? So it checked kind of all the boxes. There’s still some work to be done, of course, to kind of, again, open up those integration pathways to get all of the data points that we might want as part of kind of the advisor and client experience. Still some work to be done on how best to communicate this to clients and to advisors to try and reinforce our overall service offering both externally and internally. But a lot of the heavy lifting, I think we avoided because of kind of strategic decisions early on where we were able to start.

Jack Sharry: So what you’re describing, I’m hearing this more and more wherever I go, is combining it all. I think there’s probably a better term somewhere along the line, but I haven’t heard it yet. But that seems to be the objective with whether there, we’ve had people I’m sure you know, Doug Fritz on and Randy Lambert and some others that are, actually I’m not sure they’re podcasts… actually Doug’s just came out today and Randy’s will come out in a little while. So they’re working on the backend side and then we’re talking to other people that are building tools that are trying to do that. And we’re also talking to other RIAs and primarily RIAs that are trying to do this and then also do it through acquisition and organic growth, et cetera, et cetera. The challenge is, of what you described, is combining it all. And so I guess the, I’m not sure even what the question is, but I guess, first of all, do you agree it’s hard? I know the answer to that. And the second is, what do you think it’s going to take to do all that? Because a lot of what you… sounded like you, through acquisition, you acquired capabilities where a lot of that stuff’s being done, but it’s probably not as coordinated as you intend. So talk about that. Where are you in that journey, in that process of trying to bring all that together?

Mike Capelle: Yeah, well, I mean, I think our like the traditional wealth management services around investments and financial planning like that’s pretty well developed like and how that flows. It is adding in these new components, right? And, especially, you know, if you look in the tax preparation space, you know, kind of the go-to solution there is Thomson Reuters and using their tax prep stuff. Well, that’s a pretty legacy system that’s fairly closed.

Jack Sharry: As in old and decrepit? Oh, I’m sorry, that slipped up.

Mike Capelle: It could use some advancement, I think. So it’s in these kind of, as we’re expanding services, it’s where we’re expanding there, where we’re seeing more of the challenges that we have to work through and how do we get the data that we want to represent in the client experience. I mean, this is all continuous improvement oriented, right? Like we were, hey, we’re an operating business, right? We’re operating fine, but we certainly identify that we can be operating better. And some of those, to get there, some of those require some improvements in some of those data flows to be able to get the information where we want it.

Jack Sharry: Well, I applaud you for taking it on and good news for our industry is I’m hearing this more and more, at least as an objective and as a challenge that people are taking on. So kudos to you and your team to take this on. Where do see it going? Obviously there’s more, always more to go, but where do you see things headed not only for Modern Wealth, but for the industry? I assume that the rest of our industry will catch on or be out of it, but how do you see that going?

Mike Capelle: Well, I think you hit on it right there. It’s a, I think the industry, if you look at how fragmented it is, and you look at the fact that there’s, there is quite a bit of consolidation going on, yet the number of RIAs continues to grow, right? So it’s still a very young industry. It’s still highly fragmented. I think we’re finally dealing with something that’s been talked about for 20 years, which is succession planning, right? And, you know, finally advisors are needing to move on and the whole valuations of these businesses have moved up quite dramatically from when we started back in the day. And you end up with this valuation gap where trying to have your succession plan be the next generation creates an economic gap for the founder. And so they’re needing different solutions to be able to have them come in to provide the capital to kind of help balance out that valuation gap there. And I think we’re running into that more and more where we’re really helping enable the next generation. Not only G2, sometimes G3 for some of these firms. But I think we’re just at the beginning of that, honestly. I think there’s going to be… that’s going to continue for quite a while here. There’s still, I think these firms are dealing with the challenge of seeing where the leading edge of the service offering is moving, recognizing that that does start to become the de facto standard that consumers expect when they’re working with an advisor. And how do you get from A to B? Like, how do we get there? And that’s, know, where we can help be a catalyst to that, obviously, right? We can help take a firm that’s a great fit for us in a particular geography and help them make that migration, right? And, again, I think the future is still continued consolidation within the business. And I think for the businesses that are out there really trying to solve for how are we going to be competitive in the future and also what is the succession plan for this business.

Jack Sharry: Yes. And of course, the other part of it, you touched on it. But the other part is as people age out or retire or whatever, you need to have a system in place that where you’ve got a historical record, you’ve got a way to run the system in all the different ways you’ve described and a whole other big challenge that, frankly, technology and some vision like you’ve displayed are going to make all the difference. So I wish you well and applaud you for doing it. As we look to wind down here, this has been a great conversation. Any key takeaways you want to share with our audience before we head out?

Mike Capelle: Well, I don’t think any tech conversation would be complete without talking about AI.

Jack Sharry: Okay, please.

Mike Capelle: We haven’t talked about AI.

Jack Sharry: Yeah. It usually just comes up anyway. And I’m glad you brought it up.

Mike Capelle: Yeah. I still think we’re in the early innings of the industry. I mean, I think we’re in the very early innings of AI and what impact it’s going to have. We’re already starting to use it in different areas and kind of testing it out and looking for application for it. I always encourage people in their personal lives to use it as much as possible because you start to get really familiar with what it’s capable of doing.

Jack Sharry: And the great answers it provides.

Mike Capelle: The great answer it provides. They get better and better. The thing that sticks in my head is how urgent of an issue is it for us to address? I think maybe I kind of reflect on one wave of change that we saw coming, which was robo-advice and kind of how that all played out. And at the end of the day, I think it brought a lot of benefits to the industry, but not necessarily in the way that concerns were brought up initially about replacing human advice and things like that. And so I kind of have that a bit in my mind, I guess, about thinking about AI. I’m not as concerned about it as a replacement for advice. I think people, when they’re dealing with their wealth, want to be dealing with a human, not a machine. But that doesn’t mean that it’s not going to impact the business and allow advisors and their businesses to be more efficient and in what they do and how they execute on things. Potentially providing other insights, if you will, and kind of opportunities in solving a client’s challenges. But again, like I think there’s an analog here with the whole robo-advice thing. I think that ends up being more in the background than the foreground. There are some elements that kind of come to the foreground a bit, but I don’t think as much as the hype, the concerns that kind of first came out would have pointed to.

Jack Sharry: Yeah, just personally having gone through this literally as we speak, and we’re not quite done, but pretty close. We could not have done it with AI at this point, the state of AI. Because so many of the questions that were asked were in reaction to whatever we said. In other words, what are your priorities? And then, by the way, led to a whole set of decisions we’re in the process of making that we hadn’t thought of when we started. So how would you capture that in AI? They weren’t on our mind. We’re talking about buying a different house and you know, there’s all the stuff that comes up because we prioritized and looked at our financial picture and so on and so forth. And we decided here’s what’s important to us at this stage. So I’m with you all the way. I think that if it’s not dead, it’s going to be dead soon. That it’s not going to replace anything. If anything, it’s going to enable better decision making, better opportunity to determine what the next steps are and also create incredible efficiencies in terms of administration and you know, capturing data and, and all that stuff with which to make better decisions. I would assume you agree.

Mike Capelle: Yeah, I agree.

Jack Sharry: Well, we’ll stop there for now. We’ll have to maybe have another one of these sooner than later on where the world is headed. But I appreciate it, Mike, this has been great. One last question before we head out for good, or at least for now, is what do you do outside of work that you’re particularly passionate about or excited about that people might find interesting or surprising?

Mike Capelle: Interesting or surprising? Well, two things come to mind. I’ll share both of them. One of them maybe is not so interesting or surprising, but I have three boys and we love to get out on the mountain, go skiing, snowboarding. So we’re even thinking about it for this coming weekend. So we do a lot of that outdoors. The other one maybe is a little more interesting, surprising. So my… during COVID, I think everyone kind of found other hobbies while they were locked up and doing stuff. And so we’re in Southern California and fruit trees grow pretty well here. So I really got into my backyard and all of the different fruit trees you can have in Southern California. So from apricots, to plums, to obviously oranges, avocados, figs. And so I kind of enjoy just the backyard fruit tree orchard that I’ve got going on.

Jack Sharry: That’s great. Love it. This is my favorite part of this podcast. We’ve done almost 200 of these and every one of them, something like that comes up, fruit trees. Who would have thought of that? But you know, it’s great. You know, we all have our different things that we do outside of work and that’s fun. That’s great. So Mike, thanks. I really enjoyed the conversation. For our audience, thanks for tuning in today. If you’ve enjoyed this podcast, please rate, review, subscribe, and share what we’re doing here at WealthTech on Deck. We’re available wherever you get your podcasts. You should also check us out at our dedicated website, wealthtechondeck.com. All of our episodes are there along with blogs, curated content from many of the folks around the industry like Mike. Mike, thanks again. It’s been a real pleasure. Really enjoyed the conversation.

Mike Capelle: Thanks, Jack. I enjoyed the conversation as well. Thank you.