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wealthtech on deck podcast - Reed Colley

Creating a Modern Wealth Management Platform with Reed Colley

Summit Wealth Systems is at the forefront of transforming the wealth management industry. The company’s commitment to collaboration and innovation positions it to have an influence on the future of the industry and support advisors as they navigate an ever-changing landscape.

In this episode, Jack talks with Reed Colley, Co-Founder and CEO of Summit Wealth Systems. Reed is passionate about helping people be happy and fulfill their goals. At Summit, he helps advisors and their clients focus on an abundance mindset by using modern and innovative technology to keep them on track and move forward. He founded, invested in, and advised multiple technology companies, including Black Diamond Performance Reporting, a cloud-based portfolio management system he started and coded.

Reed talks with Jack about his current project, Summit Wealth Systems, which aims to provide a comprehensive platform for advisors to unlock the full potential of their practice. The platform focuses on unifying data, automating processes, and delivering a world-class solution to clients. Reed also emphasizes the importance of humanizing the advisor-client relationship and helping clients connect their wealth to their values.

What Reed has to say

“Our fuel to innovate comes from working with great advisors who shape the development of our platform to have an incredibly positive impact on their business and their clients.”

– Reed Colley, Co-Founder & CEO, Summit Wealth Systems

Read the full transcript

Jack Sharry: Hello, everyone. Thanks for joining us for this week’s edition of WealthTech on Deck. Over the past two and a half years, we’ve talked to more than 100 financial industry thought leaders, doers, and builders. We look at their evolving business strategies as they emerge in the marketplace and all are centered on the confluence of digital and human advice. Today, we’re talking with someone many of you will recognize and for those who may not recognize our guest, you soon will. Reed Colley is CEO and co-founder of Summit Wealth Systems. If the name sounds familiar, you may recall Reed started a little company called Black Diamond in 2003 and that was later sold to SS&C in 2011. Reed is working on a new project, which we’ll get into in a little bit. In the meantime, Reed, welcome to WealthTech on Deck. Thrilled to have you on the show.

Reed Colley: Thanks, Jack. Glad to be here. And glad to be talking about wealth tech after many years in the space, but really excited about what’s to come.

Jack Sharry: Yeah, exciting time for sure. Great to have you back. So, Reed, for those who may not have paid close attention, please provide us with a high-level overview of your career journey. If you’d fill us in on how you got started, tell us what you’ve, what led to you founding Black Diamond and later selling to SS&C. And then after we cover a little bit of history, we’ll talk about what you’re doing now.

Reed Colley: Absolutely, yeah, so I’ve been in space a little over 20 years, I started my career working for a company that did performance reporting for trust companies, and started that in Tennessee. In 2003, I had this idea for this emerging RIA space. And it was just full of an industry of people that are really trying to help their clients in the best way and do it in a very relationship-oriented way, not trying to push products and services on extensions. And what I also see is the platforms they were using weren’t helping them get to that point for them and their clients. So I had this idea for kind of a full, comprehensive platform that turned into a full portfolio management system. And in 2003, started Black Diamond. I actually learned how to code to build that platform. From the beginning, I had been on the product side, I had a person that was going to help me with the coding side and be my partner, but decided to do another role. So I learned how to code, built the platform, and grew it into a business and started working with advisors in ’04 and grew into a company with hundreds of firms in 2011, when Advent software approached us to acquire the company, and we were in a position of we didn’t need to sell anything, but it looked like the right opportunity to merge and create a better distribution platform for the market. So did the deal. And it was a great, I think a success for both sides. And it’s continued to be a strong platform in this space for a few years. And I was with the company for a few years after that. And then left in 2014 to do other projects, and then in 2019 started thinking about the space again.

Jack Sharry: Great. So tell us about what you’re working on now. I hear it’s pretty darn exciting.

Reed Colley: Yeah, well I appreciate that. We’re, we’re excited about it. I know our clients are as well. We are building a platform that is really driven towards the modern advisor and helping them really unlock the full potential of their practice, and work with modern software and modern technology. So it ends up being… it does the capabilities of a portfolio management system, but is so much more, bringing all their data together in a way that’s a unifying experience, takes processes that are manual and makes them automated. And really then humanizes that experience for themselves internally and removes operational friction from trying to get many, many pieces of software to work together, I’m sure we’ll talk more about that, and then delivers this world class solution to their clients to really just drive the best relationship that they can have in a scalable way. It doesn’t rely on manual reports and processes and Excel spreadsheets being the core communication vehicle between all of these different mechanisms. So it’s a company, we started a company called Summit, Summit Wealth. We started this in late 2019. And we’re now in market. And we’ve got 10 clients moving forward, 25 billion that we report on today. And it’s a platform that is really driven around helping advisors unlock the potential, delivering this platform that really allows them to scale and grow and do it in a way that’s really aligned with their clients.

Jack Sharry: So why don’t you talk a little bit about what you have now. My hunch, in fact, I know, it’s going to bigger, better, bolder over time, but where are you now? What’s available, at least at high level to your current clientele? And then in a little bit, we’ll talk about where you want to take it but why don’t you talk about what the offer is now and then where you are in your process in terms of going into market and obtaining more than those 10 firms you’ve already worked with.

Reed Colley: Yeah, no, absolutely. Our, our objective in our space is really to help it move forward in the best way with our clients and thought partner with our clients. So what we provide is, you know, we call it this kind of unified information architecture where we bring all of their systems together. And one of the key systems is CRM, and making sure that the data that’s in there isn’t falling into a place where it’s hard to access. And as some clients have referred to us as the black hole, the data goes in and doesn’t ever come out. What we want to do is say this data is incredibly valuable, information in there about your clients, what you’re doing with them, how you’re using, it is incredibly valuable. The challenge is, it can be hard to access, it can be hard to use internally, for the broad team, for the advisors, it can be hard for it to be generating positive interactions with our clients that clients can access it. There’s all of these limitations to it. But what we do is we bring data like CRM data together, we bring all of our portfolio management data that we have around reconciling data, grabbing data from different various custodians, aggregating, billing, reporting, all of the traditional functions you’d find and put all that together in a really meaningful platform using an engine we call Denali on our side to bring it all in, and where they actually have now like a data lake. And that data lake connects out to our user experience platform that allows you to start using data from multiple systems, from CRM, from portfolio management system, our portfolio management system, from planning, from risk, from sources that they have internally, to drive that and put it into either great solutions and automated flows internally, or great outcomes for the clients and reports that are meaningful, an app that is really driven around how they want to connect with their clients. That’s really what we offer is the ability to unlock that, bring that data together, do it in a very scalable way internally and create this great outcome for their clients.

Jack Sharry: So as I look across the marketplace, seems everyone’s building a platform. They’re combining existing tools like a CRM, a planning tool, a fill in the blank, a risk tool, call what you will. So there’s all these tools, and there’s an effort to try to coordinate them. I dare say they aren’t always that successful, it doesn’t appear to me… but their intentions are good, but it’s hard because they weren’t designed to work together. And if I’m hearing you right, you’re designing the ecosystem, pardon the expression. That’s an overused word. But clearly you’re building an expansive ecosystem that is designed to coordinate, is designed to create a better user experience. That’s what I’m hearing. Am I getting that right?

Reed Colley: That’s right. That’s right. And so we do start with our own proprietary portfolio management system. And that is the core because that is where the most important data from the portfolio sits. And we want to get that right, have all of the flexibility and control over it. But it absolutely is building that ecosystem and unified experience and bringing those things together.

Jack Sharry: You’re talking about the household level, you’re not just talking about individual accounts, you’re talking about a coordinated ecosystem around the portfolio, the full portfolio, right?

Reed Colley: Yeah, you’re 100% right, because that is the key. It is always around the household and around the client, and driving those things together. And we’ve been doing integrations for years in this space. So the first integrations were custodian sending companies like my first company data, the first integrations that we have, but now what we have is, you’ve got this really amazing growth of technology options that are… that have occurred over the last, you know, 10 to 15 years with everybody adopting is what used to be called online delivery. But just this SaaS delivery mechanism for… to be able to handle things like trusts, and wills, and estates, and risk, and IPS, and bespoke things around fee revenue analysis, there’s so many tools that are built, and it’s great innovation in our space. The challenge is the integration capabilities of these systems to core systems to CRMs, to others falls on the advisor. And when it falls on the advisor, you’re sitting in the middle of this and looking at this technology’s great, isolated pieces and trying to bring them together in this way. And, you know, I was talking to an advisor, gosh, a couple of weeks ago, and, and we were talking about how it’s really hard to bring this data together. And she said, “Well, Excel’s my best friend.” And I said, “Well, the problem is, in this space, Excel is kind of your only friend.” And so you end up relying on this thing to generate way more than it’s responsible for. So then for us, what we do is we actually are that person that steps in and actually starts to own that data and that ecosystem, so we bring it together, we’re responsible for it. Most of the integrations that are built between these platforms are, they’re one way or they’re written in a way that’s hard to modify, a little bit brittle, a little bit fragile. And the advisors trying to figure out what to do as a wealth management firm, not as a technology firm. It’s hard enough for us, as technologists, to… at a technology company to understand integrations right. It’s very, very difficult for advisors. And so for us, we’re looking at saying, this is our core competency. Let us do this work for you, bring it together because this tech stack that we’ve been… everybody’s been building over his last 10+ years, ends up looking to an advisor more like a tech spread instead of them stacking neatly like a stereo component cabinet. It’s basically mp3 players and different streaming devices everywhere, they’re trying to keep their arms around and said, “Let us handle that for you.” So we’ll have this core data, work incredibly tightly with the CRM, and then add the other pieces of data that are important and links to these things so that you have a unified experience internally, have access to the data you need, the information you need to then have automated intelligence. And then from there, you create this amazing front end for us. We also built something in a way that was designed around each firm and knowing the differences and knowing their value propositions and investment philosophies and secret sauce. So what we did, we started out with your own data lake and your own isolated single tenant model, which is very, very techy. But what it really means is, instead of commingling your data with tons of other firms like all other most of other SaaS companies in our space do, we put you on your own isolated instance. And with that, you get the opportunity to drive more access into it, it’s more secure. And it also allows you to do more things like put your own data into a model that then pushes up to the front end. And then on the front end, one thing I’ve known from working with literally thousands of advisors in my career, is that each advisor has a slightly different approach to how they want to communicate with a client. And instead of saying, as a software company, “No, no, you should do it our way. You can’t, you shouldn’t change and configure these things, or change the labels or change the ways that these components work.” We said, well we’ll embrace that. And we built an engine from the beginning. It’s called our abundance engine, because we want to move people from a scarcity mindset of the tech spread to this abundance mindset of a unified solution. But this abundance engine is really driven in a way that allows us to configure the front end for it to reflect you, and reflect your firm, reflect your value prop, and drive a experience for your clients. And we do that without having to deploy code most of the time. There are certain components we’ll have to build over time. But we can make these changes on the fly with our clients, just so we can make sure it truly reflects who they are and what they want to do with their clients.

Jack Sharry: You mentioned a couple times, a little bit, I’d like to hear more. And that is the user experience. In other words, it’s one thing to collect all this and to have a look at how it all operates at a scalable, coordinated, and I’m quite sure improved outcome sort of way. What’s the user experience look like? Who governs that? How does that all work?

Reed Colley: Great question. And it’s a partnership between our clients, and what they want to do for their clients, and our experience, and our thought partnership, and expertise in being able to deliver a really appealing, innovative way to drive these great experiences. And we, we were fortunate enough to receive an award a couple of weeks ago, award for innovative feature of the year with a really powerful piece of our platform called Wealth Journey. And Wealth Journey really focuses on the client, and the client’s interactions with their advisor, and what’s important to their client. We start with their client’s mission and their values and what’s important to them, and then start to say, what are we going to put in your life in this wealth journey, which is a series of kind of events that we articulate as cards in this really nice display over time, of what’s important you, now and potentially next year, or in three years, or in 10 years, and that’s what we’re doing from a guidance perspective. So now the advisor and the client can sit down and look at this wealth journey together, and understand what the most important things are each time they sit down. And one of things that I’ve learned, the first company I started had performance reporting in its name. One thing for me personally, as a client, when I sit down, I’d like to spend generally five minutes or less on the portfolio, and the performance that’s associated, and I want to spend time on can you help me do the things that are important to me and my family. And that is echoed in at least 80% of the conversations we have what they want to do with advisors with their clients. And I think that’s where we actually have built a great tool to empower that for the first time. Because in the past, that would be typically a PowerPoint, maybe you’re an expert with Excel, your best friend, but it’s usually putting all that together offline, very manual processes. You know, we take hours and hours, we’ve had one of our clients who they literally would take 12 to 15 hours at times for certain clients to put them together. And now that’s done through Wealth Journey, and clicking that through into our kind of updated PDF reports that are more in the app itself. Most of our advisors don’t even do the reports anymore. They just use the app as their portal. So their meeting prep just plummets. And we’re seeing it decreased by 50-75% for advisors. But the real power is they’ve unlocked now for the first time ever, these conversations with their clients they weren’t having, they weren’t having in a scalable way. It used to be, you take notes, you’d put it in the CRM, you’d have to remember to pull them out, remember to somebody would have to parse through them, what do we do with those those items that were in there before? How do we rearticulate that back? Oh, let’s put it in the deck, let’s put a bunch of bullet points in there. Then you, as a client, look at it again, and you have to reeducate yourself. That is kind of gone away, because the client has the mobile app, and they see their wealth journey events in real time. So when they get in front of their advisor, and they’re having those meetings, and they’re now finally on the same page about what’s important, and now the advisor can and say, “Well, what else? How else can we help? What’s changed? What are we looking at here? And how does it impact it?” So I think that’s a huge part of it. The other piece is, we know goals are incredibly important. And milestones are built perfectly to capture those goals, but then also to project where this is going. And for us planning is a huge part of the offering. But I… we call it kind of planning for wealth managers, as opposed to generating a financial plan, that you kind of throw over the wall, you know, every two to five years for a client and say, go work on this, we do this dynamically. And we see how the milestone changes, we see how what humans want to do changes over times, depending on the things that are important to them or things that happen in their lives. And the system is built to reflect that. And we still use all the deterministic modeling and stochastic modeling to project out where this is going in the Monte Carlo, the infamous Monte Carlo simulation or space. One of the challenges that we’ve had as a space is that these great tools are sometimes misinterpreted, and often by the clients. And advisors are trying to have that conversation with a client to tell them that you are… 85% of your simulations are on track to meet all of your goals. A lot of clients end up freaking out as a result of that. They say I’m not a B student, I got here because I’m an A student, and why isn’t it 95? Why isn’t it 98? And that’s not the objective when we look at it. So it’s kind of taking that step back to say, are you on track to doing these things and doing it in a more human way through the lens of what’s important to you, we’re going to make sure these milestones you have and these goals you have we can hit, but doing it in a dynamic way. So that we have the ability to continue to focus for you, and humanize this, as opposed to it being some objective number that we’ve set out, that turns into a subjective scarcity mindset in some clients’ eyes. That’s the humanization of all this, it’s really exciting. So from the platform itself, it’s built around tools like that, but it’s also whatever the advisor wants it to be. If you want to have 19 different screens about performance reporting, attribution analysis around on all forms of equities and fixed income, we can do that too. But we’re not seeing that’s where most advisors want to spend their time with clients. But things like our doc vault, we thought this was kind of a, we’ll do the doc vault and be fine and people love it, it’s finally a way to communicate and collaborate in a way that’s really meaningful for them. So we have all that power. And then as we talked about all the unified information, these great advisor views we’re bringing together, here’s the tasks that are overdue, here’s the tasks that are coming up, here’s meetings you have, and let’s start getting ahead of that and meeting prep and kicking off our automated services as a result of that. All of this is really combining in a platform that’s really built for the advisors to, to just grow and scale their businesses on for the next 10 years+.

Jack Sharry: So, Reed, this sounds fabulous. Sounds like what everybody’s been wanting all along. And so many people say well, but you can’t… just can’t do it, it’s just not possible. And well, we now know given technology that it is. What about the conversion process for those that are, have spent their lives in eMoney or MoneyGuidePro and all the other software, that CRM systems, all that kind of stuff? How does… Is there a conversion process? How does that all work? Tell me about that.

Reed Colley: We do upgrade your portfolio management system, moving it over into our services, but all of your other pieces, whether it’s CRM, planning, risk, even other… like it’s all up to you. It’s all modularized. So you can use whatever you want. It’s not modularized in our pricing, but it’s totally up to you how you use our platform. But we do upgrade the back end of it, everything that’s generating all of the household performance reporting and billing, we bring all the history over from the prior systems on the reporting side. But then everything else is, it either plugs in and you can use things that we have, we do not have a CRM intentionally, we know that CRMs are built really well for a specific purpose. And we want to now use the power of that data in there. Because one of the things that CRMs are not great at, typically, are creating these kind of world class, internal workflows and processes and reports and transparency for the clients. That’s where we come in. We take that data that’s sitting in that gold of the 18 gigabytes of data for a client, and we pull out the few hundred kilobytes that is really the goal, then put it into a world class reporting platform that allows them to really, really focus on the right things like their milestones and goals and wealth journey. But everything else they can use, they can use their planning, or they can start using our planning as well. It’s completely up to them.

Jack Sharry: So where do you go from here? It sounds fabulous. Sounds wonderful. I’m sure business development is high on the priority list. So what’s the future hold? Where are you guys headed?

Reed Colley: Now, we’re so excited. We’re working with our initial set of clients. We’ve got another dozen or so that are looking to come on the platform here in the next three to six months. So we’re, we’re really excited about directionally where we’re going. And really, we built this, I mentioned it earlier, this tool called Denali internally. And really, this is our kind of data aggregation engine, it’s pulling everything together, and making it into the opportunity to pull your most important information and data out and put it into these automated platforms. So then when you want it in front of you, from an advisor, or a team perspective to understand, who should we be looking at right now. Somebody had a $50,000 net outflow come in that we’re aware of, how do we have that cycle back into what that does from a planning perspective, from a milestone perspective, which milestone is it connected to, so we can really make sure we’re doing the right things for our clients. This engine of bringing all this data together, that’s where we’re really excited about extending that out. And for us, you know, working with great advisors, and working on the things that are most important to them, gives us our best fuel for our innovation, to continue to build the platform in a way that is going to be incredibly impactful for them, for their clients. So for us where, where we’re going with it is extending off of that, continuing to unify this information in the data and produce really, really impactful internal, automated flows around that so that advisors can do more. One of the things that we have been hearing a lot, Jack, in this space is that, that firms are doing a lot. They’re doing a lot of jobs in Canada, they’re doing a lot of jobs they weren’t doing 10-15 years ago. And a lot of that is… does fall down into there are systems that can help, but it is that tech spread. And bringing those pieces together often is a manual piece. And internally, we’re hearing that this is harder for advisors and their teams, and they’re running at full capacity to get this done. And some of them, as I said, it’s only summer, we haven’t even done our fall reports and meetings yet. So I think that’s what we’re seeing is we see an opportunity to help and really be a platform that can you know, reduce these internal costs by half or more and really do that in a way that is forward looking. It’s not code that was written 20 years ago or more in some of these cases. So that’s where we see the big opportunities are in a platform is to drive it. And then really, it’s the humanization. So as we start to think about platforms that are focused on providing performance reporting output, or pie graphs, and line graphs that are less human, people want to know, am I going to be okay? And they walk in with no matter how many zeros are on the end, so many walk in saying that, and that’s a scarcity mindset. And the advisors, there are some that are going to tell, “Yeah, you got to spend less money.” That’s going to happen. But for huge bulk of them, they are fine. And not only that, have some abundance. So they reflect on that and what’s important to you in your life. And start asking the questions that develop a really rich relationship with the client. And we know this, advisors have told this over and over again, you helped me get a deep relationship with my client, they’re going to be a fan forever, they’re going to refer more client and they’re going to be easier to serve. And I’m going to be able to do more of that for more people, the more of my clients that are thrilled with me. So we love the idea of humanizing the space, unifying all this data, bringing it together, and then moving the space forward to where the advisors want the conversations to be, where their clients want the conversations to be and start connecting everybody to their values, their wealth to their values, their work to their values. That’s what we’re really, really excited about.

Jack Sharry: Well, all I have to say is, wow. You shook up the industry in 2003. Twenty years later, you’re doing it again, only in a bigger, better way, it seems to me. Congratulations. It’s great work. I know you’re early days still in what you’re putting together. But I’m a real student of what goes on in our industry around these sorts of issues and you are clicking on all cylinders. So congratulations, it’s… Good for you. That’s great. Good to hear. Love a success story that is emerging, so wonderful. So, Reed, we… our time grows short, we try to keep these for half an hour. I can keep going with this, but we’ll try to keep it in sync here. So as we look to wrap up, what are three key takeaways I’d like to share with our audience as we look to close out?

Reed Colley: Wow, I do appreciate that. But the team that I get to work with every day, it’s special. We have world class people that are doing incredible things, even small things like we develop this back end system. And we’re starting to think about how data flows out to our rebalancer and even other systems for reporting and for planning. And when we’re talking about it, like oh, we should just actually use this tool we basically created to solve this industry long problem with classifying assets to the planning system. And I was like, this is great… to continue to leverage, but the team that I get to work with every day, it really is amazing. And we’ve got an incredible core set of people. And it’s really exciting. Like I always say, what we can do together. That’s what’s most exciting for me. Yeah, no, I think the three key takeaways, one is we’re excited about helping people, that’s what we do. It’s our DNA. It’s a partner. It’s not a vendor. So we have the opportunity to work with great advisors and we take it really seriously and how we do that, and it is collaborative, all of this. So we take over this data piece, this unification piece, and make it our job to then help that information surface, and the most important information serve us in the right way and own that. The second piece is, we ask all of our clients, just tell me the three things that if you could wave a magic wand or snap your fingers, you could change immediately, you would, because it’s going to be things that you wouldn’t traditionally say, come out of a system that you might have been used to using in the past, but we can help with so many things that you’re not thinking about today. And the third one is that we’re helping humanize that conversation, that relationship, helping people look at this from more of an abundance mindset, connecting people to their wealth, to their values. And that’s what a huge part of what we see the best advisors doing is making those connection points in that way. That’s what we’re super excited about.

Jack Sharry: This is great, really have enjoyed this conversation. I look forward to having many more over the years. And as we do at this point in our podcast, as we look to close up, my favorite question is coming up. What do you do outside of work that you’re excited or passionate about, that people might find interesting or surprising?

Reed Colley: Yeah, so it’s probably…I have… like a lot of people I like to, you know, use barbecue, grill, cook, all that kind of stuff. So I end up smoking meat and things like that. I’ve got one of these ceramic cookers. And it’s awesome. I don’t have enough time on my hands to do the, the 16 hour cooks all the time that are needed. But what’s interesting probably about me is that when I was actually considering Black Diamond, my wife’s family is actually in the barbecue business. And there was a chance we were going to open a barbecue restaurant in Nashville when I started Black Diamond. And it was a, a very, very small chance I might have gone and been a barbecue restaurateur as opposed to learning to code and building a company in this space. But I do love barbecue. I love to make barbecue. And there was a tiny, tiny chance that my career would have been barbecue 20 years ago. That’s probably something a lot of people don’t know about me.

Jack Sharry: Well, I’m sure you would have revolutionized barbecue as well. So…

Reed Colley: Jack, I love to eat. So that’s what’s most important. If it tastes good, I want to eat it. And so and as my family’s barbecue restaurant does… it says, if you smoke it… you poke it, we’ll smoke it. So it’s a fun thing.

Jack Sharry: That’s great. That’s great. I love it. So for our audience, if you have enjoyed our podcast, please rate, review, and subscribe, share what we’re doing here at WealthTech on Deck. We’re available wherever you get your podcasts. Reed, this has been a pure pleasure. Thanks so much, really have enjoyed it.

Reed Colley: Absolutely the same, Jack, thank you so much.