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Developing and Executing Platform Strategies for Wealth Management with Kabir Sethi

Digital transformation is inevitable, and financial services companies have to be nimble and adapt to the changing landscape. They need to find ways to capitalize on opportunities to remain relevant. As the world ages and demographics change, client and advisor relationships continuously evolve.

In this episode, Jack talks with Kabir Sethi, Managing Director and Chief Product Officer at LPL Financial. In his role, Kabir oversees advisor and end client experience and investment solutions and platforms. He is responsible for investment, banking and lending products, research, core advisor operating platform, end investor experience, third-party and fintech partnerships, and enterprise data and analytics.

With a track record of building and growing award-winning businesses and platforms, Kabir talks with Jack about how he got his start in wealth management, his strategies for creating a better wealth management system, and what he sees as the future of wealth management.

What Kabir has to say

“You have generations of investors who have grown up digitally. Wealth management will always be a combination of a human and digital relationship. The nature of that relationship and how that relationship gets executed is going to keep changing.”

– Kabir Sethi, Managing Director and Chief Product Officer, LPL Financial

Read the full transcript

Jack Sharry: Hello, everyone. Thanks for joining us on this edition of WealthTech on Deck. It seems pretty clear the future of wealth management is about how we connect and coordinate technology, products, and advice. Today we’re going to speak with someone who did a brilliant job on this at Merrill and has set out to do the same at his new home, at LPL, where he recently joined. This week, we’re speaking with Kabir Sethi. Kabir is LPL’s chief product officer with responsibility for their technology capabilities and wealth management platforms. He leads product strategy, development, and management. He’s also a member of LPL’s Management Committee. Kabir, welcome to WealthTech on Deck.

Kabir Sethi: Hey, Jack. Thank you. And it’s great to be here. It’s actually been a while, right?

Jack Sharry: Yeah, yeah. Well, good to talk and make our first extended conversation since you made the move. I want to hear more. So, Kabir, if you’d start by providing some detail, maybe a little bit of color on your role at LPL. What are you, what are you doing there? And what are you working on?

Kabir Sethi: Yeah, no, so this is the fun. I think we’re October 4, and I, it is exactly five months, five months and two days if you want to be exact. So you know, enough time to at least think you know what’s going on. But you know, every day you get reminded that you don’t. You know, it’s really fun gig. So you know, it’s the chief product officer role. Interestingly, I’m hardly LPL’s first ever chief product officer, I don’t know if that’s a good or bad thing. But I definitely liked the idea. I actually loved the composition of the role when it first came my way, because, you know, as you’re gonna see, really embodies part of, you know, I think, the philosophy I’ve had for a while about this business. So it covers our platforms, think about the advisor platforms and the end investor, so those experiences. It covers products. So think about the more traditional definition of products across investments, banking, and lending. And then we have a research organization and capability which we use with our advisors. And then data and analytics. So the enterprise data and analytics function. And, you know, as I mentioned, I liked it a lot, because I think it’s clear to all of us how these areas are increasingly becoming intertwined in the whole space of wealth management. And, you know, done well, there’s a lot of power, a lot of exciting stuff you can do. And so, you know, it kind of embodies LPL’s philosophy as well, where, you know, Dan and his team had that recognition a while ago, that you really needed to bring these areas together, have them functioning more closely, and, and, you know, start thinking about the future of wealth. And I’m sure we’ll talk about that, which is, you know, the different ways advisors and clients are going to engage with each other.

Jack Sharry: So now that you’ve settled in, all of five months and two days, as we record this session, what do you find, and I’m especially interested in what it’s like to go from a major wire house, Merrill, to the leading independent firm. Talk about what you discovered what you… interesting, surprising, illuminating.

Kabir Sethi: Good question. I mean, I’ve reflected on that a lot, as you can imagine. It is a big change. Right, as you said, going from a wire house and LPL is, you know, it’s a pretty entrepreneurial culture. I mean, we’re big now. In fact, you know, the first time I realized LPL had over 20,000, financial advisors, I was like, is that real? Is that true? And, you know, but it’s still a company that is growing up. And, you know, it’s sort of, pretty scrappy. I think historically, we’ve sort of always had this ability to jump on problems, jump on opportunities, get after them, but there is sort of this process of maturing that we’re going through. And it’s really, for me, especially interesting coming from Merrill, because, you know, you’ve been part of a fairly mature platform and company, which has operated a certain way, and you know, built up a bunch of things along the ride. And in LPL, you know, there’s a new, kind of new opportunity almost every day. And so some of what we’re learning to do over here is, you know, as you get bigger, how do you actually put in place that kind of operating discipline that big companies have. And how do you function across organization lines? And I think I find it really exciting because one, there’s the growth aspect of it. Two, there’s the opportunities, right? I mean, there’s a bunch of stuff coming our way. It’s almost like we have to be very, very targeted in terms of what we prioritize. And then I think thirdly, what is genuinely interesting to me is how, culturally, the idea of the advisor’s success literally runs through the DNA of the company. And you know, we talk about that a lot in this industry and people certainly try and live by that. Certainly, Merrill, they did. And, but over here, it literally cuts through every single thing we do, and I think that’s really positive because it’s very clarifying. Right? Whether you’re thinking of priorities or roadmaps or the future or organizational design. I mean, you’re really thinking hard around okay, what is going to enable the advisor’s success. And so they aren’t necessarily things I would have put my finger on before showing up. I mean, I knew to some extent, it’s a growing company, maturing, etc. But, but I think some of this is pretty exciting to discover as you go along.

Jack Sharry: So I want to get into that some more, I saw in a recent announcement that you’re overseeing a banking initiative. So I want to hear more about that. I’ve seen some other work. I’m not sure if it’s in your area or somewhere else. But this is some of the work you’re doing with other broker dealers. And so we’ll get into all that in a little bit. Because I’ve been, I’ve known LPL since it was Linsco and Private Ledger. And before it merged to the two different offices of Boston and San Diego, way back when, when, when Todd Robinson was running it and then later, of course, Mark Casady. But we’ll get to all that in a minute. I want to back up a little bit, if I could. Talk a little bit, if you would, about your background, how did you wind up doing what you’re doing today? It seems like there’s consultancy, at least in your background. But I’m curious how this party started.

Kabir Sethi: Yeah. And it’s been quite a winding road, right. I mean, I guess everyone’s journey is a winding road at some level. You know, obviously, as you can tell, I grew up in India, and I was, I grew up pretty fixated on this idea of coming to the US at some point in time. It’s just the most exciting country in the world, there’s tons to be discovered. And so I came to study at Columbia. This was around 2000. And I was, you know, still new. I mean, like, Times Square was the most exciting part of the city for me, because of the lights and the billboards and stuff. And you’re right, I joined Booz Allen straight out of Columbia. I was in consulting for around four years, ended up working, interestingly enough, across industries. It was only in the last year or so that I started doing, you know, very focused financial services work. And then the opportunity at Merrill came my way. And I joined in 2004. And I actually joined on the institutional side, on the investment banking side. And then in 2008, was when, as you know, Bank of America bought Merrill Lynch, and you know, everything changed. And it’s funny how, how life takes you to different places, because the person I was working for was asked at that time to think about the idea of launching a business targeted at mass affluent investors and self directed clients. You know, it had been talked about in Merrill, but honestly, in an advisory focused business, that was never a priority. The bank, for the Bank of America, that was a big deal, and that was the birth of what is today called Merrill Edge.

Jack Sharry: Right, right.

Kabir Sethi: So yeah, that time was really exciting, right? You’re kind of like in a new business, in, within a big company. We were literally doing focus groups to ask people what the business should be called. And, honestly, it didn’t take too many focus groups, for us to be pretty clear that if we were going to launch an investing business, it better have the Merrill name in it. And so, you know, Merrill Edge was this platform that I worked on, and you know, it was like new business, right, so you’re running sales, you’re launching some initiatives, I did a bunch of platform integration work and, and that really was the start of my deeper journey into digital platforms, and then working with wealth investors. And then over time, I ended up running the digital platforms in Bank of America’s Consumer Bank, which is interesting on many levels, but especially because when you go from Merrill Edge to running a platform which has over 30 million people using it, you realize, you truly realize what scale means, right?

Jack Sharry: Yes, yes.

Kabir Sethi: You better know what you’re doing before you change one… somewhere. I always tell people try and move around, like not too much. But because you learn stuff that you never thought you would learn. I developed an appreciation for scale and process that I think has stayed with me throughout, which is…

Jack Sharry: Sure.

Kabir Sethi: 55-60 million households like Bank of America does, you know, you just, you know, the ability to get things done. You can call it process, but there’s a huge amount of science to it in terms of sure how you run a business that way. And then, few years later, 2000… it was actually 2016 when this digital wealth management group was created in Merrill Lynch. Now, we’d always had platforms, right. It wasn’t a new thing. But I think there was a recognition that technology was going to play a bigger and bigger role in the world of wealth management. And you know, in one of the industry’s greatest advisory firms, they decided that they really, really needed to get serious about how we were thinking about technology in the context of advisors and clients. And so that was an exciting role. It was, I think about it as like the platform part of what I do now. But we ended up working more and more with our data teams and our investment solutions groups and things like that, but it was a fascinating journey. Right, it just for me, it was just, you know, a front row seat and to just see how, what technology meant in wealth management, right. What did it mean in the day to day of a financial advisor. And beyond some of the obvious things. And so, you know, how could data start playing into, and then, you know, we got a bunch of stuff done. And then this opportunity came my way, I, it would have taken something quite special for me to have left. I mean, I was having fun at Merrill, it’s just, when you’ve been at a firm for 18 years, right, you don’t just up and leave. And so…

Jack Sharry: Sure, sure.

Kabir Sethi: I mean, that will forever be a part of my life. This one was exciting for the reasons I mentioned to you. It was, you know, it’s growing, you almost, you sit here and to me, one of the biggest things, aside from Dan and the team who are great, great people, was also it’s the kind of platform where you can say, “Okay, we could really have a shot at shaping the future of wealth management. We really could have a big impact on what this business looks and feels like, years from now.” And so, you know, long answer to a very short question. But you know, that was the journey.

Jack Sharry: It’s fascinating. You know, we’ve talked off and on over the years, one of the things that I’m sure you’ve heard me say, because I’ve said it repeatedly, so I’m sure it’s, I said it in any conversation I’ve been in with you and others, is this confluence of digital and human advice that you’re really at the dawning, if you look at Merrill Edge, I’m a bit of a student of history of our business and Merrill Edge was a significant advance for the industry, I would say, kind of made that first departure away from just advisors as we’ve known them to a more digitally enhanced or digitally supported effort and to reach people in an effective and consistent way. And you were, you were there. And then I know you’ve done some really interesting things at Merrill, that’s not our topic for today so much. But you did a lot of groundbreaking work with Merrill on the platform from a digital perspective, again, enhancing the role of the advisor. So I’m curious, given that background, I wanted to add that bit of color to our discussion. Now, as you embark with LPL and, for my money, I just think it’s such a great firm, such… so well run for years. And I keep watching them do new innovative things, like I mentioned the banking thing, and more recently working broker dealers that are not called LPL. So I’m kind of curious, where are you now? What are you seeing, what are you feeling, so to speak? And where do you see it going? I’m kind of curious what the, as you’re starting to formulate your strategy, where are you putting your attention to start, where do you think it leads?

Kabir Sethi: Yeah, that’s interesting, right. Because it’s kind of so multipronged. And I’m trying to keep the answers short, and you can grill me as much as you like.

Jack Sharry: Sure.

Kabir Sethi: If I had to sum it up, and then we can drill down as much as you like, there’s really these three aspects across the products, the platforms, even. even research, the way we’re thinking about it. One is, this fundamental idea of making the experiences easier will always be fundamental to our industry. I think it’s easier said than done. It’s like simple words. But you know, there is no end, and you would know this, Jack, to the opportunities to take friction out, to find new ways to do things. And you know, you go out, and when you spend so much time with advisors and their teams, that just keeps coming back. There are always new ways to try and make the experiences more efficient. So that’s still going to be a big, big part of our strategy. You know, the other part, which is kind of an interesting one, we’re on and we’d started to embark on this journey even at Merrill is, how do you find ways to make the experiences smarter? Right. And that’s where a lot of the really, I would say, not just raw data and analytics, but really sophisticated, increasingly sophisticated users of information come in, which is, you know, how do you understand clients’ behavior? How do you look for opportunities to get, you know, advisors, not just more efficient, but even how do you find ways to actually get them to have more meaningful conversations with clients? And people talk a lot about this, right? So what I’m describing to you is not a novel idea. I think the part that always gets interesting is how you think about that end to end and make sure it translates into true adoption and action. Because I think, you know, when people talk about insights, and people talk about using information in different creative ways, you know, to me, it’s much less about, I mean, certainly there’s going to be applications, increasing applications of machine learning. But I do think there are ways that you can use information to help advisors be successful. And we can talk more about that, but whether it’s managing their practices, or whether it’s knowing which clients to call and why and providing that kind of context. And then I think the third aspect, which again, is an often used term, which is how do you make the experiences more personal? I mean, this is a personal business at the end of the day. But I think the opportunities are going to continue increasing, whether it’s the kind of personalization of portfolios and tax management that we talk about, or whether it’s starting to get really, really targeted around what types of research content to share at what point of time and how do you make that experience really easy end to end and frictionless. That’s where it starts to get interesting, right. When you go beyond, let’s say, the traditional law, basic definitions of personalization, but more really look at an advisor client relationship as one unit, and try and figure out, okay, how do you actually tee up information or insights or whatever it might be for advisors at the right time? Right. And so I think in many ways, we’re trying to center around those three building blocks and a lot of the input we get from advisors, because we have, we do extensive research here as well. I mean, I’ve always been a huge believer on that, because if you’re not sitting in the branch offices, then you’re not, you know, you’re making up stuff. And that’s not a good idea in any business. And so we’re sort of down that path, right. And I think this is where it circles back to where we began, which is, those areas become even more exciting when you’re looking at them across traditional products, how you serve them up on platforms, and then how you bring in content as well, to be able to to actually round out that experience.

Jack Sharry: So a term that we’ve used, comprehensive advice platforms, I saw Brian Neil, in a recent article referred to as comprehensive wealth management. But the idea is bringing all this stuff together. And I know that that’s, looks like pretty much every firm I talk to is working on some version of that. And it sounds like that’s part of your bailiwick is how do you bring all this together. So whether it’s the practice, practice management, or it’s personalization for the client, or tax manage, all different ways, risk management, tying it all together. I imagine, just given what I know about LPL, I’m sure you’re also looking at expanding the retirement space. I know, Gary Carrai is working on some work, doing some work there. Point of all this is it all comes together. And as you well know, given your background, none of it talks to each other to start, or at least doesn’t, wasn’t set up to talk to each other. But you got to make that happen. So sounds like, I’m guessing here, but I don’t think I’m far off, your job is to pull all this together. And my question is, how do you do that? How do you pull it together so you can provide a comprehensive experience that is highly personalized, as you describe it?

Kabir Sethi: I love the question. Because you know, when you define a problem like that, right, it’s one of those things, which just at initial glance is kind of overwhelming. Right? If you pick this up from the point of view, like we are doing increasingly, which is how do you look at the workflows that matter most to our advisors and their clients? Now, if you had to map that out for the world of wealth management, you get a massive amount of stuff, right? But what we’ve done actually, quite deliberately is gone out to a pretty large number of advisors to talk to them about, you know, to use your words, if we had to pull things together, which workflows matter most to you, which ones would you want us to focus on? Because it’s almost this, this whole idea of you’ve got to start somewhere? And you got to start fast…: Yeah.: So I’ll pick a few things, because I think you and I could probably go at this for like long, long time. I’ll probably start with something which is near and dear to your heart, which is, you know, we’re seeing this generational transition play out right before eyes. And you’re kind of looking at this interesting, and we’re seeing it, you know, even with the clients we deal with, which is you now have as, as this country ages and demographics change, you have generations of investors who have now actually grown up digital. And so, you know, I think that there will never, you said it right in the beginning, which is this will always be a combination of a human and digital relationship. But I think that nature of that relationship, and how that relationship gets executed, is absolutely, you know, going to keep changing. As in, you know, we already are well into the world, like this one, right, virtual meetings and stuff like that, but, but I think when you go deeper into different ways of collaborating, different ways of executing things for your clients, you know, information flow, you know, I suspect what we’re gonna see, and we are we are actively working on, not just the present, like you said, but thinking through how that’s going to evolve, is what are the different ways that advisors and clients are going to work with each other? Where both are actually quite comfortable, a lot more comfortable with these platforms, than generations before them have been. So I think there’s this big transition over there. I mean, the other part of the general, the generational transition, which is interesting is, especially in our business, which is, you know, advisors handing over practices, and we’re spending a lot of time thinking hard about succession planning, and how you actually make that happen, it’s a lot more complicated, as you know, than you might think, from the outside. And so that’s a big area of focus for us. I mean, we hear that a lot from our clients as well, I think there’s the obvious piece around, and I think about this a lot, right on the traditional product side and on retail access. We’re sort of still scratching the surface, even if you look at well-established asset classes, like alternatives, etc, you’ll see that retail access, it’s still, it’s expanding, and we hear a lot and read a lot about it, but it’s not that high. And so, you know, I find myself sort of looking at that. And then looking at the more, you know, even out there types of products. Out there, at least for us, like when you think of crypto and stuff like that as to, you know, that sort of whole product suite and what it is going to look like in the future, I actually would hazard a guess that at the end of the day, the areas like you’re involved in like retirement, etc, are still going to be more front and center. I don’t believe that people get into the traditional wealth management advisory business, or even will in the future to do high stakes gambling. I think it’s going to be much more around how do I secure my future, all the questions we ask today.

Jack Sharry: Talk a little bit about that if you would, Kabir, because as chief product officer, that means, that sounds like there’s a bunch of discrete products, and you hope everybody sells a lot of them, ultimately. And I know you better to know that that’s not how you think. But it’s really about how you combine them, about how they work together. Talk a little about because that’s the hard stuff. As you know, that’s, it’s not just the discrete products, call them what you will, alternatives, or UMAs, or, you know, all the different ways that we build toward retirement, whether it’s accumulation or withdrawal. But how do you bring them together and what are some of the challenges and what are some of the ways you’re thinking about how you bring it together because that seems to be this notion of comprehensive wealth management is around how they coordinate and how they work together. So if you’d comment on that.

Kabir Sethi: Yeah, I think, you know, you’re right. I mean, you know, some of the challenges, some of the obvious challenges are one, you could end up with a kind of product brand, which has a bunch of stuff very few people are using, right? There’s just the complexity, introducing a level of complexity into these conversations and relationships. I think where it takes you in our scheme of things, it’s why you’ll hear us talk a lot, and you’ll hear the industry talk a lot about models based practices, right, and how we’re trying to use our research, right, and work with advisors increasingly, and we’re seeing, you know, more and more of that. I mean, the industry has seen that, seen pretty significant growth around that anyway. But I think that’s a big way for us to be able to pull a lot of our thinking together, right, and the intellectual capital in terms of and translate it into investing solutions, and ideas that advisors can work with. And so that’s always gonna be a big part of our strategy. In fact, I mean, you know, we sort of, you know, we’re adding sleeves to UMA, we’re expanding definitions, etc. But I think at the end of the day, though, the idea is still gonna be, okay, how do we, how do we work with our advisors to enable them to run models best practices, because there’s so many advantages there. Right. And the ones who are doing it, are doing it with a great deal of success. So, I mean, I can give you several examples. That’s one big part of how we’re pulling things together. I think the other obvious area is content, I mean we’re gonna continue expanding research coverage, like, like a lot of other people. You know, our definition of research for us strategically, research is a way to help support our advisors to work with their end clients. Right. So it’s, it’s, it’s less for us as sort of visible and flashy, as much as you know, really, really focused on content, and then getting the content out there and getting the intellectual capital in the hands of our advisors. But it’s very much an advisor facing as opposed to a retail facing function, when you think of our strategy. So, so there’s a couple of ways. I mean, you know, there’s a ton of things we’re doing around data right now, probably talk about them in our next podcast. It’s a bit early right now, I don’t want to be talking… But it’s a, it’s a really exciting space.

Jack Sharry: I was gonna say about data, that is the, so many firms are working on just that piece, just getting it to flow in a way that you can do all the things you’d like to do. But until that’s cleaned up, and every firm is in a cleanup mode in some fashion or another. That’s, that’s, it’s critical.

Kabir Sethi: It’s also, you know, it’s an easy, like many digital spaces or product spaces, it’s an easy space to get distracted. At the end of the day, though, and that’s why, you know, those tenets of making things easier, or smarter or more personal, we sort of ground ourselves in them. And, you know, the team and me, we spent some time right in the beginning of this journey a few months ago, brainstorming because it sort of really, really is important to just stay grounded. Grounded in what’s truly important versus what, what feels awesome, right. And you can have, you know, there could be many things which qualify for both, but I think you’ve seen lots of stuff come and go, lots of things get launched and not get used and, and I think for you know, for us, or for, to be honest, for anyone in this business, I mean, it comes down to what, what matters to your financial advisors and to their clients. You can always come down to that.

Jack Sharry: I couldn’t agree more. There are about 100 topics you’ve covered tonight, or today, I should say, that we are not going to be able to get to because our time goes short, we try to keep this to a half an hour. So as we look to wrap up, Kabir, what are three key takeaways you’d like to share with our audience on what we’ve discussed today?

Kabir Sethi: I do believe that true success and the people who are going to succeed are going to have advisors at the center of their strategy, right? There’s an industry that’s adding 10 trillion assets in a decade. And if you can truly figure out and keep working at making financial advisors successful, I mean, their clients are going to benefit. But I do think that’s a very clarifying way to be able to approach this business. And there’s tons and tons of things that that leads to. The second thing I would say, and in no particular order is, you know, don’t underestimate the power of design and experience in this industry. You know, it sometimes can get overshadowed because it’s a human business. And we talk about investing products and banking, etc. But, you know, the truly ease of experience and really, really good design, you know, that’s going to be one of the biggest differentiators. And not just in a cool client mobile app, but even I would say even more so in the way you know, you serve advisors. I think that’s absolutely… And the third thing kind of goes back to what we just alluded to, which is, you know, just never forget that the only stuff that matters is the stuff that people use.

Jack Sharry: Yep.

Kabir Sethi: You know, you get… And so it’s this age old conundrum in this business around adoption and how you get people to use the app. But there are more and more creative, sophisticated ways that you can actually target usage, etc. And we’ll probably get into that another time. But I think the fundamental point is that it matters if it gets adopted. And so that’s what you want to stay focused on.

Jack Sharry: I couldn’t agree more. So, Kabir, it’s been a great pleasure, really enjoyed our conversation. My final question is my favorite, which is, what do you do outside of work that people might find interesting or surprising? So tell us about what you do for fun, or you’re particularly passionate about.

Kabir Sethi: I don’t know about interesting. But yeah, aside from, aside from, of course, my two kids, there’s a few things but one thing which truly is a passion for me, I’m on the board of the National Brain Tumor Society. Got involved with them some years back and I’ve had a family members who sort of had issues. And that’s how I got to know the folks at NBTS. And, you know, it’s one of those, those areas where until you get into it, you don’t hear about it as much, because not that many people suffer from it, which is a good thing in some ways. But you know, it’s pretty lethal. And it’s actually one of the largest causes of pediatric cancer. So I, hopefully, I’ll get you to devote a whole podcast with me to talk about NBTS. But I spend a lot of time with them. I mean, we spend time, it’s, and it’s not just around fundraising, which of course is always important. But it’s things like awareness, it’s things like getting the right people involved, not that different from work, right. I mean, you sort of… raising awareness and thinking about different ways to get the story out there. They do, they do really, really good. It’s a real passion for me.

Jack Sharry: So that is great. I share your passion, a few different charities that I am quite involved in. All those things you said are part of it. And I’m so glad people like you and and others are willing to do that. So thank you. This has been a wonderful conversation. No, no surprise there. We will have you back and we will talk some more about all of the above. So thank you for that. For our audience, if you’ve enjoyed our podcast, please rate, review, subscribe, and share what we are doing here at WealthTech on Deck. We’re available wherever you get your podcasts. Once again, Kabir, me your thanks so much. I look forward to the next time we have a chance to chat.

Kabir Sethi: Thanks, Jack. Always a pleasure. Thank you and great to see you.