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Investment Strategies to Live an Intelligent Financial Life with Rose Palazzo

Most people would agree that financial planning is an important part of life. After all, who doesn’t want to be able to retire comfortably and have enough money to live the life they want? However, financial planning needs to be much more than just a plan. It needs a clear understanding of the current financial situation and a roadmap to achieve future goals. How can investors create a financial plan that helps them live an intelligent financial life?

In this episode, Jack talks with Rose Palazzo, Group Head of Envestnet Money Guide. Before joining MoneyGuide, Rose was the Head of Financial Planning for Morgan Stanley Wealth Management, responsible for managing the development, implementation, and support of the firm’s financial planning offering. Having hands-on experience designing financial planning software, Rose was also an architect of Morgan Stanley’s proprietary goals-based wealth management platform, Goals Planning System (GPS).

Having extensive experience in the financial industry, Rose speaks with Jack about some of the exciting things she is working on at MoneyGuide, what she sees as the future of financial planning, and how she helps clients achieve their financial goals.

What Rose has to say

“Planning is getting an understanding of why you were investing in the first place. If we invest for you and provide solutions to you, we should know what the objective is.”

– Rose Palazzo, Group Head, Envestnet | Money Guide

Read the full transcript

Jack Sharry: Hello, everyone. Welcome to well tech on deck, glad to have you on board. On occasion, we invite our guests to make a return visit to our program as what they’re doing where they’re doing, it may have changed. This week, we’re speaking with my good friend rose Palazzo. This will actually be Rose’s third visit to Wealthtech on Deck that’ll tell you something about what I think of her and what she has to offer. For those who may not know rose, in my view, she has accomplished more in the design and build of comprehensive advice platforms and anyone in our industry. I don’t say that lightly. She was the person who persuaded senior management at Morgan Stanley many years ago, to build their platform in such a way as to become the clear leader with the industry’s most advanced advice platform today. And then she was one of the key leaders who corralled and collaborated across the firm, to build a platform that is in my view, and most others who pay attention to this stuff, far and away the leading comprehensive advice platform in the industry. It was about one year ago today, Morgan Stanley launched roses most significant project intelligent withdrawals, we’ll talk about that in a moment. This is the industry’s first comprehensive retirement income program won’t be the last. And it was also the time where she started as the group head of Envestment | MoneyGuide. After one year of money guided, we wanted to catch up with Rose and see what she’s been up to and where she sees the wealth management industry headed. So Rose, my friend. Welcome to WealthTech on Deck again.

Rose Palazzo: Jack, thank you so much for having me. I can’t thank you enough for having me today. But also three times. So this is amazing.

Jack Sharry: Yeah, the record, thank you, I love that.

Rose Palazzo: I want to take a minute to congratulate you on what you’ve done with WealthTech on Deck, it is truly phenomenal. You have sort of curated some of the most amazing discussions about wealth tech and what’s going on in the wealth management industry. And I am just honored to participate three times. But also personally, I have gotten a ton out of listening to your podcasts and listening to your guests who are some of the most amazing people in the industry. So congratulations.

Jack Sharry: Thank you. Thank you. Well, that’s a testament to who we have on. So I appreciate your comments. But it’s people like you that make this show. fun to do and fun to listen to, as we hear from our 5000 or so folks that do that. So, Rose, let’s start with you talking about what you went through, as you were preparing to launch intelligent withdrawals. And at the same time setting yourself up to move to money guy, we were in regular touch at that point. So you had two jobs, finishing out what you were doing at Morgan Stanley and then setting yourself up for the future of money got. So tell us about that experience and how you pulled it off?

Rose Palazzo: Yeah, well, when you say a year ago, that’s the first shocker for me, because it does not feel like a year, it feels like just a few months at best. But that feels like it was just yesterday. And it was two really significant things for the organization I was in the organization I was going to and also for me sort of personally, you mentioned and thank you for that intro, intelligent withdrawals, that platform and what it did for the advice platform at my former firm was really significant. And I was a part of that process from the beginning of the proposal of that strategy and design and all the way through to sort of the execution. So it was kind of a personal labor of love for me and the teams that worked on it. And there was a lot that went into that. So for instance, we’ll start with the decision to either kind of build that all on our own or partner with experts. And I know, you know, we partnered with LifeYield, to build that and to sort of coordinate the development of it. And it was a combination of a tremendous amount of work, both from a design and integration and coordination of multiple platforms, and partners, but also in sort of prepping for the rollout of that. And so when I left, we had just completed a really successful pilot with a core group of advisors that we thought would be engaged and give us great advice on on that. And that were it to some degree, trying to do some of this on their own. So they had some experience. So we got some good advice around what would that do to their business, and preparing to roll that out nationally, which is a tremendous effort in and of itself. And Morgan Stanley just has kind of the wherewithal to do that right? Really prepping and really sort of focused on how do we help advisors adopt what we think is kind of significant technology.

Jack Sharry: That’s great. And what was it as you were departing your friends at Morgan Stanley, all of whom you still have as friends and making new friends that money guy that was quite a transition of full time at one place. And then getting prepped for the next work you find.

Rose Palazzo: I’ll say leaving a firm like Morgan Stanley is not easy, right? Like, it’s just an amazing organization with just amazing people. But I was a longtime client of money guide and a fan of what they’ve done and how they’ve innovated around planning over the years. So that was an exciting opportunity to join and to act as kind of group head and sort of lead money guide going forward. And then I was also really inspired to some degree by what Bill’s vision was for investment, right, this idea of an intelligent financial life that all of the components of a client’s financial life are connected, right. And that requires technology to help execute and to enhance the advice that we provide clients to enhance clients lives by providing better advice and helping them to attain what they want. So being a part of that was really exciting. And so what prepped for was really getting an understanding of the current offering and sort of what that strategy was and where to focus. And I was sort of doing that at the same time, it’s kind of rounding out what I was doing in my previous role.

Jack Sharry: That’s great. And of course, when you say, Bill, you’re referring to Bill Crager, as the CEO of Envestnet, I know he’s excited to have you and want to talk a little bit now that you’re there some of the things that you found some of the things you’re excited about. Also the differences still, when you get to a firm, where I don’t know how many clients investment has been has, seems the whole industry, but there’s a lot more clients at Morgan Stanley, certainly 15,000 or so advisors, but I think I would match investment has a higher number that lots of different firms, lots of different needs.

Rose Palazzo: Yeah, you know, I’m going to actually start with the similarities, because I found a lot of similarities between the firms, they are both leaders in their respective spaces. And that has a lot to do with the leadership and the strategy and their ability to execute. They also each have a real focus on clients, both those advisors that they’re providing support and services to as well as the end clients. So what does it really mean for an investor to be able to achieve what they need? And how do we get solutions and advice to them. And then lastly, there is a discipline and dedication around innovation at both of those firms. And real successful innovation requires that right like both a discipline to say, I am going to innovate around this and to have dedication to doing that. So that I would say there’s a lot of similarities between the two, you highlighted one of the biggest differences that I found is that sitting in a seat where you’ve got a captive, you know, one firm that you are working for, and yes, 15,000 advisors, it certainly had different ways to serve their clients. But there’s certainly many more clients that I’m interacting with and serving. And it’s fantastic to see how firms and advisors are tackling these issues in different ways, and how we can think about what we provide helps them with that.

Jack Sharry: That’s great. So, Rosa, no, there are a couple of theories, you are especially excited about the work you’re doing at Envestment | MoneyGuide. So why don’t you fill us in on, somethings you’re you’re working on.

Rose Palazzo: Yeah. So when I think about the work that I’m doing now, I really think about it in two categories. So the first is repetitive money guide, I think about financial planning and advice. When I joined Envestment | MoneyGuide, the T3 survey, the 2022 T3 survey had been released just a few months later, and money guide was ranked as the number one financial planning tool as I had been for the last 15 years. So that is a focus. So the areas of work and the initiatives that we’re working on for money guys specifically, are all around providing best in class capabilities around planning and advice. And so there’s a few things that I have been working on over the past year and are focused on. And the first really deals with rounding out the offering for money guide and providing advisors and firms with a platform that serves clients, no matter their sort of lifestyle, age or demographic. We want to work with clients from mass affluent kind of emerging all the way through high net worth and ultra-high net worth. And so last year, the year before, and all of this year really we launched a wealth Studios, which is the newest sort of component of MoneyGuide. And that is focused on serving high net worth and ultra-high net worth clients through complex estate planning. And actually more broadly, just clients of all sorts of networks with detailed Cash Flow Planning. Where that helps with is the clients need requires that or the advisor prefers that method of planning versus goals based, this platform money guide can now serve sort of all those areas. So really excited about that the tool is on the same platform. So it really is money guide now is a solution that on a single platform, you can meet all of those needs. And, you know in the same vein around that continuum, we continue to focus on our development of my blocks and that’s about creating these I like to call them my Throw in many experiences around planning and advice. And a componentize is planning, they can help facilitate collaboration between an advisor and a client. And these sorts of more consumable experiences. And they also get to some very specific topical sort of discussions. So we’ve got a healthcare, let’s say, we’ve got a healthcare blog, where you can have a focused conversation around health care, or ESG, and sort of put the magnifying glass on that and make it consumable, and engage clients. There’s certainly many of those components that are actually really helpful for mass affluent clients as well. The second big category of work that I think about is the integration of planning. So that is, you know, when I joined investment money guy, there’s a ton of integration that has already happened. So many guys, integrated with investments, Tamarack platform and its investment proposal system. But we’ve done some things this year further integrating with things like FedEx, so you can go through a illustration with a client on how an annuity might help them meet their income needs, and then actually launch into the FedEx platform to execute on that, we’ve done further integration with LifeYield to help execute on an investment strategy. So go through a plan, provide a high level, I like to call it big pie investment strategy to a client. And then we’ve got the integration into LifeYield. That helps with smarter execution through asset location. And then I’ll talk about one more integration. And this one’s a little bit more non-traditional, but embedded finance. So we’re really using money guide to help embed finance in non-traditional partners to help sort of bring kind of financial decisions to clients where they are. So those are some of the areas when we think about sort of the integration aspects of what I’m focused on, that we’ve been working on.

Jack Sharry: I know you’ve been working with Dani Fava on the embedded finance. Yes.

Rose Palazzo: Yep. She’s absolutely amazing. And a great partner.

Jack Sharry: That’s great. And also for those that may not know what we talked about, well, studios, that’s something Edmund Walters who founded E-Money, isn’t that something he developed way back when it is.

Rose Palazzo: Absolutely. And that was a partnership that was developed with money guide and investment, and admin Walters, and we were able to take his best thinking around that space in terms of serving high net worth clients, and integrate that into the money guide platform to help them reimagine how high net worth planning is provided to clients. And if you take a look at that platform, you’ll see things that are really changing the way advisors can work with clients. It is more interactive, is less about you sitting in front of a static report, and more about engaging clients in the process of planning. So a really fantastic partnership there.

Jack Sharry: So I’ve been a student and a fan of Bill Crager and investment for many years. So what I just heard is you took someone that was at one point I competitor had been Walters and use some of his work, you’re doing some interesting stuff with Danny around embedded finance. So that’s, that’s new. FedEx is of series of partnerships across a number of different exchanges. And Shawn Lawler heads up those businesses in terms of developing that you’re working with LifeYield. And we very much appreciate the work we’re doing with clients to help in execution. So it sounds like you’re broadening out. And that just you’re not your father’s Oldsmobile, as they said years ago and the commercial are hurting the commercial. But you’re really starting to broaden out to connect to different elements that were not originally part of a planning construct.

Rose Palazzo: Absolutely, absolutely. It’s taking some of my past experience embedding planning across the wealth management process, and further extending that, right. And it really is about starting with a client to get an understanding of their personal goals, to develop strategies, and to execute in the best way possible to help them achieve what they want. And I think all of these opportunities that I’m talking about are addressing those right, like, how do we execute in a better way? How do we make the Technology Support being more scalable, and being able to provide this to more clients? How do we enhance the advice we’re providing to clients? So it’s exciting to extend that to see the the possibilities around that.

Jack Sharry: So I’m gonna tell a little story about Rose, if I may, some of the work that she’s done. She was way back when was working at Merrill Lynch, in the planning department, I will leave out the part where you worked as a college bartender at Merrill Lynch executive events, we’ll leave that part out. But doing a lot of good work wealth outlook at Merrill Lynch, time, moved on to Morgan Stanley came up with this crazy idea of having planning be more than just planning that is going to be a lot more than that. A lot of what is where I’m going with this question rose. And the story is you just saw that planning needed to be much more than just a plan. It needed to be implemented. It needs to be connected with all parts of the firm because that’s what clients do. They own different types of products and different type of accounts and different types of lots of stuff. They want some more advice and counsel a different life stages, all that sort of stuff. And certainly you’ve been a leader in that when you went to senior management. Many people may not know this, but rose really went to see you man has read was the advocate to what has become Morgan Stanley’s platform and in my mind, and I’m pretty informed on this stuff. There’s no one that comes close at this stage many people chasing, but no one has come close to this point. And you really were a key leader. There were others, certainly good friends and colleagues of yours that were very actively involved in, you really got to the point of the spear and making that all happen. So now you find yourself at at invest net, where intelligent financial life is the mantra for the firm as well, it should be talking about that. Where are you now? Where do you see it going? In other words, how do you pull this stuff together? Because it’s about all the different elements of what a client has to contend with all the different issues they have to consider. And then ultimately, they have to implement, they have to put it in motion. And there’s no one that knows that stuff better than us. So when you talk a little bit about that journey, and then also where you see the world going.

Rose Palazzo: Thank you for that. It’s sort of the history, this sort of starting in planning when planning was delivered in a, you know hardbound book and it wasn’t revisited, we’ll say there right and to where we are today, where it’s at paperweight it was overweight, but we’re having those discussions and there was there was value there. But the evolution has been just incredible, right? So to think about where I started, where if a client wanted to change something in their plant, it took two weeks because it a new book had to be printed and mailed out right? To a place where we’re actually making these things, tools that help clients make decisions that have huge impact on their life, right, like so it’s, it’s interactive, and it’s connected. And we’re really seeing how all these things kind of come together. So I’ll talk a little bit about the journey. And you’re right, I think, part of you know, five or six years ago, when I started on that journey at Morgan Stanley, it was a lot about how do we integrate this as part of the overall process so people can use planning conversations as context for the advice. If we want to say, how are we doing, it’s not just performance against a bunch of markets, are you able to achieve what you want. So kind of all of those things, and that requires a high degree of integration, right. And we’ll use that term sort of demean one thing, user experience, data integration, and will now take it to the next step coordination between different platforms that are working together. Because you mentioned it, clients have complex financial lives. And that means that they use different products. And it may be, you know, different advisory products, brokerage, all of the things that come together, annuities and insurance, all of those things that come together, that help them achieve what they want. So I think there’s been so much work done in integrating platforms and thinking through experience in being able to have platforms inform each other right to enhance the advice. And that’s just going to continue. And what we’ll see is more coordination of these things that are experienced. So clients understand how these things are connected. So there’s one thing about, can we provide better advice, because we’re making it more efficient for everybody to do it? And then the other is, how do we help clients actually understand that this advice is tied to the things that are important to them, and make sure that those experience are consumable and present for people. So I think we’re gonna see a lot of that, which means, you know, just a few things, one is, more clients will get better advice, right, and will be able to see some clients that previously weren’t getting advice to be able to get that, right, like through digital experiences through things like Dani’s doing with embedded finance, right, it’s coming to them. And then we’ll also be able to see advisors who are currently scaling their businesses, just the ability to increase sort of that and to enhance the advice that they’re able to provide. So greater adoption of those things that we’re building now, and just sort of more of that going forward. And I think that the platforms are just gonna get smarter. So we will see more of the platforms doing the heavy lifting for advisors, which will allow for the things that we’re talking about. So through better use of data, and things like AI and insights and things like that. It’s just, well, let’s sort of push on what kind of advice we can provide us as well.

Jack Sharry: Yeah, let me see if I could go a little bit further a little deeper on this notion of coordination, because it’s one thing to connect the dots, as we like to say. And it’s another thing to integrate, have a series of integrations. But then you have to go across the various silos, various integrated elements or elements that have been integrated, and coordinate them. And I’ll just take a given example and love to have you comment. So you have the data. That’s, that’s baseline, and we’ve worked with you for years to work on that part. It’s good to have clean data that’s consistent across the way that’s no small thing. But as an industry, we’re making great strides in that regard. And then that feeds into a planning tool and the planning tool, pick out an asset allocation, and we’ll start to identify goals and priorities and what have you. At some point, you have to consider asset location and you’ve done a good bit of work on that we’ve done it together on asset location. So where are you hold it is important that’s relatively new to our industry to really think about that and also to mechanize it or to make it more seamless and then it has to go into a proposal, this is that coordination thing we’re talking about where you goes into a proposal. And then as part of the proposal, and a lot of this is still a work in progress, it’s not just Asset Management offerings, whether it’s SMA, UMA, what have you brokerage. But now increasing alternatives and annuities and all that that’s we’re early days on those two had to be integrated into this and coordinated with this broader system. And then over time, you got to rebalance assets by come in, you got to transition. And then also, you got to take it out. That’s the intelligent withdrawals that you you’ve we talked about earlier. So you you’re drawing from different accounts and product types. And oh, yeah, gotta consider taxes, the single biggest impact on all the above of what we just talked about, if you can manage that minimize tax, you have a better outcome. So you’ve lived that I just described it roses have been working on for the past 678 years, whatever it’s been talked about, that talked about that understanding, because, frankly, we together learned a lot about that as we went along. But we talked about that experience, and also how you’re applying it today with what you’re doing an investment.

Rose Palazzo: But yeah, so I will say and you’re right, we learned a lot along the way. So we had sort of thoughts around it and our strategy around it when we started, but we learned a lot along the way. And it was critical to pivot quickly, right, like, sort of victory places and to be able to pivot quickly when you learn certain things. But I’d say this, for me, it started with that vision of planning had to be more than claiming, right? We didn’t want to hand somebody a plan. And so they move away from that and provide advice that was disconnected. And it’s for me, it’s very simple. And I say that people have heard me say this planning is really getting an understanding of why you are investing in the first place, right? And so if we are going to invest for you and provide solutions to you, we should know what the objective is right? Like it for me, it feels like it is that basic. And so that makes it the context for these things. So it was a very sort of initial sort of view on well, how do we use a plan as a way to understand what a client wants to achieve? And to vet sort of strategies and to explain those strategies to clients and what the impact is to them? And then how do we go ahead and say, if it’s a 30-year plan for somebody, I’m going to execute this in the best way possible at that time, right? Like considering everything that that goes into that. So the experience was to pick our places to think through some of the key things that were critical to get right on sort of the first pass, or what’s the first thing that we’re going to do and that was a little bit of making sure we could think about a portfolio, maintain that portfolio through the systems understand what the first step was, we’ll just talk about taking it in steps, very first step that we took was going from a plan to execution and using asset location as a way to create efficiency and do better for the client. And that was one of the first things that we prioritize, because it helped us execute in a smarter way. It gave efficiency to the adviser and benefits to the client. And so we sort of evaluated this, what could feel like boiling the ocean, what could feel like insurmountable sort of a collection of tasks, and said, Okay, let’s pick some of the ones that help us get through those first steps. And then we’ll tackle the next one, we’ll learn what sort of the pain points are with players are with the things we have to address and prioritize those and keep going. And that was, that was the journey really.

Jack Sharry: Yep. And for those that may not have heard it by now, but it’s been repeated often, certainly by me. If you’re going to have an impact on improving outcome, you got to deal with asset location, it’s kind of that simple. Taxes are the biggest drag on returns, after tax returns, which is all you get, you only get to keep what you keep, not what you made in pre-tax. And clearly together, we’ve learned a whole bunch about that. So let’s move on to the future. Before we start to wrap up, where do you see the industry going investment money guy going over the next three to five years?

Rose Palazzo: Yeah, I think I mean, I mentioned it before, we are focused on innovating around how clients and advisors experience planning how we integrate that across all the discussions that we’re having, how we enhance the advice that we’re providing. So I think we just mentioned it, how I think in the next few years, you’re gonna see better coordination through platforms, you’re seeing some of it now, that’s gonna continue, you’re gonna see in enhancements in terms of the types of advice and the coordination between the prod not just the platforms, but the products that we’re putting together, right, and having the technology to support that. More enhancements around sort of how do we execute in smarter ways, right, like so. We do a lot around developing the strategies and how do we actually execute those things in smarter ways. And I’ll go back to the use of data and the client experience being a real focus as well right like making all the things that we’re doing for clients, easy for them to consume and to use and to understand so that we can do more for them.

Jack Sharry: Fueled easy button. With clients we’ve spoken to has highlights so frequently and rightfully so, Rosa as we look to wrap up what are the three key takeaways you’d like to share with our audience?

Rose Palazzo: So, I’m going to start with something I talked about early on, which is what we’re focused on at MoneyGuide. And that’s rounding out a platform that helps us serve all of the clients that an advisor might have, right from mass affluent to ultra-high net worth at all life stages. So if folks haven’t taken a look at wealth studios are money guide. And a little while I would invite folks to do that, while studios really is innovating around the experience for that high net worth planning, making it easier, but also making it much more engaging. So I’ll start there. The other takeaway, and we’ve been talking about it is just a focus on how platforms are coordinating, right, this sort of move past integration, to coordination and thinking through just sort of how that how that actually happens, and kind of that execution. The last one, and Jeff, this will be extension on your last comment. And this one’s near and dear to my heart. It’s that sort of mantra that I have that execution matters, right like that. Not all strategies get executed in the same way. And so execution matters, taxes is a huge impact to clients. It’s one that if you’re providing investment advice to clients, to be tax aware, is important. So to think through sort of those capabilities and the impact that they can have to clients abilities, to achieve what’s important to them and what they want.

Jack Sharry: That’s great. Well rose, as always, this has been a total pleasure, love talking to you, Rose, I sneak an opportunity periodically to catch up and share. I listened to her wisdom, and I share what I hear on the industry. So once again, great to have this conversation. And now for my favorite question. Last time, we talked about what you do outside of work that you’re particularly excited or passionate about. You talked about opera, but I hear you might have a new thing about what you’re excited and passionate about. So tell me a new passion.

Rose Palazzo: I actually think of this and Jack, I share this story with you because well, it was exciting for me. But I always looked for opportunities to get my family together. And we haven’t done a ton since the pandemic. So I had planned a family trip to visit my brother. And as we got closer, my parents that are a little bit older, were a little bit nervous about traveling. So nobody wanted to get on a plane. Nobody wanted to be in the car. It was going to be about a seven and a half hour trip by car. And in kind of my sort of strategy is there’s always a solution to every problem. I googled renting an RV because I thought that a 30-foot RV with a bed and a sofa at the kitchen would be a great solution to sort of the concerns that everybody had about traveling. So I as a person who never been in an RV 30 foot RV to get all of those sorts of amenities for my family. I rationalized it by saying I have driven a U-Haul in Time Square. So surely I could drive an RV. But it was a fantastic family vacation. Everybody agreed to go we had five adults and three dogs and we’re able to kind of take a trip in that RV. Also in full disclosure, we only use that for transportation we grew up and then sort of parked it and got out of it. I haven’t fully embraced the RV lifestyle. But if that could happen, that would have been a lot of fun.

Jack Sharry: I want to selfie the next time you’re behind the 30 foot RV. I actually have one I will send it to you. Okay, great. Great. That’s terrific. So, Rose thanks. It’s been a great conversation as always, including the RV story for our audience. If you’ve enjoyed our podcasts, please rate review, subscribe and share what we are doing here at WealthTech on Deck. Were available wherever you get your podcasts once again rose, my friend. It’s been a real pleasure and I look forward to the next time.

Rose Palazzo: Thank you so much, Jack. It’s been wonderful.