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Shifting Wealth Management From Investment Products to Investment Processes with Randy Bullard

Wealth management has long been focused on investment products – stocks, bonds, and mutual funds – but there is a shift taking place in the industry. A growing number of wealth management firms are seeing the value in shifting their focus from investment products to investment processes.

In this episode, Jack Sharry talks with Randy Bullard, Global Head of Wealth at Charles River Development. Before joining Charles River Development, Randy served as General Manager of Wealth Management at SigFig. At Charles River, Randy leads the Charles River Wealth Management business globally. He is responsible for the firm’s wealth product strategy and growth of the business with a heavy focus on client satisfaction.

Randy talks with Jack about the secular shift from investment products to the investment process in wealth management. He also speaks about the current state of wealth management in the digital age, the future of comprehensive advice platforms, and coordinating wealthtech capabilities.

What Randy has to say

“Most asset managers are not doing well in this transition from an investment product to an investment process. We have to find ways to turn their value add and value proposition into data and information they can sell.”

– Randy Bullard, Global Head of Wealth, Charles River Development

Read the full transcript

Jack Sharry: Hello, everyone. Thanks for joining us and welcome to WealthTech on Deck. So glad you decided to spend some time with us as we talk about the future of financial advice. As our listeners know, I have the privilege of speaking with industry leaders each week about issues that challenge and move our industry forward. We talk about the confluence of human and digital advice, wherever it might take place. That’s wealth and asset management, retirement, insurance and annuities technology. And our guests are working on these strategies to help advisors, investors, participants and firms enjoy better financial outcomes. Today, we’re speaking with Randy Bullard. Randy is someone I’ve known for a long time, I’m sure that’ll come up. Now and again, in our conversation. Randy is the Global Head of wealth management at Charles River Development. Randy, welcome to WealthTech on Deck.

Randy Bullard: Thank you very much, Jack, I’m super excited to join you.

Jack Sharry: Great, terrific. So Randy. Yeah, let’s start with the you telling our audience about Charles River and about your role there. I’m Charles River has a big name in our industry. But just to give those that may not be that familiar. Tell us about the firm and tell us about what you do there.

Randy Bullard: Sure. So Charles over development is a wholly owned subsidiary of State Street Bank, day three bought the firm back in 2018. For that, you know, the firm had a pretty long history 30 plus year history, I’m not exactly sure how far it goes back. But you know, a really long history serving primarily the institutional asset management market with core portfolio management trading, you know, OMS type functionality and surrounding functionality, again, primarily in the institutional space. And then starting around the 2010 timeframe, they started to develop capabilities and enter the wealth management market, initially with technology for the adviser discretionary or the rep is pm type operating model for both broker dealers and private bank organizations. And then starting around the 2016 timeframe, the firm started to make some pretty substantial capital investments in a whole new set of technologies for wealth, primarily aimed at the separately managed account unified managed account infrastructure for the industry, as well as some capabilities primarily for X US markets. You know, I came into the firm, about a year and a half, two years after the acquisition by State Street Bank, the wealth business was pretty well established at that point, but it wasn’t organized as an industry vertical, it was a smattering of customers spread across the broader Charles River business. And so when StateStreet purchased Charles River for two and a half billion cash back in the 2018 timeframe, they really had an objective of growing specifically the wealth business. And they thought one of the things they needed to do, you know, to facilitate that was to organize it as an industry vertical business with a dedicated team, and to hire a leader that could kind of lead the charge into that segment. And so I was effectively hired to kind of create the organization and the strategy that we’re executing on right now.

Jack Sharry: So you and I haven’t known each other least I think probably the first time we met was a decade or two. There is a three of us, maybe only two decades ago, when you were at Placemark. You’re one of the founders there. You’ve been around the asset and wealth management FinTech industries for a while. Why don’t you fill our audience in on your background? How do you get started? How did you wind up sitting in the chairs? And then today?

Randy Bullard: Yeah, well, I have an undergrad in computer science. And my early four or five years of career work were really deep technical software development, hardware level device drivers and things, very technical engineering work. But I kind of moved into project management and ended up in management consulting ended up at at Kearney, one of the, you know, kind of higher in management consultancies, and I was a principal kind of driving the development of their it go to market strategy. And from there, it was an interesting set of circumstances, but I was kind of leading the practice that was interfacing with a lot of venture capitalists that were funding all kinds of early stage .com bubble, you know, 1.0 internet startups. And so I was kind of the interface of our firm to that market and got a lot of visibility into capital, raising a lot of different venture firms and was working with a lot of CEOs of those firms, helping them execute on their kind of IT infrastructure strategy. And it led to me effectively making a decision to start a company so I started Placemark at my kitchen table, cut the first check open an account and, you know, went to Home Depot and bought a chair. I was the first.

Jack Sharry: And when was that when Blaze founded?

Randy Bullard: It was in 99 Yeah, that was 1999 really kind of conceptualized it in 97 and 98. While I was at AG Kearney and recruited some folks from Kearney to start it with me and got some capital from our partners at AG Kearney to help get the initial seed going, and then lead the firm through a couple of rounds of funding and an acquisition with a company on the West Coast. And then you know, leisure Davion joined us after that.

Jack Sharry: When he talked a little bit about this Placemarker was pretty important in my historical memory.

Randy Bullard: It was a very innovative firm ultimately got bought by investment in 2014. So, you know, it’s about a 15-year run of really innovating in wealth management technology.

Jack Sharry: And you guys are very sophisticated ahead of your time around tax.

Randy Bullard: And we didn’t know it at the time we came at it from ignorance, you know, we were just trying to solve problems. That’s always the best. We didn’t really understand the industry barriers that we were up against, we just kind of had an eye on the prize. And for us, the prize is actually extremely topical right now. Eyes that we were trying to solve for is how do you individually construct an investor’s portfolio to improve their after-tax return? It was that simple. That’s what we were trying to figure out.

Jack Sharry: I mean, it’s about what you keep now what you make is everything. Yeah, go figure. Yeah.

Randy Bullard: And so we and we looked at the separate account industry, and this is, you know, again, we’re talking late 90s, separate account industry. So model based didn’t exist, and you amaze didn’t exist, these were discretionary managers creating into separate account platforms. And we were trying to fit in yet parametric is one firm that we had very few assets at that time, but they were starting to try to tax manage individual portfolios. And we kind of came out and said, Well, that’s interesting and good. But what if you want to tax manage the whole portfolio? And what if you didn’t just want it to be parametrics strategy, you wanted to be any manager strategy, you just wanted to change how it’s traded to improve the after tax return. And to just solve that problem, we had to tear down and rebuild the business model, we had to say, well, managers can’t trade anymore, because the second thing committee trade, that’s a taxable event. So we have to intervene, we have to interpose ourselves between the manager and the customer. So we’ll How do you do that? Well, I guess I’ll have to send us a model. And I guess we’ll have to take all those models and put them together and do this thing that came to be called overlay management. And we’ll have to put it through an engine that we’ll think about the customer and their tax impact. That’s called Tax optimization now. And so we kind of had to just do all of these things, because nobody was doing. And so we just created model based interactions, and you ma sleep sub accounting and tax optimization. And we started selling it.

Jack Sharry: And by the way, if I made her up, those are all first, right, you were the first to really do that.

Randy Bullard: Yeah, there weren’t names for these things. We just started doing them for different firms, and we ended up then signing up. First, it was McDonald investments, the old broker dealer arm of Key Bank, there was a major sponsor that hired us to run a tax optimized UNA program for them. We didn’t call it that we didn’t know what to call it. It was a tax nice thing of some kind, but it was a tax optimized UNA that had a roster of separate account managers and the individual financial advisor can construct a custom allocation and turn on tax overlay and customize it for ESG or risk, restrict industry sector Guix codes, all kinds of higher order portfolio customization was all foundation with a platform. And it was on the desktop of financial advisors and McDonald investments in 2001. And it became the number one production there all of a sudden, all the FAS and McDonald’s started to use it did the same thing at Piper Jaffray did the same thing at RBC Wealth Management. Then we had kind of the bloom came off the rose with the market events bubble and got into a difficult market timeframe. And then we really took off and launched a huge program for Smith Barney and really just started knocking them down. We were really signing up in building in house UNA programs as an outside overlay manager. For a lot of you know, the firms in the industry, we probably were running 30 or 40 Different UMA programs had really solid flows. And that’s effectively when you know invest net bought the firm. So it was a great ride on a fun, invented a ton of really interesting stuff that in hindsight, is very topical to what’s going on in the market today.

Jack Sharry: It’s remarkable. I mean, I lived through all that. I’ve watched you guys known you and the team at Placemark. Well going back to those years, and everything you’re saying is like current day conversation, so why don’t we jump ahead to what you’re doing now with Charles River because you guys did some pretty incredible stuff back then. And I gotta believe you’re doing more if not even more going forward. So talk a little bit about what you’re excited about what you know, the Charles River some of the things you’re building there.

Randy Bullard: And you know, coming into Charles River, it was really interesting or great foundational set of capabilities and technology. And the firm had started like I said earlier in about 2016 building an entire new technology stack for SMA UMA from scratch and let’s just start banging code from scratch on and think about that timeframe. So SMA UMA is not new at all model based interactions are not new, but most of the technology platforms that run most of the infrastructure in the industry are at SMA UMA are very old. And so it was an opportunity In order to step in with well established industry practice in partnership with two really of the largest wealth management organizations in the world, effectively saying We will partner with you Charles River to purpose build a new technology stack, that is a better way to implement SMA, infrastructure at scale. And so that was the partnership that had been well in flight when I effectively stepped into the role. And so I was able to kind of catch a lot of that work in flight, and bring it all into production. So in the last three years, all of those capabilities have now come to market, we build a new platform called the wealth hub, which is a different cloud based infrastructure for interacting with both discretionary and model based separate account managers, we’ve implemented a next generation sleeves of accounting infrastructure to support the portfolio management process. And probably the thing that’s most exciting to me, and it won’t surprise you, given the history of place mark, is a product we call tailored portfolio solutions, which is our engine for doing higher order portfolio personalization, via optimization. So it’s tax optimization. It’s ESG optimization, it’s direct indexing, it’s you ma kind of management across multiple accounts and registrations. It’s really kind of the product that that I dreamed of when I got here, you know, it was like, okay, we can get the basics if we can get the infrastructure solid, to where we can run a million fee based accounts and run them well and have them compliant and have them operated efficiently. Can we put on top of that, a next generation engine that can act on all of the investable information that’s now available about an investor and deliver a superior solution and allow wealth management platforms and organizations to really, you know, kind of up their game and offer more advanced capabilities and features across the board to all of their customers. So that’s a product that we’re really leaning hard into. We built it in partnership with the Contigo Acciona team, they’ve got a great underlying optimization engine that we’ve integrated. And we’ve got multiple customers that have already signed up. And we already wants to be one of it earlier this year. So we’re in production and kind of running real hard, right?

Jack Sharry: So talk a little bit about that, you know, every time I pick up the industry, rags, mercy, read publications, I’m reading about direct indexing, and you amaze the beginning and end of it all ESG hyper personalization on if you’ve heard that term, here that’s making the rounds. So talk a little about that. What’s your look at where we are now? And also curious, where do you see it all going in terms of it is becoming much more digitized, much more personalized, much more tax aware, much more values aware call it talked about that, if you would.

Randy Bullard: To me, it can’t be overhyped, it is truly transformational. We are I think, at the very beginning of a secutor, one way and up into the right, you know, transition away from investment products to investment process. And products, investment products are getting abstracted down to data, a product is represented by its data, whether that’s alpha, whether that’s beta, whatever it is, the portfolio construction rules and inputs. But at the end of the day, it’s process, how does that get implemented in the context of an individual customer has to be done at an individual customer level, which means it has to have all the information about the customer to make those decisions appropriately. And so in that kind of end state that just changes so much of how the industry operates, the role of the financial advisor, the role of asset managers, the role of technology. And so, you know, to me, direct indexing is, you know, one manifestation, hyper personalization, increased focus on tax optimization, ESG application and individual investor level, all of those are manifestations of this transition from product to process. But I think we’re, you know, we’re undergoing in the industry right now. It’s huge. It’s exciting. I think it’s been ongoing, and we’ve been in this for a long time. But it’s really only been in the last two or three years that a lot of different technologies have started to come together, that break through a lot of the barriers that make this hard to do. It’s complicated to do this kind of stuff. And it’s only really been with recent technology development that it can be done well. And at scale.

Jack Sharry: You and I haven’t had this direct conversation. But some of our colleagues have talked about this. And I promoted the concept of UMH. You know, a long time ago, unified managed household. You were one of the early voices. Yeah, actually, we had Len Reinhart on this show, and Len wrote a white paper on this in 2001 2001. Our take is that it’s still ways away, don’t get the full we actually stopped talking about because there’s a little too far of a stretch. But certainly everyone’s we went with a term comprehensive advice platforms, because that’s what’s been happening and people have all sorts of different versions of what that might mean. But it’s all fine. It’s all moving in the direction of a lot of what you’re talking about and more. You haven’t talked much. You mentioned it but I’d love to hear more about your thought around multi account, Multi Product Multi Product type annuities as an example, there are alternatives what have you where do you see that’ll going around the whole comprehensive advice platform where multiple capabilities are being looked at.

Randy Bullard: Those are all, you know, kind of forms of what I was saying of the movement from investment product to investment process, the UMH you know, UMA and other you know, you probably remember as I do kind of there were a whole bunch of three letter acronyms MSPs, and MBAs and all kinds of there’s a lot of confusion is the industry was trying to figure out what do we call these things? And we start to put different things that historically haven’t gone together in one account into an account. But it was still generally oriented around an account. And we all had this industry acknowledgement that Yeah, but nobody has one account. Everybody has multiple accounts, they have to for legal registration purposes. And so what is this construct, but the second we kind of started to talk about this contract we put UNH is the moniker that kind of bridged you know these things, because it can’t go in one product, because it mixes apples and oranges and Volkswagens, they don’t go together. Then it really, you know, I think we kind of by putting a label on and calling it a UNH, everybody looked around and said, Do I have one? Or do I not? And the answer is not binary. UNH is a process. It’s a way of collecting disconnected things and making decisions at a client level that span all the stuff that the client has. And so it’s a process, it’s not a product. And, you know, I think we’re on the journey, we’re further than we were, you know, in 2001, when Len and myself were talking about and you were talking about UMH, but we’ve still got a huge, long ways to go, you know, what you and the, you know, kind of some of your retirement efforts. I know, you know, focused on annuities and stuff, like that’s a whole world that I’m not that familiar with. But I think there’s a lot of value to add there. But just being able to knit together the decision making across a client’s retirement assets, taxable assets, 401k assets, play money in their brokerage account, assets that they have sunk in their house and other fixed assets, pulling that together and making better decisions across that pool of assets is an obvious win, if we can just get the data and build the process to execute on it. And that’s the journey that the industry has been on for, you know, 20 plus years. And we’re, I feel like barely getting started on it.

Jack Sharry: Yeah, yeah. Well, it’s exciting. I share your excitement and enthusiasm. I’d love to have your comment on this. I think we probably have a similar mind. You mentioned you’re working with axiom. I’m sure there’s probably some others that you’re working? Well, I know. With us, we find ourselves work with planning tools and annuity companies and security tools. And we were all sorts of different stuff, some of our stuff, some of its other people’s stuff. And certainly with data aggregators, and a variety of different planning tools and proposal tools, all the different stuff of a human nature. Again, we call a comprehensive advice platform just so it doesn’t sound so scary. In any event. Curious about that, it seems, what are your thoughts on this, our take is that we’re gonna be more collaborating, we don’t compete so much. And I think there’s a firm we share that axiom was working with that, where we do certain things and you do certain things. And together, it’s a better thing. So we’ll talk about that if you were to that whole collaboration. And sure, coopetition, I guess you might call it.

Randy Bullard: Yeah, I mean, listen in this business environment, and also technology environment, you know, with microservices and everybody’s API connected. And it is, collaboration is required, and also easier to do. And so we’ve got lots of partners, I mentioned Acciona there, they’re a great partner. But we have tons of partners, we’ve had over 140 contracted, named partners in the broader Charles River organization, a subset of those are specifically on you know, on the wealth side of the platform, it’s super important that you know that your open architecture that you play well with the rest of the industry, Charles River, primarily kind of sits you know, most of our technology is aimed at other financial advisors for advisor discretionary rep is pm work, we have a specific stack there, or for the home office to run large volumes of fee based accounts in different product configurations. And so we don’t have we’re not in the financial planning business. We don’t do client suitability assessment. We don’t produce proposals, we don’t do CRM, we don’t do all the things that most FAA spend most of their day doing right interface by definition, with all of the upstream systems that our customers work, we have to perform those functions, we rely on a lot of data that comes from those systems to manage the money and do the things that run the compliance processes and all the things that we do in our core operating platform. So it’s critical to everything having good, good working partnerships.

Jack Sharry: One of the distinctions I’ve made, as I’ve described what we all would your company does, our company does, we do slightly different things close but not exactly the same. Probably some overlap along the way, I’m sure and this came from one of our clients actually actually handy Sam, Christine was talking about how connected and integrated they are with all their partners who were one of those and I made the comment back to one of the people that works Randy, that it’s beyond just integrated and beyond connected, it’s coordinated. We have a particular function we were the tax folks were the income folks, that’s what we do. But we have to coordinate with the data with the planning with the proposal with the trading with a booth. That’s just how it works. We gotta coordinate all that we, it’s more than integration, because all that’s integrated. But if you don’t coordinate to create the alpha, we seek to create Ron taxes, it has to be a coordinated effort where you need to know a lot about that done to the tax lot level, all the detail in terms of what the plan objective is, what the asset allocation, what Aladdin suggests all the stuff that we have to consider and talk about that because if you get it, you understand this stuff, that whole issue of coordination instead of a next level, something that I think a lot of people putting, we find, you may find the same, but a lot of people that are putting together platforms are recognizing it’s more than integration. It’s more than connecting it’s coordination.

Randy Bullard: And that coordination is all around an overused term data centricity. It’s all about the data, everything’s about the data, who has the gold copy of what data? When is data maintained? How has it changed, who has you know, what’s the audit trail on it, you have to ingest lots of data to do your function, whatever your function is, and a large portion or all of that data that you ingest come from somewhere else. And so the sequencing, and the coordination that you’re talking about is a, you know, kind of a handing off of data, who touch the data where the data come from, it’s everything now like every every, you know, kind of all the business processes revolve around, you know, the movement touching management of data, one of the ways that we see it most is in kind of a pretty old school term, if you will, it’s the overnight batch process every night, the core, Charles River platform is usually at the center of how the large, you know, these really large financial institutions manage millions or hundreds of 1000s of accounts. And so every day, there’s an overnight process of pulling data from custody systems pulling data from pricing systems pulling data, there’s lots of data sources that all come into Charles River, and they’ve all got to be sequenced through a large batch process that does this first, and this second, and this third, and all of those are time and sequence with different data inputs. And so it’s a huge portion of every one of our projects to work with our partners, and potentially other vendors, not potentially always other vendors that are feeding that data from outside the organization, to ensure that we can do all the things that need to be happened, you know, to support a good beginning of day, you know, as a SAS operation, you know, we run it all. So, you know, our team is running. So I get all the set one alerts, I get all, you know, I have no personal responsibility to a degree to oversee that all of these processes run for our customers. And when they don’t run when anything happens when we have when something goes bump in the night and some data feed doesn’t happen. I get that alert. It’s really critical that all of that, you know, happened, and it’s a big part of what we do is make sure that that sort of thing, and those handoffs happen well.

Jack Sharry: So we’ve been largely talking about this. But is there anything we haven’t talked about in terms of where you see the world going? This is all early days, I think in terms of what you and I are describing. But where do you see it going is just getting better and better, faster? And faster, more and more refined? Where do you see it all gone?

Randy Bullard: I mean, you know, I think we’ve talked through, you know, I think all the trends around portfolio personalization are one way up into the right, and we’re gonna see a steady movement, one way movement, packaged products with tenure track records, as the thing to individually constructed portfolios that may use the data that drove those old products, but use them in a totally different way. And I think the industry is going to be, you know, making a very difficult switch, it’s going to be difficult for a lot of firms over the next decade. The other thing we haven’t really talked about, you know, before I got to Charles River, my prior couple of years, were at sig fig, I was kind of leading their enterprise rollouts of their underlying kind of digital advice, robo advice type solution to UBS and some other you know, firms, I continue to see a big convergence of these spaces and the Home Office organizations, so many of the robo advice and digital advice and consumer side of the platform was siloed off it was built over there, it was optimized around a direct consumer experience. And the fee base platform that our financial advisors used is over here. And it’s built different way of serving a different set of needs and a different set of customers. And more and more firms, I think are starting to realize these are one platform, they have to be one platform, customers will start in one and go to the other. Either direction, there’s a whole bunch of things. And so a lot of firms, I think what UBS has done and acquiring Wealthfront and some of the innovation they’re doing on their side is indicative of of some aware of the you know, the larger platforms are going to go as well. I think that’s a fascinating space. I think firms that are innovating around the digital experience for their customers. And how does that marry up with the full service offering their financial advisors a lot of innovation, their our product is a little more middle office than that that’s more kind of in the FAs desktop. But I think it’s fascinating space and one that, you know, we’re our product direction is, you know, taking us to.

Jack Sharry: Also fascinating. I’m sure you don’t have to comment if you don’t care, too, but that they hired Naureen Hassan, Hassan. Yeah, it’s kind of interesting. The CEO at NBS in the Americas is, at one time, she was head of Schwab digital and she also had a senior role at Morgan Stanley.

Randy Bullard: Very very strong digital consumer facing and digital wealth backgrounds.

Jack Sharry: So yeah, that’s the wealth front, you know? Yep, exactly.

Randy Bullard: So she’s coming into a lot of new assets. It’s great opportunity. I think it’s very interesting. 

Jack Sharry: Yeah, I think she will shake up the industry. Once again, this is a lot of what’s going on here. So this has been fascinating. We’re nearing the 25 minute mark, where which we try to start to wind things down. So what are three key takeaways you’d like to share with our audience? You’ve covered a lot of ground. So that’s gonna be hard. But what are three key things?

Randy Bullard: You know, it’s funny, because you’d asked me, you know, Hey, Randy, come up with a think about that, what are your top three. And as we’ve gone through our conversation, today, we have nailed all three of my big three. And that was not deliberate on my part, you know, we are in a sector shift from investment products to investment process. And I think people just have to understand, and particularly asset managers, and this is hard, like, I kind of feel like I’m just a truth teller, I’m just delivering the news. Don’t be mad messenger. But most asset managers are not going to do well, in this transition of from investment product investment classes, we have to find ways to turn their value add their value proposition into data and information that they can sell, which is a really difficult concept for, for a lot of asset managers. The second thing is, you know, as we make this shift from product to process, it’s all about the data. So investment management products become data, and financial advisors become data collectors and maintainers. And understanding that and having that mentality, I think is critical. And then the last one is what we were just talking about, you know, this distinction between the consumer facing platform, and the financial advisor facing platform, those distinctions have got to be erased and increasingly are being erased. There’s one platform that’s very consumer oriented, whether that consumer is going direct, they’re going through a call center, or they’re going through a dedicated high net worth, you know, oriented financial advisor. And all firms are kind of, you know, trying to figure out how to go about doing that.

Jack Sharry: And we’ll have to have you back to talk about that. I refer to that as convergence where you see workplace and wealth coming together. Morgan Stanley is a perfect example II trade workplace Eaton Vance Parametric, though they’re well, already strong wealth management, business all coming together. And ultimately, that will be one platform. They’ve been quite public about that. So but that’s for another day, we’ll have to get into it down the road here. So one of the things I already is that I love to ask is, and this is as we looked at close closers session for today is, what’s something interesting or unique you do outside of work that people may not know about, you would find interesting or surprising.

Randy Bullard: You know, we will find out my youngest son just graduated from high school. So my whole life to this day has largely gravitated around getting them out. I like to scuba dive, I would like to do a lot more diving. I think I’ll find more time to do that. I also am really looking forward to being able to just travel a lot more with my wife now that now that we’re empty nesters, so looking forward to that.

Jack Sharry: That’s great. That’s great. Enjoy. So Thanks, Randy. This has been a great conversation. I had high expectations, as I often do with people like yourself have been around a bit, but you’ve exceeded them. So thanks for that. And for our audience. If you enjoyed our podcasts, please review, subscribe, and share what we’re doing here at WealthTech On Deck. We’re available wherever you get your podcasts. Randy thanks again. It’s been a real pleasure.

Randy Bullard: Thank you. Great Jack.