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Using Transparent Data and Personalization to Build Trust and Improve Client Outcomes with Lori Hardwick

In this episode, Jack talks with Lori Hardwick, Chairman of Riskalyze and Board Member at firms like Orion Advisor Tech and Cetera Financial Group.

Lori began climbing the financial services ladder working as a wholesaler. In 1997 she had her first baby and realized the wholesaler lifestyle didn’t mesh with motherhood. So she pitched an idea to her senior executive team about starting an RIA program back when RIAs were still relatively new to the industry. She then left to start her own firm, Envestnet.

After decades as a leader in the industry, Lori describes the successes and failures that sometimes unfold when old tech meshes with emerging tech, and why culture determines the success of that merger. She also describes why financial tech is in direct competition with giants like Amazon and Google, and why our technology must allow clients to engage and interact in a way that’s personalized.

Jack and Lori discuss the importance of showing clients quantifiable benefits, why advisors should take inventory of the software at their fingertips, and the necessity of hyper-personalization.

What Lori has to say

“I truly believe that transparency and the ability to interact digitally will build trust with the advisor. The more [the client] can see, the more they trust their advisor. And that is critical to building those long-term relationships and keeping those clients happy.”

– Lori Hardwick, Chairman of Riskalyze

Read the full transcript

Jack Sharry: Thank you for joining us on WealthTech on Deck. This is the podcast focused on wealthtech strategy where we talk to industry leaders about the future of digital and human advice, much like I do every day with people around the wealthtech industry. I’m going to have a conversation with a leader in our space and we’re going to talk about enabling advisors and their clients and firms to enjoy improved financial outcomes. Today we’re going to talk with Lori Hardwick. Lori is the chairman of Riskalyze and on the boards of Orion Advisor Tech, Cetera Financial Group, and many other firms. She’s one of the leading industry voices on investing in wealthtech and making a difference with financial advisory firms, their advisors, and clients. And she is a lot of fun. Lori, welcome. Good to have you here.

Lori Hardwick: Oh, thanks, Jack. I’m excited to be here to talk with you. Always a pleasure.

Jack Sharry: Yes, great fun we’re gonna have, I can tell. So Lori, tell our audience about your journey in the advisory and wealthtech space. You’ve worn a lot of different hats and continue to wear many. How’d you get your start? Love to hear some of the highlights of your career.

Lori Hardwick: Sure. So you know, I feel so fortunate with my path. It was not one that I actually set out to take after I graduated from the Ohio State University. Like a lot of people, we kind of fall into financial services. And that was my case as well. I graduated and actually went to Chicago and went through one of those, you know, kind of early graduation headhunter experiences and ended up at a bond shop, muni bonds is what we sold, it was called Griffin, Kubik, Stevens & Thompson. And I worked for the principal, one of the principals of the firm, Larry Stevens, who I learned a ton from. But back then, and that was in 1991, you know, it was very clear that at… at least at that firm, all the sales men were men and all the assistants were women.

Jack Sharry: Yes.

Lori Hardwick: So that… I lasted about three years there, really enjoyed it and really, you know, learned a lot but knew that that couldn’t be my future, if I really wanted to continue to stride up the ladder. So I then took that experience of working with muni bonds and became a wholesaler for Nuveen Investments. So much like you, Jack, I started early in my career as a wholesaler. And as you probably can agree, there’s no better… there’s really no better foundation for learning the business…

Jack Sharry: Best training ground in the universe, I think.

Lori Hardwick: Yeah. Learning the business, that’s where I really found that I loved working with financial advisors and, you know, really felt a calling, if you will, that’s maybe too overt. But I really did feel passionate about helping financial advisors. I loved what they did to help, you know, to help clients meet their financial goals, and I thought there was nothing cooler than being kind of a supporting actress to them. So I did that for about five years, I had my first baby in 1997. And, as you might expect, wholesaling didn’t mix perfectly with having a child. So I was really fortunate, my boss at the time, Ami Tully, gave me the opportunity to kind of figure out what I could do next inside Nuveen. I pitched an idea to the senior executive team, about starting a RIA program. And back in 1997, that was really very early in the origins of RIAs, and especially for Nuveen, who worked with, you know, the big wire houses.

Jack Sharry: Sure, sure.

Lori Hardwick: So but that worked out fantastic. I… They funded the program. I became head of the very first RIA division for Nuveen. And we were really allowing our research on municipal bonds, which was fantastic at Nuveen, it still is, to work its way through the newfangled email system, to… to get to those RIA desks and it worked great. So obviously today, the RIA program there is one of the largest divisions. So I feel really fortunate to have been given that opportunity. Five of us from Nuveen then decided to take off and start a little firm called Envestnet. Left with Jud Bergman and four others, Bill Crager, as well. And we started the firm in December 1999. And so you know, being on the ground floor of this new, if you will…

By the way, I don’t know if I’ve ever shared this with you, but I was head of distribution at Phoenix Investment Partners and one of our partners firms that we bought was Roger Engemann & Associates, one of the… a renowned growth manager back in the 90s, and so on.

Jack Sharry: Yeah. 2000s. And I was out visiting Pasadena. And there were these three crazy people visiting Roger named Jud Bergman, Lori Hardwick, and Bill Crager with some crazy idea called Envestnet. And I said, that’s never gonna fly. So, how wrong can one be. But go ahead, sorry.

Lori Hardwick: That’s great. You know, those were early days. They were sweet days. They were also you know, as you know, it’s a lot of blood, sweat, and tears as well. So the culmination of all that in 2010 to take that company public was, you know, just so wonderful. Ringing the bell on the New York Stock Exchange, it’s just, you know, one of those days you never forget. I was there at and Envestnet as president… Group President, which… of the core business until 2016. And really what that meant is anything relationship management, sales, training, you know, anywhere we were interfacing with clients, that was, you know, the folks that I was working with. So in 2016, I got wooed away by Pershing, I became COO at the parent company level at Pershing. And then after that, I started my own company with Mike Zebrowski called Advisor Innovation Labs. We sold that company, you won’t believe this, March 6, 2020.

Jack Sharry: Oh, really? Good timing. Good timing.

Lori Hardwick: Yeah, it was good timing. So we sold that to Envestnet, and it’s still thriving today. So that is kind of the background that I have. And, you know, kind of brings us up to today, anyway.

Jack Sharry: So I want to hear more about today and what you’re working on, and we haven’t had a chance to catch up on all the detail. And I know you seem to be everywhere. Providing good thoughts, deep thoughts, wonderful thoughts around how to drive business, whether you’re a wealthtech or an advisory firm, and all this stuff’s coming together anyway, it’s all… it’s all wealthtech, in my view, and just how you how you play that out. And I know you’re involved with private equity and lots of different stuff. So talk a little bit about what do you… what are you working on today? What’s… a lot of strategic advice, you’ve been around a while and know your stuff. And how are you contributing that?

Lori Hardwick: Sure. So today, I have my consulting firm. I’m CEO of Wealth Tech for Red Rock Strategic Advisors. I work with Matt Johnston on that, who’s a fantastic guy. And then I also am a strategic advisor… or on the strategic advisory board to Genstar, which is a huge private equity firm out of San Francisco. They on Cetera, they own… the most recent one we worked on together is the Brinker and Orion deal. So I really believe my entire career has brought me to this point of where I can be, you know, valuable and impactful for these M&A deals. I love working with the folks at Genstar. We see things very similarly for how to help these companies grow and, and really fortify them with the pieces they need to be bigger and better for their clients. And so, you know, in a lot of what I see, Jack, like in the industry itself, and I mean, this isn’t, you know, groundbreaking but it’s happening more and more is kind of marrying up that old technology to new technology. And certainly back in my Envestnet days, Jud… no one was better than Jud Bergman to kind of bring those things together and I lived it over and over and over. We were serial acquirers. And so I have a lot of experience in kind of seeing what good can come from that. And also, when it fails, what doesn’t come together as well. And to be able to kind of stand in front of the train and say, “Let’s not do it this way. I’ve seen this movie before.”

Jack Sharry: Yeah, I think you’d agree. I’d love to hear more about this. This stuff’s complicated. And people set up a system one way, and another group sets up another way and they want to, they… it looks like they have complementary capabilities, but they don’t talk to each other. It’s… the nits and grits are pretty complicated. Not to mention the strategic cultural issues that come along with it. Talk a little bit about that, because it sounds like you must play in the middle of all that.

Lori Hardwick: Yeah, so, I mean, I definitely would not downplay cultural. Cultural is probably the biggest indicator as to whether that marriage will work or not, and it can be hard. I know at Envestnet, when we bought Prudential, for example. Prudential was super buttoned up, all their clients were buttoned up, you know, banks for the most part using their wealth management platform. And that’s why Envestnet hadn’t won that business, because we weren’t buttoned up enough for those clients. And so, you know, I remember when they came on board, the… that team, they were super, you know, super talented, but wired differently. We were getting executive reports before we went into meetings. We’re like, “What are you doing?” This is what we were. And so, you know, I… but I still see that happen today is, you know, that cultural divide, if you will, can make it or break it. And then with the technology, as you take that even further, you’re right. The code bases are, you know, it’s more complicated than one might think. But it’s also about the people.

Jack Sharry: Yep.

Lori Hardwick: Because what happens is that the people want to hang onto their code and want to hang onto what they’ve created. And so having a very strong leadership that says, “No, we’re going to pick this horse. And you’re going to fold into that code,” can sometimes be very difficult for firms to make that, you know, kind of heavy handed decision. And so I think that, you know, ultimately, as firms are building kind of the old into the new, it’s really important to remember that it’s not quite as easy as it might seem on paper. What I do think has changed about the industry, and I think is great for our industry is, you know, the data transfer from one to the next is so much easier than it used to be. You know, seven years ago, the whole idea of APIs came to market, allowing us to transfer, you know, data from one application to the next without that code having to sit inside the other codebase. And so, you know, as far as accelerating experience, I think that has helped a lot just to have the connective tissue there.

Jack Sharry: Yeah, let’s talk about that. Because as you can imagine at, at LifeYield, we’re API driven. We work with lots of other folks’ software. And we’re a component part, we think of ourselves as pretty important. But it’s all about how you work… how you play nice in the, in the code sandbox, if you will, in terms of creating a more unified managed household. Remember that term? Well, it’s coming back. And let’s… we’re working on that, virtually every major firm is working on it, in one fashion or another? So maybe as we shift from what you’re doing now, which is trying to make all this stuff work together, where do you see it all going? And I’m assuming API is at the center of it. That, in other words, for those that may not be familiar, might want to explain what that means. Not in a technical way, but just basically a way that you can have, you can all play together as your APIs talk to other APIs. And so the user experience is a consistent and clean one. But maybe talk about that, and also where you see the world going in terms of wealthtech, investment, and advisory, all that kind of stuff. Where… where are we headed?

Lori Hardwick: Sure. So I think that, you know, first of all, with APIs, that is just a more simplified way to transfer certain data points from one application to the next. And you have to have, like you said, Jack, two firms that want to work together for that to happen, you have to have two willing parties. And you know, frequently, when you see API data transferring from one application to the next, it can only, you know, sometimes it’s only one way. What we are moving towards in the most recent years is a push and a pull. So it can show up in both applications. But what I see happening mostly with the very large firms like the Ceteras and, and others, they want their own rendering of that data to their advisors and to their clients.

Jack Sharry: User experience, right?

Lori Hardwick: That’s right, the user experience. And they, you know, they just don’t want to look and feel like everyone else, I mean. So when they’re kind of picking their own best of breed for those modules that they want to show up to their advisors, and to show up to their clients, they’re being very deliberate in the way that those choices are made. And then how those applications talk to each other. A lot of the time drain on advisors is taking, I call it the swivel chair, in fact, you know, taking one piece of information from one application and then taking that into the next and then the next and the next and the next to try to build a really comprehensive, holistic story for the client. And so if we can use technology to kind of make those connections for that advisor and make the story you know, reasonable for that advisor to just be able to click in and see it all in one place, that will build capacity in their day and ultimately, I believe, help them, you know, allow… or allow them to, you know, really serve more clients. And that that’s the whole point of, you know, what we’re trying to do.

Jack Sharry: And if I may, I’m gonna do a variation on that. Translate it slightly differently just to make clarity because I… as I talk to a lot of people about what you and I are now talking about they… their eyes glaze over “API, what are you talking about?” I’ll just use the example one of our clients, Morgan Stanley, basically, they own the user experience. They own the desktop, it’s called WealthDesk, and they have a planning tool called GPS, Goals Planning System. They got a bunch of stuff, and it’s all connected. And then they work with lots of vendors like us. And LifeYield does tax and Aladdin does risk at Morgan Stanley, and they’re working on issues around cost. In other words, what investment costs, with the whole idea of how do we improve outcome? That’s all where this is headed, right, is how do we take all this complexity, all this data that used to be different, now it’s getting rationalized or synthesized or whatever the right term is, but the data flow is consistent. And then the issues of cost, risk, tax. We also do a lot of work around Social Security, including that as part of an income stream as an example. So how do you pull it all together via API, back and forth, push and pull, as you described, right? And the whole objective, and this is more for our audience, because I know, you know, all this, but just… is basically is… ultimately about how do you improve outcome? How do you improve a better advisor experience and outcome for them, frankly, financially, because if they do a better job, they have more clients and more assets and so on. But ultimately, it’s about the investor, if you can help improve their outcome. That’s all a good thing. So I’m, I’m assuming that’s the sort of stuff you work on day to day, maybe want to amplify that just a bit more?

Lori Hardwick: Oh, yeah, absolutely. I mean, it… Yeah, that experience and outcome, is you know, critically important. And, you know, connecting the dots for the end client to be able to see everything in one place, is critically important. I think also what gets underplayed in our industry is, you know, that we are up against, you know, whether we want to be or not, up against the Googles, the Amazons, those experiences…

Jack Sharry: The Walmarts are coming.

Lori Hardwick: That’s right. I saw that this week. So you know, I think that, you know, we have to up our game in several areas. And one of those is that even now, when we’re rendering information to end clients, it’s most often read-only. You know, they can go in and they can see it, but what can they do with it? And, you know, one of the things that I, you know, we were building at AI Labs is kind of this system of engagement, where end clients can actually do whatif scenarios and that the advisor is prompted to see that “Oh, Lori Hardwick’s in there doing a what if scenario. What does that mean? I’ll give her a call.” So not cutting the advisor out, but making sure technology becomes additive to the relationship and brings that client into the fold of using… utilizing that technology, bringing them back over and over. Because every time that client interacts with that advisor’s technology, they are looking at that as their experience with their advisor, even though they’re not calling them. And I can tell you the millennials, nothing annoys them more than to have to pick up the phone and call and ask for “What’s… what’s the balance of my account?” or, how, you know, “Did that transfer go through?” They want to see everything in the palm of their hand. And so we need to make sure we’re not just allowing for the transparency to that data, but also the ability to interact with it. And you know what, Jack, the one thing I truly believe is that that transparency, and ability to interact digitally will build trust with that advisor. The more they can see, the more they trust their advisor, and that is critical to building those long term relationships and keeping those clients happy.

Jack Sharry: Totally. So I’m gonna add a piece here that… I don’t know if you’ve seen this data, but I’ve been following it lately. It’s been popping up all over the place. And it has to do with the Baby Boomers. I’m familiar with them as I are one. That four times as many people… the, the run rate of people retiring was four times as high in 2020 versus 2019.

Lori Hardwick: Interesting.

Jack Sharry: 1.1 million people, baby boomers, retired in 2020 versus 250,000 the year before. McKinsey did a study, there’s a 350% increase in money in motion. And that’s largely because people are, basically what’s happening is they’re retiring or being retired. That’s also big component of that retirement. As people are in their 50s and 60s, basically that they’re high end of the pay scale and when firms cut back, they cut back the high end, backfill with the younger and less expensive folks. That’s just the reality of what happens. So what’s happening is more and more people are retiring and as they retire, and oftentimes that retirement is abrupt and not exactly planned. That… a big challenge going forward, and I’d love to get your comments on this, is how do we help these baby boomers who are not gonna get a paycheck anymore create a paycheck and draw income and make sure that it lasts, and all that sort of stuff? I would imagine, I know, you’re the Chair of the Board of Riskalyze, where they talk about risk. And I’m sure it’s something that I know Orion’s doing a lot of work around this kind of stuff and you’re on that board. So talk a little bit about where you see all that going, as these baby boomers retire? And all this money needs to get drawn down?

Lori Hardwick: Yeah.

Jack Sharry: What’s your prediction? How does that play out over the coming years?

Lori Hardwick: Well, you know, it’s a great question. And certainly the market has been, we’ve been at a very bull… bullish market. So you know, that can… those assets continue to grow, even though you know, kind of historically, you look at, you know, retirement income, and how… or assets and how they dwindle. But they’re actually growing at a relatively rapid rate right now. And I am also on the board of Vestwell, which is the retirement, you know, platform that really is a turnkey asset management platform for retirement accounts. So and I know you know Aaron Schuumm. And you’re right, at Orion, we’re, we’re very much focused on that business. I think that the general technology that we have, is so focused on getting you to retirement, that we don’t have a lot of technology built for after retirement. And, you know, there’s so many emerging firms coming out, I’m sure there’s someone thinking about that. But… and I’m sure LifeYield probably has…

Jack Sharry: Yeah, it’s kind of what we do.

Lori Hardwick: Exactly. Has some really good, you know, solutions for that. And so, you know, but I see it also on the millennial side, Jack, you know. Millennials see themselves kind of retiring, if you will, every three to four years. They’re like, “I’m gonna work three to four years, and then I’m gonna retire for two, and then I’m gonna work again,” and our systems in financial planning technology is not set up like that. Nor are… is the advisor mindset. And so we need to start, I always talk about what a great listener you are. And I know you’ve written the book on listening. And, you know, we, as an industry need to listen to what those clients need, so we can match them with the proper technology that will fit their desires.

Jack Sharry: Well, thank you for the plug of my book, Authentic and Ethical Persuasion. It’s about listening and compelling storytelling. So I’ve done a little bit of both, so. So our time draws nigh as we want to keep these to around a half an hour. So let me get a couple, two more questions for you. The first is, what are three key takeaways you’d like to leave our audience with today? What are… what are things that are on your mind you hope others will remember as they go about their daily lives in this crazy world of ours?

Lori Hardwick: Well, one thing I would encourage advisors to think about, as you know, the statistics show that every advisor, on average uses about 5-10% of their total… of each software’s total power. So start taking inventory of what you have already under your fingertips. I know there’s a lot of new emerging technologies, but all of the technologies you’re already using are branching out and adding new functionality and features that you may not even be aware of. So I would really encourage people to take an annual review of that, because there may be solutions up underneath your current providers that you are not even aware of. The other thing I would say is, you know, make sure that when you’re picking a technology partner that you’re not just choosing for today, but also for tomorrow. How do you plan to grow your business? What are your clients up against, from a, you know, well, like we were talking about, are they mostly retiring? Is there a way for them to see and for you to manage those retirement assets the way you once did during that accumulation stage. And so I would really encourage you, when picking a partner, to pick it for the long haul, and be asking the questions for the future of your practice, not just for today. And then last, the hyper personalized, I mean, you know, McKinsey just came out with that hyper personalized technology. Know that that is not just needed, but expected right now. And it’s not just about technology. It’s also about the way that you interact with the client, whether it’s marketing, whether it’s content delivery, and… and also even in their own portfolios. If, you know, if they have an ESG tilt or if they want to… If they’re a, you know, CEO, and they’re a woman, maybe they want to invest in women owned businesses. You need to be listening to your clients for what is going to create that hyper personalized, you know, experience and make sure that you’re ready for that. That is my… that’s my three, I could go on. But that’s… I’ll stick with those three.

Jack Sharry: Sounds just right. So one last question. This has been a thoroughly enjoy… enjoyable conversation. I’d like to have you share with us, as we do with each of our guests each week, something interesting or unique you do outside of work that people may not know about you and would find interesting?

Lori Hardwick: Well, I think a lot of people know, but probably, it may be news to some that my husband and I became empty nesters about three years ago, and we moved to Philadelphia. As part of that, I was kind of looking for new ways to meet people and, you know, get involved. And so one of the things that I do on the side is work with Ben Franklin Technology Partners. And what that is, is a shark tank, truly, like literally a shark tank, where the city gives and… gives certain funds to help build jobs to new and emerging firms. So they come in and do a 15 minute presentation to all of us that are on the board. And we give them a passing grade or a failing grade or a conditional pass for more due diligence. And then what’s really been fun is just, A, meeting the other people on the board, but B, really watching these emerging firms grow and thrive within the context of the city of Philadelphia. And so it’s really been an interesting thing that… and I know about all the cool new things, whether it’s a new virtual or not virtual, but you know, mobile carwash that’s coming or new, you know, I’m always like in on the cool stuff that’s coming to the market. And so I really have enjoyed that. And it’s been a fun, charitable, I think of it as charity work because I don’t get… that it’s just a fun way to get involved with my new city.

Jack Sharry: That’s great. Great and making a difference to boot. So good stuff. So thank you, Lori, this has been a lot of fun. I think we’ve just scratched the surface. So we’ll have to do this again at some point. For our listening audience. If you’ve enjoyed our podcast, please rate, review, and share what we are doing here at WealthTech on Deck. We’re available wherever you get your podcasts. And, Lori, thanks so much. This was a real pleasure and a blast.

Lori Hardwick: Thank you, Jack. Always a pleasure talking with you. I really appreciate you having me on.

Jack Sharry: Great. Good to have you.