From
Last month,
FNZ's platform-as-a-service allows financial institutions to transfer responsibility for the technology, investment operations and asset servicing underlying their wealth management businesses. Former U.S. Vice President Al Gore's Generation Investment Management and Canadian pension fund Caisse de Dépôt et Placement du Quebéc took control of New Zealand-based FNZ in a 2018 deal that alued the business at about $2.2 billion.
With a reach of more than 650 financial institutions and 8,000 wealth management firms in 21 countries, FNZ administers more than $1.5 trillion in client assets representing 20 million investors worldwide.
The acquisition represents a big opportunity for YieldX's market leading fixed income portfolio management technology to get into the hands of more advisors. But it also means changes for Green and Gross. The former, who served as YieldX CEO, will become FNZ's CEO of asset management for North America.
Gross will take on a new role at FNZ as head of asset management strategy for North America. The pair will also work to support FNZ's expansion efforts across North America, something
"We have a joint vision of opening up wealth by transforming the wealth management industry through more transparent, accessible, and personalized technology solutions," Tom Chard, FNZ North America CEO, said in a statement. "YieldX's solutions perfectly complement our existing strengths and will further differentiate our offering for the benefit of all clients."
BYieldX isn't Green's first rodeo with entrepreneurship. He got his first taste while he was still a student at Syracuse University, doing his part to take
In the aftermath of the FNZ announcement, Green,
This interview has been lightly edited for length and clarity.
Financial Planning: It's been a few weeks since the FNZ announcement was made. Now that the smoke has cleared, how are you feeling about the changes?
Adam Green: Obviously, I'm excited about this next phase of our progression. But it's not so much about me as it is about what this means for the market, and what this means for advisors in the wealth management community. What's happening in the markets with the yield environment and the rate environment … when we started the company, we had a vision that this time would eventually come. And I think FNZ, to their credit, is incredibly forward thinking about how they provide value to the entire globe of clients that they service. But specifically, when it comes to North America, the demand for customization of outcomes, digital driven advice and really seamless end-to-end technology is huge. It's such a disparate marketplace. And I don't mean that in a bad way. It's just there's a lot of people providing a lot of very relevant but sometimes disjointed services for advisors, and the No. 1 thing that everybody has a shortage of his time. So what we are going to do with this new partnership is we're going to integrate deeply into the FNZ tech stack, continue working with all of our existing partners via Envestnet or Addepar or Schwab etc., and really maintain being that connective tissue. But now we have the support of a massive global operation, a lot more resources, a lot more capabilities. There is no one else out there that has the depth and breadth of capability of technology on the front end, and execution and custody services on the back end, that FNZ does. What YieldX will do as part of that equation is really exciting.
FP: Traditionally in an economic downturn, we see a deceleration in tech spending across industries. But wealth managers are putting their foot on the gas, continuing to invest to make their stacks work better for them, and keeping digital transformation a top priority. What are your thoughts on the enthusiasm we see for wealthtech as we kick off 2023?
AG: Good questions and a lot of points to unpack there. No. 1 is, what does digital transformation mean for wealth managers? And No. 2 is, why are these markets ripe for the type of technology solution we're providing? Digital transformation can mean a lot of different things to a lot of different people. And it's really a function of the existing technology that you either have to augment and replace, or replicate. In North America there have been very large, deeply ingrained players for many decades that have been servicing the wealth management space. And by no means is it simple to build new technology, especially if you think about how preferences have evolved over time, and with the cost efficiencies and savings that are provided to the end user. Digital Transformation is a function of a demographic shift that people have been talking about, but it's coming into the early stages of fruition. The next generation is inheriting that wealth, and it's the difference between being a digital native and servicing a digital native, versus being a digital immigrant and trying to learn how all of these things work. I know those are catchphrases that you hear a lot. But I really, truly believe that. In my peer group, when I talk to folks about how they're managing their wealth, they're oftentimes not using a wealth manager because they grew up with the more digitally enabled retail brokers. Or they're just not comfortable with the way that things have been done in the past.
I think the wealth management space has been very forward-thinking and has identified that as a problem point. And it's reached a fever pitch. What does digital transformation enable wealth managers to do? My opinion is that it enables them to create better outcomes using technology, and better outcomes means, just like digital transformation, different things to every single person. Goals are going to be different because of what we want, what we need and where we're at in our life and our different preferences and tolerances. What we've seen with the use of YieldX over the past couple of years as we've really gone to market is the data is undeniable that people have very different objectives. And if you think about the old school push model of asset management where you take a strategy and you distribute it down in a very homogenous but scaled way to the end user, that doesn't facilitate a personalized outcome. With FNZ we're going to apply the pull model where we're going to use data analytics, automation and machine learning to look at the actual holdings that people have in their portfolios. And then give them better outcomes from really a product, an issue or agnostic perspective. We're not here to tell you, hey, you need to buy XYZ fund. We're here to tell you that if you want this type of return profile with this type of risk tolerance, here's a series of options for you, and you choose what's best. And that's a very freeing journey for an advisor. And it makes them look like they're really focused on the needs and wants of their client, which is the most important thing.
FP: We know you like to innovate and push ideas to the next level. So what are you excited to jump into in 2023? What are your top priorities?
AG: Well, you know, my wife not might not agree with this, but I'm a very good listener. So I really like listening to what our clients are saying, what they need and what they're asking for. I've been blessed with an exceptionally capable team that has actually built the technology that our clients have asked for. And what we're hearing a lot about now is direct indexing. We're hearing a lot about targeted outcome portfolios. And we're hearing a lot about seamless end-to-end execution. Those are things that I think are missing in the market and many places. But so from a product perspective, direct indexing is really a core focus for us right now, because of the market conditions. We launched a product recently with Principal Asset Management where we're providing a fixed income direct indexing solution. So the initial traction on that has been really exciting and incredibly well received. Now that we're part of the global one group of FNZ, it's bringing those capabilities to the entire North American market. It's helping partner with all of the best-in-class providers that are giving flexibility to the customers that are being tech-forward. And that's what gets us excited because we can only be as creative as the market will tolerate. And I think that that's really something that is difficult to balance in the wealth management space because on one hand, you have a desire for transformation. On the other hand, you have an incredibly sensitive fiduciary obligation that these firms have to meet. To not over innovate into something that's going to be contested, or potentially unnecessarily risky. And I think, unfortunately, we saw a lot of that last year with crypto, right? I think that everyone was super excited about the direction that that asset class was heading Fundamentally, and theoretically, we're still very excited about that. But I think as often is the case, with any sort of extreme innovation that you go through, you go through a maturation process and you have to really be willing to tolerate that type of volatility. Both in the asset class itself, but also in the operational part of how that asset class is tapped into.
FP: Any message for advisors as you begin your next chapter?
AG: The message for advisors is the message that I took away from this whole experience, which is that FNZ is a very unique company in terms of their capabilities and breadth. So as they get to know the company in the North American and U.S. markets, I think people will really be very positively surprised by just the incredible amount of capabilities and flexibility of the technology, and quality of the team and technology that we're bringing to market. And it's unlike anything else I've seen in the market, which is why we ultimately ended up doing this together. There's a lot of exciting things to come.
