On this week's episode of the Financial Planning Podcast, Ben Cruikshank explains why advisors may not know as much as they think they do about their clients' finances.
Cruikshank, president of the
And no matter if it's cash or crypto, Cruikshank says the idea is to keep these deeply personal assets within the RIA's orbit. There is often a discrepancy between what an advisor sees and what a client is really doing when both of these "C" words are involved. But bringing all of that activity into the light could be the key to a stronger, more competitive practice.
Flourish, a subsidiary of MassMutual, is now used by more than 440 wealth management firms representing more than $1.4 trillion in assets under management. Before Flourish, Cruikshank worked at Betterment as a founding member of the Betterment for Business team and led the 401(k) sales team.
During his conversation with FP Podcast host and lead editorial producer Justin L. Mack, Cruikshank talks about benefits of having visibility into held-away assets, the three pillars of personal finance and how the Flourish Crypto business has fared amid the crashes.
Listen to the new episode — as well as to all future and past episodes — by subscribing to the FP Podcast on
Transcript:
Justin L. Mack (
Good morning, good afternoon and good evening. Welcome to the Financial Planning Podcast. I'm your host, Justin L. Mack, wealthtech editor with Financial Planning. And it is my pleasure to introduce this week's guest, Ben Cruikshank, the president of Flourish. Ben, thanks so much for joining us this week.
Ben Cruikshank (
Thanks for having me. Really excited to be here, Justin.
Justin L. Mack (
Absolutely. Now Ben brings to this week's episode years of fintech experience and a passion for personal finance. He leads Flourish, a platform which gives RIAs the tools to secure their clients' financial futures, and he wears pretty much every hat imaginable for his team. Client strategies, organization, sales, marketing support — you name it, and Ben's hands are dirty with the details of it all.
Before Flourish, Ben worked at Betterment, where he was a founding member of the Betterment for Business team and led the 401(k) sales team. And before that, his love of startups was sparked at NewsCred, a marketing tech company where he ran the financial services sales vertical and built the sales operations organization as the company grew from just over a dozen to more than 200 people. Today, from cash to crypto, Ben is a pro on the assets that move the fastest. And in that spirit, we'll be keeping a pretty brisk pace on this week's edition of the FP Pod by hitting a lot of topics while we've got Ben here sitting in one place. But first, a little bit of background. Ben, I've had the opportunity to share a real life stage with you at INVEST 2022 over the summer, and you've helped us craft some really important virtual stages for INVEST Cryptocurrency for Advisors, a brand new event from Arizent that just wrapped up, so I already know how you get down. But for listeners who may not be hip, tell us a little bit about what Flourish is all about and the services you offer.
Ben Cruikshank (
Sure. Thanks, Justin. Appreciate all the context and going through my history there. At Flourish, our mission is to provide advisors with innovative access to financial products that they can't easily access today. So we're always thinking, what type of product would a financial advisor love to bring to their clients and would deliver true value, but they're blocked by regulation or business models or just plain and simple technology. And that's the exact space that we want to play within. We launched our business back in 2018 with Flourish Cash, a cash management solution designed for advisors to help their clients with held-away cash. The stuff that sits in the bank. That was an amazing first product for us. We built relationships with 450 different RIAs across the United States from sole proprietorships all the way up to some of the largest independents in the space. We built out integrations with key technology platforms like Envestnet, Orion and eMoney, and gained experience securely and compliantly moving billions of dollars around on behalf of our clients. We followed that up about a year ago with the launch of a product called Flourish Crypto, a turnkey cryptocurrency solution that helps advisors bring crypto into their orbit and really bring it into their practice, just like any other asset. With support for trading and compliance integrations, billing, you name it. And again, the theme here is really, how can we take things that sometimes clients are already doing, sometimes things that sit away from the advisor, valuable financial products, and then bring them directly into the RIA ecosystem.
Justin L. Mack (
All right. And why is that such a big deal? What are the deep benefits of having that visibility into those held-away accounts like cash and crypto? And beyond that, what's the key to doing that right from a tech standpoint? Because we know that's a concern for advisors. Being able to get a complete picture of your client's life, and knowing more is going to empower you to do that. But probably not the easiest thing to do to just come up with a solution that says, "Hey, I've got it all figured out!" But you guys have seemed to crack that code. So why does it matter and how'd you do it?
Ben Cruikshank (
Sure. So I'll start really thematic here. If you talk to any American, there are probably three main pillars of their personal finance. There's their investments, there's their banking and then there's their insurance. Three different domains. All really important to consumers, to investors, to Americans. And the advisors that we work with, predominantly independents across the United States, they can really only serve and help their clients with one of them: the investment management. Now, that's not to discount all the important work advisors do around planning and all the kind of behavioral work they do with their clients, but the fact of the matter is there are huge and important parts of your clients' financial lives that are sitting away from your books. Thematically, we don't actually see a world where there's a lot of fee compression hitting advisors. What we see is value compression. We see advisors being pushed to deliver more value to their clients for the same fees.
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And if you (take a) 30,000 foot view and move away from the flesh and blood advisor that we work with, you look at what's going on with the fintechs. Your Betterment, your SoFi, your Robinhood, you name it. All of them are pushing to provide more of these holistic, all-in-one, you can get everything from us types of services. When you look at what banks are doing, you have a really prominent online savings account like Ally, which also offers all manner of mortgages and credit cards. Well, Ally just hired a team of CFPs to try to provide financial advice and investment management to their clients. And on and on and on and on. And so what we think the ultimate challenge for advisors over the next 10, 20 years is, how do you speak more holistically to your clients? How do you engage with really important parts of their financial lives that you may not see today?
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You may not get paid on that today. And yet if you're not there, on the one hand, you're not able to provide the best holistic financial advice to your clients that you can. And then on the other hand, you are opening the door to a competitor to build a relationship with your clients by starting a conversation on banking or on crypto or on insurance. Now, that's the challenge that we see ourselves sitting in. To your second question, what's important in doing that well is really making sure that those components, they can't just be point solution one-offs. We need to be thinking deeply every day. How do we bring these products into your ecosystem? How do we bring it into your workflows? How do we integrate with your technology?
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And what you often see from other similar vendors is they don't really speak "advisor" They don't really know the language. They don't really understand how important it's to get the data seamlessly into the reporting system or pulling data from the CRM. Really put it at the advisor's fingertips because in order to bring these held away assets into the advisory orbit, you need to make it just as seamless as a mutual fund or an ETF. The asset classes that are advisors are so good at dealing with, but that sit on Schwab that run through the exact same custodial and technology pipes. Everything else has to be exactly that easy.
Justin L. Mack (
Definitely. And I love what you said about value compression. I think that's something that rings true for a lot of advisors. And they'll hear that and say, oh boy, that's spot on. And I think it's that expectation from the modern client that the advisor should be able to do all this, and it should be easy. And I shouldn't have to go out of my way to make sure that I have access to this. It's a totally different world. And if you don't meet those expectations, those much loftier expectations, frankly, you're going to lose some business. And again, being able to meet advisors where they need to be met and keep them from losing that business or have those clients walk out to, well, I guess the millions of other financial services. Whether it be real life folks or digital options that are in front of them every day saying, "Hey, you can manage your money with us instead of who you're with." That's a really tough thing to do. So talk to me a little bit more about cold hard cash and what was Flourish's initial foray into helping advisors with this problem. Chiefly, that disparity between what an advisor sees and the actual client cash that is being held away. Tell me a little bit about how Flourish is solving that problem and how that can benefit an advisor, strengthen relationships and everything else.
Ben Cruikshank (
In some ways, cash is the simplest asset class of all. And so understanding the challenges that we've seen in cash and the opportunities for advisors, I think it really paints a picture that you can generalize to a lot of other asset classes or topics and the financial products that we're going to talk about today. So back in 2018, we were sitting on a wealth of studies that showed that high net worth individuals hold 10 to 20% of their total net worth in cash. Not our own studies, but a number of different research organizations surveying investors, high net worth individuals directly. Ten to 20%. So I'll just do the math. Million dollar client, could that mean million dollars in the portfolio, but a hundred or $200,000 sitting outside? We went to advisors with those statistics. Just the cold hard surveys and advisors would routinely tell us, that might be true for other people's clients, but that's impossible for my clients because I keep 1% of the portfolio in cash. Or 1.5% of the portfolio in cash, 2% in cash.
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Maybe my client has an emergency fund, but that's about it. And you just immediately right then and there saw the discrepancy between what the advisor thinks about and sees every day, and the really important part of their client's financial lives that's sitting off of their books. Flash forward four years, five years later, we work with 450 RIAs across the United States. Those RIAs range the gamut in terms of size. But collectively they represent about $1.5 trillion in assets. These are really well established players in the space, and I can tell you today our average household balance is around $150,000. And our typical client is a household with one to two million in net worth. Do the math. You are getting to 10 to 20% of their money held in cash, and we don't even, it's not like we collect all of it. That client still has money sitting at Chase earning virtually nothing. Today, by the way, that remains true.
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As you scale up the wealth spectrum, when we look at clients with a reported net worth around $5 million, we tend to see more like $500,000 sitting in cash. Often again earning zero sitting in the bank. And we've been able to bring that finding back to a tremendous number of advisors and say, you thought it was really nothing, and we can look at your advisor dashboard together and say there's a lot more out there than you thought. So the second part of your question, why should you care beyond being surprised? Maybe there's a part of your client's financial lives that's important. Flourish allows and Flourish Cash really allows advisors to deliver value here. If that client has $150,000 or $500,000, whatever it may be, and it is often earning next to nothing. About half of our deposits have come from the big four money center banks alone, which I don't have to tell you often pay zero on deposits.
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That's an immediate way for an advisor to deliver value to say you are earning nothing, and now you're earning $3,000 a year. Or $5,000 a year. Or $10,000 a year. That could offset a 30-year advisory fee that could help pay for a vacation, you name it. And particularly today with the market in so much turmoil, so much uncertainty, so much fear out there as an advisor, you are often telling your clients, stay the course. Do nothing. We plan for that. That's a hard message to give to a client who is down 20% this year and feels pretty beat up. And now we're giving advisors a way to say, both do nothing in the portfolio, but I just fought and found more value for you to help you achieve your goals. Isn't that great? But now value is one side of it. That's the value to the client.
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We see this really is a two-sided trade by offering Flourish cash and talking about cash held away from you that you might not charge on. By engaging that conversation, you as an advisor gain visibility. Imagine what you would do if you saw every single one of your clients, your household, is actually 10 to 20% higher net worth than you thought. Well, on the one hand, you might rethink some assumptions around how much cash they need to keep in their emergency fund. You might be able to work with them to take more risk in the portfolio because they've got a bigger cushion than you thought. You might, over time, talk to them about bringing some of those assets into the portfolio, which is certainly every advisor's dream. And when you really look at the numbers, we have sent more money to the custodians than we have pulled out of the custodians while meanwhile, we're bringing all of this cash into the advisor's orbit from their bank accounts. And so there's a really nice trade there. And so again, it's this combination of delivering value to clients while also getting that more holistic view, allowing you to give better holistic advice and hopefully accumulate some assets over time.
Justin L. Mack (
What you broke down … it reshapes the entire relationship with just a piece of crucial information. It gives an advisor the ability to make decisions because they know more and in turn can help their client better. And it is kind of breaking down that, "Well, my advisor doesn't need to know this or doesn't need to know I have this cash." And instead, bring them into that conversation a little bit more.
Ben Cruikshank (
Yeah, Justin, I'll just say that's a really important point you just made. Oftentimes advisors say, but not my clients. They trust me with everything. My personal story here. My mom works with a financial advisor, she trusts her financial advisor with everything, and yet my mom has far more money sitting in cash in a bank account or now a Flourish Cash account than you might otherwise think (and more) than her advisor certainly knows about it. I say, hey, why is that the case? She's like, well, I trust my advisor with everything, but I don't wanna have to ask for money if I wanna redo the kitchen or buy a car or have some unexpected turbulence or whatever it might be. There's this psychological safety net clients get from holding cash themselves. They don't want to be pressured to send that to the portfolio, which is what advisors certainly have been doing for the last decade. If they've done anything at all. Oh, you have more cash than I thought? Why don't you send it over to us?
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Well, we can invest in a money market fund, we can put it in Treasury, we'll figure it out. And there's just this benefit of holding cash and almost this embarrassment in asking your advisor for that distribution to fund your life that clients don't want to engage in. And so how as an advisor, can you be clear-eyed about that? No, that's not a personal mark on you. That's not an indictment of your services. Your clients really do trust you, and yet they also want cash on the side and living in both those worlds.
Justin L. Mack (
For sure. I think everyone's got a little bit of that "money under the mattress" mindset because, you know, you can't trust everything. So I get that, especially now. I'm wondering too, what is flourishing on the platform in Flourish Cash with the rates continuing to rise and while the market is doing what the market does? How has Flourish Cash kind of adjusted to that?
Ben Cruikshank (
In short, October was the best month in our company history across virtually every imaginable metric. And as we sit here recording, I think November and December have good shots at even blowing those types of numbers out of the water. More advisors have invited more clients to the platform in recent months than in any other time period in our company history. Phones are truly ringing off the hooks. I will say very candidly, it hasn't always been like this. We sat through, we worked hard through the pandemic when rates were extremely low and no one wanted to talk about cash. And my team, to their credit, really just kept working hard, kept investing, kept launching new integration, enabling new firms, finding those spots of opportunity. And those were the lean times, if you will, within our business. We are now seeing that pay off and given recent Fed commentary, full expectation that rates will be in the 4% to 5% range potentially for the next year.
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We don't predict the future here one way or another, but having seen rates go from zero to the upper 3%, 3.75% or more depending on when you're actually listening to this recording … so that's just been astronomical for our business. We now have multiple firms that are helping their clients earn more than a hundred thousand dollars of interest every single month. That's a pretty exciting thing to be able to tell your clients. We're really helping you earn more. So it's been fun, it's been exciting and really is the result of years and years of hard work here.
Justin L. Mack (
Awesome. And with that, we're going to take a quick break and enjoy a word from our sponsors, but when we return, we'll have more with Ben Cruikshank, president of Flourish, talking about crypto, crashes and some good vibes. Stay locked. We'll be right back.
And welcome back to the Financial Planning Podcast. I'm your host, Justin Mack, and we're going to keep rolling with this week's conversation with Flourish president Ben Cruikshank. Now Ben, let's pivot a bit from cash to crypto and talk about why maybe folks might be pivoting in the other direction right now. How has Flourish Crypto fared in late 2022 as it's been a tough time. And I don't think we need to go over why, whether it be FTX or what's going on, it is a lot to talk about. But in general, tell me what your thoughts are on, well, what's going on right now. But how has Flourish Crypto managed to kind of navigate what has been a difficult time for a lot of folks?
Ben Cruikshank (
Yeah, I'll start just acknowledging that crypto within wealth management and overall institutional space has been a very, very challenging environment. There are plenty of advisors who didn't really wanna do the crypto thing and they've then seen crypto prices come down 70% to 80%, and then explosion after explosion on top of that. And I think to plenty of those folks, that's validation of the reason that they stayed out all along. And so just to level set, we are not a company that sells crypto. We don't sell Bitcoin. We don't sell Ethereum. We're here to bring access and tools to advisors and have always positioned our solution in that climate. At the same time our particular solution, our particular product, is completely unimpacted by what's happened in the last few months. And a big part of that is because when we decided to build a cryptocurrency investing solution we are not the custodian.
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We needed to partner with a crypto custodian and we chose to work with a company called Paxos. Paxos is fundamentally different than any of the players within the crypto world that are experiencing some tough times right now. They were the very first company to receive a New York Department of Financial Services Trust charter for digital assets back in 2015. The first one. They have conditional approval from the OCC to establish a national trust company for digital assets. They have their SOC 1 and SOC 2 audits. Their financials are audited by a big four auditor, on and on and on and on. So we were very clear with advisors when we launched this product that we are optimizing for safe, secure, compliant and regulated. That messaging resonated then, and it resonates now as you see so much turmoil in the crypto space. And we can very confidently say, because the decisions that we made, because of what we know are your values advisor, our product, our solution remains unimpacted.
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One conversation I'm having with advisors quite a lot right now, again, there are plenty of advisors who are looking and saying, hey, this is a time to pause and hold back. And I completely understand that instinct. The conversation we want to have with advisors right now is, far more of your clients bought crypto in the last runup than you may think. There are studies showing that about 25% of American households bought crypto. To give a little comparison there, that's on par with the percentage of American households that own CDs at banks. And as an advisor, just like you can't say I don't know anything about CDs even if you don't use them, we think you cannot say, I don't know anything about crypto any longer. And very specifically to bring that home, more of your clients, your personal clients, engaged, bought, opened an account on Coinbase, put in a hundred bucks, a thousand bucks, ten thousand bucks, than you think.
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A lot of those clients are sitting on massive losses right now. They're embarrassed, they're scared, they're unsure what to do. That is the time as an advisor where you have the opportunity to deliver value. Particularly if you weren't working hand in hand with your client as they went through that allocation. Particularly if they think of you as somebody who is anti-crypto in any way, shape or form. Now is not the time to declare winners and losers. Now is the time to reach out to your clients. And again, it is more of them than you think because they might have been embarrassed to tell you about it and say, hey, did you own crypto? And if so, let's talk about how it fits into your holistic financial planning, your estate planning, your tax planning, what opportunities are there? Do we wanna move things over to a safer and more compliant solution? It could be something like Flourish Crypto, but there are other options out there if they're potentially sitting somewhere that they shouldn't. And so I think, again, this is a time as an advisor where you can deliver value no matter what your personal views on the space are.
Justin L. Mack (
Definitely, and I think it kind of goes back to something you said here at the beginning of our conversation and what Flourish is kind of all about. Helping advisors help their clients manage the stuff they're going to do anyway. You might not know about it and that kind of goes back to the, "Well, it's not my clients holding 20% in cash. Never ever." And I think there might be some of that "well, my clients don't like crypto. Never ever." And then they find out after maybe a couple of years that, oh, they did, and now they're coming to their advisors for help to understand what they should be doing next. And that's kind of a big focus of INVEST Cryptocurrency for Advisors. Two days of content with a big educational focus that we wanna thank you again for helping us with as one of our advisory members to make sure that we're having those right conversations and empowering advisors to help their clients deal with the things they might have done when they weren't looking.
Ben Cruikshank (
And I do also have to say I had one advisor tell me fairly recently, Hey, if I liked it at $50,000, I sure should like it at $15,000. And so we have always looked at crypto as something of a speculative, VC-like investment with wildly skewed risk-reward, right? There's a chance it goes to zero. There is a chance it comes ripping back and goes to the moon, as the crypto community would say. None of us know the direction. And it is fine to say, given that context, I'm going to sit out from an investment perspective. Again, we don't think it's fine to say I'm going to sit out from an education perspective, from a developing perspective. That's really important. At the same time, if you believed in the crypto thesis a year ago or your clients believed in the crypto thesis a year ago, I'm also not here to say you can safely ignore this for the next year.
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The time to get in would theoretically then be now. And again, plenty of advisors thought the highs of last fall where it felt too high, too late to get in. Time will tell. Were they right? Were they wrong? Again, I don't know. I have a lot of uncertainty and a lot of humility about the space. But again, if you did think that this is an interesting VC-like investment, a client might wanna put in a small modest portion of their wealth. Our average account balance is around $15,000. So again, think about that $1.5 million household. Maybe it's about a 1% holding now. Potentially there's a different class of advisors that we also work with that say now is actually the time to have those conversations and at least recheck with our clients where their head is out as well.
Justin L. Mack (
Definitely. And I think crypto's always been interesting because it's kind of an emotional asset. Do you believe or not? And that's not really something that comes up a lot when we're talking about money management investments or assets. Do you believe in this? Heck, personally, I've got friends who are looking at what's going on right now with the crash and FTX and saying, all right, now's the time because the folks who don't believe will be gone and the believers will stick around. It's a lot to unpack going into next year. I won't ask you to predict what you think is going to happen with crypto in 2023. I wouldn't dare do that to you. But for advisors' priorities going into the next year, knowing that people are going to maybe be brand-new clients who are maybe coming to an advisor because they have individually made some investments in crypto. They're hurting, they're embarrassed, and they're going to go to an advisor as a brand new client with crypto already in their personal portfolio because they picked up their phone and they started doing their thing. So how can advisors position themselves to help those new next generation clients going into next year? What should they be focused on?
Ben Cruikshank (
Yeah, I think it's a good question and I think actually the next gen point is so important. A fairly recent survey found that 83% of millennial millionaires own crypto. And if you talk to an RIA … what type of client do you want to win more over the next 10 years? They're going to say, well, millionaires who are young and still accumulating assets. Like I'm telling you right now, almost every one of those folks owns crypto. And so having a perspective is really important. I also think sometimes crypto gets talked about just so mystically. And the crypto industry doesn't do them any favors by the amount of hype, the amount of hyperbole. It is going to the moon. It is an inflation hedge. A lot of narratives that are challenged. But when you really boil it down, I think it is actually simpler than you may think.
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We launched a partnership with DACFP, Ric Edelman's crypto education platform, and we're really just focusing on what is a blockchain? What is bitcoin? What is ethereum? If you can answer those three questions, you are in great shape to engage in quite a lot of client dialogue on the one hand. On the other hand, understanding just the very basics of custody and a little bit around what a hot wallet is, what a cold wallet is, but more importantly, why is an actor like FTX so risky and unsafe and outside of the law, to put it politely, based on what we know today. Whereas a solution like Flourish Crypto with Paxos (being) secure, compliant, regulated is so different. And so I think, again, just coming back to some of the basics of education and blocking and tackling, knowing you don't have to believe crypto is going up, down, or sideways, but there's still value here in being able to talk to your clients holistically about are they taking the right amount of risk? How does this fit in from an estate planning perspective? A tax planning perspective? You name it. Those same things you do with every other investment are just as much on the table when it comes to crypto.
Justin L. Mack (
For sure. All right. And just to close out, as has become customary here on the FP Podcast, I'd like to close with some good vibes. We've talked a lot about your career, what you're working on now, how you got here and just talking about the Flourish part of your career. Started in 2018. Four years later after making it through some tough times in the pandemic you're coming off of one of the best months you've had in your company's history. So a lot of change, a lot of growth, going from cash, launching another product with crypto, and I'm sure knowing you, you've got a lot more on your mind that maybe we don't know about yet. But maybe I'll be writing about it in a year from now. We'll find out. But when you think about all that, what do you love most about your job and the work you do?
Ben Cruikshank (
Sure. Two things. The first is that I love personal finance. That's the reason I'm here. That's the reason I have this job. When I was, I think, 11-years old, my dad gave me a book on personal finance. And whatever's wrong with me, I was hooked. From day one. I became the advisor to my group of friends, and that continued down the path that I am on today. I love this industry. I love it. And I'm just such a full believer in getting more, better fiduciary advice to more Americans. I find that just incredibly personally fulfilling and feel very privileged to sit in the seat that I do today. Being a small part of moving that boulder along because it is a boulder. It is a lot of work. It is hard. And yet just feel very privileged to work with the types of firms that we work with.
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The second thing on a personal level is I love building. I love the sense of creation. I love every day knowing we created or came up with a process or policy, got something in the world, talked to somebody (about something) that didn't exist yesterday, and now it does. And so certainly the journey with Flourish. Going from a very small, scrappy company to one that now works with 450 firms has been just that endless sense of … I've answered customer service tickets and design, customer service policy. I have copywritten emails and oversee email marketing strategy. Like, that type of feeling that we are building something and bringing it into the world is what personally gets me out of bed every single day.
Justin L. Mack (
Absolutely. Well, that passion you have for personal finance, it's palpable. You can see it, you can feel it. So you keep building and we'll do our best to keep our eye on the bricks. We want to thank our guest, Ben Cruikshank, president of Flourish, for joining us this week on the Financial Planning Podcast. Thanks for joining us, man.
Ben Cruikshank (
Yeah, absolutely. It was a pleasure. Thanks Justin.
Justin L. Mack (
All right. And I want to thank everyone for listening to the Financial Planning Podcast. This episode was produced by Arizent with audio production by Kellie Malone. Special thanks again to our guest, Ben Cruikshank, president of Flourish. Rate us, review us and subscribe to all of our content at www.financial-planning.com/subscribe. For Financial Planning, I'm Justin Mack. Thanks for listening.