On this week's episode of the Financial Planning Podcast, advisor and fintech founder Zach Conway explains why he is all about politely disrupting the old way of doing business.
Conway, managing director at
But after growing up in the business as a second generation advisor to a father with more than 40 years of experience, Conway is ready to shake things up. He said Seeds, a New York-based fintech startup that focuses on the creation of custom investment solutions that tap into investors' risk targets, behavioral mindsets and values.
To do it, Seeds relies on proprietary digital assessment tools to help uncover what matters most to investors. But with wealth management essentially pumping through his veins, Conway also gets fired up about the future of the industry and working alongside his fellow advisors to make it better.
During his conversation with FP Podcast host and lead editorial producer Justin L. Mack, Conway discusses what's driving values-based investing, how advisors can refine their communications with clients, and why planners need to be real people when working with prospects instead of the Wizard of Oz.
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 (00:02):
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, Zach Conway, founder and CEO of Seeds Investor. Zach, thank you so much for joining us on the show this week,
Zach Conway (00:19):
Justin. Thanks for having me. Appreciate it.
Justin L. Mack (00:21):
Absolutely. Now Zach brings to this week's pod a deep passion for personalized investing and a decade of experience in wealth management. He's a financial advisor who leads the NYC-based software platform founded in 2019 for financial advisors to assess and understand investors' values and needs and automatically deliver personalized portfolios and reporting. Prior to launching Seeds, Zack was an editorial manager for Standard & Poor's and later joined the family business,
Zach Conway (01:27):
Yeah, thank you. And you ran through the bio there. So to kind of start at the beginning, I got my economics degree and jumped into kind of corporate finance. So I was in the corporate world out of the gate, and I'd been accused of being a bit of a control freak. Being in a corporate environment and seeing things in some cases that maybe aren't the most efficient way of doing things or the best experience for the end client right out of the gates out of school, trying to try to tell the big company what to do and how to do it and maybe not getting listened to. And then of course, you know, I leave and the big companies hire McKinsey to go say the same thing and then they implement that advice. But what excited me. I always say I was lucky enough, as you've mentioned, to sort of grow up in the business and have exposure to wealth management and a dad who's been doing it now for four decades.
(02:24)
So I didn't join in out of the gate out of school. I wanted to do my own thing and I remember distinctly having a conversation with him about ultimately joining the family business and saying, dad, I don't know that I'm going to really get passionate about financial planning per se. I don't want to come in and type in data and do cash flow analysis and survivor needs analysis and be the best CFP on the planet. But what excites me about joining the business is being an entrepreneur. So having control of the destiny of the business. Those things I maybe didn't get in the corporate environment and what that meant from running a business more efficiently and making that business successful and having control over it, but also the sort of front stage aspect of that. How do you make a better, more interesting or engaging experience for our customers? So I may not be the guy that loves financial planning per se. But I love the fact that our customers who engage with us have a fantastic experience. So that's what I wanted to get involved in early on in the family business, started to do that, started to really help grow that company, build a better experience, and that's ultimately what led to what we're now doing at Seeds.
Justin L. Mack (03:44):
Very, very cool. And just in your description of what brought you into the industry along with having, like you said, that that family connection and being able to learn about it from a younger age and really see what you wanted to bring to it, I imagine that probably fed that creative and entrepreneurial spirit because you saw it early and you said, you know what? We can do this better. We can deliver for clients in a different way. And this is a very creative industry, so really cool to see you take its next step with the founding of Seeds and everything you guys are doing there. And sticking with that origin story part of the podcast here, Seeds is often described as being founded by advisors for advisors. So kind of like FUBU but different, if anyone's old enough to remember that reference or big enough of a LL Cool J fan to remember that reference, but I digress. But exactly how did Seeds get started and what problem were you guys looking to solve when you got together and created this company?
Zach Conway (04:32):
Yeah, it went back to that idea of wanting to have the best, most engaging and more digitized experience for the people who walked in our door. That sort of transactional nature of financial services sometimes. How much can we really move away from that so that we can deepen relationships with our clients? What we realized in our own business was we were kind of talking a great game about that idea about delivering a great experience and we have digitized a lot of the experience and we would go deep with families on all the different areas of traditional financial planning. When you talk about estate planning, it wasn't just how we put trust documents together, sort of the transactional nature of estate planning. It's what's the quality of your relationships among family members and what legacy are you trying to create and how do we create a solution that's digital and we can put things on the screen to sort of bring to life that legacy creation?
(05:32)
The part of our services that we noticed completely lacked experience, ironically, was the investing part of what we do. Which again, ironically, is arguably the biggest economic driver of how we're successful as financial advisors and wealth managers. And that's the part of our service where there is no experience. You walk in my door and this was our process at the time. I take out a pen and paper and as an investor I ask you things about your risk tolerance and I scribble some qualitative notes down and then I say, thanks for the conversation. I'm going to take these notes back behind my Wizard of Oz curtain and go come up with my special portfolio that only I uniquely have with a bunch of third party products in it, and then I'm going to come present it back to you in an off-brand PDF document and talk to you about how smart I am as an asset manager and why we're going to be in these strategies versus these strategies and we have access to these investments that in other advisors don't. Even though they do.
(06:43)
And then maybe you become my client and then how do I talk to you about your portfolio on an ongoing basis? I talked to you about returns because that's the only thing I can really talk about because I anchored in performance in the beginning of our conversation about investing. And so it's such a transactional, cookie-cutter manual process that completely disconnects people from what they actually own, by the way. You don't actually see or feel where your dollars are going in the world. You're just handing your money to this supposedly super smart financial advisor that's putting it in his or her special portfolio solution. And so in the company, we had sort of this holy you-know-what moment of, again, we talk a big game about experience and most arguably the most important part of what we do, there is no experience. So how do we replace that transactional cookie cutter manual assembly line process and make investing feel engaging again? Make it feel interesting? Make it feel personalized? Bring it to life for people. These are your dollars. You're putting them into capital markets. You should see what you own. You should know what you own. You should feel what that means. Of course, it's about reaching long-term financial objectives, right? That's table stakes. But what else about deploying capital in the world? What do you want to see and bring to life? So that was the light bulb sort of moment of thinking in the wealth management business and that kind of catalyst to ultimately building what we're doing at Seeds.
Justin L. Mack (08:21):
And your breakdown of that experience, that initial advisor client experience, It is painful to hear that recap because both sides of that transaction probably aren't having the best time. The client is probably nodding along because they don't understand what's happening after you come back from behind that Wizard of Oz curtain, and they're not going to say "I don't understand." They're just going to say, yeah, sure, that sounds good or it doesn't. And the advisor is now, like you said, kind of locked into this silo where this is my interaction with this individual. They know me as the guy who talks about returns and bottom lines and dollars and cents. And if you ever want to pivot into something deeper or something more personal, it's almost going to be like, whoa, what are you doing? That's not the relationship we have here. And as we know, and we'll talk about probably more extensively in the second half of the show here, that personal aspect, going deeper, understanding values and individuals is so crucial right now because competition for everyone's clients is crazy because boundaries don't exist anymore thanks to digital implementations across the board.
(09:20)
That sounds like a rough experience to say, here's my pen and pad and here you go. Just before we get into the next topic … I imagine for you, just talking to you now, it doesn't seem like that's something that you would get too fired up about to do it that way. Very assembly line as you put it.
Zach Conway (09:40):
So Justin, what's wild to me about how we were doing it … at least at the time, and we think still most of the industry is doing it, is we're kind of shooting ourselves in the foot as advisors. We're forcing people to anchor our value proposition, the reason we're getting hired on investment performance, because out of the gate we talk about what we sell, right? We sell how smart we are. We sell how we have the best investment solutions, and how we have access to the best products. The reality is our clients don't care or our prospects don't care, but we're projecting this onto them. And as we do that, then they're going to take our lead and say, OK, smart guy or gal, then that's why I'm hiring you. And in a year like last year when the S&P is crushed, then you got to pay up.
(10:36)
The reason I hired you is because you're smarter than the next advisor and getting better returns than the next advisor and it's not happening this year. So again, if you create that anchor point as your value proposition, it's not what the prospect is asking for and then you've got to pay for it in the long run. And so trying to get advisors to actually not sell anything. Don't tell an investment product story. Don't talk about how smart you are as an asset manager.sk the right questions about who these people are as investors. What does this mean to them? It's about financial goals and we have to talk about that, but what else is there about trying to create engagement with your portfolio that I can let you articulate? Then I can speak to you in the right way about what's going on with your money and not have it be about what the S&P is doing versus our portfolio performance. That has to be there, right? That's table stakes. But shifting that value prop away from advisors essentially living and dying by what the S&P is doing in a given quarter.
Justin L. Mack (11:43):
Absolutely. And 2022, while a difficult year for pretty much everybody, a big year of activity and busy year for you guys at Seeds. Investor initial capital raises, a lot of work just kind of letting people know what you're working on and sharing the word about that experience you're trying to create and how you guys are leveraging technology to do all of that. So I would love to have you give me what are some of the highlights for you from last year, and what are some of the big things your team is working on for 2023 that advisors and we should all be paying attention to?
Zach Conway (12:11):
The whole end game for us is deepening this idea of if I deeply understand an investor in what we call a three-dimensional way. So I need to know risk. I still need to know risk tolerance and capacity and need and financial objectives. We kind of think of that as dimension one. Then I want to know what makes you tick. How do you think? What's your mindset as an investor beyond risk? Are you that really analytical investor that does need to be in the weeds and understand exactly all the minutiae of what's going on in the portfolio or not so much? If I use jargon with you, you're going to roll your eyes at me in a client review meeting. So really deeply understanding how you think is dimension two. Dimension three you hit on earlier is the values component. So how do you even think about values alignment in a portfolio?
(13:01)
Some clients have no idea that it's actually a thing you can do with your money because they're so attuned to what we as an industry have done over the last several decades, which is to have portfolios be completely agnostic of that. We're going to set up your donor advised fund, you're all charitably inclined. We're helping you move dollars in a way that aligns with your values, but we don't ask about how your stock and bond portfolio might actually be doing the opposite stuff in the world. But if we can capture all of those inputs, all of those dimensions, then I can put you in the right portfolio and I can use the right words and show you the right things about the portfolio every time I interact with you. So as we zoom out, that's that fundamental thesis of what Seeds is and what we're building. The mission this year is to enhance the product, but to that end, the more we can understand the investor, the more custom and enhanced the portfolios can be, and the more fine tuned those insights can be. So that's always our North Star. And separate from that, it's partnering with forward-looking, growth-minded, awesome RIAs that want to bring it to life and partner with us.
Justin L. Mack (14:14):
And with that, we're actually going to take a quick break and enjoy a word from our sponsors. But when we return, we're going to have more with Zach Conway, founder and CEO of Seeds Investor. Stay locked. We'll be right back after this break.
And welcome back to the Financial Planning Podcast. I'm your host Justin Mack, and we're diving right back into our conversation this week with Zach Conway, founder and CEO of Seeds Investor. So Zach, before the break, we talked about the genesis of Seeds, the story that brought you into the industry, the problem you were looking to solve when this company was founded and the busy year you had and all the motivation you have to continue doing the work you've been doing. One thing we've talked a lot about is just that hunger for values-based investing and for values-based connection between advisor and client.
(14:59)
A lot of things driving that I think are very obvious. We talked about the difficulty of the returns themselves and when advisors can no longer just hang themselves or their hats on the fact that, hey, I'm better than the next guy and I have the results to prove it. Now we have to go a little bit deeper and we also see a trend continuing because the next generation of investors may be a little bit different. They care about this more because, well, the money is not as important because they can work with anybody. As we kind of alluded to. If I live in one place, I can have an advisor that lives across the country or maybe in another country. There are no limits anymore, which I think is really cool. So for you, what do you think are some of the top things that are driving that hunger for this values-based investing? And do you see this trend continuing or maybe even getting more intense as the years go on?
Zach Conway (15:48):
Yeah, so it's going to continue to grow and we always try to point out that when we look at surveys and people, the survey language says something like, would you want an ESG portfolio? So that sort of three letter acronym that has a lot of headlines and confusion these days, and you see respondents (with) different answers across demographics. Your, let's say, 60-year-old plus client may be saying maybe not so much. And then the millennials arguably are saying 90-plus percent of the time, of course we'd want that. The problem with the survey question is that the 60-year-old plus client doesn't actually understand what the question is that's being asked. They may think that means something that some headlines recently might suggest, number one. And number two, they might believe it means a discount of performance. There's this inherent trade off.
(16:41)
The drive in demand is people across demographics starting to understand that you can do this with your money. You can have autonomy over where you're putting your money in capital markets. So as much as I love ETFs and indexing for the sake of cost, diversification, tax efficiency, what has it done to investors? It has disconnected them from what the heck they own in their portfolios. Nobody realizes that you probably own Norfolk Southern in your portfolio right now because it's in every major indexed product. And if you unlock with the 60-plus year old client or the millennial that you can see what you own on single securities, see the companies in your portfolio, get the returns you need to get … there's no promise of performance ever, but if you can get the performance essentially of what the asset classes are doing, but see what you own, know what you own and feel more connected to what you own.
(17:48)
When the survey questions are framed that way, all the demographics say, yeah, of course. Why wouldn't I want that? Why wouldn't I be able to see what I own and have it more fundamentally aligned with what matters to me? All of our clients are charitably inclined. It doesn't matter, political ideology, whatever. When it's framed that way, most people actually want it to happen. The problem has been that advisors don't know how to engage the conversation. They have that process of what we talked about earlier. And so how do I even broach when people think of misunderstanding what this term ESG means or what direct indexing is and all this jargon? How do you have an advisor just sit at their desk and be able to engage across demographics and understand the client and what they actually want to accomplish? Again, if we can empower them to do that, we think most investors actually want to do it that way.
Justin L. Mack (18:47):
You hit on a great point I'd love to talk to you a little bit more about. Because like you said, those three letters, ESG, if you look around the room and look in people's faces, even without saying something, you'll probably see a little bit of a response or they'll maybe show their hand a little bit. Whether they are tired of it or they're enthused about it or they have some kind of preconceived bias toward or against it when, like you said, there is a lack of understanding. I imagine that's probably a big hurdle that you guys are working to clear and help advisors clear as well. And I imagine it's a little frustrating. Look, I'm in the news business, trying to get people to understand stuff isn't always easy. <laughs> We try as best we can. But for you, how are you guys approaching that challenge and what other challenges exist in the realm of personalized investing and values-based investing so we can get through all this stuff that really doesn't matter, and all these attitudes that really are keeping people from doing what they want to do, which is invest with their values without sacrifice on their returns.
(19:43)
What are some of those hurdles? How are you trying to clear those?
Zach Conway (19:46):
So a couple big components. The first piece is in terms of the way we actually think about the application of quote unquote ESG in an investment process. We go back to the beginning of what its original intent was, which is it's not ESG investing. It's not like a separate asset class, it's investing. It's essentially applying fundamental risk factors to an investable universe underneath these headline categories of E, S and G. So if you look at a Norfolk Southern as an example, if you look at the risk exposures of a company like that, under those three very big broad categories, there's a bunch of risk exposures there. You look back at BP, a big example. they got fined for infractions related to those types of environmental issues a lot more times than even their peers in traditional fossil fuels. So as a pragmatic investor, if you're just looking at fundamental risks to a business, which company are you picking?
(20:53)
Yet you're pitching BP with all of those risk exposures, or maybe not. We kind of joke, go political, just for fun, Ron DeSantis is an ESG investor if you just reframe what it actually is and what it's about, right? It's pragmatic investing. And so from our standpoint on our platform, that is the intent of how we integrate quote ESG factors to the extent that the end investor is communicating that that's what they want through the assessment experience. So it's eliminating risks. The secondary benefit of that is it might align with your values in a way that's meaningful to you. You don't want to own those things for values-based reasons as well. And so we capture that in that process. But the other sort of positioning point, again, it's not ESG investing. We don't want an advisor to say, hey, we have this thing and we have ESG portfolios for you if you want that.
(21:56)
Don't talk about products anymore. There's no product labels. Again, I'm just going to ask questions when I interact with you through an assessment experience, capture how you think about these ideas and then show you your portfolio. No labels, right? I heard what you communicated to me. Here's a list of securities across asset classes that brings that to life. It's not an ESG portfolio. It's not a climate change portfolio. No labels. It's just, here's the portfolio that actually aligns with what I was willing to understand about you. And that's the idea. Positioning is huge, I think, for advisors.
Justin L. Mack (22:38):
Yeah. Drop the tag. Like you said, it's just investing. It doesn't have to get put into this odd bucket or this side category that might elicit a response that it doesn't deserve a warrant. So it's just investing. So advisors, that's I guess your homework from Zach here on the podcast this year is learn how to communicate that it's just investing. And as I'm sure from your experience, I think folks have always wanted to invest in a way that aligns with their values. It's just now because the tags exist and the subcategories exist from a headline standpoint, it makes it somehow a point of contention for certain individuals. But I don't think this is really a new thing. I just think there's a better way to maybe dispatch that information or that message from advisor to client or prospect or whomever.
(23:23)
So we talked about a lot here on the podcast today, and I'm going to transition to something that has become customary here on the financial planning podcast as we wrap up. Which is ending with some good vibes. And we talked a lot about your journey into the industry, the motivation that led to the founding of Seeds Investor and the huge, huge momentum and a lot of work you guys have been doing last year and just the passion that you can hear. And for folks, and this is an audio podcast, we're doing this on Zoom, but you can see it when Zach talks about these topics, you can see how fired up he gets and is probably ready to get back to work and get done talking to me. So with all of that in mind, Zach, if I had to ask you what do you love most about your job and what you do, what would it be? What's the top of the list for you?
Zach Conway (24:06):
As you said at the beginning, being able to be lucky enough to have grown up in this business. What's exciting to me about being in this business and now working directly with financial advisors is just that. It's working with financial advisors. One of our values at Seeds is what we call polite disruption. So we need to be disruptive, we need to try to steer the ship in a slightly different direction, at least. But, I'm one of you, right? I am not coming in from the outside to tell you you've been doing it wrong forever. I'm coming in to say, hey, over the last five years, there's a recent Schwab study, if you'd net out market performance, we didn't grow. We're not tapping into new demographics of investors that have money that are looking for our help, and we must be doing something imperfectly. And if we can come in and help, we want to politely disrupt the way you've been doing things. And that's exciting to us, for us to partner with firms that are ready for that polite disruption.
Justin L. Mack (25:16):
All right. That's pretty good. And you know what? I've stolen a lot of cool phrases here on the podcast. That one, I will definitely make sure I shout you out, but I will be stealing that polite disruption. Excuse me, would you please get the hell out of my way? I'm trying to change the game here. <laughs> So thank you so much for that quote. And thank you so much for joining us this week on the Financial Planning Podcast.
And I want to thank everyone for listening to this week's edition of the Financial Planning Podcast. This episode was produced by Arizent with audio production by Kevin Parise. Special thanks again to our guest, Zach Conway, founder and CEO of Seeds Investor. Rate us, review us and subscribe to all of our content at