People of ordinary means — 75% of Americans — are in need of quality financial advisors, but the financial services industry has largely snubbed them, argues Jason Wenk, founder and CEO of Altruist, in an interview with ThinkAdvisor.
"Great advice has gotten more exclusive, not more inclusive," he says. "What we've seen in the last couple of decades is a, kind of, race to the top of the market. The industry has to do a lot better job."
Altruist, an integrated fintech firm directed at RIAs, offers custodian services, portfolio management, financial planning and billing, among other functions, at lower cost, which brings advisors better outcomes, Wenk maintains.
For the last 22 of his 41 years, the entrepreneur's mission has been to make financial advisory both more affordable and inclusive. He wants great advice to be easily available to people no matter how much money they have.
This can happen with increased advisor efficiency, which allows them to help folks for less cost. But the challenge to reach that goal persists since "legacy institutions are reluctant to change because it's too disruptive to their status quo," Wenk contends.
In the interview, he is notably candid about his view of the financial services industry, which he calls "pretty antiquated" and which "has done a pretty poor job of making it easier for [advisors] to start new firms" to serve those with modest assets and net worth.
"There aren't enough financial advisors and certainly not enough fiduciaries to broadly serve all the people who need help," he says.
Wenk aims to improve the efficiency of RIAs, many of whom are not — yet — in the AUM super-star category.
A self-described "math geek" and former one-year Morgan Stanley system analyst, Wenk went on, in 2005, to open his own RIA, Retirement Wealth Advisors.
He then founded FormulaFolios to produce model quantitative investment portfolios to help remove emotion from investing. He sold the company in 2018, the year he founded Altruist.
Under RWA, Wenk has retained nine longtime clients from his advisory days. This helps him understand client concerns, which in turn helps him to better relate to his Altruist RIA clients.
ThinkAdvisor recently interviewed Wenk, who was speaking by phone from Los Angeles, where Altruist is based.
Big plans for this and next year include ways to help individuals connect with a "great-fit advisor" so that, he says, "when people are looking for [one], it doesn't feel like a crapshoot."
Here are highlights of our interview:
THINKADVISOR: What drives you professionally?
JASON WENK: I've spent more than 20 years trying to solve the problem of how to make it easy for regular people to get great help with their money and how to increase efficiency so that advisors can help more people.
When I got into the financial services space as a computer-science engineer 22 years ago, I recognized very quickly that nobody I'd ever met in the rural Michigan community where I grew up — the vast majority of people are without significant wealth — would have access to the type of advice I was programming.
The same could be said of 75% of the United States. I wanted to change that.
Why has this been such a challenge?
It seems that there are legacy institutions that don't really want to see a whole lot of change. People are reluctant to change because it's too disruptive to their status quo.
Is it the wirehouses that have a legacy mindset?
Partially. It's even the old technology companies that advisors use. There's a lot of one company scratching another company's back.
There are an awful lot of companies that have had great opportunities to create change; but if they did that, it might disrupt one of their key vendors or key partners.
Nobody wants to [upset] the applecart.
What's the top concern in the RIA space right now?
One of the really big challenges is that there aren't enough financial advisors and certainly not enough fiduciaries to broadly serve all the people who need help.
