Page 37 - Investment Advisor March 2021

Going Out on Top Amazon & Financial Services
“Bezos also demonstrates something that’s very hard to do pro- Before starting Amazon, Bezos worked for telecom firm
fessionally: go out on top,” according to Boneparth. “Nothing Fitel and then investment management firm D.E. Shaw & Co.
can be more detrimental to the value of one’s practice than Amazon, meanwhile, has frequently expanded its product and
failing to pass the baton or exit. It also shows the importance of service assortment over the years.
having a succession plan and knowing who to pass the baton to.” Is Bezos likely to return to the financial sector in some way
Agreeing on that latter point, Tommy Marshall, executive on his own, or is Amazon interested in making a major push
director of Georgia Fintech Academy, said: “My understanding into financial services? Bruckenstein is somewhat doubtful,
is that Bezos groomed the replacement for quite a while.” pointing out that tech firms “tend to prefer industries with less
That replacement is current Amazon Web Services (AWS) regulation [that] are easier to disrupt.
CEO Andrew Jassy, who will take the helm this summer, while “That said, at some point, we will see some of the tech
Bezos will become executive chair of Amazon’s board, the giants looking to get into financial services in some way,” he
company said. explained. (That is, more than they already have.)
“Bezos is changing his position on a high, which is the Welsh predicts that “Amazon will enter the financial ser-
dream for most CEOs, and especially founders,” according to vices industry, but not in the core world of investments.”
leadership consultant Jennifer Mackin.
“ As an industry, we are still way behind most
Good Succession Planning
“Succession planning requires great other industries with regard to machine learning
thought and time, which I think has gone
into Jeff Bezos’ decision. Announcing and AI. Those who embrace these technologies
six months ahead of the change is a lot
of notice,” explained Mackin. intelligently will prosper in financial services.”
Bezos “can help advisors realize that
they can step back from a business that —JOEL BRUCKENSTEIN
likely feels synonymous with them,”
said David DeVoe, CEO and founder of consulting firm Although the digital rivals “he would run into are already
DeVoe & Co. After all, “if Jeff Bezos can step back from entrenched, have invested massively in technology and have
Amazon, you can surely step back from your RIA — with the already competed out most of the costs of distribution,” he
proper planning,” he said. said, “in areas like banking and insurance, there are still tre-
“Ideally, this realization — that even you are replace- mendous opportunities for Amazon to leverage its distribution
able — can help move the succession planning forward,” might and disrupt those slow technology adopters.”
DeVoe explained. “Many of us CEOs won’t let go. Realizing we Because of “the sheer number of financial transactions that
can let go is the first step in transition planning.” Amazon is responsible for, you can make a pretty good argu-
However, the Bezos succession plan is “not an example to ment that they would get into the financial services space,”
follow” because “surprise announcements are not good for the Boneparth predicted.
founder transition,” he argued. “However it seems clear that they are more focused on
“By contrast, the transition plans of Chuck Schwab at Schwab Amazon Web Services, so there’s an argument to be made that
and Harvey Golub at American Express are the gold standard,” financial services is not at the top of the priority list,” he added.
DeVoe said. These CEOs seasoned their candidates with a vari-
ety of senior roles, then identified their successor years before a More Views on Amazon’s Plans
specific transition date, and were there to coach them for years.” Iskowitz says Amazon is “already in financial services” any-
Unlike the other experts, consultant Craig Iskowitz, CEO way, explaining: “They have a multibillion-dollar commercial
and founder of Ezra Group, didn’t see much of a lesson that
loan book (lending to small third-party sellers), you can open
Photo: Matthew Staver/Bloomberg rience with an advisor to Amazon,” Iskowitz said. However, Amazon Rewards Visa Card, load cash into an Amazon wallet,
an Amazon checking account (through Chase), sign up for an
advisors can take from Bezos and Amazon.
“It’s become a meme in our industry to compare client expe-
and get a credit score from the company’s virtual assistant Alexa.”
“it’s not a fair comparison” because “choosing an advisor is very
However, “the $1 million question for advisors is will they
different from buying physical products from a retail website.”
offer investment accounts?” Iskowitz noted. “I don’t think so.
Fintech and financial services firm Acorns provides “an
They’re focused on the retail banking side since this is more
closely related to shopping activity.
experience that advisors should look to emulate” instead, he
“I would expect a [buy now, pay later] partnership to be on
said: “Create a community and focus on education and savings
to attract younger demographics.”
their roadmap,” he said. “Remember that another huge retailer
MARCH 2021 INVESTMENT ADVISOR 35