Altruist CEO & Founder, Jason Wenk — What Financial Advice Should Be
Last September, Ally Rae McCloskey sat down with Jason Wenk, Founder & CEO of Altruist, who was in Philadelphia shooting an episode of Altruist’s Human Advisor Podcast (check out that episode here). Altruist is an all-in-one digital platform for Registered Investment Advisors (RIAs) and their clients that helps make financial advice more efficient, more affordable, and accessible to more people. Using Altruist, advisors have cutting edge tools on an investment platform that significantly streamlines and reduces their costs, enabling them to serve more people, better. The upstart most recently raised its $50mm Series B led by Insight Partners, with follow-on participation from Series A investors Venrock and Vanguard.
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Ally and Jason discuss:
- The genesis of his passion for democratizing financial advice
“Most of our work was actually for extremely wealthy people or for proprietary capital, so the actual firm’s money, and I couldn’t help but pretty quickly start to think about where I was from and knowing there’s no way anybody that I’d ever met in my life up until that point would ever have access to that kind of wealth management…it was just not accessible”
- Why he chose to focus on Registered Investment Advisor (RIA) firms specifcally
“This just feels right. This feels like where I would want to get help, this is where I would want my parents to go get help, this is where I’d want my friends to go get help with their money.”
“I felt like [RIAs] were the future. This is where your advisor has a fiduciary obligation to work in their clients’ best interest, the don’t work for a big company, they just want to work for their clients. And also it very much fit my ideals around entrepreneurship: it was designed for people to start and launch their own small businesses, even solopreneurs.”
- How the space has evolved over the decades he’s been a founder in financial advice and wealth management, and how he was able to get “more efficient” with each new company
“Our team built all the technology nesting on existing infrastructure of the industry, the existing custodians, and clearing firms, and asset management providers, and even to some degree other fintech companies that had pretty antiquated architecture in how they operated, so we had a of liming factors. There was tons of friction, it didn’t matter how well we built our systems, if we were still relying, for example, on a custodian that required physical paper to open an account or to send a distribution to a client, these are really core, basic enemies of scale. You cannot brute force your way through that type of inefficiency”
“Ironically, around the time when I pivoted out of direct-to-consumer is when a lot of roboadvisors were just getting started. And I looked at those businesses and thought boy, they’re going to learn the hard way that customer acquisition is really expensive, and it’s going to take a lot longer to achieve scale than they think and be a lot more expensive, and so I’m going to choose to go B2B2C. So right around 2010 is when I made the decision that it’d be a lot easier if I could work with an existing infrastructure of advisors and just arm them with better tools so they could serve more people.”
- Where he stands on the human advice vs. roboadvisory trade-off
“Technology can do a lot of great things, but if we have — which we all do — these really unique personal things that are happening in our lives that sometimes you just need someone to talk to and a chatbot is not the solution. Having that human can really help. Now, that human needs to have incredible technology and skill so they can then implement that advice at scale really efficiently, really low cost, so that the customer can actually achieve more with their money.”
- The final straw that compelled him to start Altruist
“You’re dealing with a really disconnected experience of opening accounts, funding accounts, trading accounts, even in servicing clients you’re dealing with so many different parties between tech vendors and clearing and custody-type vendors, so I needed 5 years of smashing my head against the wall trying to fix these, until I finally realized someone has to fix this at the infrastructure layer, that’s the real challenge and it’s also the biggest opportunity, which is partly why no one had ever done it before”
- Quantifying the potential impact of better and earlier financial advice
“This idea that people should have to figure this sh*t out on their own and then someday when they have money they can go and hire somebody? That’s crazy. We need to get access to advice as early in people’s lives as we can, this will allow people to make good choices, if you make good choices the outcome can increase by orders of magnitude and people don’t always realize how big of a difference that 1 or 2 or 3% makes in an additional 5–10 years. It is such a huge amount of impact.”
- How he cold solicited the Top 10 Financial Advisors To Watch on Linkedin as part of customer discovery
“I didn’t want to talk to the same advisors… I wanted to talk to what I considered the next generation of great advisors and it just so happened to be there was an article came out in the Financial Advisor Magazine that had something to the effect of ‘Ten Advisors to watch’ and so I just cold solicited all ten of them on Linkedin one day saying I’d love to talk to them”
- Launching the Human Advisor Podcast to elevate the stories of a new breed of modern advisors
“I’m getting old myself, so I can say this and it’s not derogatory, but financial advice was an old, white man business, for a long time, and I think people are ready to see that change and make it more accessible”
“It was very much an idea to tell the stories of advisors who have really interesting backstories that lead them to decide to passionately serve a specific group of clients”
“And the RIA community is cool…I talked to an advisor recently who’s building a firm where everything about it is based on vegan principals. Not just vegan diet principles, the same principles that would govern those but in your investing and financial planning life.”
- Attracting a “dreamy” group of board members, including Wharton Alumni and Former Chairman and CEO of Vanguard, Bill McNabb, Jonathan Rosenbaum (Insight Partners), Nick Beim (Venrock), and Ryan Barrows (Vanguard) as an observer, and Jason’s advice on fundraising
“These are incredible SaaS investors, from storied investment firms, and some of the most important people in finance”
“The business itself has to be desirable or investors won’t back it. This idea that “oh it’s so easy to raise money now,” look there are some bad ideas that get funded for sure and there are some wildly bad valuations happening, but I think that rather than assume that it’s easy and everybody get funded, go build a great idea, have an amazing team, take early product-market fit, achieve some level of really rapid early growth, and that’s then when you can raise the larger round really that accelerate the business in that really fun hyper acceleration phase”
- Attracting folks to the challenge of taking on 2 major incumbents controlling 80%+ market share and each with $100 billion dollar valuations
“Altruist is actually an incredible business. When investors look at what we’re doing, that recipe of challenge when it’s taking on 2 major incumbents who are $100B companies is super opportunistic, we’re talking super antiquated technology, largely a mostly unhappy customer base with very few other options, very very big moat around the space, this is a good space. If you have the right investors who are willing to think big, they’re going to rally behind ideas like this, so we can build a monumentally successful business because the economics support that”
- Why Altruist’s people quotient centers on kindness, brilliance, and grit
“If your idea is big and you’re lucky enough to find some early product-market fit before you’ve had to build the business, which was our case, then in order for it to scale and be successful you have to have amazing people. And our people quotient was very simple…it was: let’s find people who are kind…everyone had to have a really high kindness quotient, which basically means treat other people the way they should be treated, we don’t have any room for arrogant jerks. The next was brilliance, which we define more as this desire to constantly get better and that usually means that you’re very humble…and the last was grit. We’re a startup, this stuff is hard…You have to have people who love doing hard stuff. If it was easy, then there would already be 50 companies in this space doing exactly what we’re doing.”
- And a WHOLE lot more
About Jason Wenk
Jason has excelled as a leader in the financial services industry over the past 20 years, working as an advisor, investment systems developer, analyst, and founder of multiple companies. He is dedicated to making finance a collaborative space between advisors and consumers, emphasizing the importance of human connection and interaction to improve financial wellness with affordable and accessible resources for more people. After a number of successful and innovative business concepts including FormulaFolios and Retirement Wealth Advisors, Jason chose to focus on creating meaningful experiences for advisors and their clients with fintech firm, Altruist. Jason was awarded GRBJ Newsmaker of the Year in 2016 and 2017 (finance category) and was named an EY Entrepreneur of the Year in 2018.
About Altruist
Altruist is a Los Angeles-based company on a mission to make financial advisors more efficient, more affordable, and accessible to more people. The team builds products to provide advisors cutting edge tools, and offers an investment platform that substantially lowers costs. As a completely digital brokerage, Altruist helps advisors provide their clients with a delightful experience with their money. Learn more at altruist.com, follow on Twitter @altruist, and check out their Human Advisor Podcast:
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About the Author
Ally McCloskey is a second-year MBA Candidate at The Wharton School and Co-President of Wharton FinTech. She fell in love with the rapidly evolving FinTech ecosystem during her years in both wholesale and retail FinTech Strategy, Incubation, and Partnerships roles at JPMorgan Chase & Co. Nowadays, Ally is focused on becoming a best-in-class advisor, partner, and occasional angel investor to early- and growth-stage FinTechs. On ‘campus,’ you can find her sourcing/dilligencing pre-seed — Series A startups as a Venture Fellow for Pear VC, hosting episodes of the Wharton FinTech Podcast, and scouring the Seed - Series A FinTech universe for captivating full-time roles upon graduation in May. Originally from Connecticut and a Vanderbilt alum, Ally enjoys staying active (yoga, snowboarding, Peloton’ing, ice hockey), experiencing new cultures, and crafting. To get in touch, you can reach Ally on Twitter, LinkedIn, or at allymcc@wharton.upenn.edu.
