The Future of Financial Advice Is Closer Than You Think | With Ed Williams & Michael Byram (Ep. 113)

Steve Chen (0:00)

Hey folks, welcome back to Boldin Your Money. Last week, Vanguard announced it's acquiring Altruist for $4.6 billion, which is big news in the wealth management space and wealth tech world. But the part that got our attention, it wasn't the deal itself, it was the problem Vanguard says it's trying to solve, which is, they believe and we agree, that far more people could benefit from financial advice than the industry has the capacity to serve. And so that's a problem we're all trying to solve.

So today, we've got two people to dive in. So one is Michael Byram, Boldin CTO. He's helped build the technology at Altruist before he came over here. So he's got a take. And then Ed Williams, who's a lead financial advisor here at Boldin, who's worked at both Vanguard and places like Fassett and Tia. And so he has a take on where advice is going in the future. So with that, Michael and Ed, welcome to our show.

Ed Williams (0:51)

Hi, thanks for having us.

Steve Chen (0:52)

Yeah, great to see you guys. So let's just start with the news. So Michael, as a Altruist alum, would love to get your take on what you think motivated this deal, and what you think it means for the future of advice.

Michael Byram (1:08)

Yeah.

I've thought a lot about it since it was announced. I really think that the way that advice is going is it's getting closer and closer to the people being served. Traditionally, advice has been, hey, you've got two, three, four, five million dollars and now all of a sudden, an advisor has time for you and they can talk to you. Altruist really tried to make advice more accessible, make advice easier to come by. Vanguard's potentially seen the writing on the wall. I think there's a number of things that have happened with Schwab and Fidelity and different organizations started to draw lines in the sand and shown they don't really care about the advisory side of the business or the consumers at the end of the tunnel. They just care about the money behind it. Vanguard saw an opportunity, and I know they were previously an investor in Altruist, and so they were really close to what they're doing, and I think they capitalized on that.

Steve Chen (2:00)

Sure. It does feel like Vanguard's a good buyer. I applaud Vanguard and Jack Bogle for really leading the way in terms of democratizing investing. They aligned the investor as an owner of Vanguard, and through that alignment, they had a big incentive to drive the cost of investing down. They drove fees down, and that changed investing for last few generations of investors. We had both the index fund and just much lower fees. It used to be, I think back in the day, like Fidelity, Magellan, you could have 100 basis points just to own the fund. And now it's like, I think, for some of these Vanguard ETFs, it's like 15 basis points, or it can be even lower.

Ed, as someone who's worked inside of Vanguard and has seen the progression of investing and getting democratized, what's your take on whether or not we'll see advice get democratized?

Ed Williams (3:00)

Well, you have a couple of things going on here.

Most importantly, is Vanguard sees the rating on the wall, as you say, is that we can't possibly, as financial professionals, serve everyone.

Right? Vanguard has a group of financial planners, they call Vanguard Personal Advisor Services, and they're trying to get a lot of their mutual fund customers signed up for personal advisor services, and they charge 0.3% on that. But even with their team of advisors, they can't come close to serving everyone that needs serve. So that's why they wanted to go into getting into working with more individual advisors, meeting more clients where they are, when they can serve them. The issue is that even though Vanguard started out as an innovator, like you said, with the index fund and bringing down costs and stuff, now they're one of the established players. And so democratizing advice means to some extent cannibalizing their own business or competing with themselves. So in general, do I think advice will be democratized? Absolutely, but I don't know the extent to which some of the big established firms like Vanguard are gonna lead the charge.

Steve Chen (4:10)

What do you think, how do you think this change will come to the industry?

Ed Williams (4:15)

Well, I think it's gonna come from firms like Boldin and a lot of the new firms that are arising. Because when you have these big established businesses, you have an incentive to keep things the way they are, maybe make some mild changes. But when you come out with flat fees, ongoing flat fee subscriptions, we found by and large that this is what people want. So, what generally happens in this kind of situation is innovative firms like Boldin and some of our competitors will come out. Clients will move overwhelmingly to the new system and firms like Vanguard will have no choice but to, you know, if you can't beat them, join them kind of deal. It reminds me of when Vanguard started the index fund.