The WealthStack Podcast
00:06:49 · Mark Swan
[00:06:49] S2: Yeah. It's a great question. So for your listeners that don't know, so I was at a company called Revolut before this. Revolut is less well known in The US, but it's actually now probably the largest digital bank in the world. By the time we left, we scaled the business or helped scale the business up to 45,000,000,000 valuation, and it was serving over 50,000,000 clients globally across like 40 different countries. And Revolut was really a pioneer of digital banking. I've mentioned to you, I just moved to New York, you know, to set up my Chase account was two and a half hours in the branch with someone pressing buttons to open their account. Revolut was you could do it in three minutes on the subway. And so really, it just digitalized a lot of the banking experience, but also offered a whole number of different products as well. So it had everything from you could book hotels to having savings account. And really, that was what I would call like the first wave of digitalization and financial services, where you really driven actually by mobile. So it was the invention of smartphones, digital banking really was being able to then actually have mobile banking, which I think actually accelerated that wave. What we're now entering into in the new wave is actually with AI. And it's not about kind of consumer side necessarily, but actually it's on the B2B side and going into big firms where there's very large you know, kind of operational complexity, which actually can now be automated with AI. Now, what was my experience at Revolut? So in the last, I'd say, eighteen months of my time there, we were as a bank going in department by department, using LLMs to actually streamline a lot of internal process. We were actually one of the first banks to ever be on OpenAI enterprise. And we were using AI to help streamline customer service. There was actually around legal compliance, kind of these like thorny middle and back office processes. Actually, my co founder, Philippe, was the head of AI at Revolut, and was like spearheading many of those processes and workflows. And really what we just saw was that number one AI is here. And we saw that in 2023, very early signs that there was a real shift with what is happening when we moved into actually being able to complete work end to end.
00:08:59 · Mark Swan
But the other thing we saw was that AI is more than just a single call to ChatGPT or Claude, right? If you want to actually install and actually going to implement AI within a large regulated financial services organization, whether that's a bank, or whether that is a wealth management firm. The LLM call is just one small part of a much larger architecture of software, right? You need controls in place, you need guardrails, you need processes, you need checking points, need human in the loop evaluation teams, like all these things. And so our learning was, you know, AI is coming in order to really implement this properly and safely and securely and at scale in large financial services organizations, you need to be much more hands on and make sure the guardrails are there. And so that was really the large part of why we founded Nevis and wanted to find this business to help firms really get the benefits that we managed to implement a couple years ago.
00:09:54 · Shannon Rosic
[00:09:54] S1: It still blows my mind that Europe and APAC region are just feels like a million light years ahead of The United States when it comes to digital banking, but that's a whole other conversation. Yeah. But I do appreciate the background and context, but... And I wanna jump into our first segment, Mark, that I call stats all folks, and I pulled a few stats that feel relevant to this conversation. And one of them you actually already dropped, so I wanna come back and ruminate on that one a little bit because you found that advisers spend up to 80% of their time on admin, not clients. And another stat I found was that McKinsey estimates the industry could face an adviser shortage of an upwards of... We're looking at 6 figures, probably about a 100,000 by 2034 at current productivity levels. And you actually also recently shared a customer story saying its platform is saving advisers ten hours a week at a $25,000,000,000 RIA, which is quite impressive. So when you hear those numbers together, what do they say about the real bottleneck in wealth management right now, you think?
00:10:54 · Mark Swan
[00:10:54] S2: Yeah. So the McKinsey report, I think, is actually... As one of the most fantastic reports, which I think summarizes where that bottleneck is. And if you think about demand and supply, right, so what is demand for financial advice, right? It is accelerating, and in particular in The US, right? So wealth is just growing significantly, right? And that is both from a wealth transfer perspective, but also just like new wealth is growing, right? Recall that about, you know, the number of people who have more than, I think it's 500,000 in assets, or I think maybe it's either 500,000 or a million in assets is growing by eight times faster than the rate of the population. And people are just getting wealth more at a higher rate than just population growth. What that means is demand for financial advice is growing, right? People have more complexity. And even on the higher end, also clients are demanding more, right? So where your typical advisor might have just done almost like brokerage type style relationship. Now you have a full financial advice, financial planning, you typically get maybe doing tax planning, states, like things that were actually reserved for family office are now actually being kind of squeezed into the same 1% fee to clients today. And I think that will continue to grow. So there is one side, which is just like complexity and demand is growing on the demand side. And I actually don't believe that will ever change. I think that's just a chart that's just growing like this, right? And so then the question is, who's going to supply this? And on the last, I'd say, kind of ten years ago, the argument might have been that Robo will actually start solving this problem. So AI will replace the need for an advisor, and we'll be able to actually service clients. And I actually think that experiment has played out really unsuccessfully, actually. I think clients have voted with their feet, they don't want an AI managing their money. And I think that, you know, I always think of this as like in the war between performance and service, right? Like, that's the ultimate of two things that advisors provide. I actually think service is really why people stick around, right? Whereas Robo was maybe thinking that service was not important, and it was ultimate performance, right?
00:12:58 · Mark Swan
And so if you believe that service is important in the relationship, and you believe that humans are important in the relationship, then you need to bet on the humans essentially providing the supply for wealth management advice. And by tying this all together, you then look at, okay, how do we get more out of human capacity, essentially? And at the moment, the number of advisors who are retiring and leaving the industry is essentially the same as the number of coming in. It's actually, I think slightly negative actually, where there's more people leaving than coming in. And so on one side of the numerator, you've got all this demand. And on the denominator, you've got actually a decreasing number of advisors. And you have all this capacity gap problem, right? And the question is, is servicing this demand? And we believe that humans and advisors will still do that, but we need to actually unlock their time. And so coming back to your first bullet point on the 80%, what are advisors doing all day, right? And what are teams doing all day? And if you actually look at it, a lot of it is administrative work, right? It's sitting in emails, trying to service requests from clients. It is being able to then prep for meetings, do follow-up. It's then on their team side, typically not the advisor, but typically their teams like trades, doing cashiering, doing RMDs, like basically interfacing with custodial platforms, trading platforms, and so on. And the idea is that if you can actually help streamline all of that work that goes in around servicing clients, then advisors can actually start managing many more clients and actually having many more kind of touch points with the clients that they do have. So basically take that time back and help them redistribute that to more time saving things. So it's ultimately demand, supply and demand. The demand is there and is growing. And the question is just how do we unlock more human supply, essentially.
00:14:43 · Shannon Rosic
[00:14:43] S1: I love that. Unlocking human supply and capacity. I think that's a great way to put it. And quelling fears out there that AI isn't coming for advisers, it's really meant to, like you said, be more of that solution to be their copilot so they can do more because Right. At the end of the day, the human element is is incredibly important. The majority of this industry is based on human relationships. That's how things get done. And so there's always going to be that emotional and psychological element to money, where people are always going to feel better talking to another human than a machine when it comes to making those kind of decisions. So I'd... I would agree with you there. And I... I'm curious your thoughts because you're obviously making the bigger argument that AI should help complete operational work end to end. So let's get under the hood a little bit. What does that actually look like inside an RIA in practice? If somebody were to utilize the Nevis platform, you know, what could their ideal day to day look like?