Nitrogen Wealth with Aaron Klein | E299
A growth platform for wealth management firms.
On today’s episode of Fintech Impact, we have a repeated guest Aaron Klein, the co-founder and CEO of Nitrogen Wealth formerly Riskalyze. Aaron was back in April of 2019, and he has been up to quite a lot. Aaron introduces the concept of behavioral science, alluding to how clients react to financial decisions. He shares an anecdote about an advisor who realized that he was anchoring his clients' portfolios based on his own risk tolerance which led to a misalignment in clients' expectations and actual investment outcomes.
Episode Highlights
00:52: Aaron discusses the evolution of their company, originally named Riskalyze, reflecting on its 12 1/2-year journey since its foundation and the launch of their initial product for advisors.
01:12: Aaron delves into the company's key concept of measuring an individual's risk tolerance and aligning it with their investment portfolio, emphasizing the issues with advisors not effectively aligning with clients' risk preferences.
02:42: Tracing the company's growth, Aaron details their transformation into a robust platform serving wealth management firms, assisting them in client acquisition and management.
03:26: Jason expresses a desire to discuss the client's journey with Aaron, mentioning the need for better structures and processes in the industry.
06:25: Aaron clarifies that while their platform doesn't primarily generate leads, it can help convert leads into meetings. He also notes the ability for advisors to incorporate a "What is your risk number?" button on their websites as a potential lead generation tool.
08:24: Aaron explains that by engaging in the Nitrogen process, potential clients may become more interested in their portfolio's risk and seek a meeting with an advisor to align their portfolio with their risk preferences.
09:20: Jason acknowledges that while there are solutions for SEO and content marketing to attract leads, the real challenge lies in the post-acquisition phase—how to nurture and engage these leads effectively, which he views as a significant task.
11:28: Aaron mentions the tool "retirement maps," designed to help advisors quickly assess a client's risk profile and financial goals, whether they offer comprehensive financial planning or not.
13:39: Aaron discusses their proposal capabilities that enable advisors to create investment proposals aligned with a client's risk tolerance and needs, emphasizing the credibility of data and analytics over traditional trust-building methods based on image alone.
14:31: Aaron emphasizes the importance of using data and analytics to build trust with clients, especially in the post-COVID era, where the traditional methods of trust-building have evolved.
16:46: Aaron agrees with the importance of dynamic, engaging presentations but acknowledges that some clients still prefer traditional reports, and therefore, their platform offers both options.
18:08: Aaron emphasizes the need for financial advisors to use modern, dynamic tools to demonstrate their active management and commitment to their clients' financial future.
19:05: Aaron introduces the concept of "check-ins," a client satisfaction survey tool designed to gauge clients' feelings about the markets and their financial future. The tool aims to simplify the feedback process by asking just two questions through email and provides a dynamic, interactive experience.
21:46: Aaron points out that clients who answer "green, red" (positive about markets but anxious about their financial future) are giving an early warning signal that they may leave the advisor if not addressed promptly.
22:27: Jason acknowledges the importance of addressing the broken client experience when clients feel good about the markets but not their financial future.
24:32: Aaron explains that the capabilities primarily like lead generation, risk tolerance assessment, engagement tools, and portfolio analytics support the creation of proposals for prospective clients or adjustments to existing client portfolios.
25:39: Aaron provides an example of how the visualization of portfolio diversification through correlation and anti-correlation can help advisors communicate the benefits of their proposed portfolios compared to a client's current portfolio.
26:48: Aaron explains that while Nitrogen isn't marketed as a compliance tool, solo advisors can significantly benefit from the platform as it helps them document client risk preferences and agreements, reducing the risk of legal issues in the future.
29:23: Aaron mentions that many advisors don't perceive Nitrogen as a compliance tool but rather as a growth tool, which inadvertently enhances their documentation and compliance practices.
30:27: Jason acknowledges that Nitrogen's approach is aligned with the idea that compliance should be integrated into the overall client servicing experience.
32:10: Aaron discusses how Nitrogen's strategic shift led to a focus on becoming a growth platform rather than an asset management platform, highlighting the changing landscape in the financial industry.
34:48: Aaron expresses his surprise that Nitrogen's direction did not lead towards becoming an asset platform or TAMP (Turnkey Asset Management Program) but rather toward being a best-of-breed software provider focused on the growth platform vision.
35:13: Aaron emphasizes the need for top-tier wealth management firms to use top-tier technology and believes that integrating the right technology into the growth process is crucial for success.
36:57: Jason points out that many large players in the industry have been acquired by even larger companies, and the landscape has shifted, making it more challenging to replicate past successes.
38:16: Aaron agrees and acknowledges that software providers should focus on delivering seamless integrations to ensure that best-of-breed solutions work together seamlessly.
39:01: Aaron discusses the importance of deep linking and seamless workflow integration to make it easier for users to transition between different software applications.
40:07: Aaron highlights a shortage of advisors given the demand for advice. He also expresses a wish to end industry disputes on topics like client charges and investment methods.
43:27: Aaron highlights the challenge of balancing customer feedback and discusses the advisors who value learning. He emphasizes the importance of advisors investing in themselves to continually serve their clients better.
44:58: Aaron discusses what excites him the most about his work, emphasizing the valuable role of financial advisors and challenging Hollywood's portrayal of them.
3 Key Points
Aaron Klein talks about Riskalyze's transformation over 12 1/2 years to Nitrogen Wealth, a platform for wealth management firms.
Aaron discusses behavioral science's role in finance and introduces tools like "retirement maps" and "check-ins" for better client engagement.
Nitrogen's focus shifted to being a growth platform. Aaron stresses the need for integrating top-tier technology in wealth management.
Tweetable Quotes
Risk is one of the critical dimensions when building investment proposals for clients. - Aaron
"Emphasizing the issues with advisors not effectively aligning with clients' risk preferences, Nitrogen Wealth steps in to bridge the gap." - Aaron Klein
"In the post-COVID era, trust-building evolves - data and analytics become more crucial than image alone." - Aaron Klein
"Nitrogen: Not just a compliance tool but a growth tool, inadvertently enhancing documentation & compliance practices for advisors." - Aaron
"Top-tier wealth management firms need top-tier technology. Integrating the right tech into the growth process is vital for success." - Aaron Klein
Resources Mentioned:
Facebook – Jason Pereira's Facebook
LinkedIn – Jason Pereira's LinkedIn
Woodgate.com – Sponsor
LinkedIn – Jason Pereira's LinkedIn