“We’ve developed methodologies that provide our clients with views on industry data that don’t currently exist.”

— Jean Sullivan, Head of Research, Ezra Group Consulting

Jean Sullivan has over 15 years of industry experience. She began her career with Cerulli Associates, then went on to launch her own firm, Dover Financial Research.  She patterned with the Money Management Institute for over ten years on their research reports. Today, Jean is part of the Ezra Group team and has some exciting announcements to make… Now hit the Play button!

This episode of Wealth Management Today is brought to you by Ezra Group Consulting. If your firm is evaluating new technology or looking to improve your current wealth platform, you need to contact Ezra Group. Don’t spend another day using technology that doesn’t offer an elegant user experience. Your advisors and clients deserve better and you can deliver it to them with the help of Ezra Group.

Topics Covered in this Episode

Companies & People Mentioned

Other Resources

If you are interested in more information about some of the topics Jean and I discussed, these blog posts would be useful:

Complete Episode Transcript:

Craig: Jean Sullivan saw a need in the industry for research on wealth management technology that was more in depth and actionable. She shares some of her insights and unique perspective on evaluating the wealth tech market with us. Welcome to this episode of the Wealth Management Today podcast. I’m your host Craig Iskowitz and I’m happy to have on the program today Jean Sullivan, the new head of Ezra Group’s research division. Hey Jean.

Jean: Hi Craig. I’m so happy to be here.

Craig: Fantastic, Jean. I’m so glad to have you here on the podcast. Welcome. So, we’re here to talk about the new research division at Ezra Group. I’m excited about it. It’s been going on for a little bit, but this is our first public announcement. So, I don’t want to steal your thunder, if you can give a little overview of your history and how you came to work at Ezra Group.

Filling a Gap in the Market

Jean: Okay, great. I actually began my career working with Cerulli Associates where I was a managing director of the consulting division. I then started my own company, Dover Financial Research, where I primarily worked with the Money Management Institute doing research on the retail advisory segment of the financial services industry. So we did a lot of research, data collection. We also worked very closely with executives across the industry from asset management firms to broker dealers, service providers, etc. As the industry began to change, I started looking to do something a little bit different. I had worked with the Money Management Institute for a long time and you and I had a great conversation around the importance of financial technology, especially in the wealth management space. And that led to the recognition of seeing that there was a real gap in terms of research and data when it came to financial technology. The other observation that we had was that a lot of firms were really looking for guidance in this space, whether it be evaluating emerging trends or helping them better position their firms. So, we sort of collaborated and I’m happy to now be the head of research at Ezra Group.

Craig: Yeah, I am happy as well. And, you know, we had the conversation, we’ve had a lot of conversations about this. We both saw that there a gap in the market for this kind of research, can you explain a little bit more about what we’re focusing on with as a group research?

Jean: Sure. So there’s a few things that we’re focusing on. The first is understanding the landscape, the technology landscape, and by technology we are really focusing more on wealth tech and more specifically on advisortech. We’ve noticed that there is a gap in terms of understanding the trends, the emerging trends that are influencing technology providers. So that’s one thing. The second thing is that we’re also looking to help enterprises, vendors, and other firms such as private equity firms, look at their own capability, look at technology solutions, and understand how they compare to each other. We’ve spent a lot of time doing comparative evaluations, across different types of technology solutions. So that’s the second thing. And the third thing is really we’ve helped a lot of clients look at the adjustable market. There’s really no information out there that helps vendors and wealth management firms understand the size of the various technology markets. And by that I mean we look at the size of the market in terms of assets under management, we will help vendors and enterprises look at revenue potential. We’ve spent a lot of time over the past few months looking at that piece of the industry as well.

Craig: Yeah, it’s not that there isn’t data out there, there’s lots and lots of data, right? I mean, I’m not going to mention the names of all the data companies out there. Well, why? But you do a way better job explaining this than I do. So what is it about all the data that these tech companies, fintechs and wealthtech come to us? Why can’t they take the report from fill in the blank company and just figure it out?

Helping Firms Understand Themselveswealthtech trends

Jean: Well there is a lot of data, but there’s a lot of overlapping data and there’s a lot of inconsistent data and there’s a lot of data that has gaps in it. So what we help firms do is really understand the data, and then we do the analysis around the data. We develop methodologies that take the data and provide our clients, the industry, with views on the data that don’t currently exist. Even though there’s data out there, it doesn’t always make sense and you can’t always pull different data pieces together without really understanding the data at a very granular level and then taking that data and meshing it in a way that makes sense.

Craig: That’s the key. You’re creating views that don’t currently exist.

Jean: Correct. So we had a client, a great client – Craig: All of our clients are great.

Jean: That’s true actually. So we have a client that was working with a private equity firm and needed to size their addressable market. They were selling a technology product, but they wanted to size the adjustable market, in terms of assets and revenue potential. We had to actually identify their potential clients across the globe, and tag them, based on certain market segments. So we were looking at the hedge funds segment, the institutional money management segment, the TAMP segment, broker dealer, etc. So we had to take all of the clients globally, tag them, size them in terms of assets, and then develop a pricing methodology to help them understand what their revenue potential was. And we work both very closely with the private equity firm as well as the technology provider.

Craig: Right. And we’re seeing a lot more of that, I’m getting a lot of inbound leads from the UK about this same thing where they’re looking for global data on the addressable market, total adjustable market, obtainable market, revenue potential, number of competitors, who the competitors are, where are they playing with space. There’s lots of data out there but not a lot of it is good and not a lot of it is created by people who understand the industry. I mean, you have over 15 years of experience.

Jean: That’s true. I do. Another example of that is that we worked with another technology company that was providing onboarding solutions. And they were thinking about moving into another market segment, so we actually sized the market segment for them, identified potential clients and helped them understand the revenue potential. But beyond that, that led to us working with them strategically to help them understand where their greatest opportunity was in terms of delivering additional technology solutions to the marketplace.

Covering More Than One Segmentwealthtech trends

Craig: We did. Can you talk a bit about firms that cover more than one segment and is that becoming more prevalent, and why is that a problem?

Jean: So you’re talking about the addressable market still?

Craig: Yes.

Jean: Okay.

Craig: When firms cover more than one segment of the market.

Jean: So, this is actually a trend that’s been taking place for a while now. But there were a lot of financial services firms that have multiple business lines. For example, Fidelity, they’re an investment manager, but they also are a custodian. There are investment management firms that do both hedge funds as well as mutual funds and other types of products. So the largest firms in the industry that occupy the largest market share often participate in different business lines. Part of the challenge is to understand the business lines and then sort of tag those companies if you will, in their appropriate segment and then measure that. And that’s pretty difficult to do, so we actually developed a methodology to help firms do that.

Craig: Which works super well. I mean it is really useful for coming up with straight forward answers to very complicated data sets.

Jean: Yes, yes. So that was the beauty of this project, we took all of that information and we created a very easy to follow overview of where the business was, what the revenue potential was without bogging the client down in lots and lots of data and analytics, or granular calculations. We were able to take it and actually present it in a way that highlighted the key findings and insights.

Craig: And what about the revenue models? That’s an important part of what our clients are asking us for. Whether they’re moving into new markets, whether they’re looking for funding, whether they’re looking for an acquisition. We work with PE firms directly, maybe they’re looking to acquire somebody and they want to know what the revenue models are. So why is it difficult to do?

Jean: Well, revenue models for technology firms often involve data points that we don’t have consistent information on. So what we had to do in this particular case, is approximate the revenue by using a different methodology. We evaluated their existing client base and came up with a different methodology for calculating or estimating the revenue. We use different types of basis points, calculations to come up with a revenue model that approximated the revenue but didn’t rely on the very detailed pricing model that they actually use with their clients.

Craig: Yeah. How do we get that data?

Jean: That was the tricky part. There are a lot of different data providers. Some of the data we ended up purchasing from research firms. Other data exists publicly and is available on the internet. So we just collected data from a lot of different sources and we vetted those sources. Both of us have been in the industry for a long time, so we have a really good understanding of what the data should look like and what we should be expecting from the data in terms of the size of the clients or the size of the firms, the number of firms in the data, etc. Once we found reliable sources, we then took all those sources together, created a very big database, and then got our work based off of that database. The other thing that we did for the client too, which was great, was we developed a battle map where we help the client understand where the target market was and which clients offered them the greatest revenue potential. We created an online battle map that allowed them to search the industry because we had created it using 3,500 different clients and they were able to search their prospective client base just by searching the database using simple criteria.

Craig: And that was extremely helpful to them and they were so happy. It saved a lot of time and effort and helped focus their sales efforts in the right direction.

Jean: Right. They didn’t have any of that information and they had been in business for a long time. I was really surprised, but they didn’t have that information. And it’s not only this particular firm, it’s firms across the industry that don’t have that type of really valuable information that they can use to better focus their sales efforts.

Updates from Ezra Group Research

Craig: And they need that. So let’s switch gears a bit and talk about some of the things we’re doing at Ezra Group Research and, specifically let’s talk about the areas that we’re focusing on, which is technology. So why are we focusing on that?

Jean: Well, one of the things that I noticed when I was working with the Money Management Institute is that asset management firms, broker dealers, the largest firms in our industry were really shifting their focus to technology solutions. That’s always been a part of the financial services industry obviously, but they were shifting away from some of the core focuses in their businesses towards developing technology solutions. Whether it’s a technology solution to better deliver advice, or technology solution to distribute their product or aggregate their data. A lot of their efforts were being shifted away from product development more toward technology solutions. They were also shifting toward becoming more efficient. So that led to our discussion but also led to our realizing that there was a gap in the industry in terms of understanding these technology solutions and helping firms understand them better themselves. So one of the things that we’re doing now is we’re developing a series of what we’re calling comparative evaluations on financial technology solutions, and it really focuses on the advisor tech landscape. By that I mean technology solutions that support the advisor, whether it’s at the front end in terms of gathering client data, advice and planning, or portfolio construction. Sort of the emerging focus on client interaction engagement. So, we are looking across the spectrum developing analyses that will help enterprises, advisors, vendors compare these solutions at a more granular level and make better purchasing decisions.

Craig: And that’s what it’s all about.

Invest In Others

Craig: Can you explain one new thing that we’re launching in our next report, which is the Ezra Score. Why do we do that and what’s important about it?

The Ezra Score

Jean: So the first report will focus on financial planning. In the report we provide a lot of qualitative content. We review the top five financial planning vendors, and that would include, eMoney advisor, MoneyGuide, RightCapital, Money Tree and NaviPlan. We go through each solution and we talk about the key components, such as retirement planning, estate planning, the quality of the user interface, etc. But it’s really hard for users of the report to then take that information and act on it. So we decided to develop the Ezra Score, and the Ezra Score takes the key capabilities, key features of financial planning technology and rates them on a scale of one to five. And this really helps people visually understand what the best fit software might be for them. So for example, if they’re an advisor or if there’s an enterprise firm that’s servicing advisors who are servicing the mass affluent market, there are particular software solutions that are a better fit for that advisor and that enterprise. So what this report does is it helps direct firms toward those solutions that will assist advisors in providing financial plans to their target client base.

Craig: And that it will. There’s definitely a lack of good information about technology and about software specifically from people who understand how it works, rather than just getting a very high level overview. There’s lots of high level stuff, but there’s very few in depth research reports that really compare side-by-side the output of these programs and how they differ, which I think is helpful for advisors making decisions as well as for broker dealers and RIA networks and RIA aggregators who are looking to provide that software to advisors.

Jean: Yeah, there is a lot of information out there and sometimes the information contradicts each other. So we’ve really taken great pains to be very objective about our evaluations. We’ve also talked to advisors in the industry and incorporated their insights into this report as well.

Future Categories for Review

Craig: And what are some of the other areas after we’re done with financial planning, there’s so many other areas to talk about. Wealth management technology is exploding and the categories are exploding with sub categories. So what are some of the categories of tech we’re going to be focusing on the next couple of reports?

Jean: There are so many to focus on. Some of the key areas that have come up in our discussions have been portfolio management software, risk tolerance software, CRM software marketing, marketing automation software, and that’s just to name four off the top of my head, there are many more areas that, but those are the core areas that we’ve decided to focus on.

Craig: Future areas could be billing and performance reporting, prospecting, onboarding tools, portfolio construction tools, and you know, the list goes on and on.

Jean: Right. Rebalancing.

Craig: Rebalancing, that’s an excellent one, we’ve done that one before. Well, I’ve written blog posts on rebalances in the past and we have a lot of internal research, but we’ve never really published it, which is one of the goals of the new research division is to take a lot of the information that we’ve had and expand on it and do a more in depth analysis of it and provide it to the market.

Jean: Right. I think the other thing that’s in the report that would be valuable to people is we review pricing and I realized that a lot of the pricing is public, but our pricing review tries to normalize pricing and give people an idea of which technology solutions are more or less expensive and how do they compare and in terms of comprehensiveness. So we provide guidance in terms of looking at the solution, the price, and then the depth of the offering.

Craig: And that’s important. It’s the depth of the offering that increases the complexity and makes it harder to evaluate.

Jean: Yeah.

An Industry First

Craig: And what about the, the, our first report? The financial planning software report?

Jean: So in this financial planning software report, it’s our first report, we cover a lot. We cover emerging trends, we go through our scoring methodology, we do a market segmentation, and then we do a deep dive analysis, both quantitative and qualitative, on each of the solutions. I named the vendors that we were covering. Our qualitative overview covers key differentiators, what makes this solution different than the others. It looks at the user experience, estate planning, analytics and reporting, pricing, the integrations, does the solution integrate with third parties, and if so, how robust is that integration? It also provides an overview of the solution and we give our advice in terms of what market we think this solution is the best fit for. Then we move beyond that. There’s a lot of financial planning vendors out there, right? We talk about the rising stars if you will, or the honorable mentions and we cover about seven different honorable mentions including Advisor Asset-Map, BlackRock iRetire, Morningstar Goal Bridge, RetireUp, and MaxiFi. We do a shorter version of an overview for those particular firms. And then I think what’s really unique is as you said, we’re going to be comparing the output. We have actually taken the output for eMoney, MoneyGuide, and MaxiFi and we’re comparing those. So we’re comparing three plans where we use the same underlying information and then we’re comparing and rating the output. I’ve never seen that happen. I’ve never seen that analysis done in the industry.

Craig: Exactly, exactly. Never been seen before.

Jean: An industry first.

Craig: An industry first! Trumpet it from the headlines, an industry first. Great. Jean, thank you so much for being on the program.

Jean: Thanks so much for having me.