I can count on one hand the number of investors I've ever heard of making a decision to go with a particular advice firm based on their technology.
Yep. It is number 11 on the top 10 list. It's needed from if you're an adviser, it's needed to compete, but it's not.
You ever go to a restaurant and say, 'What kind of oven are they working with back there?' Right. It's back of the house stuff.
You assume it's good. You assume it's there. It has to work. It's important. Yep. Yeah.
The fact that the client doesn't care doesn't make it any less important than it is.
That's about executing what you're promising that you can do for the client.
Welcome to the Informed Investor, the podcast that brings you research and insights to help separate the news from the noise.
Welcome everybody to the Informed Investor. We are coming today from Future Proof in beautiful Southern California. We have a very special guest today. We have Josh Brown, the CEO of Ritholtz Wealth Management. I'm our doctor, joined by Jake Dinder with Demential. We got our our
I think it's pretty clear who we work for.
Pretty clear. [laughter] Wait, I'm Do I work for Brooks Brothers? We'll get you a shirt. All right. All right. All right, Josh. Great to have you on the show.
It's fantastic to have you here. You are a legend in the industry with the advice, the blogs, the podcast. And your role really at Future Proof as well. You guys are a big part of this over the years.
Yeah, this is this is unbelievable to see all of these incredibly smart, talented wealth management industry professionals. We have people from the asset management side, advisers themselves. I think there are 2,700 advisers at the event, like lead advisers, and then all the support people and all the tech people. And it's just cool to get together with everyone once a year in this very special place. So,
and it's really global as well. I mean, we've got clients that are stopping by from the UK, from Australia. It's, you know what, if you're going to get on the plane to go somewhere, you should come to Paradise.
That's right. So, strategically, we [laughter] put all these palm trees here and it just it worked out.
Well, how did you and Barry, your partner, how did you guys get so involved in Future Proof?
Great question. We had done some conferences of our own prior to the pandemic and we actually threw an event in Arizona. It was called Wealth Stack. I think you guys were there.
And we were all excited to do Wealth Stack 2. The problem was the calendar went from 2019 to 2020. And very quickly we realized there ain't going to be any live events, maybe ever again, if you listen to what people were saying. So we sat out for a couple of years and we thought about what would it take to get people on a plane again. What would it take to get people to want to come and be with a group of thousands of others? It's not continuing education credits and it's not checking a box and it's not to fulfill an obligation to some society that they're a paying member of. It's got to be bigger. And what we hit on was networking.
Having great visuals for your LinkedIn or your Instagram is number two. And then number three, you have to absolutely crush it with the experience. It can't feel like you have people cooped up in a hotel ballroom eating Kind bars for three days. No one is getting on a plane for that ever again. And that's how Future Proof was born. We did the first one in '21. Now we're in year five. We've done two of these as well in Miami. So this is our seventh event. The progression is crazy. Year one there were 1,700 people here. This year we're knocking on 6,000. So, it's safe to say the bet we made has paid off and now I think everyone gets to enjoy it.
It's huge. People love it. Like we said, coming from around the world.
Absolutely love it. Here's the thing that I love about coming to this event, my fourth year coming to it, is that I think there's been this view of sort of wealth management, money management, old, stodgy, not connected. And one of the things that the vibe here is how do we make sure we design this system in a way to reach, in my opinion, a new audience, a younger audience, pull people in, all the social media, and that's the thing that it's just a different feel than any conference.
Yeah, I think that's right. And that stodginess, that reputation for being old and stuffy, it was well earned. And I think it's what organizers in this industry thought the practitioners wanted. They thought people want to show up in a suit. People want to be at these locations that are, you know, buried inside of a city or in some kind of a high-rise. But I think what's happened in the wealth management industry, so much of it has grown up away from traditional Wall Street. You guys are a great example. You guys are in Austin, Texas. You couldn't be further from Wall and Broad if you tried. I think we're an example of that. We built the firm on the internet. We had more clients outside of New York than inside New York since day one and still do. We never looked anything like Wall Street. So I think there are enough of us where we actually became the mainstream. The modern wealth management and asset management industry is very different than it was even 10 or 15 years ago. It happened almost overnight.
Well, I love that you're talking about trying something different when you started the business, you know, going through the internet. I loved your comment about coming out of COVID and trying something different and being comfortable with that. And I think everybody is comfortable on that. If you try something doesn't work so well, that's okay. You need something different than going into it.
You raised a great point. This only looks obvious now. People thought we were out of our minds. They were calling me Jaws. They thought we were they thought we were building Fyre Festival for finance. So now it seems obvious. I'm not going to tell you like nothing went wrong along the way. There was some bad ideas we had that thankfully we didn't go forward with. We've iterated, we've evolved, we've done some things that we didn't bring back in year two because people weren't into it. But when we find something that people really like, we double down. A great example of that is the Breakthrough area, which as you can see has grown so large, now we have to host it literally on the beach. I think we're going to have something like 270,000 one-on-one 15-minute meetings.
Every one of those meetings was prescheduled on the app before people even showed up here. That is revolutionary. What does that mean for the industry?
Think about what conferences were before this and still are elsewhere. You show up to an event. There's an exhibitor hall. There are, I don't know, 300 companies that were convinced to buy a booth. They're away from the main area. They're relying on foot traffic. And then they have to figure out how to flirt with people as they walk by. Like, hey, you want a squishy? You want to [laughter] that awkward? You want to, right? Hey, this will keep your beer cold. So, anyway, where are you from? Forget about all that. We want people to have purposeful meetings that are organized in advance. We want both parties to want the meeting. And we want those to be introductory. There's no reason to take someone out to lunch and waste an hour if commerce is not going to happen or if there's no spark or there's no reason for that to continue. So people have compared it to speed dating. I think that's accurate.
But we're not doing any flirting. There's no footsie.
Sit down. You said you wanted to talk to me. I want to talk to you. Let's see if there's something here. If not, hey dude, great to meet you. Or you know somebody that we should meet.
Yeah. Or right. Or you know who you should really talk to. I met this adviser and they're actually looking for what you do.
That's been really successful. We've doubled, tripled, and quadrupled down on it. So, it's an example of us saying, 'Oh my god, we were right. We were so right. People love this.' Doesn't happen all the time, but when it does, and there's a great parallel to this in investing, you figure out what the data is telling you, what works, and you double and triple down on that. Eliminate the stuff that you already know empirically doesn't. We feel the same way with the live event experience.
Great summary. Okay. Bunch of stuff I want to get into to set it up though. Let's hear about your career. Let's go back in time, your business or your experience in the wealth management space and then from there I'm going to just start pummeling you with questions.
Okay. Well, we'll start. I spent 10 years as a retail broker selling stocks over the phone and closed-end funds and IPOs and I was a product sales guy. Nothing wrong with that.
Late '90s into 2010. So, started out cold calling. Didn't know any better. And in the financial crisis about 10 years after I got rolling, I realized nothing that I have just spent the last 10 years has really been helping anyone. I dropped my Series 7. I became a financial adviser and I said from now on I don't sell the sizzle. I want to sell advice. I want to sell myself. I want to position myself on the same side of the table as the client, removing the conflicts and really being paid by the person who's getting the advice. Right? So at that time that was not as common as it is today. Now we take it for granted almost no one was acting as a fiduciary. So I saw that opportunity during the crisis because basically I had nothing to lose. So I switched over to this side of the business, was lucky enough to meet Barry Ritholtz, my co-founder and current partner. Barry was a mentor to me. He told the truth. He said it how he saw it. He let the chips fall where they may. And I watched him be brutally honest with the media, with clients, with financial advisers, and I just said, 'When I grow up, I want to be like that guy.' We built an amazing business together. We have about 95 employees. We're 13 years in, almost 10 billion under management. Cap table is fully owned by employees, no outside investors. And it's been an incredible ride. And it all started with that epiphany from back then where I realized this is not helping people. I need to figure out a way to do this where other people can win too.
Let's talk a little bit about Future Proof trends you've seen since you started this because really if you walk up and down here you're talking about the companies that are on the forefront of trying to enhance that client experience, that financial experience ultimately to benefit the end investor. What are the trends that you've seen over the last couple of years with the people that come to this? Obviously ETFs are a really big part of the event. I think in recent years custom indexing strategies, direct indexing have become equally big. This year though seems to be all about custody.
Custody is like the number one topic at the event this year. I think there's been this realization that custody is sexy again. It's been a long time.
Yeah, keep in mind the custodians were processing trades for zero in commission for most of the last four years and nobody really cared about the nuances between this one or that one. It was Coke and Pepsi.
