Nick Beim

The second and interestingly related structural problem is how profitable wealth management is.

So I think, as you know, small RIAs have profit margins in the sort of 30 to 35% range.

Large REAs have profit margins as high as 45 to 50, maybe even a little bit above 50%.

It's an incredibly profitable industry given the nature of pricing.

Someone somewhere historically said 1%.

That's what's going to be the cost for me to manage your money, and it's stuck.

It's sort of like 2 and 20 in the fund industry.

So it's an immensely profitable industry.

Because it's so profitable, there's not an incentive to innovate or adopt new technologies to survive.

If you compare it with e-commerce, which is a Darwinian fight to the death every quarter, the companies have to adopt new technologies to succeed and survive.

So with all that as background, when you provide a really high value solution in wealth management,

Your competition, the legacy players are generally, the competition is really poor and the economics tend to be really good.

So those are the things that got me very excited about wealth management.

But one last point I would highlight, because I do think this is the thing that Silicon Valley missed.

The advisors are absolutely central to wealth management.

Silicon Valley keeps waiting.

If you were to poll people in Silicon Valley today, 98% would say, well, of course the humans are going to be automated out.

And the humans are the product.

People, for the most part, there's a robo segment.

There'll be a digital advisor segment with AI, and those will grow more over time.