Hortz: Now in your second year of development, what are you learning about the dynamics of building a platform?
Spina: The key learning is a meta learning of sorts—sitting at the center of a network creates a terrific vantage for building a platform. The challenges and trends are easier to see. I know you are a fan of Greg Satell, the transformation and change expert. He states it so well: “We can no longer rely on controlling and leveraging assets, but now must take into account new sources of power, which reside not at the top of hierarchies, but at the center of networks“.
While we clearly see the power of establishing a network centered between asset managers, wealth management firms and advisors, each network participant comes with its own considerations and priorities. The need for educating participants about the potential of this new network has been both a key learning and driver of our succession.
Hortz: How do you then build the platform into a functioning community and what are the benefits?
Spina: At its launch, FLX offered asset managers access to a marketplace that provided modular and on-demand distribution solutions. As a member of FLX, asset managers received a community page that served as a central location for the asset manager to place marketing content, product training and pertinent firm information. Asset managers could then search through the various marketplaces within the platform and leverage teams of experienced sales personnel, as well as sales leadership, sales infrastructure, technology tools, marketing, website development, etc. The interest in this unique approach was immediate, and the firm executed on its first capital raise.
Covid-19 transformed the world and economy as we knew it. This crucible moment led to a second key element of building the platform into a functioning community. FLX enlisted the clients of asset managers (i.e., wealth management firms and financial advisors) to also become members of FLX. FLX identified both a bottom-up and top-down strategy designed to create gravitational pull to a newly established community. It was at this time that FLX aggressively pursued the development of a community where asset managers, financial advisors and wealth management firms would feel compelled to visit and leverage tools, services and resources to easily access information, reduce noise and increase productivity.
Hortz: What is your plan and criteria for growing your FLX Solutions Exchange on your platform?
Spina: The FLX Solutions Exchange has also proven to be an area with significant learnings to date and forward-looking opportunities. In many ways, it’s a microcosm of starting and building a business in an unconventional way. We have plans to grow our FLX branded Solutions, strategic partnerships and selectively expand the range of partners on the platform in the near to intermediate term.
Importantly and differently as we move the company into year three, we see distribution or “shared client engagement teams” as one of the Solutions available. Based on our modular approach the shared client engagement teams are routinely paired with a set of Solutions that best fit the asset manager's needs. For firms that were historically focused on institutional, alternative, or international markets and are now entering the U.S. advisor and intermediary marketplace, we routinely consult them to first ensure product readiness and promote brand awareness, leveraging the fractional services of our Solutions capabilities, then layer in the personnel.
From a strategic partnership perspective, we are selectively engaging across multiple domains. When you see and believe in the power of the network, those domains include AI, data, benefits, along with access to industry associations and wealth management firms. While other firms have built well-developed networks to aid the financial advisor in their engagements with the consumer, we are focused on the B2B “space in between” asset managers, wealth management firms and advisors in the U.S. The U.S. market alone is a $50 trillion product market and it takes about $50 billion annually to make that market function from sales, marketing and data perspectives. We also have international plans on the near horizon, eyeing markets with relatively large advisor markets including Canada, U.K. and Australia.
Hortz: Any other thoughts you can share with financial professionals on how B2B digital platforms like yours can help them evolve their traditional way of doing business?
Spina: Yes. Think about almost every other buying and selling experience, both B2B and B2C. They have changed meaningfully over the past five to 10 years, mostly to an on-demand setting aided by subject matter experts at key decision-making or inflection points. We see these trends and are catalyzing the same experience for the wholesale distribution market.
So, definitely, we see and talk with executives from such a wide variety of firms, cutting-edge boutiques to dominant players, each intent on growing their business. The conversations are taking place with asset managers, wealth management firms, large RIAs and advisor teams. In an oversimplified form, we see leaders beholden to the legacy style of things and then those willing to embrace or at minimum, experiment with a new approach.
For example, most readers can very readily recall their experiences with wholesaling, from different lenses and angles. While we’ve been saying this for a few years, even prior to Covid, it’s now clear that there will be meaningful change going forward. We are going to help by “innorupting” (innovate/disrupt) the status quo. One way is through creating a virtual wholesale market.