Episode 59 Transcript – David Lyon

Participants:

Steve Wershing
Julie Littlechild
David Lyon

Steve Wershing:
Welcome to Becoming Referable, the podcast that shows you how to become the kind of advisor people can’t stop talking about. I’m Steve Wershing. On this episode, we talk with David Lyon, CEO of Oranj, the industry’s first free wealth management platform. David was a practicing RIA for 10 years, and like other successful fintech CEOs, he began creating his technology to solve his own business problems. While practicing as an RIA, he made it clear that the value that he delivered to clients was through the wealth management and planning activities that he did for clients rather than the investment management. While he used technology to help streamline his practice, he was frustrated about the lack of software he could use to facilitate the relationship, and so he began building it on his own. Eventually, that became the platform we know today as Oranj.

In our conversation, we discuss his transition from RIA to fintech executive, how we created Oranj, and how he makes it free for advisors to use. We talk about how the fear that robos are a competitive threat is shortsighted. We talk about creating a customized experience, and we discuss how he looked to the software giants to learn how to make a sophisticated and price-competitive experience for advisors and their clients. With that introduction, let’s go to our conversation with David Lyon. David Lyon, welcome the Becoming Referable Podcast. Thanks for joining us.

David Lyon:
Oh, thank you for having me.

Steve Wershing:
Tell us a little about Oranj and what it has to offer advisors.

David Lyon:
Oranj is a wealth management software platform for financial advisors. What we’re laser focused on is helping advisors unlock their potential and being able to serve advisors through surfacing opportunities to help them achieve better results for their clients, first and foremost, but also their businesses. How we’re able to deliver that is really offering advisors a free end to end software platform that encompasses a whole lot of capabilities but is really primarily focused in on portfolio construction. We’re balancing trading, client onboarding, and client portal. Really in addition to the software that we provide to advisors, Oranj helps advisors improve their bottom line through helping them lower their costs that they spend on software and providing them a marketplace of investment solutions that offers them the ability to really lower the cost of investing for their clients.

I’m sorry. When you say help advisors achieve more, I’m assuming that you’re not going to help me run faster and jump higher. Can you tell me a little bit more about what kind of potential you help advisors unlock through your system?

David Lyon:
I think every advisor runs their business differently. I think a motto that we live by at Oranj is helping bring the advisor to the forefront. I think when many advisors hear about technology platforms like ours, they feel like we’re trying to replace them in some way. We help bring a certain level of automation to what advisors do, but we really pick and choose the places that we try to automate. We try to free advisors up to really spend less time managing and more time advising. Really what that means is instead of advisors having to go through their Rolodex of clients, calling clients for their quarterly review check-in, their annual review, whatever that might be, Oranj is actually surfacing those opportunities, very similar to how you might even check your social media feeds on Facebook, or LinkedIn, or Twitter. We’re surfacing those opportunities to advisors in real time. Instead of talking to five clients that really don’t need their attention, they can actually reach out and talk to the clients that do need their attention and actually have something meaningful to talk about with them.

Julie Littlechild:
I always think that sometimes when there’s a new approach like you’re providing, that the story that got you here really makes it clear. I wondered if I could back up to understand your journey from being an RIA to founding Oranj and the gap that you saw for advisors that you wanted to fill.

David Lyon:
Yeah. It has been a journey. My background is not in software development. As you mentioned, I was an RIA for 10 years. The idea for Oranj really started when I had challenges in the business that I was building and the business that I was running. I was pretty fortunate to grow my business to a pretty decent level within a short period of time. I started my business pre-recession. I went through all of the trials and tribulations that every other advisor listening to this podcast did. I grew my business to about $200 million within about two years and just really did that through a whole lot of activity, getting a ton of referrals. I think experiencing that kind of a growth exposed a lot of weaknesses that I had in my business but also I think just general challenges that advisors face every day in getting referrals, getting those referrals to meet with you for the first time, taking them through the process.

Really the gap in my business that I was trying to solve was really everything front office-facing, connecting, communicating, collaborating with clients and prospects. That was really the biggest pain point that I had in my business and went out, was really searching for a solution to help me with this. I couldn’t really find anything. That’s when I decided to do something about it and hired a third-party development firm to help me solve the problem. That was really the early days of Oranj. Used the early version of Oranj in my business for a couple of years and identified that there were others in the industry that had similar goals and challenges to overcome that I did in my business.

Julie Littlechild:
I want to understand more about Oranj, but it’s hard to let you go on a comment of, “I grew my business to $200 million in two years through referrals.”

Steve Wershing:
Exactly.

Julie Littlechild:
Not something you hear a lot, in fairness. Can we just pause on that for a moment and understand how you did that?

David Lyon:
Yeah. You start out and you pretty much write down, I created a spreadsheet, which we’re anti-spreadsheet. We’re anti-spreadsheets today here at Oranj. I think a lot of advisors can identify with their love/hate relationship with spreadsheets. I created a list of my entire natural market. I went out to my natural market, and I told them my story of what I was doing and asked them for five people that they thought I would enjoy meeting. One is I think it starts with your natural market. There’s a lot of great tools out there, and there’s a lot of other great ways to try to waste your time to somehow uncover more referral opportunities, but it starts with the people that you know, the people that know and trust you, and building on that, and telling I think a very authentic and honest story about who you are, what you’re doing, and growing it from there. There’s really no silver bullet to do that.

I think I was pretty fortunate in terms of a couple of high net worth investors that were within my natural market. My first client was actually a hedge fund manager. His comment to me was, “Most advisors are scared to walk into my office,” for obvious reasons. I had a personal relationship with this client before he actually became a client. I had an authentic story that I knew I could deliver on. I certainly wasn’t going to walk into his office and tell him that I was going to be able to diversify his portfolio better than he could, but my story to him was, “I’m going to do a lot of things for you that you don’t have time to do yourself, and that I’m a second set of eyes on what you’re doing, not just in your investment accounts but within your overall wealth management plan.” That was a refreshing story for him to hear. Obviously we got into how does it work, what are the opportunities that you’re going to see. I positioned myself to be very referable. He knew that I wasn’t going to get in front of anyone that he connected me to and embarrass him in any way. The experience that I delivered to him was one that he was happy to share with other folks within his network. I think that largely got me to where I was.

Steve Wershing:
It sounds like it was not the portfolio stuff that you put out forward, but it was more of the financial planning or the wealth management service that you put in front of him so that it added value to an investment manager. Is that fair?

David Lyon:
It’s 100% fair.

Steve Wershing:
Okay.

David Lyon:
He was working with a private bank. He had lots of financial needs. His situation was also fairly unique. He was taking a lot of risk in a lot of areas of his life, primarily his job where 70% of his income was generated based on the type of performance that he had, but he was running other areas of his life similar to the way that he was running his business. That was all second nature to him where he was like, “This is the way that I live my life. This is the way I’ve built a really great business, and it’s working for me.”

Steve Wershing:
When he referred you to some people and you started working with them, what was your approach to those folks and getting referrals from them?

David Lyon:
It was the same exact way.

Steve Wershing:
Okay.

David Lyon:
I think sometimes, and it’s not just with advisors, it’s with other business owners, you get in front of a business opportunity, a potential client, and you start to change your story, or you take a different approach with them. I haven’t found that to be successful in building my businesses, but other people try to do that. They try to be too much of an option quarterback where I can be a fee-based planner for you, but I’ll be a commission broker for this person. I’m just trying to build a book of business, and then five years down the road you have an efficiency problem where you’re serving seven different types of clients, and it becomes a challenge. I knew early on that there was a natural market that I had, and I had a specific type of an approach to that market. This was the type of business that I was going to build. If it didn’t work out for somebody, that’s okay, too. As long as they had a good experience working through that process with me to decide to not hire me, I was far better off in my business.

Steve Wershing:
Sure, yeah.

David Lyon:
That also makes you more referable as well.

Steve Wershing:
Right. You had said that you’d created Oranj to address a couple of specific challenges in your own business. What were those challenges that you created Oranj to solve?

David Lyon:
Connecting with referrals that I got. I ended up meeting with about 3 out of every 10 referrals that I would get. I was getting referred strongly into these prospective clients. All of them, I had a really good process where I would ask. I would ask and they’d say, “Yeah, I can think of five people.” I tried really, really hard to not leave the room until they gave me the names of five people because they’re going to go back to their busy lives, and wherever I fall on the totem pole, I fall. This was my business, and I took it seriously. I would follow up with them. I’d give them two or three sentences of how I like to be introduced. I never called a referral without being introduced before or prior to. Even with all of that, I was only meeting with about 3 out of every 10 of them because they were also very busy. Most of them were business owners, and a lot of them had been approached by financial advisors very often. I knew I needed to have a more convenient and accessible way to connect with those referrals.

Steve Wershing:
That’s interesting because I’m not sure if you know but we here are advocates of not asking for referrals. The fact that you did it and it worked for you is really interesting. What does Oranj do that helps you connect better with those folks?

David Lyon:
The way that we like to think of it is it’s a digital extension of the advisor’s business. When you think through that awkward first meeting that you have with a prospective client, it’s a get to know you, break the ice type of a meeting. You may get into, “Tell me what are you currently doing today? What are your goals? What’s going well? What’s not going well?” I think a lot of what I identified was the reason why I wasn’t meeting with more was purely because people were avoiding having that meeting. They didn’t have time to have that meeting, and they weren’t quite sure what kind of value I could provide that they weren’t getting already. What Oranj was doing in that case is providing them really a flavor of what it’s like to work with me.

A core tenet of my business and a core tenet of the value that Oranj delivers is I’m here to make your life easier. You can see me as much as you want to see me, or you can meet with me as little as you want to, but I need to be connected. I need to have an understand of what’s going on so I can make smart decisions for you or advise you to make smart decisions in other areas of your financial life. It’s really that first entry point where a prospect can come in, they can build their net worth and balance sheet in one place. They can set some goals. They can communicate with their advisor or the prospective advisor that they’re interviewing. It really provides the prospective client some self-driven tools to be able to do that as opposed to working on the advisor’s schedule, which tends to lead to lower conversion rates.

Steve Wershing:
Interesting.

Julie Littlechild:
Can you tell us a bit about the revenue model for Oranj because you mentioned it was quite different than what we see out there.

David Lyon:
Yeah. Some of our business model at Oranj is also really design based on the experience that I had as an advisor where I licensed a lot of technology during the time that I was in active practice. I tended to avoid software platforms that were charging me basis points. It was a pretty foreign concept to me to pay a percentage of my revenue to use software. I knew that in order for us to truly be on the same side of the table as the advisor, we couldn’t ask them for a percentage of their revenue.

The second thing was looking outside of our industry, who’s the best in the technology business at building software, at building businesses that build software. We looked to companies like Adobe, Dropbox. There’s a whole host of… Google with a lot of their G-suite products. They built world class software really within that freemium construct. That’s really how we’ve structured our business here at Oranj. We knew that there were a number of headwinds within the industry that advisors were facing. There’s fee compression that’s going on in the industry. I think it’s most prevalent within the asset manager vertical right now, but we’re starting to see it creep into custodians. We’re starting to see advisors’ fee structures trying to find what’s the next model that is really the best for both the clients and the advisors’ business. We felt like we had this opportunity being a young company to try to be part of that change.

Our platform is entirely free for advisors. There is a premium upgrade path that advisors can pay a fee to have some premium features within our platform, but we primarily make our money through asset manager partnerships that we have with some of the largest asset managers in the industry. We have partnerships with BlackRock, and Invesco, and Oppenheimer, and WisdomTree, and PIMCO, just to name a few. Really what they’re paying us for is better data and analytics on their funds. They have a need for that particularly, one, because data on ETFs is typically very difficult to track for them. Two is the data that they get from other sources, and we’re only one of many that provide assets managers data and analytics, it’s just we’ve actually built a data and analytics platform from the ground up with this specific purpose in mind. We’re just able to provide them cleaner data, better data, more actionable data without divulging or breaking the trust of any of the advisors that use our platform. We’re not providing them with any investor personal identifiable information. They just want to know how their funds are being used, inflows and outflows, and a whole host of other analytics. That’s really I think at the heart of our revenue model.

Steve Wershing:
Can advisors use money managers that are not on your platform?

David Lyon:
They can, and that’s really the premium upgrade path. They can use our platform without upgrading. They’re just not going to be able to do any trading or rebalancing through our platform unless they use our partners’ funds.

Steve Wershing:
Okay.

David Lyon:
The upgrade is amongst I think the lowest fees in the industry for a toolset and a solution set like Oranj provides. It’s under $5,000 a year per firm. They get a fully featured trading rebalancing system, portfolio construction, client onboarding, account aggregation, and a client portal. We feel really good at Oranj about that price point. We’re adding more and more managers every day. Our goal is that advisors don’t have to pay for Oranj at all. In our first full year out in the marketplace, we brought on 17 asset manager partners. By the end of this year, we should have about 30. We’re really excited about that.

Julie Littlechild:
Can you talk, David, about how all of that comes together in terms of delivering a really extraordinary client experience? What are the components of doing that? Obviously your technology enables it, but what should advisors be thinking about in delivering a great experience?

David Lyon:
Yeah, that’s a really great question. I think it has to start with the client and what their needs are. I think a lot of client experiences, and I was certainly in this boat when I was in active practice where I actually designed the client experience around my business operation needs versus what my clients need. I think it’s got to start with the client. I think that when you think about what that client experience is, the first step is to map out the client journey, and what do you want your business, your service, and your expertise to deliver to those clients, and what does that look like. I think then you go back and you design your business operations and processes around that. Then you decide what tools do I need to deliver that. I think it’s got to start with the client and what their needs are and what type of business are you going to run in terms of delivering that service and expertise to your clients.

Steve Wershing:
Can you give us an example, David, of how a client’s needs would be reflected in that experience and then how your platform helps facilitate that?

David Lyon:
Yeah. It starts with before they’re a client. We talk about this a lot, and I have these conversations quite a bit. The client experience starts with the first time that you get introduced to a prospect and what does that look like. Are you asking them to gather up their statements in a shoebox and bring it down to you, and meet for an hour, and then they go back and you input all that data into a financial planning system, and it spits out a 30-page document, and you go and you meet about that? What does that look like? I think that journey really has to start with the first time that you come in contact with a prospective client and taking it from there. I think that the two biggest pain points that we’ve seen both on the client side and on the advisor side is onboarding. The onboarding experience is very cumbersome. Really that onboarding experience starts before you’re transferring an account or opening a new account. It comes in the discovery phase of the areas of opportunity that you can provide value to a client in.

Steve Wershing:
Correct me if I’m wrong, but I think you’ve spoken about helping advisors provide clients an Amazon-like experience. You talked about looking to the people who’ve really mastered the freemium model and are really sharp on the programming side. Amazon, of course, would be considered in that group. How do you translate an Amazon-like experience into the financial advisor space because it’s a different kind of relationship that someone would have with an advisor than Amazon. How do you adapt that idea to what an advisor does for a client?

David Lyon:
That’s a really interesting question. I think Amazon at the surface is more transactional, and advisors are more relationship-based. But if you unpack it a little, advisors and Amazon are both service providers who really both should be making the lives of their customers easier by saving them time. They both should be helping customers save money. They both should be offering their customers the best service and experience available. While Amazon is delivering goods to their customers, that might be interpreted as being very different than what advisors do for clients, both are very similar. There’s a lot that I think advisors can adopt and apply from providers like Amazon in designing a client journey that starts with the client first, then designing their operations around those needs. I don’t think there’s really any risk in providing an Amazon-like experience or trying to adapt and apply some of the principles that Amazon is really well-known for. A better experience is going to lead to happier clients, more referrals, and when implemented well, a more efficient business for the advisor.

Julie Littlechild:
I would agree with that because there’s so much to be learned from looking outside our industry on experience and then really asking, what’s consistent with that experience? What feelings is it evoking? Why do clients love it so much? Then what does that mean in our world? I think it’s a great exercise for advisors to go through.

David Lyon:
We do that every day here. We’re looking up to the best in the business, whether it’s Amazon, or Uber, or Netflix, or Apple. Have you ever thought about the experience of what it’s like to … I don’t know if you’re Apple or Android users, but the experience of opening an Apple product is amazing. They’ve thought through every single detail. They’re selling a phone for a thousand dollars, and they want people to have the experience of what they’re paying for. I think there’s so much that we can learn if we can just get out of our own way and look at other industries and not say that Amazon, what they do doesn’t apply to what we do. All of those leaders in all industries are setting the bar that everyone else has to live up to.

Julie Littlechild:
I always think with Apple, the example I always use is when I call them for service, and then they ask me what kind of music I want to listen to while I’m on hold …

David Lyon:
Very cool.

Julie Littlechild:
… which I still find to be quite unique. Really that’s about personalization, how do we personalize the client experience. Frankly, that’s where technology plays a huge role because we can’t make that happen without technology.

David Lyon:
Yeah.

Julie Littlechild:
Go ahead.

Steve Wershing:
I was going to start wrapping up, unless there’s something else, Julie, that you wanted to ask David.

Julie Littlechild:
No, no, I was going to ask you if advisors are thinking about client experience and about what would truly set them apart, is there a place to start? Is there something specific or a question you think that they need to be asking themselves?

David Lyon:
Yeah, that’s a really good question. I could answer that in a lot of different ways. I think that three quick things come to my mind. One I think is think about how you service your clients. If I could go back 10-plus years to reinvent the service model that I created, I would’ve completely eliminated quarterly reviews and annual reviews. That was part of the genesis of why I created Oranj, but it took me a long time to get there. It took me a long time to realize that. But if you think about it, the service models that we’re employing now for clients, we’re tethering their lives to a quarterly calendar. People’s lives don’t unfold the same way that earnings reports do.

I think that’s where it’s got to start when we think about the client journey and experience, and being referable. People want to really have a customized experience. That boils down to the core tenets of why people hire advisors. People hire advisors because they want a higher level of service. They want a personal relationship with somebody that’s guiding them and helping them with their investment and their wealth management plans. They want some level of customization. I think it’s really on us as advisors. I still consider myself an advisor, but I’m not in active practice, I think that’s our responsibility to deliver that. When I started Oranj, the big buzz was are robos going to replace advisors. I think we’ve come to a point to where we know that’s not going to happen. I think what’s kind of humorous to reflect back on is the days when we thought that robos were going to replace advisors, and now we’re seeing providers like Betterment marketing aggressively that they now have human advisors.

Steve Wershing:
Right.

David Lyon:
Every advisor listening to this can feel very comforted that they’re in the right place, they’re doing the right things for people. I think just really focus in on that client journey and that service model. I think that that’s the key point here.

Steve Wershing:
Where do you figure out where to draw that line, David, on what things you customize and how far the customization goes while you can still have a particular brand identity? How do you decide what you’re consistent on and what you customize so that there’s this consistent service proposition out there with customization within it?

David Lyon:
I think just like getting a referral, and I know that you’re not about asking for referrals, but you’ve got to ask your clients what they want. Not every service to every client can be entirely unique because that’s totally not efficient, but I think that the way that you’re seeing, and I’m going to tie this back to technology, but I think when you look at software and technology that was created 10 years ago, it was very rigid, and it was very workflow-oriented. If you think back to different workflows that you create within your Salesforce CRM, there’s static workflows that are customizable, but what happens when your client goes off script and they need something that’s not part of your workflow? How efficient is that? I think you just have to really ask your clients what kind of experience do they want.

I think an old practice within the industry is segmenting your clients. Whether they’re A, B, or C clients, the A clients are going to go into your high service model, the B clients are going to go into I’m going to touch them four times a year, and your C clients, I’m going to touch them two times a year. That doesn’t work because some of your A clients just may not want to meet with you four or five times a year. Then that’s a bad experience for them. I think you have to have a baseline of this is what my general service model looks like, and this is the experience that I want to create for them. What are the tools that I need to use to support that? I think today, just tying again this back to technology a little bit, I think advisors are largely viewing technology as a stack. They’re checking the box on the 7, to 8, to sometimes 10 or more things that they need to use to run their business without or very little consideration to how those tools support the journey and the service that they provide.

Steve Wershing:
Interesting. David, there’s been a lot of good stuff in this interview. Unfortunately, we’ve got to wrap it up. If there are advisors who’d like to find out a little bit more about Oranj and how it can help them create an experience like that, where can they go to find out more?

David Lyon:
They can go to our website at runoranj.com, that’s R-U-N-O-R-A-N-J .com, or they can call us. We have a number here at 312-635-0889.

Steve Wershing:
That’s great. David, thank you so much for joining us here on Becoming Referable.

Julie Littlechild:
Yeah, thank you.

David Lyon:
No, my pleasure. Thank you guys very much. I enjoyed it.

Julie Littlechild:
Hi, it’s Julie again. It was great to have you with us on Becoming Referable. If you like what you’ve been hearing, please do us a favor and rate us on iTunes. It really does help. You can get all the links, show notes, and other tidbits from these episodes at becomingreferable.com. You can also get our free report, Three Referral Myths That Limit Your Growth, and connect with our blogs and other resources. Thanks so much for joining us.