Bill Hortz's picture

[Industry disruptions bring an urgency to break the established chains of business inertia – of continuing to do what we do because that is how we have always done it. Disruption forces challenging questions and a re-thinking of status-quo approaches, processes, structures, and mindsets because new conditions and operating environments now demand it. The truism is that while unsettling, there always is an opportunity in the uncertainty and complexity of change. It is the silver lining in the storm and the catalyst for industry evolving innovation.

How this dynamic is being applied to the decades-old investment products distribution system makes a very compelling case study of financial services business innovation – of creating an exponential jump for multiple stakeholders away from entrenched ways of doing business.

This was brought to my attention when speaking with new Institute member Brian Moran, CEO and Founder of FLX Distribution – a financial technology company that is the first Resource and Asset Management Platform (RAMP) bringing together asset managers, distribution professionals, and financial advisors in a unique way. FLX was recently recognized with the 2020 Money Management Institute/Barron’s Disruption Award for groundbreaking technology and process that “will fundamentally alter the future delivery of advisory solutions.” I took the opportunity to ask Brian questions to better understand how he and his firm are creating a new tech-enabled ecosystem and revolutionizing the distribution experience that occurs between asset managers, distribution professionals, and wealth management advisors.]

 

Hortz: What was your thinking behind starting FLX Distribution?

Moran: Most of my career has been in investment distribution in a variety of different roles from being a wholesaler to a national account manager to leading distribution teams. A key insight I had was in late 2018 when I saw the opportunity to potentially introduce a new way to do business in distributing asset management products and services.

One of the components of this thinking was that we could take the traditional distribution marketing structure of investment product manufacturers - hiring wholesalers to go see advisors and gatekeepers, interacting with them - and transform this extensive and costly internal infrastructure by applying concepts from the “sharing economy”. Could we bring this whole structure and process into a single technology platform with new ways to operate and engage asset managers, distribution professionals, and wealth management advisors with each other? That was what kicked off this initiative of creating the next generation of asset management distribution.

Hortz: What were your first steps and the ongoing process you followed in developing your solutions for those different stakeholders?

Moran: Our first efforts were on developing a technology platform that had distribution as its inaugural focus. That is where we brought together investment manufacturing (asset managers, mutual funds, separately managed accounts, alternatives, you name it) and we designed a way to match them on this platform with a broad array of specialized resources to help asset managers build or design their very own specific distribution solution based upon where they are in their lifecycle and sales strategy needs.

In 2020, we further iterated the design of the platform by engaging with hundreds of prospects, colleagues, and, especially, skeptics. We learned that the ideal distribution business model is one that addresses the industry’s most pressing needs of being more cost-effective, adaptable, and flexible than ever before. In this light, FLX created a new concept DARP - Distribution At a Reasonable Price – to provide our partners with that access, flexibility, and scale.

In order to deliver DARP, we more deeply explored and leveraged the concepts of the “sharing economy” to offer a better way to implement distribution in the asset management industry. We focused on creating a platform and organization driven by data, technology, and human connections to creatively empower a more flexible “sharing” of expertise and resources among platform members on a when needed basis. In the development process, we determined that it really does takes a village to innovate effectively in today’s operating environment of accelerating rates of change.

Hortz: Can you further explain the tangible benefits from the platform for asset managers?

Moran: We believe that conventional thinking and rationalization will not solve the necessity of growth in the face of hyper rates of industry change. We saw though how our new concept of Distribution At a Reasonable Price (DARP) was achievable due to the platform’s gig economy structure with similarities to how companies such as Uber, Match, Airbnb, and LinkedIn operate and engage. Powered by a combination of proprietary tech developments and a stack of leading software providers, we created a seamless exchange for delivering data, media, services, solutions, strategy, and technology.

 The FLX platform ultimately provides three key things every asset manager needs to succeed:

  • Flexibility - empowering an asset manager to optimally create and align a tailored distribution solution for their firm. The distribution solution can be quickly flexed up or down based upon channel, strategy, product, and/or market conditions.
  • Scale - providing an asset manager with a full team of distribution professionals for 25%-75% of the fixed costs relative to a team built in-house. FLX Distribution can do this by scaling across critical job functions.
  • Access - offering asset managers unparalleled access to investment decision makers, experienced distribution professionals, marketing/PR experts, data management and analytics.

Asset Managers decide on flexible, cost-effective, and sustainable distribution solutions by completing each step of our Journey Towards Distribution path which we develop specifically for each client. It is focused on understanding an asset manager’s existing business plans, current distribution capabilities, intermediary experience, investment capabilities, and ultimate sales and marketing goals to create a comprehensive and modular distribution solution.

Hortz: What else did you build onto your platform to develop it into a consultative ecosystem?

Moran: The FLX platform is a new form of distribution residing on a tech platform that can access all stakeholders in a meaningful way and on the stakeholders’ own terms. While the platform does have information on each asset manager who joins as a corporate member and helps promote them on the platform, we initially do not believe this will be an overarching point which draws asset managers to the site. To add value, we built 5 supportive distribution functions or verticals (2 coming Q2 2021) which are the true attraction:

  • FLX Solutions Providers
  • FLX Capital Markets
  • FLX Advisor Experience
  • FLX Media
  • FLX Intelligence

 

These allow FLX and its platform to have a more consultative approach and provide holistic value to the asset manager, so they can build their business, receive actionable intelligence, and be able to engage how and when they want help from or engage distribution and other key industry professionals, including financial advisors.

Further, the different verticals will allow distribution professionals the ability to take a more consultative approach. This approach provides more topics and opportunities to talk about and position with advisors and home offices.  Coupling this with proprietary data on the asset managers and wealth management firms, it is simple to see how we have gained traction with these three stakeholder groups. We believe there will be fewer degrees of separation across the three major stakeholder markets of asset managers, distribution professionals, and wealth management advisors.

Hortz: Can you further explain some of these verticals you launched on your platform?

Moran: FLX Intelligence, FLX Media, and Flex Data Vault are the verticals that are live on the platform:

FLX Intelligence allows asset management member firms to post market outlooks and insights to directly reach FLX network distribution professionals.  Along with industry thought leadership, research, continuing education, and FLX TV, it can help financial professionals develop alpha-generating ideas and investment strategies. It provides a curated, differentiated experience with access to dynamic personalities, thought leadership content, and the ready access to schedule calls with analysts from around the globe.

FLX Media is a creative hub that shares a common axis with FLX Distribution members looking to broaden their reach with video content. We provide value by creating an authentic and practical experience that aligns people, services, and products while showcasing your credibility.

FLX Data Vault allows asset management firm members to distribute investment portfolio data to intermediaries, compliance, sales, and marketing quickly and at low costs. Distribution has many complex factors that influence its result. And one of the factors that can influence results is the database and the request for proposal (RFP) community that are really important to asset managers increasing the visibility of their products, gaining brand visibility for what they do, and how they perform versus their peer groups ensuring investment research teams, platform gatekeepers, or institutional consultants who heavily rely on these tools and conduct the appropriate oversight that they want to and need to do.

Hortz: How are you developing your FLX Solutions Providers group? What kind of services are you orchestrating and what do they currently offer your platform clients?

Moran: Solutions Providers within the FLX Distribution Marketplace will include the following categories: Benefit Services, Coaches, Consultants, Data Analytics, Education, Finance and Accounting, Fund Services, Legal and Compliance, Marketing, Outsourced Trading, Portfolio Construction, Public Relations, Strategists, Value Add, Virtual Assistants, Web and IT Development.  

Hortz: Any last thoughts about the changing financial services industry you would like to share with us?

Moran: We fundamentally believe there is a changing landscape in how investment products must be distributed moving forward. As part of this movement, we aim to revolutionize the distribution experience that occurs between all stakeholders in the process. We are also especially proud to be a part of the shift where the distribution model is changing from an interruption-based approach to a collaborative invitation model. We feel there is an inevitability that this new closeness will drive creative and effective engagement between asset managers, wealth management advisors, and distribution professionals in the future.

FLX Distribution’s innovative technological approach with our scalable platform, flexible business model, and access to key decisionmakers, can disrupt the traditional value chain from manufacturer to distributor to advisor in a way never done before. The FLX platform provides the necessary data, connections, and transparency; allows us to act as a true consultant to all stakeholders; and increase creative engagement between all industry professionals to help them identify optimal ways to partner for win-win solutions.

 

The Institute for Innovation Development is an educational and business development catalyst for growth-oriented financial advisors and financial services firms determined to lead their businesses in an operating environment of accelerating business and cultural change. We position our members with the necessary ongoing innovation resources and best practices to drive and facilitate their next-generation growth, differentiation, and unique client/community engagement strategies. The institute was launched with the support and foresight of our founding sponsors - NASDAQ, Ultimus Fund Solutions, Pershing, Fidelity, Voya Financial, and Charter Financial Publishing (publisher of Financial Advisor and Private Wealth magazines).

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