Patagonia’s legendary advert. They were simply doing the right thing. They believe you should only buy the jacket if you need it. Not if you just want it.

Well, that’s the reps of building it. You start with the outline plan.

Same with B2B software. Buy it when you need it. If the software helps your customer have a better life then buy it, and deploy it. If it’s just there to sell them something they don’t need, then don’t.

In the long run, doing right by the customer always pays off. WealthTech software is the same.

If it is just technology to sell more funds and ETFs, to generate fees for the providers; that’s not the right way. It might be the most profitable way. But to keep things going long-term, it needs to be both profitable and good for the customer.

Good for the customer might mean that the customer buys less of the investment product you are trying to sell. Or indeed buy none. They may have enough already. The idea of wealth is to be able to live the best life you can from a financial perspective. Not to beat the market. But funds are always sold as a ‘market-beating five-year track record’. Blah blah blah.

So let’s say your KPI was the achievement of a customer goal. Not AUM. But the level of happiness in customers. I have never seen a financial advisory or asset management company have this KPI. It’s always AUM, diversification, outperformance, etc. Never. Actual customer outcome. Did they have a happy retirement? Do you know? Do you care? We should!

How do we adopt the Patagonia way? The right way. Because they did right and sold a lot of jackets.

Five ideas for our industry to do the right thing:

1. Advisors only get paid for the achievement of customer goals.
2. Asset Managers build portfolios that are correlated to customers not to markets.
3. The regulators talk to end customers, not to the providers.
4. We teach kids money at school.
5. Less is more. Imagine an asset manager telling people to want less. Not the picture of the old couple on the yacht. But actual people. Living simple lives. Happily with less because they didn’t buy those funds.

Just saying.

Best,
Ned Phillips
Founder & CEO