On this week's episode of the Financial Planning Podcast, Chris Shuba explains why a world-class asset management experience has to be about a lot more than performance.
Shuba, founder and CEO of
But his current role as leader of the Sacramento, California-based quantitative asset management firm that provides
"I had really no intention of creating Helios," Shuba said. "I was just going to go work for my friend and his large firm. And as soon as we started doing this, other advisors that had heard about it wanted to plug in."
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Finding himself at the helm of a new company born from demand, Shuba began to look into how he could remix the idea of the OCIO into something fresh. During that process, he came up with what he calls the "insourced CIO," and likened his firm's relationship with advisors to a trainer helping clients achieve their fitness goals.
During his conversation with FP Podcast host and lead editorial producer Justin L. Mack, Shuba discusses the most common goals he helps advisors achieve, the biggest challenges advisory firms are facing today and how Vegas bookies sparked his passion for financial services.
Listen to the new episode — as well as to all future and past episodes — by subscribing to the FP Podcast on
Transcript:
Justin L. Mack (00:03):
Good morning, good afternoon and good evening. Welcome to the Financial Planning Podcast. I'm your host, Justin L. Mack, wealthtech editor with Financial Planning. And it is my pleasure to introduce this week's guest, Chris Shuba, founder and CEO of Helios Quantitative Research. Chris, thank you so much for joining us this week on the Financial Planning Podcast.
Chris Shuba (00:21):
Yeah, thanks so much for having me. This is great.
Justin L. Mack (00:23):
Awesome. Now, Chris brings more than 15 years of experience to this week's podcast. Before founding Helios in 2016, he spent time at both Ameriprise Financial and Columbia Threadneedle during the early years of his career. And in 2014, he joined Westlake, Grahl & Glover Wealth Partners as chief investment officer and developed a series of algorithms that drew strong interest from financial advisors. All that CIO know-how came in handy when Helios got going and created what Chris sees as its own service category: the insourced CIO. We'll get into exactly what that means and how Helios wants to help provide support to the modern advisor on this week's show. But first, Chris, let's get right into things by kicking it old school and going to the beginning. I always like to figure out how people got into this industry, especially folks who, like yourself, who have seen it from various different angles in the different positions you've held, what you're doing at Helios and how the things you've done before have led you to where you are now. So how'd you get here? Because I find that no one's path into financial services is quite the same. What was yours?
Chris Shuba (01:28):
Definitely a very crooked path for me, for sure. I think the whole idea of asset management got in my brain in college as I started getting more and more interested in mathematics and specifically how you could use math to find secrets. To have answers. To shortcut the whole trial-and-error world. And that led me into kind of my first career path, and it snowballed into eventually the quantitative space of asset management. But it was really college. It was finding secrets. And what I'm embarrassed to tell you is that how it all started is that I've never really been a big gambler, but I became fascinated with how bookies created their lines. And I figured out they were, a lot of times, not trying to be right. They were trying to make sure there was enough money on both sides of the line. And so there were ways to game it. And so it became a little bit of a small obsession in college, and it spiraled into everything else. But yeah, just a math guy trying to figure out where I fit in the world more than anything else.
Justin L. Mack (02:30):
Very cool. But I love that very real-world, practical application of that passion you have for math and then developing that. And hey, in college we're all into different things. That's a very interesting pursuit and it is something that you can pull from now. So you never know what some of the most important messages or lessons you retained from college are. Certainly, things that I thought were just background noise at the time and didn't realize were going to be extremely vital. And love a crooked path because it proves that there's no one way to get here, there's no one set of skills to determine your place here. So let's talk about what you're doing right now with Helios. Again, founded in 2016. I'll let you explain what you mean by that service category, that one of a kind, the insourced CIO. What's that all about and what kind of services does Helios provide?
Chris Shuba (03:22):
Sure. So when I was at Columbia, I became good friends with the guys over at WGG, and they were really interested in the whole idea of having a very solid process as it related to asset management. How could you set client expectations upfront, have models that were more seen as a service, as a process that was done every day, specific to what's most important to the client, communicate effectively throughout time, and then of course have a really deep accountability structure for service meetings. And that's how the institutional world pretty much worked, especially the quantitative space. And they said, well, how do we take all of that capability and bring it to an advisor instead of just inside of big companies? And at the time, back in 2012 and 2013, that really wasn't possible. But then it became possible through cloud computing and access to the data and so on and so forth.
(04:14)
So I had really no intention of creating Helios. I was just going to go work for my friend and his large firm. And as soon as we started doing this, other advisors that had heard about it wanted to plug in. And so we started doing that, and then they just got bigger and bigger. And someone had said to me at one point in time, well, you're kind of like an outsourced CIO. And as I started researching outsourced CIO, there's like a million different definitions for it. So because we come into a practice, we actually build all of their asset management capability and their communication structure and their compliance out of their existing culture and everything we do is white labeled to their brand, we kind of consider ourselves to be more of an "insourcer" than really an outsourcer. So we've tried our best to play on those words as a way to differentiate and create some form of a definition around our little micro-industry here. But that's how we end up, for lack of a better way of explaining it, just by happenstance, by trying to define ourselves and therefore define a niche.
Justin L. Mack (05:18):
Definitely. Something that you mentioned, which is really interesting, especially with the services you provide and especially one that as you describe it, is driven by the demand that you're seeing as it naturally grew. It turned into something where, hey, we weren't planning to do this, but the demand tells us that maybe we should do this. And also doing that with that focus of the firm's culture and who you're working with. Because you are coming in and working very closely, but you're also staying true to them. Talk to me about what that's like because as wealthtech editor, I'm always interested in the word integration. It means a lot of different things. Usually we're talking about new stuff, working in your stack, playing together, but integration of people is also very vital. Especially with the work you do that is going to be supported by technology. What's that personal integration like for you when you guys come in to join a firm and take on their culture with the work?
Chris Shuba (06:14):
So it was an evolution for us, for sure. And we've made, we can kind of consider ourselves a technology-enabled service. And a lot of the way that Uber kind of works, Uber is a technology that organizes the relationship, but at the end of the day, someone's got to pick you up and take you where you're going. In its core, it's a service. And we tend to see ourselves very similarly. We know that the vast majority of the advisors that we come in to support are already really good at what they do. They've built their book and they've got a culture and a brand that their clients love. So for us to come in and say, stop everything that you're doing, let's pivot and do this. Number one, no business owner really wants to do that. And number two, clients don't like that. Clients love upgrades, they don't like change.
(07:01)
So when we come in, we are responsible for all the different things that an investment department would do. So as an insourced CIO, we're like having an entire investment department at your fingertips. So we have to do the holdings, analytics, we have to listen to what the advisor's investment philosophy has historically been and where their clients are coming from and customize all of their investment models to that brand. So we start there. An example of integration is we take all their existing holdings they're already using, run them through our calculations for do we want to keep these holdings and then construct their new models out of their old models effectively, that feels like a rebalance or a upgrade, if you will, more so than just nuking everything and buying something new. So there's a lot of little things like that where we basically frame that up as saying, we start where you are, understand where you want to grow, what you want to accomplish as a firm, what your strategic goals are, and then as a partner to you, not a vendor, we work together to achieve those. And so I can give you lots of examples, but those are just some tiny ways that we integrate on day one as opposed to just blowing everything up.
Justin L. Mack (08:09):
Very cool. Also, talk to me about what the journey's been like so far because, hey, you didn't plan on doing this. Founded in 2016 out of demand. So even though you didn't plan on it, it's been seven years now. What's that journey been like, especially for something that grew so organically? What have you learned along the way? High points. Low points. What's that been like?
Chris Shuba (08:29):
There's definitely been a lot of learning. A couple of major ones I would say is customization is the key. The reality of it is that there's an infinite number of products in our industry from mutual funds to ETFs to SMAs to newsletters, to whatever the heck a broker-dealer might be giving their advisors for free. There's an infinite amount of resources and almost every one of them says, here's what we've built for you, take it or leave it. And what we found is that what happens is that when there isn't a feeling of ownership, a feeling of contribution that an advisor has to the asset management strategies that are running day in and day out inside their models or inside their practice, there tends to be this constant recycling of investment choices. Buying something that is done well, like a Morningstar five-star rating, and then selling it when it does poorly and constantly going through these cycles of buying when it's hot and selling when it's cold.
(09:31)
And that doesn't create good returns over time. And it also doesn't create really referable client relationships. So one big leap for us was customizing everything so that there's, again, using the word true partnership and a much deeper sense of confidence from the advisor and what they're sitting across the table talking to their own clients about. So customization has been a huge leap and all of our technology and our service model is built around really meeting the advisor where they are. And I keep bringing this up because it's kind of central to where we are. The second thing that I would mention that is kind of a big learning has been in order to deliver a world-class asset management experience, it takes everything that an investment department is doing, firing on all cylinders. A lot of times the asset management world gets boiled down to did something perform or did it not?
(10:29)
So I'll use the idea of a model. I tend to think about a model as an aircraft carrier. It's really powerful. It's the sexiest thing in the fleet, but by itself it's easy to sync. And if every bit of value that an advisor provides in the asset management world is, did my model perform or not? It will for a while, and then it won't. And the aircraft carrier sinks. If you want your battle fleet to win the war, it needs all the support ships, it needs everything around it that creates a value that is greater than the individual pieces. So if you surround that battleship or that aircraft carrier or that model with really great ways of setting expectations up front, that's tangible, not just a bunch of words. The value of the model is its activity throughout time, and the client communications are crisp and clean and easy.
(11:20)
And then the accountability structure through good times and bad helps the client understand if they're on track or not. If you surround the client experience in that, you have way stickier clients, you grow faster organically, all the benefits that you want. And that's what we built Helios around was that whole fleet of ships that's needed to create a world-class experience. Not just a "here's a model and just use it until it stops performing" type of mentality. So those I think are two big learnings for us. You have to have the fleet and you have to have customization if you want that next level experience.
Justin L. Mack (11:54):
Awesome. Well, with that, we're actually going to take a quick break, but when we return, we're going to get into that fleet and all the different directions you might be sending that armada in support of advisors. So when we return, we'll have more with Chris Shuba, founder and CEO of Helios. Stay locked. We'll be right back after this break.
And welcome back to the Financial Planning Podcast. I'm your host, Justin Mack, and we're diving back into our conversation this week with Chris Shuba, founder and CEO of Helios. And Chris, before we hopped into the break, one thing we talked about is all the different ways that you're looking to support advisors, creating those different fleets to kind of meet them and help them achieve their goals, whatever they might be. And I imagine those goals have changed a lot even in the time that Helios has been founded. I'm sure there are times where those goals change. They're flexible. Because the world we're living in right now, no one really knows what we're going to be doing in a couple of months from now. So I always hate the idea of the classic "five-year plan." I think we're way too volatile to think about anything that long term, give me your six-month plan and that might be a little more reasonable. So with that, what are some of the most common goals that advisors are coming to you for help with right now?
Chris Shuba (13:08):
Sure. I'm going to break that question into two parts because some issues or goals that advisors have are universal. They really never go away. And then there's the ones that are kind of topical based upon what's going on in the world. Universally, we're realists, right? We're math people. Advisors only really come to us for three pretty basic reasons. Number one, they want to look great to their clients. They want to have a world-class experience that makes their clients love them, right? Number two, they want scale and efficiency. They want to focus on what they do best. They want their team to focus on what they do best. And there's a lot of work that goes on inside a really high-functioning advisory practice that doesn't need to be done by the existing staff. And the third one is they want to run a great business.
(13:59)
They want to have great profit margins, they want to be successful. And honestly, when we implement a new advisor, we actually implement through those three lenses. Here's how we save you time so you can focus on your clients. Here's how we have a great client experience, and here's how we help you run a great business. So we are very much in tune with our design around the common problems that advisors face that never go away. But to your question, that's where the customization comes in because the problems constantly change. Back in the day I wanted models where the most important thing to those models is risk management. And when the slightest hint of trouble comes along, I want the mathematics to kick in, reduce my risk, whether it's through the holdings, transactions or the overall aggregate risk of the portfolio. I want to document the heck out of it from a compliance perspective.
(14:45)
I want to communicate clearly to my clients why I did this for them. But that's largely passed, believe it or not. The post-2008, 2015 scares are kind of gone, and now it's different. I want flexible models that can step on the gas when times are good, pull back the reins a bit. But I want to stay around the center point. Every practice, every advisor has their own narrative, their story, their belief structure, and that constantly changes for their clients. So therefore the models and the communications and all the documentation changes too. That's the beautiful part about using technology to create custom models. We support hundreds and hundreds and hundreds of advisors, and no two of them have the exact same model. It's crazy. It's amazing. It's beautiful.
Justin L. Mack (15:28):
Very cool. And that's a really good point. Like you said, it's not so much that, hey, the goals are drastically different. But what that goal might mean depending on the era in which we're operating will adjust. So client experience was still a goal many years ago, but what client experience is today versus then has been very different. And I imagine also, which a follow-up question I have for you now is that it's not so much about what the goal is or what success looks like for whatever firm you might be working for. Knowing that every firm is different and they might have different goals. They all want client experience, but what that looks like for every firm is going to be different. How is that helping different firms understand what their success is? What does success look like for firm A versus B and helping them go after that? I imagine it's never a dull moment. Lots of opportunities to really drill down and apply that analytical passion you have into your work. I imagine that's pretty cool.
Chris Shuba (16:23):
It is. And normally when we're getting to know an advisor, one of the three things that I mentioned, either the client experience, creating scale or driving a better business, one of those three rises to the top. And we talk a lot about that as we get to know them. And that typically begins the success criteria conversation, how we know we're being a good partner, but a lot of times it's measured through referrals and organic growth or the staff-to-client ratio as a practice grows. And there's, do you want more and more headaches than HR conversations and cost of running your business, or do you want to be more efficient and reinvest that money into marketing? So we get to know the strategic objectives that they have, and that becomes our benchmark for success, at least from a partnership perspective. And the beautiful part about customization is that it can evolve, right? Because you're not locked into, well, this is a mutual fund, take it or leave it. This is the SMA, take it or leave it. As the practice changes, as new advisors come in as practices or purchases are purchased and new people come in with their own preferences or their own beliefs, models and communications and experiences can be shaped to absorb those new folks very, very easily. So we tend to find [that] we really gravitate towards growth-oriented advisors that want to grow organically, and those that want to acquire other practices.
Justin L. Mack (17:42):
Talk to me about some of the challenges as you help firms achieve those goals, looking good in front of the client, running a good business, providing a great client experience. So what are some of the things that are providing the roadblocks or hurdles as firms pursue that?
Chris Shuba (17:57):
The thing I always say to my team internally and even sometimes in the process of onboarding an advisor is a lot of times we are seen as aspirational. We run across a lot of advisors that are at that catchpoint between, do I start building out my own investment team or do I look at something like Helios? Or they've lost a person or they've acquired a practice. There's usually something going on that is changing their world. And we come in and we're a little bit aspirational. Sometimes the way a gym works, they want to get fit, but in order to get fit, you have to change some of the things. You got to eat a little differently. You got to show up at the gym. And so we find ourselves oftentimes as that, playing that trainer role where, hey, you told me you want to have this type of a client experience.
(18:40)
You want to have more of an institutional field of what you do, alright, we're going to have to have your initial client meetings look this way. And I know you're used to spending exactly 35 seconds talking about asset management, but I need you to spend 10 minutes in each client meeting talking about your analytics and your models this way instead of 35 seconds. So let's do that together. And then we check in with them. We walk alongside the advisors. We support very frequently to make sure that aspirationally they're achieving what they're doing. And a lot of times reversion will happen. A lot of times they'll stop coming to the gym for a little bit, and we're like, okay, come on, let's go. Yeah. So sometimes hurdles are just human nature, but because we are a bit aspirational sometimes we have to play that trainer role to get people cracking.
Justin L. Mack (19:25):
Definitely. But it goes to what you kind of said earlier about that being a true partnership because what's a good trainer? It's a partner. It's someone that not only wants to push you towards your goal, but also takes vested personal interest in that goal. You know, almost take it on as your own. And when that person has success, everybody wins. It feels good. It's a feel-good moment that we can inject into our workday in the pursuit of that bottom line and that higher dollar. So with that, I actually kind of want to transition into something that has become customary here on the Financial Planning Podcast, which is closing things out and wrapping up with some good vibes. And something I want to talk to you about is something I don't hear people talk about enough sometimes. What do you love most about your job? And I think you kind of started to hit on some of that as you even discuss the challenges that firms are facing. I could hear it in you. So what do you love most about the work you do and the opportunities you get to have working alongside advisors?
Chris Shuba (20:22):
There's so many parts to my role that I love. Everything from researching new analytics and ways of thinking about asset management to when we're presenting to large groups of end users. But my favorite part about my job is there's a little moment the first time we ever meet an advisor where we explain to them what we do. And that's the summary of everything you've built. That moment where you get to explain it for the first time. And the thing we hear constantly is, holy cow, we had no idea something like you existed. And that moment is very important for me because it's a bit of validation of everything that we've all worked on together. So I could point to a lot of cool things that we do day in and day out that are just fun and exciting, but that little rush of adrenaline that we get five, six times a week is really my favorite part if I'm being totally honest with you.
Justin L. Mack (21:22):
Very cool. And then I got to ask as a follow-up, too. With all that excitement going on and looking back on your journey, what do you guys have on tap for the rest of the year? What's the focus? What's the top priority? What are you going to be working on next? After you get done talking to me, because I see the energy in you, I imagine you got plenty on your to-do list. What do you got going on?
Chris Shuba (21:42):
Sure. Well, we are consistently investing in our technology to help advisors just be more scalable and more efficient, especially as they're interacting with us. We got a lot of cool technology rollouts coming. Secondarily, we're in the middle of building out some new algorithms, or we call them elements that are further deep, deepen the customization that we can do for advisors. Allow them to express their opinions in different ways with us walking alongside them. And so between the research arm and the technology build-outs, we've got a ton of cool stuff going on for the remainder of the year, and that's where my focus is going to be.
Justin L. Mack (22:17):
Awesome. Well, I want to thank you so much for sharing what you've got going on, your insight and your good vibes for us this week on the Financial Planning Podcast. Thank you so much for joining us this week, Chris.
Chris Shuba (22:28):
This was awesome. Thanks for having me.
Justin L. Mack (22:29):
Awesome. And I want to thank everyone for listening to the Financial Planning Podcast. This episode was produced by Arizent with audio production by Kevin Parise. Special thanks again to our guest, Chris Shuba, founder and CEO of Helios. Rate us, review us and subscribe to all of our content at www.financial-planning.com/subscribe. For Financial Planning, I'm Justin Mack. Thanks for listening.