On this week's episode of the Financial Planning Podcast, Aaron Klein explains how his firm wants to turn service oriented financial advisors into growth engines without twisting them into salespeople.
Klein, co-founder and CEO of Nitrogen, stops by the latest episode of the Financial Planning Podcast during a season of significant change. Just weeks before sitting down with FP Podcast host and lead editorial producer Justin L. Mack, the Auburn, California-based wealthtech firm that spent the past decade as Riskalyze was
Klein said because the company previously tailored around the "Risk Number" had evolved into a firm that offers lead generation, marketing, client engagement and compliance solutions alongside risk analysis, the old branding no longer fit.
But retaining the legacy they've established is a top priority for both Klein and advisors who use the products. So much so that Klein said some firms reached out with hang-ups about no longer being able to use the Riskalyze name on their websites.
"I love that we have customers that are so passionate about our product and our brand. If nobody cared, we would be nothing. And so I take it as the highest compliment from those advisors," Klein said. "My message back has been … the Riskalyze brand, we still own it. We will be the makers of Riskalyze until the end of time."
During his conversation with Mack, Klein goes deeper on the first steps of his new chapter, shares what he thinks wealth management can learn about growth from other industries, and explains why inertia can be dangerous when pursuing progress.
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 reporter with Financial Planning. And it is my pleasure to introduce this week's guest, Aaron Klein, co-founder and CEO of Nitrogen. Aaron, thank you so much for joining us on the show this week.
Aaron Klein (00:20):
Hey, great to be with you Justin. And man, this is one of the first podcasts that I've done as the co-founder and CEO of Nitrogen instead of Riskalyze.
Justin L. Mack (00:31):
Absolutely. Yeah, it's cool. It's the first time I get to intro you on the mic as CEO of Nitrogen. For those who don't know, and it's dang near impossible not to because the man does keep busy, Aaron is indeed the leader of the company formerly known as Riskalyze. But as his team continued to expand their scope beyond risk and champion the growth of advisory firms, Aaron and the squad felt a new identity that more accurately conveyed that message was in order. But much like risk, growth can be a very difficult concept to wrap one's mind around, let alone dispatch in the service of advisors. So today, I'm going to poke and prod Aaron as much as I can to figure out exactly how that works and how Nitrogen is helping firms grow long into the future. Aaron, we've had a chance to talk quite a bit. However, you are a new visitor to this platform, so as a result, you have to walk the toll. When I bring people in, I always like to ask, let's go back way before you became Mr. Riskalyze and long before Nitrogen made its debut, how did you begin your career path into this industry in the first place? What's your origin story? Your "Peter Parker getting bit by the spider" moment that brought you into wealth management?
Aaron Klein (01:39):
I love it. That's great. I mean, first of all, I think you have to start with getting bitten by the radioactive spider of entrepreneurship, right? Entrepreneurship. My dad was an entrepreneur and I started working for him at the age of 12 in the afternoons after school. And it was an amazing, amazing experience. I learned so many things from him. And then I kind of was doing some things with the internet and it started to intersect with finance. And so my career, I've always kind of been at the intersection of finance and technology, and I was helping to build technology products that options traders would use. And I remember saying to a buddy of mine who was a financial advisor, it is crazy how the average investor thinks about the concept of risk. And he said, if you think that's crazy, you should see how many of us financial advisors think about it.
(02:37)
We just haven't had the tools in our profession to really understand who our clients are and really match them up with the right amount of risk in their investment portfolios. And so we started jamming on that idea and thinking about that idea and ultimately created the company. The first thing that we built was around risk. It was around risk assessment for clients and matching that up to the risk and portfolios. And we named the company after it. Riskalyze. And we then spent the next decade building this growth platform to help financial advisors grow their wealth management businesses. We built all these features and capabilities and I know we'll get into it, but that's what led us to drive this change in our brand and identity because we kind of needed our name and our brand to catch up to what our product actually does.
Justin L. Mack (03:31):
Definitely. And as we've had a chance to sit down and chat before the news went live — and be sure to
Aaron Klein (04:09):
For sure. It's fascinating to me because first of all, if you take a firm with three or more advisors, literally across the board, it's just 100% positive. They're just like, I get it. I totally understand what you do. For us as a firm of three plus advisors, and I'm talking about firms with three advisors, 10 advisors, a hundred advisors, a thousand advisors, we serve firms of all those different sizes and across the board those firms, it's just been 100% positive. We get it. This is what you do for us. Nitrogen. It's the essential element for growth. It's the catalyst and force multiplier in our universe, and you're the catalyst force multiplier for our business. So I get it, firms with one or two advisors are positive, but maybe about, I don't know, 20% of them are kind of hung up on this one thing.
(04:59)
And I actually love it because I take it as the highest compliment. They're just like, listen man, I'm excited for you, but I use the Riskalyze brand with my clients and I would tell them that I use this tool called Riskalyze. I have a Riskalyze page on my website and you're kind of messing with my mojo here. Does it work the same way for me to have a Nitrogen page on my website? And so first of all, I love that we have customers that are so passionate about our product and our brand. If nobody cared, we would be nothing. And so I take it as the highest compliment from those advisors. My message back has been, well, listen, a couple of thoughts. Number one, the Riskalyze brand, we still own it. We will be the makers of Riskalyze until the end of time.
(05:58)
That is our legacy. That is our history. That is what we built our reputation on. And so you can continue to use the Riskalyze brand with your clients. You have our permission, we own it, and you can do that. Second, you could transition to the Nitrogen brand if you wanted to. You could use that with your clients as well. I'm pretty sure your clients would not be upset to have their portfolio connected with the force multiplier for growth in our universe. But what I would say is this could be an opportunity for you because in all candor, we never intended for financial advisors to use the Riskalyze brand or the Nitrogen brand with clients. We never intended that. We actually built the Risk Number brand very intentionally as the brand for advisors to use with their clients. If you ever look at a Risk Number, you'll notice our logo is not in it.
(06:51)
Our hexagons for Riskalyze were never in it, and our fractal now for Nitrogen is not in it. And that's because the Risk Number brand, it's iconic, it's recognizable, but it's designed to really fit in underneath a financial advisor's brand very seamlessly and make it appear like it's theirs. So our encouragement to those advisors has been, hey, you can just know that you're working with a company called Nitrogen. You can talk to your clients about how you use this thing called the Risk Number to improve their portfolios and understand who they are and match them up and help them become fearless investors. And that's a really powerful brand that you can use as well.
Justin L. Mack (07:31):
Interesting to hear the difference in the response. I never thought about that. As you guys are worried about your own branding, you're kind of changing marketing efforts for advisors. And one thing I wanted to ask too is that — and full transparency folks, the Financial Planning Podcast is recorded in advance, and I'm talking to Aaron fresh off of a bit of a conference tour — and one thing that we kind of bonded on is that, Aaron, you're a little bit extra. I'm a little bit extra, too. So I recognized that and saw some cool things at your booth popping up on Twitter. If you also don't know, Aaron's got a fairly strong Twitter game. Check it out. But some billowing smoke and some treats going on at your booth. What's up? How are you making a splash as you are introducing Nitrogen to advisors and other folks in the industry in real life for the first time?
Aaron Klein (08:40):
Yeah. Well, this has been a real blast. I mean, the Nitrogen brand is a really fun brand because it conjures up energy and growth and that catalyst and that force multiplier. But the billowing smoke is, that's what liquid nitrogen gives off when it's released into the atmosphere. And so literally we had people at the booth making nitrogen ice cream for people coming by the booth. It was a lot of fun. It was great. They've even, they've bottled up energy drinks, they've got sugarfree Red Bull or whatever that is, and it's called Wealth Management Rocket Fuel, and they give that out of the booth as well. So definitely come by and see us at your next conference. We've got some fun stuff going on there
Justin L. Mack (09:24):
For sure. And then making it tough for the other booths. People are handing out beer koozies and pens and you've got nitrogen ice cream. Steep competition. So we've been through the spider bite, the origin story, the transition and the growth of Riskalyze into Nitrogen. So let's really talk about that focus. Make the case for a growth platform in the first place. Why do we need something like this? Advisors have a lot of tools and a lot of options and a lot to keep in mind already. Why do they need something like what you're providing for through Nitrogen?
Aaron Klein (09:59):
Well, the growth platform in my mind is this round hole that everybody has been trying to stuff a square peg into for the last few decades. If you sit back and you kind of look at the wealthtech stack for a wealth management firm, of course everybody needs an asset platform to run assets on. Everybody needs marketing tools to be able to bring leads into a practice. Everybody needs a CRM to kind of keep track of people through all of that process. But there's this hole in the middle for like, well, how do we actually take these leads from our marketing and how do we turn them into meetings and how do we turn those meetings into valued clients and how do we turn those clients into referral champions for a firm? And by the way, when we get that happening and those leads turn into meetings and meetings turn into value clients and clients turn into referral champions, it just starts the growth flywheels spinning, right?
(10:56)
Because the referral champions are putting more leads into the top of that funnel. And so that's how we really drive growth as wealth management firms. And so what's so fascinating is a lot of advisory firms are out there doing, first of all, a lot of manual work to try to make that happen. Second of all, our industry has been trying to stuff these square pegs into that round hole for the last few decades. I've seen a lot of firms try to take a great tool like comprehensive financial planning and stuff it into that hole in the middle of the wealthtech stack. And you know what? Financial planning is a great tool. Forty-five minutes of data capture is not really the best way to turn a meeting into a client, right? That's not super optimized for that. I've seen people take charting tools, great tools and try to stuff 'em into that peg. Stuff 'em into that hole to be a growth platform. Tough sell.
(11:52)
I've seen people take PowerPoint and Excel and try to use it as a growth platform. I've seen people take whiteboards on their wall and try to use it as their growth platform. The point is, at the end of the day, here's the challenge we have as an industry. Advisors don't actually want to be salespeople. The vast majority of them, the number one college degree is finance. The number two is economics. These are people who want to be practitioners and help people. And we're the only profession I can find that thrusts the practitioners into the role of being the salespeople. And I look at this and I go, well, here's the great thing. If we take a purpose-built growth platform that drives that lead to meeting, meeting to client, client or referral champion process, and we put that in the hands of fiduciary advisors, we can turn those fiduciary advisors and financial planners into growth engines for their firm without twisting them into the salespeople that they really don't want to be. That's the promise of the growth platform.
Justin L. Mack (12:56):
You talk about square peg, round hole, like you said, take someone who wants to be a practitioner or maybe serve a client from a very service oriented standpoint and then force them to get out there and sell, sell, sell. That is not exactly the right fit. And I've got to ask, does this concept exist outside of wealth management? I find that our industry can often learn a lot from other industries and kind of adopt that. Remix that a little bit and make it work for advisors. What do you think about that?
Aaron Klein (13:24):
Great question. I mean, you said it so nicely and diplomatically there, Justin. I'm going to say it a little bit more bluntly. I think sometimes our profession lives a decade in the past.
Justin L. Mack (13:35):
Just for the record, Aaron said that, not me.
Aaron Klein (13:40):
Behind the bleeding edge of technology, we're often like a decade in the past. And if we look out there to the rest of the world, you're right, this is somewhat of a solved problem. If you look out there to the rest of the world, hey, guess what? They've got marketing automation tools, too. They've got systems of record, we call 'em asset platforms in our industry. They call 'em ERP out there. They have CRMs as the system of record for people. But there's this huge market that has grown up out there in the outside world. And really it's kind of two sides of the coin. They'll call them sales enablement tools and they'll call them client success or customer success platforms. And those are the two sides of the coin of growth. I put those two sides together and call it a growth platform, but that is a $7.5 billion industry out there in the outside world, outside of wealth management.
(14:32)
So I really think that the analogy holds that we need to be much more professionalized and create a consistent growth process inside of our industry. Because when we do that, there's a reason why in the outside world they've said Salesforce can't do it. All the CRMs can't do the entire job. And so that's why these sales enablement and client success tools have cropped up. And I think you put those two things together, that's the promise of the growth platform.
Justin L. Mack (15:08):
Absolutely. And with that, we're actually going to take a quick break and enjoy a word from our sponsors. But when we return, we're going to have more with Nitrogen CEO Aaron Klein. 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 jumping right back into our conversation this week with Aaron Klein, co-founder and CEO of Nitrogen. Now, Aaron, before the break, we had a lot to talk about. What it really means to provide a growth platform, what that concept looks like and how you're trying to dispatch that out to advisors to provide that support. So let's get into some of the hurdles that wealth managers are working on or needing to clear in regards to this growth focus, which is what we're all focused on right now. What's the biggest impediment to firms adopting a growth platform right now?
Aaron Klein (15:58):
Yeah, that's a great question. I think the biggest thing is that advisors and firms can kind of get stuck in inertia. They've been doing it the old way a long time, and they can survive doing it the old way. I'm not sure they can thrive. I'm not sure they can grow, but they can probably survive doing it the old way. And inertia is a very, very powerful force. That's a universally true thing. What we've really done is kind of perfected working with firms to help them find their early adopters who really are willing to jump in and adopt new technology to drive results in their practice, and then really start showing the rest of the firm how it's done. We have one firm that comes to mind, a 1,000 advisor firm, and they rolled this out across the firm, but they really followed that strategy by going and getting some of the best early adopters that they had be on the bleeding edge.
(16:57)
And then very quickly were able to show how they were able to dramatically increase their meeting to client rate. They were in a position as a firm where they were converting low 40s, I think it was about 43% of their meetings into clients. Here we are a couple years in, Nitrogen has helped them take their firm-wide meeting to client rate from the low 40s to the low 90s. They're winning about 92% of the client meetings that they have. So that's the kind of results that we can see, but you've got to figure out how to break in inertia there. And a lot of times it's about identifying the early adopters and letting them show it off inside the firm. Sometimes it's just data.
(17:53)
And one of the things that we went out and undertook was the Nitrogen growth survey that we just released, and it's a great piece of data. A thousand different firms responded. About 45% RIAs, somewhere around 40% of them, were $100 to $500 million firms. About 10% of them were billion-dollar-plus firms. So a really great mix of wealth management firms across the industry spectrum and lots of different cool findings about what drives growth in a firm. But one of the bottom lines was Nitrogen users are about two times as likely to be a hypergrowth firm growing 20% plus per year than to be a slow growth for 5% minus a year. And so it's really impactful. It created that causal link that will show, and the data can help advisors get out of their own way and say, wait a minute, I gotta get out of inertia because if I adopt this technology, it's going to have a meaningful impact on my business.
Justin L. Mack (18:50):
Something I want to follow up on with you, too, an interesting point is about the early adopters and those folks being really crucial whenever we're looking to create a shift. Not just in this industry, but any industry requires early adopters to take that plunge. And it's something that I'm always mindful of because outside of this, I'm, for example, a huge consumer electronics nerd. That's just my thing. Early adopters, something new, something unproven, I'm jumping in. Heck, I had a Microsoft Zune. I thought it was going to change the world. It didn't quite work out. But I think there's something to that to where you kind of need to be willing to get out there, beta test in a way and see what happens and then learn from that. Just curious, in your experience, what is the early adopter advisor? I ask that question because I think sometimes when we talk about the forward-thinking or the tech advisors, however we come up with this monolithic idea that they're all like this or they're all like that. "These are what these kinds of advisors are like." But in reality there's a really wide chasm. People have different experiences. Advisors who've been in the game for decades, but still want to be that early adopter. And of course the people who are brand new and are ready to shake things up. In your experience, what do you see? What is an early adopter advisor and do they really paint in all different shades?
Aaron Klein (20:08):
Yeah, it's a great question. But I will also say one of the things that's exciting about being a Zune owner is you still get to see it in Guardians of the Galaxy, right?
Justin L. Mack (20:19):
It's still kicking.
Aaron Klein (20:21):
It's still kicking right there for Rocket. So yeah, so it's a great question. I think what I've found is really true about early adopters is that it's a mindset. Everybody has a different brain and sometimes it's a frame of mind. I was much more of an early adopter 10 or 15 or 20 years ago and just, I don't know, the busyness of life, having kids being in an intense job, it makes you a little bit less of an early adopter. But I still have a lot of that mindset inside of me that makes me want to try out new things and be on the bleeding edge of things, even if it's not quite at the level it might've been 10 or 20 years ago. But all that to say, because it's a mindset, I think it cuts across things like advisor affiliations. I think it cuts across the size of firm.
(21:22)
I think it cuts across a lot of different things like that. But I would say where I have seen a correlation is I do think that some of the faster growing firms are early adopters, and it's very simple. It's that they're willing to adopt the technology and the practices that will help drive their growth. And at the end of the day, that is, I think it's a bit of, it's less correlation and it's more causation when you adopt the right technology that is going to drive growth. That just happens to be because you're an early adopter that you're kind of out there adopting it faster, but it's a causation driver as to why you're getting that kind of growth.
Justin L. Mack (22:02):
Interesting, interesting. Very cool stuff. And then switching gears a bit, I have to ask, what is on deck for the rest of 2023? You guys have already had a really busy year, you kind of went through an entire identity change. So you've done a lot already in the first half of the year as we head towards the second half of the year. What's on tap for Nitrogen?
Aaron Klein (22:21):
What I love about this rebrand, by the way, is that it's really about getting our name and our identity to catch up to what our product has been for a long time. So we started, I talked about it earlier in the podcast, but we started out as a risk questionnaire and a little bit of risk assessment in the portfolio. And then we built out all these other capabilities like deep portfolio analytics and stress testing and proposals and investment policy statements and insights and compliance workflows and things like that. And so many different capabilities that we've built that are really focused on helping wealth management firms drive that growth process. And so what's really on deck for us, I think is just even more focused on that. One of the things that I made really clear late last fall at about the same time we announced we were going to do the rebrand, I said, listen, we decided strategically that as far out as we can see in the future, we are not going to build to the right, as I call it on the flow chart. We're not going to become an asset platform or become a TAMP or be asking you for a piece of your basis points.
(23:38)
That's just kind of not the kind of firm we're trying to build. We're going to be very, very focused on being a pure play technology company that is driving growth for wealth management firms. So what that really means is we've got all of our R&D investments that we're making focused on making it easier for firms to accelerate the growth flywheel. So in my mind, a few of those things are like, I want to build even deeper integrations with our marketing partners like Snappy Kraken and FMG. And that's, I think, going to be on tap in the future. I want to make it really easy for firms to see how advisors are working leads and turning them into meetings and then turning those meetings into clients. I think we have a lack of visibility and process and consistency of process on that across wealth management. And I think we can do more with software to make that a lot easier for the advisor to do and be a lot more visible. Not just for advisors running their own practice, but for firms that are trying to scale at three or four or five or 10 or a hundred or a thousand. So really excited about that, where that's putting a lot of focus is how do we help these firms just make the analytics richer, make the engagements with their clients richer, because that's really how we add value to advisors and firms.
Justin L. Mack (24:58):
Fantastic. And then as we wrap up here and come near the end of this week's podcast, we're going to transition into something that has become customary here on the Financial Planning Podcast, which is ending with some good vibes. And Aaron, we've talked a lot today about what you have on deck for Nitrogen, the genesis of the change, everything you've been through, the concept of a growth platform, and you can hear the excitement every time a new topic comes up. And I think folks who've had a chance to meet you in person can feel that excitement as well. So with all that in mind, another thing that everyone has to answer, what do you love most about your job? And I'm going to make you try to narrow it down as much as you can. So what keeps you coming back to this? What keeps you wanting to get spider bitten over and over again?
Aaron Klein (25:47):
I love that. For me, it's definitely got to be knowing that we're impacting millions of American households and empowering those individuals to understand their Risk Number and to be fearless investors. And because of that, that's really what drives our ability to be a force multiplier for wealth management firms to expand the impact of their advice to more people. I mean, I'm so bullish on the future of human financial advisors and the impact that they can make on the world. And to me that's what gets me out of bed in the morning and makes me seek out the spider and makes me come to work, is I just get super excited about that and our ability to impact millions of American households in that way.
Justin L. Mack (26:30):
I don't think there's a better way to end than that. So I do want to thank you so much for sharing your time and your passion with us, and next time I see you, make sure you have some of that nitrogen ice cream handy because I'm hungry just thinking about it.
Aaron Klein (26:43):
It's a deal. Thanks for having me.
Justin L. Mack (26:45):
Absolutely. Thank you for coming by. 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, Aaron Klein, co-founder and CEO of Nitrogen. Rate us, review us and subscribe to all of our content at