On this week's episode of the Financial Planning Podcast, Samuel Deane talks about his evolution from being an advisor who relies on fintech to an advisor who backs it.
Deane, the founder of Atlanta-based Deane Wealth Management, has a unique relationship with technology. The
But Deane soon realized that even the millennial niche could be drilled down to more specific subgroups that have their own unique set of needs. So he got more specific himself, becoming an advisor to tech professionals at pre-IPO companies with equity compensation.
That allowed him to learn even more about the tech space, an experience that inspired him to invest in the solutions that kept his practice running. After all, who better to invest in wealthtech than someone who knows what works, and what doesn't?
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"How many investors are ideal users of the software that they're investing in? So I think that that puts me in a quite unique position to evaluate the software, add valuable insight, help them test certain features and ultimately market the solutions to my peers and other folks on the independent side in this space," Deane said. "That's been a relatively new venture and again, I'm having lots of fun doing it."
During his conversation with FP Podcast host and lead editorial producer Justin L. Mack, Deane talks about why advisors are the ideal wealthtech investors, his origins as an angel investor, and why he believes being an advisor is the "best job in the world."
This week's podcast is also part of a multipart Financial Planning series looking at how the
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 (00:02):
Good morning, good afternoon and good evening. Welcome to the Financial Planning Podcast. I'm your host Justin L. Mack, and it is my pleasure to introduce this week's guest, financial planner, entrepreneur and firm founder, Samuel Deane. He does it all. Sam, thank you so much for joining us this week for a very special edition of the show.
Samuel Deane (00:21):
Thank you so much for having me. It's a pleasure to be here, Justin.
Justin L. Mack (00:24):
Absolutely. And this week is special because the show is part of a larger multipart series where I take a look at the current fundraising and consolidation environment in the wealthtech space. I don't know if you've heard, but there's no more free money for tech startups. This isn't 2021, after all. So in the digital and print pages of FP, I've got a piece talking to industry insiders about how high interest rates, low volatility and conservative investors have transformed the dealmaking environment for startups. But the insiders say that the dark clouds that once watered wealthtech's money trees come with quite a few silver linings, and plenty of opportunity. Again, you can find all that online and in print from Financial Planning right now. A really cool series that I'm really glad I had a chance to talk to people about. And as a piece of that conversation, I wanted to bring in Sam to talk about another part of the wealth tech investing landscape. Which is advisors becoming investors themselves.
(01:16)
It's a topic I've wanted to get Sam to talk about for a while. Glad we have the time now. And Sam, a friend of the show despite never being on it, has spoken on everything from tech to practice management for us at multiple INVEST events. In particular, his insight on
Samuel Deane (01:50):
Man, that's such a great way to start off. It was by no means my plan to be a financial advisor. Ultimately, I chose this profession because of the opportunity for entrepreneurship. To give you a little bit of context, I went to college as a pre-med student. My entire life, I thought I was going to be a doctor. Got to junior year of college and realized, I don't know if I want to go through more years of school. And I had the grades and everything was fine, but I was just so focused on earning a living and making my parents proud and those sorts of things that I ironically chose not to go to medical school. But I was fortunate enough that when I graduated, my mom, who is a registered nurse, had a health care staffing agency. She was building it from the ground up. When I graduated college, it was herself, a business partner and one other person than myself.
(02:50)
And I got to essentially try my hand at entrepreneurship as a 22-year-old. And so it was that experience that really influenced me to go to business school. I'm from Long Island and I lived 10 minutes away from Hofstra University at the time and pursued my MBA, and it was really in business school. A lot of business students, I imagine, kind of fell into finance. I think throughout my life, my parents always sort of instilled in me that if you work hard and get good grades, we'll get you nice things. And so growing up, I kind of knew that I had to work hard. I had this sort of interest and affinity with money and investing growing up without necessarily wanting to be a financial advisor. And then in business school when I realized a lot of advisors … I learned about Kitces and the CFP and the Series 65 and those sorts of things, that's when it really hit me. Like, wow, I can start my own wealth management firm and marry the two interests of money and investing in entrepreneurship. And that's essentially how I got here. And it's been five years of me running my own firm now, and I'm happy to say I'm having a blast.
Justin L. Mack (04:02):
That's awesome. And going through that process of self-discovery, like, hey, I was going to go to school for this, change gears and then still be able to have fulfillment and success, a really cool story. And I always love highlighting the kind of unorthodox paths that people take to this industry because, unfortunately, the business doesn't do a great job of letting people know about the business and kind of spreading that word. So it's interesting to hear how you found it and going from med school to being an advisor. I know that's an interesting switch for the parents. But trust, I know the feeling. I was supposed to go to law school and ended up as a reporter. So imagine telling your parents you were going to have a lawyer salary then having a local newspaper salary. It's a very interesting conversation. [laughs] So getting into the work that you have been doing for five years, share with folks some of the work about your firm, the clients you serve, as well as any other organizations that you're a part of that you'd like to highlight because I know you do stay busy and you stay involved.
Samuel Deane (05:02):
Yeah, thanks for asking. So I run a wealth management firm that works exclusively with startup founders and early employees. And so a lot of our clients are employees at pre IPO startups and even new public companies like Coinbase, Airbnb. So I've worked with clients from those tech companies. Whether startups or big tech and really focused on equity compensation and that liquidity event, that big day. And so with that comes tax planning. I run what I refer to as a one-stop shop for all things money where we work with clients with comprehensive financial planning, investment management, tax prep and planning, estate planning and so on and so forth. As I mentioned, it's been five years of me running my own firm. We work with about 30 households and manage a little over $10 million in assets. It's a great experience to get the opportunity to choose who you get to work with, right? I'm fortunate that I view all of my clients as friends and get opportunities to hang out with them and those sorts of things. And so it's been great so far.
Justin L. Mack (06:15):
It's very nice. And with that I want to switch gears and talk a little bit about how you got into that investor side of the advisor fintech relationship because I know, as we've had a chance to share with you before and speak with you about in other platforms here for FP, technology is a very central part of the work that you're doing. It's how you've been able to do what you've been doing, see the growth, connect with the people that you have been working with, and many of the people you work with are in tech themselves. So you get to learn them and, like you said, consider many of them friends. So I imagine you learn a lot about what that process is. To be a startup founder is not easy, as my story will point out. A lot of tough times to go with all that innovation and creation. So how did you even get into that side of it, becoming an investor as an advisor? That's a little bit different. Explain your background there and what you've been doing.
Samuel Deane (07:06):
As an advisor who's an owner and operator of their own firm, I used to joke around a lot that when you first launch your firm, you look at the Kitces map and you see all the different choices that are out there and you kind of pick and choose what you think will help you in your firm for the foreseeable future. And so I used to joke around and say that for quite some time, I felt like a chief technology officer and that this is not necessarily the role that you imagine a financial advisor who runs their own business playing. But it is what it is. The facts are the facts. And so what led me into becoming an investor was essentially me being a practicing financial advisor that specializes in working with tech employees. The technology that we implement, particularly on the independent side, are mostly that of early to mid stage private companies.
(08:07)
And I often found myself working with some of the product teams providing user feedback and client feedback and those sorts of things. And after a few years I realized some of these companies were going on and getting acquired and having liquidity events. And I wasn't necessarily participating in that, and I thought it would be cool, too. So I realized that there were some unique investment opportunities within the wealth tech sector, and that was really when I started investing. Maybe about two years or so. I specifically stick to advisor fintech because that's what I know. We only invest in what we know, and the way I describe that is really technology that enhances the wealth management and investment process for professional investors. As an owner and operator of an independent wealth management firm, a lot of times we are ideal users and provide feedback, valuable feedback at that, to these startup founders.
(09:11)
And so when founders are reaching out to sell me as a customer, a lot of the time I have the ability, because I sit in this seat … to say, hey, this is a product that I think will really move the needle forward for my firm and firms like mine. And so just I think that, not to say that I'm better than other venture capitalists out there or angel investors, but I think that that's an experience and a perspective that the average investor just won't have, right? How many investors are ideal users of the software that they're investing in? So I think that that puts me in a quite unique position to evaluate the software, add valuable insight, help them test certain features and ultimately market the solutions to my peers and other folks on the independent side in this space. And so that's been a relatively new venture and again, I'm having lots of fun doing it.
Justin L. Mack (10:14):
I imagine that's got to be a really rewarding process because, yeah, you mentioned it's an interesting relationship, especially as a growing advisory practice. What's going to be maybe new or different or cost effective, working with companies that are still in the process of growing alongside your firm. So you see that tech grow and change, and you know [you] can start using a tool maybe five years ago, and then once it changes and grows and gets acquired, it looks different. It feels different. And you can see the input you had as an advisor materialize in those changes, and you're like, well, hey, what about me? It's not that you so much want to reap the benefits, but you know, you had a hand in it. So I guess through becoming an investor, you can continue to have a hand in a product that you helped refine just through your use and through your practice.
(11:00)
And with that, we're actually going to take a quick break and dive deeper into what that process has been like for Sam, and get some advice maybe for other advisors who are thinking of doing the same thing and changing their relationship with tech a little bit. We'll have all that and much more after this break. Stay locked. We'll be right back.
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 Samuel Deane of Deane Wealth Management for a special edition of the Financial Planning Podcast, going with a multipart series that we're doing looking at the current fundraising, M&A, consolidation, just all the business movement in the wealthtech space right now. A lot to keep track of. And as we've shared, Sam has become an investor himself. A different kind of interest and relationship in the wealthtech that has helped power his practice for five years since he's been doing his thing.
(11:54)
So I want to talk a little bit more about what that process has been like overall because where do you even start with something like that? You're like, boy, this sounds like a good idea. Never done it before. Where do you go for help? So I kind of want to start there. What was your entry and how did you educate before you made that first choice on what to invest in? That's probably nerve wracking too. What am I going to support? I'm doing this. This is a new endeavor. I don't want to screw it up. Nobody does. How'd you get started, man?
Samuel Deane (12:21):
Yeah, similar to my wealth management firm, I was essentially just following my interests and following a hunch. I don't know that this has a ton to do with it, and maybe it does subconsciously, but when I made this decision was around the time Coinbase had went public and I thought to myself like, man, there are certain companies that I'm providing feedback to that I'm helping and those sorts of things. And when they were to have a liquidity event, I'd want to participate in that. And so fortunately I had an advisor who was also a pretty good friend of mine that was working on a financial planning software for folks who have equity compensation. If you know anything about equity compensation, it's something that is relatively hard to plan for. It's really scenario-based and there isn't really quite a tool that exists right now to solve those pain points.
(13:22)
If you talk to any advisors who are working with folks that have equity compensation, they're likely using a combination of RightCapital or some other financial planning software plus Excel. And so knowing that and being so proximate to the pain point, it was a no-brainer to invest. I knew the founder, he was actually somewhat like a mentor, if you will. I knew that he was competent and he was probably one of the most knowledgeable people in the space to be able to tackle this problem and it was something that he was committed to. And so I think that it was a little bit, I think a lot of personal relationships there that allowed me to make that first investment. And quite honestly, all of the other investments that I've made have also been in other advisors who have been friends where I'm confident rather in their knowledge of the problems and the pain points that they're looking to solve.
(14:20)
And again, in terms of figuring out and understanding if this idea actually has product market fit, I am the market, so I can determine that relatively easier than an average VC can. In the process of an investing thing, you read and you hear a lot about how deal flow, deal flow, deal flow, that's the one thing that you need to be able to attract LPs and investors to invest in you. If that's something that you're doing, or let's say you want to be more of a prolific angel investor, at the end of the day you still need deal flow. And I'll say that that hasn't necessarily been hard for me to come by, primarily because I'm an ideal user. And so all I simply have to do is put myself out there as someone who's willing to back innovative wealthtech solutions. And quite frankly, that's really all it's been is positioning. Putting myself out there as someone who's willing to invest in these early stage ideas, and as an ideal user, as someone who runs their own firm who has a network in the space for founders, I believe it's sort of a no-brainer to say, yes, we need this investor on our cap table.
(15:40)
And so rather for fighting for space on the cap table, I think it's been quite, I wouldn't say easy, but it wasn't what I was expecting.
Justin L. Mack (15:52):
For sure. That's got to be desirable if you're a startup to have that kind of perspective, if you're also pairing it with somebody who's going to provide backing while also being someone who's going to use the product. It's probably like you said, not that you're saying you're better than any other VCs, but that perspective is powerful in a sense that there will be other VCs with maybe different capital availability, and you'll be able to have a different, I guess, perspective to provide as well. And that's all going to be important for firms, especially as they're trying to compete, innovate, stand out. You mentioned the Kitces map earlier. It's a big map. There's a lot of single-point solutions in our industry, so trying to make sure that you're one that sticks around and either works in with something bigger or just gets that kind of motivation or buzz among advisors isn't easy.
(16:37)
So that perspective, it's power for you. And with that, I kind of wanted to have you give some advice for other advisors who are interested in doing the same. I don't know if there's other advisors that you work with who are also doing this that you're kind of learning from and collaborating with to kind of figure out how to be more effective. Or if you're even sharing like, hey, this is something you might want to check out, what that environment's like, but advice for other advisors who want to transition and not just be users of tech but supporters of it. How do you get started? Where would you say they go first?
Samuel Deane (17:08):
Yeah, I'm more than happy to connect with advisors who are interested in learning more about this space. A lot of the time that I am investing in some of these companies, I may only be able to write 5 to 10K checks. But if as an independent advisor community, if we're able to pull 5 to 10K checks together and write bigger checks, that will obviously go a longer way. And that's essentially what I've done over the last two years. And so I've been investing my own money, but also close friends and colleagues who also see merit in the ideas and have interests in having exposure to this space as well. And so I'm happy to connect with folks and sort of share what I'm seeing. Again, it's a pretty unique seat because I'm sort of seeing the future of wealth management, if you will.
(17:58)
These are ideas and things that haven't really come into fruition just yet, and it really gives you a unique seat to what's up ahead. And there are advisors who don't really find interest in that, and there are those that do. And so I'm happy to connect with other advisors who want to learn more about this space and chat about this space and potentially invest in some of these companies because there is, I don't know, again, the advisor fintech space isn't really a sector that has a lot of VC attention. The biggest exit that has come out of this space, as far as I know, has been about $500 million with MoneyGuidePro, right? We're not even talking about unicorn money. I mean, unicorn status right there. So most investors aren't really looking at this space. And I think it's an opportunity for advisors to really shape the future of wealthtech, have a hand in the solutions that we're implementing in our own firms and benefit from that financially as well. And so I'm happy, again, happy to connect with folks who are interested.
Justin L. Mack (19:03):
Yeah, it's an interesting little family and community, the wealthtech space, it's small enough to have an impact if you get involved and start doing that early enough that you can actually see, again, your advice and your feedback come to life because of how tight-knit it is. And I've got to ask, too, before we kind of transition to the end here, being someone who is into trying new things, being a beta tester, an early adopter, and having that spirit, what's some of the downfalls of that? Because as someone who is also an early adopter and down to try new things, there's bumps in the road when you're trying new unproven tech and solutions. Anything that stands out as far as maybe a learning experience, something that was tough as you not only invest in these new ideas, but embrace them, try to work 'em into your workflow. I know that's not easy.
Samuel Deane (19:49):
Yeah, I mean, by no means is it easy. And as anyone would imagine, you find a lot of bugs in software that is starting to acquire early users and starting to figure out where bugs exist and those sorts of things. And so I go into these arrangements with my expectation set that it's not going to be the perfect tool, but fortunately I have clients who are open to giving feedback, who are open to testing out certain things as long as obviously their private information is not being spread all over the place. But there are folks who are willing to be early adopters along with me in this process, and it doesn't have to be something you implement firm-wide, but if you have a small group of folks who are willing to try these things, if it makes your lives easier, why not? But it's all about setting expectations. And I know that there's going to be things we find, there's going to be mistakes, there's going to be bugs and errors. But again, it's all about setting proper expectations for yourself as well as for the client.
Justin L. Mack (20:57):
Definitely. There's nothing wrong with that. Those bugs and those mistakes need to be ironed out and then turned into the solution of the future if you get it right and you listen to that feedback and implement those changes. And then advisors like Sam can invest and then everybody's winning because everybody had that big public exit and it's all good. [laughs] But with that, we're going to transition to the final part of the show and something that has become a tradition here on the Financial Planning Podcast, which is ending with some good vibes. And Sam, we had an opportunity to talk about how you got into the business, making that switch from medical school to becoming an advisor, your relationship with technology, how it's helped power your firm for five years, and how that relationship has changed when you decided, you know what, I want to be an investor. I want to back some of these solutions I believe in. So a lot that we've talked about and a lot to consider. But with all that accounted for, what would you say is the thing you love most about your job? What's the thing that keeps you coming back, considering how much work it takes and how unpredictable this job can be, what do you love most about it?
Samuel Deane (21:57):
It's easily the impact. To know that you are giving someone financial security or security in general in a place or in an area where they couldn't even imagine. What that feels like, I think, is a very fulfilling feeling for me. I think being a financial advisor is the best job in the world, and I don't know if there is another career where you can help someone. You can empower someone economically while doing the same for yourself and your family and all incentives or most incentives are aligned. I don't know that there's another career like that. And so that's what I love about it the most.
Justin L. Mack (22:49):
For sure. Well, good vibes don't get much better than that. So with that, I think that is a perfect place to end this week's edition of the Financial Planning Podcast. And Sam, I want to thank you again for sharing your time and your passion and your energy with us this week and helping us dive into this topic of investing in wealthtech from a different perspective, from that advisor perspective. So I thank you again for taking the time and joining us this week.
Samuel Deane (23:10):
Thank you for having me, Justin.
Justin L. Mack (23:12):
Absolutely. 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, Samuel Deane of Deane Wealth Management. Rate us, review us and subscribe to all of our content at