What's Former LPL Chief Mark Casady Up To Now? Breaking Fintech Apart.

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Artificial intelligence, machine learning, DeFi, blockchain, Bitcoin. It seems like everywhere you turn in the financial industry, technology is there. And while technology is important, it's not the only thing necessary to build a thriving business. Hi everyone, I'm Steve Sandusky for Barron's Advisor, and welcome to Actionable Intelligence. My guest today is is Mark Cassidy. Mark is the former chairman and CEO of LPL Financial, which is a company he took public back in 2010. Today, he's the co-founder of Vestigo Ventures, which is a venture capital company that invests in early-stage fintech startups. Mark and I discuss two critical areas to your success as an advisor. First, we talk about the role technology should play in your practice, and second,. We talk about the psychology of high net worth investors and how many advisors get it wrong in this area. So let's get started with Mark Cassidy. You retired from LPL as the chairman and CEO a few years ago. I imagine you retired as a fairly wealthy man. You probably could have done whatever you wanted to do, but instead you decide, I'm going to start a venture capital firm and I'm going to focus on investing in seed stage and Series A investments in the fintech space. So, why not just ride off into the sunset, play golf, and travel, but instead you're doing all this technology stuff?

So, why is that? [Speaker:BRAD_STONE] Well, I'll tell you a funny story, then I'll tell you why. So, my son, I have 4 kids and my son's my youngest, and he's in the industry. He works at a mutual fund company in marketing. And someone asked him, you know, what I was doing and did I have any hobbies? And he said, "Well, my dad has a hobby of starting companies." So, I do like starting new ventures and new ideas. It's one One of the things I loved at LPL was starting new ways to help advisors do what they do and to think about different types of advisors who could come in. And so this is really an extension for me of a lifelong love of thinking about business, how it operates, how to help them be better, how to recognize when they have problems, how to deal with personnel issues. I just thought to myself, there's no way I can spend enough time traveling or playing golf or boating or other things I like to do that will fill my soul. I have always been someone who has to learn. Learned. So I want to try new things. I sometimes get mad at myself when I have a moment where I feel like I'm overwhelmed in learning, and then I realize, well, no, this is what you asked for, right? And these things. But for me, it was about 3 things. One was learning more as an adult and creating a new environment to do that. Number 2 was a way to give back. I lived in Boston for over 25 years, but yet I don't really work here a lot until now because I traveled so much for LPL, which is obviously a national company. So it was a way to think about how do you give back to local entrepreneurs and local businesses in a capitalistic way, which is an important, you know, organizational consideration for me. And the last one was just that, that it's such an incredible time in financial services. It's the most interesting time I've seen in a nearly 40-year career of the application of technology to all the things we do, whether it's, you know, provide advice, whether it's banking, whether it's insurance. We're in a time that's going to change our industry dramatically in the next decade. So I thought, what's the best way to, to really be part of that and help make that happen.

So what year did you start Vestigo Ventures?

We started the year before I retired and Ian Sheridan co-founded along with Dave Blunden and I, the company. And they basically, Ian operated on his own in the first year since I needed to focus on my final year at LPL. Um, and we really got started when I retired in 2017. So our first fund, when you think about funds, they usually have vintage years. It's a 2017 vintage year, just as our fund number 2 will be a 2021 vintage year. So it's just the way you think about when you raise the money and when you start putting it to work.

Well, let's look at those bookends. So let's go back to 2017 when you raised the first fund and think about the state of technology in 2017 and the kinds of companies you were investing in then. And then let's look at today, you've got Fund II. Could you make any comments or observations about the state of technology 4 years ago versus the state of technology today?

Yeah, 4 years ago, you know, the excitement was really around blockchain and what blockchain would do to change any number of our parts of industry, which we can go into deeper, but, but effectively blockchain was the big buzzword, if you will, in technology back then. Artificial intelligence was there, but it's been there for a while and it just wasn't quite as buzzy as it was 4 years ago, you know, at that. So when we opened the fund, we thought for sure we would have a mix of, companies that focus on artificial intelligence or machine learning. There's a bunch of other names for it, data science, and we would have many that did blockchain. And if you told me it was 50/50 out of 20 names, I would have said that sounds about right in 2017. If we fast forward, it turns out we only had 3 companies out of 20 that use the blockchain, and they were very specific applications to the infrastructure of crypto investing. And so that is blockchain, but it's, it's the purest form of blockchain connected to crypto. We never found a company that was a blockchain dominant technology that we invested in Fund 1, and we're starting to invest Fund 2, and we're starting to see a little bit more emerge today.

[Speaker:BRIAN_LAWRENCE] Yeah, so back then, it was, as you say, it was blockchain, not Bitcoin, I think was one of the common phrases back then. Today, of course, we've seen what Bitcoin has done, and now we've got Ethereum, and we've got DeFi, And you've got Dogecoin, you've got, you've got all sorts of things that are crazy and things that are incredibly smart.

Our belief back in 2017, '18, '19 was that crypto and cryptocurrencies, mainly Bitcoin and a bit of Ethereum and probably a couple of others would emerge as investable assets or investable ideas. And so we invested in 3 companies that support that concept. One's been sold. One is going through its A round and has been very successful and one didn't make it. So it's a classic story of venture investing, right? So far. And the one that's made it of course is is the one that's most conventional. It provides tax information to traders in these assets, and it also supports your governmental review of tax obligation in the space. So it has two businesses, B2C and B2G, and is doing very well, particularly with these tailwinds of Bitcoin being so excitable. And then we've supported Eaglebrook Advisors, which is a newer company. We've decided not to put any crypto in Fund II. And so Eaglebrook was one that I invested in personally, holding it for the fund in case it wanted it. But Eaglebrook has had a lot of success with, you know, Mariner Advisors and others and becoming a Bitcoin solution, an SMA basically, you know, for them. So in that space, that's the only place we've seen blockchain emerge. We all know the blockchain was invented by Satoshi, who invented Bitcoin, and, and that's what made it so exciting, as you say, in the early days was the separation of the currency and the asset crypto from the technology, which is blockchain.

So why no crypto in Fund 2?

Our view is that the infrastructure has been built. And so at this stage, if you were to back a wallet company or a trading company, they're too far along. We're a seed stage investment. If we were a growth-oriented investor looking at B and C rounds, we would be looking at it. But because it's seed stage, we felt like the parade has marched on, as it should. And so the appropriate place for us to invest was in Fund 1. We were a little early because we caught the upper part of the last wave. And then of course, we caught crypto winter, which lasted almost 2 years. That wasn't much fun. And then as I said, the companies emerged from it and now have this sort of renaissance or boom that's going on in crypto that's obviously helping the businesses there. It's classic venture, right? You make these bets and this belief in what's going to happen, and you're right or you're wrong, and your timing is a big part of that being the case. But we're describing there 3 of 20 companies, right? So it's not— it's 15 of the total portfolio. We were never going to do more than 4 in the portfolio because we felt that would have been over-indexed to crypto as an idea. The other 17 are basically AI-based, generally enterprise SaaS models that help insurance companies, banks, asset managers, advisors do things more efficiently and more effectively.

Well, I think you're in an interesting vantage point in terms of thinking about the technology. Your background, you've been in the financial industry for, as you said, I think around 40 years. Running LPL, one of the largest brokerage firms in the country, you're very much into technology. You understand how, I'll call it the traditional financial system infrastructure works. Now, you're at the leading edge of blockchain and crypto. Now, a lot of people are talking about DeFi, decentralized finance, and we've got these different protocols. What's your take on that? Is the financial system, is the financial infrastructure going to be completely remade in a digital fashion, in a decentralized fashion, what do you think is going to happen there?

Let's start with the basics on DeFi, I think that always helps. DeFi means a lot of things to a lot of different people. I always think of it as the deconstruction of finance, as opposed to others think of it in a different way. Why do I think of it as deconstruction is because what's happening is, whether using blockchain or AI, you're basically taking apart the value chain that is a bank. Or taking apart the value chain that is an insurance company. And when you start to do that, just think of a Lego set, right? My son and my daughters loved Legos and they would sit for hours and build the Death Star, right? That thing would sit in your living room like for days or weeks or months and sometimes years, you know, complete, or they would completely destroy the Death Star, right? And then they would make 5,000 other things out of it. And that is what DeFi is about. Let's take what we know today as this thing, banking, and let's break it apart into 25 different pieces. And then what happens when entrepreneurs start to put that together in different ways? Let me give you an example, because I think that's the best way to explain it. So today we think about the mortgage process is pretty straightforward. You buy a condo in Boston for $500,000, you put $100,000 down because that's what's required under today's mortgage convention, and a lot of investment and ventures going to making that process easier. That's good, that's fundamental, that's core. That's not DeFi though, right? That's just efficiency and so forth. DeFi would be, now let me add a blockchain solution that takes part of your $100,000 and breaks it into a million pieces, right? Because I don't want to have just exposure. If it's a condo, I'm probably young. If I'm young, this might be my biggest assets. Do I really want to have $100,000 or 80% of my assets focused towards just this one condo in Boston? Well, no, but there's no alternative to that. That's all I can do today. But DeFi would create a new process where you apply blockchain. I turn in half of that, $50,000, and I get back a basket of exposures to maybe houses all over the country. And if I were Rocket Mortgage, I could offer that service to you for a fee. And I might charge you a few basis points, you know, for making sure and monitoring that pool, right, and creating, you know, that in a well-diversified way and reporting on it, because your mortgage lender is going to need to know about it as well. And I would probably have some restrictions, like, you know, couldn't trade it and all those things, because I'd want to make sure that you stay solvent in your housing. And then once I do that, as Rocket Mortgage, I actually create an institutional solution that would allow an institution to buy an incredibly diverse basket of real estate exposure in the US. And I might be able to sell part of your $50,000 to an institutional investor and get you some liquidity. So now we've created an entirely new market where none existed. New fees can be charged. And guess what? Blockchain can do that. It can get measured down to an infinitesimal level of exposure and be very cost-effective in doing so. That's, to me, a really good example of how a new market can get created in the midst of a new technology of blockchain.

Well, and along this idea of the housing market, I've wondered why title insurance is not on the blockchain. I mean, that's the most, to me, the most archaic, the most expensive, the most ridiculous service out there when it comes to buying a home is why can't we say, that I own this house, we put it on the blockchain, and that's the permanent record that I own this house. And then when I go to sell it, I don't have to pay $1,000 or $1,500 for title insurance. It's just on the blockchain and we know who owns it.

[Speaker:ROBERT_LEONARD] It's a great application. We've seen 3 businesses. So we looked at 1,400 businesses to get to 20 that we invested in in Fund 1, right? So we're very selective. We've seen 3 businesses with exactly that idea. And the problem is, is it's really hard to solve because basically you have to choose, am I going to attack the system, right? And go headfirst into saying, I'm an alternative, and therefore everything you've ever worked with is no longer valid. That's a really tough hill to climb. Or, so two of them we saw that way, and basically now we looked at them maybe 3 or 4 years ago, they didn't make it. And then we saw one that is still puttering around, it hasn't really gotten a lot of revenues, but we continue to monitor it because we like the team, but weren't in love with them. And what was important about them is they figured out a way to apply blockchain to the title companies, right? So now they're a partner in making that change occur. And they replaced the core system a title company uses to keep track. And they didn't yet take on the title insurance issue, but they just said, let's be an efficiency play and get blockchain put out as many places as we can. And so we haven't found somebody who's solved for that in a way that we think is baffling, you know, because it is an enormous problem, but it is exactly the kind of use case that you would want to look for. What we think is going to happen next in terms of DeFi, you've given a good example of blockchain application, I wouldn't argue that that's DeFi, because you're taking a system and just replacing it. But what you want to look for, what are new systems or new ideas that are being created? You may be familiar with a company called Circle that's based here in Cambridge, Massachusetts, and what they've done is they've created essentially a stablecoin that allows them to transfer money effectively connected to the banking system through a partnership they have with one of the card companies. And so they can use the banking rails, but they basically can create an entire environment in which the costs are very low. And then they intelligently created an API, right? An easy way for an entrepreneur to get access to that system. And they also have a system for trading assets, but they've also created an API for what we're looking for is the entrepreneur who takes those APIs and maybe some from other companies and combines them together in some new way to create a new solution in the marketplace. So we spend a lot of time with the MIT FinTech Club, with the FinTech Sandbox here in Boston, with others in New York and Toronto and Montreal at different accelerators looking for entrepreneurs who are starting to see that technology emerge to a level where they can say, ah, now I can apply that to this business problem.

As you're thinking about allocating your money and you have an option to choose between a great team who has a mediocre idea versus a great idea that has a mediocre team, which one are you going to bet on? Neither. That wasn't an option.

I know it wasn't. Part of my job is to create something new. Yeah, so we would always back the great team. It's the number one issue in early-stage venture is the team. I interviewed a number of VCs before we started Vestigo so I could learn from them. People were very generous with their time, and then I continued that on after we formed the company, and now we we have some great partnerships with those VCs. And what they all said was, there's two things. One, it's the team. Two, it's the team. Three, it's the team, right? It's like location, location, location. And the second thing they said was, you're always better off to do this in groups, right? To have several VCs together rather than one. And of course, we're from an industry where we're used to being the one, right? At LPL, we wanted the advisor to be the primary advisor to their client and hopefully have as much of the assets as possible. But in the venture business, it's actually quite different. I was just on a call this morning, we're talking about a company that's going through a seed round and, you know, the other VC has been there in what's called a pre-seed round, which we don't particularly usually do. And basically you immediately talk about what you're carving up. We'd have to, you know, we want to be the lead. So we want to write a check of a certain size, but they want to make sure they get a fair allocation in the round. And we want them there because they're experts in the area. That we're invested in. So it tends to be a group sport and it tends to be all about the team.

So let's say I'm a financial advisor and I've seen all this stuff about Bitcoin and blockchain and Ethereum and DeFi and all this really interesting technology. What should I be thinking about as an advisor? Because I got a business to run, I got clients I have to work with. How much of my time should I be allocating to be thinking about these different areas to be preparing my business for this without going overboard necessarily? How should an advisor be thinking about all these things?

It's tough. I mean, I admire advisors because they have so much to do in a given day, and there are only 24 hours of the day. And I— it's what I observed at LPL. I observe it today. It's, you know, the technology has helped create productivity, but there's still an awful lot to do. It's a very complex business. My experience tells me a few things. One is it's fun to play with new technology. If that's interesting to you as an advisor, that's okay. It's like my joke about forming companies as a hobby. If that's what you like to do, you should do it. But I think it is important that the businesses that we saw grow the fastest at LPL had a stable view to technology, meaning that they adopted a set of technologies, and they stuck with them for quite some time measured in years. You do see an awful lot of advisors who this week love this trading, module from so-and-so, and a year later they love something else. And a year after that, they want a different financial planning tool, and that's fine. But what you'll find is you spend too much time on your infrastructure and not enough time on building the business. These are technology-dependent businesses, but these are not tech businesses, right? These are human capital, classic service businesses. And what you want is a set of tools that lets you be as efficient as possible and makes a complex world simple.

Now, what about the investing piece? So we've got Bitcoin, we've got Ethereum, we've got all these other coins out there. We've got other digital assets, we've got non-fungible tokens. So we've got all kinds of new ways because of technology to invest in things. So how do you think a financial advisor should be approaching these new digital assets? Is this something that they need to be allocating to at this point? Do they just need to be putting them on a watch list, so to speak? How should they be thinking about it?

I think we have to do it in a broader context. We know that fundamentally, what advisors do a great job of is taking the emotion out of investing. I can tell you story after story at LPL with facts that during the crisis of a decade ago, and I'm sure in this crisis, the same thing happened, advisors really did a great job servicing their clients. In doing so, kept them from running out of the stock market at a scary moment. That's critical for their long-term success. We all know that. But we can't forget how important that role is, right? So it's the constant communication. It's the building of trust that is the number one task in my view for an advisor. Second thing is they love investments. I've never met an advisor who didn't love to talk about the markets or talk about new asset classes like these. And that's cool. That's part of the fun. I've always been a student of the market. It's one of the reasons I like to invest now, as it's a form of the same thing, right? Again, nothing wrong with that. And if you're particularly talented at it, let's say that you're particularly good at picking a portfolio of 20 public stocks, let's say, or you're particularly good at asset allocation, you should use that as your advantage or your distinctive offer within your practice. And again, I've seen many practices that do that well, but in many cases, it's really about the first order of business, which is helping people with understanding their financial needs and plans and their emotions around money, and then using these tools, right, to make asset allocation and investing super simple. And there's so many today that are inexpensive and useful to making that happen. And then within that context, now we come to, you know, thinking about asset allocation in its purest form, I've always felt that a small percentage, 1% or so, in digital assets is an appropriate allocation to a bet on whether cryptos themselves will be successful, whether blockchain as a technology will be successful, or just in general that you're creating an alternative asset class. But it wouldn't be appropriate to do it 10%, in my view, because it just would be too much of a bet. And what I saw happen was when we went to this money experiment that we have going on at the moment, where we're spending an enormous amount of money, both fiscally and through the federal government, through the Federal Reserve. That's when advisors went, wait a minute, we need to think about an alternative place that's a store of value. And that's why Bitcoin has become so popular so quickly.

So you're not a fan of modern monetary theory?

I'm not a fan because if it worked, it would be a simple answer, Steve. We would just give everyone $1 million and we'd all be millionaires, right? And there would be no consequences to that, but there are consequences to it. And you know, we need to figure out what those consequences are. I I do believe that we have a problem of inequality in this country. I do believe that we have other super challenging social issues that need to be addressed. So I'm not against spending appropriately, but I will say that we're reaching levels where we've put $1.9 trillion— just to give you a sense of scale of that, right? $1.9 trillion of stimulus would be the equivalent of putting the Japanese economy into the US economy at once, right? So we just basically took the US economy and we dropped the Japanese economy on top of it, the third largest economy in the world. You're going to stimulate something, right? You're going to stimulate asset values, you're going to stimulate inflation, you're going to do all sorts of things that happen. And I think we may be in a situation where we've overstimulated from there, which gets me to worry a bit about things like where do I allocate assets? I'm a Bitcoin owner. You know, I adhere to the 1% rule, roughly speaking, and that is an important part of it. But I only own Bitcoin. I would be happy to bet on Ethereum, but Ethereum is really a technology to me, as opposed to Bitcoin, which can be a store of value given its limited supply.

Let's talk about artificial intelligence for a moment here. So what are you seeing in that area and how over time do you think AI is going to affect the work that a financial advisor does?

AI is going to change financial services very broadly because it is such a productivity enhancer. Let me give you an example from our portfolio, cause it's fun and it's in our portfolio. It's a company called Roots Automation. It's in Fund 2. It's, it was founded by an ex-CTO of AIG Insurance. And what they did is they built bots, right, that basically go out and pull information from the files of an insurance company and they do claims. This bot is 8 times more productive than the human who does claims, you know, work for an insurance company today. These bots are so lifelike in their interaction. Now remember, these aren't physical bots. These are intellectual bots. So they're inside of their systems. These things are so real to the employees they work with because they get emails from them. They get text if they want to work in that way. However they work, they get interaction. They just don't have a physical interaction face-to-face like you and I are doing now. They're so real to them that spontaneously in 3 different applications, the employees named the bot, gave it a birthdate, and gave it an employee card, right? So that's how real this interaction is. But now imagine, you know, that basically as an insurance company, you just bought a bot for the cost of 1 employee, and it's 8 times more productive. Now it's 8 times more productive because Root sets the key at 8 times. It won't let you have more productivity without paying more.

Oh, nice.

It could actually be, you know, significantly more productive than that, but of course that isn't a great business model as things go. This is the first company we found that we think is, is doing the practical application of bots for every company. In fact, they're going to do an automation process for one of our startups, believe it or not, because we're so excited by the productivity that can occur. And they're off to a really good start. We're seed investors, they'll soon do their A, and that's a really good example of the application of AI. First in insurance, they'll also go to banking and other processes. And it'll come to financial advice. Financial advice is actually one of the harder places to come because of the complexity. Claims management, you know, root processes that you might outsource to a lower labor cost market, those are the first ones to be attacked, and then it'll just keep moving up, you know, the intellectual stack from there.

If we go back 100 years, let's say, people were saying because of technology, at some point in the future, we're only going to be working 8 hours a week or 20 hours a week. And here we are with all this massive amount of technology, and we're working more hours than ever. So when we say technology is going to make us more efficient, it seems like it just enables us to do more. It's not that we cut the amount of time that we're working. It's just we can get more done in those 40 or 50 hours. Is that how you see it too, or how does this eventually evolve?

The most intelligent application of AI and these productivity tools are for people who are incredibly efficient themselves, right? You know, the old adage is, if you want something done, give it to the busiest person you know, right? That's a long-lived statement, and it's always been true in my experience, perhaps yours too. And so I do think these are all just ways that do make us busier. But let's take a practical application for advisors, right? We know advisors work really hard. They work long hours, and they have, you know, in an independent practice, you might have 300 clients if you're really super efficient. You know, 200 is probably more the average. America actually needs like triple that. Like, we need you to take 600 clients, right? We need you to take 900 clients. You can't do that with today's tools. You will be able to do that with the tools that are getting built by people like Roots and others. You know, as more and more of that automation, you know, really gets to the core processes of financial advice. And the same is true in insurance. Same is true in banking. Same is true in other parts of investment management and financial services.

So it may just be that as humans, we're wired to work.

I think we are. I think we need a purpose. I started my career in wealth management at Northern Trust, wonderful organization. I was there for 11 years. I learned many important lessons, but one that really stuck with me was in my first couple of years, and I had children young, so my oldest I had when I was 22. And I'm working away on a trust for a very well-known family. And they had like a grandchild born. And literally that child was born as a millionaire because they had so many trusts. This was 1984. So it was a long time ago. And so this little baby came out, popped with the trust and a million bucks later, right? This child starts life as a millionaire, pretty good life as life goes. And I remember talking to the administrator or the financial advisor who worked with the family. And they basically said the biggest problem we have isn't, of course, wealth. They have plenty of wealth. It's purpose. Right? And so what we actually spent a lot of time on at Northern was how do you help this child, this grandchild, whoever it is, you learn a purpose in life. And often that is work. Now, it could be work where you're a teacher, where you don't get paid as much, but your family can support you. It can be work that's nonprofit. It doesn't have to be work in which we measure success by the wealth that we create. But everyone has to have a purpose in life. And I will tell you, you know, 40 years on in the industry and many years as a parent, that getting a passion for work of any type is really important for, you know, mental satisfaction, for excitement in life. So, we are wired to work. I completely agree with that statement.

Yeah, and I think that's a great segue because I also want to talk about psychology, and I think you're a great example bringing this up here. So, you retired from LPL, I think, probably in your mid to late 50s, and again, you're worth a lot of money and you wouldn't have to necessarily work another day in your life, but you start this venture capital firm, and I'm guessing you may be as busy today as you've ever been, but you're enjoying it. So, let's talk about psychology from two standpoints. One is I want to talk about the psychology of technology. And what I mean by that is you've got some people out there who are afraid of technology, who want to keep things as is, they like the status quo, they may feel threatened by technology. Yet here you are, you're a baby boomer, and you're working in and investing in the bleedingest of leading technology. So what is it, do you think, about your psychological makeup that makes you receptive to change and willing to evolve over time as technology changes?

For me, the first part is learning. As I mentioned, when we first started is that I have to be learning something. I'm not effective, I'm not much fun to be around when I'm not learning. Like, I love to share stories like we're sharing now, right? And I love to learn person. So that's the first motivator. This role is perfectly connected for that to be the case. And then the second thing that is important is, you know, almost all advisors are natural networkers, right? They, they connect to their community, they connect to others in the industry, they connect to their clients, and they have a really big network. That's what makes them successful. And I've always loved, you know, staying connected to people, always loved networking. And that is another thing that really helps in the venture business, although it helps in all forms of life. That's there. So that's the second component that stimulates the natural network desire I have as a human being. And I think the third part of it is that I do like risk. Like, I used to have a quote on my desk that said, if you don't touch the wall or you don't crash once in a while, you're not going fast enough. Mario Andretti said it. We had Mario Andretti at a conference who I just idolized as a boy, as I went to the Indianapolis 500 many, many times in junior high, high school, college, because I lived in that area of the country. And Mario Andretti was just big figure. AJ Foyt was the other one, but he's unfortunately passed away.

So were you there in— was it 1969 when Mario won the Indy 500?

Exactly. No, I was. And so, long story short is I just love that quote because it said you've got to really push yourself, right? And that sometimes it's going to result in a crash and that's okay, right? It's what you do after that that matters, right? It's the old adage that we often use with our children and we often use with fellow employees, which is, look, it's not the fact that you've had a problem, It's what you do about it that really matters, and it's your perseverance. And in venture, it is all about perseverance and making sure that you can get through what are usually very challenging days and that you have this almost obstinate view of wanting to make this idea successful is what makes a successful entrepreneur. So that component is part of who I am. As I said, I do wake up once in a while going, why am I doing this? Like, why did I take this challenge on? But then I step back and think, well, the other alternative isn't so much fun. I wouldn't be stimulated. I'd be frustrated and that's not good.

So if you think about the degrees of technology, so we've got the bleeding edge, we've got the leading edge, we've got like, this is what's happening today, and then we've got maybe lagging technology. So if I'm a financial advisor, do you have any thought on maybe where on that spectrum a financial advisor needs to be thinking about their technology? And I know just a moment ago you said that the most successful advisors you worked with tended to have a fairly stable tech stack, but obviously, that's still got to evolve over time. Maybe where in the spectrum should an advisor try to position themselves?

Yeah, I do think that it's different in terms of investing. As you said, we need to be at the bleeding edge in venture because remember, we're working with a company for 7 to 12 years. These are very long relationships in which you invest. If they're bleeding edge 7 years ago, they're not going to be so bleeding edge today. That's why blockchain is so fascinating. In '17, we said, oh, that's going to be investible. Here we are in '21, and it's still not quite there yet. Isn't that remarkable? So I think if you're an advisor, I would not try to be on the bleeding edge. Now, one defines the bleeding edge in different ways, right? And likely, if it's a tool that's being brought to you by a startup or by a vendor, it's probably not bleeding edge technology. What it really is is just innovative technology. The stack probably needs to start there as the first piece. And again, you need to do what's right for you personally, right? If you find that really fascinating, maybe the better way to take that energy isn't to change your systems all the time, which is a recipe for complexity, right? And instead put that energy towards investing. Maybe part of what you should do is think about having an investment in public companies for your clients, or maybe personally be an angel in some of those investments. I see a lot of RIAs and others who do that. And that works well to scratch that itch. Then sometimes people say to me, well, Mark, you ran a public company and you were a corporate guy for a long time, and what makes you qualified to be a VC? I have been an angel investor. I am fascinated by technology. I've worked hard in the last 4 years to really learn what to do here, and I do have some scars for having done that, but importantly, you can learn it. If it's that fascinating to you, you might think about or even a switch to something similar to what I've done. But I do think that having a stable stack, you know, with maybe the occasional change, is the recipe for the fastest growing practices that we observe, you know, at LPL.

You said you've got some of the scars, so what's one or two scars or lessons that you've learned in that area?

Oh, you can think it's investable and it's a great idea, and you don't do enough market research, and you take it out to the world and You've probably overbuilt it, and then basically the world says, "No, that wasn't what I wanted at all. Thank you." And so, you know, a lesson from that is, well, start small, right? Start inexpensive, get right to market with an MVP, right? And then get feedback and then alter and just keep that iteration going over and over again. It's absolutely the case for startups, but it's also true for large corporations. They have to do that iteration of an MVP. And then the second thing I'd say is that this business is complex. So a lot of my scars, you know, come from running a big complex business where I didn't change the team fast enough, right? Where we needed to maybe get some different experience on the team. So I thought we did, but in retrospect, I'd say, boy, any change I made, I should have made faster. And I don't mean faster by a week or two, I mean faster by months or a year in some cases. I think the other lesson is that there's a way of growing a business that can be fast, but you have to really be careful about scaling. At different parts of time in LPL, I think we got the scaling and the growth just right for the vast majority of the time that I was there. And there were some moments where we overgrew, we acquired too quickly, we grew organically quite a bit. And what ended up happening was, is that we got a bit caught up, right? And we had some challenges in operational controls and those kinds of things that were not fun to deal with. So I have plenty of scars that are about the lessons of business, but I'm not sure I'd change any of it. In the end, right, that's part of what made me and part of what was the journey for the company. When I retired, my statement to the team and to Dan Arnold, who's done a wonderful job is my legacy isn't what's happened up to 2017 when I retire, it's what happens after I go, right? Because that tells me that we either got the team, the right team in place, that we had the right setup or foundation built for the company. And I have to say, I'm really proud of what Dan and the team have done since I left. They own all of it, right? The last 4 years is theirs. But I do feel that we got the structure right for the business and for the team that has taken over.

Yeah, I think that's a good point that if you've been leading a company for a long time and then you leave and then the business falls apart, well, you failed because you didn't set the business up for success after you left. Just like you said, LPL has done really well since you left, which is a great testament to you and everything that you put together up to that point that this business is going to thrive without you there.

Yeah, I was never interested in it being about me. You can't help when you're the CEO and the chairman, it is always about you, right? Because it just is. It's the nature of how we think about things as humans. But I found that when I let my ego be there, I wasn't very effective, right? But when instead I was much more about the team and my service to the team and to the clients, to the advisors, those are always my best days and always my best performance. I took very much to heart exactly your statement, which is this company needs to be more successful when I leave it than when it was when I was here. And it certainly has done that. And it's not because, you know, I've done something to set them up. Up, it's because we really worked hard on the team and we worked really hard in succession planning. And then Dan's done an excellent job of executing and bringing his own style to it. I was a COO CEO, meaning that I like the details, right? You can tell that I like to talk about technologies and processes and those things. I like to be that detail-oriented CEO. And I felt we needed to get someone who was a real business builder, a real leader in thinking about markets and sales and those things.. And Dan was exactly that, right? And so we had the perfect candidate in-house to be able to bring the company to its next part of its journey, which is all about growth and all about servicing to advisors. When I ran the company, we were looking for operational efficiencies. Our service was okay. It wasn't great, I must say, but it was sufficient. We were really cost-effective, and that was important at that time in my view. And what Dan's done is said, well, I want to add to the cost-effectiveness. I've gotten that knocked out, right? I'm good there. But now what I need to do is really add a service component, and they've done an excellent job of upgrading service talent and the advisors. You can see it and hear it from them when you talk about it. And that's, again, good examples of how businesses, you know, create success over long terms is they think about what are they trying to do when, and is that appropriate, you know, in the environment they find themselves.

So let's touch on a second aspect of psychology that I want to delve into for a minute. So first, we're kind of talking about about the psychology of technology and why you're a guy who is very interested in technology and very open to change and evolving, but what about the money side here? And so, a lot of financial advisors listening to this are working with very wealthy people. You yourself is a pretty wealthy person. You worked with a lot of people who have a lot of wealth. And so, I would imagine you're in a pretty good position to make some observations about people that have wealth, how they think about money, and how should a financial advisor be approaching people that have a lot of wealth, and how can they help them beyond just A, preserving that wealth, or B, making that wealth continue to grow? Because all of us have a complex relationship with money. And when you have $5 million or $10 million or a billion, it only magnifies it. So, what are some of your observations in that area?

I'm a little surprised by the industry, I must say. I always took a position when I was at LPL not to use an advisor that was part of the system, because I felt like it was like, why would I pick person A versus person B? I suspect that was a good idea. But now that I've left, I can observe it in a different way. Physical location is important to me and important to my wife, Julia. And so we wanted advisors who were in the Boston area so we could see them and they could get to know our kids and other things that deal with our particular financial situation. And I will tell you, I probably interviewed a dozen different advisors over the last 6 years, and I've been surprised by how poor the presentations are. I mean, just fundamentally, they come in and they throw numbers at you and they complexity. And I'm like, you know, I'm an investment guy. Like, I get that you're going to take my money and you're going to do something with it, right? I get asset allocation. You don't really need to, you need to show me how you think about it. So I can agree or disagree, but that can't be the premise under which we work together. I can get that anywhere, right? What I need though is someone who helps me with understanding the meaning of money. My wife and I put ourselves through college, right? I grew up, my father was a minister. We never had money. And I'm not lamenting that, it's just a fact of life, right? So, and then we also had my parents went through a divorce when I was in my teenage years and we suffered a pretty significant setback economically. So I can remember what it's like to not have much of anything. That sets something in your head, right? And it's a little bit of the reason why I work hard is because my view is I can just outwork that tough economic moment. But if you don't know that about me, right, and you don't inquire about it, you just look at the numbers on a page and go, well, this guy's fine, right? But this guy isn't fine. This guy has moments where he worries about whether this is the right amount of money to give to a child, whether this is the right amount of money to live till he's 110, right? And I just have the normal worries anybody would have., but they are a bit amplified because of my particular experience. So I think that the advisors who are best, and I saw hundreds of them at LPL who fit this mold, they really get to the knowledge and understanding of the meaning of money with their clients. And that most of their discussion is about that, not about returns and not about your markets and the like.

I will tell you, it's still a very rare thing to find in the world. Yeah. And I think that's such a key point is is, as I mentioned, we all have a complicated relationship with money and the way that we grew up. So, like, you come from a divorced family, you were economically challenged growing up. So, that's going to last probably for your whole life. And you mentioned that that was probably one of the reasons why you work so hard is because you never probably want to be in a situation where I don't have money. Not that it's all about how much money can I make, it's just probably the security that that's going to give you that you'll never have to go through that. I think I heard you say as well, and maybe it wasn't you and I here, but on a previous podcast I heard you on, that it was important for you and your wife to pay for your kids' college education and not have them come out with some college debts. And so again, another example of how a financial advisor, if they can ask these kinds of questions, if they can get those money stories, if they can understand the money environment that someone grew up in, those might be some latent things that are rolling around in their head that are affecting how they think about money. And while I may observe your behavior and say, "Well, that's really dumb. I can't believe you're doing that." But if I understood where you were coming from, it might make complete sense why you're acting that way.

[Speaker:ROD] I can remember distinctly, we had an event before my LPL days where I was lucky to be part of a company that sold and a nice amount of money came into our lives, let's put it that way. And my advisor at the time looked at me and said, "That's great. We're gonna fund your retirement now." and we're going to put some serious money away. And I'm like, no, we're not. We're going to take most of this and put it in 529 plans for my 4 kids. And he's like, you're an idiot. I mean, he didn't say it that way, but he was like, that's not the right choice given where you are in terms of your longer-term goals. And I said, but it's the right choice for my wife and I, right? Because we did have to put ourselves through college. We wanted to put away an amount of money that would make sure they could send themselves to undergrad at no cost. Now, others would say, I want my kid to work 50% of the payment because I want them to have the experience of having to, you know, had to work hard against it. And that's fine for them, right? We all have our own thing. But as you say, it's really about getting into that. I'd say the second thing, Steve, is it's about service. I really am quite surprised by how difficult it is to follow through on some things like, you know, oddly enough, my wife and I were having this conversation just last night. About— we have 3 advisors of a type, like one who does taxes, and a lawyer, and a couple of advisors who run money. I have to tell you that at any point in time, any one of them just forgets to do stuff.

They don't have their AI assistant with them.

I was like, come on, this is not that hard. It just is quite remarkable to me. Unfortunately, I've experienced that through most of my life, that no one cares as much as you do about your family, about your job, about your money. That's human nature. But boy, any firm that can just be good about saying, you asked for these 3 things and we delivered, or we didn't, or we know that they're there and let me give you an update on them. It's the basics that need to be done. And I hate to say it, but when I talk to friends who are reasonably well off, or I can remember talking to prospects for LPL Advisors who were well off, this was often the theme, that service just wasn't what it needed to be. And I definitely have seen, we experienced experience a very high-touch service through one of our advisors, and they're very good at what they do. But everyone can use a reminder of how important it is to stay attuned to the things you promised and getting those done. And so, like, how basic is this, right? Yeah, I understand clients' meaning of money, and do what you say you're going to do.

This is not hard. Yeah, well, and, you know, I used to tell the story— I grew up in Omaha, Nebraska, so I'm a big Nebraska Cornhusker I'm a big football fan, and I would relate back to when Tom Osborne was coaching the team, one of the greatest football coaches of all time. Well, who wants to go to Nebraska to go to college? I mean, let's get real here. So, Nebraska never really got the most talented athletes to go there, yet they won several national championships. And in Tom Osborne's 20-some years of coaching the team, he always won at least 9 games. I mean, it was incredible. What he did was he did the blocking and tackling. He got the basics done. And when you do the blocking and tackling and the X's and the O's and the basics, you're going to win some football games.

Yeah, it really is surprising how fundamental that is. And it doesn't require technology necessarily, although technology can help. And it doesn't require extraordinary intelligence, right? It just requires good old-fashioned common sense. And so I'd encourage all advisors out there to really examine your processes and your team about their connectedness to your client base and how you're keeping track of promises you've made. My experience of advisors is they're really good at what they do. So this is meant to be all in the spirit of continuous improvement, but it is funny, the process. I don't think it's about exposure to assets. I don't think it's about the better investor. There's definitely some things you'd want to invest in. Like if you had a chance to go to Baupost, the massive hedge fund that's based here in Boston, I'd go in a heartbeat if I could. But they don't take money. So there's definitely a handful or two handfuls of really extraordinary investments that are darn impossible to get into. But you know what? That's rare. And what is more the norm is you can get exactly what you want on the investment side. You can get what you want on financial planning and tax advice, estate planning, all that's pretty readily available. But in the end, it turns out to be just the fundamentals, as she said.

Well, as we wrap up here, Mark, a couple of things. So one is kind of the thread that I've heard as we've had our conversation here today is really 3 things that financial professionals can do to continue to be successful. One is we've talked about the technology. So, you don't have to be on the bleeding edge, but I think it's important that you make sure that you're keeping up with what's happening in the technology space, even if that means that maybe you personally will invest in some of these things to get to know them before you decide that it might be something that's good for your clients. So, I think tech is one piece. A second piece, as you were just talking about here, is the service piece and just how important it is to get the basics done. I mean, have your client service model, have the systems in place, have the structures in place so that you can deliver a consistent high level of service. So, I think that's key. And then a third that we were touching on here was this idea of getting your client stories and taking that personal interest in them and trying to understand where did they come from? Experiences that they had in their younger days that affect how they think about money today. And you gave the great example about wanting to pay for college for your kids. So I think those three things, you know, it's not rocket science, but those three things will go a long way to really building a successful business.

Yeah, the equivalent in the venture world that I always like to say is our job as seed investors is to help the company build a culture, right? Is it client-centered? Does it follow through on its promises? That's the culture, right? Second thing is market fit. And the third thing is market price. If we can do that with a startup, then they're going to likely go on to a successful A round, which is what our job is as investors. It's the same whether you're a financial advisor, what's your culture for having those things happen in the way you just described? And then how do you measure that success within your practice? And it doesn't mean you have to run a $10 billion RIA, right? It means that what you do is so interesting to you. And so fulfilling and so wonderful for your clients, you know, that's a great way of measuring success.

Excellent. Well, Mark, what's the best way for folks to reach out and connect with you?

Always happy to have any emails to mcassidy, and Cassidy spelled is a little strangely, it's C-A-S-S-A-D-Y, @vestigoventures, which is vestigoventures.com. So, Mark, mcassidy@vestigoventures.com is the best way to reach me. Social media @mscassidy for Twitter and LinkedIn, of course, as well. So I've got a lot of DMs from people, which is always nice.

Well, you're a fun follow on Twitter too, so enjoy your tweets there. They are fun. All right. Well, Mark, this has been great. Really appreciate you taking some time here. Congratulations on the wonderful career that you've had and the great things that you're doing here at Vestigo Ventures. And I wish you all the best going forward.

Thank you so much.

Really appreciate it. My key takeaway from my conversation with Mark is the importance of getting the basics right. Sure, technology is fun to play with and we need to stay up to date with it, but if you don't get the basics right of delivering great service coupled with understanding who your clients are as human beings, then no amount of technology will save you. All right, that's all for today. Make sure you subscribe to the channel. You like and share this podcast through your favorite social platform. And for more great podcasts, visit us at barons.com/podcast.

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