For the next feature in the Fintech Luminaries series, we’d like you to meet Larry Roth, Managing Partner of RLR Strategic Partners, a wealth management and asset management-focused M&A advisory firm affiliated with Berkshire Global Advisors, the international investment bank.
Mr. Roth has had a long, successful career in the independent wealth management space, leading some of the largest and most influential firms in the industry, serving thousands of financial advisors across the country. He was the CEO of AIG Advisor Group (which later became Advisor Group) as well as CEO of Cetera Financial Group.
Since retiring from Cetera in 2016, Mr. Roth has returned to his roots as an investment banker, providing strategic guidance to C-suite teams and boards of directors, structuring M&A and capital raising transactions that drive growth for wealth management, asset management and fintech firms.
In addition to running RLR Strategic Partners, Mr. Roth serves as a member of the board of directors at both Oppenheimer & Co. Inc. and Clark Capital Management Group, as well as chairman of the board of advisors at Haven Tower Group, one of the top strategic communications and PR firms for the wealth management industry.
Most recently, Mr. Roth was named lead independent director of Kingswood Acquisition Corp., the first-ever special purpose acquisition company (SPAC) with an exclusive focus on wealth management acquisitions.
Digital Wealth News caught up with Larry Roth recently to understand the ways in which fintech can address the most pressing issues faced by wealth management firms and the investors they serve.
Name: Larry Roth
Title: Managing Partner
Company: RLR Strategic Partners
What is the most important pain point fintechs should be trying to address in the wealth management industry?
For the last few decades wealth management firms, financial advisors and many of the providers that support them have largely focused on helping consumers accumulate wealth for that far-off day in the future when they would retire.
The industry, until now, hasn’t devoted nearly as much time, energy and resources to decumulation – that is, the planning and strategy that go into how investors will make the portfolio they have amassed in their working life last for as long as they need it, while accounting for factors such as inflation, taxes, Social Security income and health needs.
The industry now finds itself at an inflection point, with baby boomers retiring en masse, many of them having spent much more time thinking about getting to this point rather than thinking about how to live in the decades to follow.
What are the biggest problems facing the fintech industry in the future?
In a few words, I think the biggest issue is the misalignment of the solutions that fintechs are creating with the major pain points in the market. Many times you see tools or platforms that, even though they were created by smart, well-intentioned, innovated people, aim at only part of a problem, attack a problem that only a few people have or present a narrow or short-term solution to a broader, long-term issue.
To a degree, it speaks to one of the failings of the modern technology ecosystem, in which venture capitalists and founders are incentivized to seek out solutions that provide quick fixes. The task I described earlier of helping retirees successfully and judiciously spend their savings is a long-term problem. This is a fundamental misalignment that could lead to less-than-ideal outcomes for consumers.
What do you believe the next major innovation in financial technology will be and why?
I think the smart fintechs will realize – if they haven’t already – that the most pressing long-term puzzle the wealth management industry faces is the one of decumulation. So the next major innovation will be a platform that allows consumers to manage assets – their 401ks, their IRAs, 529 plans and other accounts — as well as managing their debts, such as credit card debt, mortgages, student loan debt and other liabilities – in one package, holistically and seamlessly.
It’ll be a tool to really understand both after-tax accumulation and after-tax decumulation, taking into account all investments, real assets, short- and long-term liabilities and federal, state and local taxes that investors must pay through their retirement years, along with looming costs, such as healthcare.
Helping retirees decumulate is essentially a math problem that any capable financial advisor should be able to untangle. The barrier is in accessibility. The vast majority of investors who have cobbled together retirement nest eggs aren’t wealthy, so for those beyond a relative handful of high-net worth and ultra-high-net worth investors, the cost in time and money of those services must be low.
Technology and automation are the way forward. I would even go farther to say that this problem must be solved by technology or it won’t get solved at all.