By Vasyl Soloshchuk, CEO and Co-Owner at INSART
Lowell Putnam
Cofounder and CEO at Quovo
Lowell came to wealth management from the investment banking space. He worked at Lehman Brothers and Barclays Capital, in the Financial Institutions Group, with a specialty in consumer lending companies. In 2008, Lowell started trading stocks and became an active personal investor. This is when he faced problems tracking his own investments over time. Together with Michael Del Monte, who is CTO at Quovo today, they built a data platform for pulling outside account data into other platforms. The two joined forces with CPO Niko Karvounis to found Quovo.
During the interview, we discussed trends disrupting the wealth-management industry, peculiarities of working with FinTech startups and financial enterprises, and expectations about the industry’s future.
The most exciting industry trend
The start of the Quovo project, which then turned into a business, coincided with the start of the robo-advisor trend. At that time, the wealth space was experiencing a huge explosion of innovation, and Lowell says that there was a particular moment at which he and Michael realized that the data platform they had built had turned out to be rather innovative and could become a new trend.
Talking about today’s trends, Lowell mentions fee compression as the biggest and most exciting:
“Fee compression is making advisors realize that their operating leverage is at risk, and so they’re more willing to look for data-driven solutions to add leverage into their business. That leverage can come in the form of automated processes like robo-advisors, but can also come from next-best-action data insights, or data-driven practice management.”
According to Lowell, fee compression brings more financial account data and data insights into customer relationship management and improves the financial advisor’s experience.
Startup vs. enterprise: Blurred lines
Quovo works with FinTech startups as well as financial enterprises. These customers have both similarities and differences. The main difference is the sales cycle.
“It’s not rare to have a one- to two-year sales cycle for enterprise customers, as opposed to a couple of months for a FinTech customer.”
However, Lowell states that it is sometimes difficult to draw a clear line between FinTech startups and financial enterprises.
“Robo-advisors like Betterment and Wealthfront—what do you call that? Are they startups or are they enterprises? They have hundreds of thousands of customers, they have billions of assets. They’re looking more and more like enterprise customers. So the line’s getting very blurry.”
In addition, some enterprises create FinTech squads or skunkworks teams to build tools to work with the Quovo platform. In this case, Quovo works with them more like startups than enterprises.
Still, there are some differences in the processes established there. While at enterprises vendor management and procurement is a stated function, at FinTech startups it is generally absent or ad hoc. Moreover, most startups don’t invest in a full information security team, account-management team, or implementation team.
“Those were the things we had to invest in very early to get through the information security review and the vendor procurement processes that big enterprises have. It’s a very different process, and so you have to be staffed with people who can handle that work.”
Predictive analytics and roadmaps
Quovo uses machine learning in a number of their algorithms. Lowell states that, unlike machine learning, predictive analytics is much more straightforward and heuristic.