Video Transcription: [Music] this is the biz of wealth challenges rumblings and evolution of the wealth management industry [Music] Slata Introduction: Welcome to business of wealth today, I have the great pleasure of welcoming Priya Malani who is founder and CEO of Stash Wealth a financial planning and investment management firm for Henrys high earners not rich yet. While working at Merrill Lynch, Priya became disillusioned with the lack of affordable financial services for her generation and decided to leave the bull, Wall Street, behind to fund Stash Wealth. The company provides the same white glove services offered by more traditional firms but with an updated model to fit the wants and needs of young professionals and beyond. Think video chats instead of stuffy office meetings. In addition to running Stash Wealth she’s a featured expert of numerous sites including brides the coverture vassal queer wow CNBC wall street journal and Forbes, she serves as the financial expert for refinery 29 and she speaks regularly at business and universities around the country and has been invited to speak at Cornell, Harbor, New York university, Yelp, Twitter and young IBM and more, she appears regularly as the millennial money expert on SiriusXM without much further a-do this is a very fun interview I hope you enjoy it. Alejandra Slatapolsky: Priya welcome to The Business of Wealth, thank you so much for being here. I’m so happy first woman finally in the financial services industry talking here, so the first question I’ve seen you are very experienced with media interviews and exposure: What is one question you wish you were asked more often in your interviews? Priya Malani: It’s a good question and it was actually really difficult for me to think about what question do I wish I was asked more often and then you and I have been chatting a little bit and I’ve been kind of getting a sense for what some other people say here and I agree with one of your previous guests that you know. I think about how entrepreneurship is portrayed and I think that’s a really great topic to talk about because I am adamantly against the way entrepreneurship is portrayed specifically on Instagram. Alejandra Slatapolsky: Yeah! Priya Malani: I think it’s a very interesting optics and it has not at all been my experience to sit at a coffee shop with a beautiful latte that is Instagramable and type away on my laptop and just build a business it doesn’t happen like that. And so the question is you know what is entrepreneurship like I think is a very good question because it’s important to let people who are interested in becoming entrepreneurs understand that it is not at all how it is portrayed in social media it can be a very difficult path and perhaps for some it’s beautiful and easy and clients are just flocking to them but in general it’s been a very long road for us and it’s taken a lot of failure and it looks nothing at all like what it looks like on Instagram. Alejandra Slatapolsky: Right, so I was talking like we were talking how it is portrayed in two extreme ways right, some you know publications or people will make you think that you are truly working your bone working yourself to a bone, every single day and then others that you know portray us just work from the beach and everything will be fine and you fulfill your purpose and you’ll be completely fine and by fighting the balances between those two and accepting balance, right? Priya Malani: I agree, yes I can also say that there was about a two and a half year period where I did not visit my mother, I was working so hard I did not even see her so I have struggled finding balance myself and also has to do with you know the way in which I think about balance can be to the detriment of the people that rely on me so for example my employees like we’re all working to further the mission of Stash Wealth and I want to be able to help more Henrys and I want to be able to pay my employees more and I feel that if I find a little too much balance in my life I don’t feel like I’m working at the pace and the speed I should be to bring those initiatives to fruition and I want to be able to have a successful company and give my employees work-life balance and right now they all work very hard and so it’s not in my nature to find balance perhaps in the way it’s defined. Alejandra Slatapolsky: Actually, you mentioned your mother and I was gonna ask you because I’d love to ask this how would your parents describe what to do? Priya Malani: I actually called her to ask her when I was reading through some of these prep questions I said mom how would you describe me and what I do for a living and it was pretty simple and I didn’t even know she knew the word but she said CEO of your own wealth management company you’re the boss, well that’s very to the point uh yes, I don’t know if she knows exactly like what that means. Alejandra Slatapolsky: No. Priya Malani: But that was what she said which I thought was I was like oh bravo very good yes that is exactly what it is. Alejandra Slatapolsky: So, what really attracted me to you and you know Stash Wealth was your business model like I’ve been you know thinking about how you structured your offering and it I feel like that’s the future of wealth management honestly so, why don’t you tell me about it in your words? Priya Malani: Sure, our business model was a work in progress for a very long time when I originally left Wall Street and I said I was going to reinvent wealth management for the next generation of wealth I really wasn’t doing that I was kind of doing the same thing for younger people and I thought I was being so you know so much innovation and so inventive and I really was wasn’t so we failed actually for many iterations of our business model until we finally got it right but the business model as it stands today is predicated on the belief that millennials first of all have never young professionals Henrys as we call them high owners not rich yet they’ve never been offered white glove service and they’re not even sure if they need it so what we wanted to do was we wanted to give them an opportunity to taste what wealth management or financial advice financial planning could feel like so we productized the experience in this into this it’s a five to six week experience that we’ve designed that we put our clients through as their very first engagement with us and we charge a flat fee for it. We say you’re getting a financial game plan without marrying a financial advisor right you don’t have to like handle over a hand over all of your money to invest. You can taste it, taste the feeling of the support get a just a sense for what it might be like and that has worked beautifully for us. People like that non-committal young professionals that tend to have more of that non-committal attitude and so to feel like they can just kind of buy this flat fee know what they’re going to get charged and get a ton of value in return has been incredibly appealing and the model from there obviously does also have an assets under management component but that is something that you opting after completing your stash plan as we call it that’s the business model as it stands today. Alejandra Slatapolsky: So you’ve been you know iterating you mentioned the model itself, how did you arrive at it? how did you work on it? Actually, you know I’ve been seeing a lot of agencies through communication agencies productizing their offering because we do the same right we end up with a new you know personalized plan for each company so a lot of what we do can be prioritized how did you write to that? Priya Malani: By trying other things and failing, we tried to package our services into this sort of annual subscription and tier it out based on income or net worth or complication of situation like how complex you know would is the support you need and no one bought it, so it doesn’t take a very long time for you to figure out oh gotta try something different Alejandra Slatapolsky: Good that’s great. Priya Malani: But we tried that for two three years and I mentioned like based on net worth based on income even which I see is a very popular model charge them based on their household income that didn’t work for us and I think part of it goes back to the fact that millennials have never been offered this by anyone else. So, what are they offered right they’re offered like they can try Netflix for a month a couple months and they know exactly what they’re going to pay and exactly what they’re going to get that alludes to the subscription model which isn’t exactly what we did but we borrowed inspiration from the idea of this like low barrier to entry very clear concrete value in return in exchange for a flat fee it’s simple to explain. You get a game plan you pay a flat fee for it doesn’t matter how complex how simple your situation is you get a comprehensive game plan that answers all your questions simple. Alejandra Slatapolsky: How do you do you actually so after the game plan you just offer them to implement it for them? Priya Malani: Exactly! We leave them the point of the stash plan is to leave them with the ability to implement it on their own and we truly do leave them with the ability we give them all the advice and guidance we share with them additional resources we literally give them everything they might need to go do it on their own but as of last month we had about an 87 percent conversion to our full-time where we implemented for them. Alejandra Slatapolsky: That’s the AUM component. Priya Malani: Exactly, so as much as we give them the ability to do it on their own many of them just feel like you know ’d rather just I’ve enjoyed working with you I’d rather just continue working with you and yeah it’s worked really well. Slata: I love it and they saw a quote that you say you don’t believe in budgeting, why? Priya Malani: We hate budgeting, as a concept in general yeah! You know people always say they want a budget like oh you know the reason I’m not good with my money is probably because I haven’t implemented a budget, I think that’s what’s missing I need a budget. You don’t need or want a budget nobody does nobody wants to micromanage their financial life what you want is to be able to enjoy your money and I don’t necessarily think budgets are set up for that they’re set up for you to micromanage your financial life and track your spending and their high maintenance and also budgets are very rigid you’ve created sort of this these buckets, the caps of how much you should spend and the goal of budgeting is in hopes that you have money left over to save and usually what happens at the end of the month is you’ve overspent anyway you’ve negotiated and made yourself feel guilty oh I spent too much money on clothing so I’ll cut back on travel and this negotiation budgets are so rigid right they don’t leave flexibility for you to live your life the way you want to live your life month and life is unfortunately it’s unpredictable especially for young professionals and obviously in light of current environment extra unpredictable so budgets just don’t work in our opinion. Alejandra Slatapolsky: So, what works? Priya Malani: What works? Alejandra Slatapolsky: That made me think of uh a close friend of mine she has she’s a nutritionist like I know it’s part of but hear me out she doesn’t believe in diets, she’s like dieting would ruin your life dieting will make you actually gain weight in the long run. Alejandra Slatapolsky: it was so true it reminds me of clients who say to Ceceda so you know I’m putting a hundred dollars a month into my savings account and I’ve been really doing it for like almost like two years now I feel so uh proud of myself for being able to consistently save a hundred dollars a month into my savings will say that okay well how much is in your savings account right now and usually it’s like oh like three hundred dollars. Alejandra Slatapolsky: Right. Priya Malani: Because they actually spent, they don’t they spent it move it right back to their checking account they use it to pay bills so this like intention of saving it doesn’t actually leave them better off or with something to show for it. Alejandra Slatapolsky: Right. Priya Malani: So, the reverse budget is what we call it and it doesn’t sound a lot sexier than budgeting but it works and I think that is enough said. The concept behind the reverse budget and it’s not it’s not new Warren Buffett preaches it rather than saving whatever you have left after you spend whatever you have left after you save and so if we figure out and put purpose behind your savings what are you saving for and how much do you need to save and you automate it and keep it out of sight out of mind there’s a couple bullets in there that I could flesh out a little bit but there’s a couple components to reverse budgeting whatever’s left in your checking account is yours to blow guilt-free. You never have to ask yourself like oh have I already capped how much I was supposed to spend on dining out have I already capped how much I’m supposed to spend on online shopping it doesn’t matter if the money is there below it enjoy it you never have to ask yourself should I buy this can I really afford this and that’s why we love reverse budgeting instead. Alejandra Slatapolsky: I love it actually now that I mentioned it that’s what we’ve been doing in my family and I didn’t really. Priya Malani: Absolutely yeah, it’s not rocket science. Alejandra Slatapolsky: Well we’ve got this quote that says pay yourself first which is crazy. Priya Malani: Exactly that’s, what it is yeah pay yourself and pay all your savings goals like whatever you want to save for pay that first and then yeah enjoy the rest of it and don’t think twice when you spend it. Alejandra Slatapolsky: Millennials really connect with this way of believing actually and these totally. Priya Malani: It resonates so much more with their you know wanting. Alejandra Slatapolsky: To be against their parents I suppose which were the opposite right exactly also in your business model they’re going against the parent’s financial advisor too because they really aren’t. Priya Malani: Right a lot of the conventional advice that’s passed down from our parents’ generation does not stand anymore and so we are also there to come in and say like while your parents said x y and z this is why that may not be right for you even though they have your best interest at heart times have changed the resources available to you are different the investment resources that are available to you are different so when they said buy stock that may not be the best thing for you today. Alejandra Slatapolsky: Exactly yeah, I like it okay and talking about we were talking about how the market is changing who do you think is gonna win who’s gonna lose who’s gonna disappear after always? Priya Malani: I mean things are changing so quickly and technology has really created sort of an equal level playing field for the old institutions they know how to employ it correctly which that’s debatable and the newer emergence of these like robot advisors for example. I think the old institutions need to pay closer attention to the pain points of the younger generation that’s set to inherit you know trillions of dollars over the next couple decades, they need to pay closer attention to the pain points and also the way in which they message part of the problem with the older larger institutions is that they simply can’t nichify as much as these newer institutions are willing to take those risks and go out on a limb with their with their messaging. So, I think robot advisors will certainly have an advantage and maybe even boutique financial planning firms or investment management firms that are comfortable nichifying because that level of customization is now what the personalization is now what the consumer is demanding and unless those large institutions can find a way to really segment their offerings and tailor their solutions I think it’ll be very hard for them to win the end. Alejandra Slatapolsky: That’s why I love you yeah, your journey you did exactly. Priya Malani: That so that’s yeah we are for Henrys and future Henrys and that’s it if you’ve waited too long to get your financial shit together we’re not going to be able to help you we don’t really want to either we want to help the people who are in their 20s and 30s and are thinking about this sooner rather than later and planning and advising them is so much fun because most often we get to say like yes this is possible, yes this is possible but for the older generation who’s waited too long it’s just not as much fun to plan with them that’s not what we do there are people who can help but it’s not us. Alejandra Slatapolsky: I was thinking about that you were saying millennials and you called 20s and 30s millennials? Priya Malani: Technically when you’re born 1980 to 2000, so they’re I would say you know yes. I mean those are millennials but technically we serve Henrys high earners not rich yet our average client is 32 years old. Alejandra Slatapolsky: oh, really well yeah. Priya Malani: So, somewhere between that like 27 to 39 is a sweet spot when you’re making good money you’ve made some smart financial decisions but you want a professional to take you seriously to listen to your financial goals and to design a very customized road map for you. Alejandra Slatapolsky: So, how open are they to those conversations I suppose generally they’re starting their own families and that’s how they it clicks right that’s when they start thinking about it. Priya Malani: Yeah, I would say they’re starting to see like savings build up in their checking account and they’re like oh I know this isn’t the smartest thing I should be doing with my money but I don’t really know where to begin with the rest of the conversations so yes sometimes family planning sometimes just building up of cash sitting in their savings account or checking account because they’ve got a couple commissions they’ve maybe invested stock at a couple companies and you know executed upon it they’re just sitting on a pile of cash and they don’t know what to do with it they work hard for their money they want their money to work harder for them that’s the instigator. Alejandra Slatapolsky: So, I know how you say you productize your offering right? and I always talk about in this channel we talk about a lot about the integration of human kind technology and I saw this quote that you say smart technology supports the conversation is that does not replace it, so, tell me how is your approach to using technology and is it included in these fertilization of your offering that we were talking about? Priya Malani: It’s a great question this is where stash while blending human advisors with smart technology this is where we differentiate from the robots so if you think about young professionals who are making good money their only option for financial services is they have two options they either can go to these robots which is a great technology a really awesome experience millennials and Henrys and young professionals love smart technology and are very comfortable with it but there’s no human support it feels like a call center. On the other side of the equation they can go to their parents financial advisor but really those financial advisors don’t want to talk to you unless you have a million dollars and even if you have a million dollars we say they treat you like a d-list client they take your money they turn into a bunch of investments and then you never hear from them ever again because you’re like at the bottom of their tier. Alejandra Slatapolsky: Yeah, you know it doesn’t mutual fund and forget about. Priya Malani: Exactly, exactly right. The model isn’t compensating them to give you a high level of uh hand-holding and so this is part of like you know stash’s iteration to our current business model was figuring out how do we build how do we how do we bring the level of hand holding that’s otherwise available to really rich people white glove service how do we bring that to millennials and we knew that one of the ways we could do that was pairing technology with a human. A human that cares about, you don’t feel like a call center knows your situation inside and out and gives you that personal touch. So, we you’ve utilized and we started in 2016 building technology building software to make our financial advisors more productive more efficient at delivering white glove service and we’ve also figured out the components that can be handled by the client and given them access to great tools, so that they can stay on track with their financial life and fill in the note with their financial life and really just need us for that higher level hand-holding that true advice financial advice and guidance. We’re still in the process of building our software but ultimately it will be it will be the gold standard with wealth manager as far as wealth management software is concerned that’s good. Alejandra Slatapolsky: Yeah! software it’s never enough you never end, right there’s always something else to develop in that. Priya Malani: oh yeah! Alejandra Slatapolsky: So, tell me something that it’s true that almost nobody agrees with and agrees with you? Priya Malani: This is a kind of a funny story I remember sitting on a panel at the girl boss rally in New York it was two years ago and I was on a panel with someone from BlackRock and I said to them this was my answer for this question. I said one of the things that we found in our experience is that Henrys high earners not rich yet are actually over saving for retirement and it was the BlackRock retirement specialist who was like no chance, not possible. And it’s a 100 true here at stash we’ve literally had to take clients who are contributing to retirement we’ve got to lower their retirement contributions because they’ve been over saving and why we suggest that it’s because the media and our parents have sort of told us that we’re never going to be ready, so when we’re given never be never going to be ready for retirement, so when given the option to max out a 401k for example or max out a retirement account. We think that’s the right thing to do but when you start maxing out a retirement account in your early 20s you’re very plausibly over saving for retirement especially depending on how your definition of retirement is if you’re not planning to retire until you’re you know early mid 60s late 60s or maybe you want to always kind of have some sort of side hustle income coming in you don’t need to max out your retirement account. Alejandra Slatapolsky: Yeah, it’s like I you know I haven’t even heard about it. Priya Malani: Yeah! Alejandra Slatapolsky: I have never heard about it it’s such a common conception of like just maximize your IRA, maximize your 401k don’t even think about how do you calculate it then? Priya Malani: Well, so it’s different for everyone I mean it’s a conversation around like well first of all I think one of the things that we do really well is we help millennials think through their goals, retirement goal being one of those and we talk about how in general young professionals are redefining what retirement even means do they plan to continue to work until the day they’re not here anymore and they want to take. I don’t know six months sabbaticals every three years maybe that’s what retirement means to them that flexibility maybe they do want to do it the way the previous generation did and work until they’re 65 and then stop so first is figuring out what kind of retirement might want to look would look like for them and then obviously calculating what they need to be on track for and using financial planning software in a slightly more creative way to factor in the fact that they’re at the earliest years of their earning potential they’re going to be earning more over time and really planning with that in mind and what’s cool is we get to take the money the extra money that they’re putting towards retirement and we get to redirect it to hey you could buy like a boat on your vacation home and you can or you could buy a bigger first house or you can plan for three children instead of two or four instead of three whatever and it just feels so much more empowering to them feeling going from feeling like oh I’m never gonna retire I’m stashing all this money away, I don’t even know when retirement’s gonna happen to wow I’m on track for retirement and I can do all these fun things now right so I can enjoy my life. Alejandra Slatapolsky: So basically, your offering is you know you productize the planning side then you have an 80, 87 rates of you know onboarding of those kinds into your let’s call it investment management offering Priya Malani: sure. Alejandra Slatapolsky: How do you manage the long run? so you were talking like I assume you know you’re 20 years later you have no idea what you’re going to do on your retirement that’s the reality of it right. So, you can imagine now what you want it to look like but then you know after you have kids you figure out okay no actually you know I want to change that and then after you know the kids leave the house you want to you want to review it again how do you keep that relationship alive because everybody that’s hearing right now that is a traditional financial advisor is going to say no wait I’m not going to just offer them a plan because they may leave that’s their panic right because they have this capacity to stay with their clients forever, so how do you do that? Priya Malani: That’s a great question so just like any good financial plan the stash plan is a living plan. It’s meant to grow and adapt as your life goals job situation changes so for our full-time clients our asset management clients; we this is another way in which I believe stash is truly trying to redefine the advisory relationship included in our asset fee. We also offer them an annual update to their financial plan at no additional cost we encourage them once a year to say okay let’s reevaluate your lifestyle your expenses how everything looks and also we’re going to reevaluate is this goal still applicable did you accomplish buying that vespa, okay great we’re done with that one let’s move on to the next, like oh you want to buy a tesla in three years, you’re pregnant okay like so then we recalibrate, you know like and then that’s like what any good financial planner should and probably, is doing we’ve baked that into the service so that they start understanding, that they get to reevaluate their life on this ongoing basis and reevaluate their values and priorities and that’s actually part of our asset ongoing. Alejandra Slatapolsky: So, your asset management service is fee based. Priya Malani: It is, its fee based and it includes financial planning. Alejandra Slatapolsky: so, we’re gonna close with just a little more fun little questions what is your favorite word? Priya Malani: crumpet Slata: why crumpet? Priya Malani: Okay the first word that came into my hand, yeah you know like the tea the queen drinks she has tea and crumpets that’s really, it’s a funny word. Alejandra Slatapolsky: Would you put that in a billboard why would you put in a billboard? that’s the other question. Priya Malani: I’m a very pragmatic person so I’d probably just say something like keep your eyes on the road. I mean like right now we’re doing a whole lot with user experience and the best user experience of billboard Alejandra Slatapolsky: I mean what do you. Priya Malani: They actually in fact if you put keep your eyes on the road and then just put your logo maybe the Stash Wealth logo at least they know you have their best interest at heart [Laughter] Alejandra Slatapolsky: That’s perfect what’s the thing that you most repeat to your team like if I asked your team you know what does she say most often thank you moto. Priya Malani: oh my god, the thing I say all the time oh my god this is such a good question that I didn’t think about. Alejandra Slatapolsky: Sorry. Priya Malani: No, I say get shit done I’m an executor. We and right now being a small business you have to be in executor mode so don’t just sit and talk about it get it done even if it fails. I don’t care I’d rather watch them fail and then figure it out and then you know one of my other quotes that I love is uh failure is simply an opportunity to begin again this time more intelligently Henry Ford but yeah uh I’m always saying get you done get it done have you done it get it done do it great do it I prefer something done other than late right ship it I say that that’s a Seth Godin thing. Alejandra Slatapolsky: Yeah! Cody I know I love him. It’s been such a pleasure thank you so much I was really looking forward to this interview and it did not disappoint oh absolutely. Priya Malani: it was my pleasure, thanks for having me. [Close Music]