In this podcast, Matt Fleissig, CEO of Pathstone, and AgilLink discuss how Pathstone adds value to its clients and how it differentiates itself from its competitors. Their focus on technology, diversity, and innovative technology for family offices helps the Pathstone team offer the best customer experience possible, and these elements are the keys to Pathstone’s success.
Matthew Fleissig is a co-founder and serves as the CEO of Pathstone, the Modern Family Office, which serves families, family offices, and foundations and endowments. Matt is responsible for accelerating innovation and setting the firm’s overall strategic vision and direction. He is a shareholder, a voting member of the firm’s Investment Oversight Committee, a member of the Executive Leadership Team, and serves on the Board of Managers. Prior to his role as CEO, Matthew served as President at Pathstone Family Office.
This synopsis is of a podcast conversation between AgilLink and Matt Fleissig.
Note that the conversation has been edited for length and clarity.
ABOUT PATHSTONE, THE MODERN FAMILY OFFICE
Pathstone is an independently operated, partner-owned advisory firm which offers families, family offices, and select nonprofit institutions comprehensive family office services and customized investment advice. Pathstone's objective is to help clients create, manage, and preserve wealth across generations. Pathstone integrates smart, innovative programs with its traditional family office services to provide solutions that withstand the test of time. Pathstone has 11 locations in the US, and over 200 employees. It manages over $22B in assets for 300+ clients.
WHAT MAKES PATHSTONE UNIQUE?
Matt offered the following: “We view ourselves as a single-family office for multiple families. We do everything we can to satisfy our clients’ needs. Our business model is to offer a wide variety of services completely unbundled, so if someone is looking for accounting, and someone is looking for taxes, and someone is looking for investments or aggregated reporting, we can completely unbundle these services and charge the client based on their needs. It's not a basis point, it's not a retainer, it's a combination of what makes sense for the client.”
“We have deep-bench strength in accounting, tax, investments, estate planning, aircraft management, and household payroll. I joke that we'll do everything but walk the dog! This incredibly large scope of services has been the differentiator for Pathstone since we started the business.”
WHAT DOES DIVERSITY MEAN TO YOU AND WHY IS IT IMPORTANT AT PATHSTONE?
“Diversity is in our foundation,” Fleissig says. “It's finding the best people to do the best job. Pathstone has done a great job finding diverse, interesting people to serve our very interesting clients. Our people are located in offices across the country, and when a client comes in, we try to match their needs with the very diverse group of talented people that we employ. Our strategy for office location is based on talent, rather than office location or demographics of potential clients.”
HAS USING INNOVATIVE TECHNOLOGY CONTRIBUTED TO THE SUCCESS OF PATHSTONE?
“To us, it's all about scale and automation, and what our people can do with it. As we added clients and advisors, we needed automation to scale up on things that were traditionally done in a manual process. While we have developers in-house, we realized that there's no way we're going to create a better multi-client bill pay and GL (General ledger) system like AgilLink, and there's no way we're going to be able to create a CRM (Customer Relationship Management) like Salesforce. Understanding this, we've created a warehouse to store our data for use between the systems, creating a unique solution which works very, very well. The development was out of necessity, and the rest of the industry has yet to create the tools and software that we envisioned early on. We’ve been able to scale and grow as our client base expands, and that's been the mission and the plan for Pathstone from the beginning!”
HOW HAS TECHNOLOGY AND INNOVATION IMPACTED FAMILY OFFICES —SPECIFICALLY SINGLE-FAMILY OFFICES PARTNERING WITH MULTI-FAMILY OFFICES?
“When you look at family offices, the trend that we see is that the patriarchs of the single-family office are aging. The staff of those single-family offices are typically the same age as the patriarchs. The next generation of leaders is coming in and wants to modernize the office. Many of these offices are still using spreadsheets. While we’ve seen some innovative spreadsheets, it is not scalable, and it doesn't work for this new generation of leaders. Pathstone is able to come in and show a scalable platform built around approval rights. It's not unusual to see the staff in a single-family office signing checks without checks and balances and executing trades without a reconciliation process. Pathstone's success is providing the single-family office infrastructure and systems where people can place trades, they can place wires, they can do bill pay with reconciliation, rules, and approval rights. We can even provide access to our investment platform and facilitate third-party aggregate reporting.”
WHY ARE MORE FIRMS OFFERING BILL PAY TO THEIR CLIENTS?
Fleissig answers, “We've offered bill pay from the start, but I think the reason you're seeing it in vogue is that firms are trying to add services because the investment management business has been somewhat commoditized. So, this is a way to attract or retain clients. The issue is that you have to commit resources to support the effort, such as how are you going to set it up, and how are you going to staff it. It's a different level of commitment, and if you look at the accounting team at Pathstone, it's a highly qualified group that really knows how to handle bill pay. AgilLink is a platform that helps us a lot, but it is a bigger commitment than just saying, ‘We're going to do bill pay.’”
WHAT ARE SOME COMMON MISTAKES THAT YOU SEE FIRMS MAKE WHEN OFFERING BILL PAY?
Matt offered the following perspective: “The most common thing we see is when accounts are set up and the advisory firm is essentially going into the client's investment accounts and trying to pay the bills through online bill pay systems. I believe there's a compliance and approval issue with this scenario, but then, a lot of times, you see where people are trying to pay bills from brokerage accounts. With City National Bank, we’ve created operating accounts that the clients don't use, which are separate from their investment accounts. We've created this bifurcation of investment in operating accounts, and we'll open pocket accounts for clients, or they'll keep their own accounts for themselves, but we don't commingle personal banking with operating and bill pay accounts.”
HOW DO YOU FUND “BIG IDEAS” AT PATHSTONE?
Fleissig responds, “Growth requires capital and idea-flow. As the firm gets bigger, it's strategically important to understand how you are investing in technology. Innovation is part of our culture, and automation is an obsession at Pathstone. While we have the capital to make investments in these tools, we also need the idea-flow and the sense of how to do it using internal and external resources. I think we have the right balance of building internally, and then collaborating with the right external developers to finish the projects.”
“With our external partners like AgilLink and Risclarity, we’ve built and created a lot of unique things together, but we always thought the Holy Grail of the family office was connecting an investment performance reporting system to the general ledger. In 2017, when we were finally able to do that, it was a turning point on the technology side. Suddenly, all the work that you're doing on the tax side can be done through the GL, using AgilLink. That innovation vaulted the growth of Pathstone forward at an exponential rate.”
WHAT PROBLEM(S) DOES AGILLINK SOLVE FOR PATHSTONE?
Fleissig enthusiastically responds, saying, “There are a lot of nice features in Datafaction (now AgilLink), such as having imaging together with the GL, with multi-client bill pay, with custom rules by vendor, with repetitive accounts that are set up — even the way the credit cards are handled automatically in the GL, and the way our investment data flows in automatically into the GL. All of this has enabled us to scale and leverage our capabilities to benefit our clients, and this is what Datafaction has facilitated.”
DISCLAIMER
This article is for general information and education only. It is provided as a courtesy to the clients and friends of AgilLink. AgilLink does not warrant that it is accurate or complete. Opinions expressed and estimates or projections given are those of the authors or persons quoted as of the date of the article with no obligation to update or notify of inaccuracy or change. This article may not be reproduced, distributed or further published by any person without the written consent of AgilLink. Please cite source when quoting.
This podcast is for general information and education only and is provided as a courtesy to the clients and friends of AgilLink. It is compiled from data and sources believed to be reliable, however AgilLink does not warrant that it is accurate or complete. Opinions expressed and estimates given are those of the speaker as of the date of the podcast with no obligation to update or notify of inaccuracy or change.
City National Bank is a subsidiary of Royal Bank of Canada. Deposit products and services are provided by City National Bank.
Pathstone is an independent company and is not associated with AgilLink, City National Bank, or Royal Bank of Canada.
Top