In this podcast, Matt Fleissig, CEO of Pathstone, and Mark Wickersham 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.

Mark Wickersham is VP of Strategy, Marketing, and Business Development at AgilLink.

This synopsis is of a podcast conversation between Mark Wickersham and Matt Fleissig.

Note that the conversation has been edited for length and clarity.

WHAT MAKES PATHSTONE UNIQUE?

Mark Wickersham kicks off the conversation by asking Matt Fleissig this question, and Fleissig offers 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.”

HOW HAS TECHNOLOGY AND INNOVATION IMPACTED FAMILY OFFICES —SPECIFICALLY SINGLE FAMILY OFFICES PARTNERING WITH MULTI-FAMILY OFFICES?

Flessig says, “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 ages as the patriarchs. The next generation of leaders are coming in and want to modernize the office. Many of these offices are still using Excel as their primary platform. While we’ve seen some innovative spreadsheets, Excel 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.”

To summarize, Mark Wickersham says, “Pathstone provides the infrastructure, while the office maintains the personal relationships with the family, and the added benefits are reduction of errors inherent in the Excel scenario, along with auditability.”

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.’”

Wickersham offered this, “We call it accidental bill pay, when firms get into it without the resources or commitment and try to scale from one client to multiple clients. It just doesn't work.”

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.”

Wickersham says, “I think that's very insightful. Having segregated operating accounts ensures that you have cash available when you're paying bills.” 

IN YOUR OPINION, DID ANYTHING GOOD COME OUT OF THE PANDEMIC?

In response to this question from Wickersham, Matt Fleissig relates the following experience he had: “There were some pretty unique, special things that I think people did when they rallied together. And it was neat seeing the Pathstone client base come together — from medical device professionals, to connections in the hospital systems, to connections in some of our factories during a very challenging and tough time.”

Specifically, Fleissig says, “One of the most innovative and uplifting things I've seen was a family that had a factory that was in the construction space — producing doors and windows for new construction. The family actually converted the factory from doors and windows to making PPE. We connected through the Capstone Network as they were looking to pivot the factory. We connected with clients in the medical device community, and then connected to a number of hospital systems. So not only did you have production of PPE that we were able to help facilitate, we also had a hundred people in a factory that were probably going to lose their jobs, and the factory ended up staffing 2- or 300 people.”

ABOUT PATHSTONE

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.

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.}