It’s not everyday someone has the opportunity to sit down with a financial services veteran who has:

• Spent the entirety of their career in the financial services industry from being an employee to starting their own firm
• Subsequently then sold their firm to private equity
• Gained countless insights throughout their lifetime about finance and how it works to create and maintain wealth

One of the least transparent industries in the world is finance. It makes sense that so many finance executives are secretive of what goes on behind the scenes. Yet Adriel Tam, the CEO of AdvisorCheck, has graciously shared his time with us to get into the details of:

• The ins and outs of the financial services industry, including the good, bad and ugly
• How the financial services industry has helped clients from all walks of life achieve their dreams
• The passion behind why he joined AdvisorCheck
• How it can help you avoid fraud, poor service and incompetence
• The vision for the company’s future
• How AdvisorCheck could lead an AI movement in the intermediate future

Get ready for an exciting interview. Getting insights like these from a finance expert are quite rare, so there will definitely be a lot to unpack here.

Let’s get started and if you find anything enlightening, make sure to share this with a friend, family member or colleague, because there’s an extremely high chance that they will find value in this interview as well.

Leonard Kim: Adriel, it’s such a pleasure to be able to get a moment to speak with someone as accomplished as yourself, selling a firm with close to a billion dollars under management to private equity right before joining AdvisorCheck.

That’s quite a journey.

What brought you into the financial services industry in the first place and what was that experience like?

Adriel Tam: I've been in financial services since finishing school at Seattle Pacific University and you know, I just love this industry. I first started working at GE Capital in 1998, then when I entered the wealth management industry, I started as a rookie in the bullpen at UBS Financial Services. It sounds weird, but that’s the terminology for someone who is absolutely brand new in the industry. And, you know what, 90% of the class that I was in all dropped out or were kick out within the first year or two. They all either left or failed.

I was very lucky to make it through there and it's a hard training ground that many people drop out of, but I'm so thankful for that background and the experience because it taught me so much about the industry, about salesmanship, about service and about competence, which I continue to take with me to this day.

Those things that I learned were what I was able to take with me to help build the next two companies, which were Viridian, which I sold off to private equity, and now AdvisorCheck.

Gaining that framework and understanding was hugely beneficial, but also then the application of it is even more fruitful. I have firsthand experience of implementing these concepts at AdvisorCheck in terms of how we can benefit consumers based upon the insight gained from both working at a wirehouse like UBS, as well as running a large independent Registered Investment Advisor (RIA) like Viridian.

How was the shift into the wealth management industry and what did you learn about that?

The wealth management industry is a specific subset of the financial services industry. Being inducted into the wealth management industry led to me being introduced to so many foreign terms, instruments and terminology, it blew my mind.

While wealth management technically falls under financial services, it really is in a category of its own. A category that requires its own expertise, experience, and specialists to provide wealth management services. I was introduced to things like pooled investment vehicles, private letter rulings, 1035 exchanges, iron condor trades, closed end funds, structured products, private placements, complex insurance and securities hybrid products, not to mention all the proprietary products a firm can create.

It was incredible – the creativity, the complex structures, the tax maneuvering, the entity within entity structures – and yet at the same time so overwhelming. I love this industry and its ability to attract some of the most incredible minds, generate massive wealth for clients, create solutions to highly intricate problems, as well as truly help clients achieve their financial goals.

What I don’t love about the industry is that many times, products are created with the intention of creating inflated fees and inefficiencies for the end consumer. This is not inherently a bad thing, but the reality is very few investors – even financial advisors – truly understand how lopsided some of these products and solutions can be. This is why I was adamant to focus my career as a financial advisor on financial planning and advising clients, rather than selling products.

Adriel, you mentioned that there were helpful products and unhelpful products that have inflated fees and inefficiencies for the end consumer.

Anyone working with a financial advisor would love to know whether or not they are getting the right products and services. Would you mind sharing some of the good that really helped the investor and some of the bad ones that have hurt the investor?

Absolutely. Private Letter rulings were interesting from insurance perspectives, because insurance companies can say unique things like the word guarantee. They get special tax treatment, which they've gotten in the past and continue to utilize just because of the fact that they're an insurance company and not a securities company, but they blend the two a lot of times. Yet it becomes a convoluted product. So yes, there's very unique scenarios where entities within entities or structures or specific products can really help high net worth and savvy clients.

Products like these are specifically made and created to be legal, but work in gray zones that stretch the boundaries of the law, but still be within a defensible position.

There's some very unique products that allow wealthy individuals and those who work with financial advisors at connected firms the ability to accomplish that. So there's definitely some really cool things out there.

There's some really horrible things that happen in this industry where proprietary products are sold and there's a lot of fat baked into them for the maker of the product, or the commission of the product is completely inflated. That means you have to dig very deep into each specific product to understand what the benefits and costs are.

While there’s beneficial products that are created, there’s also some very inflated products too. Those inflatable products are debatable when it comes to the benefit of the consumer versus how much benefit goes to the person selling the product and the company making the product.

So the products that clients should avoid would usually be typically like a firm derived product, not like a traditional product that anyone could buy that could be inflated with the fees?

It would be traditionally be a firm created product. But almost all products are created in one way or the other. What really determines whether a product is good or bad is how much layering that product has. The more complex a product becomes, the more layering is generally introduced, but that's not necessarily always bad because sometimes specific products, for example insurance products have a lot of layering, but they can provide very, very unique benefits. That is because insurance companies have a different classification than securities. There's also different tax treatment for insurance products. So there are some justifications, but there are also some really hyperinflated products out there to be wary of.

Thank you for that answer Adriel. What do you love most about the financial services industry, what financial advisors are doing and how they’re helping their clients?

I love the power a financial advisor has to make smart decisions today for a client that will benefit them decades down the road. Every time I helped a client or saw one of my Financial Advisors at the firm I later operated share a winning story with the team, it gave me such fulfillment and satisfaction with what we were doing for our clients.

In the industry, we often would talk about the 3 things that influence our client’s lives the most. They are typically one’s health, their wealth, and their family, in various orders of priority of course. But ultimately, through observation and interaction with countless households, financial stability is such a critical part of any person’s overall happiness or satisfaction in life. The role a financial firm, its advisors, and the whole team play can be so powerful in helping them achieve a healthy financial scenario in their lives. I truly love this about what good advisors can truly do.

That’s amazing. You mentioned that there are some winning stories that really brought you a lot of fulfillment and satisfaction.

Were these financial advisors able to help their clients buy a nice car, purchase a home, or become a millionaire?

There are so many stories! You know, there's some stories which are very typical for the high net worth client and some stories which I don't think get enough exposure. So you mentioned like helping you buy a car or a yacht. Absolutely.

We've helped clients buy expensive things like second, third, fourth homes, buy expensive cars, help to negotiate rates or directly interface with third parties. So those are the fun, glamorous high net worth type of profile milestones that are very cool. I think people like to see that.

Where I think people see less of is where a financial plan really comes in and helps challenging complex situations. So one situation I dealt with was for a client. This was my personal client. He had a timeshare and he was unfortunately dealing with dementia for his wife. So one of the solutions that I came up with in his financial plan was to spend down to qualify for Medicaid, while still preserving what we could for himself. That is a complex scenario and in of itself that we dealt with and worked with an attorney to solve.

But there was a spend down. One of the things that came out of that was he had a timeshare. Timeshares have no real asset value, but they can create an incredible liability in terms of the annual payments that you have to make for them. So offloading that timeshare was something that I personally did for him, helping to sell that timeshare in a bad period of time.

I think this was in 2008 or 2009 when real estate was doing horribly, so actually reselling that timeshare through a broker and offloading it would’ve been a considerable expense for him and his family.

So that's one of the wins that I think is really cool because he was able to qualify for Medicaid after that, which was a huge win. The flexibility that a financial advisor has to go outside of their bounds and create creative solutions to complex problems is really cool.

Wow that is so touching for this man to be able to qualify for Medicaid to help his wife with dementia. What a touching story.

A lot of people think that financial advisors only help their clients make money, but they don't think that they help people who might be struggling financially.

Do you have any other unique situations that stand out with maybe someone in a lot of debt?

You know another great story. I had a client earlier in my career and she had her retirement savings with us. We weren’t really talking about financial planning. Once we got into budgeting and became more focused on the topic, it became evident she had serious credit card debt.

I think it's something a lot of Americans deal with today, but she had an investment account and a retirement account. She had an investment account and my solution to the problem was through taking a look outside of what her investments were. The big issue here was derived completely from a budgeting issue. This specific scenario was really about budget planning rather than financial planning. Her spending was out of whack with her savings and affected her ability to invest her money. So we actually found a solution where we took out some of her money from her investment accounts, then paid off her credit cards because the interest was far outweighing the return on the investments.

Now this was not something I typically recommend, taking money out from your retirement account… But the scenario was so bad. The debt was at a far greater ratio so in this instance, it just made sense to get rid of the debt.

I made a deal with her and said that the only way I will do this for you is if we take your credit cards out and cut them up together. And so we physically did that together.

I brought a picture frame and we kept the credit card cut up so that it would remind her not to spend so much money and that we did this for a purpose. I think it really helped to change her life and change her mentality of spending because it was a great moment that we both still look back on.

We cried together too. It was quite cathartic, and it's moments like those that financial advisors don't get taught until they experience it for themselves.

That’s something I don't think get talked about enough and I think that's where financial planners and financial advisors really prove their weight. Situations like these are when they really proved their worth to their clients. While moments like these are not as glamorous as purchasing an expensive item, they are incredibly powerful to the relationship and the value that a financial advisor or planner brings to clients. I feel these moments should be discussed far more often.

There seems to be so many amazing stories that happen behind the scenes that not many people hear about in the financial planning and financial services space.

Hopefully we can collect more stories like these to show people how much of an impact financial advisors and planners are making.

However, there has to be a bad side of the industry as well, right?

Unfortunately, there is the bad side of our industry: the advisors who are fraudulent, selling bad products to clients, stretching the truth, or straight up stealing from them. These are the real bad apples out there tarnishing the industry and hurting everyday Americans.

I want to shine a light on these bad actors and get them out of our space.

The fraudsters are an easy topic to cover. People gravitate towards that because of the Bernie Madoffs, Ponzi schemes, people doing fraud. It's headline news; losing millions, losing your entire household’s wealth, savings, all your retirement… Those are headline articles that gather a lot of attention and people do lose a lot of money every single year due to these fraudsters…

You’re right, there is a lot of attention towards fraud and how it could wipe out a household’s entire net worth. I think a lot of people think that these situations are so extreme and that they won’t happen to them, but we both know that’s definitely not the case.

The fraudster could be the most charming person in the world and probably could take anyone for a ride, even myself…

What do investors who work with financial advisors overlook that they should be paying attention to?

Those fraudsters aforementioned are the obvious characters who need to be ousted and there’s definitely things to look out for when you’re working with a financial advisor like that, such as giving them 100% of your trust and not looking over what they are doing. You should always have your guard up and double check everything someone who is managing your money is doing.

But there is a less obvious culprit. They are the financial advisors who have questionable competence or poor service. There are unfortunately so many more of these financial advisors that are much harder to identify and call out, because there are no easy ways for consumers to measure or evaluate these criteria. In many ways, this low-quality service and skill is a bigger issue than the straight up fraudsters, as it is much harder to quantify. The downside is that these traits can have a significant negative impact on a client’s life, if the financial advisor’s service and competence goes unchecked for years, or even decades.

The impact of poor service and competence can create huge tax consequences, degrade the performance of a client’s portfolio, and hurt generations of the investment families made by millions and billions of dollars. In fact, hundreds of billions are estimated to be lost every single year simply because of a lack of competence and service attentiveness.

That makes sense and it’s definitely something every investor should be paying attention to when working with a financial advisor because it’s causing so much in losses.

It makes sense why it gathers less attention because how do people even notice these things if they aren’t an expert at this stuff?

The best question I can ask here is how do you even look out for poor service and competence?

Well the reason it gathers less attention is because it's more subversive. It’s more subtle. Poor service can only be evaluated on an individual level. But competence is hard to evaluate, right?

You're not an expert in financial services as a client, right?

You're not supposed to be.

So how do you know if you're have a good advisor or not? That's kind of the questions you should be asking:

• Is my advisor any good?
• Are they competent?
• Do they have the skills I need?

And that's where I think people get confused with someone who's got gray hair. Sure, that means they've been alive for a while, but that doesn't necessarily mean they have relevant experience in the financial services industry.

Understanding relevant experience is very important as well as not just number of years of life, but how much experience they have helping types of clients like yourself.

If a financial advisor only works with five clients, is that enough clients under their belt to have enough case studies and experience to work with all different types of scenarios, including what you and your family need?

Probably not, but if they work with 1,000 clients, maybe that's too many clients too. Will they able to service you as an individual, or is that too many clients to take care of every single quarter of every single year, leaving you without the attention you deserve?

You have come into a balance of what is the right amount of clients potentially and experience and advisor should have.

Then you get into the competence with the service. Here’s some ways to determine how competent they are:

• Are they continually investing in their education?
• Have they seen enough cases?
• Have they dealt with all kinds of complex issues?
• Have they dealt with the state issues where the family is arguing? Have they worked through a lot of attorneys in different types of scenarios for different types since family situations like blended marriages, multiple states, multiple residences, international issues?
• And the list goes on…

You have to look at your specific circumstances, and then it really comes down to the balance for you as a client and the service and experience that makes sense for you.

If you're not an international person with multiple residences across the world or multiple residences across multiple states, you potentially don't need a lot of complex planning. But if you are, then you probably do need all that complex planning.

The evaluation of competence is very hard because unless you've worked with a lot of financial advisors, you probably don't know what else you should be looking out for, which is why AdvisorCheck is great.

We're here to try to help everyday people, regular investors, understand the things they should be looking out for. We’re helping investors look for the things they should be finding out about their financial advisor to see if they are competent and if the service is continuing to be good. That's the subtle piece that I was talking about, yet it’s probably the biggest factor in the client’s relationship with a financial advisor.

Poor service and competence sound awful, but what does this lead to? Higher fees, losing returns? What’s the outcome of working with a financial advisor who provides poor service or competence?

Poor performance or poor competence or poor skills play out over a long period of time, right? So with fraud or fraudulent activities, you lose your entire life savings. Well, in poor competence and poor service, you're losing out on all of these potential gains. All these potential opportunities are missed because you have someone that has less than desirable attributes that you're looking for as a financial advisor.

So those are things that we want to help educate our members on. We want to help bring that financial literacy to help the consumer.

Anyone is welcome to use our platform to help them evaluate or educate themselves and use our tool to help them make better investment decisions when hiring or monitoring their financial advisor and we love seeing that.

This is why I’m so honored to be a part of AdvisorCheck.

That makes a lot of sense and while fraud just seems horrible, losing out on potential returns sounds a bit worse in my opinion, because it seems that there are countless amounts of people, maybe hundreds of thousands or even millions of people who aren’t getting the returns they deserve because of this, whereas maybe dozens or hundreds of people are losing everything every month.

I guess I’m trying to say that poor service and competence affect a lot more people overall than fraud does, so a lot more people need help in this area to ensure that they are in fact hitting their financial goals and milestones.

Where do you see AdvisorCheck heading in the future?

My ultimate goal is to raise this great industry and see more investors work with more financial advisors. I want to weed out the bad actors and poor performers to help the every day investor.

Our goal at AdvisorCheck is simple, but the path is challenging because we are creatures of habit and disrupting an industry that creates a massive amount of money will be very hard. I truly think that all the great financial advisors out there will be advocates of our mission and support the cause. I also know many will oppose what we are doing because transparency does not benefit their personal bottom line.

Transparency is such an inspiring mission for such a gated industry. It’s made such an impact in healthcare where we wanted to be transparent at my last employer and even post bad reviews about our own physicians.

It made everyone step up and perform their best, even when they didn’t feel their best. I mean what kind of institution goes out there and posts negative things about their own employees?

That’s true transparency and the financial services industry is about to face that same disruption.

Anyway, what kind of traction has AdvisorCheck been able to achieve so far due to their mission for expanding transparency?

You know, we are less than a year old on the internet, and we have already become one of the largest websites across the world. Only 30% of websites ever get to the statistics we've gotten to and we did it in 7 months of being alive in August 2023. And that's having over 100,000 monthly visitors a month. Less than 30% of websites globally ever achieve that mark in their entire existence. We've done it all organically too.

That's something I'm really proud of for both the marketing and technology team. It’s extremely exciting and a proud accomplishment as well.

You may not be aware of this, but most financial services websites in general never get to 100,000 visits a month, while we are leading a lot of well established, large financial firms. We get more site traffic than they've ever gotten. We generate that on a monthly basis and we're just growing. So that's extremely exciting for me.

The second thing is even though we're categorized as a fintech company, I really think of us as a data technology company.

Why is that important?

Well, the data of all of the firms, the financial advisors, the information we're gathering is incredible in allowing us to make better decisions. That's why we introduced the background check and the monitoring tool which we're coming out with. It's all about elevating the industry.

Thanks. I’m glad we got to hit these results. It’s been fun. But you mentioned data and the importance of it. Can this data lead to a prosperous future in Artificial Intelligence?

The big hot topic right now is AI. Artificial intelligence is irrelevant without data, right? You must have data for AI to perform its capabilities. We are creating the food that will feed all of the artificial intelligence that will be making decisions around potentially a big part of financial services. The data that we're building, the data that we're collecting from an investor perspective is so powerful because of the natural feed into the AI phenomenon. Without the data, AI is kind of irrelevant, but AI is the natural progression for everything that we're doing.

But you probably want to know why what we're doing is so important. How does it have value?

It's the data we're collecting. We're cleaning it. We're aggregating it. We're making it easier to understand. We're filtering it, and as we gather more data, the data is just creating the fuel by which AI is powered. So without data, all that is irrelevant.

Those AI insights are exciting and could make anyone intrigued about what we’re doing. Adriel, thank you for taking the time to share your valuable insights with us.

I know just how valuable your time is due to your schedule restrictions, but I’m sure everyone who is reading this is thankful to understand your deep insights into this industry and where it’s heading, along with how to protect themselves with AdvisorCheck’s tools.

Do you have anything you want our readers to do now?

We know we’re in for a long journey that is ahead of us and we’re excited for what we have built so far and the traction we’re receiving, along with the recognition from a lot of prestigious publications.

If there’s anything that I can ask of you, it’s that I hope you will join us in our transparency calling and ‘join the movement.’ We need a lot more people to help us achieve these goals and so much more.

Adriel Tam, Chief Executive Officer, interviewed by Leonard Kim, Marketing