Jason Ford Steel Patriot Partners Podcast Transcript
SPEAKERS: Hank Multala, Founder, Adviser First Partners, Jason Ford, CEO, Steel Patriot Partners
Hank Multala 00:00
Well, welcome to the podcast. This is A Chat with Hank and I'm Hank Multala. As a veteran owned business, we like to reach out to other product and service groups that deliver and support business solutions and really have a willingness to share insights with the investment community, especially when the groups provide an industry leading solution. And today, I have a chance to chat with Jason Ford. He's the CEO of Steel Patriot Partners, and Steel Patriot Partners provides outsourced IT, simplified cybersecurity, and compliance services, to really remove the burden of day-to-day technology operations, with a focus on information security, as businesses navigate their digital transformation. So Jason, thanks for taking sometime today to chat.
Jason Ford 00:52
Thanks for having me.
Hank Multala 00:53
So before we get into the company in just a moment, I always prefer to start off a little bit on a personal note. Like you I began, my undergraduate education engineering yours I believe is in electrical, and mine and mechanical. And at a young age, I realize engineers don't necessarily work in the engineering field, but they're often hired as problem solvers. So, give us a quick roadmap of what led you from being a network engineer 20 years ago, into FINTECH and the unique perspective you feel that this gives you?
Jason Ford 01:29
Yeah, you're right. I mean, the very nature of engineering is to solve problems and that's driven into us at a very early time, as you progress. and they are a different type of person from the perspective that we do like to solve problems. It's always about the scientific method, you make some mistakes, you take some more measurements, you make more mistakes, that's always the characteristic of an engineer is you want to write something a little bit, and then you solve the issue. I really consider myself fortunate that I was able to grow up on a farm in rural Pennsylvania, that was problem solving was put into me at a very early age, from the perspective of, if something broke, you had to fix it, and whether that's mechanical or whether that was electrical, or something just needed to be put back together because it fell apart.
Hank Multala 02:21
You can't rely on others you have to you have to do it yourself. Just so well, thanks for that, just so we can all be on the same page, specifically, your page, provide just a brief overview of the firm, and what the overall focus and objective is
Jason Ford 02:40
Happy to, Steel Patriot Partners was created from seeing a need for financial firms as they navigated and managing their IT and focusing on really security and data privacy. Normally, there's some compliance concerns there as well, whether that's SEC, or FINRA, or even others as well, and how they go through either audits or how they, they deliver their services that our clients. It really forced many companies to kind of devote resources and time to trying to figure out how to do that. And what we found is that a lot of people were falling short of that, and they were finding those deficiencies in their audits or anything of the like. So that's kind of where Steel Patriot Partners was born from that concept.
Hank Multala 03:29
So let's start with something that's kind of at the forefront of everybody's mind in today's environment. And that would be COVID. And there's been a very swift change in in how it impacted interpersonal interactions and relationships for about a year now. So where has this impact left advisors with their clients and partnerships from your perspective, and what do you think will be really the lasting impacts of these changes?
Jason Ford 04:00
It was certainly an uncomfortable shift for many, because a lot of people in this space were used to doing things very much like they were 20 years ago, and everything was face to face, everything was done on paper, everything was done, not digitally. So what really forced a lot of advisors to start to look at was how they were delivering their services, how they were finding new clients, their client acquisition, how all those things were really leading to how they were doing their business in the first place. While we won't certainly be at the level, we were in February of last year or January of 2020, going forward, I do think that there'll be some hybrid approach that there'll be some homework from anywhere policy that that will be some norm and will level back out and that certainly won't be where it was in April and May of last year either and this market, this vertical is something that has been resistant to change and this really forced change to happen.
Hank Multala 05:02
So I know one of the reasons that I really want to talk to you outside of just being in our industry is that I know I know your work in numerous industries, such as financial, but you also work in manufacturing, you work in healthcare, you work in consumer products. So how does the work in these other industries benefit those in financial sector? And conversely, how is your work within the financial services industries help other industries? And the reason I asked this is, listeners may be primarily in the financial sector, but their clients may be in the other industries and maybe facing similar concerns and how you address those issues, issues where you bring a solution. So can you provide some detail on that?
Jason Ford 05:48
So it the finance sector certainly isn't the heaviest laggard when it comes to adopting technology and digital transformation, but it's certainly not at the forefront, either. There's certain pieces inside the finance sector. FinTech is obviously a lot more technology savvy, or they're not as risk adverse as, as other pieces in the financial sector, such as banking as an example. But at the end of the day, if you look at what happened, like digital payments, post COVID. Now, you can use touchless payments or QR codes, you cannot have to have currency going between, you don't have to handle card anymore. All those things really shot forward and got adoption post COVID. But if you really converse that to like, 10 years ago, with conferences, everyone had a QR code on their badge. There was a lot of security concerns about that, and data privacy concerns, because people were walking around phones and just snapping the QR code and now they have all your information without even knowing that they had it. It's no different than people walking past you with credit card skimmers or anything like that. It's, all about how to get those data privacy security concerns answered, for your particular vertical or the customers that you're servicing in that vertical. And that's where I think like, conferences aren't obviously in the financial sector, but it is something that a piece of technology was picked up out of that from 10 years ago and put into the finance sector. And that's where I see the commonality between all these is that you see technology moving back and forth between them.
Hank Multala 07:28
I must be a little ignorant, because I never knew that you could scan some of these QR codes is walking by in and grab the personal information, I guess it's attached to it. So they would have access to it.
Jason Ford 07:38
And no different no different you going out to a restaurant now. I mean, what do you have to do, you have to pull your phone out, use your camera and scan a QR code, right. And that right brings up the menu for you. It's a piece of data, it's just a URL string, right? So at the end of the day, your personal data, whether it's a menu, it's just a method to get to that data.
Hank Multala 07:59
It's surprising how much we just we just take all this for granted that nothing's really gonna happen. I'm sure we'll get into that a little bit. So as you work with those firms providing financial services, specifically, what are some of the biggest issues they face today that you're seeing as you start consulting work with them?
Jason Ford 08:19
I'll kind of focus on two areas here, I feel they're kind of the hardest hit now would be banking and wealth advisors. Banking, due to regulations, and repressing kind of innovation through regulation, if you will, a lot of people talk about open banking, especially in FinTech and FinServ. it's hard to give those services out on an internet model, just because the way the regulations are written. On the wealth advisor side, it's everything I was talking about before is that they were used to doing everything face to face, and now they've been forced to do something that they're not comfortable with, which is remote using technology, whether that's using zoom calls, or teams, or whatever you're using at that particular time in order to connect with your clients or how do you even prospect for new clients, because you were used to going to either conferences or something else? I think we're all used to going to conferences, and then all disappeared. And then we all must figure out how to do something different to find new clients?
Hank Multala 09:18
Okay. So I want to focus on one specific area, and that is cybersecurity. It's a concept that financial services firms, say they want, but what do you see in the advisor market, or practice market that is missing or that or that concerns you about their individual practices?
Jason Ford 09:40
The biggest concern, I think, is the misconception that the custodial platform that you're on, protects all your data relating to the day. The custodial platform, whoever that is, is going to be watching out for themselves, right. You're using their platform. They're doing their housing, your transactions and rightfully so everything that you upload into that custodial platform is under their, their control in their cybersecurity terms. However, we run into a lot of advisors that are using things like OneDrive, Google Drive, storing stuff on their phone, client documents, because you must upload them from somewhere and those clients or sending them to you in an email. So no one's looking at their email, no one's looking at where they're storing those documents. So what's gonna be the first place that someone, a bad actor is going to try to go after? It's not going to be the custodial platform, because that has a staff of cybersecurity engineers watching it, we're gonna go after the weakest link and that is the advisor, because they know, they're storing stuff rightfully so for their use on these different technologies, but they're not watching them and protecting those as well.
Hank Multala 10:49
Yeah. It's a path of least resistance. So along that same thought, do financial firms struggle with technology in general? And what if anything, can you share with advisors as they move their business and their relationships to a digital delivery of their services?
Jason Ford 11:11
Financial firms do struggle with technology in general. And I don't know if it's the very nature of just going back to use to being doing things face to face or almost being 20 years behind in some cases, or 10 years behind, on how they deliver their services. But the biggest piece I can kind of give you a piece of advice I can give is do your research, use your gut instinct when you're making some choices. It comes down to this burden for them to try to deliver their services digitally, whenever they don't understand the concepts of technology in the first place.
Hank Multala 11:49
Alright, so I want to make a little shift here. So you know, being very familiar with this industry, I know, there's a dreaded word out there that most advisors and practices are not that fond of hearing and that's forgive me, I'm going to use vulgarity. It's called audits. So how can advisors really protect themselves and remove that stigma behind the word and really feel comfortable and secure that audits are no longer that they don't need to be feared?
Jason Ford 12:15
It comes down to practice. And you know, you must practice, you must do dry runs no differently than you practice in front of people to talk to potential clients or give a presentation, you just don't go up and wing it and try to figure out. This is going to sound great, because how, how long does that usually go for you, usually not well. So it's no different than that. If you go through a self-audit, generate the needed reports, evidence, that kind of thing, you're not have to really worry about it. And that's kind of the approach we take with our clients to remove that burden is to figure out what they need to do how they need to do it and if the dreaded word audit does come up, which, in the cases usually about 10, to 15%, of in particular RIAs are audited every year. You know, it's, it's gonna happen at some point in time, it's gonna happen to you.
Hank Multala 13:08
Okay. So there's roughly about a little bit over 310,000 producing advisors in the US and the size of the firms, they work for ranges greatly of sole proprietors, multi partner practices, then you have broker-dealers, RIAs, hybrids, and a multitude of different business models, ranging from financial planning, retail, business, asset management, institutional, and a combination about all we just mentioned, and, and those are the parties that we work with also. So what advice do you have for them when it comes to building trust with their clients as it relates to information security,
Jason Ford 13:47
If you're doing stuff to protect your clients data, share that with them, talk about it, and put it in your marketing materials, put it out in front, put bells and whistles around it, whatever you need to do to draw attention to it, because you're doing something that is protecting your client at the end of the day. No different than you protect their money, you're protecting their assets and there, their, their retirement or whatever it is that you're helping them get to whatever goal you're helping them get to. If you're protecting their personal data as well, you don't have they don't have to worry about you releasing their social security number or their personal identifiable information out into the world so that they don't have that retirement at the end of the day.
Hank Multala 14:29
Right. So what's holding what's holding back advisors and financial service firms from moving forward with digital transformations? In your opinion, is it and I don't mean to answer your question here, but is it fear? Is it lack knowledge? Is it implementation? And if you could give us a give us an example of perhaps a worst-case scenario for those who elect to stick their head in the sand because we all know that willful negligence or procrastination doesn't make the issue go.
Jason Ford 15:01
Yeah, it certainly doesn't. And, you know, in this field, like I said, I really think it's risk aversion in some ways, because in this market, advisors are trained, to look at risk nonstop when managing people's wealth, and it is that and it's also I think, fear of the unknown. A lot of advisors really don't want to change until they're forced to do so. And I could see that across the financial sector period, except for FinTech, that's kind of like the special thing. But fear of change is certainly a huge thing. When we saw March of 2020, happen with COVID, there was this real forced fear upon everybody really at the end of the day, but how, how do advisors then go meet face to face? Because you can't, you know, in that particular market? And then how do you shift that demographic that thought, in that demographic over ? How do you protect those people, because the people they're protecting, their wealth their protecting is an older generation? So who was the most vulnerable was that generation?
Hank Multala 16:09
So I have two questions. Is there a way a client can be confident that their advisors firm that they work with has implemented appropriate cyber security compliance issue or compliance services? And if so, or not, what can an advisor or practice do to educate the client base? I think you mentioned it just a couple minutes ago, but I wanted to, get more detail on it.
Jason Ford 16:35
Really at the end of the day, ask questions of your advisor to provide some sort of evidence that they do what they say that they're doing. It's no different than you ask for referrals or references in you're going to try to ask certain questions. And the unfortunate part is, is that most people who are in this, they're clients of advisors aren't going to be looking for that kind of stuff, unless they're told to ask for it. That's really what I can see as being this protection, and the advisor should be able to say, look, I have this from the SEC, I have this from FINRA, I'm implementing these cyber security things to keep your data private. It's no different than you are putting your trust in into a bank if you will.
Hank Multala 17:27
So it's really a case of the practice, should be proactive and letting their clients know versus being reactive, because the last thing you want to do is end up on the defensive. Because it sounds like perhaps you didn't even address this or let us know or give us updates. Is that probably in a simplistic way?
Jason Ford 17:43
Absolutely. Because if you're if you’re an advisor firms put on the front page of the news, because you let all your clients high net worth clients be compromised. How fast do you think that is going to go around their circles? I think you're probably gonna be out of business at that point.
Hank Multala 17:55
Yeah, I would say so. Okay, so this industry seems to change overnight as it relates to compliance and FinTech as well as consolidation. And as a firm that is at the heart of the most important aspect of a practice. What do you see happening in five years from now? And what could practices be doing to prepare for these changes over the next five years?
Jason Ford 18:30
There's certainly a move towards giving clients more access to their data. And in ways advisors didn't want their clients to have access to that data. And in the fear of that the client would just disappear, right? Because if they knew what was going on behind the scenes, they'd become more educated, and they would just leave that advisory firm. I think in the next five years, there certainly will be a need for advisors to really come down on more compliance, more audits for data privacy, as SEC, and FINRA and other government agency bodies, =if the state's regulating you as an example, they're going to put more of these things in place. You're going to be required to follow and in the next five years, I can certainly see that happening. I think a major force for the quick change would happen, it's kind of like what we saw for March with, with COVID happening with remote work. If something like Bernie Madoff happens in this space, that would obviously catapult regulation or compliance forward, because now, people are going to want to have checkboxes to make sure that people aren't bad actors.
Hank Multala 19:36
It's unfortunate that you would need an in an instance like that to drive this resolution quicker. So, Jason, I wanted to thank you again for your time today. I'm always very honored and appreciative of those who are willing to chat and share their insights with the industry. And for those of you who are interested in learning more about how Steel Patriot Partners and how they can help you can visit them at steelpatriotpartners.com You can also find their link on our site on the Outside Resources page at adviserfirstpartners.com. That will direct you directly to Steel Patriot Partners. Their site really has some great resources especially in the security thoughts tab to further educate everyone on the importance and the need of a simplified cyber security operations and compliance for your practices. So please don't forget to subscribe to our podcast A Chat with Hank, on Stitcher, Google podcasts, Spotify, wherever you may listen to programs. And again, Jason, thanks once again for your time and sharing your thoughts on a very critical and necessary need for this.
Jason Ford 20:44
Thanks for having me.
Hank Multala 20:47
You're very welcome.