Gravity Exists

discussion

Reaching Underserved Wealth

June 06, 2022


Yvette Butler is used to taking charge. As the head of wealth management at Silicon Valley Bank, she successfully oversaw the integration of Boston Private –a $13 billion RIA, through a merger valued at over $900 million. Afterward, she served as head of the combined unit, integrating a traditional wealth management firm into the culture of the elite tech sector–focused lender. She has also served on the Boards of Hillcrest Finance and Voya Financial for years, among her other roles.

Now, Butler is taking up a new challenge. Her new Fintech, Impart Media, and social network, Hive Wealth, connects affluent but chronically under-advised members of Generation X, Millennials, and Gen Z to help them chart a course to lasting wealth. Gravity Exists was eager to ask Butler a few questions about her start-ups.

So, the obvious question. You achieved a lot in the wealth management industry and could easily transition into a senior role at a major firm if you chose to. Why a start-up, now, at this phase of your career?

After spending 30 years in financial services, Hive Wealth is the culmination of what I saw financial services was missing. There are some great solutions. There are some great providers. There’s been a democratization of access through trading apps, digital apps, and educational components. But no one really ties financial services together for folks or puts it in the proper context.

How are you going to tie things together?

I believed three things were missing in financial services: Community, Context, and inspiring Content. Hive Wealth seeks to address all three Cs. Regarding ‘Community.’ We’ve been sold a myth that money is a shameful thing. You shouldn’t boast about it, and you shouldn’t talk about it. You should just suffer in silence. We shatter that myth by pairing people in the same profession and stage of life who would otherwise never meet. You will be financial peers in a Hive to build wealth together, honestly talk about money, and share successes and failures. We want to build an inspiring community where we can all win and prove that money is not a zero-sum game.

The next layer is the ‘Context.’ Having been in financial services for so long, I saw if you were lucky enough to have a good adviser, you beat the benchmark for the quarter by 10 basis points. That’s nice. It’s better than not beating it, I guess, but it doesn’t really mean anything. If you have the analytics and the data — the Context — you can delve into how you’re doing. Our app allows you to benchmark your net worth and other financial metrics against census data, against your Hive, against all kinds of parameters you might be interested in. You get a deep understanding of how you’re doing and what you are missing because we also generate a personalized to-do list to keep you on track.

Finally, the ‘Content.’ Because money has been shrouded in shame for so long, your money journey doesn’t provide a level of satisfaction that matches the effort you’ve put into it. For example, think about a home journey. There is a whole channel, HGTV, committed to documenting home failures and successes. You see where and how you can live and the lifestyle decisions you can afford. They show people overcoming obstacles. That does not exist for money. Our Money Matters by Impart Media channel on YouTube shows real-life people navigating financial challenges to inspire others to succeed. Hive Wealth’s guiding principle is a quote from Maya Angelou, ‘If you know better, you can do better.’ That is what it’s all about.

What do you see as the key planning factors for affluent younger people seeking to establish wealth, and how is your firm positioning to assist this?

Most people don’t know that anywhere from 75 to 90 percent of active managers do not beat their benchmark in any given year. Clients are overpaying for underperformance. I want to reverse that.

We begin with a calculation that no app does —net worth. People ask, ‘Why is that so important?’ It’s important because net worth is the marker of generational wealth. If you want to help people grow that number to have an impact and leave a legacy, that’s the metric you have to use. And you use that metric to track your status and pursue strategies to improve it.

Eighty-five to 90 percent of your portfolio —retirement assets, legacy assets, everything — should be in a passive, diversified, Core Portfolio. The Core Portfolio centers around your retirement, in particular, and any kind of college savings or other obligations that you have in your life.

A conservative Core Portfolio will have a significant amount of cash and more bonds. An aggressive one will have many slices. This portfolio has International, Small Cap, S&P, NASDAQ, and a nice blend of assets for diversification. There are a whole set of portfolios in between, of course. What’s most important is to pick the right, diversified portfolio and fill it with passive management. That can include index funds, ETFs, and more. That way, you are assured you’re not overpaying just to underperform. The other 10 to 15 percent goes to what we call ‘Alternatives.’

What do you mean by Alternatives, and what is your approach there?

The Alternative Portfolio, that 10 to 15 percent, is where real wealth generation occurs. If you’re a business owner, you might fill that Alternative sleeve with your own company, which might be more than 10 percent or 20 percent. I recognize that, and we can plan around that. But for those of us who work for a salary, that Alternative Portfolio is the opportunity to build generational wealth.

Another core principle at Hive Wealth is that every saver should have an equal opportunity to leave a legacy and an impact. Most financial services focus on the first part of the story. It’s great to have a plan that says you’re going to be able to retire and not run out of money or become a bag lady — which is a big concern of many women. However, the purpose of Hive Wealth is to allow everyone to dream beyond that. What would you like to leave for your school? What would you like to leave for your family? What would you need to fund your kid’s business? That’s really what that Alternative Portfolio is about. And as our Hives get more robust and secure in their Core Portfolios, we will facilitate crowdsourcing into diverse venture capital managers.

So, you are really proposing investing directly into the entrepreneurial efforts of the family and community?

One thing that’s been really important post-George Floyd is that fund managers are becoming more diverse. In these positions, women and people of color are much more likely to invest in diverse founders and diverse communities. Our strategy is to vet fund managers and crowdsource from the Hives. And occasionally, when we observe the proper skill set, we may help a founder launch their business using their go-to-market strategy. Or we might make investments in these founders directly and then help support them on their path to market.

That leads us to discuss your target demographic and how you selected them? Are there any groups you have identified as underserved and/or representing a significant business opportunity? How do they resonate with you personally and professionally?

In a way, my target demographic came to me. I was president of a private bank that served the one percent, quite frankly, as all private banks do. For the most part, the one percent, the highest-net-worth folks in the country, are getting pretty good advice. They have access to deals, they have access to great products, they have good financial plans, they have good lending solutions, etc. They’re going to be okay.

At the other end of the market are the folks we call ‘budgeters.’ But our real opportunity is with the 50 million Americans in the middle we call ‘savers,’ who are unsure of what to do with their savings. They’re at a point in their careers where their income exceeds their expenses. They might be putting money away in their 401k or have started a college fund. But the majority of these ‘savers’ don’t feel confident. They don’t know if they’re getting good advice. They don’t know if they’re doing the right thing, and they worry. They say things like, ‘Have I just wasted too much time?’ and ‘Is it too late?’ We’re there to fill in the gaps in financial services and serve these folks, and we can serve them without requiring them to leave their current institutions.

So are you competing with the robo advisors?

About ten or so years ago, robo advisors experienced immense growth. There are some great platforms out there. But the essence of their model was you leave your advisor and let them use their algorithms, platform, and technology to serve you at a lower cost. But you can use Hive Wealth whether you’re using a traditional firm or a robo advisor. We’re not here to replace any of that. We’re here to give you the Community, the Content, and the Context to ensure you’re on the right track. We want to help you identify things you or your advisor haven’t thought of or things others in your community are doing, so you can take advantage.

Okay, so, collaborative self-direction?

What’s nice about our platform is the Hives consist of people with similar professions, ages, and content preferences. We will create the content in your Hive the way the Hive wants to receive it. We need to be flexible enough for everyone. We can’t say there’s one way to get information and think that we will reach all of our targets. Other models ignore this type of flexibility, but at Hive Wealth, our goal is to bridge that gap between the current model and the large population of Americans lacking confidence in their money management.

How does your business strategy contemplate looming demographic inflections such as the boomer retirement, Gen X peak savings, and young generations just becoming financially established? Is Hive Wealth responsive to these generational currents in a way that addresses the impact on the financial wellbeing of disruptions, such as the credit crisis and pandemic?

I conducted early focus groups with Boomers, and they said things like, ‘I would never use your platform because I don’t talk about money.’ For this platform to work, you have to be willing to share, which is what the social media generations — Gen X, Millennials, Z, and Alpha — are doing. Before they apply for a job as a product manager, for example, they’ll go to the coffee shop with six product managers and say, ‘How much should I ask for?’ or ‘Is this the right level for me to go into?’ That community aspect of sharing is an integral part of servicing these generations.

How each generation receives information is different. Gen Xers, like me, like the Facebook style of content with comments, scrolling, and the occasional pictures. Meanwhile, Millennials are more Instagram-oriented, leaning towards content with pictures and videos. Beyond that, Gen Z prefers the TikTok format, and all kinds of financial information are delivered there now. We meet people where they are and give them information in the way they want to receive it.

Since this is a social/collaborative platform, will there be a place for philanthropy and purpose/impact investment as part of the Hive Wealth Strategy?

Of course! Our goal at Hive Wealth is to close the generational, gender, and racial wealth gap by 2040. The company exists to fulfill this mission. There will be many opportunities to create something lasting when money peers use the power of the crowd. One of our primary motivations is building a more diverse community of people who can drive philanthropy. Often, the folks receiving that philanthropy look like me, but I’m also like a lot of the customers that we serve. Wouldn’t it be great if the folks who understand the community best designed the giving programs? It’s a simple concept that runs deep in the technology world.

What challenges do you face in a start-up leadership role that differ from your past experiences in larger organizations? Are there any that were unexpected?

When the Internet first took off in the early 2000s, I was involved in three start-ups before going back into corporate America. I came into this part of my journey feeling pretty clear. I’m saddened by how firms founded or co-founded by women still get two percent of the venture capital. I think for people of color, Black people and African Americans in particular, it’s around the same percentage. The general partners and VC funds are still stuck at 2 to 3 percent. It’s persistent. There’s lots of research indicating that diverse teams make better decisions, yet we’re still in the single digits for women and people of color. You have to keep chipping away to influence change.

That’s awful when you think about women. We’re half the college graduates and half the workforce. Now, I do think it’s improving, but we have such a long way to go. When money from a more diverse set of LPs is spent on philanthropy and invested in companies, the whole economy works better. That’s not because it’s the moral thing to do, which I think it is, but because you get better outcomes. I am determined for Hive Wealth to be an agent of change because it’s the flywheel that will keep change sustainable. That’s the beauty of the flywheel. Once it gets momentum, it sustains.

Before Founding Impart Media/Hive Wealth, Butler led the wealth management efforts at Silicon Valley Bank and Boston Private.

Yvette ButlerBefore Founding Impart Media/Hive Wealth, Butler led the wealth management efforts at Silicon Valley Bank and Boston Private.