There is no such thing as perfection. One of the things I love about music is that musicians are always discovering new ways to interpret a piece of music. Each time they perform they strive to communicate that new interpretation to their audience, so no two performances are ever identical. I’ve always taken that approach with my companies — even if you think you’ve done something well, there’s always the opportunity to look at it from a different perspective and improve.
As a part of our series about strong women leaders who are shaking things up in their industry, I had the pleasure of interviewing Sheryl O’Connor, Co-Founder and CEO of IncomeConductor.
Sheryl O’Connor has spent over 25 years in the financial services industry including stops at insurance and investment management firms where she led strategic business growth and technology innovation. In 2006, Sheryl co-founded 3D Asset Management, an SEC-registered investment management firm that provides innovative practice management solutions and investment portfolios to fee-based advisors. In 2017 Sheryl co-founded a retirement income-focused FinTech firm, IncomeConductor, that provides a revolutionary strategy and technology to advisors and their clients that meets the needs of today’s retirees and serves as its CEO. Sheryl won 1st place in the 2018 Female Founders in FinTech global competition and now serves as a global ambassador to encourage women entrepreneurship in technology.
Thank you so much for doing this with us! Before we dig in, our readers would like to get to know you a bit more. Can you tell us a bit about your “backstory”? What led you to this particular career path?
I grew up in a small town in Massachusetts during the ’60s and ’70s. Although I was a free-range kid-focused more on exploring the world than changing it, world events during that time had a lasting impact on me. The women’s movement upended the traditional role of women, the space race resulted in a man walking on the moon, millions of people protested in the streets to end the Vietnam War and end racial injustice and inequality. Even the music we listened to promoted freedom from societal norms. Everything was exciting and anything seemed possible.
Maybe because of that I’ve never followed a traditional career path. I became a professional musician at the age of 13 and, after attaining two bachelor’s degrees and a master’s, taught music in private and public schools. In the mid-1990’s I completed a software development training program at MassMutual, worked as a developer, and eventually as a program manager working on large, strategic initiatives. In 2001, I was recruited by The Hartford to work with PwC to help develop and roll-out a project management framework and PMO. In 2005, my husband asked me to join him and a partner to launch an asset management firm — I jumped at the chance to become an entrepreneur and build a company from scratch.
My focus at the asset management firm was to build a TAMP (Turnkey Asset Management Program) that allowed financial advisors to outsource their back-office operations. That’s how I got to know Phil Lubinski, an advisor from Denver, CO and a retirement income expert. Phil had developed an innovative distribution strategy called ‘time segmentation’ that he had successfully used with hundreds of his own clients, but he was lacking a technology that could support his strategy. When he asked me to partner with him to develop that technology, I was intrigued. After testing out a BETA version with some advisors, we launched IncomeConductor in mid-2017 to enhance the technology and bring it to the financial marketplace.
Can you tell our readers what it is about the work you’re doing that’s disruptive?
Financial professionals have mostly focused on helping people accumulate wealth. When it came to distributing their clients’ savings in retirement, advisors were still using the same strategies they had for decades — systematic withdrawal (or more commonly known as the 4% rule) and Monte Carlo testing — that results in a “probability of success”. To understand how crazy this approach is, imagine getting on a plane and having the captain tell you that there is a 78% probability of the plane not crashing during the flight. Would you stay on that plane?
That approach worked for earlier generations who had pensions and really didn’t need to count on their savings to deliver steady income, but retirement has changed a lot since then. 401(k)’s replaced pensions and advances in healthcare have resulted in people living much longer. There are millions of Baby Boomers moving into retirement with no effective way to ensure they won’t run out of money before they die. It’s a perfect storm.
We set out to address that problem by completely disrupting the status quo. First by utilizing a time-segmented approach that gives retirees a plan, not a probability. Second by creating a technology that not only provides huge efficiencies around creating, tracking and managing a retiree’s plan but completely changes the way planning is done.
Advisors have traditionally followed a ‘black box’ approach — they meet with the client to collect data, then go into their back-office and spend hours inputting that data into a complex tool. At the next meeting they present the client with a long report full of confusing financial jargon. If the client wants to make even the smallest change, the whole process starts over. IncomeConductor is extremely intuitive and allows the advisor and client to create the plan together, illustrating the impact of each plan assumption in real-time. Advisors tell us their clients are fully engaged and have a lot of fun testing out ‘what if’ situations. Clients love it because they get a written income plan, customized to their needs and goals, not just a probability of success number, and reports that are short and easy to understand.
Now that they have a real plan, they can measure success against it. IncomeConductor integrates with the client’s accounts and tracks the plan’s daily performance, providing the analytics that help inform spending and product decisions over 30 or more years of retirement. IncomeConductor proactively alerts the advisor if there are opportunities to protect the client’s income, which keeps their client happy and manages their behavior even through volatile markets. The technology brings unparalleled efficiencies and compliance to advisors and their firms, helping them grow their business quickly without having to worry about litigation.
We’ve disrupted the way everyone approaches retirement and, best of all, are helping people enjoy their retirement to its fullest.
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lesson you learned from that?
I really can’t recall any mistakes that were particularly humorous, or any really big ones. It’s more the little things that you learn along the way that you’re constantly making mental notes on. The nice part of being a serial entrepreneur is that you get to review those notes when you start a new firm and avoid repeating those mistakes or sub-optimal choices.
We all need a little help along the journey. Who have been some of your mentors? Can you share a story about how they made an impact?
There have been a lot of people over the years who have provided support and mentorship to varying degrees. We recently established an Advisory Board made up of seasoned financial service professionals who have already provided valuable mentorship.
I’d have to go back to my childhood for the people who have had the most significant impact on my life. My dad was an engineer who could basically do anything. For every problem life threw at him, he could figure out a solution. And if he didn’t know how to do something, he’d just teach himself. He taught me how to not only be self-reliant, but that learning was a life-long pursuit.
The other person was one of my high school teachers who taught a history course called “World Cultures”. Up to that point, school had been compartmentalized into discreet subject areas — science, languages, art, etc. This teacher taught me that everything in the world is connected and interdependent, and to truly understand any historical period we need to look beyond political events and understand society as a whole — art and music, what people ate, how they dressed, their jobs and social interactions. Once my eyes were open to this interconnectivity there was no going back.
Because of these influences, I love to learn about a broad range of subjects. There is so much we can learn from other areas of study and practice that can make what we do better. For example, the whole field of Behavioral Economics was developed when psychology was applied to understanding how people make financial decisions. Behavioral Economics has helped advisors better understand their clients’ behavior and helped the industry develop new strategies and technologies that lead to improved investor experiences.
In today’s parlance, being disruptive is usually a positive adjective. But is disrupting always good? When do we say the converse, that a system or structure has ‘withstood the test of time’? Can you articulate to our readers when disrupting an industry is positive, and when disrupting an industry is ‘not so positive’? Can you share some examples of what you mean?
Not so positive disruption can result from oversimplification to the point of becoming meaningless. We need to understand and accept that some processes and structures are inherently complex, like retirement income planning. Some technology takes a total gamification approach in some of these complex areas that may be fun for the user, but really doesn’t provide much real value. When very serious matters, such as physical, mental or financial health, are over-simplified it can lead to a false sense of security and even be harmful.
There’s also the issue of taking a disruptive idea way too far. Improvements in farming and food production in the mid-20th century helped feed troops in WWII, and the Baby Boomer explosion after the war. Unfortunately, these practices led to extremes that have negative rather than positive effects: monoculture, factory farming; artificial foods like hydrogenated oils; and, carcinogenic additives that extend shelf life.
Can you share 3 of the best words of advice you’ve gotten along your journey? Please give a story or example for each.
#1 — There is no such thing as perfection. One of the things I love about music is that musicians are always discovering new ways to interpret a piece of music. Each time they perform they strive to communicate that new interpretation to their audience, so no two performances are ever identical. I’ve always taken that approach with my companies — even if you think you’ve done something well, there’s always the opportunity to look at it from a different perspective and improve.
#2 — Don’t sell a product, tell a story. We’re hard-wired to love stories. Stories were the way information was passed down through generations for millions of years before the invention of the printing press. They spark our imaginations, stir our emotions and entertain us while teaching life lessons. Try to communicate your firm’s value proposition with a story vs. data.
#3 — Don’t take things personally. When someone says something hurtful or negative, many times it’s because they’re having a really crappy day or they may be dealing with a problem you know nothing about. Try to give people the benefit of the doubt and always another chance to make a positive impression.
We are sure you aren’t done. How are you going to shake things up next?
Not sure at this point but I am very interested in how the entire concept of retirement is changing. Many people are not retiring with the goal of playing golf every day. The rise in older entrepreneurs and the number of seniors re-applying their professional skills to the non-profit world bears this out. These new ways of experiencing a ‘post-career’ phase of life is rife with possibilities to support these efforts using technology.
In your opinion, what are the biggest challenges faced by ‘women disruptors’ that aren’t typically faced by their male counterparts?
Women have struggled for decades to achieve full equality regarding opportunity and compensation in the job market. This is especially challenging for women entrepreneurs seeking capital to start and grow a company. In 2017, women founders received 2% of the total Venture Capital funding made that year. By 2019, that number had only increased to 2.8%, despite all the media focus on the issue and the rising number of female-founded firms.
There is a misconception fostered in the VC culture I like to call the “Facebook Fallacy”. They tend to believe that investing in technology start-ups led by young, male founders will provide the best return on their investment. In fact, a study by the Kaufman Foundation published in 2019 showed that private technology companies led by women are more capital-efficient, achieving 35% higher ROI, and, when venture-backed, 12% higher revenue than startups run by men. And women-founded companies in First Round Capital’s portfolio outperformed companies founded by men by 63%. It’s a challenge to break through this established mindset even when reality clearly supports the opposite.
Do you have a book, podcast, or talk that’s had a deep impact on your thinking? Can you share a story with us? Can you explain why it was so resonant with you?
I love to read on a wide variety of subjects, and so many books, articles and talks have impacted me in different ways. One of my favorites over the past couple of years was the book “Hit Refresh: The Quest to Rediscover Microsoft’s Soul and Imagine a Better Future for Everyone” by Satya Nadella, Chief Executive Officer of Microsoft. In discussing the future of Artificial Intelligence and the myriad of ways it can be used to help the world, Mr. Nadella points out that AI will never be able to replace two very important human attributes: empathy and creativity. It supports my view that, for many jobs where empathy and creativity are important, humans will never be fully replaced by technology. When it comes to financial planning and management, especially working with aging clients that need emotional as well as financial support, the human advisor will always be a critical component in ensuring the client is financially secure and has confidence in that security.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
There’s a quote attributed to a Greek philosopher, “We have two ears and one mouth so that we can listen twice as much as we speak.” In this fast-paced world, it’s challenging sometimes to make the time to really listen. When I speak to our customers I try to ask questions about their business — what are their pain points, what client segment(s) do they serve, what are their business goals? If I can understand their business, I can better communicate where our solution can help or identify improvements we need to make to meet their needs.
You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
There are people involved with this movement right now for different reasons, but I would love to be able to inspire people to think of food differently. Food is our body’s fuel — you wouldn’t put maple syrup into your car’s gas tank and expect it to function properly. What we eat not only affects our ability to optimally think, move and work, our food choices have a huge impact on the world around us. If people really understood the true cost of their food choices and moved mostly to a plant-based diet it would result in increased personal health, longevity and happiness, improve our environment, and stop the cruel practices of growing and slaughtering the creatures that share this world with us. Our global economy would change for the better and be much more sustainable.
How can our readers follow you online?
They can learn more about our strategy and technology on our website, www.incomeconductor.com, follow us on Twitter at @IncomeConductor or engage on LinkedIn. We often do webinar presentations hosted by our strategic partners like custodians, advisory platforms, industry organizations and consultants and other FinTech firms.
This was very inspiring. Thank you so much for joining us!