WEBVTT - Hurricane Milton Impact, Israel-Hamas War 0:00:02.440 --> 0:00:09.119 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:09.160 --> 0:00:13.280 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:13.360 --> 0:00:15.840 Eastern on fo card Playing and Broun Auto with the 0:00:15.840 --> 0:00:19.720 Bloomberg Business app. Listen on demand wherever you get your podcasts, 0:00:19.960 --> 0:00:21.640 or watch us live on YouTube. 0:00:22.480 --> 0:00:26.159 We are live in Orlando, Florida, Commonwealth National Conference for 0:00:26.320 --> 0:00:30.680 Financial Advisors. It's raining here, but apparently we have a 0:00:30.760 --> 0:00:34.040 hurricane on the way. It's out in the I guess 0:00:34.120 --> 0:00:35.800 the Gulf of Mexico, but making its way to the 0:00:35.800 --> 0:00:38.920 west coast of Florida. Supposed to hit here on the coast. 0:00:38.960 --> 0:00:41.199 I think that Wednesday morning is kind of what they're 0:00:41.200 --> 0:00:43.640 saying at some point. So, but both Alex and I 0:00:43.680 --> 0:00:45.960 were scheduled to flow out of here tomorrow afternoon, so 0:00:45.960 --> 0:00:47.760 we should be okay. And people here they are used 0:00:47.760 --> 0:00:50.840 to these hurricanes, but they've had a really tough couple 0:00:50.840 --> 0:00:54.040 of weeks here up at the Bend, up in northern Florida. 0:00:54.160 --> 0:00:56.000 Now here on the west coast, so let's kind of 0:00:56.000 --> 0:00:58.720 put some numbers around it. From an insurance perspective, at 0:00:58.720 --> 0:01:01.240 Matt Palazola, he does that or CC Insurance almost for 0:01:02.440 --> 0:01:06.240 Bltteberg Intelligence mat Can you just frame out what the 0:01:06.720 --> 0:01:10.320 last week or two for hurricanes and then this one 0:01:10.400 --> 0:01:13.080 coming up to hit the coast. What are the numbers 0:01:13.080 --> 0:01:15.160 around these things because they seem pretty big here. 0:01:15.520 --> 0:01:18.440 Yeah, So what we knew was going to happen was 0:01:18.760 --> 0:01:23.800 with Helene, the losses were mostly are going to be uninsured, 0:01:24.000 --> 0:01:27.120 so storm surge and flooding is not really a covered 0:01:27.160 --> 0:01:31.240 peril by homeowners insurance, so you're going to see a 0:01:31.360 --> 0:01:35.760 larger than normal diversions between insured and uninsured losses. With 0:01:35.880 --> 0:01:38.200 Hurricane Helene, we knew this was going to be a 0:01:38.200 --> 0:01:40.440 bad hurricane season, it wasn't actually living up to it 0:01:40.520 --> 0:01:42.880 until like the past week or so. So now we've 0:01:42.920 --> 0:01:47.119 got Hurricane Milton in the Gulf, category four, it will 0:01:47.160 --> 0:01:49.600 probably probably hear worse news before better, so it will 0:01:49.640 --> 0:01:53.320 probably strengthen to a category five. What's going to happen 0:01:53.440 --> 0:01:55.360 is going to hit a bunch of wind shear before 0:01:55.360 --> 0:01:58.880 it makes landfall, and that will actually lower the intensity 0:01:58.920 --> 0:02:01.200 of it. So right now National Hurricane Center is still 0:02:01.240 --> 0:02:04.840 saying major hurricane, which is category three or above, so 0:02:04.880 --> 0:02:06.960 it should be three when it makes the landfall, and 0:02:07.520 --> 0:02:09.600 I would just say one thing on the forecast. You 0:02:09.639 --> 0:02:12.920 look at the National Hurricane Center website and there's a 0:02:12.960 --> 0:02:15.280 cone on there and they call that the cone of uncertainty, 0:02:15.280 --> 0:02:18.960 and that cone goes across the whole Florida West Coast 0:02:18.960 --> 0:02:22.000 at this point, so it could be almost anywhere. The 0:02:22.040 --> 0:02:24.920 midpoint is that Tampa region, which is really a worst 0:02:24.960 --> 0:02:27.639 case for insurance companies, but that's where we're at now. 0:02:27.680 --> 0:02:30.160 So there's significant uncertainty over the next two days. And 0:02:30.200 --> 0:02:33.680 like you said, Paul, probably Wednesday morning where we have 0:02:33.720 --> 0:02:36.320 a landfall. 0:02:36.440 --> 0:02:38.799 Yeah, that was when my flight was supposed to take off, 0:02:38.840 --> 0:02:41.800 so we changed that. But to your point, Milton rapidly 0:02:41.800 --> 0:02:46.680 intensified into a Category four storm that happened around nine o'clock, 0:02:46.720 --> 0:02:50.079 and then now at about eleven o'clock, the National Hurricane 0:02:51.600 --> 0:02:55.359 continues to rapidly intensify, so worse. Before we get any 0:02:55.440 --> 0:02:57.280 kind of better news, I keep hearing that if the 0:02:57.320 --> 0:03:00.400 storm goes a little north versus a little south, little 0:03:00.440 --> 0:03:02.960 north is more catastrophic, little south would be better. What 0:03:03.000 --> 0:03:03.720 does that mean? 0:03:04.440 --> 0:03:08.280 So the main thing with hurricanes is the location. Right, 0:03:10.360 --> 0:03:12.440 a larger storm could hit the Big Bend region and 0:03:12.480 --> 0:03:15.200 you'd see the property values there are just not as 0:03:15.360 --> 0:03:19.040 high as somewhere in Tampa. So a stronger storm could 0:03:19.120 --> 0:03:21.400 hit a lower property value area and you're going to 0:03:21.440 --> 0:03:26.840 have lower insured and economic losses. The real main problem 0:03:26.919 --> 0:03:29.400 would be a direct hit on Tampa Bay. So if 0:03:29.440 --> 0:03:32.000 you go Hurricane Ian was a little further south a 0:03:32.000 --> 0:03:34.760 couple of years ago, that was sixty five billion dollars 0:03:34.760 --> 0:03:38.240 in insured losses. We're thinking this one just early, could 0:03:38.280 --> 0:03:40.640 be tens of billions, could be in that sixty five 0:03:40.680 --> 0:03:43.400 billion dollar range. It could be higher, frankly, if it 0:03:43.480 --> 0:03:47.280 hits as a stronger storm. So that's what happens there, 0:03:47.400 --> 0:03:53.720 and the path can shift pretty rapidly, So it's going 0:03:53.800 --> 0:03:56.760 to be down to the last minute before we actually 0:03:56.800 --> 0:03:58.760 know what will happen with insured losses. 0:04:01.120 --> 0:04:01.320 Him. 0:04:01.480 --> 0:04:04.680 If I'm and insurer, why do I even write business Florida. 0:04:04.880 --> 0:04:07.320 It's to say these four folks are getting hammered mold. 0:04:07.480 --> 0:04:09.720 Lot don't anymore, right, I guess, So. 0:04:10.040 --> 0:04:12.080 Good question, Paul, So a lot a lot don't. The 0:04:12.160 --> 0:04:14.839 large national carriers that we cover, a lot of them 0:04:15.280 --> 0:04:19.200 have avoided the region. All State is there, Progressive is there? 0:04:19.200 --> 0:04:22.600 So those are probably the two biggest public insurance state. 0:04:22.680 --> 0:04:24.600 Farm is one of the biggest there that's not public, 0:04:24.600 --> 0:04:28.320 it's a mutual company. The companies that really have will 0:04:28.360 --> 0:04:31.839 probably take the brunt of this are Florida specialty writers, 0:04:31.880 --> 0:04:36.280 so the Universal Insurance, Heritage Insurance, they focus mainly, if 0:04:36.320 --> 0:04:39.160 not exclusively, on that Florida market, and those stocks are 0:04:39.200 --> 0:04:44.200 down significantly, and the teams of twenty percent today. 0:04:44.440 --> 0:04:46.880 When we take a look at the insured losses, I 0:04:46.880 --> 0:04:49.479 mean maybe tens of billions, you said maybe the sixty 0:04:49.480 --> 0:04:52.200 five billion dollar range. What do we then extrapolate that 0:04:52.240 --> 0:04:55.599 the uninsured losses are because that was the part with 0:04:55.680 --> 0:04:59.479 Hurricane Helene that just sort of the numbers are staggering. 0:05:00.320 --> 0:05:04.000 Yeah, so the numbers are early, and I'm skeptical of 0:05:04.120 --> 0:05:06.480 some of the numbers out there for the economic losses. 0:05:07.120 --> 0:05:09.839 Typically the insured loss maybe you're looking at forty percent 0:05:09.920 --> 0:05:12.039 or half of the losses. But what has happened in 0:05:12.080 --> 0:05:15.720 these events with large surge and flooding is that the 0:05:15.760 --> 0:05:20.359 insured portion becomes a lot smaller. The Tampa Bay I 0:05:20.400 --> 0:05:22.840 believe it was a Chamber of Commerce or had put 0:05:22.880 --> 0:05:26.600 out a report in twenty twenty looking at what if 0:05:26.600 --> 0:05:29.680 a Category five hurricane hit the area and they it's 0:05:29.680 --> 0:05:34.400 a just residential property losses. We're somewhere in the range 0:05:34.400 --> 0:05:37.799 of three hundred billion dollars in that event. This probably 0:05:37.800 --> 0:05:39.960 won't be that bad. And you know, I don't know 0:05:40.040 --> 0:05:44.200 all the inputs that went into that, but you could 0:05:44.279 --> 0:05:47.640 see something like that which would maybe extrapolate a hundred 0:05:47.640 --> 0:05:50.680 billion dollar insured loss. But those were numbers that came 0:05:50.680 --> 0:05:53.960 out from Tampa Bay. 0:05:54.080 --> 0:05:55.760 All right, Matt, thanks so much for joining us. Always 0:05:55.760 --> 0:05:58.680 appreciate it. Matt Palozola. He is the insurance analyst for 0:05:58.720 --> 0:06:01.760 Bloomberg Intelligence Center. Bloomberg Arrector broke the studio back in 0:06:01.839 --> 0:06:06.120 New York. Yikes, we are here. We're in Orlando, and 0:06:06.160 --> 0:06:08.680 the folks here again, James to com, I was at 0:06:08.680 --> 0:06:12.479 the park yesterday. People were there, got every the ponchos on, 0:06:12.640 --> 0:06:14.479 the families were there. I mean, I guess you know, 0:06:14.480 --> 0:06:16.440 they're kind of hoping for the best here. But the 0:06:17.640 --> 0:06:18.800 hardy people. 0:06:18.520 --> 0:06:22.560 Those well, we were talking to trap earlier from Commonwealth. 0:06:22.600 --> 0:06:23.560 I was like, oh, we did a lot of people 0:06:23.560 --> 0:06:25.919 wind up canceling. It was just it was just a handful. Really, 0:06:26.240 --> 0:06:27.960 there was still two thousand people here, so maybe a 0:06:28.000 --> 0:06:31.159 few hundred maybe weren't able to come. But that just 0:06:31.160 --> 0:06:34.120 shows the commitment to financial advisers. I'm actually surprised we're 0:06:34.160 --> 0:06:37.320 not tasked with being outside with her hurricane storm. And 0:06:37.520 --> 0:06:39.440 I mean we're not offering, We're just saying we're surprised 0:06:39.440 --> 0:06:43.560 we haven't been asked there. All right, Oh my gosh, 0:06:43.640 --> 0:06:44.400 that's hardcore. 0:06:46.000 --> 0:06:49.880 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:06:49.960 --> 0:06:53.000 weekdays at ten am Eastern on Apple card Play and 0:06:53.000 --> 0:06:55.920 androyd Outo with the Bloomberg Business App. You can also 0:06:56.000 --> 0:06:59.160 listen live on Amazon Alexa from our flagship New York 0:06:59.240 --> 0:07:02.240 station Just Alexa playing Bloomberg eleven. 0:07:04.360 --> 0:07:06.240 We need to get back to what's happening in the 0:07:06.240 --> 0:07:09.080 Middle East. That does not seem to be any lessening 0:07:09.160 --> 0:07:12.320 of the efforts and operations in that part of the world. 0:07:12.400 --> 0:07:15.120 Mark Champion joins us, he's a Bloomberg opinion columnist. You've 0:07:15.160 --> 0:07:19.080 got to calumn out today. Middle East transformation must start 0:07:19.160 --> 0:07:23.040 with Israel. Mark, tell us what you mean by Israel 0:07:23.080 --> 0:07:25.119 really has to be leading any kind of change there. 0:07:26.720 --> 0:07:28.560 Well, I mean the point I really wanted to make 0:07:28.760 --> 0:07:32.480 was that, you know, Prime Minister Defension, I mean net 0:07:32.640 --> 0:07:35.280 Yahu has been criticized a lot for not putting out 0:07:35.360 --> 0:07:39.720 a strategy to you know, sort of make sense of 0:07:40.120 --> 0:07:42.160 all of the military action and create a sort of 0:07:42.160 --> 0:07:44.480 longer term pass so that we can see, you know, 0:07:44.520 --> 0:07:46.480 how to get out of the war and into some 0:07:46.560 --> 0:07:50.400 kind of security and peace. So, you know, he went 0:07:50.480 --> 0:07:53.120 to the UN and he said, I do have a strategy, 0:07:53.120 --> 0:07:55.320 and I do have a you know, a long term vision, 0:07:56.040 --> 0:07:58.720 and he called it the sort of the blessed scenario. 0:07:58.880 --> 0:08:01.360 But it's it's one in which, you know, Israel becomes 0:08:01.360 --> 0:08:04.560 a kind of catalyst for the region with its economy 0:08:04.560 --> 0:08:09.640 which is incredibly strong and sort of technologically advanced, and 0:08:09.720 --> 0:08:13.240 you know, there are connections, you know, through pipelines and railways, 0:08:13.240 --> 0:08:16.640 et cetera, all the way through Israel to Europe from 0:08:17.080 --> 0:08:21.320 Dowdi Arabia, et cetera. And you know, I'm just trying 0:08:21.320 --> 0:08:24.960 to make the point, really that for that to happen, 0:08:25.000 --> 0:08:27.880 he's right that there's no room for Hamatha the lah 0:08:28.000 --> 0:08:30.760 and for the whole acts of resistance that is committed 0:08:31.120 --> 0:08:33.520 and exists in order to get rid of the state 0:08:33.559 --> 0:08:36.840 of Israel. But he has a problem at home, and 0:08:36.880 --> 0:08:39.240 that problem is that there are extremists in his own 0:08:39.280 --> 0:08:44.720 cabinet whose language and you know, kind of ideas about 0:08:44.800 --> 0:08:49.040 you know, the future of Israel are very similar in 0:08:50.000 --> 0:08:53.760 the in the way that they don't allow for any 0:08:53.840 --> 0:08:56.360 kind of compromise, any room for the other side, in 0:08:56.400 --> 0:08:59.800 particular the Palestinians. So it's trying to sort of make 0:08:59.840 --> 0:09:02.319 that point and to say, you know, you really, if 0:09:02.520 --> 0:09:06.719 you want that sort of uh you know, secure, prosperous 0:09:06.720 --> 0:09:11.480 future where Israel is accepted and normalized within uh, you know, 0:09:11.559 --> 0:09:15.160 the the Middle East, then you really have to start 0:09:15.200 --> 0:09:17.800 at home, and you have to start you know, not 0:09:17.920 --> 0:09:21.400 just saying the Saudias are on our side, but you know, 0:09:21.800 --> 0:09:24.160 listening to the Saudiast when they say we want to 0:09:24.160 --> 0:09:27.560 be but there has to be some sort of vision 0:09:27.679 --> 0:09:28.880 for how we get out of it. 0:09:31.160 --> 0:09:33.120 Yeah, and Mark, you kind of make that distinction between 0:09:33.200 --> 0:09:38.000 strategy versus military force, right, And I'm just wondering where 0:09:38.040 --> 0:09:41.280 do you think Prime Minister Benjamin And YEAHO stands on 0:09:41.320 --> 0:09:44.720 that spectrum of military on one side and then strategy 0:09:44.720 --> 0:09:45.120 on the other. 0:09:46.320 --> 0:09:50.240 Well so forth, so far it's been all military. And 0:09:50.559 --> 0:09:52.320 you know, it's not that I'm saying that, you know, 0:09:52.559 --> 0:09:54.880 I'm not one of these people who sort of believes 0:09:54.880 --> 0:09:57.760 that Israel sort of you know, turned the other cheek 0:09:58.280 --> 0:10:02.319 after you know, the appalling events of exactly a year 0:10:02.360 --> 0:10:06.679 ago today they had to go in and deal with Hamma. 0:10:06.840 --> 0:10:10.160 They are dealing with Hamma. You know, there are always 0:10:10.280 --> 0:10:14.240 questions though about how you do that and how you 0:10:14.240 --> 0:10:16.680 you know, how you frame that in such a way 0:10:17.440 --> 0:10:20.520 that you can get people on your side. You know, 0:10:20.600 --> 0:10:23.400 whether it's you know, Palestinians you don't particularly like Hammas, 0:10:23.440 --> 0:10:25.800 and there's a lot of those in Gaza, more than 0:10:25.840 --> 0:10:27.880 in the West Bank, for example, where they don't actually 0:10:27.960 --> 0:10:30.920 live under Hammah. You know, you could say the same 0:10:30.960 --> 0:10:34.360 in Lebanon, where a majority of the population is not 0:10:34.559 --> 0:10:38.839 the It does not like Hisbella does not want its 0:10:38.960 --> 0:10:41.640 country to be used as a platform for Iran to 0:10:41.960 --> 0:10:46.360 you know, conduct its foreign policy with Israel. So you know, 0:10:46.559 --> 0:10:49.480 you can talk about the Iranians too, where a majority 0:10:49.480 --> 0:10:53.120 of the population doesn't like their regime or want their 0:10:53.120 --> 0:10:57.160 regime their scope here for a different kind of Middle East, 0:10:57.200 --> 0:11:00.520 it's just extremely difficult to get to and can't just 0:11:00.600 --> 0:11:04.640 be done with weapons alone. Weapons can you know, actually 0:11:04.720 --> 0:11:08.880 open a path, but they they can't get you to 0:11:09.000 --> 0:11:10.640 the other you know, to the other side, to a 0:11:10.679 --> 0:11:14.400 place of kind of peace and security. 0:11:14.960 --> 0:11:18.080 So mark to that point, does Prime minison that yahoo, 0:11:18.080 --> 0:11:20.560 Does he have the political capital, does he have the 0:11:20.600 --> 0:11:23.120 support of the people to play this long game that 0:11:23.120 --> 0:11:23.880 you're talking about. 0:11:25.840 --> 0:11:28.280 Well, I think he would if he wanted to sell it. 0:11:28.280 --> 0:11:32.000 It's very interesting when you know, opinion polls are done 0:11:32.760 --> 0:11:35.319 in Israel. There's a couple of institutes that have done 0:11:35.360 --> 0:11:37.160 Poles and when you ask the sort of bold question 0:11:37.240 --> 0:11:41.040 do you want to to state solution with a Palestinian state, 0:11:41.720 --> 0:11:44.560 there's a majority against. When you ask the question, do 0:11:44.600 --> 0:11:47.360 you want a to state solution as part of a 0:11:47.440 --> 0:11:51.800 deal with Saudi Arabia with you know, the US, and 0:11:51.840 --> 0:11:55.800 that would create this sort of secure environment and a 0:11:55.880 --> 0:12:01.400 multinational you know force in Gaza to create a transition there. 0:12:01.400 --> 0:12:03.000 When you when you put it as part of a 0:12:03.080 --> 0:12:06.560 package where people can understand how it might actually work, 0:12:07.320 --> 0:12:10.280 you know, for their benefit, then you know, the numbers 0:12:10.320 --> 0:12:12.920 change quite dramatically and you get a majority in favor. 0:12:13.000 --> 0:12:15.400 So I think that the you know, it's all as 0:12:15.440 --> 0:12:18.200 always it's a question of you know, what you sell, 0:12:19.120 --> 0:12:22.320 how you explain things, and I think you know that 0:12:22.400 --> 0:12:26.280 it's the choice on Netanyahu's pot part to to not 0:12:26.400 --> 0:12:29.520 go down that road, and there are you know, understandable 0:12:29.559 --> 0:12:34.200 reasons in terms of just pure power politics, because part 0:12:34.240 --> 0:12:37.520 of his cabinet has told him very clearly that if 0:12:37.559 --> 0:12:40.440 he does make any sort of you know, noises about 0:12:40.440 --> 0:12:43.760 a two state solution or a compromise, they will collapse 0:12:43.760 --> 0:12:44.200 the government. 0:12:46.960 --> 0:12:50.040 So if we look forward and if we wanted to 0:12:50.080 --> 0:12:54.800 see some kind of pivot from Netanyahu or some rhetoric 0:12:54.880 --> 0:12:58.360 that may indicate some kind of change or subtle shift, 0:12:58.480 --> 0:13:00.520 how would that be canmunicated? 0:13:02.800 --> 0:13:04.559 Well, I think you you know what you would start 0:13:04.600 --> 0:13:10.120 to see, you know, So the the main message I think, 0:13:10.800 --> 0:13:13.800 you know, people outside Israel may may not understand quite 0:13:13.800 --> 0:13:18.720 as well, but within Israel, what he's doing now in Lebanon, 0:13:19.000 --> 0:13:22.200 and you know, and in dealing with Iran directly, that 0:13:22.360 --> 0:13:26.719 is extremely popular Iranians. I mean, I'm so sorry Israelis 0:13:27.600 --> 0:13:32.440 are you know, convinced and with good reasons that Iran 0:13:32.520 --> 0:13:35.240 has been building up a kind of noose around their 0:13:35.280 --> 0:13:39.360 country and that this is all very calculated and extremely 0:13:39.400 --> 0:13:42.400 hostile and they have to do something about it. So 0:13:42.559 --> 0:13:46.200 the fact that they see Nephnia who now doing something 0:13:46.240 --> 0:13:49.560 about that, I think that is very popular. But you know, 0:13:49.760 --> 0:13:54.520 you could he certainly could sell that by you know, 0:13:54.559 --> 0:13:57.520 at the same time he's going after Iran, he could 0:13:57.679 --> 0:14:01.480 organize the ceasefire in in Garda that would get the 0:14:01.559 --> 0:14:04.800 hostages out that you know, would start to sort of 0:14:05.600 --> 0:14:10.200 create some kind of scope there, just to create you know, 0:14:10.720 --> 0:14:13.200 a more political path and to start building on that. 0:14:14.080 --> 0:14:17.080 So you know, it is imaginable. It's just a choice 0:14:17.360 --> 0:14:20.680 that Netnia, who at the moment does not want to make, 0:14:20.840 --> 0:14:24.480 and I can't see any sign of him making that 0:14:24.600 --> 0:14:28.680 change anytime soon, especially when he has people in his government, 0:14:29.600 --> 0:14:33.040 you know, who are absolutely opposed to it. 0:14:35.400 --> 0:14:37.000 Right all right, Mark, thank you very much. We really 0:14:37.040 --> 0:14:39.360 appreciate getting a few minutes your time. Mark Champion of 0:14:39.360 --> 0:14:41.680 Bloomberg Opinion. Calum is giving us the latest on the 0:14:41.680 --> 0:14:46.240 Middle East and maybe what might be some next steps there, 0:14:46.280 --> 0:14:48.760 but a very difficult situation in fluid situation. 0:14:50.160 --> 0:14:54.040 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:14:54.120 --> 0:14:56.840 weekdays at ten am Eastern on Affle car Playing and 0:14:56.960 --> 0:15:00.280 Broudoo with the Bloomberg Business app. Listen on demand wherever 0:15:00.400 --> 0:15:03.520 you get your podcasts, or watch us live on YouTube. 0:15:05.400 --> 0:15:08.359 Paul Sweeden and I we are live from the Commonwealth 0:15:08.480 --> 0:15:12.160 National Conference for financial Advisors right here in Orlando, Florida. 0:15:12.240 --> 0:15:15.000 We will be back and taken off before the hurricane 0:15:15.080 --> 0:15:17.280 hits though, So there is that. The theme for this 0:15:17.520 --> 0:15:20.840 year is the Future is Now, and that mission is 0:15:20.920 --> 0:15:23.400 to help advisors build a blueprint for their future and 0:15:23.480 --> 0:15:27.000 empower advisors to navigate business transitions. And this is the 0:15:27.080 --> 0:15:30.480 tenth year that Bloomberg Radio has broadcast live from Commonwealth's 0:15:30.520 --> 0:15:33.440 national conference, so that's pretty cool. Joining us now is 0:15:33.480 --> 0:15:36.920 Trap Plowman, President and COO of Commonwealth. First of all, 0:15:36.960 --> 0:15:39.120 thanks for having us ten years Spielzic milestone. 0:15:39.440 --> 0:15:40.040 It's terrific. 0:15:40.120 --> 0:15:41.040 Did you get us anything for that? 0:15:42.120 --> 0:15:45.560 Yes, I have some, but no, thank you for all 0:15:45.560 --> 0:15:46.400 your support and coming. 0:15:46.680 --> 0:15:49.800 So walk us through the Future is now? What does 0:15:49.880 --> 0:15:52.000 that mean this year at the conference? 0:15:52.440 --> 0:15:52.600 Yeah. 0:15:52.760 --> 0:15:55.760 One of the things as we were, Commonwealth works to 0:15:55.800 --> 0:15:59.160 support so many advisors who are really small business owners. 0:15:59.520 --> 0:16:01.440 One of the things you have to do, absolutely is 0:16:01.480 --> 0:16:05.360 be thinking forward and constantly navigating an increasingly complex industry 0:16:05.800 --> 0:16:10.160 with regulation, with technology, and if you're just focused on 0:16:10.240 --> 0:16:12.800 the next quarter the next year, you're going to fall behind. 0:16:12.960 --> 0:16:13.960 So the future is now. 0:16:14.120 --> 0:16:16.440 You really need to be looking forward, and it's our 0:16:16.520 --> 0:16:19.920 responsibility and it's one of the things that we enjoy 0:16:20.040 --> 0:16:23.120 doing is helping advisors think forward and start preparing now 0:16:23.200 --> 0:16:23.720 for the future. 0:16:24.200 --> 0:16:26.560 Trap Let's say I'm an advisor at a wirehouse of 0:16:26.600 --> 0:16:29.520 Smith Barney and Merrill Lynch. What's my thought process when 0:16:29.560 --> 0:16:32.240 I think about leaving the mothership and kind of going 0:16:32.320 --> 0:16:36.840 on my own and being a registered independent advisor. What's 0:16:36.880 --> 0:16:37.760 the thought process there? 0:16:38.040 --> 0:16:40.160 Yeah, I think there's a lot of different reasons, but 0:16:40.360 --> 0:16:42.840 I think three that stand out and we commonly hear 0:16:43.360 --> 0:16:45.040 is one, as you get to build your own brand, 0:16:45.760 --> 0:16:48.120 you building your community, and you're known for what you 0:16:48.200 --> 0:16:51.040 want to stand for. Two is just the greater independence 0:16:51.120 --> 0:16:53.600 to make your own decisions and not necessarily have to 0:16:53.640 --> 0:16:56.760 follow the lead of a larger employer has many different 0:16:57.480 --> 0:17:01.680 conflicts and objectives and priorities. And the third and probably 0:17:01.800 --> 0:17:04.560 most importantly is you're now building value in your own 0:17:04.600 --> 0:17:08.320 business that you can monetize. And so as an employee, 0:17:08.359 --> 0:17:11.080 oftentimes you know you're leaving to get the gold watch. Here, 0:17:11.160 --> 0:17:13.879 you're building an incredible value that you can leave to 0:17:13.920 --> 0:17:17.120 the next generation or sell. And we're seeing the values 0:17:17.200 --> 0:17:20.200 of these independent businesses increase dramatically over the last couple 0:17:20.240 --> 0:17:21.520 of years, and I think that's here to stay. 0:17:22.119 --> 0:17:25.040 Why so, why is this increasing so much intoch a 0:17:25.080 --> 0:17:26.639 small amount of time and how do you see that 0:17:26.680 --> 0:17:27.119 playing out? 0:17:27.359 --> 0:17:27.560 Yeah? 0:17:27.600 --> 0:17:32.440 I actually think the businesses were chronically undervalued Historically. People 0:17:32.520 --> 0:17:36.719 didn't realize as there's been the transition from brokerage business, 0:17:37.080 --> 0:17:39.800 which obviously is commission based and it's sale to sale. 0:17:40.960 --> 0:17:43.719 Our advisors are over ninety percent pheebas, then many are 0:17:43.720 --> 0:17:46.680 one hundred percent phoebeas as an RIA or fee only. 0:17:47.400 --> 0:17:49.680 And when you have that recurring revenue stream and you're 0:17:49.720 --> 0:17:52.800 doing more than just investment management, you're doing financial planning 0:17:52.880 --> 0:17:56.119 and building relationships with clients that are deep and sticky 0:17:56.640 --> 0:17:59.720 that now then has value versus something that previously was 0:17:59.760 --> 0:18:02.520 trained actional. So as we've seen the growth in Phoebe's business, 0:18:02.920 --> 0:18:06.520 that has exponentially increased the value of those businesses and 0:18:06.600 --> 0:18:08.480 gives them something to transition. 0:18:09.440 --> 0:18:11.640 So when you meet with your financial advisors at event 0:18:11.760 --> 0:18:13.840 like this trap, what do you hear most from them? 0:18:13.880 --> 0:18:17.840 What do they need right now? Right now? It's weather advice? 0:18:18.000 --> 0:18:21.720 Yes, well there's that for those of you wondering. It 0:18:21.880 --> 0:18:23.760 is cloudy, rainy, not too much wind. 0:18:23.600 --> 0:18:25.840 Yet, no, not at all, I think we're in good shape, 0:18:26.680 --> 0:18:29.560 but it's it's an array of needs. And I think 0:18:29.600 --> 0:18:31.879 one of the strengths of a community like Commonwealth is 0:18:32.160 --> 0:18:34.359 we have fantastic advisors who are willing to share with 0:18:34.480 --> 0:18:37.080 each other, and so they're always you know, someone's already 0:18:37.240 --> 0:18:39.159 been there, done that, so no one needs to reinvent 0:18:39.240 --> 0:18:41.840 a wheel and Commonwealth we can play a great role 0:18:41.960 --> 0:18:44.760 in bringing, you know, the best practices together to unlock 0:18:44.800 --> 0:18:47.879 them for advisors. So for a wide variety, it's you know, 0:18:47.960 --> 0:18:49.520 how do you scale your business and get to the 0:18:49.600 --> 0:18:52.760 next level. How do you add and attract new advisors 0:18:52.840 --> 0:18:55.600 and train them, how do you take your technology, your 0:18:55.640 --> 0:18:59.840 internal infrastructure stack, adopt AI. It's an array of challenges. 0:19:00.280 --> 0:19:02.800 One of the most fascinating things that has impressed me 0:19:03.640 --> 0:19:06.280 is so many advisors are like, where can I find 0:19:06.320 --> 0:19:09.119 the next client? At Commonwealth, we never hear that they 0:19:09.240 --> 0:19:14.040 grow so incredibly fast through referrals, they're coming to us. 0:19:14.200 --> 0:19:16.159 How can I find the next advisor to keep up 0:19:16.200 --> 0:19:19.240 with the growth that we're seeing. And as you all know, 0:19:19.359 --> 0:19:21.240 as businesses are growing in scale and you have to 0:19:21.520 --> 0:19:25.560 change your processes, evolve and get more administrative support. So 0:19:25.640 --> 0:19:28.720 we really help them, not just as a BD or 0:19:28.720 --> 0:19:32.440 an RIA doing investment management. We're helping them run small businesses. 0:19:32.720 --> 0:19:34.400 And that's really the central theme we're seeing. 0:19:34.880 --> 0:19:36.879 How long do you think that growth can continue for? 0:19:37.080 --> 0:19:37.240 Right? 0:19:37.320 --> 0:19:41.520 Because in essence, people made more money the way does 0:19:41.560 --> 0:19:43.359 went up. We had the COVID stimulus, right, so they 0:19:43.400 --> 0:19:45.919 needed financial advisors, right. And you have a huge amount 0:19:46.000 --> 0:19:50.040 of equity within the stock market for regular individuals. At 0:19:50.080 --> 0:19:51.760 some point does that max out? And if we had 0:19:51.840 --> 0:19:54.880 like a huge drawdown or for some exogenous events, those 0:19:54.920 --> 0:19:56.560 small businesses get real small. 0:19:57.280 --> 0:19:57.480 Yeah. 0:19:57.640 --> 0:20:00.679 I actually, in looking all the different factors that can 0:20:00.760 --> 0:20:03.760 drive that activity, we're still continuing to see growth in 0:20:03.800 --> 0:20:06.800 the population, growth and savings overall, if you will. So 0:20:06.880 --> 0:20:09.520 I think the demand for financial advice is actually only 0:20:09.600 --> 0:20:13.240 going to improve. And there some concerns with the advancement 0:20:13.280 --> 0:20:16.200 of AI and what could the impact that be on 0:20:16.359 --> 0:20:20.800 many industries. But the reality is financial advice is not 0:20:21.040 --> 0:20:24.000 just again investment management. It's caring for people on a 0:20:24.080 --> 0:20:27.480 topic that can often be insecure and stressful. So you know, 0:20:27.560 --> 0:20:30.600 the most successful financial advisors are the ones who are 0:20:30.640 --> 0:20:33.840 really great at human relationships and caring for people through 0:20:34.560 --> 0:20:37.960 very challenging times, and so I feel what we have 0:20:38.040 --> 0:20:42.000 great tailwinds behind us and we'll continue to see growth 0:20:42.359 --> 0:20:44.080 in this industry, not just in commonwealth. 0:20:44.640 --> 0:20:46.879 Well, one of my offspring actually did follow me in 0:20:47.200 --> 0:20:50.480 my footsteps in financial services, works for a financial services firm, 0:20:50.560 --> 0:20:53.520 and you know, his firm says that their clients are 0:20:53.640 --> 0:20:55.440 really going to need them over the next twenty to 0:20:55.520 --> 0:20:58.560 thirty years because I have this massive wealth transfer from 0:20:58.600 --> 0:21:02.440 my generation to the next. How do you guys frame 0:21:02.560 --> 0:21:04.800 that topic for your advisors. 0:21:04.880 --> 0:21:08.719 Yeah, that's absolutely accurate, and we have hundreds of breakout 0:21:08.800 --> 0:21:11.760 sessions here and many are on that exact topic. And 0:21:12.080 --> 0:21:15.840 you know, the wealth transfer between insurance, trust and state 0:21:15.920 --> 0:21:19.600