Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg business
Speaker 1: Week inside from the reporters and editors who bring you
Speaker 1: America's most trusted business magazine, plus global business, finance and
Speaker 1: tech news. The Bloomberg Business Week Podcast with Carol Messer
Speaker 1: and Tim Stenebeck from Bloomberg Radio.
Speaker 2: Carol Maslow, Barry Redholts. We are live here at Futureproof
Speaker 2: in Huntington Beach, California. Bloomberg Radios Lives broadcast from future
Speaker 2: Proof sponsored by JP Morgan Asset Management.
Speaker 3: We want to kick off our coverage this hour. We've
Speaker 3: got a special guest, Marlena Lee.
Speaker 2: She's global head of investment Solutions at the registered investment
Speaker 2: advisor Dimensional Investing.
Speaker 3: They've got seven hundred and forty.
Speaker 2: Billion dollars in firm Whine Assets under management. Welcome, Welcome,
Speaker 2: Thanks for joining us. Carol's so excited to be here.
Speaker 2: Tell us a little bit about your firm because founded
Speaker 2: about forty years ago. But historically you guys look at
Speaker 2: AKAD research and then think about how that applies to investing.
Speaker 2: I am curious about research that you're finding interesting in
Speaker 2: today's market environment.
Speaker 4: Yeah, so absolutely right, Carol. We were founded in nineteen
Speaker 4: eighty one, so it's been forty two.
Speaker 3: Forty senior year cycles.
Speaker 5: Yeah.
Speaker 4: Absolutely, And from the very beginning, our founders were actually
Speaker 4: folks who worked on some of the very first index funds,
Speaker 4: and they kind of really liked some of the ideas
Speaker 4: that were coming out of the academic research around different
Speaker 4: drivers of expected return, but also just that flexibility has value.
Speaker 4: So from our very beginning we had these ideas that, hey,
Speaker 4: you want really low cost, well diversified portfolios that an
Speaker 4: index fund would give you, but you do leave money
Speaker 4: on the table when you have the rigidities of index funds.
Speaker 4: So adding some flexibility and using academic research to pursue
Speaker 4: out performance is a winning strategy, and we have forty
Speaker 4: years of track record to show it.
Speaker 6: Their focus, if I remember correctly, David Booth began with
Speaker 6: this small cap factor and took that from a single
Speaker 6: fund that was slow to catch on, and eventually people
Speaker 6: figured out, hey Booth seems to know what he's doing,
Speaker 6: and expand into a whole bunch of other elements of
Speaker 6: French and FAUMA or advisors to the firm. You have
Speaker 6: like long standing ties to University of Chicago Darmouth, like
Speaker 6: really fascinating academic backgrounds, including a number of Nobel laureates.
Speaker 7: Absolutely, Barry.
Speaker 4: So we have I think five Nobel laureates that are
Speaker 4: associated in some way with the firm, either through as
Speaker 4: academic consultants, advisors to the firm, or on the fun board,
Speaker 4: so representing our investors in the fund. And they all
Speaker 4: joined and got involved before they won their Nobel laureates,
Speaker 4: So really deep academic ties.
Speaker 7: Yes, absolutely right, Barry.
Speaker 4: That our very first fund was focused on this small
Speaker 4: cat premium that was well before smart beta or factory investing.
Speaker 6: Was your original smart beta so well.
Speaker 7: I like to call it pioneers of factor based investing.
Speaker 4: You know, we're absolutely the first value came on the scene,
Speaker 4: of course, right as Fama and French were writing their
Speaker 4: three factor model paper.
Speaker 7: These days we're.
Speaker 4: Looking at profitability adding that to the lineup. Profitability is
Speaker 4: a fantastic compliment for value because those premiums tend not
Speaker 4: to show up at the same times. So we do
Speaker 4: think that when you build a portfolio that focus on both,
Speaker 4: you can help smooth out the ride.
Speaker 3: You are teaching assistant right for your gene Fama I
Speaker 3: was tell us a little bit.
Speaker 6: Oh is that true because David Booth was Gene Fama's
Speaker 6: teaching assistant forty plus years ago.
Speaker 7: Yes, we share that in common.
Speaker 3: How did that shape you or tell us a little
Speaker 3: bit about that experience.
Speaker 4: Oh my gosh, it was the best experience. I would
Speaker 4: have done it for free. Yeah, I was a Bell laureate.
Speaker 7: He wasn't at the.
Speaker 3: Time, right, but he did become so.
Speaker 4: Before arriving at Dimensional, I was doing my PhD at
Speaker 4: the University of Chicago, studied under Professor Fama, and then
Speaker 4: became his teaching assistant. And when I told he was
Speaker 4: also on my dissertation committee. And when I told him
Speaker 4: I didn't really want to do the academic thing. He
Speaker 4: was so kind because my other advisors they tried to
Speaker 4: convince me otherwise. But Fama he connected me to Dimensional.
Speaker 4: And it's such a perfect fit because I got to
Speaker 4: continue focusing on this academic research that I had spent
Speaker 4: five years of my life learning and studying, and instead
Speaker 4: being able to apply it and helping to explain it
Speaker 4: to investors who deeply care because it does help. Understanding
Speaker 4: the research just leads to a better investment.
Speaker 7: Dot Com.
Speaker 4: I think if you understand that there's more of robust,
Speaker 4: a better way to pursue higher returns than stock picking
Speaker 4: or trying to time the markets. And just the confidence
Speaker 4: that it gives someone to be a long term discipline investors,
Speaker 4: which I think is really important to be able to
Speaker 4: stick with market downturns and get.
Speaker 2: You an environment where trades to move so quickly and
Speaker 2: react to day to day news events, whether it's company
Speaker 2: stock specific or just macro specific, that when you really
Speaker 2: understand the deep research behind something right, you can have
Speaker 2: a lot more conviction behind an investment, whether to buy
Speaker 2: or sell.
Speaker 7: Yeah.
Speaker 4: Absolutely, I think that we are most investors are investing
Speaker 4: for decades. Yeah, and we should have a decade long
Speaker 4: investment horizon. And the research speaks to decades long of
Speaker 4: patterns and data as opposed to like what's going to
Speaker 4: happen tomorrow or what's going to happen in the you know,
Speaker 4: in the next few months.
Speaker 6: So Fama French was a good couple of decades ago.
Speaker 6: Those first three factors were really interesting. You're essentially an
Speaker 6: academic at heart. What's the most interesting new research you're
Speaker 6: finding that might eventually become some form of real life
Speaker 6: application of theory.
Speaker 4: Well, there's always little improvements that we can make. But
Speaker 4: I would say profitability was the last really big one.
Speaker 4: Some people might think of it as quality.
Speaker 6: I was going to ask, I think of quality as
Speaker 6: the last big one. You using profitability in the same
Speaker 6: way as quality. So when I think equality, I think
Speaker 6: of low debt, good management, no other problems, and you're
Speaker 6: just cutting that down to straight up profitability.
Speaker 7: Just straight up profitability.
Speaker 4: And once you capture profitability, a lot of those other
Speaker 4: variables they're not important for explaining it.
Speaker 3: Over revenue growth.
Speaker 2: Well, revenue growth, So we it's just so funny we
Speaker 2: talk so much about the importance of like growing your business,
Speaker 2: because profitability great profits you can play around with.
Speaker 4: Well, let's let's back it up and just talk about
Speaker 4: why profitability should help explain returns in the first place.
Speaker 7: When you invest in a company.
Speaker 4: You get future cash flows and it's all discounted back
Speaker 4: to a price today.
Speaker 7: That's the stock price.
Speaker 4: That discount rate is the expected return. So what we
Speaker 4: want is we don't get to look up the expected
Speaker 4: return in Bloomberg. Instead, we have to infer it from
Speaker 4: two variables that we can sort of see. We definitely
Speaker 4: get to see price today, but we don't get a
Speaker 4: perfect view of those exps future cash flows. But it
Speaker 4: turns out today's profitability just levels our pretty dang good
Speaker 4: predictor of those profits several.
Speaker 7: Years out into the future.
Speaker 4: The most company the most profitable companies today tend to
Speaker 4: stay the most profitable companies for many years now. Profitability
Speaker 4: growth is another aspect that does help a little bit,
Speaker 4: but the most important one to capture is the level
Speaker 4: of profits.
Speaker 6: Ye.
Speaker 4: And then the challenge with profitability growth is it does
Speaker 4: introduce a lot of additional turnover. So it's something that
Speaker 4: we're actively partnering with Robert Novi marks another academic that
Speaker 4: we work very closely with to see if there's there's
Speaker 4: certainly something there in the data, but whether it would
Speaker 4: survive transactions, costs, things like that are also very important
Speaker 4: before you add something to a live portfolio, where you
Speaker 4: have to patrading costs and things like that.
Speaker 6: Yeah, so I want to unpack why profitability has persistence
Speaker 6: into the future when and what's so different from just
Speaker 6: profits because most people think of pe as their measure,
Speaker 6: but profitability means it's a company that sometimes has a
Speaker 6: moat and a strategic advantage that they're not carrying a
Speaker 6: lot of debt that can eventually eat into future profits.
Speaker 6: What other elements are you looking at that explain why
Speaker 6: profitability tends to persist out into the distance.
Speaker 4: It's a fantastic question, Barry, because actually, across a lot
Speaker 4: of different measures of profitability, you see that companies with
Speaker 4: higher profitability have higher returns than companies with low profitability.
Speaker 4: That's you can look at a very top line number
Speaker 4: like revenues, you can look at net income, so at
Speaker 4: the very bottom it all helps create spreads and returns.
Speaker 4: So that's really important because it gives you a better
Speaker 4: sense that that's something that's real in the data. You're
Speaker 4: not just cherry picking something that's really like a fragile
Speaker 4: academic result, and so that's comforting. What we end up
Speaker 4: using in our portfolios we call operating profitability because.
Speaker 7: We want something that's going to predict future profitability.
Speaker 4: So you don't want things that are super variable year
Speaker 4: year or one one time events. So operating profitability gets
Speaker 4: to the heart of what are kind of a more
Speaker 4: stable stream of revenues minus costs, and that's what we
Speaker 4: see or what we use in the portfolios. That is
Speaker 4: something that is stable enough where we can run a
Speaker 4: portfolio that focuses on high profitability names in a portfolio
Speaker 4: without a lot of turnover.
Speaker 6: Is there an overlap between profitability and momentum or is
Speaker 6: that just something completely different?
Speaker 7: It turns out to be different.
Speaker 4: The thing that's more related to momentum or price momentum,
Speaker 4: which is what we usually think of as momentum, is
Speaker 4: earning's momentum is related. So Robert Novemars did have a
Speaker 4: paper or a few years back where he showed that
Speaker 4: those two things are quite related. We do take account
Speaker 4: momentum in.
Speaker 7: The portfolios as well.
Speaker 4: But the thing with momentum, just like I was saying
Speaker 4: with profitability growth, is that it does tend to have
Speaker 4: high turnover if you try to pursue it directly. So
Speaker 4: a better way to take advantage of momentum is if
Speaker 4: you're already managing a portfolio. Let's just say that's pursuing size, value, profitability.
Speaker 4: You want to trade a little bit every day in
Speaker 4: order to make sure you're focused on those premiums, not
Speaker 4: introducing style drift into the portfolios. But you can take
Speaker 4: into account something like price momentum at that point of trade.
Speaker 4: So I could say, hey, here's the stock I want
Speaker 4: to buy, but it's down momentum, therefore it should continue
Speaker 4: to underperform for a little while.
Speaker 7: Let's just wait before I buy it, or vice versa.
Speaker 4: If I want to sell something that has up momentum,
Speaker 4: I could just wait a little.
Speaker 6: Just I just want to follow up with that because
Speaker 6: I understand the way we use dimensional funds in our shop.
Speaker 6: I understand the way they operate. But I want you
Speaker 6: to clarify something because I don't want people to misunderstand
Speaker 6: what you say.
Speaker 5: What you said.
Speaker 6: It's not that you think you have to trade every
Speaker 6: day for the sake of trading. You what I The
Speaker 6: way I know the way you guys have run various
Speaker 6: funds are you are opportunistically looking for your time and
Speaker 6: place to pick up specific things. And it's not like, hey,
Speaker 6: let's go trade today. It's let's see if anything that's
Speaker 6: on our by list that we're looking to accumulate has
Speaker 6: become a more attractive price point.
Speaker 7: Am I?
Speaker 6: Am I doing that any justice?
Speaker 7: So great?
Speaker 3: That's absolutely right.
Speaker 4: When I say we look to trade every day. The
Speaker 4: turnover in our portfolios are is very low. So a
Speaker 4: core portfolio might have something in the high single digits.
Speaker 4: A higher, more narrow portfolio like a small value portfolio,
Speaker 4: for example, might be somewhere between twenty to thirty percent turnover.
Speaker 4: Just to translate that, a twenty five percent annualized turnover
Speaker 4: means when I buy a stock, I expect to hold
Speaker 4: it for four years. So it's a long holding period,
Speaker 4: which we think is really important because as you're incurring
Speaker 4: trading costs, you can spread that across a long holding period.
Speaker 4: But the daily rebalancing also just gives us a lot
Speaker 4: of flexibility. So those are index like levels of turnover,
Speaker 4: like passive indices like level of turnover.
Speaker 7: Right, But whereas an index might.
Speaker 4: Try to drive all of that turnover into defined reconstitution
Speaker 4: days once to four times per year, we can spread
Speaker 4: it across two hundred and twenty trading days a year,
Speaker 4: which makes it really easy to control training costs.
Speaker 3: More, Does the macro change any of this impact this?
Speaker 2: I mean, here, we are, you know, obviously in a
Speaker 2: you know, waiting the FED meeting, and I do wonder
Speaker 2: as the Fed's getting ready to finally cut rates, like
Speaker 2: it's a different cycle environment, does the macro play into this?
Speaker 4: You know, I would love to be able to say
Speaker 4: here's when the premiums are going to be higher or lower,
Speaker 4: But the data is just too noisy. So we view,
Speaker 4: at least in these equity portfolios, we want to be
Speaker 4: focused on these premiums day and day out, and macro
Speaker 4: environments don't really change that view. And it goes back
Speaker 4: to that idea for why we see these premiums in
Speaker 4: the first it's low prices combined with good future cash flows,
Speaker 4: and that should always indicate higher expector returns than something
Speaker 4: with a high price and low cash flow.
Speaker 7: And that's true regardless of what the Fed's going to do.
Speaker 4: Recession expansion, regardless of recession, long recession, doesn't matter. Those
Speaker 4: premiums are not correlated with all of these macroeconomic variables.
Speaker 4: And we would love to be able to figure out
Speaker 4: to crack the nut of how to focus on these
Speaker 4: premiums during certain times, but we think it's best to
Speaker 4: do it every day.
Speaker 6: Really interesting, very cool.
Speaker 2: Stuff in a nutshell ten seconds, the market environment an
Speaker 2: interesting one, a hard one, a complex one.
Speaker 3: How would you describe it?
Speaker 4: It's always complex, it's always changing. It is easy, But
Speaker 4: I do think that when you have a long term view.
Speaker 3: Right now today, it doesn't matter or what.
Speaker 4: It doesn't matter, like we're going to be positioned on
Speaker 4: these premiums regardless of and that's part of why our
Speaker 4: clients like this, because they know what to expect from us.
Speaker 2: It's really interesting, kind of a healthy thing, right when
Speaker 2: we're so day to day to talk about the long term.
Speaker 6: I always think of Dimensional funds as indexing plus it's indexing,
Speaker 6: but the next level goes beyond it.
Speaker 3: Very cool stuff, Marlena, thank you, Thank you, appreciate it.
Speaker 3: Marlene ut Lee.
Speaker 2: She's global head of Investment Solutions at Dimensional Investing, joining
Speaker 2: us right here on Bloomberg BusinessWeek.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 2: You are listening and watching future Proof pub Carol Manser, Almit,
Speaker 2: Barry Ridholtz. And we should point out that Bloomberg Radios
Speaker 2: Live broadcast from future Proof is sponsored by JP Morgan
Speaker 2: Asset Management. All right, we do want to get to
Speaker 2: our next guest. She is Joanne Bradford. She's president and
Speaker 2: Chief Money Officer ever to Main Money. It was founded
Speaker 2: in twenty twenty two by Adam Dell, former head of
Speaker 2: product at Marcus by Goldman Sachs. It's a financial advisory
Speaker 2: firm and her background is killer. We're going to get
Speaker 2: into that because she was a chief revenue officer at Microsoft,
Speaker 2: president of Honey of so FI.
Speaker 3: Welcome, welcome, welcome, and you're a friend of Barry's, of course,
Speaker 3: how are you good?
Speaker 8: Thanks?
Speaker 2: Talk to us a little bit about the environment today.
Speaker 2: And when you come to an event like this, what
Speaker 2: do you want to hear? Who do you want to
Speaker 2: hear from? What are the questions you're asking of people?
Speaker 9: Yeah? I do two things here. I advise a company
Speaker 9: called Wealth dot com and they announced a thirty million
Speaker 9: dollars Series A led by Google Ventures and City Congratulations yesterday,
Speaker 9: which was exciting and it shows you that, like, hey,
Speaker 9: look it's time for some automation and some technology and
Speaker 9: for some AI to be applied to this category because
Speaker 9: it's sort of the last one to break, you know.
Speaker 9: I was in the advertising business, which they said will
Speaker 9: always be sold over Martini's people to people, and this
Speaker 9: business has said the same. And I think we're sort
Speaker 9: of seeing the beginnings of that in this part of
Speaker 9: the business, not you know, like the Visa's MasterCards, plaid stripes,
Speaker 9: those things, but actually in in the wealth management side
Speaker 9: of it. So it's exciting to see that to be
Speaker 9: a part of it. I think there are sort of
Speaker 9: two camps here, and all the people I've talked to
Speaker 9: one is, hey, look, I'm just going to keep doing
Speaker 9: what I'm doing and I hope that I get to
Speaker 9: the end of my career before the iceberg melts. And
Speaker 9: then there's other people that are like, no, I actually
Speaker 9: I'm going to try to change this. I want to
Speaker 9: be digital first. I want to go after millennials. I
Speaker 9: want to talk about how people have different needs around
Speaker 9: their money today. You know. So those are the two
Speaker 9: sort of camps, and I think it sort of happens
Speaker 9: in every industry, but it's clear it's playing out.
Speaker 5: Here, Joanne.
Speaker 6: Are those two very different generations? Is it philosophical or
Speaker 6: is it The fifty and older group is like I'm
Speaker 6: just going to run out the clock, and the thirty
Speaker 6: forty some things are like, no, it's got to be digital.
Speaker 6: It's got to be technology. That's what our clients want.
Speaker 9: I think it's both the providers and the customers right,
Speaker 9: because you know, I think the last conference we were at
Speaker 9: they said, you know, in the next ten years, a
Speaker 9: third of this industry is going to retire. And then
Speaker 9: you know, I worked at SOFI and we built a
Speaker 9: digital first tool right where everybody wants to do everything
Speaker 9: on a device, wants to have it done, and then
Speaker 9: they still do want to know that there's human and
Speaker 9: a person that understands their values on the other side
Speaker 9: of it. I think it's happened everywhere in life except
Speaker 9: in personal wealth management. So it's finally going to show
Speaker 9: up here, but it's not. We're not quite ready for
Speaker 9: it yet.
Speaker 3: But how does it change?
Speaker 2: How do you see the transformation in terms of it
Speaker 2: becoming more digital or digital you know, and embracing of technology.
Speaker 9: Yeah, I mean I literally I have a private wealth manager.
Speaker 9: I don't really want to talk to them. I just
Speaker 9: open up my schwab every day and look.
Speaker 6: At it, and we'll first stop opening it every day.
Speaker 7: Please every No, I like it once a week.
Speaker 5: It feel good.
Speaker 2: I just had a conversation about long term investing every day.
Speaker 5: Is too much.
Speaker 9: Every day, But I look at my AMEX bill every day.
Speaker 9: You want to show me your AMX bill on the
Speaker 9: credit card, Like what did I buy?
Speaker 3: When my husband says, let's look at the AMEX bill,
Speaker 3: I'm like, well I do it.
Speaker 9: You know, in this morning, I was like sitting watching TikTok.
Speaker 9: Next thing, you know, I'm like, oh, Apple pay oops, bang.
Speaker 9: My husband calls it the BOD and he's not talking
Speaker 9: about Board of directors.
Speaker 5: Box of the day.
Speaker 3: So he's like a box of the day showed up
Speaker 3: for you.
Speaker 2: But what does it mean for estate planning and tax
Speaker 2: planning and educational planning?
Speaker 3: Like how do you guys think about because that's your world.
Speaker 9: Yeah, so when we want to let's talk about domain
Speaker 9: money for a second. So our average customer is thirty
Speaker 9: nine years old, makes two hundred and fifty thousand dollars
Speaker 9: a year, and doesn't really want to put their money
Speaker 9: into Aumah. They have made some money, they're trying to
Speaker 9: figure it out. They might have some stock, they get
Speaker 9: a bonus, and they just don't know what to do.
Speaker 9: They're overwhelmed. They may have gotten married, may have gotten divorced,
Speaker 9: and they want some professional help. So it's a flat
Speaker 9: fee financial plan. We saw one for twenty five hundred dollars.
Speaker 9: We look at all your expend to, we look at
Speaker 9: all your spending, we analyze it. We use a bunch
Speaker 9: of technologies in AI. We put together a plan with
Speaker 9: a paraplanner, and then we give it back to you
Speaker 9: in a ninety minute discussion, and then we set up
Speaker 9: a discussion after that with.
Speaker 5: All your to dos and follow ups.
Speaker 9: Well, actually log into Zoom your Schwab account on Zoom
Speaker 9: with you and help you change, like move that there,
Speaker 9: because that's really where people freak out is they don't
Speaker 9: know how to do that. Our NPS score is ten
Speaker 9: out of ten. It's NPS Net Promoter score. It means
Speaker 9: would you recommend it? And we use it again? And
Speaker 9: on a one out of ten that's unheard of.
Speaker 3: Get it.
Speaker 9: We get a ten.
Speaker 3: That's a perfect score.
Speaker 9: It is a perfect score because everybody at the end
Speaker 9: of it is like, wow, you helped me, you heard me,
Speaker 9: I got value, and I know what to do. We
Speaker 9: have a twenty five hundred dollars version of forty five
Speaker 9: hundred dollars version and a seven five hundred dollars version.
Speaker 9: Most people end up taking forty five hundred because they
Speaker 9: want actually.
Speaker 3: A year or one time plenty went.
Speaker 9: And then they can come back to us for three
Speaker 9: to five hundred dollars an hour to be like, hey,
Speaker 9: I want to truck to key?
Speaker 3: Is it How long do people stay with you guys?
Speaker 9: Well, I mean, you know, it's they come back a
Speaker 9: little bit every couple of years. But I think it
Speaker 9: should be like the dentist, you know, right you you know,
Speaker 9: if you're using a sonic toothbrush, maybe you don't go
Speaker 9: every year, right, yeah, you know, the dental industry came
Speaker 9: up with you need to go every six months.
Speaker 6: Three times a year. They want cleaning three times a year.
Speaker 3: That's really But I wonder.
Speaker 2: If you can tell there's a trajectory of somebody who
Speaker 2: comes to you when they first get married, and then
Speaker 2: maybe they go through a divorce, they come back, and
Speaker 2: then they get married again, and then they have kids
Speaker 2: and they have to think about college planning, and then
Speaker 2: they have to think about, you know, retirement.
Speaker 3: So do you see that trajectory.
Speaker 9: There's four there's four personas. There's the twenty nine year
Speaker 9: old that's like, hey, I need some help here. I
Speaker 9: have a good paying job and I just I like
Speaker 9: to be prepared. I call them like sharp pencil people,
Speaker 9: you know, They're like, I want help. I'm going to
Speaker 9: hire a trainer, I'm going to go to a therapist.
Speaker 9: I'm going to have the best of every tech check check.
Speaker 9: Then the next group is like a thirty nine year
Speaker 9: old that's like, I didn't do anything, and please help
Speaker 9: me catch up very fast so we can do that.
Speaker 9: The next group is a fifty year old who is like, wow,
Speaker 9: I had something happen in my life, health, in my family, divorce, partner,
Speaker 9: I hate my career, I can't do it for the
Speaker 9: rest of my life, and I need to know how
Speaker 9: do I get out of this? And they want a
Speaker 9: financial plan for that. And then there's a group of
Speaker 9: people that need to help family members where they're like, hey,
Speaker 9: I'm now this sandwich generation. I have to take care
Speaker 9: of a parent and I have to take care of
Speaker 9: a kid. And there's really not anybody that serves that
Speaker 9: rights so real, So like description you know, and I've talked,
Speaker 9: I've I listened to every conversation. I know this audience
Speaker 9: from my time.
Speaker 5: It's so.
Speaker 9: And there's nobody really serving that market.
Speaker 8: Right.
Speaker 9: We don't tell them what products you use. We're like,
Speaker 9: use fidelity U schwab do whatever. And my entire sort
Speaker 9: of mission in life is I don't care who you
Speaker 9: use for your financial plan. I just want you to
Speaker 9: actually have one. I don't care if you do it yourself.
Speaker 9: I don't care if you sign up for you know,
Speaker 9: missus Dow Jane's and take the course. A friend of
Speaker 9: mine the other day she works at Apple. She has
Speaker 9: worked there for thirteen years, never sold a sheriff's stock.
Speaker 5: I said, how do.
Speaker 9: You manage your money? And she said, oh, I'm taking
Speaker 9: a course on the weekend. Yes, And I said, oh, okay, great.
Speaker 9: And you know, she's mother of three. She's like, I
Speaker 9: got a save for college. I have to do these things.
Speaker 5: Da da da da.
Speaker 9: And I'm like, well, I'm glad you have a plan, right,
Speaker 9: And she paid three thousand dollars for that course, and
Speaker 9: I'm like, well, you could have just paid someone to
Speaker 9: do it for you and not spent your Sundays and
Speaker 9: a course. But like whatever, you know, I'm just happy
Speaker 9: that people are doing it doing something because you and
Speaker 9: I know the power of compounding, the power of starting
Speaker 9: it off, and it just really matters. And so at Sofi,
Speaker 9: I saw so many people with student loan debt. I
Speaker 9: met thousands and thousands of people. I had dinners with
Speaker 9: them once a week, and I know this customer and
Speaker 9: I know most people do not pay attention to their finance.
Speaker 6: So, Joanne, you started out by discussing how it's digital first,
Speaker 6: there's technology driven. But what I'm really hearing from you
Speaker 6: with these four different categories of people are that they
Speaker 6: want somebody, a live human to talk to yes and
Speaker 6: hear what their issues are. How do you marry technology
Speaker 6: with live human advice.
Speaker 9: Well, we do it all on Zoom. We have an
Speaker 9: app where they upload all their documents, makes it easy
Speaker 9: for them. We give them the report and the action items. Afterwards,
Speaker 9: we let them schedule all their meetings and times via technology.
Speaker 9: We follow up with them. So everything that is possible
Speaker 9: to take out of the process of friction of humans
Speaker 9: do accept that conversation and the review of the plan
Speaker 9: and the input and really understanding your values. Some people
Speaker 9: are like, I want adventures. Some people are like I
Speaker 9: want a career. Some people are like, I'd like to
Speaker 9: get rid of my spouse. You know, you know, there's
Speaker 9: just everybody has something and they want someone on the
Speaker 9: other end of it to hear them and to acknowledge.
Speaker 3: What's the most common mistake? Is it just people not
Speaker 3: having a plan.
Speaker 9: It is just not knowing the number, not ever looking
Speaker 9: at the numbers.
Speaker 3: What do you mean just everything?
Speaker 5: Yeah, I'm in their head.
Speaker 6: It's sort of juggled, like what's your checking balance? I
Speaker 6: don't know, it's around this.
Speaker 9: I'll give you a perfect example. I was talking to
Speaker 9: a and just got about forty seconds. Yeah, a Bloomberg
Speaker 9: reporter one day and she said, not me, I have
Speaker 9: student loans. And I said, well, how much do you owe?
Speaker 9: What's your interest rate? And when will you be done?
Speaker 9: And she said, I don't know. I just know one
Speaker 9: day it'll be gone.
Speaker 3: Okay, So I don't care who you are.
Speaker 9: You got to look at the number.
Speaker 6: Really interesting me.
Speaker 3: If you don't know what you have, how do you figure?
Speaker 5: No, And most people don't.
Speaker 3: Yeah, they just don't. Really cool stuff, so fun, really cool.
Speaker 6: Stuff, really really cool stuff.
Speaker 3: I'm kind of taking note. It's going to share, folks.
Speaker 6: I told you before she came on. She's a fascinating
Speaker 6: person with an amazing background, and I love how she's
Speaker 6: combined technology and human advice into one and bringing so
Speaker 6: far in with the student loans on top of it.
Speaker 3: It is pretty cool, like how all the stuff you
Speaker 3: did let.
Speaker 9: Up to where you are honey coupon code, one click
Speaker 9: coupon code. We sold it for four billion dollars. There's
Speaker 9: always a tech solution there. There you go exactly, Thank
Speaker 9: you so much. Okay, thank you guys.
Speaker 2: You bet Joan Bradford, President and Chief Money Officer, for
Speaker 2: it to main money.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Listen live
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Speaker 2: We mentioned this yesterday about the great well tramsfer baby boomers,
Speaker 2: the silent generation they're going to pass down to combine
Speaker 2: eighty four point four trillion dollars in assets to younger
Speaker 2: generations is going to happen in the next couple of decades.
Speaker 3: Our next guest, safe to say.
Speaker 2: Is pretty familiar with all of that with us now
Speaker 2: from future Proof is Tim White. He's co founder and
Speaker 2: chief growth officer at the estate planning platform Wealth dot com.
Speaker 2: How are you and nice to have you here with us.
Speaker 8: Oh my gosh, this is absolutely this is our second
Speaker 8: year a future Proof.
Speaker 5: We absolutely love it.
Speaker 8: It's just great to be immersed in this advisory community.
Speaker 8: It's absolutely incredible. So, well, that's energy.
Speaker 2: Well when you it is great energy, and there's there's
Speaker 2: something about being outside and next to the beach. I'm
Speaker 2: not gonna lie the positive or negative ions that come
Speaker 2: from the ocean.
Speaker 3: I don't know what it is.
Speaker 2: Having said that, you know, there's a lot of firms
Speaker 2: that are here involved in the management of money.
Speaker 3: What is it?
Speaker 2: What are the kind of things that you're looking for?
Speaker 2: Are the conversations? There's various panels. There's one happening behind me.
Speaker 2: What are you looking to find out?
Speaker 8: Well, I think this, I mean, it's a really exciting
Speaker 8: time for us here at Wealth dot com. On Monday,
Speaker 8: we actually announced a series A led by Google Ventures GV,
Speaker 8: followed by City Ventures Outposts which is Newburger Berman and
Speaker 8: also Firebolts. So we're really excited. We're running with that
Speaker 8: energy and I think for us, like it is a
Speaker 8: very exciting time. You talked about the Great Wealth Transfer right,
Speaker 8: nearly half of all assets over the next two decades
Speaker 8: are transferring over right to a new generation. And so
Speaker 8: part of that is like how do we empower advisors
Speaker 8: through technology? And it's just an exciting time to be
Speaker 8: at Wealth dot com because you know, as a founding
Speaker 8: team for GV for us, they have just such an
Speaker 8: incredible track record of supporting advisors with big aspirations and
Speaker 8: big ideas to make.
Speaker 5: A generational company.
Speaker 8: And so we couldn't be more excited to be here
Speaker 8: and just to be around this incredible advisor community.
Speaker 2: Tim talk to us about does Google Ventures get involved?
Speaker 2: They they is it a financial investment, but do they
Speaker 2: also I mean understanding of technology, of data, the power
Speaker 2: of it, the impact, what it can do, the productivity
Speaker 2: of it.
Speaker 3: How else do they assist you guys in what you're doing.
Speaker 8: Carol, That is an absolutely fantastic question because when we
Speaker 8: actually ran the Series A, there was so many advice
Speaker 8: excuse me, and investors interested in our organization.
Speaker 5: But GB was absolutely the right fit. Is because of just.
Speaker 8: Their expertise right not only access to incredible talent, but
Speaker 8: also how we can add supercharge our AI capabilities within
Speaker 8: our ecosystem. Because here at Well dot Com, we are
Speaker 8: just really focused on building the most complete, most comprehensive
Speaker 8: ecosystem in the market. So, whether there's an advisor here,
Speaker 8: Carol that is serving the mass affluent high net worth
Speaker 8: or even the ultra high net worth that is well
Speaker 8: dot com, and so they're going to be here to
Speaker 8: really help us supercharge things.
Speaker 2: Well, tell people who might not be familiar with you,
Speaker 2: guys Bloomberg, it's a smart audience. But remind people about
Speaker 2: what you do specifically. And I'm curious about your debito.
Speaker 2: Who are really tapping into your services?
Speaker 5: Well, that's a great question too.
Speaker 8: So yes, we are a digital state planning ecosystem, servicing
Speaker 8: advisors that have clients across the entire well spectrum. So
Speaker 8: whether it's a client or household that needs those foundational
Speaker 8: documents or even worse.
Speaker 3: Some basic stuff like KENI oh.
Speaker 5: But not this there, Carol.
Speaker 8: We work with the ultra high net worth as well,
Speaker 8: so families that have one hundred million dollars plus in assets,
Speaker 8: we're helping them visualize those complex estates. And so we
Speaker 8: are the one stop shop for big large firms to
Speaker 8: be able to supercharge their state planning strategy and empower
Speaker 8: their advisors to have these incredibly important topics and conversations.
Speaker 8: You know, today, Carol, sixty percent of Americans do not
Speaker 8: even have a will in place? Can you believe that
Speaker 8: in forty percent? Well, there's a probably good share of
Speaker 8: them that actually need to do a restatement. And so
Speaker 8: having technology be able to compliment accomplish that is a
Speaker 8: big thing.
Speaker 5: And we're here to solve big problems.
Speaker 2: Well, and to be fair, we had a conversation with
Speaker 2: Joanno over at Domain Money, right, So there's a couple
Speaker 2: of you guys right that are out there certainly helping
Speaker 2: people think about, Okay, what's my complete holistic financial picture
Speaker 2: and what do I need to be taken care of?
Speaker 3: I am curious about you know.
Speaker 2: The majority you say you have clients, you know, all
Speaker 2: different types of spectrum. Is there though a demographic? Is
Speaker 2: it people getting their first big job? Is it people
Speaker 2: getting married?
Speaker 6: Like?
Speaker 3: When do people often come to you?
Speaker 5: Absolutely? So we power the financial advisors.
Speaker 8: So we work with all different type of advisors, whether
Speaker 8: they are working with the family office.
Speaker 3: It's can provide the services for those.
Speaker 5: So what power those conversations?
Speaker 8: So it can arrange for a variety of different and
Speaker 8: type of client right, they have a new family getting
Speaker 8: those foundational documents using our AI capabilities. Like just case
Speaker 8: in point, right, a new client comes to an advisor
Speaker 8: that used to have to sift through those really complex
Speaker 8: legal documents. We have AI capabilities and this is what
Speaker 8: Giv's really excited about. To read those existing plans into
Speaker 8: a visualizer report in layman terms, so be able to
Speaker 8: sit with the client and say, look at it's time.
Speaker 8: You've created this plan about twenty years ago. Let's set
Speaker 8: you up with the restatement, let's give you access to wealthne.
Speaker 3: So this is happening already.
Speaker 8: Yes, yes, yes, it's really It's an amazing time for
Speaker 8: the space. We work with actually over five hundred institutions, right,
Speaker 8: we have some massive, massive partnerships we're going to be
Speaker 8: announcing in the next few weeks as well.
Speaker 2: Tell me about the technology curve, because obviously we have
Speaker 2: all been all in on AI of the last year
Speaker 2: and a half or so, Tim and I think we've
Speaker 2: seen a lot of spending on the infrastructure side of it,
Speaker 2: the build out. But you guys, you know obviously it's
Speaker 2: already happening, right, the yes generated AI, the large language
Speaker 2: models are already adapting what financial advisors can do in
Speaker 2: those companies.
Speaker 8: Yes, so, Carol, this is the uniqueness about wealth dot
Speaker 8: com when you think about the landscape, the category, the
Speaker 8: founding team, myself, our CEO, executive chairman, Ray Carvallo, We
Speaker 8: come from technology. We created a fintech that we scale globally,
Speaker 8: working with large financial institutions, leveraging machine learning, leveraging AI,
Speaker 8: and we sold the business to Lexus Nexus for five
Speaker 8: hundred million dollars in twenty nineteen. We actually took that
Speaker 8: expertise that a players from that company over to well
Speaker 8: dot com to supercharge this and bringing in that into
Speaker 8: our DNA has been so important because what again, what
Speaker 8: makes us unique? This is all done with technology but
Speaker 8: also with a human touch.
Speaker 5: But well, but.
Speaker 2: What's different because as you know, Tim, I mean AI,
Speaker 2: we know has been a lot around for a long time,
Speaker 2: and so I always feel like, you know, we're all
Speaker 2: talking about AI, but it's not like a new new thing.
Speaker 2: So tell us about, like, what's the next level of
Speaker 2: everything that we've been talking about in the last year
Speaker 2: year and a half in terms of what it can
Speaker 2: do and help financial advisors going forward? It's all will
Speaker 2: some say it's you know, we're scratching the service in
Speaker 2: terms of what it can do.
Speaker 8: Yes, and I think we are scratching the surface. I
Speaker 8: really truly believe that. But it's all about efficiency right
Speaker 8: where the firm for the advisor. Yeah, for us, how
Speaker 8: we look at that.
Speaker 3: Everything needs a human essentially, everything.
Speaker 8: Needs a human, but there is a role for the human.
Speaker 8: We've seen that too. I mean, look at several years ago,
Speaker 8: it's all about the robo advisor to disrupt. The advisor
Speaker 8: is never going to be pulled out in that very
Speaker 8: important relationship with the household of the client.
Speaker 5: But how do we make his and her role more efficient?
Speaker 8: And that's using AI, that's using technology, and that's using
Speaker 8: the skills that we have to read through Again, some
Speaker 8: of these legal documents are sixty pages. To be able
Speaker 8: to read through that instantaneously extracting all that important document
Speaker 8: in that way, I'm.
Speaker 2: Looking forward to the AI chatbot or AI power tool
Speaker 2: that looked at a document and said, Okay, ninety nine
Speaker 2: point nine percent of this is yes, unnecessary, Yes, here's
Speaker 2: what you really need in like a couple of setons.
Speaker 5: Let me let me seriously, let me just tell you this.
Speaker 3: We've all been there.
Speaker 8: We are going to be really launching this in such
Speaker 8: a direction. We're crossing new frontiers. I you know, look
Speaker 8: at us in five years. It's going to be remarkable.
Speaker 3: All right.
Speaker 2: So okay, I don't know. Take us five years from now,
Speaker 2: what is it going to be. I go to my
Speaker 2: financial advisor, I open up my laptop, or I pop
Speaker 2: up my phone, Like what is it it is?
Speaker 5: It's gonna be there.
Speaker 8: It's going to be a living and breathing ecosystem that
Speaker 8: is dynamic as your life, that's feeding you that important information.
Speaker 8: Because state planning is at a one and done transactional thing, right,
Speaker 8: it moves because your life evolves. You know, whether Carol,
Speaker 8: you're in California, you moved in New York. You need
Speaker 8: to be notified of that, and those documents need to
Speaker 8: be optimized for that state.
Speaker 5: And that's the type of stuff we're going to be doing.
Speaker 8: In addition to that, what we can do with scenario
Speaker 8: analysis as well, really empowering the advisor, informing the client.
Speaker 5: Because this is extreme, So.
Speaker 3: What do I mean?
Speaker 2: Like you can play all right, so perhaps I do
Speaker 2: this and that's what does it mean? How does it
Speaker 2: impact my financial.
Speaker 8: Trajectory exactly exactly, and that's the power of wealth dot Com.
Speaker 2: What's the tricky part of this and part of me,
Speaker 2: like my you know, radar goes off in terms of
Speaker 2: it's a lot of information, right that's out there increasingly
Speaker 2: in the digital world. That's already out there in many ways,
Speaker 2: but it sounds like this is going to take it
Speaker 2: to potentially another level.
Speaker 3: What do we have to be concerned about? What are
Speaker 3: the risks in all of this?
Speaker 8: Honestly, I mean the good thing about this is wealth
Speaker 8: dot Com is prepared as an organization. We actually process
Speaker 8: transactions with American Express in twenty eight countries. Bringing that
Speaker 8: level of security to firm is extremely important.
Speaker 5: So that is number one.
Speaker 8: And then also for us, it's like, you know, giving
Speaker 8: the right information to the advisor. Don't overwhelm the I mean,
Speaker 8: do not overwhelm the client. And that's the problem today
Speaker 8: even with the traditional model with its state planning attorneys.
Speaker 8: You get a sixty page document. I could walk around
Speaker 8: this event and say, who's actually read through this? I'll
Speaker 8: give you ten thousand dollars that if somebody has nobody absolutely,
Speaker 8: you know.
Speaker 2: What's also interesting is I'm thinking about the money that
Speaker 2: you're getting from Google Ventures.
Speaker 3: You talked about GV.
Speaker 2: What do you guys do? Is it all about being paid?
Speaker 2: You know, investing in technology? Like, what do you do
Speaker 2: with it?
Speaker 8: I think the unique position of GV both on to
Speaker 8: be able to work with us to develop the technology,
Speaker 8: but access to talent.
Speaker 5: It's all about growing our team in the.
Speaker 8: Right and healthy way and bringing additional experts to already
Speaker 8: amazing organization.
Speaker 3: You sound super optimistic. I am so really cautious.
Speaker 2: But as we move forward because it does feel like
Speaker 2: the financial world. We've talked about fintech for a long time, right,
Speaker 2: but this is something.
Speaker 8: Different, This is this is I will tell you this
Speaker 8: why I'm optimistic. I have an experienced team. I've done
Speaker 8: this before, we have a track record, and I'll tell
Speaker 8: you something. Walk around future Proof today, You're going to
Speaker 8: feel the excitement of wealth dot com. You're going to
Speaker 8: see it now, especially after this conversation. So I hope
Speaker 8: that you actually stop by and talk to the team.
Speaker 8: We should get you. Where are you with your state plan?
Speaker 6: Hi?
Speaker 5: For every statement.
Speaker 2: Probably always, always, always, Well, so as you go around here,
Speaker 2: who are the voices that you want to be talking with? Obviously,
Speaker 2: a lot of the probably big financial advisory firms.
Speaker 5: Right.
Speaker 8: Honestly, when you're building a brand like wealth dot com,
Speaker 8: I want to speak to every single person at this event.
Speaker 8: I want to speak to every single person. One thing
Speaker 8: that we do really well here is marrying phenomenal people,
Speaker 8: great tech. And we've built this brand based off of
Speaker 8: the evangelists within our advisory network, our community advisors. They're
Speaker 8: out there actively running around this event selling our product
Speaker 8: could be in a better position, and that's why GV
Speaker 8: invested in us.
Speaker 3: Yeah, and so what do you hear?
Speaker 2: What are you know in terms of the financial advisory community,
Speaker 2: As you say, they want things that are going to
Speaker 2: be easier, right, make what they do in terms of
Speaker 2: working serving their clients easier.
Speaker 3: What else are they looking for?
Speaker 8: They're working for a team that understands integrations right, right,
Speaker 8: So you have all these disparate technologies and how can
Speaker 8: somebody bring it all together? That's also strength. We api
Speaker 8: connect to all the major CRMs, the major planning softwares,
Speaker 8: even into larger firms proprietary systems, so they have access
Speaker 8: bi directionally to this important data.
Speaker 3: What's the long term plan for you guys? Do you
Speaker 3: go public? At some point I would one.
Speaker 5: Hundred percent IPO all the way, all the way how long.
Speaker 2: I mean, you obviously are getting money right and we've
Speaker 2: talked about this for a long time at Bloomberg how
Speaker 2: there's a lot of money out there in the private
Speaker 2: markets which gives you a certain luxury right as you
Speaker 2: do the build out. I don't know, is there a plan,
Speaker 2: Is there a trajectory?
Speaker 8: There is a trajectory, there is, there is, and there's
Speaker 8: a few stadiums out there that I can imagine Wealth
Speaker 8: dot Com being on. Okay, so yeah, we have big aspirations.
Speaker 8: Look at our team, done it, We've done it before.
Speaker 8: We're gonna be patient in what we're building here, and
Speaker 8: we're gonna build it right. And we want Wealth dot
Speaker 8: Com within the advisory community to be actually enabled to
Speaker 8: every single one within our group.
Speaker 2: As I kidded you before about like your enthusiasm, and
Speaker 2: it's really it's pretty fun to be and I feel
Speaker 2: like in general and as we kind of bary when
Speaker 2: when he's here, we're talking about it's hard not to
Speaker 2: when you're in California near a beach, and this is
Speaker 2: a really wonderful event to have a financial conference, having
Speaker 2: said that there are some real concerns, you know, in
Speaker 2: terms of the economy, the elections, geo political risks, macro concerns.
Speaker 2: We're talking fed policy, We're talking could there be a recession?
Speaker 2: Any of that impact eventually or does tougher time make
Speaker 2: you need to do what you're doing even more urgent.
Speaker 2: I'm just curious about the macro environment. When you're building
Speaker 2: out a business, it matters. You know, you did get
Speaker 2: money and that is going to keep you going for whatever.
Speaker 2: But I just do wonder about the macro environment what
Speaker 2: that means for you as a business owner, Carol, I'm
Speaker 2: gonna be guys running your business.
Speaker 8: I think that's a great question, and I'm gonna go
Speaker 8: a little bit backwards before I go forwards. Yeah, the
Speaker 8: company that we created in the past was in the
Speaker 8: actual account opening work stream and also the e commerce
Speaker 8: work stream.
Speaker 5: We sold it right before Covid. Could not be a
Speaker 5: better sale, right.
Speaker 8: I also look at I know, right it was a
Speaker 8: great success, great time for us with the email agent,
Speaker 8: also for Lexus and Next it's one of their most
Speaker 8: successful acquisitions and that was really important for us.
Speaker 5: Now with wealth dot.
Speaker 8: Com and seeing what's happening in the world today, The need,
Speaker 8: the demand for estate planning is going nowhere. Now is
Speaker 8: the demand going and paying you know, ten thousand dollars
Speaker 8: for these foundational documents or getting it through your advice
Speaker 8: as a value add right? Right, it's going to be really,
Speaker 8: I think, a great position for us, whether economy booms
Speaker 8: or it slows down.
Speaker 2: Yeah, and I guess as we've seen more and more
Speaker 2: wealth creation certainly in society, right, there's more demand. Do
Speaker 2: you think about it as you say you're serving advisors?
Speaker 2: Is it going to be though, what you guys are
Speaker 2: doing available for all of the economic strata, if you will.
Speaker 3: Ultimately?
Speaker 2: Is that the thinking one? I mean, I understand for
Speaker 2: the high net worth and no, no.
Speaker 8: But so for the mass effluent, high networth and ultra
Speaker 8: high net worth. That is the solution of wealth dot com.
Speaker 5: You know. One of the things that we're very principled.
Speaker 8: We love our go to market and selling through financial advisors,
Speaker 8: and that is always going to be our strategy is
Speaker 8: solving the problem statements of this wonderful industry and event
Speaker 8: and that people here that they're dealing with on a
Speaker 8: day to day.
Speaker 3: Yeah.
Speaker 2: I think that, you know, if I think about the
Speaker 2: Bloomberg audience or people who use an advisor, they just
Speaker 2: assume they're there. They do their thing. But there's a
Speaker 2: lot that's going on or that can be transformative ultimately
Speaker 2: in the next few years or even sooner because of technology.
Speaker 8: I would say this for it is already Carol, for
Speaker 8: your audience, I would say fine. A Wealth dot Com advisor,
Speaker 8: I'm just sameless plug shout out to our wonderful advisory community.
Speaker 8: Thank you so much, Carol, interesting stuff.
Speaker 2: Tim White, thank you so much, co founder and Chief
Speaker 2: growth Officer at the estate planning platform Wealth dot Com.
Speaker 2: Brother mac.
Speaker 8: A journal.
Speaker 2: How about you let me drive?
Speaker 3: Oh no, no, no, no, who's going.
Speaker 5: Honey?
Speaker 1: Please gravel let's mate, I want to drive.
Speaker 8: It's a good question.
Speaker 1: This is the drive to the Globe.
Speaker 7: Dot com to me than well Bun.
Speaker 5: On Bloomberg Radio.
Speaker 2: All right, everybody, it's time for the Drive to the
Speaker 2: Close today from future Proof Bloomberg Radios. Live broadcast from
Speaker 2: future Proof is sponsored by JP Morgan Asset Management. So
Speaker 2: let's get to our Drive to the close. Guest, I'm
Speaker 2: Carol Master alone with Barry Ridholtz did a diorias with
Speaker 2: us Co Cio of investment. It's a fintech company offers
Speaker 2: software services for the financial industry and financial advisors.
Speaker 3: Welcome, Welcome, Welcome, How are you. I'm great, Thank you
Speaker 3: so much for having me. I'm happy to be here.
Speaker 2: I didn't get to tease this, but you have talked
Speaker 2: about our notes that you shared with our producer that
Speaker 2: inflation is the flying the ointment.
Speaker 3: I get that. I get that.
Speaker 2: So with a FED meeting and we're all like, you know,
Speaker 2: there's expectations and there's a lot of debate and investors,
Speaker 2: traders thinking it should be an aggressive move.
Speaker 3: They still have to keep a watch of inflation, don't
Speaker 3: they They do. And you know what's funny is and
Speaker 3: we saw retail sales today. Yeah, you know, which is good.
Speaker 3: It means the economy not falling apart what inflation. There's
Speaker 3: goods and then there's services. And I think we're saying, ye,
Speaker 3: a pretty big split, right, and so you know, goods,
Speaker 3: interest rate cuts are needed. Services. I think they're still
Speaker 3: gonna want to keep an eye on I've been you know,
Speaker 3: it's gonna be a twenty five. It's hard for me
Speaker 3: to believe that they're going to take their hand off
Speaker 3: and do a fifty right out of the gate, but
Speaker 3: it would be very unlike this FED. And I feel
Speaker 3: like Jay Powell, right, I agree with you, I think,
Speaker 3: And you know, there's a lot out there around inflation
Speaker 3: coming in waves, and yes, maybe we've got a handle
Speaker 3: on it for this time around, but you know it
Speaker 3: could come back. You know. I think twenty five is
Speaker 3: the safer bet. And I still would say twenty five,
Speaker 3: but it wouldn't blow me away if it ended up
Speaker 3: being fifty.
Speaker 5: Yeah.
Speaker 6: This seems like a very timid, cautious, why are we
Speaker 6: taking chances type of FED. And every time we talk
Speaker 6: about the FED, I feel obligated. It's like my disclosure.
Speaker 6: Inflation peaked in June to twenty twenty two. The FED
Speaker 6: was late to recognize at start it's peak. It's finish.
Speaker 6: Is it fair to say they are institutionally behind the curve?
Speaker 6: That's just the nature of a big, you know, conservative institution.
Speaker 8: Yeah.
Speaker 3: I think they're going to act with a little bit
Speaker 3: of a lag, my polite way I.
Speaker 2: Can symtance, Yah, Yeah, I think haven't they lagged a
Speaker 2: lot already?
Speaker 3: I think, Well, I mean there's look, there's a whole
Speaker 3: narrative out there around we're way behind on these cuts
Speaker 3: that you know, and and a lot of it too
Speaker 3: is why why do we think we're having these CAUs
Speaker 3: Is it just to get to neutral or is it
Speaker 3: because we actually think that, you know, we didn't stick
Speaker 3: the landing that recession is coming. I mean that that
Speaker 3: that's a debatable question as well. But I think when
Speaker 3: you're looking at the cuts and you're looking at the FED, yeah,
Speaker 3: they've been they they are not quick to want to act.
Speaker 3: They have a dual mandate. Unemployment is still pretty pretty tame, right.
Speaker 3: I mean, we're certainly seeing a cooling in the job market,
Speaker 3: but jobless claims still don't speak to having something like
Speaker 3: a bazooka fifty basis point rate cut for a FED
Speaker 3: that hasn't really wanted to take that kind of you know,
Speaker 3: big action.
Speaker 2: I also wonder about the elections, like do they want
Speaker 2: to do something like that, whether or not they say,
Speaker 2: you know, they're not political, I do wonder about the
Speaker 2: appearance of that.
Speaker 3: Yeah, I'm well, I mean just I'll say I'll simply
Speaker 3: say if you look historically, typically in an electioneer you
Speaker 3: get you know, some easing, right, Like that's not an
Speaker 3: unusual thing to expect an electioneer. I don't think this
Speaker 3: FED is really looking to be political. I mean, I
Speaker 3: really do think, you know, Barry said it, they're cautious,
Speaker 3: and they're just you know, they're moving cautiously. And some
Speaker 3: of it too. Don't forget. You know, the markets are
Speaker 3: going to front run anything that they do. So whether
Speaker 3: they give us a twenty five or they give us
Speaker 3: a fifty. If they talk about if they give us
Speaker 3: the twenty five, but they say, ah, you're going to
Speaker 3: get a hundred by the end of the year, it's
Speaker 3: kind of takes you to the same place. It has
Speaker 3: the same impact at the end of the day, and
Speaker 3: so there, and they're willing to do that.
Speaker 6: So you mentioned retail sales. One can't help but notice
Speaker 6: the bottom half of the economic strata is carrying a
Speaker 6: lot of credit card debts. We had a guest yesterday
Speaker 6: talk about not a big uptick, but a modest uptick
Speaker 6: in credit card delinquencies. In defaults is starting to show.
Speaker 6: It seems like the higher rates are falling disproportionately on
Speaker 6: those lower end retail shoppers.
Speaker 3: I agree. I the COVID money's gone right and we've
Speaker 3: eaten through that buffer. I also think, Look, let's not
Speaker 3: forget inflation coming in line doesn't mean the level of
Speaker 3: the prices are going down, right, we have to have
Speaker 3: we all know, just not going up much as much.
Speaker 3: And so you know, it was a big increase for
Speaker 3: people to take. And when you talk about the lower
Speaker 3: income groups and trying to keep pace with you know,
Speaker 3: even discretionary needs, a little one non discretionary needs and
Speaker 3: needing to borrow maybe to kind of meet that make
Speaker 3: those ends meet. So they're they're sort of facing this
Speaker 3: double whammy of much higher prices than just a couple
Speaker 3: of years ago, and then on top of it, really
Speaker 3: high interest rates. And so yes, I agree, it's not
Speaker 3: a great place for you know, kind of common man.
Speaker 6: So the two follow up questions. We know wages have
Speaker 6: risen fairly in line with inflation, but real estate is
Speaker 6: probably the thing I hear more people complain about, especially
Speaker 6: first time home buyers. What my ID a series of
Speaker 6: rate cuts do for that audience.
Speaker 3: I think it could unlock that.
Speaker 5: I agree.
Speaker 3: I mean, there's it's interesting you bring that up because
Speaker 3: in my discussions of the advisors, and of course they're
Speaker 3: working with people, you know, they're they're talking to them
Speaker 3: about all their problems, not just how do I allocate
Speaker 3: my financial assets, and they're talking to them about things like, yeah,
Speaker 3: my kids can't buy a home, you know, or I
Speaker 3: put it in a they put in an offer on
Speaker 3: a house and you know, they were beat by like
Speaker 3: one hundred thousand dollars to try to get this house
Speaker 3: or whatever. You know, just like just you know, crazy
Speaker 3: kind of premiums being spent on the you know, existing
Speaker 3: homes and that they can't get into the market. So
Speaker 3: I think this is a major concern for people. I
Speaker 3: think advisors are worried about it from this, not only
Speaker 3: from the standpoint of you know, whatever allocations from a
Speaker 3: financial perspective, but to your point on just the real
Speaker 3: estate market in general and what their clients are facing.
Speaker 3: But I do think rate cuts can start to unlock
Speaker 3: that because bringing rates back down, of course, under where
Speaker 3: a lot of those mortgages are dan.
Speaker 2: The penalty you're involved in here at future Proof is
Speaker 2: about the future of investment delivery. How are you, you know,
Speaker 2: thinking about where that all goes. You've been talking increasingly
Speaker 2: about the role of technology and how that can change things.
Speaker 3: But what are your thoughts, what do you what's your vision. Yeah,
Speaker 3: so coming from investment a wealth tech ecosystem, we're really
Speaker 3: from our perspective, it's about outsourcing to managed account type
Speaker 3: solutions and really bringing scale. And I add to that
Speaker 3: that we see the future of investment solutions as leaning
Speaker 3: toward personalized services. Personalized solutions. This is you know, is
Speaker 3: that courtesy of AI or something else. I think it's
Speaker 3: I think it's just look at today, Look at your smartphone. Yeah,
Speaker 3: all the recommendations that serves up to you, the expectation
Speaker 3: you can around kind of drives me crazy. Does it
Speaker 3: drive you crazy?
Speaker 6: I turn most of my notifications so it can't be bothered.
Speaker 3: Sorry, but younger you know, younger generations aren't right. I'm
Speaker 3: right there with you. No, no, no, you know they're
Speaker 3: they're they're looking for, you know, a personalized services and
Speaker 3: they're going to expect that from their financial advisor. And
Speaker 3: gen Z actually wants a human being in the room
Speaker 3: with them, but they're going to expect technology to bring personalization.
Speaker 3: And the only way an advisor can do that is
Speaker 3: with tech to scale those types of solutions. Direct indexing,
Speaker 3: tax overlay, high net worth type services.
Speaker 5: Yeah.
Speaker 2: I like the combination, though, I think there's a lot
Speaker 2: of things tech can take care of that you don't
Speaker 2: necessarily need an individual, but you want an individual for
Speaker 2: the stuff that really matters.
Speaker 3: This was fun. Thank you so much. Thank you really
Speaker 3: appreciate it. Danna Dioria, co Cio of Investment.
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