Speaker 1: Because you're a subscriber to this Bloomberg podcast, we thought
Speaker 1: you'd be interested in a sponsored podcast called The Great
Speaker 1: Client Transfer, produced by Prudential and Bloomberg Media Studios. Here's
Speaker 1: the recent episode.
Speaker 2: Welcome to the Great Client Transfer. If you're a financial advisor,
Speaker 2: I'm sure you've heard about and thought about the Great
Speaker 2: Wealth Transfer. This is an inflection point where there's a
Speaker 2: huge opportunity to try to solidify a new generation of clients. However,
Speaker 2: when the money moves, there's a very good chance your
Speaker 2: clients will move to Demonstrating true understanding of how this
Speaker 2: new generation thinks about wealth and retirement will be essential.
Speaker 2: Today we'll discuss the data behind the wealth transfer and
Speaker 2: how financial advisors can make the most of this moment.
Speaker 2: I'm Maggie Lake, a financial journalist, and I've heard experts
Speaker 2: opine on this issue for years, but today I want
Speaker 2: to boil it down to some hard facts and actionable ideas.
Speaker 2: To do that, I've put together a fantastic panel. We
Speaker 2: have Chelsea Ransom Cooper, a financial advisor with Zenith Wealth
Speaker 2: Partners who's actively working to retain current clients and attract
Speaker 2: new ones. Britney Castro, a financial planner will offer a
Speaker 2: behavioral finance perspective for our conversation. She's here to decode
Speaker 2: the why behind a lot of client actions we've been seeing.
Speaker 2: And we have David Blanchette, the head of Retirement Research
Speaker 2: for Prudential Financial and portfolio manager at PGIM. So welcome everybody.
Speaker 2: It's wonderful to have you here in person.
Speaker 3: Thank you for having us.
Speaker 4: Yeah, great to be here.
Speaker 2: This is a really important topic. So I think we're
Speaker 2: going to have some fun and hopefully give some people
Speaker 2: some stuff to learn about. David, Prudential has done a
Speaker 2: lot of research on this great wealth transfer. What's the
Speaker 2: research telling you?
Speaker 5: I mean it's a really big number, right according to
Speaker 5: our Serulei report, over one hundred trillion dollars it's estimated
Speaker 5: to be transferred to generations in the next twenty five years.
Speaker 5: So I mean we're talking about just this tremendou and
Speaker 5: this you know, opportunity in this risk. Because if you
Speaker 5: look at at people when they're asked like are you
Speaker 5: going to stick with your parents' advisor? Only about nineteen
Speaker 5: ish percent say they're going to stay with their advisor,
Speaker 5: you know, going forward. So I think that what this
Speaker 5: creates is just is just this question, like, how are
Speaker 5: you preparing as an advisor to meet this new possible demand.
Speaker 2: That's a shockingly low number. I think I was not
Speaker 2: expecting to hear that. Brittany, you focus on the behavioral
Speaker 2: part of finance. Why why is that number so low?
Speaker 2: Why do people feel like they have to make a change.
Speaker 4: Well, I think for so long they feel unheard or
Speaker 4: unseen by the financial advisor, Especially in this scenario where
Speaker 4: it's the next generation, they probably are looking at that
Speaker 4: advisor as like no offense, but old dinosaur, Like they're
Speaker 4: not talking to me in a way that makes sense.
Speaker 4: They're not like relating to me where I'm at with
Speaker 4: my goals, with my different lifestyle. I mean, planning is
Speaker 4: a lot different for millennials and younger than it is
Speaker 4: for the baby boomer generation. So if they're feeling unheard, unseen,
Speaker 4: uncomfortable asking questions of the person that they're supposed to
Speaker 4: hire as their professional, of course they're going to leave
Speaker 4: and find somebody who is more relatable, who can help
Speaker 4: them where they're at, help them feel empowered, not feel
Speaker 4: bad about the decisions they've been making with their money
Speaker 4: up until that point.
Speaker 2: And I find it surprising because there is it's a
Speaker 2: big important thing. It can be stressful, So you would
Speaker 2: think continuity would be the easy path, the path of
Speaker 2: least resistance, But they're blowing it up and saying, I
Speaker 2: want something different, I want to find a change. Are
Speaker 2: you seeing that?
Speaker 3: Absolutely, I'm seeing it with a lot of the clients
Speaker 3: that are even coming to us right now. So I
Speaker 3: worked with a family who was going through the similar situation,
Speaker 3: and as they were planning for their wealth transfer to
Speaker 3: their children, the children met that advisor and when they
Speaker 3: walked out of that meeting, they're like, this is not
Speaker 3: our guy, this is not our person. It felt like
Speaker 3: a dinosaur to Britney's point, and they wanted somebody that
Speaker 3: could actually understand where they were coming from based on
Speaker 3: where they were in their life as millennials. So I
Speaker 3: think that's the element where they decided to look for
Speaker 3: somebody on their own and then start to have family
Speaker 3: conversations with this newer advisor akame instead of that traditional advisor.
Speaker 2: This has to be a tough statistic for some to hear,
Speaker 2: because I certainly know when I talk to people who
Speaker 2: work so hard trying to grow their net assets and
Speaker 2: have something to leave for the next generation. They've worked
Speaker 2: so hard, they want to protect their life's work and
Speaker 2: they want to make sure that it is able to
Speaker 2: transfer in a seamless way. But now we hear this,
Speaker 2: there's this big disruption.
Speaker 5: So I think that for better for us, A lot
Speaker 5: of times we're talking about about portfolios and financial advising.
Speaker 5: We're not focusing on household or focusing on individuals and
Speaker 5: perceptions of what matters really differ across men and women.
Speaker 5: I think women are much more interested in things like protection.
Speaker 5: But if you look at at surveys out there, there's
Speaker 5: these huge gaps that exist in terms of what advisors
Speaker 5: think they're doing for their clients and what people actually report.
Speaker 5: Ording to an Alliance for Lifetime in Come peerp study,
Speaker 5: sixty two percent advisors think they're talking about protecting with
Speaker 5: their clients. Only twenty seven percent do. And so I
Speaker 5: think I think it requires being intentional understanding, like where
Speaker 5: your strength and weaknesses are, because if you if you
Speaker 5: don't have a plan how to how to engage you know,
Speaker 5: the spouse, the next generation, like you're going to be
Speaker 5: part of that eighty percent, not the twenty percent.
Speaker 4: And I've heard it so many times in my career
Speaker 4: where women would leave the financial advisor after the husband
Speaker 4: died or passed away because they didn't feel seen or
Speaker 4: heard that entire relationship. And so while the advisor thought
Speaker 4: it was a successful relationship, the client immediately when she
Speaker 4: had the chance, she left.
Speaker 2: Chelsea, this is interesting because you're in, you're on the
Speaker 2: front line on this. Is it that the advisors are
Speaker 2: not talking about it or that the clients aren't hearing
Speaker 2: everything they're saying.
Speaker 3: I think it's a bit of both, because I think
Speaker 3: as advisors were taught away on how to deliver advice
Speaker 3: and how to have conversations with individuals to make sure
Speaker 3: that we're you know, dotting all our eyes and crossing
Speaker 3: our t's when it comes to retirement planning, estate planning
Speaker 3: and protect But if they're not receiving it because they
Speaker 3: are just not prepared for that conversation or they're not ready, well,
Speaker 3: then we're missing each other. And I think that's something
Speaker 3: pretty common where we're doing something because we know this
Speaker 3: is important to have this conversation, but maybe they're not
Speaker 3: ready to receive it yet.
Speaker 4: It's a huge problem, and I think for financial advisors
Speaker 4: when they start to realize the value that they bring
Speaker 4: to clients is more about helping that client make decisions,
Speaker 4: helping them feel empowered with their money, excited, confident, versus
Speaker 4: putting the data in front of them. They'll say everything
Speaker 4: in one meeting, go over cash flow, tax planning, retirement planning,
Speaker 4: and stay planning, all of it. But it is so
Speaker 4: much information. And remember, money is emotional. So what I
Speaker 4: retain in a meeting, even if you've told me everything,
Speaker 4: I'm filtering through my own history, own emotions, behaviors, mindsets
Speaker 4: with money. So maybe I walk out of that meeting
Speaker 4: only hearing ten percent of what Chelsea told me. That's
Speaker 4: a problem. So what advisors can do to help combat
Speaker 4: that is also just deliver it in short forms. So
Speaker 4: we have to remember that as financial advisors give clients
Speaker 4: information in bite sized pieces, have more meetings more regularly,
Speaker 4: talk about only one or two things at each meeting.
Speaker 4: That's going to help the client so much more than
Speaker 4: trying to dump everything in one meeting.
Speaker 3: Right.
Speaker 5: So, I mean, I'm an investment guy. I love me
Speaker 5: a good portfolio, but portfolio is one very small component
Speaker 5: of achieving a financial goal. I think what we're seeing.
Speaker 5: Is this evolution or a profession away from advisors defining
Speaker 5: their value propositions. I build portfolios to I help you
Speaker 5: accomplish your financial goals, right, and that's retirement, that's everything,
Speaker 5: And to me, like that should have always been the focus,
Speaker 5: but it hasn't been. And it does require advisors to
Speaker 5: think about how are they going to rise to the
Speaker 5: occasion and do this?
Speaker 2: How do you see that? How do you deal with that?
Speaker 3: I absolutely see it, especially as I'm training the newer
Speaker 3: advisors on our team as well, because there's so much
Speaker 3: pride when you build that financial plan right, and you
Speaker 3: have all your pages and you know all the math works,
Speaker 3: and you show it to them and then is just
Speaker 3: not as excited as you are, And it's like why
Speaker 3: are they not as excited? It's like they're not emotionally
Speaker 3: connected to all of this data you're putting in front
Speaker 3: of them. So you have to find a way to
Speaker 3: tie it to their values and what's important to them.
Speaker 3: But I also encourage advisors to ask two really important questions.
Speaker 3: The first one is what does wealth mean to you?
Speaker 3: So when they talk to a new client and they're
Speaker 3: starting to build that rapport, really understand their relationship with
Speaker 3: money and what wealth truly means to them, but also
Speaker 3: what does financial success look like in having a relationship
Speaker 3: with a financial advisor.
Speaker 4: And I think financial advisors have to be willing to
Speaker 4: go to that place with clients, which is more emotional
Speaker 4: intelligence versus just data. And so even having that open mindset,
Speaker 4: like David's saying, there's things you could do. You can
Speaker 4: learn skills to talk to your clients in a different format,
Speaker 4: like there's financial coaches, or bring in a financial coach
Speaker 4: if you don't know how to have these conversations. But
Speaker 4: being that holistic, you know it's more than just numbers.
Speaker 4: It's the life, it's their dreams, it's their family, it's
Speaker 4: like what they care about most. And like Chelsea was saying,
Speaker 4: and when you connect those two, they're going to be
Speaker 4: so much more motivated to one implement, but then two
Speaker 4: senior praises, and you'll probably get a lot more.
Speaker 2: Referrals and that story may be different than the original client.
Speaker 5: We talk about gaps. According to the Alliance for Lifetime
Speaker 5: and Computer Purport seventy some advisors say they frequently discuss
Speaker 5: how their clients are going to spend their time and retirement,
Speaker 5: But clients report only twenty nine percent have those conversations, right, So, like,
Speaker 5: I mean, retirement's about a lot more than money. And
Speaker 5: I think if you're not talking about like how you're
Speaker 5: going to fill your time, how you're going to structure
Speaker 5: what you have to maximize that time, you're not doing
Speaker 5: the best job you could.
Speaker 3: And I think it's a hard conversation for a lot
Speaker 3: of individuals to have to really think about that behavioral
Speaker 3: component of what are you going to do, what's in enquirement,
Speaker 3: and what's next. And I think sometimes clients are so
Speaker 3: eager to work towards that goal where they can get
Speaker 3: out of that nine to five or quit the corporate
Speaker 3: rat race, that they're not actually thinking about what are
Speaker 3: they going to do in that time so they still
Speaker 3: feel fulfilled and all the other elements of their life.
Speaker 3: But I think those are the core pieces that we
Speaker 3: need to focus on to make sure that their values
Speaker 3: are mapped to their financial plan in that roadmap.
Speaker 5: I don't love the word retirement because I think as
Speaker 5: negative baggage. I like the word financial independence. You know,
Speaker 5: like think about if you were to be financial independent,
Speaker 5: like how would you spend your time like, I like
Speaker 5: that question more because I just like, maybe it's just me,
Speaker 5: but I have like, like people golfing are going on,
Speaker 5: I don't know that. Imagine you don't have to work,
Speaker 5: what would you do? I think that's a better way
Speaker 5: to think about the end of life stage versus quote
Speaker 5: unquote retire.
Speaker 4: I think that's also a great point too for financial
Speaker 4: advisors to start to pay attention to the language they're
Speaker 4: using with clients, because I agree, like the next gen
Speaker 4: millennials and below are not thinking about retirement. We're thinking about, well,
Speaker 4: let's find something that we enjoy that we can have
Speaker 4: financial independence. Yes, but even the idea of stopping working
Speaker 4: seems kind of like very odd.
Speaker 3: And that's exactly what a lot of my clients talk
Speaker 3: about because they are first generation wealth builders and the
Speaker 3: term they'll use as a work optional lifestyle where they're
Speaker 3: working for their passion because they choose to and not
Speaker 3: because they feel obligated to. And that's really the number
Speaker 3: that they're working towards, is where they have that piece
Speaker 3: and that flexibility in their life.
Speaker 2: The other thing that Prudentials Research has touched on is
Speaker 2: a confidence gap. What do you mean by that?
Speaker 5: What does that mean, yeah, I mean, you know, you
Speaker 5: could call it a gap or a paradox, but you know,
Speaker 5: there's this like people don't always have the best assessment
Speaker 5: of where they are financially what they should be doing.
Speaker 5: There are large gaps in what you'd call like subjective
Speaker 5: and objective knowledge when it comes to finances. According to
Speaker 5: the Prudential's latest pul survey, about ninety percent of mass
Speaker 5: affluent Americans think that they're on track to cover their
Speaker 5: essential expenses in retirement, but only about forty percent of
Speaker 5: people have an advisor, only about a third of a
Speaker 5: financial plan. So there's kind of this misalignment from where
Speaker 5: folks think that they're in a really good spot, but
Speaker 5: the data might suggest otherwise.
Speaker 2: Brittany, can you help us make sense of that? How
Speaker 2: can you be confident and to have no plan at
Speaker 2: the same time two things seem like they would be
Speaker 2: polar opposites.
Speaker 4: I think a lot of people have this with their money.
Speaker 4: They might know what to do, they might think they
Speaker 4: know what to do, they might research everything what to do,
Speaker 4: but they don't actually do it. And that is for
Speaker 4: many reasons. I think money, like I said earlier, is
Speaker 4: super emotional for people, so there's a lot of concepts,
Speaker 4: a lot of mindsets, a lot of scripts that we
Speaker 4: inherit from parents, from family, society, school, and to really
Speaker 4: get clear that yes, you can have a crystal clear
Speaker 4: plan in place, but that doesn't mean you're actually going
Speaker 4: to implement or behave in that manner with your money.
Speaker 3: So oftentimes when I work with clients, sometimes they'll come
Speaker 3: to us because they feel obligated because this is the
Speaker 3: thing to do. I know I should talk about my finances.
Speaker 3: I know I should have an advisor, But deep in
Speaker 3: their soul, they're really not at that place yet where
Speaker 3: they're ready to do the work or actually engage and
Speaker 3: like taking care of their finances. And that is okay
Speaker 3: that maybe that's not their moment yet, but it's really
Speaker 3: hard to work with somebody if they haven't reached that
Speaker 3: phase and they know what their internal why is. So
Speaker 3: I think there's an element of as advisors, we need
Speaker 3: to do the work to make sure that we're bringing
Speaker 3: the knowledge and the empathy to the table. But I
Speaker 3: think clients also need to internally know their why too,
Speaker 3: of what they're building, why they're building towards these goals,
Speaker 3: so that it can really be a really good partnership.
Speaker 5: You know. I think what we often overlook is that,
Speaker 5: like we've kind of solved inertia for people in accumulation
Speaker 5: right now, we have defaults. You know, we talk about
Speaker 5: behavioral finance, like you know, automatic enrollment, default savings rates,
Speaker 5: you know, targeted funds. All these things make the default
Speaker 5: path easiest. Is you get closer to your retirement, like
Speaker 5: you have to start making decisions, yes, right, And so
Speaker 5: I think like that's where advisors are so viable, because
Speaker 5: like you can't not make decisions or you'll make the
Speaker 5: wrong ones. And so all of a sudden, you know,
Speaker 5: like this this this knowledge gap. Well, like we're kind
Speaker 5: of creating an environment here we don't have to be
Speaker 5: very knowledgeable to build wealth. But then how how do
Speaker 5: you even figure out how to accumulate that? That's an
Speaker 5: entirely different skill set.
Speaker 3: I actually was talking to a client recently where they're
Speaker 3: about two years out from retirement, and just the thought
Speaker 3: of pulling money out of that account where they've worked
Speaker 3: so hard to see it grow every single year, and
Speaker 3: now the element that we are pulling money out so
Speaker 3: that they can live off of it was it was
Speaker 3: a tough conversation. We had to have an in depth
Speaker 3: meeting about like that feeling and why there is so
Speaker 3: much hesitation around this when we had run the plan
Speaker 3: and the analysis that they were okay. So I think
Speaker 3: those are the elements of having somebody in your corner.
Speaker 3: It's just so important the work that we do as advisors.
Speaker 5: They need more help than they often realize.
Speaker 2: So what should financial advisors be thinking about doing next week?
Speaker 2: How can they make the change? What do those changes
Speaker 2: look like?
Speaker 4: One have an open mindset. I think learning is something
Speaker 4: that you have to constantly be willing to do, no
Speaker 4: matter what age you are, and that's just because of
Speaker 4: the world we live in with technology, AI's constantly changing things,
Speaker 4: So we all have to have that open beginner's mindset.
Speaker 4: And for a financial advisor, if they go next week,
Speaker 4: look at their practice, look at how they're communicating currently
Speaker 4: with their ideal client, tele maybe start to identify are
Speaker 4: there just terminology gaps, Like instead of saying retirement, should
Speaker 4: we start saying financial independence? You know, in our marketing
Speaker 4: and in our meetings with clients.
Speaker 3: I think these are the elements wheref we're missing people consistently,
Speaker 3: they're looking for somebody that is using the same language
Speaker 3: that they're using, but understands the trajectory that they're trying
Speaker 3: to go and can meet them on that path.
Speaker 2: So you have an audience of financial advisors listening. Some
Speaker 2: are earlier in their careers, some have a very well
Speaker 2: established book of business with well healed clients. What should
Speaker 2: they know?
Speaker 4: You know?
Speaker 5: So if you look at its surveys of financial advisors
Speaker 5: in terms of, you know, threats that they perceive or challenges,
Speaker 5: client acquisition is first followed intergenerational transfers, and so they're
Speaker 5: kind of acutely aware that they need to get more
Speaker 5: business and the need to retain the business of GOT.
Speaker 5: If you've built a business doing something for a certain subset,
Speaker 5: I think there's a really good chance that that might
Speaker 5: work for a few more years. But to be long
Speaker 5: term durable, you have to be able to meet with
Speaker 5: the next generation. You got to have different paths to
Speaker 5: offer services. I think that requires like a team model
Speaker 5: and just doing more than what we've seen. And I
Speaker 5: think there's been a really exciting evolution of our industry
Speaker 5: over the last at least two decades in terms of
Speaker 5: being more holistic, more advice. I think that has to continue,
Speaker 5: and it's easier more now than ever given the tools
Speaker 5: we're seen being created.
Speaker 3: Yeah, I heard you say yes absolutically, And I think
Speaker 3: the team based approach is so crucial because we can't
Speaker 3: be everything to everyone and that's naive to assume that,
Speaker 3: but we want to make sure that we're able to
Speaker 3: add the right people on our team to make sure
Speaker 3: that we can connect with different individuals. So I always say,
Speaker 3: you know, trust is earned, and it's not just your
Speaker 3: credentials or the performance you're able to get a client,
Speaker 3: but it's really being there in those moments and having
Speaker 3: people on your team that can connect with other members
Speaker 3: of their family or different groups that you just may
Speaker 3: not be able to connect with.
Speaker 5: I mean, I think it's important to just acknowledge where
Speaker 5: you are on that spectrum.
Speaker 1: Right.
Speaker 5: If you've got a bunch of younger clients, like you
Speaker 5: should be in attack mode, right, you should build the
Speaker 5: infrastructure to engage the next generation to get these clients
Speaker 5: as they gain wealth. If you have an older, larger
Speaker 5: book of business, how are you actively protecting it? What
Speaker 5: are you doing to make connections to the spouses, to
Speaker 5: the next relation to ensure that you know when things happen,
Speaker 5: your position actually maintained those.
Speaker 2: Assets to bring it all together. The world that financial
Speaker 2: advisors work in is changing in a couple of key ways.
Speaker 2: The people who will be their clients in five years
Speaker 2: probably aren't their clients today. They need to be ready
Speaker 2: and receptive to this new group of investors, and this
Speaker 2: new cohort wants an advisor that's available, empathetic, and adaptable.
Speaker 2: If that describes you in your firm, then you're in
Speaker 2: good shape moving forward. Thank you to David, Brittany and
Speaker 2: Chelsea for being with me today. Thank you to Bloomberg
Speaker 2: Media Studios and Prudential for producing and sponsoring this episode.
Speaker 2: I'm Maggie Late, Thanks so much for joining us.