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Speaker 1: This is Master's in Business with Barry Ridholts on Bloomberg Radio.

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Speaker 1: This week on the podcast, I have a special guest.

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Speaker 1: His name is Rick Edelman. And if you are an advisor,

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Speaker 1: if you are somebody who is interested in the financial

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Speaker 1: services industry or a consumer who is looking for financial advice, UH,

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Speaker 1: you're gonna want to hear this conversation. Rick has built

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Speaker 1: a powerhouse firm over the past thirty years. They now

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Speaker 1: manage twenty one billion dollars. And he did it really

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Speaker 1: in a in a way that is fairly unique. When

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Speaker 1: when he launched Anentileman financial services, there weren't very many,

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Speaker 1: if any other similar firms. He he was a pioneer.

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Speaker 1: He was doing things before there was a script or

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Speaker 1: a roadmap or any sort of guidance. And he and

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Speaker 1: his wife we're kind of making it up along the way.

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Speaker 1: They knew what they didn't want to do. They saw

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Speaker 1: what was taking place at the big brokerage firms, and

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Speaker 1: they kind of became the anti broker. Uh. Not only

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Speaker 1: are they um a traditional r i A as we

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Speaker 1: think of them, meaning their fee based, not commission or

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Speaker 1: transactional based. Uh, but they effectively have no minimums If

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Speaker 1: you're a five thousand dollar account, they'll take it. If

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Speaker 1: you're less than five thousand hours UH, they'll take your

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Speaker 1: money and wave their fee on a pro bono basis.

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Speaker 1: I can't think of any other firm that approaches asset

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Speaker 1: management that way. It's fairly unique and and Edelman says,

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Speaker 1: shame on people who don't do that. If you're in

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Speaker 1: the services industry, like a doctor, you have an obligation

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Speaker 1: to your clients. If it's If it's not quite a

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Speaker 1: hippocratic oath, certainly the fiduciary standard requires not only putting

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Speaker 1: the client first, but putting people who might not be

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Speaker 1: clients first. And I think that's both a a unique

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Speaker 1: and refreshing perspective that we don't hear a lot of

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Speaker 1: UH in the world of finance. So I expect you'll

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Speaker 1: find this conversation fascinating. So, with no further ado, my

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Speaker 1: conversation with Edelman Financials Ric Edelman. My special guest today

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Speaker 1: is Rick Edelman. He is chairman and co founder of

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Speaker 1: Edelman Financial Services, affirm that manages well over twenty billion

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Speaker 1: dollars in assets for thirty four thousand families via forty

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Speaker 1: three offices across the USA. Rick is the author of

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Speaker 1: no less than nine books on financing, perhaps most notably

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Speaker 1: The Truth about Money, which is now in its fourth edition.

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Speaker 1: Is that right correct? Fourth edition? It is the winner

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Speaker 1: of several prizes and awards on financial liter racy and education.

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Speaker 1: Edelman Financial Services has been ranked either one or two, uh,

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Speaker 1: the number one or two independent financial advisor in the

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Speaker 1: US by Barons for the years two thousand and nine

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Speaker 1: to two thousand and twelves. And then they kicked me

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Speaker 1: off the list. They kicked you off the list. We'll

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Speaker 1: get into that, Rick Edelman, Welcome to Bloomberg. Thank you,

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Speaker 1: very great to be with you. Uh. You know, I've

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Speaker 1: been looking forward to this since we bumped into each

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Speaker 1: other at a conference way back when in um the spring,

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Speaker 1: and you just sort of derailed me. Why did they

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Speaker 1: Why did they kick you off the Barons list? How

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Speaker 1: do you go from number one to off the list? Well,

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Speaker 1: because they wanted to shake up the list and create

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Speaker 1: an opportunity for others to get accolades. Is number one,

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Speaker 1: and I was number one three times, and that one

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Speaker 1: in between it was number two. And so we agreed

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Speaker 1: that I was evolving personally. I was spending as our

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Speaker 1: firm grew, we we were much bigger than the typical

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Speaker 1: advisory firm, of course, with twenty one billion in assets

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Speaker 1: and with forty three offices, a hundred sixty advisors, six

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Speaker 1: hundred employees. These days, I was spending as much of

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Speaker 1: my time as CEO running the business as as an advisor,

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Speaker 1: working with individual clients and the folks at Barons, and

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Speaker 1: I recognize that we were creating the next generation in

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Speaker 1: the advisory marketplace. You know when when we started, way

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Speaker 1: back when I got licensed in eighty six, how about you,

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Speaker 1: uh ninety something? Yeah, I mean back then everyone was

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Speaker 1: the seven. I didn't get the six, I didn't get

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Speaker 1: sixty five, and he gave up the seven. So when

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Speaker 1: we began back in the eighties, there was no financial

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Speaker 1: planning firm you could go join, so we had no

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Speaker 1: choice but to start our own because the industry was

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Speaker 1: brand new, and I was that first generation among the

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Speaker 1: pioneers who create did this into you an early CFP?

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Speaker 1: I never obtained my CFP. I didn't have the time,

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Speaker 1: and I ended up teaching classes of CFPS and um

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Speaker 1: A continuous certified Continuing at Instructor, and I taught at

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Speaker 1: Georgetown University for nine years. I hold six professional designations,

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Speaker 1: but never bothered to get that one. So so wait,

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Speaker 1: let me interrupt you here because this is really fascinating.

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Speaker 1: You began more or less as a financial journalist, and

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Speaker 1: is that? Isn't that the background? Yes? And where did

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Speaker 1: where did Georgetown fit in in the chronology? So my

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Speaker 1: background as is as a journalist. That was my degree.

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Speaker 1: I have a communications degree, not a business degree. And

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Speaker 1: I'd like to brag that I graduated college without ever

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Speaker 1: having taken a business class, which means I wasn't brainwashed.

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Speaker 1: In journalism school, they teach you two things. One how

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Speaker 1: to ask questions and to how to explain the answers

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Speaker 1: in plain English. And my very good skills very important

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Speaker 1: when dealing with individual consumers who aren't expert in this subject.

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Speaker 1: And so I was writing in the financial trade press

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Speaker 1: out of college, and that was my entree to personal finance.

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Speaker 1: The publisher I started in the financial in the medical field,

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Speaker 1: but my publisher owned a variety of financial publications, and

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Speaker 1: there were twenty three of us on the editorial staff,

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Speaker 1: and we ended up writing for a whole bunch of

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Speaker 1: different things. And I wrote for some financial publications and

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Speaker 1: that was my entree. And my wife and I in

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Speaker 1: our early twenties, recognizing with my experience now as a

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Speaker 1: writer in the financial press, Hey, we ought to pay

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Speaker 1: attention to this and we decided to go to a

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Speaker 1: financial planner. Like most young couples, we wanted to buy

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Speaker 1: a house, and we went to a financial planner for

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Speaker 1: advice on how to do that. He ended up telling

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Speaker 1: us to lie on our mortgage application, told us to

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Speaker 1: commit a felony qualify for the mortgage. Um. The guy

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Speaker 1: was a jerk. He We could not believe that this

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Speaker 1: crook was telling us to do this. It really made

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Speaker 1: us mad. And that was the impetus for us saying,

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Speaker 1: you know what, why don't we learn how to do

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Speaker 1: this ourselves and then teach others what we've learned. And

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Speaker 1: that was the basis and thes and not lying. To

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Speaker 1: give people good advice, not bad advice. And so Jean

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Speaker 1: quit her job, went to work for pain Web and

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Speaker 1: they're back of office to learn the back end operational

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Speaker 1: side of the business. I got securities licensed, joined an

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Speaker 1: independent firm, became an independent advisor immediately on the broker

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Speaker 1: dealer side or on the broker dealer side, like there

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Speaker 1: really wasn't There wasn't scenario side back then, it really

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Speaker 1: didn't exist. I mean it technically did, but nobody. Why

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Speaker 1: are you explained to listeners the difference between commission and

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Speaker 1: fees just the nickel version. Well, back in the old days,

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Speaker 1: you had the brokerage licenses where you made money commissions

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Speaker 1: selling mutual funds um and every time you sold a

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Speaker 1: mutual fund you're in a commission for doing so. The

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Speaker 1: notion of a fee based advisor being licensed by the

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Speaker 1: SEC came about much later, and we made that jump

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Speaker 1: in the early two thousand's, And so we began our

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Speaker 1: firm in the nineteen eighties and focused on financial education,

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Speaker 1: teaching consumers how money works and how to make it

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Speaker 1: work for them. And we did it by seminars, teaching

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Speaker 1: elementary school e t A S. How to say for college,

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Speaker 1: and the word spread and we ended up being invited

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Speaker 1: on the radio and eventually being offered my own radio show,

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Speaker 1: and now twenty seven twenty eight years later, it's the

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Speaker 1: longest running national personal finance radio show in the country.

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Speaker 1: That's fantastic. You launched the firm in eight six as

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Speaker 1: a broker dealer I was affiliated with a broker dealer

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Speaker 1: for licensing and then the r I A part wasn't

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Speaker 1: until the two came in oh three and we launched

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Speaker 1: our fee based money management program, the Edleman Managed Asset Program.

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Speaker 1: We launched that in two thousand five. Today it's one

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Speaker 1: of the largest turnkey asset management programs in the industry

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Speaker 1: with twenty one billion in assets. That that that's quite amazing.

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Speaker 1: So the real question that's on my mind after hearing

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Speaker 1: this is you've been doing this for twenty seven years.

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Speaker 1: Who who is your competitors in that same space. Is

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Speaker 1: it the big Merrill Lynches, is it the lpls, is

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Speaker 1: it uh Dynasty or high Tower? How do you look

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Speaker 1: at the world out there and say, oh, we're competing

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Speaker 1: head to head with these guys. It's everybody and nobody.

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Speaker 1: It's a I'm a big fan of astronomy and Gene

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Speaker 1: and I have done some phone throughout activities in astronomy

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Speaker 1: of a big interest there. So let me give you

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Speaker 1: one analogy. We know how big galaxies galaxies are, and

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Speaker 1: we know that a couple of galaxies are colliding, including ours,

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Speaker 1: including ours, and when you look at the nasive photographs

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Speaker 1: of these colliding galaxies, there's an assumption when you first

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Speaker 1: look at them, that all of the stars within the

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Speaker 1: galaxies and all the planets within the galaxies will collide

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Speaker 1: and be big explosions and all that kind of good stuff,

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Speaker 1: except for the vast spaces between the stars exactly. And

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Speaker 1: the galaxies are so huge that they will so called collide,

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Speaker 1: but they will pass through each other and nothing will

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Speaker 1: ever touch anything else because the spaces are so vast.

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Speaker 1: By the same notion, in the financial services industry, our

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Speaker 1: industry is so big. It's an nineties seven trillion dollar economy.

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Speaker 1: That's how much money is invested. That's the net worth,

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Speaker 1: the market value of all things in this country that

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Speaker 1: have assets and market values, stocks, bonds, real estate, business assets.

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Speaker 1: Ninety seven trillion dollars. No one in our industry has

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Speaker 1: market share. Merrill Lynch, one of the biggest in the industry,

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Speaker 1: has about three trillion dollars three out of ninety seven.

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Speaker 1: They have coming up on five, Black Rock on six,

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Speaker 1: and there's no market share anywhere. If you look at

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Speaker 1: the soft drink industry, there's coke and Pepsi and everyone else.

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Speaker 1: Look at the airline industries, Delta United and everyone else.

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Speaker 1: In most businesses, there are three or four major competitors

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Speaker 1: who have market share. They're competing all the time in

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Speaker 1: our industry, Barry, you're a competitor of mine. Have you

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Speaker 1: ever encountered one of my clients ever anywhere? And I've

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Speaker 1: never encountered one of yours? Because this industry is huge.

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Speaker 1: We're talking about three hundred million Americans dealing with three

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Speaker 1: hundred thousand advisers, most of whom have a couple of

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Speaker 1: hundred clients, and dealing with a couple of tens of

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Speaker 1: millions of assets, and so On the one hand, this

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Speaker 1: industry is so huge, this economy is so vast, our

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Speaker 1: country so broad. We will never encounter competition anywhere. We're

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Speaker 1: all on the frontier and there are a bunch of

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Speaker 1: guys in the wilderness trying to shoot game. But we'll

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Speaker 1: never account each other on the mountains because the mountains

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Speaker 1: are too big. That's one answer. Here's the other answer.

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Speaker 1: Everybody is my competition everywhere. Money magazine and kiplingers to

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Speaker 1: publications that are constantly giving financial advice for five a

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Speaker 1: month are competition in may because I'm in the business

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Speaker 1: of trying to get consumers to listen to my advice,

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Speaker 1: and they're being distracted by the advice for Money magazine

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Speaker 1: and Kiplingers. They're being distracted by the Motley Full. They're

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Speaker 1: being distracted by Dave Ramsey and Susie Orman and Jim

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Speaker 1: Kramer and CNBC. And they're being distracted by the brokerage,

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Speaker 1: the big box brokerage firm Merrill Lynch and Well's, far

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Speaker 1: Ago and Ubs and all the majors. They're being distracted

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Speaker 1: by the mutual fund company's Fidelity in Vanguard and t

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Speaker 1: ro Price and t I A A. They're being distracted

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Speaker 1: by the banks, um Us Trust and Bank of America

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Speaker 1: and on and on and on. So in one sense, everybody,

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Speaker 1: everywhere is my competition. So it depends on how you

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Speaker 1: look at it. I have to mention, you have a

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Speaker 1: weekly radio show, you hold regular seminars, You've written nine books.

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Speaker 1: What does that footprint do to distinguish you Rick Edelman

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Speaker 1: from your everyone in No One competition. Well, it provides

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Speaker 1: name recognition. On the one hand, it also very importantly

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Speaker 1: helps consumers understand our philosophical view on financial planning and

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Speaker 1: investment management, allows them to kick the tire, so to speak.

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Speaker 1: It allows them to get a lot of freer, low

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Speaker 1: cost advice um that can be applicable to their own

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Speaker 1: personal situation in a non threatening way. They can digest

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Speaker 1: it as they wish, whether it's listening to the radio

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Speaker 1: or watching our videos or my television series on Public

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Speaker 1: Tape TV, or going to our seminars, or reading our

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Speaker 1: newsletter or going to our website. We we make financial

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Speaker 1: education accessible, we make it easy, we make it non threatening,

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Speaker 1: and I try really hard to make it fun. So

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Speaker 1: Scott Galloway is a professor and while you stern and

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Speaker 1: he covers a lot of technology companies like Amazon and

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Speaker 1: Facebook and Google, and he constantly says Amazon is where

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Speaker 1: they are today because their narrative is so clear, so

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Speaker 1: well defined, so well told by Jeff Bezos. How it

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Speaker 1: sounds like you're describing a somewhat similar approach that the

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Speaker 1: Rick Edelman story or Edelman Financial Services story is the

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Speaker 1: business you're in, and everything else is just running the

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Speaker 1: nuts and bolts of it. That's correct. Um. Most of

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Speaker 1: the advisers in this industry, in my experience, come from

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Speaker 1: a business background. They came from the brokerage industry of

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Speaker 1: the insurance industry. They spend most of their time talking

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Speaker 1: to each other, which means they're talking shop and filled

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Speaker 1: with jargon, and they don't know how to talk to

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Speaker 1: ordinary consumers in plain English, in language people understand that

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Speaker 1: is understandable and actionable. And my background and communications helps

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Speaker 1: me talk in plain English to folks in in clear,

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Speaker 1: easy language, and it's I've learned. It's a big advantage

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Speaker 1: because consumers are intimidated by this subject. They don't have

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Speaker 1: any background in it. Most people go through their entire

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Speaker 1: K to sixteen education without ever taking a personal finance class.

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Speaker 1: Their parents taught them nothing about money, their employers teach

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Speaker 1: them nothing about money, and they're a litter. We have

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Speaker 1: a nation of financial literance. Every study tells us this

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Speaker 1: that more arey Americans can't pass a basic personal literacy

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Speaker 1: financial literacy class or test, and so we are the

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Speaker 1: oasis for these folks. We help them understand that this

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Speaker 1: stuff is not complicated. It's incredibly simple and easy to understand.

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Speaker 1: It's Wall Street that tries to make it intimidating, to

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Speaker 1: make you their slave, to make you think that you're

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Speaker 1: dependent on them to buy their high priced, high commission,

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Speaker 1: high risk, low liquidity products that are designed to benefit

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Speaker 1: themselves first and the consumer second. Actually the consumer third,

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Speaker 1: they benefit themselves first, the broker, yeah, so right, the

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Speaker 1: consumers fourth. And so we've always taken a different attitude,

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Speaker 1: My wife and I we we took this from a

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Speaker 1: consumer perspective and said, we want to understand how this

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Speaker 1: works as consumers, and we're somebody going to share what

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Speaker 1: we've learned with others. And that's the basis of our books.

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Speaker 1: The tag onto my first book is that uh Personal

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Speaker 1: Finances fund uh And you know we we wrote it

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Speaker 1: and I'll do all the other financial education we do

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Speaker 1: because very simply, uh, money doesn't come with instructions. You know.

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Speaker 1: You you reference the complexity and the complications of finance

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Speaker 1: on Wall Street that has been described as a feature

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Speaker 1: not a bug. You obviously agree with that, meaning if

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Speaker 1: we make this really sophisticated and complex and convoluted, people

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Speaker 1: just pay us a fee to manage it. And made

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Speaker 1: camp people in Wall Street made its money by intimidating people,

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Speaker 1: obfuskating by being opaque and not being upfront and transparent.

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Speaker 1: Our attitude is I don't have to have a bias.

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Speaker 1: I don't have to try to sell you a product.

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Speaker 1: Instead I'll just teach you how money works. I'll explain

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Speaker 1: to you the difference between a stock and a bond,

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Speaker 1: and once you understand the difference, which is really easy,

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Speaker 1: you can then make an informed decision. And as long

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Speaker 1: as you retain me to assist you with this, then

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Speaker 1: I can make a living and we both win. So

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Speaker 1: I don't have to be a champion of any particular product,

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Speaker 1: or any particular company, or any particular strategy. We're free

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Speaker 1: to do whatever is in the client's best interest, and

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Speaker 1: that is uncommon in our industry, so we didn't really

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Speaker 1: talk about this previously. What about things like alternative investments,

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Speaker 1: hedge funds, vetric capital, private equity? Is that something that

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Speaker 1: you guys look at or do you? Is that just

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Speaker 1: too complicated and too expensive for for your client base.

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Speaker 1: We have available to us, as you do, virtually every

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Speaker 1: product available in the industry, so we can give our

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Speaker 1: clients anything. We choose not to give them any of

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Speaker 1: the stuff you've just described because they are not in

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Speaker 1: the client's best interests. These products are too complicated, they're

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Speaker 1: too expensive, they have a terrible history of underperformance, they're

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Speaker 1: very high risk, and they're ill liquid. Aside from those, Well,

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Speaker 1: I'm awesome, very often very adverse tax consequences rather than that,

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Speaker 1: you know, how was the how was the playing right?

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Speaker 1: I'm fond of saying, come for the high fees, stay

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Speaker 1: for the underperformance. Is it works out really well? And

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Speaker 1: you mentioned earlier, uh, the Dave Ramsey's and Susie Orman's

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Speaker 1: of the world, and how do you contrast what the

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Speaker 1: Rick Edelman's of the world do versus that group? Well,

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Speaker 1: we would you put yourself in that ground? You know,

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Speaker 1: if I were trying to be provocative, you know, I

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Speaker 1: would do something funny by saying the difference between me

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Speaker 1: and them is that I'm not an idiot. Um, but

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Speaker 1: but you're not gonna be provocaive. I'm not. I'm not

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Speaker 1: gonna be provocative and say that more seriously. I mean,

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Speaker 1: both of them are very talented and proven um successes,

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Speaker 1: and what they do there's a very big difference and

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Speaker 1: what they do versus what I do, and um, it's

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Speaker 1: twofold number one. I'm an actual practicing financial planner dealing

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Speaker 1: with actual clients, sitting across the coffee table, giving advice

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Speaker 1: to people on a long term, years and decades basis,

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Speaker 1: getting to know them, and their families in very intimate ways.

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Speaker 1: That is a very different perspective than when you're just

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Speaker 1: talking into a microphone on the radio to the masses,

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Speaker 1: where even if you're doing a call in show, as

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Speaker 1: Susie does and Dave does and I do, you really

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Speaker 1: can't do all that much for someone in a three

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Speaker 1: minute radio telephone conversation. And so when you are only

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Speaker 1: doing mass media activity, you're limited in your ability to

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Speaker 1: truly serve the client well, which is why we always

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Speaker 1: say on my show, don't act on anything you ever

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Speaker 1: here on the show uses as the basis for learning

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Speaker 1: more and talking to an individual advisor about your own

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Speaker 1: personal circumstances. There's one other very fundamental difference between Susie

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Speaker 1: and Dave and myself. They're talking to a different audience,

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Speaker 1: and that is why their advice is different than mine.

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Speaker 1: So who is your audience and who is their audience?

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Speaker 1: Their audience i'd like to refer to as the young

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Speaker 1: and the stupid um and again I'm not going to

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Speaker 1: be particularly provided um. They're talking predominantly to people who

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Speaker 1: are young, uh. Demographically if you look at their data

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Speaker 1: that there is more as a gray year audience, not

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Speaker 1: at all eighteen to thirty four year old single females

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Speaker 1: predominantly as our audience. Uh, and these folks don't have

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Speaker 1: much money, they don't have much knowledge, and they are

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Speaker 1: often in many cases, the vast majority of both of

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Speaker 1: their audiences are immature and irresponsible with personal finance. Dave's

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Speaker 1: big thing is helping people get out of debt. People

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Speaker 1: have too much credit card debt, they're over their heads

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Speaker 1: with mortgage debt, stream owned debt, and his advice, which

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Speaker 1: is a huge focus on getting rid of that debt,

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Speaker 1: is absolutely right, absolutely perfect for his audience. Susie very similar.

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Speaker 1: When they're talking to people who are irresponsible with money,

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Speaker 1: who are dealing with the emotional issues of money, who

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Speaker 1: are dealing with money as a power tool, and it's

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Speaker 1: an impact on their relationships that they have with their

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Speaker 1: their partner, their spouse, their families. The advice they're giving

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Speaker 1: them is very very good, very very important. But I'm

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Speaker 1: not talking to those people. People on talking to are

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Speaker 1: fifty years of age plus. They tend to be married,

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Speaker 1: they tend to be dual income, they tend to be

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Speaker 1: college educated, they tend to have half a million dollars

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Speaker 1: of investments, are more. All of this data is shown

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Speaker 1: by the survey research of our radio audience and our

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Speaker 1: seminar audiences. And we know that these folks don't need

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Speaker 1: my advice and whether or not they can afford a

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Speaker 1: cafe latte, they don't because they always advice. But there

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Speaker 1: you know, if you if a fight at a latte

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Speaker 1: is going to make a difference in your ability to retire,

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Speaker 1: you're doing something else very well. And that's my point.

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Speaker 1: So my audience doesn't need that kind of advice. They

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Speaker 1: don't need me to harp on them about the fact

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Speaker 1: that they're acting stupid, that they're buying, you know, fancy

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Speaker 1: pocket books and lots of jewelry and big costly vacations

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Speaker 1: when they're not even joining their four O one k

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Speaker 1: at work. I don't have to tell my clients this

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Speaker 1: because my clients are mature, intelligent, responsible members of their

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Speaker 1: community who simply want to understand the complexities of money,

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Speaker 1: of tax law, state planning, insurance, long term care, family

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Speaker 1: issues to help them make the best decisions that they're

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Speaker 1: already trying to make. So all we do is kind

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Speaker 1: of like tweak our clients along, do this instead of that,

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Speaker 1: because it's more efficient, more effective, it's lower risk, lower cost,

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Speaker 1: lower in tax, and so our audiences are very different. Therefore,

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Speaker 1: the advice Dave Ramsey gives is dead wrong for my clients,

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Speaker 1: but the advice I give my clients is probably dead

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Speaker 1: wrong for his. And so there is a place for

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Speaker 1: Dave Ramsey in this world, and for Susie Orman and

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Speaker 1: for me, and the audience needs to recognize who is

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Speaker 1: that they need to be listening to based on their

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Speaker 1: own situations. Let's talk about running a firm as large

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Speaker 1: as yours. You have forty three offices in sixteen states,

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Speaker 1: You work with thirty four thousand families. How many employees

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Speaker 1: do you have working? So that's a really big shop.

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Speaker 1: And you earlier, either proudly or cheapestly, admitted you took

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Speaker 1: no business classes whatsoever. How do U s chairman oversee

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Speaker 1: such an empire? Well, these days I don't have to,

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Speaker 1: so that's the good news. A year and a half

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Speaker 1: ago we brought in a CEO for the first time

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Speaker 1: so that I didn't have to continue running the firm

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Speaker 1: on a daily basis. My wife and I started the

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Speaker 1: firm thirty one years ago and we ran it ourselves

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Speaker 1: for a very very long time, the first thirty years,

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Speaker 1: and we began to realize that I was doing three

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Speaker 1: major things. One uh serving as a financial planner to

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Speaker 1: my personal clients that I've had for decades. Uh to

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Speaker 1: serving as the public face of the of the firm,

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Speaker 1: writing books, doing radio and TV seminars, public appearances and

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Speaker 1: all that kind of good stuff. And third, serving as

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Speaker 1: CEO of a growing enterprise. When you do all three

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Speaker 1: things in a full time basis, something has to slip,

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Speaker 1: and so we recognize that it was. You know, I'm

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Speaker 1: a really good CEO. I've I've done better as an

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Speaker 1: entrepreneur and founder than most in the industry. But I

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Speaker 1: wasn't doing it full time. So better to bring in

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Speaker 1: another talented, proven executive in our industry as a full

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Speaker 1: time CEO, so I didn't have to deal with the

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Speaker 1: day to day because, let's face it, dealing with I

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Speaker 1: T and operations and compliance and you know, finance and accounting.

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Speaker 1: You're right, that's not fun. That's all why I got

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Speaker 1: into the business. I got into the business because I

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Speaker 1: love consumers and I'm not a big fan of money.

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Speaker 1: I'm not a big fan of the subject of personal

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Speaker 1: finance and in sins I'm a big fan of individuals,

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Speaker 1: of people of their families, helping them achieve the goals

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Speaker 1: they have in life, getting their kids into college and

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Speaker 1: buying homes and caring for aging parents. That's the fun.

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Speaker 1: That's why we all get into financial planning, and the

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Speaker 1: operational side of the business is a distraction, necessary one,

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Speaker 1: an obligatory one, but nevertheless a distraction. So by bringing

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Speaker 1: in Ryan Parker, he was at LPL previously and before that,

430
00:24:26,680 --> 00:24:30,160
Speaker 1: which had seventeen thousand, I think fifteen thousand financial advisors

431
00:24:30,160 --> 00:24:35,159
Speaker 1: in their organization prior to that, uh frank Russell one

432
00:24:35,200 --> 00:24:37,879
Speaker 1: of the biggest firms in our industry, and before that

433
00:24:38,000 --> 00:24:41,160
Speaker 1: Franklin Templeton one of the biggest mutual fund companies in America.

434
00:24:41,240 --> 00:24:46,040
Speaker 1: Twenty year executive um fabulous guy, very skilled and talented

435
00:24:46,119 --> 00:24:47,760
Speaker 1: who's now running the firm day to day. So I

436
00:24:47,760 --> 00:24:50,359
Speaker 1: don't have to deal with all of that, and I

437
00:24:50,440 --> 00:24:53,399
Speaker 1: have my financial planning team working with my clients for

438
00:24:53,400 --> 00:24:55,479
Speaker 1: the most part, and so I can focus my energies

439
00:24:55,520 --> 00:24:58,439
Speaker 1: and attention on bigger picture stuff that is really going

440
00:24:58,480 --> 00:25:01,200
Speaker 1: to move the needle for a America, not just our firms,

441
00:25:01,240 --> 00:25:03,840
Speaker 1: but all of America dealing with a major challenges. We're

442
00:25:03,880 --> 00:25:07,120
Speaker 1: dealing in the field of personal finance. So you're now

443
00:25:07,720 --> 00:25:11,359
Speaker 1: twenty point six. I always afraid to round up, but

444
00:25:12,119 --> 00:25:14,440
Speaker 1: let's call it one. It depends on what the market

445
00:25:14,480 --> 00:25:16,920
Speaker 1: did today. You know, it's one billion, you know, so

446
00:25:17,600 --> 00:25:23,160
Speaker 1: it's not swinging five percent a day. But when did

447
00:25:23,200 --> 00:25:26,040
Speaker 1: that really ramp up? If you launched thirty one years ago,

448
00:25:26,760 --> 00:25:30,280
Speaker 1: was it was it that hockey stick growth immediately? Was

449
00:25:30,320 --> 00:25:32,720
Speaker 1: it a long slow process? Tell us about what that

450
00:25:32,800 --> 00:25:37,040
Speaker 1: growth curve looked like. It has been growing steadily and

451
00:25:37,400 --> 00:25:40,040
Speaker 1: growth was never our goal. Gene and I we real

452
00:25:40,119 --> 00:25:42,040
Speaker 1: simple about it. We said, look, we're going to help people,

453
00:25:42,600 --> 00:25:44,640
Speaker 1: and if somebody asks for our help and we don't

454
00:25:44,640 --> 00:25:46,640
Speaker 1: have the capacity to help them, we'll grow. We'll add

455
00:25:46,680 --> 00:25:50,600
Speaker 1: a financial planner who can assist, and we'll stop growing

456
00:25:50,600 --> 00:25:53,800
Speaker 1: when people stop asking us for help. But we continue

457
00:25:53,800 --> 00:25:57,360
Speaker 1: to receive tens of thousands of phone calls and emails

458
00:25:57,359 --> 00:26:00,280
Speaker 1: a year from people asking for our help, and so

459
00:26:00,320 --> 00:26:03,400
Speaker 1: we continue to grow to serve them. The real key

460
00:26:03,440 --> 00:26:08,320
Speaker 1: for us as we've grown is to sustain who we are,

461
00:26:08,960 --> 00:26:12,760
Speaker 1: because that's why people culture of the philosophy that you know,

462
00:26:12,760 --> 00:26:16,399
Speaker 1: there's a phrase somebody in your office referenced one face,

463
00:26:16,480 --> 00:26:20,440
Speaker 1: one voice. That's an internal phrase. It's gotten out into

464
00:26:20,440 --> 00:26:22,480
Speaker 1: the public, which is fine, but it was never meant

465
00:26:22,480 --> 00:26:25,719
Speaker 1: to be a slogan externally, but it's kind of become one.

466
00:26:26,560 --> 00:26:29,800
Speaker 1: The real message is this whene when someone calls our

467
00:26:29,840 --> 00:26:33,400
Speaker 1: office asking to talk with an advisor, the reason they're

468
00:26:33,440 --> 00:26:35,919
Speaker 1: doing that is that they've had some exposure somewhere to

469
00:26:36,000 --> 00:26:38,919
Speaker 1: our organization. They've heard my radio show, they've been to

470
00:26:38,960 --> 00:26:41,200
Speaker 1: a seminar, they've read one of my books, they've seen

471
00:26:41,240 --> 00:26:43,800
Speaker 1: my TV show, they've been to our website something somewhere,

472
00:26:44,160 --> 00:26:47,000
Speaker 1: and because of that, they've been exposed to our philosophy.

473
00:26:47,040 --> 00:26:49,200
Speaker 1: They know how I feel about mortgages, which is different

474
00:26:49,240 --> 00:26:51,639
Speaker 1: from most advisors. They know how I feel about muni bonds.

475
00:26:51,840 --> 00:26:54,320
Speaker 1: They know how we feel about investment management and insurance

476
00:26:54,320 --> 00:26:56,359
Speaker 1: and taxes and all this kind of good stuff. So

477
00:26:56,400 --> 00:26:58,800
Speaker 1: when they call in, it's because they liked what they heard.

478
00:26:58,840 --> 00:27:01,199
Speaker 1: They enjoyed that advice, and they want to know that

479
00:27:01,240 --> 00:27:03,199
Speaker 1: the advice they're going to get from my colleague is

480
00:27:03,240 --> 00:27:05,119
Speaker 1: the same as the advice they would have gotten for

481
00:27:05,200 --> 00:27:08,440
Speaker 1: me personally, And so we work really hard to make

482
00:27:08,480 --> 00:27:12,560
Speaker 1: sure that the client experiences uniform within the firm, that

483
00:27:12,640 --> 00:27:15,399
Speaker 1: no matter which of my hundred sixty advisers you talked to,

484
00:27:15,960 --> 00:27:20,280
Speaker 1: the philosophy, the methodology, the entire client experience will be

485
00:27:20,359 --> 00:27:23,360
Speaker 1: the same. It's the Starbucks model. Go to any Starbucks

486
00:27:23,400 --> 00:27:25,320
Speaker 1: in the country, you know what your experience will be.

487
00:27:25,520 --> 00:27:27,800
Speaker 1: Every latte tastes the same no matter where you are.

488
00:27:27,840 --> 00:27:29,800
Speaker 1: The stores all have the same look and feel. The

489
00:27:29,920 --> 00:27:33,960
Speaker 1: client's service, customer service for them is similar. The baristas

490
00:27:34,000 --> 00:27:36,640
Speaker 1: all act the same way. They can meet you, they

491
00:27:36,680 --> 00:27:38,919
Speaker 1: greet you the same way. And so we want the

492
00:27:38,960 --> 00:27:42,159
Speaker 1: client experience to be not dependent on you talking to me,

493
00:27:43,080 --> 00:27:46,040
Speaker 1: but on the firm itself, because that's the Achilles hel

494
00:27:46,080 --> 00:27:48,800
Speaker 1: In the financial services industry, Merrill Lynch has what fifteen

495
00:27:48,840 --> 00:27:53,119
Speaker 1: thousand brokers the thundering her, and the experience you have

496
00:27:53,280 --> 00:27:56,240
Speaker 1: as a client depends on which of those fifteen and

497
00:27:56,240 --> 00:27:59,240
Speaker 1: you talk to, because totally you have one guy buy

498
00:27:59,280 --> 00:28:01,280
Speaker 1: an IBM and another one is shorting it, one guy

499
00:28:01,359 --> 00:28:03,840
Speaker 1: is trading options, another one is buying mini bonds. Meryl

500
00:28:03,880 --> 00:28:06,040
Speaker 1: couldn't care less as long as those brokers are acting

501
00:28:06,040 --> 00:28:10,320
Speaker 1: honestly and ethically, morally and profitably. The advisors are free

502
00:28:10,400 --> 00:28:12,480
Speaker 1: to do what they want, which means the advice you

503
00:28:12,520 --> 00:28:15,359
Speaker 1: get is dependent on the advisor, not on Meryl. That's

504
00:28:15,400 --> 00:28:17,600
Speaker 1: not the same at Edelman Financial. At our firm, it's

505
00:28:17,600 --> 00:28:20,120
Speaker 1: all about the firm, it isn't about the individual advisor.

506
00:28:20,520 --> 00:28:22,880
Speaker 1: So that has been a hamstring in our growth because

507
00:28:23,200 --> 00:28:26,080
Speaker 1: we can only bring in advisors who agree with me,

508
00:28:26,359 --> 00:28:29,639
Speaker 1: who adhere to the philosophy, methodology and the process that

509
00:28:29,680 --> 00:28:34,359
Speaker 1: we use so that we can sustain the corporate culture

510
00:28:34,359 --> 00:28:37,520
Speaker 1: and the client experience. And so we don't have fifteen

511
00:28:37,560 --> 00:28:39,680
Speaker 1: thousand brokers like Meryl does. I wish I did, but

512
00:28:39,720 --> 00:28:41,800
Speaker 1: we don't. One day, I hope we will. We have

513
00:28:41,800 --> 00:28:46,560
Speaker 1: a hundred sixty and the client experience I fully believe

514
00:28:47,200 --> 00:28:51,800
Speaker 1: is consistent across the spectrum in our firm. What surprised

515
00:28:51,840 --> 00:28:55,160
Speaker 1: you about how you've developed was it? Was it the

516
00:28:55,280 --> 00:28:58,520
Speaker 1: number of advisors you've added, the number of clients, Like,

517
00:28:58,600 --> 00:29:02,600
Speaker 1: what was that process and what was as expected? And

518
00:29:02,640 --> 00:29:06,040
Speaker 1: what was Hey, I really wasn't thinking about that, I

519
00:29:06,080 --> 00:29:09,160
Speaker 1: guess the surprise to me was that we serve a

520
00:29:09,280 --> 00:29:13,480
Speaker 1: marketplace and we deliver services to that market in a

521
00:29:13,520 --> 00:29:16,400
Speaker 1: manner that is different from pretty much everybody else in

522
00:29:16,440 --> 00:29:19,480
Speaker 1: the industry. When you say you deliver services, is it

523
00:29:20,200 --> 00:29:23,000
Speaker 1: the services to clients or is it the footprint you

524
00:29:23,040 --> 00:29:25,720
Speaker 1: have that attracts the clients in the first place? The

525
00:29:25,760 --> 00:29:33,120
Speaker 1: services to the client. Most advisors, most firms are targeting

526
00:29:33,160 --> 00:29:36,120
Speaker 1: the high net worth. They want to deal with people

527
00:29:36,160 --> 00:29:37,960
Speaker 1: who have a million dollars or more. And you're a

528
00:29:38,000 --> 00:29:42,200
Speaker 1: minimum is five thousand dollars. That's very unusual. It's unheard of,

529
00:29:43,000 --> 00:29:46,240
Speaker 1: and it used to be fifty. Is it five thousand

530
00:29:46,320 --> 00:29:49,120
Speaker 1: with an advisor or five thousand worth a robo advisor?

531
00:29:49,840 --> 00:29:52,200
Speaker 1: Either way, and if you don't have the five thousand

532
00:29:52,240 --> 00:29:53,600
Speaker 1: will help you anyway. We'll treat you as a pro

533
00:29:53,640 --> 00:29:55,240
Speaker 1: bono case, so we'll help you until you get the

534
00:29:55,240 --> 00:29:57,440
Speaker 1: five thousand. Really, so, we don't care whether you have

535
00:29:57,480 --> 00:29:59,280
Speaker 1: any money or not. We only care as to whether

536
00:29:59,360 --> 00:30:01,920
Speaker 1: or not you want to improve your financial lot in

537
00:30:01,960 --> 00:30:03,959
Speaker 1: life and if you're willing to take you our advice.

538
00:30:04,400 --> 00:30:07,520
Speaker 1: So let me push back at that. I could hear

539
00:30:08,080 --> 00:30:13,320
Speaker 1: all the advisers listening saying, well, you're there are certain

540
00:30:13,360 --> 00:30:17,000
Speaker 1: costs associated with each household you have, legal and accounting

541
00:30:17,000 --> 00:30:20,320
Speaker 1: and compliance and all the software stack we have, each

542
00:30:20,360 --> 00:30:24,400
Speaker 1: of there's a per household cost to that at forget

543
00:30:24,640 --> 00:30:28,400
Speaker 1: fifty thousand, at five thousand, it's a big money loaser yea.

544
00:30:29,200 --> 00:30:33,080
Speaker 1: And what's your point, Well, this is what the why.

545
00:30:33,120 --> 00:30:35,560
Speaker 1: I think a lot of people don't take those clients. Yeah,

546
00:30:35,600 --> 00:30:37,880
Speaker 1: we'll shame on them, arrogant s obs. They ought to

547
00:30:37,880 --> 00:30:40,960
Speaker 1: get the hell out of this industry and explain what motivated.

548
00:30:40,960 --> 00:30:43,280
Speaker 1: Would you imagine a physician saying I'd love to help you,

549
00:30:43,320 --> 00:30:45,680
Speaker 1: but unfortunately you don't have any money, so I'm sorry,

550
00:30:45,720 --> 00:30:48,800
Speaker 1: I'm not gonna give you. That gets said every single day,

551
00:30:48,920 --> 00:30:51,800
Speaker 1: Oh we don't have insurance, Well go to the emergency room.

552
00:30:51,840 --> 00:30:55,360
Speaker 1: I can't help you. And so that's exactly what happens.

553
00:30:55,360 --> 00:30:56,960
Speaker 1: And they you do get the services and the care

554
00:30:57,040 --> 00:30:59,280
Speaker 1: that they need, because that's what There isn't a physician

555
00:30:59,280 --> 00:31:01,520
Speaker 1: in this country that will turned down a sick patient

556
00:31:01,600 --> 00:31:05,000
Speaker 1: because they don't have the money. And that's ridiculous. And

557
00:31:05,560 --> 00:31:07,440
Speaker 1: if they don't have the insurance, they're not getting past

558
00:31:07,480 --> 00:31:10,960
Speaker 1: in there set the front door only in certain small

559
00:31:10,960 --> 00:31:13,280
Speaker 1: private practices. But if you look at the vast majority

560
00:31:13,280 --> 00:31:15,640
Speaker 1: of physicians who are dealing with the hippocratic oath, they

561
00:31:15,640 --> 00:31:18,120
Speaker 1: are not going to look at somebody lying on the

562
00:31:18,120 --> 00:31:20,160
Speaker 1: sidewalk bleeding to death. Same Wait a minute, I think

563
00:31:20,160 --> 00:31:23,440
Speaker 1: I want to check the guy's wallet before if it's

564
00:31:23,440 --> 00:31:25,239
Speaker 1: the same thing here, these people are coming to us

565
00:31:25,240 --> 00:31:27,520
Speaker 1: saying I'm bleeding to death and I need your help,

566
00:31:27,520 --> 00:31:28,920
Speaker 1: and I'm not going to say to them, well, can

567
00:31:28,960 --> 00:31:31,120
Speaker 1: you afford my faith? My answer is I'm going to

568
00:31:31,240 --> 00:31:32,880
Speaker 1: help you, and if you can't afford my fail, I'll

569
00:31:32,920 --> 00:31:35,200
Speaker 1: waive my faith because what matters more is that you

570
00:31:35,240 --> 00:31:37,080
Speaker 1: get the help that you need. And you're right, most

571
00:31:37,120 --> 00:31:39,400
Speaker 1: advisors won't do it because their attitude is I can

572
00:31:39,400 --> 00:31:41,560
Speaker 1: only handle This is what most advisors say. I can

573
00:31:41,600 --> 00:31:44,440
Speaker 1: handle a hundred and fifty families and that's it, and

574
00:31:44,560 --> 00:31:46,480
Speaker 1: I can't fill them with people who can't afford me.

575
00:31:46,920 --> 00:31:49,560
Speaker 1: So this is why they're arrogant and they're idiots. If

576
00:31:49,600 --> 00:31:54,160
Speaker 1: you can't handle to serve these people because you can

577
00:31:54,200 --> 00:31:56,840
Speaker 1: only handle a hundred fifty clients, then double your capacity

578
00:31:56,880 --> 00:32:01,040
Speaker 1: to three hundred. Bring in another advisor. Because now you've

579
00:32:01,040 --> 00:32:03,400
Speaker 1: got two advisors, you now have double the capacity, and

580
00:32:03,480 --> 00:32:06,520
Speaker 1: you build the infrastructure so that the criteria of can

581
00:32:06,560 --> 00:32:09,000
Speaker 1: I afford you is no longer gone. And I'll take

582
00:32:09,000 --> 00:32:11,320
Speaker 1: it a step further from a practice management perspective. And

583
00:32:11,320 --> 00:32:13,160
Speaker 1: in this radio show we're talking to consumers. Let me

584
00:32:13,160 --> 00:32:17,200
Speaker 1: talk to advisors for a moment. If you're an advisor

585
00:32:17,680 --> 00:32:20,280
Speaker 1: and your attitude is I can't afford to take on

586
00:32:20,320 --> 00:32:22,200
Speaker 1: that small client because they don't have any money, let

587
00:32:22,240 --> 00:32:24,480
Speaker 1: me tell you something. The good will you will generate

588
00:32:24,480 --> 00:32:27,480
Speaker 1: and serving that client for years, that person will age

589
00:32:27,480 --> 00:32:29,920
Speaker 1: in life, and as they do, they will get money,

590
00:32:30,160 --> 00:32:33,000
Speaker 1: they will get an inheritance, they will win a legal judgment,

591
00:32:33,000 --> 00:32:35,520
Speaker 1: they will win the lottery, they will get uh, they

592
00:32:35,520 --> 00:32:38,240
Speaker 1: will marry up. That something will happen in their life,

593
00:32:38,280 --> 00:32:40,160
Speaker 1: and the good will you have bestowed on them for

594
00:32:40,240 --> 00:32:42,280
Speaker 1: years will come back to you in spades. Who referrals

595
00:32:42,320 --> 00:32:44,040
Speaker 1: you don't know who they know. You don't know who

596
00:32:44,080 --> 00:32:46,280
Speaker 1: they're going to become. So if you insist on being

597
00:32:46,560 --> 00:32:50,600
Speaker 1: self interested in self motivated, treat it like planning seeds.

598
00:32:50,920 --> 00:32:53,120
Speaker 1: Stop looking inward at what's in it for you, and

599
00:32:53,160 --> 00:32:55,960
Speaker 1: recognize that you have an obligation with your skills, talent,

600
00:32:56,000 --> 00:32:58,880
Speaker 1: and knowledge to help people who lack all three, to

601
00:32:59,080 --> 00:33:01,560
Speaker 1: serve them the way they need to be served. Don't

602
00:33:01,600 --> 00:33:05,479
Speaker 1: fulfill and maintain the terrible relationship and reputation that our

603
00:33:05,560 --> 00:33:08,440
Speaker 1: industry has, which is that we will only serve the

604
00:33:08,480 --> 00:33:12,160
Speaker 1: one percenters. This is why the hate Wall Street. It's

605
00:33:12,160 --> 00:33:15,520
Speaker 1: a terrible reputation Wall Street hasn't. It's well deserved. So

606
00:33:15,800 --> 00:33:17,840
Speaker 1: if you are a consumer, let me shift gears now

607
00:33:17,880 --> 00:33:21,520
Speaker 1: and talking to consumers. If you're trying struggling looking for

608
00:33:21,560 --> 00:33:24,320
Speaker 1: an advisor who won't help you because you're not already

609
00:33:24,360 --> 00:33:26,480
Speaker 1: a millionaire, well now you know there's a firm that

610
00:33:26,520 --> 00:33:29,240
Speaker 1: will help you, an award winning organization that will give

611
00:33:29,240 --> 00:33:31,240
Speaker 1: you the advice you need in the services that you need,

612
00:33:31,280 --> 00:33:33,840
Speaker 1: whether you have the million or simply wish that you did.

613
00:33:34,000 --> 00:33:35,920
Speaker 1: I love that. I love that I've pushed your buttons

614
00:33:35,960 --> 00:33:39,880
Speaker 1: and gotten you rolling. Let me ask you another question

615
00:33:39,920 --> 00:33:44,000
Speaker 1: that I know you're somewhat passionate about. You mentioned there

616
00:33:44,040 --> 00:33:48,400
Speaker 1: are three hundred thousand financial advisors in the United States.

617
00:33:49,120 --> 00:33:52,280
Speaker 1: I've heard you say that most of these folks are

618
00:33:52,320 --> 00:33:55,120
Speaker 1: either going to have to merge or get hired by

619
00:33:55,200 --> 00:33:59,040
Speaker 1: a bigger firm, or go out of business. True or false. Yeah,

620
00:33:59,080 --> 00:34:00,880
Speaker 1: So over the next five years, half of them will

621
00:34:00,880 --> 00:34:03,120
Speaker 1: be gone. Half will be gone. So the three will

622
00:34:03,160 --> 00:34:05,600
Speaker 1: be one fifty. What what are the other half going

623
00:34:05,640 --> 00:34:08,600
Speaker 1: to be doing They'll be other than working for you

624
00:34:09,320 --> 00:34:13,040
Speaker 1: or you or they'll be They'll be they'll get together

625
00:34:13,160 --> 00:34:16,319
Speaker 1: and and create larger practices. They will merge with each other,

626
00:34:16,920 --> 00:34:20,319
Speaker 1: they will join larger practices, or they will be out

627
00:34:20,320 --> 00:34:23,160
Speaker 1: of the business. The notion of a small solo practitioner

628
00:34:23,200 --> 00:34:26,160
Speaker 1: will be gone. That's that's a point notion. But it's

629
00:34:26,280 --> 00:34:30,200
Speaker 1: very you know, Norman Rockwell, Americana. Hey, here's a person

630
00:34:30,239 --> 00:34:33,359
Speaker 1: who's in a small town. He hung a shingle loud

631
00:34:33,600 --> 00:34:36,400
Speaker 1: He or she is working with his friends and neighbors.

632
00:34:36,640 --> 00:34:40,319
Speaker 1: And what is wrong with that model? It's unsustainable. This

633
00:34:40,400 --> 00:34:42,120
Speaker 1: is the model that you began with. It's the model

634
00:34:42,200 --> 00:34:44,640
Speaker 1: I began with. Model we all did. And it's not

635
00:34:44,719 --> 00:34:48,839
Speaker 1: that the model is bad. It's simply not sustainable into

636
00:34:49,000 --> 00:34:53,200
Speaker 1: day's environment. And there are three reasons for it. One

637
00:34:53,400 --> 00:34:58,799
Speaker 1: is regulatory, two is competition, and three is technology. From

638
00:34:58,800 --> 00:35:02,719
Speaker 1: a regulatory perspective of the SEC is more demanding. And

639
00:35:02,760 --> 00:35:04,520
Speaker 1: I put that in quotes as a good word, not

640
00:35:04,600 --> 00:35:07,880
Speaker 1: a bad word. The SEC is more demanding than ever

641
00:35:08,400 --> 00:35:12,080
Speaker 1: in making sure that advisors are serving the client's best interests,

642
00:35:12,120 --> 00:35:15,319
Speaker 1: that they that the advisors are engaging in practices that

643
00:35:15,360 --> 00:35:18,960
Speaker 1: are in the spirit and intent of the law, not

644
00:35:19,120 --> 00:35:22,919
Speaker 1: merely the rigs of the law, and so many advisors

645
00:35:22,960 --> 00:35:25,680
Speaker 1: are currently selling products that in the future will not

646
00:35:25,719 --> 00:35:27,520
Speaker 1: be able to be sold. We're already beginning to see

647
00:35:27,520 --> 00:35:30,560
Speaker 1: the beginnings of the fiduciary standard coming about. Despite the

648
00:35:30,600 --> 00:35:33,680
Speaker 1: best efforts of the current administration, who are not apparently

649
00:35:34,080 --> 00:35:36,920
Speaker 1: big fans of the fiduciary nor is the industry, and

650
00:35:36,960 --> 00:35:40,719
Speaker 1: despite all of their efforts to delay it quash it,

651
00:35:40,719 --> 00:35:43,839
Speaker 1: it's eventually going to happen. And when it does, the

652
00:35:43,880 --> 00:35:48,360
Speaker 1: majority of investment products currently foisted on the American populace

653
00:35:48,440 --> 00:35:51,800
Speaker 1: today will cease to exist. And when they cease to exist,

654
00:35:52,080 --> 00:35:54,680
Speaker 1: so will the commissions that are behind them, the non

655
00:35:54,719 --> 00:35:58,080
Speaker 1: traded reads that have a ten percent commission variable. Universal

656
00:35:58,280 --> 00:36:00,439
Speaker 1: of a problem with non traded reads with a ten

657
00:36:00,480 --> 00:36:03,719
Speaker 1: percent fig And how is how is uh? How are

658
00:36:03,719 --> 00:36:05,880
Speaker 1: the boys going to make their money down by the

659
00:36:05,960 --> 00:36:08,480
Speaker 1: docks If they can't charge a ten percent tax on that,

660
00:36:08,680 --> 00:36:10,200
Speaker 1: they won't be able to And they're going to quit

661
00:36:10,200 --> 00:36:12,160
Speaker 1: the business, and they're gonna become used car salesman, which

662
00:36:12,160 --> 00:36:14,600
Speaker 1: is what they should be doing anyway. So they're not

663
00:36:14,600 --> 00:36:16,760
Speaker 1: going to be able to survive because the regulatory environment

664
00:36:16,760 --> 00:36:19,040
Speaker 1: will not allow them to continue operating the way that

665
00:36:19,040 --> 00:36:21,800
Speaker 1: they currently do. Margins are going to be crushed, revenues

666
00:36:21,840 --> 00:36:24,360
Speaker 1: are going to be decreased, and many of these organizations

667
00:36:24,400 --> 00:36:26,120
Speaker 1: will just be thrown out of business. In fact, that's

668
00:36:26,160 --> 00:36:28,360
Speaker 1: one of the arguments the industry has used in court

669
00:36:28,800 --> 00:36:31,600
Speaker 1: to overturn the rule. They finally said to the judge,

670
00:36:31,719 --> 00:36:33,680
Speaker 1: if this rule goes in, we're going to be out

671
00:36:33,680 --> 00:36:35,799
Speaker 1: of business because we can't make the money we're making. Well,

672
00:36:35,880 --> 00:36:37,920
Speaker 1: that's the whole point of the rule. So that's a

673
00:36:38,040 --> 00:36:40,360
Speaker 1: rather silly argument. I thought. That's number one is regulation.

674
00:36:40,800 --> 00:36:45,520
Speaker 1: Number two is competition. Firms like mine are growing in

675
00:36:45,600 --> 00:36:47,680
Speaker 1: ways that have never been before. There are probably a

676
00:36:47,719 --> 00:36:50,319
Speaker 1: dozen of US firms like mine that have become not

677
00:36:50,400 --> 00:36:55,239
Speaker 1: just practices, but companies, businesses, survivable businesses. Yeah, where we

678
00:36:55,320 --> 00:36:58,480
Speaker 1: have the funding of private equity firms, where we have

679
00:36:58,560 --> 00:37:03,400
Speaker 1: incredibly depockets, we world class executives from a variety of

680
00:37:03,400 --> 00:37:07,719
Speaker 1: of expertise, and I T finance and accounting, in operations

681
00:37:07,760 --> 00:37:11,160
Speaker 1: and compliance and all over the map. Allowing us to

682
00:37:11,200 --> 00:37:13,960
Speaker 1: run our company is the way that IBM runs its company.

683
00:37:14,280 --> 00:37:16,800
Speaker 1: Enabling us to do things on a huge impactful basis.

684
00:37:16,840 --> 00:37:20,520
Speaker 1: You're going to see these mega firms like Edleman Financial.

685
00:37:20,560 --> 00:37:22,680
Speaker 1: In the future, you're going to see a trillion dollar

686
00:37:22,920 --> 00:37:25,440
Speaker 1: r i A, just like you have trillion dollar brokerage firms,

687
00:37:26,040 --> 00:37:29,000
Speaker 1: and that's going to create a big challenge for the

688
00:37:29,040 --> 00:37:32,440
Speaker 1: individual practitioner because he isn't gonna have the financial resources

689
00:37:32,760 --> 00:37:36,400
Speaker 1: largely again because of technology. Point number three. Technology is

690
00:37:36,400 --> 00:37:39,719
Speaker 1: getting to the point where much of what that old

691
00:37:39,800 --> 00:37:44,200
Speaker 1: country doctor does is being supplanted by technological solutions. The

692
00:37:44,280 --> 00:37:49,080
Speaker 1: same thing to advisors. Investment management is already a commodity.

693
00:37:49,280 --> 00:37:51,719
Speaker 1: You already have the ability to get investment management for

694
00:37:51,800 --> 00:37:55,080
Speaker 1: twenty five basis points one quarter of one percent per year,

695
00:37:55,680 --> 00:37:59,239
Speaker 1: incredibly low cost. So advisors who make their money by

696
00:37:59,480 --> 00:38:02,440
Speaker 1: charging big fees on investment management, or who claim they

697
00:38:02,440 --> 00:38:06,160
Speaker 1: can beat the market, those days are gone. So the

698
00:38:06,200 --> 00:38:09,240
Speaker 1: technological environment is going to be that the guy who's

699
00:38:09,280 --> 00:38:12,160
Speaker 1: got in that little Norman Rockwell town of a hundred

700
00:38:12,160 --> 00:38:14,319
Speaker 1: and fifty clients, the clients are going to be saying

701
00:38:14,360 --> 00:38:18,520
Speaker 1: to that advisor, I want the services of the biggest,

702
00:38:18,600 --> 00:38:21,759
Speaker 1: best firms, and that little country bumpkin isn't going to

703
00:38:21,840 --> 00:38:23,400
Speaker 1: be able to provide it because he doesn't have the

704
00:38:23,440 --> 00:38:26,959
Speaker 1: money to invest in that software, to build those technological

705
00:38:27,000 --> 00:38:29,920
Speaker 1: platforms and systems, and he's gonna lose out to the

706
00:38:29,960 --> 00:38:33,640
Speaker 1: competition voisted by the regulation, all because of the technology

707
00:38:33,960 --> 00:38:37,080
Speaker 1: revolution underway. These guys are dinosaurs and part of the

708
00:38:37,080 --> 00:38:39,680
Speaker 1: reason the average age in our industry, Barry, you know,

709
00:38:39,760 --> 00:38:43,319
Speaker 1: the answer is it's almost sixty years of age. So

710
00:38:43,480 --> 00:38:46,960
Speaker 1: facing this conundrum, the typical advisor is gonna say, in

711
00:38:47,000 --> 00:38:50,280
Speaker 1: his sixties, oh the hell with it, I just quit instead,

712
00:38:50,480 --> 00:38:52,120
Speaker 1: And that's why half of them are going to be gone.

713
00:38:53,040 --> 00:38:55,880
Speaker 1: We have been speaking with Rick Edelman. He is the

714
00:38:55,960 --> 00:39:00,160
Speaker 1: founder and chairman of Edelman Financial Services. If you enjoy

715
00:39:00,160 --> 00:39:03,200
Speaker 1: this conversation, be sure and stick around for the podcast extras,

716
00:39:03,480 --> 00:39:06,120
Speaker 1: where we keep the tape rolling and continue to discuss

717
00:39:06,160 --> 00:39:10,120
Speaker 1: all things investing. You can find that wherever fine podcasts

718
00:39:10,120 --> 00:39:15,239
Speaker 1: are sold iTunes, Overcast, SoundCloud or Bloomberg dot com. We

719
00:39:15,400 --> 00:39:19,719
Speaker 1: love your comments, feedback and suggestions right to us at

720
00:39:20,120 --> 00:39:23,440
Speaker 1: m IB podcast at Bloomberg dot net. Check out my

721
00:39:23,560 --> 00:39:26,280
Speaker 1: daily column on Bloomberg View dot com. You can follow

722
00:39:26,280 --> 00:39:29,880
Speaker 1: me on Twitter at rid Halts. I'm Barry rid Halts.

723
00:39:29,920 --> 00:39:45,960
Speaker 1: You're listening to Masters in Business on Bloomberg Radio. Welcome

724
00:39:46,000 --> 00:39:48,239
Speaker 1: to the podcast, Brick, Thank you so much for doing this.

725
00:39:48,239 --> 00:39:51,760
Speaker 1: This has been a conversation I have been looking forward

726
00:39:51,760 --> 00:39:54,760
Speaker 1: to and I have I have so many more questions

727
00:39:54,800 --> 00:39:59,400
Speaker 1: we haven't gotten to. UM. I have to ask you

728
00:39:59,480 --> 00:40:02,400
Speaker 1: launched us thirty one years ago. You look back. Do

729
00:40:02,400 --> 00:40:04,520
Speaker 1: you ever turned around and say, how the hell do

730
00:40:04,560 --> 00:40:07,279
Speaker 1: we get to twenty one billion dollars? It? It is

731
00:40:07,360 --> 00:40:10,680
Speaker 1: the success of of this like, wait, what what? How

732
00:40:10,719 --> 00:40:13,520
Speaker 1: did that happen? Yeah? Because it wasn't. It wasn't. Never

733
00:40:13,560 --> 00:40:16,840
Speaker 1: the intention when I created my first business plan, which

734
00:40:17,120 --> 00:40:21,880
Speaker 1: Gine and I did when we were planning the launch

735
00:40:21,920 --> 00:40:25,440
Speaker 1: of our little practice. My business model called for us

736
00:40:26,080 --> 00:40:28,520
Speaker 1: earning three thousand dollars a month. Did you did you

737
00:40:28,560 --> 00:40:31,480
Speaker 1: bootstrap this or did you use an outside investor? No? No, no,

738
00:40:31,600 --> 00:40:33,440
Speaker 1: we we bootstrapped. I don't get the sense you're a

739
00:40:33,440 --> 00:40:37,080
Speaker 1: big private equity guy. Though you referenced the availability of capital.

740
00:40:37,120 --> 00:40:39,839
Speaker 1: Do you use private equity capital? We do now? And

741
00:40:39,840 --> 00:40:41,600
Speaker 1: what do? We were one of the first to have

742
00:40:41,640 --> 00:40:45,000
Speaker 1: done that. We started in two thousand five with our

743
00:40:45,080 --> 00:40:48,759
Speaker 1: first we've gone through UM use it for acquisitions or

744
00:40:48,800 --> 00:40:51,840
Speaker 1: how does that just just to fund the growth and

745
00:40:51,960 --> 00:40:53,880
Speaker 1: fueling of our firm. You know, we got to the

746
00:40:53,880 --> 00:40:57,200
Speaker 1: point recognizing No. Five we built a very nice little

747
00:40:57,239 --> 00:41:00,560
Speaker 1: practice at that point was one of the largest and industry,

748
00:41:00,600 --> 00:41:03,400
Speaker 1: and like any other self respecting entrepreneur, all of my

749
00:41:03,480 --> 00:41:05,240
Speaker 1: net worth was tied up in the value of the business.

750
00:41:05,239 --> 00:41:07,920
Speaker 1: People say where do you investment? Used to say, highly

751
00:41:07,960 --> 00:41:12,240
Speaker 1: speculative growth company, And so I guess I'm gonna steal

752
00:41:12,239 --> 00:41:14,759
Speaker 1: that line from As we wanted to grow on a

753
00:41:14,840 --> 00:41:17,680
Speaker 1: national scale, we realized that would be very expensive and

754
00:41:17,840 --> 00:41:21,439
Speaker 1: very risky, and any self respecting financial planner would say

755
00:41:21,640 --> 00:41:23,960
Speaker 1: you shouldn't throw off some of that risk, yes, And

756
00:41:24,000 --> 00:41:26,359
Speaker 1: so that was what we did. And so we are

757
00:41:26,440 --> 00:41:28,919
Speaker 1: now on our third private equity partner and our best

758
00:41:28,960 --> 00:41:33,840
Speaker 1: to date, Helman and Freeman and um So it's been

759
00:41:33,880 --> 00:41:36,600
Speaker 1: a great ride. And I assume you guys are still

760
00:41:36,719 --> 00:41:40,000
Speaker 1: majority owners, you and and Gene. No, we're not any longer.

761
00:41:40,480 --> 00:41:43,680
Speaker 1: I'm still the largest individual shareholder of the farm, but

762
00:41:43,760 --> 00:41:46,399
Speaker 1: Helmant and Freeman is now the majority old is it?

763
00:41:46,480 --> 00:41:50,280
Speaker 1: Is it? Oh? Really that's quite fascinating In terms of control,

764
00:41:50,440 --> 00:41:53,200
Speaker 1: Do you still maintain control or no longer? I used to,

765
00:41:53,280 --> 00:41:55,839
Speaker 1: but I gave that to Helman and Freeman, but they

766
00:41:56,520 --> 00:41:59,480
Speaker 1: their attitude is that and the reason that they were

767
00:41:59,480 --> 00:42:02,440
Speaker 1: interested in partnering with Gene and May in the firm

768
00:42:02,640 --> 00:42:05,040
Speaker 1: was that they love what we do and they want

769
00:42:05,120 --> 00:42:10,360
Speaker 1: to sustain and expand it. They don't want to change

770
00:42:10,360 --> 00:42:13,359
Speaker 1: it in any way. And they are quite passive in

771
00:42:13,440 --> 00:42:17,319
Speaker 1: their ownership and they are fabulous Pete partner. There has

772
00:42:17,360 --> 00:42:21,000
Speaker 1: been no nothing noticeable by any of our staff, or

773
00:42:21,239 --> 00:42:25,920
Speaker 1: our planners or our clients by their presence. So one

774
00:42:25,960 --> 00:42:28,359
Speaker 1: of the questions that come up all the time with

775
00:42:28,400 --> 00:42:31,560
Speaker 1: the solo practitioners is, Hey, what happens if you're hit

776
00:42:31,600 --> 00:42:34,680
Speaker 1: by a bus? What sort of succession plan do you? So?

777
00:42:34,680 --> 00:42:37,160
Speaker 1: So what you just made me think of this? Now?

778
00:42:37,200 --> 00:42:40,560
Speaker 1: What how do you guys think about the future of

779
00:42:40,680 --> 00:42:43,560
Speaker 1: Edelman Financial? What sort of succession plan? We recognized this

780
00:42:43,640 --> 00:42:46,120
Speaker 1: a long time ago, and that was the impetus of

781
00:42:46,640 --> 00:42:50,799
Speaker 1: getting outside money to bring in and create a very

782
00:42:50,840 --> 00:42:54,399
Speaker 1: talented executive team. Uh. And so we've been working very

783
00:42:54,400 --> 00:42:57,479
Speaker 1: hard at this for years and we've made um I'd

784
00:42:57,480 --> 00:42:59,919
Speaker 1: say it's almost total, not yet total, but almost total.

785
00:43:00,000 --> 00:43:02,880
Speaker 1: And its transition. I now have to co hosts on

786
00:43:02,920 --> 00:43:06,120
Speaker 1: my radio show so they noticed that they can take

787
00:43:06,120 --> 00:43:08,000
Speaker 1: the show over at any moment. And I noticed the

788
00:43:08,080 --> 00:43:10,080
Speaker 1: on your video segments you were rotating a lot of

789
00:43:10,160 --> 00:43:14,760
Speaker 1: other people through UM. Well, in house, we have ten

790
00:43:14,960 --> 00:43:18,560
Speaker 1: full time instructors who do all of our seminars. Will

791
00:43:18,560 --> 00:43:20,759
Speaker 1: do six hundred seminars this year nationally, Like I do

792
00:43:20,840 --> 00:43:23,200
Speaker 1: virtually none of them. I used to do all of them,

793
00:43:23,360 --> 00:43:25,279
Speaker 1: do all them. Now I do virtually none. So we

794
00:43:25,320 --> 00:43:28,759
Speaker 1: have all of our instructors doing all of our seminars.

795
00:43:28,760 --> 00:43:33,440
Speaker 1: Were how productive of the seminars? Because quick flashback, I

796
00:43:33,560 --> 00:43:36,680
Speaker 1: remember about fifteen years ago going with a buddy name

797
00:43:36,760 --> 00:43:39,279
Speaker 1: is Tony Dwyer who was I forgot the name of

798
00:43:39,280 --> 00:43:41,279
Speaker 1: the farm he was at, and it was my this

799
00:43:41,440 --> 00:43:43,880
Speaker 1: like late nineties, early two thousands. It was my first

800
00:43:43,920 --> 00:43:48,520
Speaker 1: exposure to that sort of seminar. And obviously the nineties

801
00:43:48,520 --> 00:43:51,000
Speaker 1: are a different era than today. Wait, you could show

802
00:43:51,080 --> 00:43:53,799
Speaker 1: up and have a long discussion with people, and that's

803
00:43:53,800 --> 00:43:56,279
Speaker 1: the difference between them breaking out a checkbook and saying

804
00:43:56,280 --> 00:43:59,160
Speaker 1: here's half a million dollars versus a phone call and

805
00:43:59,280 --> 00:44:03,440
Speaker 1: email or what ever, how how successful, how productive do

806
00:44:03,520 --> 00:44:07,560
Speaker 1: you find that form of communication versus radio, television, everything else.

807
00:44:07,880 --> 00:44:10,680
Speaker 1: Our seminars are very effective. We'll have tens of thousands

808
00:44:10,719 --> 00:44:12,920
Speaker 1: of people attend we've we've over the years have had

809
00:44:12,960 --> 00:44:15,680
Speaker 1: I don't know how many millions, millions points, I don't

810
00:44:15,719 --> 00:44:18,280
Speaker 1: know how many people have attended our seminars over the decades.

811
00:44:19,239 --> 00:44:22,960
Speaker 1: But they're very effective as an educational tool because it

812
00:44:22,960 --> 00:44:27,040
Speaker 1: allows people to sit in a ninety minute session um

813
00:44:27,080 --> 00:44:30,400
Speaker 1: with a speaker and you know, there's audio and there's video,

814
00:44:30,440 --> 00:44:34,480
Speaker 1: there's handouts there. It's it's very disarming. It's very low risk,

815
00:44:34,600 --> 00:44:37,319
Speaker 1: very low pressure. We're not doing product pitching seminars like

816
00:44:37,400 --> 00:44:40,239
Speaker 1: the guy's pitching annuities. But we're doing is education. And

817
00:44:40,280 --> 00:44:41,880
Speaker 1: people pay a fee to come to our seminars, to

818
00:44:41,960 --> 00:44:44,600
Speaker 1: typically charge fifteen bucks to get in. Just in order

819
00:44:44,640 --> 00:44:47,000
Speaker 1: to make it, they have to really be committed to down.

820
00:44:47,040 --> 00:44:48,440
Speaker 1: We were not, and we're not giving them a free

821
00:44:48,440 --> 00:44:50,040
Speaker 1: state dinner. We're not you know, we're not there to

822
00:44:50,080 --> 00:44:52,560
Speaker 1: feed their stomach. We're feeding their brains. And we're giving

823
00:44:52,600 --> 00:44:54,960
Speaker 1: them information that they can use on their own with

824
00:44:55,040 --> 00:44:57,480
Speaker 1: their own advisor, or if they choose, they can hire us.

825
00:44:57,480 --> 00:44:59,800
Speaker 1: That's entirely after them. But nobody's pulling out a checkbook,

826
00:44:59,800 --> 00:45:02,440
Speaker 1: No be signing up anything that night. They're simply getting

827
00:45:02,440 --> 00:45:06,800
Speaker 1: an education. That's fascinating. So you do books, you do radio,

828
00:45:06,920 --> 00:45:10,960
Speaker 1: you do your own video. In terms of the time

829
00:45:11,040 --> 00:45:13,719
Speaker 1: you put in, what is the most time consumptive? And

830
00:45:13,760 --> 00:45:16,880
Speaker 1: then I have a follow up question, what what takes

831
00:45:16,960 --> 00:45:19,640
Speaker 1: more of your time and attention writing a book or

832
00:45:19,640 --> 00:45:22,160
Speaker 1: doing the radio show or or And now you don't

833
00:45:22,200 --> 00:45:24,440
Speaker 1: do the seminars, Well, they're all I mean, I create

834
00:45:24,480 --> 00:45:28,560
Speaker 1: the seminars still and train the speakers. So again that

835
00:45:28,640 --> 00:45:31,719
Speaker 1: one face, one voice, they're all messaging the same thing.

836
00:45:31,800 --> 00:45:36,239
Speaker 1: They're following my script um. And so they're they're all,

837
00:45:36,360 --> 00:45:38,319
Speaker 1: I don't know how much. I mean, the businesses are

838
00:45:38,360 --> 00:45:40,279
Speaker 1: life and and you know, I don't know. I don't

839
00:45:40,400 --> 00:45:43,160
Speaker 1: have any. So then the flip side of that is

840
00:45:43,600 --> 00:45:46,560
Speaker 1: what do you think resonates the most with the consumer

841
00:45:47,160 --> 00:45:50,760
Speaker 1: or or different consumers. It's different. Some people love listening

842
00:45:50,800 --> 00:45:53,480
Speaker 1: to the radio, Others love going to seminars of love

843
00:45:53,840 --> 00:45:56,160
Speaker 1: love reading the books that different people like to digest

844
00:45:56,200 --> 00:45:58,520
Speaker 1: the content in their own style. And then and now

845
00:45:58,600 --> 00:46:01,439
Speaker 1: you think I've prone to be I'm master at all

846
00:46:01,520 --> 00:46:04,560
Speaker 1: of those forms of communication, master of all media. I

847
00:46:04,600 --> 00:46:06,480
Speaker 1: think how it's going to get angry at you if

848
00:46:06,480 --> 00:46:08,879
Speaker 1: you can quite say it that one I did, though, UM,

849
00:46:08,920 --> 00:46:12,720
Speaker 1: and the videos, that's relatively new in the history of

850
00:46:12,719 --> 00:46:14,080
Speaker 1: of what I mean. I know you've been doing it

851
00:46:14,120 --> 00:46:16,439
Speaker 1: for a while, but the books, the radio came away

852
00:46:16,520 --> 00:46:19,720
Speaker 1: before that. Well. I've been doing TV for almost twenty

853
00:46:19,719 --> 00:46:22,280
Speaker 1: five years. My first TV show was back in the nineties,

854
00:46:22,320 --> 00:46:24,840
Speaker 1: and I've hosted a variety of them currently on PBS,

855
00:46:24,880 --> 00:46:28,640
Speaker 1: and I do specials for them as well. And uh,

856
00:46:28,840 --> 00:46:32,960
Speaker 1: TV is probably my least favorite. Why a medium, Well,

857
00:46:33,200 --> 00:46:36,680
Speaker 1: because it's personal finance is not a very visual medium.

858
00:46:36,920 --> 00:46:39,640
Speaker 1: You know, there are no cars exploding on set, there's

859
00:46:39,680 --> 00:46:42,080
Speaker 1: no you know, there's nobody with a low cut dress

860
00:46:42,120 --> 00:46:44,279
Speaker 1: and standing in front of a blue screen. I mean,

861
00:46:44,320 --> 00:46:51,480
Speaker 1: it's just it's it's a yeah, you know, it's a

862
00:46:51,560 --> 00:46:55,680
Speaker 1: medium that UM doesn't. I don't think it's terribly conducive.

863
00:46:55,719 --> 00:46:58,759
Speaker 1: It's a talking head conversation. So I work really hard

864
00:46:58,760 --> 00:47:03,280
Speaker 1: on our TV shows to make get visually interesting and stimulating,

865
00:47:03,680 --> 00:47:05,399
Speaker 1: and I think we do a really good job at that.

866
00:47:05,840 --> 00:47:10,000
Speaker 1: But television is much harder to produce than radio because

867
00:47:10,040 --> 00:47:12,640
Speaker 1: it has to be scripted to the minute. You're creating

868
00:47:12,640 --> 00:47:15,560
Speaker 1: a visual element in addition to an audible element, and

869
00:47:15,600 --> 00:47:18,040
Speaker 1: it's just very it's very difficult to do. It's it's

870
00:47:18,080 --> 00:47:21,400
Speaker 1: the audience loves it. It's great. But radio is so

871
00:47:21,480 --> 00:47:24,200
Speaker 1: much easier to produce. I also noticed that the television

872
00:47:24,200 --> 00:47:28,160
Speaker 1: clips are the on on your site are two three

873
00:47:28,239 --> 00:47:30,520
Speaker 1: four minutes. Yeah, we carve them up and the radio

874
00:47:30,640 --> 00:47:33,520
Speaker 1: is much longer form correct because people are usually listening

875
00:47:33,560 --> 00:47:35,879
Speaker 1: to the radio or a podcast and while they're doing

876
00:47:35,920 --> 00:47:38,600
Speaker 1: other things. That's good and bad. The good news is

877
00:47:38,600 --> 00:47:40,719
Speaker 1: you can multitask. The bad news is you're only half

878
00:47:40,760 --> 00:47:43,120
Speaker 1: listening and you usually got wrong what you thought. I said,

879
00:47:43,640 --> 00:47:45,960
Speaker 1: if you're in the car, or on a treadmill or

880
00:47:46,000 --> 00:47:48,279
Speaker 1: on a bike, you're really paying attention. It's if you're

881
00:47:48,280 --> 00:47:51,000
Speaker 1: trying to read while you listen, or your vacuuming, or

882
00:47:51,040 --> 00:47:53,560
Speaker 1: you're yelling at the kids or whatever. You know, so

883
00:47:53,880 --> 00:47:55,600
Speaker 1: and that you so. People often will call and they'll

884
00:47:55,600 --> 00:47:57,839
Speaker 1: say Rick said on the radio. The following they're like, no,

885
00:47:58,080 --> 00:48:02,800
Speaker 1: he didn't. But before we get to our favorite questions,

886
00:48:03,239 --> 00:48:08,359
Speaker 1: I have to ask about this astronomy thing. How did

887
00:48:08,440 --> 00:48:11,240
Speaker 1: you get interested in astronomy and what are you doing

888
00:48:11,280 --> 00:48:14,600
Speaker 1: with that? Well? I'm really bad at it. Um when

889
00:48:14,640 --> 00:48:17,960
Speaker 1: you say bad at it, So you haven't discovered gravity waves.

890
00:48:18,000 --> 00:48:21,120
Speaker 1: I appreciate that, but all you know, I can't. I

891
00:48:21,200 --> 00:48:22,839
Speaker 1: can't tell you most of what I'm looking at at

892
00:48:22,840 --> 00:48:24,799
Speaker 1: the night. There are apps for that, you have any

893
00:48:25,880 --> 00:48:27,839
Speaker 1: fantastic But no, no, no, no, no no, I don't

894
00:48:27,880 --> 00:48:30,000
Speaker 1: like them. I mean, I have a GPS on my

895
00:48:30,400 --> 00:48:35,799
Speaker 1: uh own um saddle, on my own um telescope, but

896
00:48:36,160 --> 00:48:39,480
Speaker 1: I don't like to use it because what what fascinates

897
00:48:39,520 --> 00:48:46,360
Speaker 1: me about astronomy is what a fascinated Galileo and Hyigans

898
00:48:46,600 --> 00:48:51,000
Speaker 1: and um uh Hovelius and and all of these guys

899
00:48:51,000 --> 00:48:53,120
Speaker 1: from the Renaissance. They were looking up the night sky,

900
00:48:53,360 --> 00:48:56,440
Speaker 1: not knowing what they were looking at. And when Galileo

901
00:48:56,560 --> 00:49:01,600
Speaker 1: pointed his telescope to Jupiter and saw the moons of

902
00:49:01,680 --> 00:49:05,960
Speaker 1: Jupiter for the first time ever, when he looked at

903
00:49:05,960 --> 00:49:08,080
Speaker 1: the rings of Saturn for the first time, the first

904
00:49:08,120 --> 00:49:14,040
Speaker 1: time that uh Clavicus saw the orion Nebula. Uh this

905
00:49:14,480 --> 00:49:17,279
Speaker 1: it was the age of wonder. And so when I

906
00:49:17,360 --> 00:49:20,239
Speaker 1: use the telescope, I don't use a GPS, which tells me,

907
00:49:20,320 --> 00:49:23,320
Speaker 1: you know, pointed to Neptune because I want to see it.

908
00:49:23,880 --> 00:49:26,799
Speaker 1: Uh Instead, you know, I don't want don't show me

909
00:49:26,960 --> 00:49:30,799
Speaker 1: a a a dark cluster. I instead want to just

910
00:49:30,880 --> 00:49:33,200
Speaker 1: take my telescope pointed up at the sky and see

911
00:49:33,200 --> 00:49:36,719
Speaker 1: what I see and enjoy the wonder of this. And

912
00:49:36,800 --> 00:49:38,839
Speaker 1: that has been our basis of astronomy. So what you

913
00:49:38,960 --> 00:49:41,759
Speaker 1: and I do is we collect rare astronomy books. We

914
00:49:41,880 --> 00:49:46,000
Speaker 1: collect books from the fifteen hundreds and sixteen hundreds written

915
00:49:46,080 --> 00:49:50,240
Speaker 1: by bra hay And and these greats in the field

916
00:49:50,239 --> 00:49:54,360
Speaker 1: of astronomy who were documenting for the very first time

917
00:49:54,480 --> 00:49:57,800
Speaker 1: things that no human had ever seen before, trying simultaneously

918
00:49:57,800 --> 00:50:00,560
Speaker 1: to explain what they were looking at. And it's the

919
00:50:00,680 --> 00:50:03,160
Speaker 1: age of wonder that, unfortunately we've gone away. We had

920
00:50:03,160 --> 00:50:07,600
Speaker 1: this this solar eclipse a couple of months, amazing, fascinating,

921
00:50:08,280 --> 00:50:10,360
Speaker 1: but everybody knew it was coming, and everybody knew what

922
00:50:10,360 --> 00:50:12,160
Speaker 1: it was, and everybody knew why it was and what

923
00:50:12,239 --> 00:50:15,000
Speaker 1: it all meant. Back in the sixteen hundreds and in

924
00:50:15,239 --> 00:50:18,480
Speaker 1: the in the year a thousand, when a solar eclipse came,

925
00:50:18,719 --> 00:50:22,200
Speaker 1: they would cause wars, It caused people to panic, the

926
00:50:23,239 --> 00:50:28,560
Speaker 1: exactly And so we've lost the wonder of astronomy fascination.

927
00:50:28,640 --> 00:50:31,080
Speaker 1: So here's where I have to totally disagree with you.

928
00:50:31,600 --> 00:50:35,839
Speaker 1: We absolutely have not lost the wonder of astronomy. Right now,

929
00:50:35,920 --> 00:50:40,920
Speaker 1: the biggest debate going on in in cosmology is dark matter.

930
00:50:41,440 --> 00:50:46,440
Speaker 1: Have we found We've actually recently discovered that most of

931
00:50:46,480 --> 00:50:49,480
Speaker 1: what we thought was dark matter is really just very

932
00:50:49,520 --> 00:50:52,400
Speaker 1: thinly dispersed gases and dust. Understood, and I'll take it

933
00:50:52,400 --> 00:50:55,319
Speaker 1: a step further, and that's the multiverse concept. Um, that's

934
00:50:55,360 --> 00:50:57,360
Speaker 1: a whole, that's a whole, different layer. I understand that.

935
00:50:57,400 --> 00:50:59,560
Speaker 1: But so yes, I don't mean to suggest that the

936
00:50:59,560 --> 00:51:01,399
Speaker 1: age of one or is gone, but what you're talking

937
00:51:01,440 --> 00:51:04,359
Speaker 1: about requires a pretty advanced level of knowledge that most

938
00:51:04,400 --> 00:51:07,239
Speaker 1: consumers looking up at the night sky. In fact, let's

939
00:51:07,239 --> 00:51:09,560
Speaker 1: face it, most people looking at the night sky can't

940
00:51:09,640 --> 00:51:15,440
Speaker 1: see any stars because of pollution, and they live in

941
00:51:15,480 --> 00:51:19,759
Speaker 1: cities where the lights just kill it. And so what

942
00:51:19,880 --> 00:51:22,719
Speaker 1: I have been focusing on is this age of wonder.

943
00:51:22,760 --> 00:51:24,399
Speaker 1: And so what Gene and I did was we gave

944
00:51:24,440 --> 00:51:26,520
Speaker 1: a bunch of money to Rowan University to create the

945
00:51:26,600 --> 00:51:32,120
Speaker 1: Edelman Planetarium, and we have thousands of school children every

946
00:51:32,200 --> 00:51:35,520
Speaker 1: year going to the planetarium for free. Because if you

947
00:51:35,560 --> 00:51:39,040
Speaker 1: can get a child excited about science at a young age,

948
00:51:39,320 --> 00:51:42,279
Speaker 1: they become immersed in science for life, and we know

949
00:51:42,360 --> 00:51:45,080
Speaker 1: that that's the key to America's productivity in the future

950
00:51:45,239 --> 00:51:49,280
Speaker 1: is stem education. So we're very heavily focused on science

951
00:51:49,360 --> 00:51:52,279
Speaker 1: education for for kids. This is why we've given rowing

952
00:51:52,320 --> 00:51:55,160
Speaker 1: another big bucket of money for the Edelman Fossil Park,

953
00:51:55,440 --> 00:52:01,120
Speaker 1: which is paleontology. We're finding dinosaurs in South Jersey. Um,

954
00:52:01,160 --> 00:52:04,360
Speaker 1: they're everywhere, They're everywhere and define but they're everywhere not

955
00:52:04,400 --> 00:52:06,040
Speaker 1: at the Fossil Park. You go in there for an hour,

956
00:52:06,200 --> 00:52:08,239
Speaker 1: you will find fossils and you get to take them home.

957
00:52:09,080 --> 00:52:12,439
Speaker 1: And so by getting kids to focus on I think

958
00:52:12,440 --> 00:52:18,080
Speaker 1: the two most fun sciences dinosaurs and stars, paleontology and astronomy,

959
00:52:18,120 --> 00:52:21,320
Speaker 1: we can make a big difference in uh these kids

960
00:52:21,360 --> 00:52:23,920
Speaker 1: lives and in the nation's competitive edge over the next

961
00:52:23,920 --> 00:52:26,080
Speaker 1: several decades. So what do you what do you read?

962
00:52:26,120 --> 00:52:29,200
Speaker 1: What do you pay attention to related to astronomy? Because

963
00:52:29,680 --> 00:52:32,520
Speaker 1: if you're on Twitter, you could follow some amazing people.

964
00:52:32,880 --> 00:52:36,120
Speaker 1: It's like building your own um Phil played as Bad

965
00:52:36,160 --> 00:52:38,880
Speaker 1: Astronomer and Michelle Taylor and there's a whole run of

966
00:52:38,920 --> 00:52:41,720
Speaker 1: people who are just wonderful. Is there anything you anyone

967
00:52:41,760 --> 00:52:44,560
Speaker 1: you read? Any blogs you follow, any television shows you like,

968
00:52:44,880 --> 00:52:49,960
Speaker 1: not in astronomy particularly. I am more focused these days

969
00:52:49,960 --> 00:52:54,120
Speaker 1: over the past ten years on exponential technologies generally because

970
00:52:54,120 --> 00:52:58,560
Speaker 1: I think that's more impactful to our daily lives and

971
00:52:59,200 --> 00:53:03,440
Speaker 1: of to me, just greater fascination of artificial intelligence, robotics,

972
00:53:03,520 --> 00:53:09,919
Speaker 1: machine learning, big data, uh neuroscience, but striguing things. Yeah,

973
00:53:09,920 --> 00:53:12,200
Speaker 1: and that's what my new book is, My ninth book

974
00:53:12,239 --> 00:53:14,239
Speaker 1: is all about the truth about your future, how these

975
00:53:14,239 --> 00:53:17,359
Speaker 1: exponential technologies are going to impact our personal finances. Let

976
00:53:17,360 --> 00:53:19,879
Speaker 1: me make one television recommendation and then we'll get back

977
00:53:19,880 --> 00:53:23,960
Speaker 1: to our questions, which is on the on the Science Channel,

978
00:53:24,560 --> 00:53:26,960
Speaker 1: How the universe works. Yes, we do watch that. We

979
00:53:27,000 --> 00:53:30,239
Speaker 1: also watch planets Planets is interesting. Yeah, so yeah, I

980
00:53:30,239 --> 00:53:33,320
Speaker 1: mean it's have you been paying attention to the thought

981
00:53:33,320 --> 00:53:37,799
Speaker 1: process about the new ninth planet somewhere out beyond the

982
00:53:38,040 --> 00:53:41,360
Speaker 1: uh um one of the big asteroid belts beyond Uranus

983
00:53:41,440 --> 00:53:45,799
Speaker 1: is planet Uranus. Is this giant planet that we've never

984
00:53:45,840 --> 00:53:49,800
Speaker 1: been able to see that is potentially disrupting um comments

985
00:53:49,800 --> 00:53:52,160
Speaker 1: and other things. Yeah, and I'm a big fan of

986
00:53:52,200 --> 00:53:55,000
Speaker 1: the fact that Pluto was demoted. I don't know, I

987
00:53:55,000 --> 00:53:57,200
Speaker 1: don't disagree with Yeah, I I do. In fact, I

988
00:53:57,200 --> 00:54:00,440
Speaker 1: went to a an event at the Smithsonia and by

989
00:54:00,480 --> 00:54:03,040
Speaker 1: the guy who did it, and it was a great presentation.

990
00:54:03,080 --> 00:54:05,400
Speaker 1: He said, why I killed Pluto, Pluto and White deserve.

991
00:54:05,719 --> 00:54:08,320
Speaker 1: His daughter was very angry at very much so because

992
00:54:08,320 --> 00:54:11,359
Speaker 1: of the whole Disney thing. Um, but um, yeah, so

993
00:54:11,480 --> 00:54:14,280
Speaker 1: there's no question I think you're right that the ninth planet,

994
00:54:14,280 --> 00:54:17,040
Speaker 1: that real ninth planet, has been discovered in our Solar System.

995
00:54:17,080 --> 00:54:21,080
Speaker 1: I'm fascinated by, um, the fact that we now have

996
00:54:21,160 --> 00:54:24,279
Speaker 1: satellites that have reached interstellar space. I mean, the the

997
00:54:24,320 --> 00:54:27,120
Speaker 1: original voyage that they have. No people don't understand what

998
00:54:27,120 --> 00:54:29,680
Speaker 1: you mean by interstellar space. There's there's some argument if

999
00:54:29,680 --> 00:54:32,759
Speaker 1: it's truly in interstellar they're at the outer edges of

1000
00:54:32,800 --> 00:54:36,399
Speaker 1: the Solar System, but they're far beyond Pluto concept that

1001
00:54:36,840 --> 00:54:40,080
Speaker 1: the light from the Sun doesn't reach it. That isn't

1002
00:54:40,080 --> 00:54:42,160
Speaker 1: a I mean, look up at the sky and when

1003
00:54:42,160 --> 00:54:45,120
Speaker 1: you see something black, it means that what's behind it

1004
00:54:45,160 --> 00:54:47,040
Speaker 1: hasn't been able to reach us yet. And that's how

1005
00:54:47,080 --> 00:54:51,439
Speaker 1: far away Voyager is. That's just heady to me. And

1006
00:54:51,480 --> 00:54:54,440
Speaker 1: the one big reason I like astronomy. It helps ground us,

1007
00:54:54,440 --> 00:54:57,520
Speaker 1: It helps us realize in our busy important days, tiny

1008
00:54:57,600 --> 00:55:01,160
Speaker 1: insignificant nothing exactly, So let's not get too caught up

1009
00:55:01,160 --> 00:55:03,759
Speaker 1: in our own self importance, which, by the way, is

1010
00:55:03,840 --> 00:55:06,560
Speaker 1: what's so fascinating about the rare Earth thesis. And I'll

1011
00:55:06,560 --> 00:55:11,080
Speaker 1: give you a thirty second digression. So originally, UH go

1012
00:55:11,160 --> 00:55:13,719
Speaker 1: back a thousand years and Earth is the center of

1013
00:55:13,719 --> 00:55:16,000
Speaker 1: the universe, and there is no other planets, and there

1014
00:55:16,080 --> 00:55:19,319
Speaker 1: is no other life anywhere else. It's just us. And

1015
00:55:19,320 --> 00:55:21,800
Speaker 1: then we discover not only are there a hundred billion

1016
00:55:22,200 --> 00:55:25,640
Speaker 1: stars or two billion stars in our galaxy, there are

1017
00:55:25,680 --> 00:55:28,960
Speaker 1: a couple of hundred billion galaxies in our known universe

1018
00:55:29,320 --> 00:55:31,800
Speaker 1: before we even get to the multiverse. But it turns

1019
00:55:31,800 --> 00:55:36,279
Speaker 1: out the universe is an extremely hostile place with in

1020
00:55:36,360 --> 00:55:38,720
Speaker 1: the center of a galaxy, there's just too much radiation

1021
00:55:38,800 --> 00:55:41,279
Speaker 1: to sustain life as we know it. UH. In the

1022
00:55:41,360 --> 00:55:45,560
Speaker 1: outer parts of the galaxy, there just isn't enough heavy

1023
00:55:45,560 --> 00:55:49,960
Speaker 1: metals to create UH planets that have enough gravity or

1024
00:55:50,040 --> 00:55:53,480
Speaker 1: have enough actual landmass that you can have an atmosphere

1025
00:55:53,480 --> 00:55:56,960
Speaker 1: and have And you end up turning out that the

1026
00:55:57,160 --> 00:56:01,640
Speaker 1: sort of most systems are binary, which creates very irregular orbits,

1027
00:56:01,680 --> 00:56:05,600
Speaker 1: which creates very regular seasons. The all the unique factors

1028
00:56:05,640 --> 00:56:09,279
Speaker 1: that came together in the Solo System with this planet,

1029
00:56:09,360 --> 00:56:13,520
Speaker 1: with this unusually large moon relatively close to us, is

1030
00:56:13,600 --> 00:56:16,759
Speaker 1: exceedingly rare, and you may end up when not with

1031
00:56:16,920 --> 00:56:22,520
Speaker 1: millions of planets that can sustain earthlike intelligent advanced life,

1032
00:56:23,040 --> 00:56:27,120
Speaker 1: but only a dozen or so per galaxy. I love

1033
00:56:27,160 --> 00:56:31,880
Speaker 1: that whole fascinating digression because it's just full circle for

1034
00:56:32,080 --> 00:56:34,840
Speaker 1: completely different reasons. And by the way, I have no

1035
00:56:34,960 --> 00:56:39,359
Speaker 1: idea if it's true. It's just a fascinating thought experiment. Yeah,

1036
00:56:39,440 --> 00:56:43,320
Speaker 1: until it's all irrelevant, because until they conquer the speed

1037
00:56:43,320 --> 00:56:47,360
Speaker 1: of light, which well, but they're on the verge of

1038
00:56:47,400 --> 00:56:50,440
Speaker 1: doing this. There's a design underway now that they think

1039
00:56:50,480 --> 00:56:54,239
Speaker 1: they can send spaceships out at the speed of light.

1040
00:56:54,840 --> 00:56:58,880
Speaker 1: That itself is pretty remarkable. They're doing with laser beams. Um.

1041
00:56:58,920 --> 00:57:02,720
Speaker 1: That's until they solve that issue. It's all academic because

1042
00:57:02,800 --> 00:57:06,240
Speaker 1: everything is so far away. Even if the life is there,

1043
00:57:06,560 --> 00:57:08,640
Speaker 1: were too far away to ever know it right by

1044
00:57:08,680 --> 00:57:11,200
Speaker 1: the time you get there, that their life cycle is

1045
00:57:11,200 --> 00:57:14,560
Speaker 1: already over. It's fascinating, all right. In the last twelve

1046
00:57:14,560 --> 00:57:18,840
Speaker 1: minutes or so, we have let's attack the last of

1047
00:57:19,040 --> 00:57:23,440
Speaker 1: our questions. Who are some of your early mentors, anybody

1048
00:57:24,040 --> 00:57:28,080
Speaker 1: really stands out as guiding your career in the financial industry,

1049
00:57:28,080 --> 00:57:30,480
Speaker 1: that we're none. I invented most of what we do

1050
00:57:30,560 --> 00:57:33,520
Speaker 1: in our firm, and we were pioneers in the type

1051
00:57:33,520 --> 00:57:35,360
Speaker 1: of advice we were giving and the way we were

1052
00:57:35,400 --> 00:57:38,400
Speaker 1: delivering it, who we were delivering it four. So there

1053
00:57:38,440 --> 00:57:42,120
Speaker 1: really weren't mentors in the field itself. I have to

1054
00:57:42,160 --> 00:57:44,440
Speaker 1: thank my parents, my father and my mom, because they

1055
00:57:44,480 --> 00:57:47,160
Speaker 1: were entrepreneurs and business owners, and most of what I

1056
00:57:47,240 --> 00:57:49,560
Speaker 1: learned about being a business owner I learned from osmosis

1057
00:57:49,560 --> 00:57:52,160
Speaker 1: from growing up in that household. What did your parents

1058
00:57:52,160 --> 00:57:55,360
Speaker 1: do what? My dad was a pioneer in his industry,

1059
00:57:55,400 --> 00:57:58,480
Speaker 1: in the bowling industry. He ran bowling tournaments across the

1060
00:57:58,480 --> 00:58:03,040
Speaker 1: country and became the biggest at it. And even today

1061
00:58:03,040 --> 00:58:05,800
Speaker 1: my brother now running the business outside of out of

1062
00:58:05,840 --> 00:58:09,000
Speaker 1: Las Vegas, UM. So it's you know, bowling was a

1063
00:58:09,080 --> 00:58:12,040
Speaker 1: huge industry in this fifties, sixties and seventies in this country.

1064
00:58:12,240 --> 00:58:15,120
Speaker 1: The number one participant sport in the nation. Some argue

1065
00:58:15,120 --> 00:58:17,720
Speaker 1: it's fishing, but there are no numbers to support that.

1066
00:58:17,760 --> 00:58:20,080
Speaker 1: Everybody knows how many people go to a bowling alley,

1067
00:58:20,200 --> 00:58:23,360
Speaker 1: So Um, so that was a neat way to grow up. Um.

1068
00:58:23,600 --> 00:58:26,320
Speaker 1: Within the media world, I have had a large number

1069
00:58:26,320 --> 00:58:29,000
Speaker 1: of mentors radio and TV. There were a large number

1070
00:58:29,000 --> 00:58:32,120
Speaker 1: of people who helped spur my growth and development and

1071
00:58:32,200 --> 00:58:35,120
Speaker 1: skill set at being a host of radio and television.

1072
00:58:35,520 --> 00:58:38,800
Speaker 1: And I've found over the years that in the media

1073
00:58:38,880 --> 00:58:40,919
Speaker 1: world there are a lot of people who will help

1074
00:58:40,960 --> 00:58:42,920
Speaker 1: you in your success. I'm sure you've experienced that here

1075
00:58:42,960 --> 00:58:46,240
Speaker 1: a bloom Shot unlike Wall Street, where it's very cutthroat

1076
00:58:46,320 --> 00:58:48,240
Speaker 1: and people will do whatever they can to hurt you

1077
00:58:48,280 --> 00:58:51,480
Speaker 1: and harm you and steal your business. But that's not

1078
00:58:51,560 --> 00:58:53,440
Speaker 1: the way it works in media. People are very helpful

1079
00:58:53,480 --> 00:58:57,560
Speaker 1: and and supportive to uh eight year career. At least

1080
00:58:57,560 --> 00:59:00,920
Speaker 1: that was been my experience. And there is some mentorship

1081
00:59:01,000 --> 00:59:03,840
Speaker 1: that actually takes place in Wall Street, but I think

1082
00:59:03,960 --> 00:59:06,800
Speaker 1: it's faded over time, and the sort of mentorship that

1083
00:59:06,840 --> 00:59:10,800
Speaker 1: existed twenty years ago or fifty years ago, it is

1084
00:59:10,840 --> 00:59:13,680
Speaker 1: all but but gone today. It's it's few and far between.

1085
00:59:13,960 --> 00:59:17,160
Speaker 1: How about how about investors? Who has influenced your approach

1086
00:59:17,600 --> 00:59:25,280
Speaker 1: to thinking about portfolio management? Marco Witz clearly um Harry Markoitz,

1087
00:59:25,320 --> 00:59:28,400
Speaker 1: winner of the Nobel Prize for his modern portfolio theory.

1088
00:59:28,920 --> 00:59:32,240
Speaker 1: The basis of his work is the foundation of our

1089
00:59:32,280 --> 00:59:36,600
Speaker 1: investment management approach. Famine and French who just who also

1090
00:59:36,640 --> 00:59:40,160
Speaker 1: have won the Nobel Prize. They are three factors. French,

1091
00:59:40,560 --> 00:59:43,440
Speaker 1: uh yeah, Well their joint work is what led to it.

1092
00:59:43,720 --> 00:59:46,680
Speaker 1: French is overdue. Um yeah. And he you know, maybe

1093
00:59:46,680 --> 00:59:48,760
Speaker 1: he left Chicago a little too early, you know, being

1094
00:59:48,760 --> 00:59:53,120
Speaker 1: a dartmouth. You imagine going to New Hampshire because the

1095
00:59:53,120 --> 00:59:55,800
Speaker 1: weather is better than Chicago. What can I tell you?

1096
00:59:56,280 --> 00:59:58,880
Speaker 1: So they're a three factor model. Now five factor model

1097
00:59:59,120 --> 01:00:02,200
Speaker 1: is um uh taking the industry to a whole another

1098
01:00:02,280 --> 01:00:06,040
Speaker 1: level and investment management concepts. And now Richard Taylor, who's

1099
01:00:06,080 --> 01:00:10,240
Speaker 1: this year's winner of the Nobel a behavioral finance guy.

1100
01:00:10,560 --> 01:00:13,680
Speaker 1: Um Marco Witz told me I've had the opportunity to

1101
01:00:13,680 --> 01:00:15,360
Speaker 1: spend a lot of time with Marco Wits and he

1102
01:00:15,480 --> 01:00:18,240
Speaker 1: told me that he Although Taylor is considered the father

1103
01:00:18,320 --> 01:00:21,480
Speaker 1: of behavioral finance, MARKA. Witz considers himself with the grandfather.

1104
01:00:21,880 --> 01:00:24,360
Speaker 1: He wrote the He wrote the first paper on behavioral

1105
01:00:24,400 --> 01:00:28,960
Speaker 1: finance back in the fifties, and it's a fascinating um

1106
01:00:29,160 --> 01:00:34,320
Speaker 1: thought experiment that acknowledges that humans don't behave the way

1107
01:00:34,680 --> 01:00:37,920
Speaker 1: classical economists expect humans to behave and everybody gets it

1108
01:00:37,920 --> 01:00:41,160
Speaker 1: except economists. That's what's so fascinating about behavioral finance. So

1109
01:00:41,160 --> 01:00:43,520
Speaker 1: we've been studying all of us. I've been writing about

1110
01:00:43,520 --> 01:00:48,040
Speaker 1: it for decades, and those three major themes explained the

1111
01:00:48,040 --> 01:00:51,400
Speaker 1: basis of our investment management approach. Let's talk about books.

1112
01:00:51,440 --> 01:00:54,520
Speaker 1: What are some of your favorite books, be they fiction, nonfiction,

1113
01:00:54,880 --> 01:00:57,320
Speaker 1: finance related or not. What What are you reading? What

1114
01:00:57,400 --> 01:00:59,760
Speaker 1: have you enjoyed. I'm a huge fan of Early American

1115
01:00:59,840 --> 01:01:03,880
Speaker 1: his three of written or not written read most UH

1116
01:01:03,960 --> 01:01:07,040
Speaker 1: of what I can get my hands on. Churnow and

1117
01:01:07,280 --> 01:01:11,280
Speaker 1: Isaac Center my two favorite UH authors. Stories. Did you

1118
01:01:11,320 --> 01:01:14,960
Speaker 1: get the good new Galleo book from? I do have it,

1119
01:01:15,000 --> 01:01:17,440
Speaker 1: but I'm not reading it yet because I'm reading Churnow's

1120
01:01:17,440 --> 01:01:19,800
Speaker 1: book on Grant. Oh really, I'm a third of the

1121
01:01:19,840 --> 01:01:23,360
Speaker 1: way through that thousand page book. I brought the Galleo

1122
01:01:23,440 --> 01:01:25,800
Speaker 1: book home and my wife grabbed it and she's like,

1123
01:01:25,880 --> 01:01:27,200
Speaker 1: I'm like, can I take a look at that? She's like,

1124
01:01:27,240 --> 01:01:29,720
Speaker 1: I'm a hundred pages into it. I'm sucked in. I'll

1125
01:01:29,720 --> 01:01:32,560
Speaker 1: give it back. So so that's my next biography. I'm

1126
01:01:32,560 --> 01:01:36,040
Speaker 1: a big fan of American history and biography and and uh.

1127
01:01:36,240 --> 01:01:38,080
Speaker 1: The problem I have with the books that the Gene

1128
01:01:38,120 --> 01:01:41,360
Speaker 1: and I have collected on early astronomy is that they're

1129
01:01:41,360 --> 01:01:45,440
Speaker 1: almost all in Latin, which we don't read. A few

1130
01:01:45,440 --> 01:01:48,600
Speaker 1: of them are in Greek, which is even worse. Google translated,

1131
01:01:48,800 --> 01:01:51,840
Speaker 1: just translated right for you. Yeah. Are these books, by

1132
01:01:51,840 --> 01:01:56,720
Speaker 1: the way, are they purely are they not in digital format? No?

1133
01:01:56,840 --> 01:01:59,640
Speaker 1: I understand that, But have you gone through the process

1134
01:02:00,120 --> 01:02:04,280
Speaker 1: of preserving them for prospect for for the future in

1135
01:02:04,400 --> 01:02:07,480
Speaker 1: some digital format? You are entrusted with these rare books.

1136
01:02:07,520 --> 01:02:10,560
Speaker 1: We do recognize that we are the current caretakers as

1137
01:02:10,600 --> 01:02:13,720
Speaker 1: opposed to the owners of these books, and so, um,

1138
01:02:13,800 --> 01:02:16,680
Speaker 1: you know, we have plans, so so think about going

1139
01:02:16,720 --> 01:02:19,720
Speaker 1: digital with those eventually. Try now has put out a

1140
01:02:19,800 --> 01:02:22,920
Speaker 1: number of spectacles. What else have you read of his

1141
01:02:23,040 --> 01:02:28,080
Speaker 1: that you really like? Um? I like everything that that

1142
01:02:28,240 --> 01:02:33,120
Speaker 1: he's written. His book on Washington, I love and U.

1143
01:02:33,640 --> 01:02:36,920
Speaker 1: I mean it just their history is not dry when

1144
01:02:36,920 --> 01:02:40,280
Speaker 1: it's done correctly, and they read like fiction. They read

1145
01:02:40,320 --> 01:02:43,800
Speaker 1: like thrillers. And even when you know the outcome, you're

1146
01:02:43,800 --> 01:02:46,200
Speaker 1: amazed at what you didn't know that and it helps

1147
01:02:46,240 --> 01:02:52,160
Speaker 1: you gain a fresh appreciation and humility for the founding

1148
01:02:52,200 --> 01:02:55,080
Speaker 1: of our nation. And that's what probably my biggest regret.

1149
01:02:55,080 --> 01:02:56,880
Speaker 1: If I had things to do over again, I would

1150
01:02:56,960 --> 01:03:00,040
Speaker 1: join the military. I grew up in an arrow. It

1151
01:03:00,160 --> 01:03:04,120
Speaker 1: was just after you both after the Vietnam War and

1152
01:03:04,240 --> 01:03:08,720
Speaker 1: the draft was over, and before the Gulf Wars, and

1153
01:03:08,840 --> 01:03:11,800
Speaker 1: so how how old are you all right? So you

1154
01:03:11,920 --> 01:03:14,480
Speaker 1: got you got three years on me. I've always had

1155
01:03:14,520 --> 01:03:18,760
Speaker 1: a similar thought. I debated it very briefly in college.

1156
01:03:18,760 --> 01:03:20,520
Speaker 1: I never it wasn't even a debate for me. I mean,

1157
01:03:20,560 --> 01:03:23,280
Speaker 1: my father was adamant. He served in World War Two,

1158
01:03:23,720 --> 01:03:25,880
Speaker 1: as did my uncle's but my dad coming out of

1159
01:03:25,960 --> 01:03:29,200
Speaker 1: Vietnam was adamant on my brothers, and I had no

1160
01:03:30,040 --> 01:03:33,200
Speaker 1: it was not a conversation. So but looking back on

1161
01:03:33,240 --> 01:03:36,920
Speaker 1: it and reading, um, what these folks did to build

1162
01:03:36,920 --> 01:03:40,800
Speaker 1: our nation, Um, it's it's very humbling. We we have

1163
01:03:40,840 --> 01:03:45,520
Speaker 1: a number of military vets in our office and where

1164
01:03:45,640 --> 01:03:48,560
Speaker 1: we have a disproportionate number. And it's always been one

1165
01:03:48,600 --> 01:03:51,800
Speaker 1: of those things, you know, when I was younger and

1166
01:03:52,080 --> 01:03:56,080
Speaker 1: less disciplined and less responsible, that's something I would have

1167
01:03:56,200 --> 01:04:00,760
Speaker 1: loved to do. Um did churn out write JP Morgan biography,

1168
01:04:00,800 --> 01:04:03,800
Speaker 1: And I'm remembering that correctly. I don't know if that

1169
01:04:03,840 --> 01:04:08,400
Speaker 1: wasn't somebody else but but Washington and granted the two

1170
01:04:08,480 --> 01:04:14,360
Speaker 1: you really Benjamin Franklin's that Isaacson did is awesome. I mean,

1171
01:04:14,360 --> 01:04:16,640
Speaker 1: they're two great writers, and so whoever they write about

1172
01:04:17,840 --> 01:04:20,800
Speaker 1: is worth reading. So all biographies, let's let's talk a

1173
01:04:20,840 --> 01:04:25,240
Speaker 1: little bit about UM and lots of books on exponential technologies.

1174
01:04:25,840 --> 01:04:28,080
Speaker 1: Let's I have on my website a complete list of

1175
01:04:28,080 --> 01:04:30,240
Speaker 1: the books I recommend as well as in our industry.

1176
01:04:30,480 --> 01:04:32,840
Speaker 1: There's so many books in our field about manias and

1177
01:04:32,880 --> 01:04:36,560
Speaker 1: crashes that go back a hundred years to help people

1178
01:04:36,640 --> 01:04:40,000
Speaker 1: understand what to do when markets tank, which they inevitably do,

1179
01:04:40,560 --> 01:04:42,640
Speaker 1: going back to the tool of Craze of sixteen thirty

1180
01:04:42,680 --> 01:04:44,320
Speaker 1: six and all the way through to the crash of

1181
01:04:44,400 --> 01:04:48,160
Speaker 1: twenty nine. UM. So d Burger is the bo that's

1182
01:04:48,200 --> 01:04:51,000
Speaker 1: one of them. Uh, there are I list a couple

1183
01:04:51,000 --> 01:04:53,560
Speaker 1: of dozen books on my website, UM that you ought

1184
01:04:53,600 --> 01:04:56,040
Speaker 1: to read if you want to become more familiar with

1185
01:04:56,120 --> 01:04:58,120
Speaker 1: how money works and how to make it work for

1186
01:04:58,160 --> 01:05:02,560
Speaker 1: you it. I will include a link on the right

1187
01:05:02,640 --> 01:05:06,360
Speaker 1: up to this to to your book list. UM. Now,

1188
01:05:06,560 --> 01:05:08,600
Speaker 1: and when I was trying to pull it up on Google,

1189
01:05:08,640 --> 01:05:10,560
Speaker 1: but it didn't come up. House of Morrigan is what

1190
01:05:10,640 --> 01:05:12,960
Speaker 1: did come up? That is a churn out book. Um,

1191
01:05:13,080 --> 01:05:16,200
Speaker 1: so let's talk about a time you fail to tell

1192
01:05:16,280 --> 01:05:18,680
Speaker 1: us when you tried something it didn't work, and what

1193
01:05:18,720 --> 01:05:21,160
Speaker 1: you learn from the experience. I've never failed at anything.

1194
01:05:21,160 --> 01:05:23,000
Speaker 1: I've just learned lots of ways not to do things,

1195
01:05:23,920 --> 01:05:26,240
Speaker 1: meaning meaning what you know you learn more from your

1196
01:05:26,240 --> 01:05:28,720
Speaker 1: failures than your successes. You know you learn more when

1197
01:05:28,760 --> 01:05:31,680
Speaker 1: you're listening to when you're talking, and so we you know,

1198
01:05:32,200 --> 01:05:35,360
Speaker 1: entrepreneurial activity means taking risks, doing things that have never

1199
01:05:35,360 --> 01:05:38,160
Speaker 1: been tried, and they don't always work out the way

1200
01:05:38,160 --> 01:05:39,960
Speaker 1: that you'd hoped. I can't begin to tell you the

1201
01:05:39,960 --> 01:05:44,439
Speaker 1: money that we've blown doing things in ways that didn't

1202
01:05:44,480 --> 01:05:46,080
Speaker 1: work out. But you know what you learn how not

1203
01:05:46,160 --> 01:05:49,240
Speaker 1: to do it next time. And there's a rule in

1204
01:05:49,280 --> 01:05:51,520
Speaker 1: our firm, a basic rule that we teach at New

1205
01:05:51,600 --> 01:05:53,840
Speaker 1: Higher Orientation everybody who comes in. And one of those

1206
01:05:53,920 --> 01:05:57,040
Speaker 1: rules is the following. You're allowed to make mistakes, You're

1207
01:05:57,080 --> 01:06:00,160
Speaker 1: expected to make mistakes. You're simply not allowed to make

1208
01:06:00,160 --> 01:06:02,920
Speaker 1: the same mistake twice. Always, always a new mistake. Go

1209
01:06:03,080 --> 01:06:04,560
Speaker 1: make a new one. There are plenty of mistakes out

1210
01:06:04,600 --> 01:06:06,600
Speaker 1: there to make. There's no mistake. We tell our staff,

1211
01:06:06,640 --> 01:06:09,560
Speaker 1: there is no mistake you can make that I can't fix.

1212
01:06:09,840 --> 01:06:13,000
Speaker 1: We're not in the medical field. You're not gonna kill anybody.

1213
01:06:13,160 --> 01:06:15,360
Speaker 1: Don't worry about this. There's nothing you can do we

1214
01:06:15,480 --> 01:06:17,880
Speaker 1: can't fix. Don't worry about making a mistake that costs

1215
01:06:17,880 --> 01:06:20,560
Speaker 1: a client money, because we'll reimburse the client. So don't

1216
01:06:20,600 --> 01:06:23,640
Speaker 1: worry about this. Do what is in the best interests

1217
01:06:23,640 --> 01:06:25,520
Speaker 1: of the client. Do what you think is right, use

1218
01:06:25,560 --> 01:06:28,000
Speaker 1: your judgment, use your brain. That's why we're hiring you.

1219
01:06:28,040 --> 01:06:30,360
Speaker 1: And if you do make a mistake, tell us we'll

1220
01:06:30,440 --> 01:06:32,240
Speaker 1: fix it. And now you know what not to do

1221
01:06:32,320 --> 01:06:34,040
Speaker 1: next time, and go on and figure out something else

1222
01:06:34,080 --> 01:06:37,240
Speaker 1: to do wrong. Um, down to a last few questions.

1223
01:06:37,320 --> 01:06:40,520
Speaker 1: What do you do to keep mentally sharp outside of

1224
01:06:40,520 --> 01:06:42,919
Speaker 1: the office? What do you do to relax? My wife

1225
01:06:42,920 --> 01:06:46,040
Speaker 1: and I love to entertain We love movies. Um. We

1226
01:06:46,160 --> 01:06:49,240
Speaker 1: love to travel, which historically we've never really been able

1227
01:06:49,240 --> 01:06:51,200
Speaker 1: to do, but finally, thanks to Ryan Parker as our

1228
01:06:51,240 --> 01:06:54,480
Speaker 1: new CEO, we get that opportunity now. Uh and I

1229
01:06:54,560 --> 01:06:57,520
Speaker 1: love to play cards, love to play chess, love the

1230
01:06:57,520 --> 01:07:01,720
Speaker 1: shoe pool, and we'd just be with that's a nice,

1231
01:07:01,920 --> 01:07:05,919
Speaker 1: nice list. If a recent college grad or millennial came

1232
01:07:05,960 --> 01:07:09,160
Speaker 1: to you and said they were interested in going into finance,

1233
01:07:09,320 --> 01:07:12,120
Speaker 1: what sort of advice would you give them? Don't do

1234
01:07:12,160 --> 01:07:14,080
Speaker 1: it the way I did it, because the way I

1235
01:07:14,080 --> 01:07:16,120
Speaker 1: did it no longer exists. If I don't do what

1236
01:07:16,160 --> 01:07:18,160
Speaker 1: you're trying to do either, Barry, I mean, I would

1237
01:07:18,200 --> 01:07:20,320
Speaker 1: tell them not to do what you're doing because what

1238
01:07:20,360 --> 01:07:22,080
Speaker 1: you and I do no longer exist. And that is

1239
01:07:22,080 --> 01:07:25,560
Speaker 1: is that true that you can't go backwards into this, No,

1240
01:07:25,800 --> 01:07:30,440
Speaker 1: you can't become a mass media guy anymore. Radio, as

1241
01:07:30,520 --> 01:07:33,760
Speaker 1: you know, Barry, has evolved and changed dramatically over the years.

1242
01:07:34,200 --> 01:07:37,160
Speaker 1: The opportunity that I had to host a radio show

1243
01:07:37,200 --> 01:07:40,880
Speaker 1: twenty seven years ago doesn't exist today. And so I

1244
01:07:40,920 --> 01:07:43,600
Speaker 1: would not encourage somebody new in the business to try

1245
01:07:43,640 --> 01:07:46,960
Speaker 1: to become a mass media person. Do not try to

1246
01:07:47,000 --> 01:07:52,680
Speaker 1: become a broadcaster. Instead, become a narrow caster, meaning develop

1247
01:07:52,720 --> 01:07:56,840
Speaker 1: a niche. Um. I know, yeah, I know an advisor

1248
01:07:56,880 --> 01:08:00,000
Speaker 1: in Maryland who only works with Marriott employees, as office

1249
01:08:00,080 --> 01:08:02,200
Speaker 1: is across the street from Marriott's world headquarters. I know

1250
01:08:02,240 --> 01:08:04,440
Speaker 1: an advisor in Dallas who only works with the United

1251
01:08:04,480 --> 01:08:07,640
Speaker 1: Airline pilots because that's their hub. I know an advisor

1252
01:08:07,680 --> 01:08:11,160
Speaker 1: who only works with retirees, another one only with executives,

1253
01:08:11,200 --> 01:08:14,520
Speaker 1: another one only with divorces. Um. It's like medicine. My

1254
01:08:14,640 --> 01:08:17,559
Speaker 1: farther just had surgery on his thumb, and the surgeon

1255
01:08:17,680 --> 01:08:20,760
Speaker 1: is a guy who only operates on thumbs. He's the

1256
01:08:20,800 --> 01:08:22,519
Speaker 1: thumb guy. You no matter if you've got an issue,

1257
01:08:22,520 --> 01:08:25,599
Speaker 1: you're gonna go see this guy. Yeah, well, we need

1258
01:08:25,640 --> 01:08:28,919
Speaker 1: to specialize in our field. There are we're becoming more complex,

1259
01:08:29,000 --> 01:08:32,280
Speaker 1: more complicated with tax law and everything else, investment management issues.

1260
01:08:32,640 --> 01:08:36,200
Speaker 1: Be be the planner to plumbers. Go to the plumbing convention,

1261
01:08:36,280 --> 01:08:38,479
Speaker 1: right for the plumbing magazine, and don't take anyone who's

1262
01:08:38,479 --> 01:08:41,639
Speaker 1: not a plumber. Be a narrowcaster. Focus on your niche,

1263
01:08:41,720 --> 01:08:45,000
Speaker 1: what motivates you, What do you love? Serve that audience

1264
01:08:45,120 --> 01:08:48,479
Speaker 1: and no one else. That's fascinating. And our final question,

1265
01:08:49,040 --> 01:08:52,080
Speaker 1: and my personal favorite, what is it that you know

1266
01:08:52,200 --> 01:08:57,519
Speaker 1: about investing management, financial services, the whole field we toil

1267
01:08:57,600 --> 01:09:01,040
Speaker 1: in today that you wish you knew thirty years ago.

1268
01:09:02,200 --> 01:09:06,360
Speaker 1: I wish I had realized earlier that what we were

1269
01:09:06,360 --> 01:09:09,040
Speaker 1: doing in our firm and Edelman Financial was unique in

1270
01:09:09,080 --> 01:09:11,200
Speaker 1: the industry, that the fact that we were serving the

1271
01:09:11,280 --> 01:09:15,000
Speaker 1: mass affluent, middle class Americans and that the rest of

1272
01:09:15,040 --> 01:09:19,360
Speaker 1: Wall Street wasn't. I didn't realize. I didn't. It took

1273
01:09:19,400 --> 01:09:23,160
Speaker 1: me over a decade to figure that out. I couldn't

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Speaker 1: understand why we were so popular and why so many

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01:09:25,120 --> 01:09:27,280
Speaker 1: people were coming to us. It's because nobody else would

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Speaker 1: talk to them. They had been orphaned by the rest

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Speaker 1: of Wall exactly, and so had I realized that earlier

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01:09:32,520 --> 01:09:35,680
Speaker 1: we would have become our begun our national growth earlier.

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Speaker 1: That's quite fascinating. Rich, Thank you for being so generous

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Speaker 1: with your time. This was really quite delightful. Barry, you

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01:09:42,360 --> 01:09:44,919
Speaker 1: make it easy. Thank you. Um We have been speaking

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01:09:44,960 --> 01:09:48,680
Speaker 1: with Rick Edelman. He is the chairman, co founder and

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01:09:48,960 --> 01:09:53,720
Speaker 1: uh no longer CEO at Edelman Financial Services. If you

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01:09:53,880 --> 01:09:56,360
Speaker 1: enjoy this conversation, be sure and look up an Intra

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01:09:56,479 --> 01:10:03,200
Speaker 1: down an inch on iTunes, I I Everything, iTunes, Overcast, SoundCloud,

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01:10:03,200 --> 01:10:05,760
Speaker 1: Bloomberg dot com, and you can see any of the

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01:10:05,800 --> 01:10:10,240
Speaker 1: other hundred and sixty plus or so such previous conversations

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01:10:10,240 --> 01:10:14,360
Speaker 1: that we've had. We love your comments, feedback and suggestions

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01:10:15,040 --> 01:10:19,120
Speaker 1: right to us at m IB podcast at Bloomberg dot net.

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01:10:19,479 --> 01:10:22,800
Speaker 1: If you enjoyed this, go to Apple iTunes and give

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Speaker 1: us a review, write something up. You can see that

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Speaker 1: at iTunes dot com Slash podcasts, and you could just

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01:10:30,840 --> 01:10:33,479
Speaker 1: search for Masters in Business. Uh. Not only can you

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01:10:33,520 --> 01:10:37,080
Speaker 1: see all the other previous podcast but there's an opportunity

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01:10:37,080 --> 01:10:40,559
Speaker 1: to give us a review and share your thoughts with us.

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01:10:41,320 --> 01:10:44,000
Speaker 1: I would be remiss if I did not thank my

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01:10:44,160 --> 01:10:48,440
Speaker 1: crack staff who helps put together these shows. Medina Parwana

1298
01:10:48,880 --> 01:10:53,280
Speaker 1: is our audio engineer, Slash executive producer. Taylor Riggs is

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01:10:53,320 --> 01:10:57,320
Speaker 1: our booker. Michael Batnick is UH in charge of research.

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01:10:57,800 --> 01:11:01,400
Speaker 1: I'm Barry Hults. You've been listening Anisters in Business on

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Speaker 1: Bloomberg Radio. M