Speaker 1 (00:12):
Welcome to another edition of ETF Central. I'm your host, Bilal Little. This episode is really special to me. I'm interviewing one of my close friends who I've known for 15 years in this business. His name is Adam Yofan. He's a wealth advisor and consultant with Focus Partners. Focus is one of the largest investment firms on the street, and he's gonna give us a little insight on how wealthy families plan and what have they done from an investment perspective to properly a- and allocate capital to ETFs and strategies to really help them with their long-term estate planning. And with that, Adam, welcome to the show.
Speaker 2 (00:44):
Thanks for having me. When
Speaker 1 (00:45):
Was the last time you were at The Exchange?
Speaker 2 (00:47):
I was, uh, in this building inside 25 years ago, outside 10 years ago.
Speaker 1 (00:55):
Are you serious? So this is your first time in a quarter century?
Speaker 2 (00:58):
First time in a quarter century. Wow. Hasn't changed apparently.
Speaker 1 (01:02):
New studio. <laugh> New studio. Yeah. Um, well, I'm excited to have you. Uh, we gotta make sure that this is a good memory for you then.
Speaker 2 (01:09):
Thank you.
Speaker 1 (01:10):
Um, Adam, I think it's important, uh, I, I, I told everyone obviously when I kicked the show off that you're a good friend of mine. Uh, we've known each other nearly 15 years since I was a wholesaler. Mm-hmm. But I wanted you to come on for a, a, a lot of reasons, but one reason in particular, I have a real strong affinity for the financial advisor in this country, particularly the service and the work that they do. Mm-hmm. And, uh, I think you got a phenomenal background, but I tell all my guests, you set the stage and you tell us a little bit about your background and then the seat that you have today and your role in this sort of coaching, player coach role - uh-huh. Mm-hmm. Uh, at Focus Partners. And then we'll talk a little bit about Focus and then we'll carry the conversation.
(01:48):
Okay. So I'll let you level set.
Speaker 2 (01:50):
Okay. So, uh, I always wanted to be a CPA.
Speaker 1 (01:56):
Okay.
Speaker 2 (01:57):
Because my dad was friends with a dude who was a CPA who had a Porsche. <laugh> And a big gold chain, right? And a lot of stuff coming out of here. Yeah. It was the 70s. Yeah. And so, uh, I went to Miami of Ohio -
Speaker 1 (02:14):
Okay.
Speaker 2 (02:15):
Where they mint CPAs.
Speaker 1 (02:17):
Okay.
Speaker 2 (02:18):
Became a CPA, worked for Deloitte for a dozen or so years. Mm-hmm. And decided I needed a career change. So I got into this business. I went to work for Smith Barney. Hmm.
Speaker 1 (02:33):
What year, what year are we talking?
Speaker 2 (02:34):
Uh, n - 01. My first day of production was the day after nine eleven.
Speaker 1 (02:43):
Wow.
Speaker 2 (02:44):
So, uh, the training was three weeks in Hartford. They bust us down here to see the stock exchange a week or two before nine eleven.
Speaker 3 (02:56):
Wow.
Speaker 2 (02:57):
And, um, back then was just smiling and dialing.
Speaker 1 (03:02):
Yeah. You
Speaker 2 (03:03):
Know this. <laugh> And my first appointment w- was with the lady the day after nine eleven. We'd scheduled it the week before. And I called her on nine eleven. I said, you know, this is obviously a tragedy. And she said, "I still need to retire."
Speaker 1 (03:18):
Mm.
Speaker 2 (03:19):
And that's when the light bulb went on, right? Mm-hmm. So I did that for a few years, realized I wasn't put on this earth to pitch stocks.
Speaker 3 (03:27):
Mm-hmm.
Speaker 2 (03:28):
Back then, that's really what we were doing. Uh, that woman helped illuminate the fact that I'm here to impact lives.
Speaker 3 (03:36):
Yeah.
Speaker 2 (03:38):
So after five years of pitching stocks at Smith Barney, uh, I left. I went to go work for a CPA firm. We built out the planning component of this.
Speaker 3 (03:50):
Mm-hmm.
Speaker 2 (03:52):
I ran that for a half a dozen years. I subsequently bought out my partners. Ultimately, I sold my firm to the firm that became Focus Partners.
Speaker 3 (04:04):
Okay.
Speaker 2 (04:05):
Where I still worked for a half a dozen years. And then a year ago, our CEO and our president suggested that I could change more lives, more families if I coached the advisors who worked with the families rather than just working with the families. Mm-hmm. And that was a nice transition for me, a nice challenge - uh-huh. Uh, with the ultimate same desired outcome I have of impacting lives.
Speaker 3 (04:32):
Mm-hmm.
Speaker 2 (04:33):
So I started doing that a year ago. Uh, I had 100 odd families that are now being serviced by my colleagues. Hmm. And I am a full-time coach, teacher, mentor, whatever word you wanna use.
Speaker 1 (04:46):
I love that. Wow. There's a, there's a lot to unpack there and I, and we, we might have to do that offline honestly. Uh, especially, uh, the nine eleven stuff with your, that being your first client. I wanna talk a little bit about who Focus Partners is. Yeah. So if you can level set, because I think it's a brand in the industry that a lot of people may not be as familiar with, but it's a very signi- significant brand. Yeah.
Speaker 2 (05:08):
So Focus is the largest RA you've never heard of. <laugh> Uh, we have clients in 50 states, thousands of employees. Uh, I don't know what our current ADV says, but, uh, I think we're top five in the United States.
Speaker 1 (05:29):
In total AUM.
Speaker 2 (05:30):
In total AUM.
Speaker 1 (05:31):
And your role now as this coach is to effectively coach advisors on how to service their clients. Could you unpack a little bit about what you're doing and how - Yeah. Maybe some of those conversations.
Speaker 2 (05:42):
So it's really great. It was a made for adam role. <laugh>
Speaker 1 (05:45):
Yeah.
Speaker 2 (05:46):
Uh, and I'm still filling that out, but we have, uh, 800 advisors or so -
Speaker 3 (05:53):
Okay.
Speaker 2 (05:54):
Who all think the same. We're all fiduciaries. We all have roughly the same hymnal, just different ways of doing it. And we have, I say we have guide rails and not train tracks.
(06:08):
Yeah. But what I learned long ago was words matter. And you could have multiple different advisors with m - the same fact patterns and have completely different outcomes for the clients, depending on how that message lands. So we're trying to get somewhat of a consistent message delivered. So I start with one to many. So I have webinars for our advisors. I teach in-person classes. And the, and those who want to continue to move forward and, and like my style, opt into one-on-one coaching. It could be once a week, it could be once a month, whatever that advisor needs - uh-huh. To help him or her, uh, improve their skillset, which ultimately helps the clients. It's not about selling, it's not about servicing. It's, I use the term outcome a lot. It's about getting that client to their desired outcome.
Speaker 1 (07:08):
Yeah. Yeah. I, I, I think about it as being like a steward, right? Like you're a steward. Great word. Um -
Speaker 2 (07:14):
Great word. I
Speaker 1 (07:14):
Wanna, I wanna stay with the advisor for a minute - Yep. Um, before we get into like the family needs. You talk about your role changing from a stockbroker to wanting to be more of like a, you've transitioned into a coach. Yeah. Can you talk a little bit about what that path is? Because I think there's a lot of young people who watch this who try to figure out, "Well, should I be a financial advisor?" Or like what does that entail or what does that role look like today, given all the technology and all the things that you see from your seat from a production level?
Speaker 2 (07:44):
That's a great question. Um, because with all the technology there, a lot of people think this job is going away. Just like 25 years ago with day trading, they though the job was going away. Mm-hmm. I think the fundamentals are portfolio management, financial planning, however you wanna. Social security maximization. Whatever you want, you could pull out, uh, an AI tool and they will give you a great plan.
Speaker 3 (08:14):
Mm-hmm.
Speaker 2 (08:15):
So you have to, an advisor has to be able to do that. We have better tools to, uh, minimize that effort now. Mm-hmm. I think the value becomes if you think that pyram - of that pyramid, you know, Maslow's hierarchy of needs anything else. Mm-hmm. The table sta- stakes are what I mentioned previously. The value comes with building the trust - Mm. With the client. And what you need for that is EQ. You know this, I think, right? Absolutely. You need huge EQ. Uh, maybe you can teach it to some, maybe it's innate. But those people who are in this business, myself included, we're numbers people. We didn't go into sales, we didn't go into marketing, we didn't go into psychology because numbers are our language. Yeah. And it's very hard to take someone and say, "Hey, the plan is table stakes, but it's not the value."
Speaker 1 (09:04):
Mm. Unpack that. Stay with that.
Speaker 2 (09:07):
So, okay, again, a client. We see this all the time. Clients come to us saying, "I asked ChatGPT what a safe withdrawal rate is. I asked ChatGPT what a portfolio looks like for me at age 60 with this and that and the other." That plan is probably within 1% of what any advisor out there will tell you.
Speaker 3 (09:27):
Yeah.
Speaker 2 (09:28):
I think a great advisor then says, "That's good. For example, tell me about your plan to age. I'm not trying to sell you long-term care, but tell me what the plan is. Tell me about the plan to pass not just money, but values onto your kids. Tell me about how you're gonna equalize things because you have an estranged child."
Speaker 3 (09:52):
Mm.
Speaker 2 (09:54):
Nobody wants to touch the estranged child with a 10-foot pole. A great advisor will. A good advisor will keep their head down and focus on numbers.
Speaker 1 (10:02):
Oh, this is a - Right? Oh, this is good. You, you, you have no idea. Uh, the- these conversations matter so much more than, than, than people think. I think, um, what I wanna get really quickly before we leave this advisor profile is if someone's coming out of college today - Yeah. It's hyper competitive, firms are not hiring at the bullpen level - Yeah. Like Smith Barney, how does one penetrate and get into an advisor role today? Yeah. What would you say to somebody?
Speaker 2 (10:29):
I, I think like many other things, to some extent, it is who you know. Mm. But to a large extent, it is showing them who you really are. There are a million 4.0 students, D-1 athletes, uh, people who do service projects. Mm-hmm. All that stuff is the norm to some extent. Mm-hmm. I think if you get in front of s - of a decision maker, number one, you have to ask what they're looking for, right? Yeah. We all know it's about them and not you. For sure. And number two, like anything else, show your vulnerabilities, show them who you are. Yeah. Because I think too many people, whether it's the resume or the interview, it is so plain vanilla, and we old people, we, we can see right through that BS. So I think you just show them who you are.
Speaker 1 (11:21):
I, I think a great advisor today is human, right? Human in the sense of, uh, they have life challenges like everyone else, and it makes you more relatable. And at the same time, your interests should actually show and illuminate, "Hey, there's some dynamic characteristics to this person. There is more depth." Yeah. And at the end of the day, you know this, and you said you picked up your first client, your d - first day of production. When things get really bad, at the end of the day, with all the technology, people are still going to want to speak to a person. Yeah. A person they trust,
Speaker 2 (11:55):
Which is different than like.
Speaker 1 (11:57):
Mm. Stay with it. Come on. Talk
Speaker 2 (11:59):
About it. Yeah? So I like the woman who gives me my pedicure. I like my barber. I like my mechanic. <laugh> I don't know anything about him.
Speaker 1 (12:08):
Right. It's transactional. Yeah.
Speaker 2 (12:11):
If I know something about you, if I know the struggles that you are having, if you've opened your kimono just a little bit, I now see that you are real. I now see that you have maybe the same, maybe not the same struggles, that you're human. Yeah. And I trust you because you have trusted me by showing me that.
Speaker 3 (12:35):
Yeah.
Speaker 2 (12:36):
And that's something that we talk about all the time at Focused, just being relatable. Mm. And again, instead of asking what your dog's name is or about the weather or what your daughter is doing this summer, it's about saying, "Tell me about the plan for your son who has failed to launch." Hm. And there's a lot of uncomfortable silence after that.
Speaker 1 (13:00):
Yeah.
Speaker 2 (13:01):
But that's what's keeping them up at night. That's what they care about. They don't care about the pie chart.
Speaker 1 (13:07):
For sure. I agree. I agree. Man, we could stay on this all day. I, honestly, I wouldn't change, but I, I wanna cover some other topics. Um, so okay, we covered the advisor. Let's switch in pivot and now look at, um, the actual families that you're, you've planned for and ones that wll need help and service today. Mm-hmm. What's one thing that you see that is different between really high net worth, wealthy families and a family that may be just getting started? Mm. What's the big disparity or difference that you see? Uh,
Speaker 2 (13:39):
I think the wealthy family, and I'll just use that word because there could be other - Yeah. Attributes. The wealthy family focuses on value versus cost. Their first question out of the gate is not what is your fee or what is the expense ratio?
Speaker 3 (13:59):
Hmm.
Speaker 2 (13:59):
They wanna know what we can do for them. Hmm. Because they're having other life experiences out there. For example, they stay at really nice hotels. They know what service looks like. The wealthy family maybe is a business owner, so they give service to others. They know the service they receive, and they're willing to pay for that. Hmm. Maybe the people starting out are former do-it-yourselfers or current do-it-yourselfers, maybe they need to watch that penny for. Th- that's great. That's the delta between, uh, folks who ha- have money and real money, I think.
Speaker 1 (14:33):
No, that's good. That's good. That's good. What would you tell a family that's just starting out? They know they need to do some planning. They know they need to start diversifying and doing some other things at the investment level. What's one piece of advice that you would tell them just as they're getting started? Let's say the family's 25, 30 - Yeah. Married, one kid, and they're trying to figure it out. What would you say? It's not what you
Speaker 2 (14:58):
Make, it's what you keep. The tax man is your partner. So I think we as young people, particularly males, we are focused on accumulation.
Speaker 3 (15:12):
Yeah.
Speaker 2 (15:14):
Three-quarters of the people who die on Everest die on the way down. The goal is to get down, right? Not to get to the summit.
Speaker 3 (15:21):
Yeah.
Speaker 2 (15:21):
So you can do a great job accumulating this, but if you have all your money or most of your money in tax deferred accounts, that means Uncle Sam's gonna get a third or 40% or whatever the number is based on your tax bracket.
Speaker 3 (15:32):
Yeah.
Speaker 2 (15:33):
So I think if you could set that foundation early on and say, "Okay, I'm going to save, but I'm gonna say in the most tax-effective way as possible."
Speaker 3 (15:42):
Yeah.
Speaker 2 (15:43):
And we. I've got, uh, a couple of good ideas for that later if we have the time. Yeah. Uh, examples for those people. I think that's the one thing that really makes what I call left of the decimal point difference - Yeah. Rather than worrying about right of the decimal point and underperforming by four basis points. Yeah.
Speaker 1 (16:00):
Who
Speaker 2 (16:00):
Cares?
Speaker 1 (16:00):
Well, well, let's just unpack it right now. Okay. What's, what's the starting point - So. To, to get that going? Right here's - What are your, like, non-negotiable start here?
Speaker 2 (16:07):
Okay. So here's an idea, uh, called asset location. I'm sure a lot of the folks on here talk about allocation, but location is owning the right investment in the best account based on that account's tax treatment. Example, Roth IRA grows tax-free, comes out tax-free. Yeah. You want to own that investment with the highest expected return in that account, because Uncle Sam doesn't get their hands on it. Mm. Conversely, IRA 401 403 tax-deferred accounts, they get their hands on. So we say own the account with the. Own the investment with the lowest expected return there, because you're giving a large portion of it away. Uh, sophisticated, I won't say wealthy, but sophisticated individuals or trusting individuals will say, "I understand together that is an ideal asset allocation."
Speaker 3 (17:03):
Mm-hmm.
Speaker 2 (17:03):
Um, more difficult individuals might say, "Hey, Adam, my IRA is only up 2%. My Roth is up 10. Uh, tell me why," or not just tell. May- maybe fire me because my buddy's IRA is up six. Mm. And I said, "Yeah, but your buddy's gonna end up giving away a lot of his money down the road. You're not." Um, so that goes where the trust is.
Speaker 3 (17:28):
Mm-hmm.
Speaker 2 (17:28):
I'm, I'm a fan of trust but verify, but at the end of the day, if you don't trust your advisor, go find another one.
Speaker 1 (17:33):
Yeah.
Speaker 2 (17:34):
It's better for the both of you.
Speaker 1 (17:35):
Let, let me, let me stay with this question that I've been just thinking about r - more recently now that you said this. Why is tax so important for a high net worth family compared to, I think, investors who just wanna get in and get in the market? Wh - like, why is that conversation so critical at that level?
Speaker 2 (17:59):
So I would argue that at the end of the day, we're really talking about dollars that you could spend.
Speaker 3 (18:06):
Yeah.
Speaker 2 (18:06):
You might, you might look at your statement and its numbers and their commas and there's everything else, but the en- end of that transaction cycle, let's just say, when you sell something and transfer to your bank account to pay for college or rent or retirement, there are dollars coming through. And to the extent you could minimize that which you can control, which is tax to some extent - Yeah. Then why wouldn't you say, "I'm gonna keep an eye out on growing, uh, growing my assets in a way that is, uh, appropriate for me, whether it's risk, and again, using the tax code -
Speaker 3 (18:47):
Yep.
Speaker 2 (18:48):
To benefit me perfectly legally -
Speaker 3 (18:51):
Yep.
Speaker 2 (18:52):
In a way that when I pull those dollars out, fewer dollars go to the IRS or states and more comes to me.
Speaker 3 (18:58):
Got
Speaker 2 (18:59):
It. I, I, I think, going back to your original question, that is the one thing I be - I think most people ignore when they're young. Yeah. But the one thing they wish they knew when they were our age. Yeah.
Speaker 1 (19:12):
Let's be honest, there are thousands of ETFs out there. How do you keep track of all of them? That's why there's etfcentral.com. It's a website designed to actually provide resources and tools for anybody to track ETF portfolios. Please visit etfcentral.com. I wanna switch gears a little bit and talk broadly about, um, how you communicate what's happening in the markets during times of uncertainty or where there are times of exuberance. You've talked. You worked with a lot of different families - Yeah. Over the, over decades - Yeah. And over time. Uh, I feel like a lot of people, especially with social media today and the amount of information that's out there, there's information overload and sometimes they need help finding the blockers. Like, how have you communicated just what's going on in the markets with people? And not even saying what your view of the markets is today, but just how do you think about communicating what's going on?
Speaker 2 (20:00):
So, uh, are you familiar with what buffaloes do in a storm?
Speaker 1 (20:04):
<laugh> I am not familiar with what - They go
Speaker 2 (20:07):
Right into it.
Speaker 1 (20:08):
You're right. Fashion out. That's right.
Speaker 2 (20:10):
They
Speaker 1 (20:10):
Go
Speaker 2 (20:10):
Right
Speaker 1 (20:10):
Into it. Yeah, yeah, yeah, yeah.
Speaker 2 (20:12):
And we know, as adults, because we've made mistakes, you can't really go around. You can try, you can't avoid. You just gotta get through it, man. So, this goes back to the trust versus like.
(20:25):
Mm-hmm. I think you have a conversation, and this is what I coach a lot of our people. You pick up the phone and you get down to it, and you say, "This is a tough time, but remember, we picked our allocation that you stick with in good times or bad." Mm. This is a tough time, uh, and talk about the progression to get to that client's desired outcome as an exa. We're still on the path. This is, you know, it's a down market we know all that. At the same time, I think, and technology could do this for you, but this is where a human helps. You say, "Okay, if your tolerance is, say, 60 / 40, I'm just using that as example, and the exuberance has taken you to 65, 66, and you have to come back. Well, we have technology to do that.
(21:07):
Yeah. It just bring. Right? Yep. Too many times, I think clients, uh, want to keep the ride going. Hmm. And I think a likable advisor goes along with that. Mm. But a truth teller, an accountability partner says, "Hey, this was the deal, 60 / 40, which also requires buying when the market goes down."
Speaker 3 (21:30):
Yeah.
Speaker 2 (21:31):
Which is very tough to do.
Speaker 3 (21:32):
Yep.
Speaker 2 (21:34):
Further, I think, uh, people like me, who like numbers - uh-huh. We like to explain things. We love our charts. We love our decks. Clients don't care. <laugh> Just give me my sausage, man. Yeah. Don't tell me how it's made.
Speaker 1 (21:52):
Yeah.
Speaker 2 (21:53):
We advisors sometimes use it as a crutch.
Speaker 1 (21:56):
Mm.
Speaker 2 (21:58):
Or because we don't wanna look 'em in the eye and say, "This is painful."
Speaker 3 (22:01):
Mm.
Speaker 2 (22:04):
The client just wants to get to their destination, and that's why it's important to ask a client early on, "Bilal, what is your desired outcome for the money?" Money can only go four places. Mm-hmm.
(22:16):
You spend it, the tax man gets it, charity gets it. Mm-hmm. The heirs get it. Mm-hmm. It can't go anywhere else. That's it. Bilal, tell me what your desired outcome is, and we will develop a plan for each one of those destinations. By the way, taxes are somewhat voluntary. Mm. If you don't have any money, if you give it all away, there is nothing to tax. Mm. So you make a, you make a decision, to some extent, how much you're gonna pay in tax by choosing to give or not give your money away. Mm. Tell me what the destination is. So we know your destination is to make memories with your family, which is to spend it. Dynamite, let's come up with a spending plan. If the market goes down 10% and our plan is not derailed, why are we talking about this? We're still getting to our destination.
Speaker 1 (23:02):
Hmm. Well, my follow-up question to that is, what's the difference between the families that if two families receive the same level of advice, one family follows - Yeah. The other doesn't?
Speaker 2 (23:12):
Yeah. Uh, you know, you're married, communication takes two people. I think the giver and the receiver. So on the giving side, going back to my advisor analogy, I think sometimes we provide data and not guidance.
Speaker 1 (23:32):
Gotcha. Fair.
Speaker 2 (23:35):
When I go to the doctor, my doctor can show me my blood work, my this, my that, and that's great. My greatest doctor looked to me and said, "You need to lose weight and you need to lose weight now or you will die."
Speaker 1 (23:49):
Yeah. I
Speaker 2 (23:50):
Don't need numbers to tell me that.
Speaker 1 (23:51):
Yeah.
Speaker 2 (23:52):
A great advisor is like the buffalo, goes right into it. On the receiving end, sometimes there's so much, I think, analysis paralysis. There's so many to-dos rather than just saying, "I have a destination. I'm, I'm going on a trip." Mm-hmm. "I'm just gonna put one foot in re - in front of the other, one step at a time, one task at a time. But oh, by the way, I have an advisor and I have a team of advisors. I have an accountant. I have a lawyer. I have a life insurance man, a property and casualty." Mm-hmm. And a good advisor can grab all of those people to serve you. A great advisor realize that advisor doesn't need to be the center of the universe.
Speaker 3 (24:34):
Mm.
Speaker 2 (24:34):
'Cause they can't be. I mean, one person can't do all that. Yeah. So let the philanthropic advisor shine. Yeah. Go find that person at the community foundation. Go find a certified exit planner. Yeah. Go find an aging care specialist. All of those, by the way, we have at Focus, but, uh, if you're an advisor and you don't have that, grab all those people around because that's what your clients need.
Speaker 1 (25:03):
Yeah. Let's, uh, let's, let's talk about, um, stick with the client today. Let's talk about the do-it-yourself investor. Yeah. That audience is growing, uh, significantly. Yeah. And especially grown with the trader community following COVID with the, uh, introduction of Robinhood and so many other trading platforms. And that audience has a temperament, and I'm just generalizing, that, um, you know, the doors are open. Basically, we're in the kitchen. It's an opportunity for us to get into the markets, trade, invest. Mm. What's one piece of advice you might wanna submit to that group where they've been in a market where since COVID, right, the market's kinda run straight up. Yeah. What would you tell them today?
Speaker 2 (25:47):
Yeah. Um, I have a lot of friends and clients who are former do-it-yourselfers.
Speaker 3 (25:57):
Mm-hmm.
Speaker 2 (25:59):
And I would say many of them mistake luck versus skill. <laugh>
Speaker 1 (26:04):
I like that. I like that. Let's stay with
Speaker 2 (26:07):
That. So a rising tide carries all ships, as you alluded to. That's great. I keep coming back to this. What is your desired outcome? What is the purpose of that pile of money that you've accumulated - Yeah. Because you're wired to accumulate. What is the purpose for all this money? And do you have a plan to minimize risk, minimize taxes, do all of those different things? If you don't, who can help you do that? Because we're just too emotionally wired - uh-huh. Right? Or blind spots. And those f, uh, former do-it-yourselfers who have come to me, it's interesting. Since COVID, I've had quite a few. These men have raised their hands and said, "Okay, I recognize I need some help. This is not an easy thing for me to do." Uh-huh. Right? And I look at the wife and the r. Well, the wife's shocked, because this is the guy who never asked for directions.
(26:58):
Yep. <laugh>
Speaker 1 (26:59):
Yeah.
Speaker 2 (26:59):
And he's saying, "I need help." Yeah. So it's a, it's a tough decision to say, "I need help." Yeah. So I applaud those
Speaker 1 (27:06):
People. Have you seen the growth of that trader, the do-it-yourself investor utilize more ETFs or, or what vehicles are you seeing them? I'm not gonna put you on the spot, but are you just seeing more, um, ETF usage or what are you seeing?
Speaker 2 (27:21):
Yeah. I, I would say, and I think the data supports this, the high cost fund, whatever vehicle wrapper, has certainly declined. I know you know the data better than I do. So I've seen that dramatically. I've seen an uptick in separately managed accounts that are very tax aware. Yeah. Right? The, the long shorts and these other types of things that really only, uh, probably are fitting for a handful of people up here. But it. I know when I first started, SMAs were just getting started. Huge. Yeah. And then it seemed the eight ETFs took from that. Mm-hmm. And again, the ultra wealthy, you have an eye on taxes, these SMAs are s - are certainly, I think, uh, more able to cater to them. Yeah. And I know there are other, other types of funds.
Speaker 1 (28:11):
For sure, for sure. No, like, there's so much happening with the SMAs being converted - Yeah. Through 351s for tax efficiency - Yeah. Yeah. Into ETFs. Yeah. And that, that train hasn't stopped. Um, you know, the one area that we see just so much excitement around is obviously AI, so I can't - Yeah. Let you off the hook without talking about AI. But I, I wanna ask you a question about AI, uh, from a, from a service perspective. Yeah. Because obviously, there's value - Yeah. For unlocking scale for the advisor. Mm-hmm. Preparation, document, re- re- re- recordings and things of that nature. The advisor that hasn't utilized or embraced AI - Yeah. I'm assu - I'm assuming there are a few on your team. What are you guys doing or how, how are you having conversations
Speaker 2 (28:52):
Around artificial intelligence? Yeah. So at the, at the larger scale, certainly our organization isn't just using AI. We've got all of this workflow stuff. So anything that is away from the client's eyes is as automated as possible, right? Mm-hmm. What the greatest advisors are doing are automating that email reply, automating that other stuff, and using all of their f- free time to spend that one-on-one time with the clients asking those tougher questions.
Speaker 3 (29:23):
Yeah.
Speaker 2 (29:23):
Not going to the baseball games necessarily - Yeah. And doing those other things. And you and I said AI can't do that. So they are, um. I'm not so much sure on the workflow, at least our firm, because workflow's automated. Yeah. But I know so many other tools that are, um, administrative in nature. For sure. I, I can't wait to see what the next version of AI looks like. I know people are working, uh. So we have, uh, Jump.
Speaker 1 (29:48):
Mm-hmm.
Speaker 2 (29:49):
Jump AI, yeah. Jump AI, right, that measures the talk time -
Speaker 1 (29:53):
Yeah.
Speaker 2 (29:54):
With client meetings. Yeah. And it's really great because we get real-time feedback. "Oh, Adam, you're meeting with Blah. 60% of the time. Whoa. Okay. It doesn't mean you're taking in. No, it's real time feedback. Yeah. But you also get to see, I think the. I wanna go back. I think the great advisors are asking the hard questions. You can see if you're asking questions. Yeah. So the benefit to that really, again, ultimately accrues to the client. Because if the client trusts us and the client earn - you earn the client trust through questions, the client doesn't care about your vacation. Yeah. The client doesn't care that you went to a Yankee game. If you earn that client's trust, that client will act upon your recommendation and increase the likelihood of their success - Mm. And their outcome. Mm.
Speaker 1 (30:42):
I gotta, I wanna switch gears because I, I, I think you're talking about something that's really important as far as earning trust goes and asking questions. Yeah. I wanna talk about estate planning for -
Speaker 2 (30:54):
Mm.
Speaker 1 (30:55):
The general public.
Speaker 2 (30:56):
Mm-hmm.
Speaker 1 (30:58):
I've, I consulted advisors for a long time and it always felt as if the industry is willing to service those who have -
Speaker 3 (31:06):
Uh-huh.
Speaker 1 (31:08):
Versus those who don't. Mm-hmm. GoFundMe raises about $330 million a year in memorials. Hmm. That's basically people saying, "Holy crap." Mm-hmm. "We didn't do anything. Can the public help us out?" Mm-hmm. What would you tell the general public they should at least start to do from an estate planning perspective, even if they don't have a lot?
Speaker 2 (31:30):
Yeah. I think the internet has made basic estate planning and doc prep very affordable. Hmm. Number one. Number two, you do not want your government dictating where the money goes.
Speaker 3 (31:49):
Mm.
Speaker 2 (31:52):
If you don't get number two, go back to number one, right? Yeah. You just don't want the government in your business. Yeah. I don't. Yeah. So I know there are various online vehicles where you could do all that thing, number one. So I would say something basic in place. Yeah. Uh, I think the biggest, um, hangup sometimes is guardianship for your kids.
Speaker 1 (32:14):
Yeah.
Speaker 2 (32:14):
Or trustee. Okay, put someone down because if you don't, again, the government's coming up. Hmm. Put someone down. Something's better than nothing. You can always go back and change it. These are changeable documents, a basic will. Um, uh, living will, healthcare power of attorney. I think most people discount that. Yeah. I think that's one of the most important things there, right? God forbid you're, uh, dying or something happens. What do you want to happen? What do you want your last days to look like? Uh, are you gonna put that burden on your children?
Speaker 3 (32:47):
Hmm.
Speaker 2 (32:48):
I don't know. I, you have, you have a young child, you don't want that burden on your children.
Speaker 1 (32:52):
Yeah. Where would you say, um, have you had a, have you or any of your close advisors lost someone. A client has passed away and they didn't have all of their stuff in order in the last year or two. Um,
Speaker 2 (33:11):
I've lost my father and my brother in the last 12 months.
Speaker 1 (33:15):
Wow.
Speaker 2 (33:16):
And their stuff was pretty simple. My brother, we were doing a fire drill while, while he was in the hospital. Days before he died, I am on the phone with people. Can I get a notary in this hospital? It was all unnecessary. It was all unnecessary. But my brother, big macho man, strong as bull, just didn't, didn't do it. Didn't do it. Uh, interestingly, his widow, shortly thereafter, got her documents redone lickety split. Sometimes it takes a tragedy.
Speaker 1 (33:57):
Why do you think people don't do it?
Speaker 2 (33:59):
People don't wanna face their mortality. Plain and simple. So I have a longtime client, very wealthy individual who, whose wife will not come to the table for this discussion. And they are in their late 70s now. And I finally said to him, "This is no longer an option."
Speaker 3 (34:27):
Yeah.
Speaker 2 (34:28):
"We're gonna have breakfast. I'm bringing the attorney to the table. If your wife doesn't come, that's okay. At least one of you should have a plan."
Speaker 3 (34:39):
Yeah.
Speaker 2 (34:40):
He said, "Great. Good." Now, we haven't executed documents yet. Yeah. But at least he knows if something happens to him, there is a plan for care. Again, the funding is irrelevant. Yeah. What is the plan for care? Do you wanna withhold life-sustaining measures? Do you want this? Do you want this? He doesn't want his wife to make that decision. I don't know that she could even make that decision.
Speaker 1 (35:07):
Right.
Speaker 2 (35:08):
So I'm eating the elephant one bite at a time.
Speaker 1 (35:12):
What is, um, as we wrap - Yeah. What is one piece of advice you would leave to anyone when it comes to financial planning? End of question. What's one piece of advice?
Speaker 2 (35:31):
So I think I would look at financial advice like you look at almost anything else. And I, I talk about the three A's, awareness, action, accountability. Where do you wanna go? What is that desired outcome? Whether you are a young person getting out of school or podcast host or a retiring advisor, where do you wanna go? How big is the gap? That's your awareness. What is the action plan to get there one step at a time in a way that's comfortable for you, right? If it doesn't work for you, you're never gonna do it. And who's your accountability partner? What are you gonna do to measure it? And if you need to course correct, who is going to help you do that? Because your goal is to get to that end, whatever that is. If you can do it alone, great. If you can't find somebody, because you won't get there.
(36:26):
So it's pretty fundamental. I think it's, uh, useful in any part of life.
Speaker 1 (36:31):
Adam, we have gotten to a part of the show, uh, and thanks for sharing that. We've gotten to a part of the show where I ask a random off the wall question where you have no clue where this comes from. Uh, but today's conversation for me, uh, it hit me a little differently, um, for a lot of different reasons from things that you said. But the question that I wanna ask you is, what do you want your legacy to be?
Speaker 2 (36:59):
Hmm. Oh, man. This is a good one. Uh, so I turned 60 a few months ago.
Speaker 1 (37:07):
Happy belated.
Speaker 2 (37:08):
And I, I think I've been thinking about this for a while. Uh, I think I w. I don't know that I want to be known, but I, but let's just say, uh, I think it could be said that I helped people, that I wasn't perfect, but I acknowledged that and did the best I could with what I got. And that you should always take advantage of the opportunities, right? This is life. You get one spin, so drink it up.
Speaker 1 (37:45):
Adam, thank you for joining ETF Central.
Speaker 2 (37:47):
You're welcome. Thanks for having me.
Speaker 3 (37:53):
That's our conversation for this week. Remember to rate, review, and subscribe wherever you listen and follow us on X at Icehouse Podcast. From the New York Stock Exchange, we'll talk to you again next week, Inside the Ice House. Information contained in this podcast was obtained in part from publicly available sources and not independently verified. Neither ICE nor its affiliates make any representations or warranties, express or implied, as to the accuracy or completeness of the information and do not sponsor, approve, or endorse any of the content herein, all of which is presented solely for informational and educational purposes. Nothing herein constitutes an offer to sell, a solicitation of an offer to buy any security or a recommendation of any security or trading practice. Some portions of the preceding conversation may have been edited for the purpose of length or clarity.