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Welcome back to another episode of Ben with Benefits. Carl, Josh came up with that name. He's pretty good at that stuff. I have a very special guest. Carl Richards is here. Carl, you started out as an adviser to clients. Now, I guess it's safe to say that you're an adviser to advisers. Is that fair?
In some ways, you do a lot of stuff. I'm just curious if you really notice any differences between managing clients and managing or helping advisers in terms of offering advice. Is it really that different or is it just different things that you're working with?
That's such an interesting question. I think for the most part, the stuff that you and I enjoy and that we talk a lot about are human problems, right? So it doesn't really matter. I mean, the only thing that I've noticed with advisers, and this happened, seems like this started happening 10, 12 years ago as we got a better handle on this line of thinking that we call behavioral finance, I noticed a sense of smugness sometimes, you know, like we now understood all these silly human mistakes. But other than that...
Yeah, I've got it all figured out now, right? Yeah.
Yeah. And I think we've all kind of gotten over that, right? Like we've sort of learned. So, no, I think these are human problems for sure.
Yeah, that makes sense. So, I think people in wealth management focus a lot of time on client worries, right? How to manage client behavior and client stresses and how to keep them happy. You talk to a lot of advisers, like what are they concerned about in terms of either their businesses or working with clients? Like what are the things that keep advisers up at night? Because I think we all know what keeps clients up at night.
Yeah. Yeah. I think two things. I'm thinking very carefully about this. There's two things that I seem to hear most, and again, I don't think these are uncommon outside of the advisory space, like anybody running a business, particularly sort of starting to ask questions of like, you know, often advisers, many advisers I know got successful sort of by accident, you know, they were just head down working really hard, they built this business and then they wake up and they... I have the belief that every business is a lifestyle business, it's just what lifestyle are you building? You know, so you often wake up and are like, 'Wow, how did I get here?' Right? Like, so this idea of like, are you building on purpose? A little bit of this Stephen Covey quote of the last thing you want to do is spend, you know, your whole life climbing a ladder only to find out it's leaning against the wrong wall. So I find a lot of advisers asking that question themselves, like, was this the right wall? Like, have I built what I wanted to build? What am I going to do with the next phase of my life? And then the second thing is also a question, it seems to be in the air, right? Is just what's my real job and what part of it will not be replaced?
You know, what part of it can? That's a huge topic we're going through now because Michael Batnick called me about a month ago and he says, 'I woke up like in this fit of panic and I just thought, oh my gosh, what if AI replaces financial advisors?' And he said, 'I've never really entertained that thought before, but I'm just thinking like, what if this thing is so sentient and smart that it replaces financial advisors?' And my initial feeling is, well, I don't know. I just don't think that wealthy people are going to trust robots to run their financial lives. But maybe I'm wrong. Like, where do you fall on that? Because I think it's more of a help for advisers than it is taking them away because there's been a lot of advances in technology that have helped advisers and maybe the ones who weren't good advisers in the first place got replaced. But where do you fall in that line? Like, does that concern you at all?
Yeah. Yeah. I mean, I love the idea of like this sort of AI and technology will just make us better at what we do. I love that idea, but I also think it's legitimate to be... So I think the studies that have been most interesting to me are the experiences where an AI tool has gotten empathy, right? You know, there's been a super interesting study where people were more likely to talk about traumatic experiences with a computer named Ellie than a real person named Ellie. And it was largely along the lines of judgment, felt judged. Another interesting experiment where clients met with advisers over Zoom, but the advisor's camera was off and they were more willing to share with the camera off because they didn't see two eyeballs staring them judgment-wise. So, I think that's interesting whether those are legit or not. It's an interesting thing because I used to think, oh yeah, the tech will replace the math, but you can never replace the empathy. Well, I think that's now an interesting conversation. But what I love to think about is like I'm a huge fan and I don't think we're far off from self-driving money. Like I want self-driving money, but I was in a Waymo recently and I felt safer than I did in the Uber that I was in before, but I still needed to tell the Waymo where to go, right? And so I still think the idea of like, please, can we have self-driving money? And somebody's going to need to help talk about like, where is it that I think I want to go? Why do I want to go there? When I get there, where do I want to go next? And I think those conversations, I think the solution is like become technically super, super good at what you do and have a bunch of technical tools that help you be super good at what you do and be a deeper human.
Yeah. And these questions, what happens when someone jumps in front of the Waymo? Then what do you do, right?
Yeah. Yeah. Yeah. No, I think there's all sorts of good analogies there, but I like self-driving money does not scare me.
Yeah. Yeah, I agree. So, I've been getting tons of, and just as someone who's produced content for so long like you have and I have, I get questions from advisers all the time who I think are realizing, listen, I've got to find another form of growth. Like the brokerages aren't giving me referrals anymore and this private equity game of them buying a bunch of other advisory firms can only last for so long. And I think they're realizing like a way to stand out in an AI world that is going to be commoditized or whatever, where you'll be able to produce any piece of content that you want, is sort of finding your own voice. And so I get questions from advisers all the time like, hey, I want to start producing content. And I'm not trying to build an audience because I always tell them like don't have that be your first goal. Don't try to build an audience. Try to come up with a library of things in newsletters and sayings or quotes or whatever or drawings like you do that you can give to your clients to kind of prove your expertise. I'm just curious like what advice do you have for advisers who are trying to get into this production of content as a way to differentiate themselves whether it's through marketing or just kind of mass consumption or mass producing communications for their clients.
Yeah. We started thinking a couple years ago about like what are we going to do in a world where content is ubiquitous, right? And I think the answer, although the jury will be out for a long time, is, you know, be who you really are and go the whole way. Like be who you are because whatever that old saying is like everybody else is taken or there's no competition. I think having an opinion, solving problems that you're interested in, you know, like writing the stuff that you want to hear but you cannot find. I think we've all heard the idea of like you're writing for an audience of one. And I think the more sort of taste, the more you... that's to me, that's the only chance we have of having a relevant signal amid all the noise. And the people who are interested in that signal, the stronger the signal, the more unique it is, the more likely you are to attract those people. The other game I think stopped working five years ago, but it's just increasingly not working because it's just so noisy. So, you either be outrageous or you be deeply relevant.
Yeah. And you can only be outrageous for so long, right, before it gets old to you or...
Outrageous doesn't work really well in our industry anyway.
Yeah, it is funny. I will do this really deep piece of research and create a chart and a graph and all these numbers and I think it's the best thing in the world, but then I share a personal anecdote as kind of a throwaway and that's the thing people grab onto, right? Because it helps with the trust type of thing.
So, your book, The Behavior Gap, I still have a copy here, a hard copy, which I, you know...
Yeah, I still got all my little marks in it. I think I did a book review on my blog a long time ago when it came out.
No, I remember you did. Yeah.
But I'm just curious because I've been thinking that I feel like all of this education that we've been doing over the years and we pushed against for so hard, like listen, stop doing stupid things with your money or stop making the worst mistakes at the worst time. I feel like it's actually kind of worked a little bit and not for everyone, of course. There's always going to be people who make mistakes and even people who are successful with their money make boneheaded mistakes. But do you think that that behavior gap is closing where people actually are becoming a little smarter with their money because technology has helped to automate these things and we have target date funds and index funds and lower fees? Because it seems to me that a lot of people have actually taken this idea of long-term investing and realized I don't want to run out of the building when it starts on fire and the stock market is falling, like I'm actually going to keep buying because what other choice do I have? What else am I going to do? I feel like things are actually getting better. Do you get a sense of that as well? The behavior gap is narrowing a bit.
Yeah, that's really interesting. Let me just tell a quick story. I found myself in a conversation Sunday night. My nephew who's 18 on his way to college had a little gathering and I was in a conversation with four 16 to 18-year-olds and every one of them pulled up and showed me their accounts. They were all at Fidelity. They all owned large, largely passive ETFs. They were all dollar cost averaging into them. Like I had no clue.
And I just remember looking around like, you guys, how old are you, like 17? They had sort of core explore. So it was like SPY and QQQ and then they each like, I have a little Tesla, I have a little... but they all, and these are from different families. So, I don't know the answer, but I seem to think that you're... my experience is that I'm having that conversation far more than I used to where it's like there's some intention around the portfolio design. I'm just dollar cost averaging. I don't think about it. But what still gets in the way is, okay, great, why are you doing it? Like what's this all for? What's, you know, this sort of larger questions that are still not being answered, right?
Yeah. Not just building a pile of money or getting a certain return. And I get the sense that you're right, the thing about being intentional. There's so many people now who say, 'Listen, 80% of my portfolio is on autopilot.' And then the other 20% I'm going to have some fun and I'm going to own crypto and I'm going to pick stocks and I know that this little sidecar here is probably, I'm probably not going to do as good as this other big piece, but it helps me scratch that itch. And I think people just having that intentionality is one of the biggest changes where they have their 401k at Fidelity, but then they have their, you know, Robinhood account where they do this other stuff. And after a certain time maybe they realize it's not worth the time and the energy. But I actually don't mind that as long as it helps keep the other piece going and you leave it alone.
Yeah. Yeah, I also think that that leads to fun conversations about like where... I've been, the question I've been thinking about a lot lately is like, where do you get your kicks from? And so if you start thinking about like, if that, you know, just to use the example, if that Robinhood account, what is the expected utility of that account? Like why are you doing that? What's the reward you're getting? And if you can, I just think being able to answer that question, like it gives me something to talk about. Cool. That's a fine answer, right? It keeps me interested. Fine answer. It protects. It's the thing I promised my spouse I would do so I don't mess with that other thing over there. Great answer. But if you don't have an answer to it, if it's sort of like, well, it's what my friends are doing and I don't know. Like I think it's the intentionality behind it. As long as you've got a defensible reason that's defensible for you, entertainment's a fine answer. Do you know what I mean? Like we all know plenty of people who do that for entertainment. Fine. Like just as long as you're clear about what the goal is.
Yeah. Like it's like sports gambling in some ways on your phone. Yeah.
So you mentioned talking to the young people. I get questions from young people all the time, too. I had a talk with a high school senior the other day, and he's already figured out, I want to go into wealth management. I said, 'Oh my gosh, I'm not going to give you any advice because you are already way ahead of the game from where I was.' Like, you don't need to hear from me because when I was 18, I didn't know what I was going to do next week. So, I think there are a lot of young people who have it more figured out these days, but they're all asking like, 'Hey, should I get the CFP or the CFA? Should I do this?' And I tell them, just, you know, have an open mind. There's a lot of different things you can do in the world of finance. But the thing I keep falling back on is that there are, you know, 70-plus million baby boomers retiring and they're all going to need a lot of financial advice in the years ahead, right? And obviously building a nest egg for some people is not easy. But for a lot of people, that's kind of the easy part. And then you switch to, well, what do I do with it now? I have to spend it. I have to come up with a withdrawal strategy. I have to worry about taxes. And I don't know how long I'm going to live and all these things, these uncertainties that have existed forever, but this group is living longer and they're bigger. And so my whole thing is, you know, financial advice is going to be more important in the next 20, 30 years maybe than it's ever been because these...
And you have a bunch of the advisers aging out.
Yes. Right. So my question is like, are advisers up to the challenge for the amount of advice that's going to be required?
Yeah. That's really interesting to think about. I don't know. But yeah, it seems like the demand is growing. The supply of advisors is shrinking. We've got tools to be more effective in terms of scale. So like if I was thinking about getting into this as a career, I would want to be a really good prompt engineer, like understand all the technical pieces of it and understand the tools to do that fast. And then I'd want to focus my educational skills on something closer to psychology, marriage counseling, therapy, coaching, executive coaching, like that kind of stuff. Because the dilemma still is like 2 plus 2 never equals envy. 2 plus 2 never equals, you know, fear, right? And so this isn't a math job. It's like part a math job. So you got to be a technical rockstar, but that's largely now just understanding tools and being really good at prompt engineering largely, right? Like...
