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- [00:05]
Michael Batnik
Welcome to Animal Spirits, a show about markets, life and investing. Join Michael Batnik and Ben Carlson as they talk about what they're reading, writing and watching. All opinions expressed by Michael and Ben are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Ritholtz Wealth Management may maintain.
- [00:28]
Ben Carlson
Positions in the securities discussed in this podcast. Hello.
- [00:35]
Michael Batnik
Welcome to Animal Spirits with Michael and Ben. We are live from the Morningstar conference on Navy Pier. It only took us 26 minutes to walk all the way back here, my lordy.
- [00:46]
Ben Carlson
So we are. How would you describe what we're in? We're in a booth. It's like a fishbowl. A fishbowl. There's people with headphones looking at us. I'm just gonna look at you. You have my full attention. Okay.
- [00:57]
Michael Batnik
All right.
- [00:57]
Ben Carlson
No distractions.
- [00:58]
Michael Batnik
We are very close.
- [00:58]
Ben Carlson
So today's episode is gonna be a little bit different than the normal shows and it's gonna be a little bit self serving because there is a conversation that I have on repeat and the volume ebbs and flows, but it's something like, hey, love your guys. Podcast. I want to get into the business, the industry. Here's what I'm doing. What would you recommend? How would you recommend? I break through.
- [01:26]
Michael Batnik
And a lot of times it's people who are completely out of finance. Sometimes it's people in finance who say, I want to go from this track to this track.
- [01:33]
Ben Carlson
Yeah.
- [01:34]
Michael Batnik
A lot of times it's, listen, I love this stuff. I follow it all the time. What do I do?
- [01:38]
Ben Carlson
Yeah. So I've gotten pretty good at this. Not to brag because there are only so many different variations of a story that somebody can tell you where they're coming from, whatever background, whether they're in the industry and want to pivot if they're at a large company. Like, I know what to say to, to who I'm talking to. And so this is self serving in the sense that anytime I get this, I'm just going to forward them this link. So I had a call earlier last week and the person was our age. Ish. Three kids, middle age, middle age, approaching middle age, not quite middle age. And so I'm like, so tell me your story. And they exited their previous career and sort of like, I was in 2010. What do you want to do? I love the market. All right, well, cool. What do you want to do? I just, I love stocks.
- [02:31]
Michael Batnik
Right. I follow this stuff religiously. I hear all the podcasts, I read all the books, all the blogs.
- [02:36]
Ben Carlson
So here. So. All right, so what are you doing now? He said, I'm actually prop trading. Oh, boy. Okay, that's.
- [02:42]
Michael Batnik
Wait, personal capital or, like, for an actual firm? Because that's. There's a difference.
- [02:47]
Ben Carlson
Personal capital with, I guess, leverage from the company that he's working for.
- [02:51]
Michael Batnik
No, no, no.
- [02:51]
Ben Carlson
It's not a. This is not a professional.
- [02:53]
Michael Batnik
I just think it would be funny if an individual called their own trading account. Like, my Robinhood account is a prop trading account.
- [02:58]
Ben Carlson
No, no, no, no. Actually, you know what? Yeah, no, I'm pretty sure he's working, like, at a. At a place.
- [03:04]
Michael Batnik
Okay. Because that'd be a great thing to fudge on your resume, like, prop trading. Yeah, but it's like your Roth ira.
- [03:10]
Ben Carlson
Yeah. So I love trading. It's a ton of fun. And the seduction of. You're going to turn your account into, you know, a lifestyle, obviously, is not real life. We. We know a lot of people in and around this industry. I don't think I know a single person that trades for themselves that doesn't also have income from either a course. And zero disrespect, but nobody is putting food on the table who is reliant solely on their profits from trading. Because once you do that, you introduce all sorts of different pressures. It influences how you trade. It's just. It's not possible.
- [03:46]
Michael Batnik
Or if you're that good, you go do it for a hedge fund.
- [03:48]
Ben Carlson
Exactly.
- [03:49]
Michael Batnik
But wait, do you think any of those skills in trading translate into wealth management? Because I'm. I'm not sure that they do.
- [03:56]
Ben Carlson
Well, it depends on the personality, the skills, and I will use that word very generously or very liberally. No, of course not. Trading has nothing to do with what we do. So. No, not transferable at all. So, anyway, I'm like, all right, well, he's not delusional, Right. Like, he's having fun. He knows that this is not going to be a future for him, but he wants something. So paint me the perfect role for you. If you could snap your fingers and create a job out of thin air, what would that job be? And he's like, you know, equity research. Pm. I'm just about to sign up for the cfa, and I'm like, timeout. The world that you're describing, the role that you're looking for died about 10 years ago.
- [04:44]
Michael Batnik
You also think AI is going to take over for a lot of analysts. That's your take.
- [04:47]
Ben Carlson
I know it Is we met, we, we referenced Mark Rubenstein, his substack net interest. He said that he was looking to hire people and AI has made that so that he doesn't have to. Rex Salisbury just put on LinkedIn that perplexity launched a finance assistant. Same thing. He said I was getting ready to hire one or two junior analysts. I don't need to anymore. So. But that's not even so. So that role is gone. And the cfa. I'm like, dude, the CFA still has value. If you are at Penn or any other of these Ivy League colleges and you want to get into private equity or you want to work for one of the big banks, sure do the traditional path.
- [05:33]
Michael Batnik
So wait, so but you think that like sell side analysts are a dying breed then?
- [05:38]
Ben Carlson
Oh, for sure. But particularly for what this person is describing, the equity research, the pm, he's like, I just want to get my, you know, get my roll my sleeves up and do some fundamental work, maybe some tech. I'm like, dude, that it doesn't exist. We are at Morningstar, the Morningstar conference. And.
- [05:57]
Michael Batnik
Well, part of it is too that the index funds and ETFs.
- [05:59]
Ben Carlson
Yeah. It is still a large industry, gigantically large. And in fact, I don't know if it was Jeffrey Patak or Ben Johnson or somebody at Morningstar, I believe, said that even though the flows into active mutual funds or out of active mutual funds has just been a perpetual tidal wave, the revenue is still going higher because the tailwind of the market.
- [06:24]
Michael Batnik
Yeah. Even if the flows aren't.
- [06:26]
Ben Carlson
Yeah.
- [06:26]
Michael Batnik
The market value is still climbing. The fees are still there.
- [06:29]
Ben Carlson
It's still a large industry, but it's not growing the way that it once was. Obviously, index funds have played an etf, have played an enormous role in changing the trajectory. Beating the market is hard. And now, AI, it's just like the final nail in the coffin. So I'm saying to this guy, like, you are so lucky that you got to me. Because he's like, I was just about to spend eighteen hundred dollars on the CFA course, and I'm like, dude, you have three kids. You don't have the hours.
- [06:55]
Michael Batnik
Takes a lot of time.
- [06:56]
Ben Carlson
You are going to waste the prime earning years of your life, you chasing a figment of your imagination.
- [07:03]
Michael Batnik
What do you tell him to do?
- [07:04]
Ben Carlson
The role that you're describing does not exist. Or it does, but not exist. Not for you. And it did it for me, okay? Because I was, I was him in 2010 and I was such a pathetic loser that I was willing to go to San Antonio to be an internal wholesaler. What? That's an internal role. Why would you leave New York City? Because I. There were no doors that were open for me now in 2010. Like, the world was in a different place. There were different challenges, but it's not going to happen. So you're welcome. Let's talk about what can you actually do?
- [07:37]
Michael Batnik
So this is a tangent here, but Bern Hobart on his. On the diff.
- [07:41]
Ben Carlson
Yeah.
- [07:41]
Michael Batnik
Wrote a piece a couple of weeks ago called, what happened to working your way up from the mailroom? There's all these stories about Ice Bear Stearns. I started out in the mailroom. Or Lehman Brothers. I started out in the mailroom and worked my way up. You cannot do that.
- [07:51]
Ben Carlson
There is no mailroom.
- [07:52]
Michael Batnik
No. And all the hedge fund managers say, listen, I wouldn't hire myself when I was 20 because all the people I hire now are in Ivy League schools or whatever. You're right. It's. That doesn't exist anymore.
- [08:03]
Ben Carlson
He's like, all right, so what about. What about what you guys do? I'm like, all right, well, you have a decent personality. Like, would you. Do you want to give financial advice? And he's like, sure. Tell me more. Like, how do. How do I do that? In the past, my answer was. And it's not a bad answer, is, first of all, stop. Don't send your resume. You have no resume. Like, you are in a different career. I don't even look at resumes when they come in. Honestly, like, people email me.
- [08:33]
Michael Batnik
It's funny. I don't either.
- [08:34]
Ben Carlson
A resume might or might not be attached. I don't look at it. And if I do, it's only sort of, like, by mistake.
- [08:39]
Michael Batnik
I don't know. Proficient in Excel and Word.
- [08:41]
Ben Carlson
Right. Right.
- [08:42]
Michael Batnik
Ooh.
- [08:44]
Ben Carlson
So I said what you have to do. And this is universal advice at this point. Go into somebody's branch, ask to speak to the hiring manager. Have a nice smile on your face. Like, go into somebody's office and see if they're hiring and maybe give them your resume physically. So the advice that I had done was getting a job at an RAA with no experience, pretty tricky. But there are always companies like Vanguard, like Fidelity and Schwab and Morningstar that are hiring for all sorts of.
- [09:19]
Michael Batnik
We talk to college students all the time that go start as a customer service associate at Vanguard and learn the business and work their way up and then move on right to an array if that's the path they want.
- [09:30]
Ben Carlson
Each one of those paths have different opportunities, different challenges. But that is a viable thing to do. Right. Like you can get a role. Maybe not saying it's going to be easy because you are competing with people that are younger than you, that are cheaper than you, that have less baggage than you. So it's not going to be easy. Here is advice if you want to get into wealth management. Now, it's tricky because this wouldn't work for us, but you got to have.
- [10:02]
Michael Batnik
Rich parents you can bring on as a client.
- [10:03]
Ben Carlson
Right? So let's assume that doesn't happen. How do I get my foot in the door? Right. How do I get my foot in the door is the question. You start at the client service associate level. What is a csa? A CSA is an operational role. You learn about all the different account types, all the different paperwork, what the steps look like, cashiering. You learn how to talk with people. You work for the advisor and you learn the business slowly now.
- [10:35]
Michael Batnik
Yeah, because you get to do a lot of stuff in that role. Right? You get to.
- [10:38]
Ben Carlson
So that is the type of role that it's hard to come by. It's like we are always hiring for that role. And it's a difficult role to find because for the most part, unlike advisors who get a paycheck, who we can talk about if you want, for CSAs, it's mostly a lateral move financially and so things have to be going poor where they are for them to turn over. So there's much less turnover amongst that industry or amongst that job seeker than there is with advisors. So you go in there and you say, here's the deal. I don't know anything about this industry, but I have aspirations to be the best that I can at this particular function. I am willing to put in whatever time it takes. I will be the best CSA that you will ever hire. And I'm willing to dedicate myself for X number of years and learn the business. And maybe somebody will say, you know what? I like your attitude. I like your smile. You seem sincere and genuine. You're saying all the right things. You're not bullshitting me. You're here to learn. I'll give you a chance. And then you stay in that seat until they pluck you out of it. You put your head down and you be the best CSA possible until somebody recognizes your talents and says, you know what? Would you like to do something else?
- [11:55]
Michael Batnik
So that's a family feud. Good answer.
- [11:57]
Ben Carlson
Thank you.
- [11:57]
Michael Batnik
Okay, so I had a guy come up to me, actually. I was speaking at a CFA event. You think CFA is dead, but I still speak at Their events, I don't think it's dead. And a guy came up to me. He said, listen, I was one of the guys who asked you, like, three years ago, I want to break into the industry. I think he was attack something. He said, I asked you what to do, and you gave me advice. And I don't remember what I told him, but he said, I'm working for an RA now. I said, what did you do? He said, I beat down every door in my town that I could. And I said, I'll do anything you want. That's. He's. If someone finally took a chance on me, that's it.
- [12:24]
Ben Carlson
So when. When people are talking to me or us about working for Reynolds Wealth Management, the number one thing that I'm looking for is personality and drive and.
- [12:38]
Michael Batnik
And email etiquette.
- [12:39]
Ben Carlson
And email etiquette. And don't be annoying. And I don't care where they went to school. I just want somebody who's like, listen, because this is how I was. I said to Josh and Barry, I will do anything you guys need me to do. And I meant it. And that's the mentality that I had, and that's the type of mentality that I respect and admire, that I want to work for us.
- [12:59]
Michael Batnik
That's kind of funny because, yeah, your role actually was a csa, even if it wasn't called that at the time. Yeah, a little bit.
- [13:03]
Ben Carlson
Yeah.
- [13:04]
Michael Batnik
All right, so I want to talk about more wealth management when you're in the industry. So I've had probably four calls in the last three weeks. And we have advisors reach out to us, ask for advice. Hey, I'm thinking about moving from this place to this place, or I want to grow my firm. They've had three calls in the last three weeks, four calls. People saying, listen, we're stuck.
- [13:22]
Ben Carlson
We're.
- [13:22]
Michael Batnik
We're only getting bigger on referrals. We're at, like, we've reached our ceiling of what I think our growth can be. The older advisors, the gray hairs don't want to grow anymore. They're happy with where they are. They're happy with the clients they have. They've checked out, but they're not leaving yet. Us, younger group, the next group, we're in our 30s, our 40s, late 20s. We want growth. Like, here's our plan. What do you think? Or what can we do? So I had one specifically, and a lot of them ask, you know, we want to do content like you guys. That seems like a good way to. And I tell them, that is a good approach. Even if they probably can't do what we do. Exactly. But one guy said, listen, I'm walking into a potentially 800 million to $1 billion RIA based in the Midwest. They want me to grow the firm beyond the 10 or 15 referrals they get a year. What do I do?
- [14:07]
Ben Carlson
Is this person an advisor?
- [14:09]
Michael Batnik
This person is a, in the sales growth role. He's coming from out of the RIA industry. And he said, should I do this? And I, I said, not knowing you've never worked in wealth management before, that might be kind of tricky. Said, well, they're going to give me equity. So. Well, that that might change it a little bit. That's the incentive. I guess that's a carrot on a stick. But he said, I'm trying to figure this out, wrap my head. Like, how would you grow a billion dollar firm into a $5 billion firm? Yes. Beyond the referrals?
- [14:38]
Ben Carlson
No, no. But like not buying other RAs.
- [14:41]
Michael Batnik
Yes. Organically. How? He said, how would you do this?
- [14:44]
Ben Carlson
Yeah.
- [14:46]
Michael Batnik
And I said, first of all, you're probably not going to be able to do that. It's very hard. Maybe you can. But I like temperate. Because he said, I don't want to do this and I want to do this like in a one, two, three year plan. I'm like, I want to have goal posts.
- [14:56]
Ben Carlson
Okay.
- [14:57]
Michael Batnik
And I said, all right, well, just.
- [14:58]
Ben Carlson
Whatever, pump the brakes.
- [14:59]
Michael Batnik
Kind of like any kitchen remodel, you in your house, it's going to take longer than you think. Like, this is going to take a long time. You have to get the advisors on board and can they close business and these things. And I said, I'm speaking from experience. The only experience I have in wealth management is content marketing. But I do feel like a lot of RAs have figured out that's the way to do it even. It's not like building an audience or building a substack or building a social media following or something, but it's creating a library of content for your clients that, that's like, that's the resume now. Right. Because that's your level of expertise. It shows you thought about this stuff. I feel like half the time when we get questions from clients, what do you think about this geopolitical event? What do you think about the debt situation? What do you think about interest rates or inflation? Half the time they just want to know that you've thought about it so they don't have to think about it.
- [15:50]
Ben Carlson
Yeah. But yes. And talking to clients. So doing content for the sake of being efficient with Your time if there is an event. Talking to all of them at once instead of sitting on the phone or sending emails one by one is an effective strategy. But that's not a growth strategy per se. Right. Like, so you're talking planning the seeds.
- [16:11]
Michael Batnik
For a longer term growth, but yeah.
- [16:12]
Ben Carlson
This person's talking about what, building an audience and then attracting clients.
- [16:15]
Michael Batnik
Yes, but I kind of said that's not. There's no way your mile markers are going to be reached that way.
- [16:20]
Ben Carlson
No.
- [16:21]
Michael Batnik
So I said, can your advisors close business? Do they, do they reach out to current clients and ask for referrals or ask if they have more money? Well, no, they don't do any of that. I'd say that's part of it. Part of being an advisor is selling and closing business, which is not something that you, that they teach people. Some people are born with that skill. We know some of those people that they're naturals. Other people have to actually learn it. And we've seen that path with plenty of our advisors. Yeah, but like what, what would you tell someone in that situation? Your best bet is buying other advisory firms?
- [16:57]
Ben Carlson
No, I would be honest. And, and I would say I don't think it's going to work. I would say, like, think long and hard about what you're going to do before you get there. Have a game plan, talk to people in the industry and do a sanity check. Does this make sense?
- [17:14]
Michael Batnik
But we, I've had multiple conversations where we talk a lot about the inheritance that's coming, the inheritance wave, from baby boomers to the next generation. I feel like that push and pull, I've had a ton of those conversations about there's a group of young advisors, three or four of us, and there's a group of old advisors that own the firm or whatever, and them butting heads and they're not leaving when they said they would or I thought I was going to be handed the business. What do we do? And I think maybe the thing is you roll out in your own firm or something.
- [17:44]
Ben Carlson
Like, all right, so before we get to that part of the conversation, financial advice is a, it's a weird industry. I heard Carl, I think it was Carl Hichenberg talking with Michael Sichmore. It's a lonely industry in the sense that we are all very much doing our own thing. Like I've had.
- [18:01]
Michael Batnik
It doesn't really feel like you have competitors in a sense.
- [18:03]
Ben Carlson
Right. So we do. We just don't see them and we don't really interact with them. So we've made A lot of investments in young wealth, tech companies. And oftentimes I'm asked, hey, what other advisors do you know that you think we should be talking to? And my answer is like, I know this sounds ridiculous. I really don't know any. I mean, I know I know one. I know I have like one friend in this industry outside of our firm. Now we, we communicate with all of the advisors like they listen to our podcast. But. Okay, fine. Well, well, who, who should I reach out to? Who do you respect? Like, who do you think's doing a good job? I don't know. How would I know? It's not like the NBA where you could see, like, what, what teams and coaches and players are doing.
- [18:44]
Michael Batnik
Well, I guess the answer is, unfortunately, it's probably the biggest firms are going to continue to get bigger. Because I still think that you talk about the cfa. When people ask me CFA versus cpa, I say CPA or cfp. CFP all day long. Because I think there's a huge growth potential for advice in the years ahead.
- [19:01]
Ben Carlson
And there's also, there's a demand for CFPs.
- [19:03]
Michael Batnik
70 million baby boomers. They hold all the money. They hold, you know, 60% of the wealth or whatever it is. A lot of them are going to need advice on their money. So the problem is, I think a lot of the bigger firms are just going to get bigger.
- [19:15]
Ben Carlson
Yeah. All right, so here's my, here's my point about the industry and the fragmentation. Even though we don't directly see our competitors, it's. It's pretty rare for a prospect to be like, all right, I'm talking to you and I'm talking to three other reas. Right. It doesn't genuine. At least for us. It doesn't happen that way. But just because you don't see your competitors doesn't mean that it's not insanely competitive. Because you're not just competing with reas. You're competing with Wirehouses. You're competing with Vanguard and Schwab. They have low cost solutions. And on the content side, you are competing with Netflix. You are competing with Joe Rogan and the Ringer. Like, it's insanely hard to get somebody to be like, yeah, I'm going to listen to this person's podcast who's on their second episode who doesn't know how to talk coherently into a microphone. Because we've been doing this for eight years now. And I had butterflies in my stomach for the first two years. It's hard. It takes practice. We were shit.
- [20:13]
Michael Batnik
Yeah.
- [20:13]
Ben Carlson
Because I Didn't go to broadcasting school. I don't. Like. I don't know how to. I didn't know how to talk to a microphone. So it was difficult. And we were doing this on the back, let's be honest, of Josh and Barry. They had the audience and absent.
- [20:25]
Michael Batnik
Yeah, they helped build our audience.
- [20:26]
Ben Carlson
Absent them, we wouldn't have been able to do this.
- [20:29]
Michael Batnik
I don't know. So there's not really a good answer to that.
- [20:31]
Ben Carlson
No, there is a good answer. Figure out something else. That's the truth.
- [20:36]
Michael Batnik
How about this? What I tell people all the time is find your niche. So we just had a guy come in here before we started, and he said, I cater exclusively to dentists. I think we talked to someone before who just does. Delta airline pilots. If you really want to stand out, it's a niche in your expertise, because it used to be I'll just go to the place down the street or in downtown, and that's my advisor. But now the pandemic blew this doors off of this. Your competition now is everywhere because people are willing to talk on zooms and find an advisor somewhere else. Right. It's not just the place down the street that you're willing to go anymore.
- [21:11]
Ben Carlson
Josh put on LinkedIn the other day. What would you do if an acquaintance of yours comes to you with a really bad idea that they're passionate about? What would I do?
- [21:20]
Michael Batnik
Tell them no to dumb ideas. So I. I would say good luck.
- [21:25]
Ben Carlson
Yeah, you would say. You would say that sounds. Yeah, sounds good. Good luck. I really enjoy being frank with people because most people, there's no upside to telling somebody that their idea is not a good one, especially if they're passionate about it. Now, there's times where I'll bite my tongue, obviously, if somebody's like, you know, I've got this whole. It's. It's tricky, but for somebody, like the conversation that I had last week, like, hey, I'm thinking about doing the CFA prop trading. I love that I just saved that guy's life.
- [21:53]
Michael Batnik
The chances of that working out are very small.
- [21:55]
Ben Carlson
And had he not spoken to me, he would have gone down a really bad path. So I love being able to do that for people. Now, I'm not always right, but I know what, like, I know when I'm right.
- [22:05]
Michael Batnik
So you want to start the CFA prevention hotline?
- [22:08]
Ben Carlson
Yeah. Listen, my side gigs are a bald consultant.
- [22:11]
Michael Batnik
That's true.
- [22:11]
Ben Carlson
And no, the CFA is not for you. That ship sailed.
- [22:15]
Michael Batnik
We should mention we both have our CFA designation. You know, ironically, it helped Me get my second job.
- [22:21]
Ben Carlson
My renewal just came yesterday.
- [22:23]
Michael Batnik
I got mine, too. They keep badgering me about it.
- [22:25]
Ben Carlson
I've told this story before, but it's just so funny how life works. So for people that are outside who are not familiar with my story Hour podcast, I was a jackass of all jackasses growing up in a college. I kicked out of Indiana University, shout out to Kelly twice for just not caring. And so I was. I fell very far behind professionally when I got out of college in 2008, it's like, oh, this is why. This is why people actually put time into their education, dumbass. So I went down the CFA route because I needed something. I had nothing. I had nothing going on. And I'm in an interview with Allianz or Pimco, I think it was when Allianz bought the merger, whatever it was, and it was going great. This is for an internal wholesaler role. And my first interview was going wonderfully well, and I felt, like, adrenaline and excitement. I'm like, finally. Like, finally, I found. I found a home. And then he introduced me to his hiring manager, and the guy was like, wait, cfa? This is not. This is not the role for you. This is an internal wholesaler. I was like, no, no, no, no, no, no. Like, I'm only on level one.
- [23:39]
Michael Batnik
I'll.
- [23:39]
Ben Carlson
I'll stop doing it. And he was like, no, dude. Like, you're in the wrong. You're in the wrong role.
- [23:43]
Michael Batnik
I don't know what EBITDA means. I swear.
- [23:45]
Ben Carlson
He goes, apply for something else. This is not. This is not the role for you. This is more of, like, a sales, you know, relationship role. So had I not done the cfa, I would have been in a much. I would have gotten that job. Like, I would have gotten that job, and my life would have been very different.
- [23:59]
Michael Batnik
How about this, though? Sales is one of the few places where AI is not going to disrupt if you have the ability to sell. AI is not going to take your job.
- [24:08]
Ben Carlson
Not yet.
- [24:10]
Michael Batnik
Well, you think AI is going to take all jobs?
- [24:12]
Ben Carlson
No, I don't.
- [24:12]
Michael Batnik
What are we going to do if no one has a job?
- [24:14]
Ben Carlson
Well, here's a role that's disappearing, and I'm sure of it, because I won't hire for it. The Power Planner role, that is a very difficult role to fill because typically, not typically, always. These are younger people who are new to the industry. Maybe they. They went from CSA to Power Planner, so they might have some experience, but they need mentorship from the advisor and tutelage. Is that the same Thing? I think so, yeah. They need to learn. They need to grow and develop.
- [24:43]
Michael Batnik
Just saying it's an investment.
- [24:44]
Ben Carlson
They need to make more money. They need to grow up emotionally, like how to learn how to, you know, the soft skills. And then, heaven forbid they have success. They leave the nest and the advisor has to start from zero. It's a horrible role, but it's a necessary role for young people to get into the industry, and that is disappearing because that role is being replaced by AI today. Disagree.
- [25:08]
Michael Batnik
No, I think it makes sense. This gets back to the established advisors and the established firms. Those are the ones that are going to get bigger. I think.
- [25:15]
Ben Carlson
I think you're right.
- [25:16]
Michael Batnik
We're hollowing out the middle.
- [25:17]
Ben Carlson
We have five minutes. What's on your mind?
- [25:20]
Michael Batnik
Well, AI is not going to disrupt conferences. Right. People are still going to want to meet in person more than ever because of all the technology. I keep saying I've noticed in the last few years, I think people are more excited to come to these kind of events than they were in the past because a lot more people are working remotely.
- [25:38]
Ben Carlson
Yeah. All right, this sounds like filler talk. Let me. I've got one last topic for us.
- [25:42]
Michael Batnik
Okay.
- [25:43]
Ben Carlson
Right. I mean, we have anything else to say? Conferences.
- [25:46]
Michael Batnik
Yes.
- [25:47]
Ben Carlson
All right. So I wrote about this recently. Advisors Want a Paycheck was the title of the post. So in 2017, 2018, Chris and I were having weekly conversations with advisors about joining rwm. Now, at the time, we were really not. We did not have the foundational infrastructure to be able to offer a compelling reason for why these people should leave their jobs and join us. Like, we just. We weren't there yet.
- [26:17]
Michael Batnik
The people who came to us took a leap of faith.
- [26:18]
Ben Carlson
Huge leap. So, yeah, Jonathan and Brian in Chicago, like, they saw the future, but they took a risk. Yeah, right.
- [26:27]
Michael Batnik
By the way, I took a risk. When I told my family that I was joining Ritholts, they were like, so you know these guys from the Internet and you're leaving, like, this billionaire family to join them? The guy who owns the firm says they can't even afford me. So I got that going for me.
- [26:39]
Ben Carlson
We couldn't. You took a risk. Josh says that me and Chris took a risk. We were laughing the other day that he always says. I was like, dude took a risk. Should I stay unemployed forever, or should I work for the one person who I wanted to work for more than anybody else in the world?
- [26:54]
Michael Batnik
That's why I didn't think it was a risk either, because I wanted to.
- [26:56]
Ben Carlson
Work with Unemployment or maybe something. But anyway, so, and then I would say a combination of two things. Covid disruption. People weren't going anywhere. And more importantly, the mega, the, the 800 pound gorilla in the room is private equity. And it got so competitive and is so competitive that all of the advisors who would have come to us were getting cold called and heaps of bags of money thrown at them. And it was very clear to me. I, I had this conversation with Chris many times where the advisor like, dude, I'm not making this up, wake up. This is what's happening. And this is why we're having one call a month instead of 11. Okay, fast forward to today and the.
- [27:42]
Michael Batnik
People that were talking with us. A lot of times it was, listen, I've got this ped on the table. Yeah, but I want to talk to you guys too.
- [27:47]
Ben Carlson
Yeah, there's a lot of those and wouldn't you know, and most people are capitalists and so we don't give paychecks. And so, you know, they made their decision. I probably would have done the same thing. All right, now fast forward to today. A couple of things are happening. Number one, and we have two minutes. I'm going to make this really quick. Number one, a lot of the money came with strings attached, right. There is no free launch. And so there are certain incentives and pushes to either sell product or to get more efficient, make more money, whatever the case is. And there's a lot of people that got swallowed where the senior advisor got money, the junior Advisor who's now 40, they didn't get money. Like why am I still here?
- [28:28]
Michael Batnik
Who's going to be looking when this, when these deals, some of them won't work out, obviously. Who's going to be making you look the switch faster? The clients or the junior advisors?
- [28:36]
Ben Carlson
Probably the advisors.
- [28:38]
Michael Batnik
Like, whoa, I didn't, I didn't know this.
- [28:39]
Ben Carlson
I was signing up for, I would say the advisors. So we're starting to hear from them a lot more frequently. We're also hearing from the advisor who is now our age ish, who hung the shingle, tried it and it was like, wait a minute, I want to get financial advice. I don't want to run my own company.
- [28:51]
Michael Batnik
Right. I don't want to do the trading and rebalancing.
- [28:53]
Ben Carlson
And so we are now having way more conversations with advisors than we did in the past few years. And I suspect that this is not a flash in the pan. I think this is not a counter trend rally. I think that this is a regime shift. And the next couple of years are going to be very interesting.
- [29:11]
Michael Batnik
Yeah. It's going to be like consolidation to breakups.
- [29:14]
Ben Carlson
Yeah, there will be.
- [29:16]
Michael Batnik
We're going to be there for the rebound.
- [29:18]
Ben Carlson
Yeah. Yeah, absolutely. Any closing thoughts, Ben?
- [29:23]
Michael Batnik
Thanks to Morningstar for having us.
- [29:24]
Ben Carlson
Great event. Thank you, morningstar. Thank you, listeners. Thank you, people outside who are staring at us with headphones on. Animalspiritscompoundnews.com personal emails, personal responses. We'll see you next time.