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Capital Ideas. Conversations with Mike

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0:16

I went to ChatGPT. I told it I

0:18

was going on the podcast. I told it

0:20

what kind of questions I was going to

0:22

be asked. And I said, please play the

0:24

role. And it was pretty good. I mean,

0:26

I feel going to get replaced.

0:28

Welcome to Barron's advisor, The Way

0:30

Forward, Next Generation, a special series,

0:33

spotlighting the emerging leaders, shaping the

0:35

future of financial advice. Twice a

0:37

month, we'll be digging into the

0:39

strategies, insights, and game-changing moves that

0:41

will help you take your practice

0:44

to the next level. I'm Alison

0:46

Tucci, and today, my special guest,

0:48

is Eric Sontag. Eric is C.O.O.

0:50

and President of Wealthspire Advisors, an

0:52

independent advisory firm with about $30

0:55

billion assets under management, and approximately

0:57

385 professionals. Today, he's going to

0:59

be talking about his role as

1:01

C.O.N. President, as well as how

1:04

you can amplify your personal identity

1:06

through technology and practice management skills.

1:08

Welcome to the podcast. Thanks for

1:10

having me. Great to be here. Can you

1:12

share a little bit about the

1:15

intergenerational challenges that you're seeing today

1:17

with your staff? And then what

1:19

are some of those challenges you're

1:21

seeing with your clients? And how

1:24

are you approaching that? With clients,

1:26

I see it in two different

1:28

ways. One is just different expectations

1:30

that you have across different generations

1:33

and expectations as just consumers and

1:35

what they're used to, the speed

1:37

of turnaround on things, but also how

1:40

they do research, you know, what resonates

1:42

with them is not going to be

1:44

the same as what resonates with you

1:47

know prior generations. Part

1:49

of it is also having

1:51

advisors of different ages right

1:53

and I think as a larger

1:55

firm that's a benefit is looking

1:57

across our 25 offices and

2:00

if we have roughly 150 advisors

2:02

plus we have advisor associates, it

2:04

really spans across demographics, across interests,

2:06

locations, geographies, all of that, having

2:08

next-gen advisors and listening to their

2:10

perspectives and understanding how they would

2:13

approach members of their generation is

2:15

a key place to start. From

2:17

a digital engagement standpoint, I do

2:19

see some strides being made there.

2:21

I think RIA's. are a little

2:23

bit at the mercy of like

2:25

the custodians that we work with.

2:28

So we could build a really

2:30

fancy digital led web portal for

2:32

our clients to look at for

2:34

reporting and communications, but we still

2:36

are going to rely on the

2:38

custodian to like... open up accounts.

2:41

That's it. You're still getting the

2:43

same paperwork for the account opening

2:45

process. Yeah. And you're going to

2:47

be reliant on that if they

2:49

change their process, what happens? Those

2:51

downstream implications. Exactly. But we are

2:54

seeing strides there. So for example,

2:56

there was docu sign first. But

2:58

then people realize, hey, docu sign

3:00

is still really tedious. You have

3:02

to fill out all these fields.

3:04

Yes, it's better for the client

3:07

to sign. But now we're seeing

3:09

the emergence of truly like electronic

3:11

and. built for digital. It doesn't

3:13

feel like an old form that

3:15

is just using digital signatures. It

3:17

is much more of a true

3:20

digital experience, and we are jumping

3:22

on that train as fast as

3:24

we possibly can. Also thinking about

3:26

intergenerational challenges with clients is when

3:28

you have families with multiple generations

3:30

of wealth. Again, something that's been

3:33

talked about in our industry for

3:35

years. is still not solved by

3:37

the way. Yeah and I don't

3:39

know that there's a silver bullet

3:41

right to solve for how do

3:43

you retain the next gen because

3:46

next gen often doesn't want to

3:48

work with their parents advisor and

3:50

if they're married I mean if

3:52

you're if you're told you're going

3:54

to work with your the advisor

3:56

of your in-laws like I don't

3:59

I don't think that's an exciting

4:01

prospect. So we've been very intentional

4:03

at our firm, and we started

4:05

this years ago, where when we

4:07

have those types of families, yes,

4:09

we'll have one senior advisor that

4:12

works with the matriarch and patriarch,

4:14

but we're able to select advisors

4:16

to work with the next gen,

4:18

so that the next gen really

4:20

feels like they have their own

4:22

relationship, and they are their own

4:24

client, and they're not always just

4:27

being viewed as the G2 of

4:29

their parents. And we have seen

4:31

that be really successful. Moving to

4:33

the question on challenges for the

4:35

team, I think there's a confluence

4:37

of a couple of factors going

4:40

on. One is the industry is

4:42

as competitive as it's ever been.

4:44

My father will talk about this

4:46

all the time, right? When he

4:48

started the business in 1995, saying

4:50

we're open architecture, we're fiduciaries, we

4:53

sit on the same side of

4:55

the table as the client, we're

4:57

truly an advisor, we don't care

4:59

what investment products you are in,

5:01

we do wealth strategy planning, that

5:03

was... actually very differentiated at the

5:06

time. And now, it's not. So

5:08

that alone is more table stakes,

5:10

right? And so I just- That's

5:12

everyone's slogan. Exactly. So it's a

5:14

highly competitive industry, which would make

5:16

it harder for new entrants to

5:19

go find clients. But I also

5:21

think there's another dynamic, which is

5:23

I think about the people that

5:25

built the firms started- the firms

5:27

of the prior generation who were

5:29

on the cusp of retiring and

5:32

very few of them went to

5:34

school or thought they were going

5:36

to go into financial planning. I

5:38

think most of them were coming

5:40

out of either broker-dealer backgrounds, maybe

5:42

some CPAs. It could be investment

5:45

backgrounds, insurance, right, where sales was

5:47

part of that culture and you

5:49

knew if you were going into

5:51

insurance that you're picking an industry

5:53

that you know there's going to

5:55

be sales as involved. you probably

5:58

have some interest in it. When

6:00

I look at a lot of

6:02

the... new hires, new entrants, not

6:04

just for Wellspire, but across the

6:06

industry for planning-led firms and RIA's.

6:08

A lot of them are really

6:10

coming from like a service-based background.

6:13

They're really passionate about planning, about

6:15

solving people's problems, and that is

6:17

great for clients, but sales is

6:19

often not top of mind, and

6:21

for some may even be like

6:23

a dirty word. And we've really

6:26

tried to send the message that,

6:28

hey, if you really believe in

6:30

what you are doing, then view

6:32

sales as a lens through how

6:34

do you expand the reach of

6:36

the positive work that we are

6:39

doing to more people. So I

6:41

would list that as an intergenerational

6:43

challenge, especially as the older advisors,

6:45

many of whom have been the

6:47

rainmakers, look to retire. And the

6:49

next generation, I just, I know

6:52

I'm very broadly speaking, but I'm

6:54

not sure there's, they're wired the

6:56

same way towards sales. So

7:06

in terms of advising the next

7:08

generation with business development and outreach,

7:11

essentially, what are your top couple

7:13

pieces of advice? Is it asking

7:15

your existing clients for referrals? Is

7:17

it going on LinkedIn? Is it

7:20

using social? How would you say

7:22

you would advise someone who walked

7:24

into your office and said, great,

7:26

I heard you, I want to

7:29

go out and do business development

7:31

and sales? Now what? all of

7:33

the above. There's multiple prongs to

7:35

it. We have launched a program

7:38

that we call Find Your People.

7:40

First, it is working with advisors

7:42

so the marketing team will pick

7:44

a cohort of advisors because they

7:47

can only work with so many

7:49

at a time and do a

7:51

really deep dive with those advisors

7:53

and understand what are you passionate

7:56

about? Who is your target client

7:58

and target profile? client profile. So

8:00

who are the types of clients

8:02

that you work best with, that

8:05

you enjoy working with most, that

8:07

you think you deliver the most

8:09

value? And that can be driven

8:11

by any number of things, what

8:14

they're passionate about, the types of

8:16

complexities that they deal with, where

8:18

they are in their life, industries,

8:20

that they are in those types

8:23

of things. So the marketing team

8:25

will really help them hone in

8:27

on, hey, you have to build

8:29

this target client in your head.

8:32

And then... they will work through

8:34

strategy. Some people are really prolific

8:36

on social and LinkedIn. If that's

8:38

the case, they will go through

8:41

and look at how they can

8:43

tailor it. Little, you know, small

8:45

tweaks here and there can make

8:47

a big difference that can really

8:50

speak to the people you're targeting

8:52

more. But it's also, it's not

8:54

just if you build it, they

8:56

will come like, oh, if you

8:59

just start posting on this, suddenly

9:01

you're going to get tons of

9:03

clients. It is how do you

9:05

actually go out and do outreach

9:08

for these groups, right. an advisor

9:10

that very clearly established her target

9:12

client profile as strong. ambitious women

9:14

going through certain types of transitions

9:17

in life, divorce being a primary

9:19

one, and our marketing team saw

9:21

a way to help supercharge that,

9:23

and launched a sisterhood summit that

9:26

was put on. It was wildly

9:28

successful. It was very local. Multiple

9:30

clients came out of that, and

9:32

now we're looking to expand that.

9:35

Do we make that more national?

9:37

Do we do that every year?

9:39

So there's numerous examples like that.

9:41

I like that idea that you're

9:44

thinking about of create your client

9:46

persona. So if you're an advisor

9:48

right now, go home and make

9:51

that list of what that persona

9:53

is for your ideal client and

9:55

then start building your brand around

9:57

it. And then the outreach comes

10:00

almost secondary to who your ideal

10:02

persona is. Yep. Spot on. And

10:04

that outreach isn't just direct to

10:06

clients. It's okay if it is,

10:09

if you have a CDFA. is

10:11

you're focusing on women going through

10:13

divorce, then there are COI's very

10:15

clearly, attorneys or CDFA's who practice

10:18

just as CDFA's, right? Right, referrals.

10:20

Where you get fantastic referrals and

10:22

what is your strategy for approaching

10:24

them as COI? So it's really

10:27

a multi-pronged approach, but it exactly

10:29

as you said. It starts with,

10:31

know your persona, your target persona.

10:33

You're listening to Barron's advisor the

10:36

way forward. Next Generation. We're going

10:38

to take a short break. Stay

10:40

with us. If you are a

10:42

financial advisor, then you know building

10:45

a retirement plan practice takes work.

10:47

Capital Group can make it easier

10:49

by offering a platform to help

10:51

you build it. Learn more at

10:54

Capital Group.com. Capital Client Grouping. We

10:56

talked a little bit about technology.

10:58

I don't want to pivot into

11:00

that. Our official intelligence is something

11:02

that our industry has talked about

11:04

quite extensively. It means a lot

11:07

of things to a lot of

11:09

different people. So let's just first

11:11

start there. What does artificial intelligence

11:13

mean to you, your company, and

11:15

how are you approaching it? So

11:17

I'm focused on generative AI, right?

11:19

The chat, BT launch and everything

11:22

that's come from it. We have

11:24

an advisor summit that we do

11:26

every year. I'm leading a panel

11:28

there on AI and I have

11:30

panelists who are from our firm.

11:32

There's an advisor, there's a member

11:35

of our investment team, our chief

11:37

compliance officer as well, because of

11:39

course that has to be part

11:41

of this. Compliance has to be.

11:43

Absolutely. On just practical use cases

11:45

using the tools that we have

11:48

and I've spoken with some advisors

11:50

that have said on a busy

11:52

day of client meetings, their use

11:54

of AI has saved them up

11:56

to an hour. Can you give

11:58

me an example of that? So

12:01

what, give me a practical example

12:03

that an advisor can go home

12:05

right now and use AI and

12:07

it's not. you know, specific for

12:09

WorldSpy or something that maybe they

12:11

can they could do. Sure. So

12:14

as long as it's approved by

12:16

the firm that you have these

12:18

tools and capabilities, but Microsoft Teams

12:20

has office co-pilot at this point.

12:22

Zoom also has an AI tool

12:24

that's that's similar to what you

12:27

would get in teams, but getting

12:29

meeting notes and if you transcribe

12:31

the meeting, of course with client

12:33

consent, the immediate benefit is... Of

12:35

course, you get summarized notes. Now,

12:37

can it make mistakes? Of course,

12:40

but so can you as a

12:42

human, right? Like if you don't

12:44

have that tool, there's errors of

12:46

omission. You're trying to multitask. You're

12:48

focused on engaging with your client

12:50

while also trying to jot things

12:53

down. I have not heard anyone

12:55

say, I started using it, and

12:57

it's not helpful. It's always, oh,

12:59

this is 90% there, and because

13:01

I was more focused. on engaging

13:03

with the client, it's very easy

13:06

to go through and just edit

13:08

those notes. You should always edit

13:10

your notes anyway, right? Absolutely. From

13:12

there, you can start drafting an

13:14

email. And again, it's 85% of

13:16

the way there, and you can

13:19

give it instructions for how you

13:21

generally write your emails and the

13:23

kinds of tones. That alone is

13:25

a ton of time. So you

13:27

mentioned something about client consent. So

13:29

how do you, how would an

13:32

advisor approach that conversation with a

13:34

client? Let's assume they might be

13:36

hesitant to use AI, might be

13:38

a little bit older from a

13:40

demographic perspective. How would you get

13:42

over that hurdle as an advisor?

13:45

We frame it as, look, a

13:47

transcription is, think of it as

13:49

someone who's taking notes throughout this

13:51

conversation. Everything that we're doing. is

13:53

above board, right? There's no shady

13:55

activities being discussed. And think of

13:58

it as it's just helping me

14:00

as your advisor to take. take

14:02

notes. And we really haven't seen

14:04

a lot of client pushback. We

14:06

also highlight that it helps us

14:08

focus more on the conversation, that

14:11

it prevents things from falling through

14:13

the cracks. Now some of the

14:15

tools allow for that type of

14:17

meeting summary without needing to actually

14:19

transcribe. So that's an option as

14:21

well if there is sensitivity. But

14:24

I find that video is very

14:26

different, right? I mean, advisors are,

14:28

it could be a very emotionally

14:30

heavy. topic and if someone's going

14:32

to have those emotions out and

14:34

really, you know, be vulnerable and

14:37

speak about these things, thinking that

14:39

you're being videotaped about it is

14:41

that can be very off. putting,

14:43

but I think if it's just

14:45

a transcription and it's thought of,

14:47

divorce, or something that's pivotal in

14:49

their life that changed their financial

14:52

plan. Absolutely. So we find there's

14:54

a very big difference between a

14:56

video recording versus just a transcription

14:58

and an uptaking. And you said

15:00

there's no client pushback. Has there

15:02

been any advisor pushback and how

15:05

I'd become over those hurdles as

15:07

well? Sure, I think it's natural

15:09

for any type of change. I

15:11

think there's elements of, well, AI,

15:13

oftentimes, haven't you seen the article

15:15

where it made up references to,

15:18

you know, a law firm and

15:20

it can get things wrong? I

15:22

think that's probably been the biggest

15:24

source of pushback. And again, my

15:26

response to that would be, we

15:28

shouldn't be underestimating the degree to

15:31

which we as humans also. get

15:33

things wrong and really view it

15:35

as if you use it the

15:37

right way if you use it

15:39

as a tool and if you

15:41

are never going to just take

15:44

it verbatim and send it right

15:46

which no one should ever do

15:48

with anything that's AI generated then

15:50

you know just to think frame

15:52

it in a different way and

15:54

then of course I always try

15:57

to get out of the way

15:59

right and I'm not an advisor

16:01

so I've Well, I learned a

16:03

long time ago that the best

16:05

way to help convince an advisor

16:07

to adapt something new is have

16:10

them speak to another advisor who

16:12

has done it successfully. So I

16:14

try to really get out

16:16

of the way for these

16:18

conversations. How

16:23

do you stay up to date

16:25

on the new advancements that are

16:27

happening at AI? I mean, to

16:29

your point, every other week, there's

16:31

a new type. How do you

16:33

stay up to date? And how

16:35

do you go through the compliance

16:38

aspect of it? First thing, any

16:40

tool that you are using must

16:42

be approved by your compliance and

16:44

your cyber security department. Like any

16:46

tool. I think it would be

16:48

very dangerous. for any advisor to

16:51

say, oh, I read about some

16:53

great AI in the journal today,

16:55

and I'm going to download it

16:57

on my phone, and I'm going

16:59

to bring it to a client

17:01

meeting and use that to transcribe.

17:03

That's a huge no now. and you

17:06

don't know where that information is being

17:08

stored for what we use through because

17:10

it's Microsoft and we're a Microsoft shop.

17:13

We know exactly the data policies we

17:15

know that when we are using the

17:17

chat bot that any kind of PII

17:20

or client information that's in there does

17:22

not go. out. It might be pulling

17:24

things in to help respond to questions,

17:27

but our data is never leaving the

17:29

security of it's not sharing it with

17:31

the data model in order to make

17:34

it better. So I think advisors have

17:36

to be very, very careful about that.

17:38

And so you'd really start with the

17:40

tools that are available to you. I

17:42

think you find a group of people

17:44

that are really passionate. about it. I

17:46

spent up a team's channel with 10

17:48

people that we called AI innovation. I

17:50

saw that they were engaged in it

17:52

and learning because no one person can,

17:54

and I'm not going to understand all

17:57

the use cases because I'm not

17:59

an advisor. I want to hear

18:01

from the advisors that are using

18:03

it. And so the 10 of

18:05

us would chat about it. And

18:07

now we're about to launch a

18:09

more formal AI innovation committee across

18:12

the firm, probably about 10 people

18:14

where we're coming together quarterly formally,

18:16

but of course informally chatting all

18:18

the time. And I'd say we're

18:20

focused more on how do we

18:22

take our existing. AI tools which

18:24

are constantly evolving, like I look

18:26

at Copilot now versus a year

18:29

ago and it is a huge

18:31

jump. We're focusing on how do

18:33

we get the most out of

18:35

that and what use cases can

18:37

we use rather than trying to

18:39

stay up with every single new

18:41

AI that's being launched. AI

18:49

is changing constantly. How do you

18:52

see a changing the advisor role

18:54

in the next five years? And

18:56

I'm thinking of, you know, that

18:58

young advisor, they initially learned, sitting

19:01

there, taking notes. Now that aspect

19:03

is taken away from them because

19:05

AI is doing it. You know,

19:07

AI is going to be able

19:10

to do some of the computations

19:12

and some of the financial plans

19:14

going forward. Some of these more...

19:16

tactical or rudimentary skill sets that

19:19

advisors once did to learn sort

19:21

of the ropes before stepping directly

19:23

into that client relationship is being

19:25

kind of taken away through AI.

19:28

So how do you see the

19:30

advisor role changing? How do you

19:32

see the training changing if those

19:34

things are not available anymore? Yeah,

19:37

so I actually viewed differently. I

19:39

think for an advisor associate advisor

19:41

in training that is learning through

19:44

taking notes, I'd say you're actually

19:46

doing a disservice in certain ways

19:48

because the subject matter expertise is

19:50

critical and advisor associates need to

19:53

gain education and expertise in these

19:55

critical areas. However, you can't overestimate.

19:57

the importance of the EQ and

19:59

interpersonal side of being an advisor

20:02

and the art of being an

20:04

advisor. So look, it's not rocket

20:06

science to run a financial plan

20:08

and figure out that a client

20:11

needs to sell their house, right?

20:13

We have people straight out of

20:15

school who can successfully run that

20:17

plan, but delivering that successfully. to

20:20

a client in a way that

20:22

they actually heed your advice, listen,

20:24

how you work them through it,

20:26

I mean that's in art form.

20:29

So taking notes doesn't help. with

20:31

that. If the notes are covering

20:33

the basics of just what's being

20:36

said and you as the junior

20:38

advisor can focus more on how

20:40

the lead advisor in the room

20:42

is actually engaging, right? What is

20:45

their tone? When do they choose

20:47

to introduce things? Right. How do

20:49

they do it? What are they

20:51

doing? Right. Like how are they

20:54

connecting? How do they mirror their

20:56

clients? If you could spend more

20:58

time focusing on that, I actually

21:00

think that's much better. set of

21:03

training. So that'd be one response.

21:05

The second would be I think

21:07

AI, there's a lot of possibilities

21:09

with training on technical expertise as

21:12

well. So you can use AI

21:14

to, and we've showed this in

21:16

some of our sessions, build me

21:18

a 20 question quiz around qualified

21:21

small, like QSPS policies and put

21:23

citations for. everything, right, which if

21:25

you're using the right types of

21:28

systems, it's not going to make

21:30

stuff up and we'll actually cite

21:32

where you could go to articles.

21:34

There's a lot of possibilities there,

21:37

and it could also help with

21:39

how you appear in Zoom meetings.

21:41

There's feedback you could get. Did

21:43

you talk too much? Did you?

21:46

Were there certain filler words that

21:48

you said too frequently? And actually,

21:50

in getting ready for this podcast,

21:52

I knew I wasn't going to

21:55

be using any PII, so I

21:57

went to ChatGPT. You can now

21:59

talk to it, which is wild

22:01

if you haven't tried it. I

22:04

told it I was going on

22:06

the podcast. I told it what

22:08

kind of questions I was going

22:10

to be asked, what the format

22:13

was going to be. And I

22:15

said, please play the role. And

22:17

Allison obviously did not hold a

22:20

candle to you, but it was

22:22

really helpful. And it was pretty

22:24

good. Like it was a little

22:26

scary. Good, my robot, you know,

22:29

interviewer was. And then I had

22:31

all the notes that came from

22:33

it, and then I could ask

22:35

questions about the notes. What would

22:38

be the length of my response?

22:40

Like, so there's so many ways

22:42

that people can use AI to

22:44

actually help train themselves as well.

22:47

I mean, I feel like I'm

22:49

going to get replaced now. That's

22:51

how. Maybe a little nervous right

22:53

there. Well, thank you for coming

22:56

here today. I appreciate your time.

22:58

Thanks for having me. It's been

23:00

fun. The production team for Barron's

23:02

advisor, The Way Forward, Next Generation,

23:05

is Ellie, Ismailidou, Rebecca Bizdale, Paul

23:07

LeBlanc, King of Roy Jacques, Joseph

23:09

Lusby, and Alexis Moore. Melissa Hagerty

23:12

is the executive producer. Jenna Mathis

23:14

is the director of programming for

23:16

Barron's advisor programs. Greg Bartalis is

23:18

the editor-in-chief of Barron's Wealth and

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Essa Management Management Group Management Management

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Capital Group, we believe in the

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potential energy of fixed income. Our

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distinctive investing approach seeks to deliver

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