Steve Gresham headshot

The Challenges of Generating Organic Growth in Wealth Management with Steve Gresham

Organic growth in asset and wealth management is experiencing a slowdown, leaving behind a trail of passive assets and declining client numbers. The tide is turning as baby boomers are retiring with their wealth poised to flow toward a new generation with vastly different priorities and expectations.

In this episode, Jack Sharry talks with Steve Gresham, Managing Principal at Next Chapter. Steve is also a Senior Education Advisor to the Alliance for Lifetime Income. Steve is a dedicated disruptor, and before founding Next Chapter, he held several senior leadership positions in the wealth management industry.

Steve talks with Jack about the current state of the asset and wealth management industries and the challenges they face in achieving organic growth. He highlights the decline in organic growth and the need for firms to adapt to the changing landscape. They also discuss the best remedies for resolving these problems and the four ways firms can prepare for the future.

What Steve has to say

“You have to be fully invested in the arms race with the consumer. The consumer is calling all the shots. They always win. They may be delayed or distracted and think things are better than they are for a while, but when they bite, they bite hard.”

– Steve Gresham, Managing Principal, Next Chapter

Read the full transcript

Jack Sharry: Hello, everyone. Thanks for joining us for this week’s edition of WealthTech on Deck. We’re coming up on our third anniversary of recording the WealthTech on Deck podcast series. It’s happening in a few weeks by the time we broadcast this, I can’t help but reflect on the fascinating conversations we’ve had on the future of financial advice, and specifically, the confluence of digital and human advice. And knowing what our scheduled guests looks like for the coming weeks and months, we have some more fascinating conversations to come. So stay tuned. The best part of WealthTech on Deck, the whole project, is to see where our industry is headed next. And that’s why I invited my good friend and colleague Steve Gresham, to join us to talk about his latest efforts to shake up the industry. As always, Steve is working on projects that are designed to foment innovation, if not revolution. Steve’s the managing principal of Next Chapter and a longtime dedicated disrupter. He and I have had an opportunity to do that together many times, in fact. He will fill you in on the number of tracks he’s going down. And so with that, Steve, welcome back to WealthTech on Deck.

Steve Gresham: Thank you, Jack. Great to be back here again.

Jack Sharry: Terrific. So, Steve, at high level, why don’t you lay out, I know a lot of the projects you’re working on. There’s a lot of really rich, interesting stuff happening. But please lay out the projects you’re working on now. And then we’ll talk about each one a little more in depth, so.

Steve Gresham: Sure. Well, the central theme is what do we do to reestablish organic growth in both the asset management and wealth management industries. As you know, asset management has pretty much lost its organic growth primarily to passive. And wealth management, we know is pretty much screeched to a halt, the culprit there is demography. But we can talk a lot more about that. So everything that we are doing at Next Chapter is in support of reestablishing that organic growth.

Jack Sharry: So talk about that. I know you have some stats on that. Essentially, our industry is just money moves around the same places and organic growth, I… it’s few and far between in terms of firms that are actually capturing that. So why don’t you describe the current state, and then why don’t you describe what your recommendations are to, to remedy it.

Steve Gresham: Yeah, so that’s a very important point that you just made, Jack, because there is, there’s two different ways to view this. So if you take the sort of zero sum approach, the money is moving back and forth among providers. Then it was very easy to see for a number of years, the transference in asset management from active to passive, and in wealth management from some of the higher priced, high touch, what we would call full service providers, and seeing that transition over to direct providers, you know, the sort of big box stores of Fidelity, Schwab, Vanguard. And you know, I participated a lot in that process. What we’re talking about here is something that’s a little different, which is the aggregate growth of the industry being now either flat or we suspect right now, it’s actually begun to tilt down. And so that is not movement from one part of the industry to another, that’s movement of the assets basically, out of the industry.

Jack Sharry: So talk a little bit more about that, because that’s one of those things that I think people struggle with, to understand because, you know, read the daily industry news and people are acquiring firms and people are… you know, RIAs are expanding or, you know, having a part of a larger organization, there seems to be a lot of activity, a lot of movement, lot of assets flowing back and forth and upside down and backwards. But I think the number I heard, you were at Tiburon, I wasn’t able to get there this year. I think the industry growth rate is between two and three percent. So it’s anemic, at best. But talk a little bit about that. And as to what’s been happening.

Steve Gresham: You know, so when I say the the money is leaving the industry, it’s not leaving the industry going to another industry. It’s leaving the industry going into the pockets of the people who want to spend it. So the thing that that is interesting that you and I have talked about for more than 30 years together, is that at some point, the ascendancy of the demography was going to result in the people actually then using their money in this retirement thing. And I always use air quotes around retirement because I’m not really sure what it is or, but I’m quite sure most people don’t like to think about it that way. But this next chapter that they are in, they’re using the cash, so the money is coming out.

Jack Sharry: Interesting. So I know you spoke at Tiburon, you’ve spoken at MMI recently. What were some of the things that you shared, some of the observations you’ve made, given the fact that we’re in a, we’re sort of that downward slope in terms of the money flowing out to pay for things like their next chapter or retirement, call it what you will?

Steve Gresham: Well, so the question is, what’s your adjustment? You know, your firm, what are you doing to adjust? And you know, at MMI it was really about the four major issues that you confront when you realize that your organic growth is not where you want it to be. The RIA world, the investment advisory world is pretty clear where it is, you know, usually they’re looking at some kind of internal growth rate that they’d like to achieve, otherwise known as the hurdle rate. There are organic capacities for that, or strategies for that. There are inorganic strategies, and the inorganic strategies, as most of these leaders are telling us, those are still achievable. And so inorganic growth really is supportive of earnings. And so if you’re really, especially as a public company, if you are interested in maintaining your earnings, it is very seductive to be able to do things that can actually drive your inorganic growth. So you can feel good about those numbers. And that comes back to the point you just made, Jack, which is spot on, which is lots of activity. You betcha there is. Because if you were facing the inability to hit your hurdle rate or your earnings results, or any of the forecasts that you’ve put out there in the public markets, it wasn’t too long ago that advisory firms were not being rewarded for the earnings that they had. And that has changed over the last few years in particular, and so, to the better. So you want to keep that thing moving. And you’re going to do that through acquisition, you’re going to do that through buyback, you’re going to do that through anything that you can do to drive up the earnings. It however, masks the fact that you do not have organic growth, which does not include the market, does not account for acquisition, and is effectively the combination of your ability to retain your existing clients, and then add more assets on a net flows basis.

Jack Sharry: Gotcha. So what’s your remedy? If you’re, you’re one of these, you’re any kind of firm these days, you’re not relying on acquisition or whatever, and you’re not reliant on the markets, you’re just relying on actually going out and obtaining or winning more assets, because of the, the offering that you’re making? What’s the remedy? What do you do?

Steve Gresham: Well, first thing you do, as you always say, go back and channel your experience and understand what’s happening. So for me, this is a flashback, as you know, to the fall of 2009 at Fidelity. You know, I’ve been there less than a year, the retail business is actually in net outflows all the way across the business, and especially against our top 12 competitors, many of whom are actually much higher priced. And so that was something that was not really understood, the gross flows continued to be enormous. But it was the net flows that had actually gone negative in the fall of ’09. And that’s just mind boggling to think of the scale of that business being in that much trouble at that time. And it was a long road to come back. But basically, that’s where I come up with these four issues that you have to deal with very quickly, and we can dig into any of them that you find interesting. The first one is you got to stop doing something because no organization that I’ve ever been witness to, or that you and I have worked in, has ever been able to do anything meaningful until they stopped doing something else. This idea of starting a new initiative off the corner of your desk is going to be about as stable as sitting on the corner of your desk. It doesn’t work. You have to stop doing something. And there’s a couple of strategies in there for the industry that we talked about at MMI in particular. The second thing is that you’ve got to become a fully invested in the arms race with the consumer. The consumer is calling all the shots, they always win. They may be delayed, distracted, they may think things are better than they are for a while. But when they bite, they bite hard. And one of the things we saw, I got to see at Fidelity, for the first time after all these years in full service was the power of the consumer and how they can actually be a partner in getting to them and helping to satisfy them. You just have to recognize that you’re stuck with them, because the consumer is not so happy about us either. The third one I refer to as the death of the salesman. So people who are our parents’ age, silent generation, you know, they were a pretty thrifty group, which is one of the reasons why they’ve done, comparatively, quite well in retirement, in their own retirements right now. My mom is still here, as you know, at 89, powering away. You know, she has her own podcast now. So the idea of, of them paying too much for something was also part of the spark that lit the fuse, lit the opportunity for the direct providers. Paying less was really important. Jack Bogle channeled these people. Chuck Schwab channeled these people. The Johnson family channeled these people. The new issue, however, is that because of the incredible amount of information that’s out there, in part, people are as concerned today about being sold as they were in, let’s say, the old days about paying too much. So there’s a lot of interesting research of late that suggests that the actual process of acquiring the product or service has become as important or more important than the product or service itself, that you have to sit on that for a couple of minutes and think about what exactly what that means. But the point is that people have so much information out there, they don’t like it. And if they catch one of these companies, actually selling them on something, then the reaction is, is bad. It’s really bad. And there are lots of examples of that. But so you got to be careful that there’s implications and then stuff, of course, you know, to do. And then the fourth one is the one that is probably the most vexing to me, which is that the longevity of the really serious American cohort that is owning most of the assets, paying most of the bills for the financial industry, that cohort has gotten older. And we keep talking about it as though it’s an abstract and it’s not going to arrive. But the median age of the boomer is now 68. The oldest is 77. That has implications for the business, it’s a huge deal of difference from where we were back in ’09, for sure. But we needed to use all four of those components at Fidelity to achieve the success that we, that we achieved.

Jack Sharry: So one of the things I find fascinating with all four of those, those points, is they all center around the consumer. And you and I grew up in the industry on the full service side. And we paid a lot of attention to advisors and firms and markets and all this stuff we paid attention to, because that’s what we talked about, that’s all that seemed to matter. And, and frankly, dare I say it out loud, but we observed it, the consumer was an afterthought. It was just not, not part of the thinking. Certainly Fidelity and Schwab and many others changed the game on that, I could make an argument, which I won’t necessarily do at any length. But I wonder sometimes if they haven’t lost their way a little bit, on those big firms, about the consumer. Vanguard is another example that they keep bringing it in, because the perception, the brand is around that they care, but I don’t observe it in terms of their offering, I’ll just make that an editorial comment. But talk a little bit if you would about how that is changing. Because I do see firms are trying to do that. They don’t have that muscle memory on how to care about the consumer. Talk a little bit about what you would prescribe in terms of what the industry needs to do to understand the consumer, to give them what they want. Because my sense, my observation is they’re not getting what they want.

Steve Gresham: Well, it’s an interesting question to ask. And depending on on who you ask it to, in this food chain of service, you get different answers, which is, again, I think, is kind of your point, it’s a bit baffling. You know, Ned Johnson, who was the chairman of Fidelity when I got there always said, don’t spend any time worrying about the competitors, spend all your time worrying about our customers, because they’re the ones that are going to tell us what we need to do. And, you know, frankly, that’s, we should be putting all of our energy into that. That’s hard enough. So I think what has happened is the role in here somewhere of two things. One is that we’ve built the investment management financial advice business on the backs of something that my Next Chapter colleague, Doug Heikkinen, says, is really a sales culture. So initially, that entire industry was built, the people were recruited. And still, in most, what we again, we would refer to as full service firms that control the vast majority of the assets in the business, contrary to the at least the perception of of some people. So they really got the show. And most of the people who are client facing people in those organizations are compensated on the basis of what they earned from those client accounts. Now, there’s different forms of that, fees and commissions and all that. And I think most of the sting has been taken out of it. But still, if you were thinking about the industry, as a young person going into it, you get the distinct feeling that you are going to be compensated by your sales ability, and not because of the quality of the advice you might deliver. That’s a problem. Because, again, as I said, it’s one of the reasons why I pick out the salesman or the death of the salesman as one of the four formative issues and the trends that are really the unstoppable trends of the industry, is we have to come to grips with that. Now, that’s the first one. So we’re sort of already embedded with the kinds of people that are already thinking that way, grew up that way. And it’s, as you know, very difficult for people to make a change in that kind of behavior. But the second one is that the consumer themselves has for the longest time, I believe, viewed the full service advice industry, kind of the way they view their physician. Now there’s a good side of that and and not so good. But I think there was a lot of belief that the financial advisor and the firms and the investment companies all knew better, and that they were in a position to tell the clients, this is the way it is. Now, you could also, in some cases, you could wrap yourself in regulation. And well, this is kind of the way it is. But I think basically, that relationship between the consumer of financial advice and the providers of financial advice and products got themselves in a situation where they weren’t really connected. And so they weren’t able to connect that well. You know, we say the managed account industry put everybody on the same side of the table, and compared to a commission based product sales environment, 100%. Not so much, though, when you start thinking about different kinds of services. The simplest form of that, that we have seen more recently, and we did see at Fidelity was, what if I don’t want just investments? So in other words, what if I want to make sure I get a retirement paycheck? How would that be achieved? Well, no problem, the industry says, “We’ll give you a swip off of your managed account.” Now, that’s not actually what I’m talking about. I would like to get a check. And then I’m also kind of worried about that portfolio. Because if something happens, like I’ve seen happen before, what if the week after my retirement date, the market goes down? So we would refer to that as sequence of returns risk, the clients refer to it as, “You gotta be kidding me. Oh, my God.” Listening to the words and their true meaning to the consumer. And so I don’t actually believe that they’re working well together, which is one of the reasons why we see this skyrocketing trend of consumers saying they’re not really interested in talking to a financial advisor.

Jack Sharry: Yep.

Steve Gresham: Does that makes sense? Those two things?

Jack Sharry: I also know you spoke at Tiburon recently, and you had a similar consistent message, but also a variation on a theme. So I’m curious what your thoughts were about that. And then, where I want to go with all this, so what do we do about it? Where does it all take us? So why don’t you fill our audience in on some of what you’ve shared at Tiburon, which I found to be fascinating?

Steve Gresham: So at Tiburon, you know, it’s, Chip’s got a really good setup there. He’s basically set the stage for anything that I would say, because you show them data and data and data and data. And as you know, he can spin through 227 slides faster than anybody I’ve ever seen. So, and a lot of it’s really good stuff. So the point that I made was following up on what Chip had said, as you referenced earlier, the organic growth in ’22 had actually gone down to 2.4%, from 6.2% the prior year. And I guarantee you, when he updates that data, that ’23 is going to be worse. And just again, because of the rise in the trends that we referenced a couple of minutes ago. So my point to them was, as you look at what’s happening, can I ask why it is that we don’t seem, as an industry, to be terribly focused on what is creating the paucity of organic growth. What pulled the rug out from underneath this thing that was running like crazy now, quite literally for decades. So then I asked, If I could just have a show of hands, how many people in this room have personal experience with a relative or friend that has suffered from some kind of cognitive impairment? So you would think we are shifting topics. So, what just happened? Probably three quarters of the people in the room put a hand up, which I think is actually interesting, because I’m surprised it wasn’t 100% like it is in some venues that I, that I attend. And so I asked, if that is such a prevalent issue among the people in this room, why wouldn’t we have a better level of preparation for when that same phenomenon hits our clientele, which by the way it is and so we can just decide whether or not it’s a big thing or not. And so then I showed my favorite chart, which you can easily reference in almost every place that I go that my colleagues at Wealthcare Planning put together, which is the chart is basically, it’s an S curve, hockey stick for the growth of cognitive impairment among the cohort that we are now servicing today as clients. The reason I bring that up to you all is that right now, retirement is sort of the Rodney Dangerfield of financial services, gets no respect because you don’t hear any complaints. Clients are not really complaining. Advisors, not really complaining. Owners of firms that just sold themselves are not really complaining and they’re not going to because all of that bad news ahead says that we’re sliding the clients slowly, accelerating but slowly currently, from what we would say is their working career into this retirement thing which is really more of a vacation than a demand and then the wheels start coming off the bus. And that’s what happens in the sort of second and third trimesters of retirement. That is what we are looking forward to. If you don’t hear complaints about, from clients, about their retirement today, it’s because on a relative basis, they don’t have any. They’re still pretty young, the youngest boomers are only 59. A lot of them haven’t even retired yet. But again, as I said before, the oldest are 77. There’s a big deal of difference between a 59 year old and a 77 year old. So I teased it from there. But I said, but think about what the implications are. And God forbid, you have a firm that you bought, an advisory firm. Again, as you referenced earlier, Jack, people running around, buying those firms all over the place, I’m pretty sure that if you take a close look at that clientele, you are realizing that what you bought is not going to sustain the hurdle rate that you think that you’re going to need to earn to get a good return on that investment.

Jack Sharry: So tell me, what was the reaction? I just spent a gazillion dollars buying this, that, or the other thing, and it’s all predicated on forever exponential growth. And things are flattening out, in fact, probably heading the other direction as people spend their, their assets. So what was your reaction as you chatted with people afterwards?

Steve Gresham: The reaction as you know, having broken a few eggs over the years yourself, when you are confronted with that, which is uncomfortable, it just makes you uncomfortable. And then it’s a question of how do you respond to being uncomfortable? So some people, you know, this is fantastic. That’s the greatest presentation I’ve ever heard. And then you take a look at the other end of the bell curve, and oh, this guy doesn’t know what he’s talking about. Because you know, blah, blah, blah, blah, blah.

Jack Sharry: Sure.

Steve Gresham: You know, we’re used to that.

Jack Sharry: Yeah. Interesting. Interesting. So let’s talk about the future. Where does this all lead? What does this all mean? What, if you’re running a business, if you’re a C suite level exec, if you’re an architect builder, we talk a lot about building platforms, what… where would you be spending your time and money in terms of building for the future?

Steve Gresham: Well, the great news about a really significant trend, like the one we’re talking about here, which is really, I would call it just the dark side of retirement, because the service requirements expand geometrically, the amount of time needed to stick with the clients and help them through this situation of longevity, you know, that’s just something that is just not in the calculus of most advisory practices, most advisory firms, and definitely not through the people that you referenced, Jack, a second ago, which would be the product and solutions providers that sell through financial advisors, and therefore think they don’t really have skin in the game. It’s all over. So the good news is about one of those big trends, everybody’s thrown in the same bucket. So let’s try to figure out how to live in that bucket or get out of it together. So there’s really, there’s four things to do along the way, and they reference back to the points we discussed at the MMI. And the same at Tiburon. The first thing to do is to normalize longevity. It’s not going away, it’s going to get decidedly worse. It is not an issue just for the financial services industry, it is going to remake society. So if you have anybody in your family that has gone beyond that sort of happy stage of retirement, and I said at, at the MMI, I was able to know all four of my grandparents, and three of my great grandparents. And I watched my grandparents go from retirement, which was awesome. We played golf, we went fishing and we had boat trips, you know, they wrote stuff, they became… they did all kinds of things, you know, they were just nonstop, all four of them. And then you get to that second phase of retirement, that second trimester, where something’s not so good, at least with one member of the couple.

Jack Sharry: Sure.

Steve Gresham: And then you get to the place where my mom is right now, where she’s alone. And so that’s the actual most time that you have, as you get older. And so we just have not, we have a hard time with that, you know, as a society. So financial services is not exempt from that. The three operating things are a lot easier. When I said before, you have to stop doing something. There are two easy targets here. One is just get rid of marginal product. You’re not great at everything. But you don’t have time to be bad at anything. You need that time back. You need those resources back. Stop faking it. I mean, I know it’s, it’s attractive to hang on to something. But you’ll remember that one of the things that we did in the turnaround of Phoenix Investment Partners is that we killed off a bunch of underperforming funds. We merged a few. And that gave us bandwidth to then create new stuff. And that really was the genesis of the game plan, which I think, you know, George Aylward and offend the Virtus team are still firing on all cylinders doing.

Jack Sharry: Sure.

Steve Gresham: So that’s important. For the advice industry, it’s the marginal client, you know. Pareto until you can convince me otherwise has still got our number, it’s 80/20. And you either are working for the 80, or the 20. But 80% of the clients are not getting an appropriate level of attention from the advice world. So that’s a problem. But I would say focus on the 20 and secure them, and then find an off ramp for the 80. Because the biggest problem where you never want to be in the world of financial advice, or, or service or solutions delivery, you never want to be in the middle. There is no place in the middle, you’ve got to pick one side or the other. And I think as an industry, we spend too much time with one foot on the dock and one foot on the boat of the future. And that’s a physically awkward place to be.

Jack Sharry: Yep.

Steve Gresham: So that’s the stopping. The salesman issue is important. Because if you’re caught being a salesman, these days, salesperson, it’s not good. And it’s going to feed an issue later on, that I think we’re just never going to shake, which is that consumer regulation of financial services has got nowhere to go but up. And so, God forbid, something happens to this market. That is the only reason in my opinion, why there has not been more energy behind some of the capabilities. This is not a federal issue, by the way, it’s going to be much more an issue with the states. And they’re going to want to protect their consumers, and they’re going to see a buck in it for them. And they’re going to keep going. And it’s a pretty ripe target. If you’ve got commissions and compensation that people don’t actually think is appropriate. I’m not saying it is, I’m saying it’s under scrutiny. And so you gotta be there. The solution for that is to work really, really hard on your reputation. This is where I have issue with the people I mentioned before, who say, “Well, we sell through advisors, we don’t really have to do that. We’re sort of the Intel Inside.” Okay, the only reason you know about the Intel Inside was because it was a campaign. And so there was actual campaign to make sure that Intel chips were noted as a component. My point back to advisors and firms is if we showed up at your house because you needed to have windows replaced. Would you pick from the Jack Sharry windows, the Gresham windows, or the Andersen windows? Well, Anderson sounds good. Yeah. Why? Because they spent some time, even though they’re a component, in making sure that they had name recognition. And you’re going to want that all the way through for business partners, as well as the consumers. The consumers are looking at everything that financial advisors do today, we see that in our work with Advisorpedia as you know, 60% of the activity is search, and it’s consumers coming in to see what’s going on because they want to learn it all. And then the final part is the consumer. And I just don’t see serious humility around the consumer. You know, the old phrase from my colleague David Dintenfass at Fidelity was that if you really have true customer centricity, true, customer centricity is an act of extreme humility. And I don’t see humility in a mostly bull market with a mostly record financial results, bunch of companies and advisors. It’s not the right recipe for humility, which is one of the reasons why I think it’s so important to understand today. You know, kind of my test, can you point to the chief customer officer in your organization. And most people point to the sales manager. Don’t do that.

Jack Sharry: So, an observation here. So we’re going through an unusual, interesting, challenging economic period. Each day, we read about another firm that’s laying people off, I’m just talking about our industry for now. But it’s broader than that. I’ve always viewed that as just when things are a little bit tighter, it’s, it’s easier to, to lay people off just because you have to, and you feel better just because you’re doing the right thing for the organization, shareholders, whatever. But there’s that. And then also seeing a lot of senior level executives in our industry that, as they sold off to private equity firms, are no longer the chairperson or COC. And what all this points to to me and, just banking off your comments, you and I have talked a little bit about this, but I am a firm believer in everything you’re saying here. And you and I ggace talked about this, as I think about it, for decades. It’s few and far between that people understand how to generate organic growth. It’s hard, as we know, because you and I have worked at it hard for a long, long time and together and in separate places. So organic growth is hard, easier just to lay some people off or try to change it hoping that’ll work out. I’m always curious to see what the change to the new person is because their charge is to figure out how to do organic growth in a more challenging period. So I’m not sure that they have that background because they’re, they’re doing it in a better period, easier period, if you will, elsewhere. So it’s sort of interesting to observe and I think our industry will probably struggle a little bit sorting all this out because the challenges that you highlight as people age as longevity becomes more of an issue. That’s gonna need, frankly, resources and money and all the rest of that stuff. So all these are challenges that the industry will grapple with. One of the… and this is a shameless plug. But I know it to be true. That actually there’s, there’s a fair amount of efficiency or inefficiency, I should say, in terms of how we’ve built our systems. So our systems aren’t built for efficiency. That’s changing. And people are working on tech stacks and ecosystems and all the other names they use, to try to become more efficient. And I have to say, because we’re, we have a front row seat, and we work with a lot of firms, firms struggle with. It takes a long time to come to a decision, because they’re not, they don’t want to make a mistake, because they’ve made plenty of mistakes in the past. So it’s a sort of interesting time, I’d love to get your thoughts on this. It’s an interesting time where organic growth has never been more elusive, at least for a long, long time. There are challenges and trying to figure it out in what arguably is more bloated system, and you’re going to lay people often and then there’s some holes, you got to be more focused, which firms aren’t good at, they just tend to say they’re focused, and then they’re not, to your earlier point. And just the challenges are going to, I think, be here for a while. So your thoughts. What’s your advice to the leaders in our industry as they’re trying to sort this conundrum/challenge as they try to sort this all up?

Steve Gresham: Well, you know, I hate to say it, I mean, it’s pretty much as obvious as, as you begin to lay out the component parts, it’s pretty much obvious about what, what the shift has to be. So if you have a, an industry that is expanding, and I mean, all the drivers of organic growth, more and more assets are coming in, where are those assets coming from? They’re coming from the earnings capability of the clients. So the clients make money, they put it in their investment management accounts, and the industry grows organically, because it’s a shift in the economy from the money that’s coming from work and being put into investments. So it’s moved from one sphere to another. Well, when the group of people who is taking the money out at 70 million in the boomers starts to be bigger than the people, than the money that people are paying in. So in other words, a boomer rolls off, takes their stops, the money coming in, at probably their highest level of compensation in their entire career. They’re being replaced, if they are, by a Gen X, Gen Y, millennial who’s making a lot less, who is also buying, shocking, get ready for it, less profitable products for the industry. So you’re swapping out a really valuable client for one that’s not. They’re also in an earlier part of their career. So basically, what you now have is a kind of a high price game of Survivor. So all the money has already been accounted for. Of course, you know, at the edges, there’s more money coming in from boomers, as I said, a lot of them haven’t retired. And there’s, there’s, Gen X is really interesting, because they’re going to inherit a lot of it. But the industry has got to understand where the money is. Because if it’s not growing in the aggregate, then it becomes fairly a zero sum game of competition. That’s where I use the phrase that now we’ve got a high class version of Survivor, because now you got to kind of get your head around the idea that if we’re going to grow organically, it’s going to be at the expense of a competitor. And when you start thinking that way, it becomes an awful lot easier to get focus. So yes, I’m focused on the consumer, as you said, Jack, that’s guiding everything that we do at Next Chapter. But at the same time, you’ve got to recognize that the consumer has got choices that are significant. And the biggest choice that they have today, against the financial services industry, is the self empowerment, you know, being able to do it themselves. When they say they’re not looking for a financial advisor, it’s not because they say, “Well, I’m going to rely on my friend, Fred, next door,” what they mean is going to do it themselves. Because pretty much all the tools are there. So I’d be surprised if you don’t get more, a little zip in your step as an organization, if you recognize that not only are you trying to chase that consumer down, you are trying to beat the competitor to get to that consumer.

Jack Sharry: And I’m going to add one other thing, which we’re going to talk about over the course of the coming year in our podcasts. So I had, did a podcast recently with Bill Capuzzi, he is CEO of Apex. And he used a term that, while I don’t like the word, it’s sort of describes what’s coming. And it’s interoperability. In other words, it’s one thing to have all this capability planning and portfolio management and hold a ton of tools all which you can get off the internet right now, and for free. But how do you coordinate and connect all those? That’s interoperability because what you do around risk and what you do around cost and what you do around tax and what you do about maximizing retirement income and Social Security. The human brain can’t do that, it’s too complex, too hard, and there’s a lot of inefficiency inherent in that. So we’re going to talk about that a lot in the coming year. We’ll write about it as well, just the challenge of interoperability. In other words, how do you make all this stuff work together? And I think that is a big frontier, for our listening audience, you’re gonna hear me talking a lot about that in the coming year, because you got to make all this stuff work together. It’s not, we have a single product, single tool mindset. We’ve had that for years. And that’s, the smart money is going the interoperable route. But you know, Steve, we’ll talk about that one on our next podcast together sometime in the next few months. So Steve, as always, this has been a lot of fun, wonderful, to get your perspective, always interesting, unique, and powerful, frankly. So one last question before we part, at least for now. And you’ve answered this question a few different ways. It’ll be interesting to see what you come up with this time. And what do you do outside of work, because I know, you have lots of hobbies and passions… what do you do outside of work that you’re excited or passionate about, that people might find interesting or surprising?

Steve Gresham: Interesting and surprising? Well, you know, I don’t know, I just, I just delivering this thing here today to a friend of ours that you know, so…

Jack Sharry: By the way that, for our audience, who’s only listening, which is largely that… what did you just show them?

Steve Gresham: Oh, so this is a bowl made from some of our local cherry wood. So, you know, carving that out is kind of a cool thing to do when you step away.

Jack Sharry: Steve is a master woodworker, for those who may not know.

Steve Gresham: Yeah, I don’t know about that. But I think you got to have stuff that is easier to do than trying to solve the problems of longevity or interoperability or… I couldn’t even spell, so.

Jack Sharry: I know, I have to look it up. Well, that’s great. I, as always, Steve, this has been a lot of fun to get caught up. I love the way you think and the way you look at things, it really shakes up my thinking and I… hopefully it shakes up the thinking of our industry colleagues who are listening in. But all important stuff and to be continued when, I know we will have more of these conversations over time. So for audience, if you’ve enjoyed our podcast, please rate, review, subscribe, and share what we’re doing here at WealthTech on Deck. We’re available wherever you get your podcasts. Thank you, Steve. It’s been a lot of fun as always.

Steve Gresham: Awesome. Jack, you’re the best. Thank you, sir.

Jack Sharry: Take care now.

WealthTech on Deck

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WealthTech on Deck is a LifeYield podcast about the future of wealth management and the major role technology plays in it.

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