The transcript from this week’s MiB: Adam Frank, JPMorgan Wealth Management’s Head of Wealth Planning and Advice, is below.
You can stream and download our full conversation, including any podcast extras, on Apple Podcasts, Spotify, YouTube (video), YouTube (audio), and Bloomberg. All of our earlier podcasts on your favorite pod hosts can be found here.
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MASTERS IN BUSINESS
Adam Frank
Head of Wealth Planning and Advice, J.P. Morgan
Transcript · Bloomberg Radio · Host: Barry Ritholtz
00:00:02 ANNOUNCER: Bloomberg Audio Studios. Podcasts, radio, news.
00:00:07 BARRY RITHOLTZ: I’m Barry Ritholtz. You are listening to Masters in Business on Bloomberg Radio. My extra special guest this week is Adam Frank. He is the head of wealth planning and advice at J.P. Morgan. Previously, he held the same job at Bear Stearns before J.P. Morgan acquired them. The group manages about $1.4 trillion and specializes in sophisticated family, business and succession planning, estate and gift tax management, philanthropy, estate litigation, taxation, and employee stock option analysis. J.P. Morgan’s combined asset and wealth management business, including global, institutional, private bank and retail, is over $7 trillion. Adam Frank, welcome to Bloomberg.
00:01:06 ADAM FRANK: Barry, thanks. It’s great to be here.
00:01:07 BARRY RITHOLTZ: It’s great to have you. That was a mouthful to get out. I’m glad that —
00:01:11 ADAM FRANK: $3 will get you on the subway.
00:01:12 BARRY RITHOLTZ: That’s right. So before we delve into what you do at J.P. Morgan, let’s talk about your background, because it’s really very interesting. You earned a bachelor’s in psychology at the University of Pennsylvania, then a JD at Yale. I’m guessing the original plan wasn’t wealth management.
00:01:31 ADAM FRANK: It was not. The original plan was practicing law, because it was either that or being a doctor.
00:01:37 BARRY RITHOLTZ: One or the other.
00:01:38 ADAM FRANK: That’s what my mom told me.
00:01:40 BARRY RITHOLTZ: And you didn’t just practice law. You began your career as a law clerk to Judge Jacob Mishler in the Eastern District of New York, a legendary court. And then you end up working with him for a year and a half, two years?
00:01:55 ADAM FRANK: A year. The full clerkship.
00:01:57 BARRY RITHOLTZ: Tell us what that was like.
00:01:59 ADAM FRANK: It was very interesting, because he was a senior judge at the time, so he got to generally choose his own cases. He wasn’t really in the criminal wheel, so he mostly had civil cases. And it was fascinating to watch him on the bench objecting on behalf of parties because their lawyers weren’t quick enough, and watching him think through — or talking with him and understanding his thought process of how he would get to a conclusion, and then doing the research to back up that conclusion, or sometimes tell him why I thought the conclusion was not right.
But the biggest benefit of the fact that he was senior: he and his wife had a condo in Lauderhill in Florida. And so every year he would write to the Chief Justice of the Supreme Court, who would appoint him to the Southern District of Florida in Miami, where he would sit for four months. And each of his clerks — there were two of us — got to go down to Miami on combat pay from the government. So it was a nice gig. And that was a very interesting court as well, because he was in the criminal wheel there.
00:03:10 BARRY RITHOLTZ: And you know, I don’t care how much you like or dislike Florida, there are worse things in the world than Miami in the winter.
00:03:18 ADAM FRANK: Yeah, in the winter. And it was the winter of 1993, and there were seven or eight ice storms in New York. So my wife kept planning to come visit me in Florida, and she kept not being able to, because the airports were closed and the weather was so bad. And I felt a little bit guilty, but not that guilty.
00:03:37 BARRY RITHOLTZ: So after you clerked, your first year at Sullivan & Cromwell, and then you’re at Schulte Roth & Zabel — two highly regarded firms — you’re focusing on high net worth clients and closely held businesses. Tell us a little bit about that practice. You can see how your progression is moving you towards wealth management.
00:03:59 ADAM FRANK: Well, it was interesting. When I was in law school, my third year, I just took a trusts and estates class because it fit into my schedule, because I didn’t want to have classes on Fridays, and the T&E course was Tuesday, Thursday.
And it was fascinating, because it’s a casebook, and it’s stories that the judges have written about the litigants in front of them. And it was all of the families fighting over who Mom loved best, using their money or their business or their restaurant as a proxy for that. It was fascinating to me because I was a psychology major as an undergrad. I didn’t want to go to grad school, which is why I ended up in law school.
And I just thought it was a great intersection of law — and property class, which I really enjoyed — and the psychology. And it was very human, as opposed to a corporate practice or a litigation practice, both of which are great if you’re interested in them, but I wasn’t in particular. So being at Sullivan, I did a bunch of work on estate litigation, actually.
And it was the same thing. It was families fighting over who Mom loved best. One of the people in the case that I worked on had found out, about a year and a half before her mother died, that she was adopted.
00:05:19 BARRY RITHOLTZ: Oh, really?
00:05:21 ADAM FRANK: And so she and her son, the older woman’s grandson, sort of moved in, took over — bad behavior. They stole money, they did a lot of bad things, which was terrible, and it was a terrible story. But as a third party, it was so interesting. It’s other people’s problems, right? And I enjoyed that.
00:05:45 BARRY RITHOLTZ: Hey, soap operas are popular for a reason, right?
00:05:47 ADAM FRANK: And so that was it. It was a big soap opera. And then I ended up finishing that litigation successfully and then working, as you said, on wealthy families — heirs, inheritors of wealth, creators of wealth, business owners, people wanting to create a family compound or do whatever. And so it was a very varied practice.
Sullivan called it the Estates and Personal group, because we did a lot of personal work. I sued a dry cleaner once because he ruined a couture dress by ironing out the pleats.
00:06:24 BARRY RITHOLTZ: So this is very rich veins for a lot of our later discussion. How do you get from Schulte Roth to Bear Stearns? If I read your bio correctly, you joined Bear in the legal and estates department, not as wealth management.
00:06:42 ADAM FRANK: So the team that I run now, the wealth planning team — and the wealth management team that I ran at Bear — is generally a team of planners. So practicing trust and estate and tax lawyers, CFP professionals, CPAs, and other designations — people who are enthusiastic about bigger-picture planning, helping advisors work with their clients in the areas that advisors aren’t necessarily great at talking about. So Bear at the time — it was the late nineties, it was like 2000 when I started talking to them — was still very much in the transaction mode. They had stockbrokers calling clients to say, we’ve got this great bond or we’ve got this great stock idea.
And what they wanted was people who could talk to wealthy people about something other than the next stock or bond idea: their kids, their plans, their goals, their estate documents, their ownership structure, right? All of the ancillary things that are critically important to somebody, but you’re not necessarily going to your financial advisor for that unless you know that they have it.
So I was hired into Bear to basically start that group up, or help start that group up. And it grew significantly while we were at Bear. So the fee-based revenue, which is how we measured the success, when I got to Bear in early ’01, was about 3% of the net revenue of private client. And by the time 2006 ended, it was about 37%.
00:08:19 BARRY RITHOLTZ: That’s a big move in five years.
00:08:20 ADAM FRANK: It’s a huge move. And we hired the right people, the right advisors, the right planners, but it was really changing the culture of how the advisors interacted with their clients, as well as bringing on managed platforms, which Bear didn’t really have when I joined. And then we hired a group of people from Oppenheimer when they got sold to CIBC — CIBC tried to sell them to Fahnestock — and we brought a lot of them over. So it grew significantly.
And then after ’06 — the beginning of ’07 — is when Bear started having trouble. It’s when the housing market first started to crack, and through the summer of ’07, our stock price continued to fall.
00:09:00 BARRY RITHOLTZ: We’ll talk more about that a little bit. I want to ask you about that transition, but I want to stay with lawyering for a bit. You’re lawyering for years for very wealthy families. How does that tee you up to run a wealth management practice, and what does it teach you about what the industry just gets wrong about what wealthy people need?
00:09:24 ADAM FRANK: I don’t know that it’s what the industry gets wrong. Even now, there’s a little bit of a blind spot, because the focus of the wealth management industry broadly is investment product and investment success, measured against — and part of this is regulatory, and it’s partly the result of the kinds of oversight that we have at the governmental levels — but it’s a focus on relative performance: relative to an index, relative to a benchmark, relative to something to prove how good an investor you are.
And at this point, I think people expect that their investments will perform in some way relative to the S&P. Everybody can see — CNBC, Bloomberg, right? Everybody has all of the news at their fingertips. And the democratization of information that came about with the internet, and decimalization of pricing, has caused a lot of people to become more knowledgeable generally.
But the industry still attracts people who are really interested in investing and thinking about, why am I going to buy this company versus that company, or why am I going to buy this manager versus that manager, this fund versus that fund. And what I saw in the legal practice, and moving over into wealth management, is really people have a purpose for their money. Or people have an idea about what they want their money to be able to do for them. And if you can talk about, what are your goals? What’s the intent of your money? What’s this for, really?
Why do you need to beat the S&P? Well, I want to make sure that I can retire well and maintain my three homes and make sure my kids go to the best schools and make sure my grandkids are taken care of. And if you can show them that they can do all of that and more — they can give charitably, they can get a fourth home, they can do whatever — it’s very freeing for them to not have to focus on investment returns. But it’s not the same skill set, usually, for somebody to be comfortable talking about the numbers, talking about the underlying fundamentals of a company or the alpha that this manager brings, right?
And using Greek letters to people who are very smart but not trained in finance is like you’re talking Greek to them, right? Literally. And a lot of times people smile and nod, because nobody wants you to think that they don’t understand what you’ve told them. But at the same time, a lot of times they don’t, really.
But if you take away all of that and say, what’s the purpose of the money? And does it need to grow at this amount? Or if it doesn’t, here’s what happens. Like, if your money never grows again, you can live your life as you have it today, with inflation, for the next hundred years, and you’ll be fine.
And then you can see people say, huh, I haven’t thought about it that way. Nobody’s told me. Nobody’s thought about it or given me that framework. Let’s talk about what I want to do, what I’ve thought about in the background but have not been able to — I didn’t think I had the freedom to do that.
00:12:59 BARRY RITHOLTZ: I’m so glad you framed it this way. Let’s both agree that the industry overemphasizes investing and, are we beating the benchmark? Where are we? You mentioned a blind spot, but what does the industry underemphasize? Is it taxes? Is it estate planning? Or is it the whole family dynamics around succession planning and generational wealth transfer? Where should there be greater emphasis, if there’s too much emphasis on, hey, how’d my portfolio do this week?
00:13:39 ADAM FRANK: I’m in a unique position, because I think J.P. Morgan is in many regards at the forefront of this. We’re not the first mover, but we focus a lot on, and ask our advisors to focus on, exactly those things: the estate planning, the succession planning, the family dynamics. We have a team dedicated to family engagement and governance, thinking about the purposes of your wealth and how to make sure that your plan — your estate plan, your financial plan — is successfully transitioned from generation one to generation two to generation three. Because the failure usually isn’t the result of bad documents or poor drafting or a bad investment plan. It’s the people who aren’t prepared, or the people who aren’t executing what you thought they would execute, because they’re not you, and maybe you didn’t train them enough.
So I think generally the blind spot is more of an emphasis on purpose and intent and goals, right? The industry has moved from transactions to fees and managed money. And the conversation around managed money is generally, what are your goals? What’s the time period you need? What’s your risk tolerance, right?
00:15:01 BARRY RITHOLTZ: The financial plan de-emphasizes this quarter, this year, right?
00:15:06 ADAM FRANK: Which is good, and it’s a step in the right direction. I still think that it could be taken further to say, here’s the overall financial plan, but you’ve got some short-term needs, you’ve got medium-term needs, you’ve got longer-term needs. Let’s think about this, whether it’s a bucket framework or whatever you want to call it. And then particularly for legacy — the legacy bucket, the succession bucket, whatever it is —
00:15:33 BARRY RITHOLTZ: Philanthropy, wealth transfer, right down the whole list.
00:15:36 ADAM FRANK: How do you effect that? Because that’s the stuff. The short-term spending — I want to put an addition on my garage, I want to get a third home, I need another car — that’s spending money. You can plan for that, but that’s what people are doing in their day-to-day lives. If you can help them, that’s great. And if you can help get their cash — you know, move your cash out of a savings account into an investment account where you’re getting an extra few percentage points — that’s great, and that’s very useful at the margins.
Once you start talking to people about their kids, or nieces, nephews, their pets, right, their grandkids, then you’re talking about the things that people really care about. And a lot of people think of their businesses as a child and really care about their business. So you can talk about the business and how they can think about transitioning the business, whether the succession plan is giving it to one of their kids or more than one of their kids, or selling it to a third party or employees. Once you start talking about those things, the conversation turns. And I think that’s where you end up developing the much stronger relationship that doesn’t rely — even if it’s not quarter to quarter, it’s year to year, and still relative performance to something.
00:16:49 BARRY RITHOLTZ: So when did you realize that your psychology degree was going to be more valuable than the law degree?
00:16:55 ADAM FRANK: It was probably a couple years in, once I realized what I was supposed to be doing.
00:16:58 BARRY RITHOLTZ: Really fascinating. Coming up, we continue our conversation with Adam Frank, head of wealth planning and advice at J.P. Morgan, talking about how J.P. Morgan Wealth Management grew from a small part of the firm to a substantial entity. I’m Barry Ritholtz. You’re listening to Masters in Business on Bloomberg Radio.
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00:17:21 BARRY RITHOLTZ: I’m Barry Ritholtz. You are listening to Masters in Business on Bloomberg Radio. My extra special guest this week is Adam Frank. He’s head of wealth planning and advice at J.P. Morgan. His group runs about $1.4 trillion in client assets.
So I want to talk a bit about Bear, which led you to J.P. Morgan. You ran a very similar wealth management group there. And you mentioned earlier what it was like in ’06, ’07, but I’m fascinated by September ’08 and March ’09. You are right in the center of the storm. What was that experience like? That had to be sheer mayhem.
00:18:03 ADAM FRANK: It was in fact sheer mayhem. It started probably over the summer when the hedge fund blew up.
00:18:10 BARRY RITHOLTZ: And that was ’08 or ’07?
00:18:12 ADAM FRANK: That was ’07, the year before. Right? Because —
00:18:15 BARRY RITHOLTZ: And the market was still red hot.
00:18:17 ADAM FRANK: The market was doing very well. And in fact, after Bear went under — not went under; after J.P. Morgan agreed to buy Bear Stearns on March 16th, 2008 — the market rallied through the summer until September. And there were indications before that. Countrywide — there were a few other firms that were teetering. There was one bank that, at the beginning of ’07, went under, and I can’t remember which one, but that sort of started to demonstrate the cracks in the housing market.
But that summer, the hedge fund was collapsing, and Rich Marin, who was the head of Bear Stearns Asset Management at the time, was out and he was posting a movie review on his blog. He was completely tone deaf, and we got a lot of flak for that. And then being there in September when the —
00:19:09 BARRY RITHOLTZ: Lehman and the —
00:19:09 ADAM FRANK: AIG. Well, it was Lehman first, over the weekend, and then the Reserve Fund, which broke the buck, which we had a relatively large position in for clients. And just watching that week. An advisor I know — when I saw him the following year, in like the summer of 2009, so after the crisis — March of ’08 was Bear’s collapse. September of ’08 was the Lehman beginning of the crisis. Lehman and AIG and the rest.
00:19:46 BARRY RITHOLTZ: Then by the time you get to March ’09, the market bottoms and gets back. So by the summer, people are still nervous, but things are getting much —
00:19:53 ADAM FRANK: Better. But he had this stack of Wall Street Journals on his desk, upside down. And when clients would come in being nervous about the market, not wanting to invest, he would take them one by one and flip them over. Like, Bear Stearns. AIG. Fannie and Freddie, right, which was over the summer. Lehman. Merrill. Right? If you remember all of that. Morgan Stanley, Smith Barney, boom, boom, boom. Madoff, which came in the middle of all that, right? And just the stack, the weight of the papers hitting the table, was just such a visceral reminder of that.
But in March we had no idea that that was coming. We actually thought that it was capitulation. Bear didn’t manage the balance sheet of those funds well. We ended up taking a couple billion dollars of bad assets onto our books, which caused that collapse. The weeks leading up to it were chaos, because everybody kind of knew that we were going to go out of business, but we were still in business. And in fact — so March 17th was Monday. The 14th, that Friday, a client wanted to come in and talk about moving their accounts over to Bear Stearns. And three of us met with her. Like, you know, we’re going out of business this weekend, right?
00:21:07 BARRY RITHOLTZ: Can you wait till Tuesday?
00:21:08 ADAM FRANK: We don’t know what’s going to happen. Are you sure you want to move forward with this? Oh yes, no, I definitely want to do this. So we had the most surreal meeting of my career.
00:21:18 BARRY RITHOLTZ: That’s unbelievable.
00:21:19 ADAM FRANK: And then that weekend there was an auction, right? So Saturday we were in the tower and all the different businesses had their books open, and Flowers — Chris Flowers — came in, and J.P. Morgan was there, and a bunch of other firms were looking to buy either pieces of the firm or the whole thing. And by Sunday it was a done deal.
And eight o’clock Sunday night, we were on a call with Jamie and Bill Harrison and the people on the operating committee for J.P. Morgan and the Bear operating committee saying, we’ve reached a deal, we’ve sold to J.P. Morgan. Because we didn’t know if we were coming into work on Monday, right? So Friday, you see people taking the Aeron chairs and using them as dollies to take their boxes out. And so one of the guards — I was at 383 Madison — one of the guards said to a woman who was rolling out three boxes on a chair, we can’t take that out of the building. She says, I’m going to bring the chair back. I’m just taking the boxes out. He’s like, yeah, okay, go ahead. This is the most bizarre time I’ve lived through in a business sense.
00:22:24 BARRY RITHOLTZ: And it was pretty clear J.P. Morgan was by far the savviest acquirer during the financial crisis. What was that transition like — not just that weekend, but from Bear, which was doing something in a very specific way, to JPMorgan Chase, which was large but clearly getting larger? And they had cleared out their book of any derivatives and securitized junk years earlier, so they were in a great position. What was that transition like?
00:22:57 ADAM FRANK: For a while, it was numbing. I mean, we were numb. And J.P. Morgan bought all of Bear. There were, I think, four primary businesses that they were interested in, but they’d gotten everything. And I think it took six or eight months, if not more, for them to really understand what they had gotten. And so for a while we were just operating as a standalone division — it was Bear Stearns, a division of J.P. Morgan.
I’ve been doing the same job since basically 2001. But starting in 2008, I was doing the same job and I must have had six different business cards, because we were Bear Stearns, and then it was Bear Stearns, a division of J.P. Morgan. Oh no — Bear Stearns, a J.P. Morgan company. So for two months after the closing we were a J.P. Morgan company, then we were a division of J.P. Morgan, then we got rid of the Bear Stearns name, then we moved across the street. Same thing.
00:23:47 BARRY RITHOLTZ: Same job, different business card.
00:23:50 ADAM FRANK: But while they were figuring out what they had and what they wanted to do with it, especially on the private client side — because J.P. Morgan did not have a broker-dealer-based wealth manager. They had the branch-based advisors who used a broker-dealer, but they were branch advisors generally working with not proprietary investment products, but proprietary thought leadership, and the private bank. And they didn’t have the broker-dealer-based wealth managers, the wirehouse model, even though Bear was more boutique-y.
And so they didn’t quite know where to put us, and they left us alone for a while. So we were part of J.P. Morgan, with all the benefits of that, but still sort of off to the side. And it took a couple years for the firm to start to integrate the heritage Bear business into the broader wealth management channels.
For a while we were aligned with the private bank in the line of business, the asset and wealth management business. And then we moved over in 2019 into the consumer bank, where we sit today. So we’re in the consumer and community bank, aligned with the branch advisors, who J.P. Morgan has worked very hard to get more aligned to a planning framework. And so I think that on the whole, it was a good transition. It was just weird for a couple years. And then the transition — it’s different cultures that you’re merging, and ultimately I think the culture that’s emerged is a very good one.
00:25:38 BARRY RITHOLTZ: What’s the big takeaway from that experience about risk and liquidity and just fragility of institutions? What do you look back at that and say, hey, it’s almost 20 years ago, here’s my big lesson? This March, it’ll be 20 years.
00:25:55 ADAM FRANK: It’ll be 20 years. No, I know. I still have a confirm on my desk that I had framed, and then the frame broke in a move. I sold a couple hundred shares of Bear Stearns that I had, because I had exercised some options and I was just holding them, because it was Bear Stearns, a great stock —
00:26:10 BARRY RITHOLTZ: And the stock had done nothing but go up for decades.
00:26:12 ADAM FRANK: Go up, right. And so I sold that stock at like $3.79 that Monday, the 17th, because it was —
00:26:20 BARRY RITHOLTZ: You left a little money on the table. That went for 10 bucks.
00:26:22 ADAM FRANK: A little, I know, I know. But Monday, I said, why is the stock trading at three and a half bucks? It’s a $2 deal.
00:26:27 BARRY RITHOLTZ: Nobody believed it. Well, enough people didn’t believe it.
00:26:30 ADAM FRANK: People didn’t believe it. But the shorts were covering. There were a lot of market explanations, like, oh, it’ll go up and sell. So it reminds me: I don’t know what I’m doing in terms of investments.
00:26:40 BARRY RITHOLTZ: At least in terms of trading.
00:26:41 ADAM FRANK: In terms of trading, for sure. But the market’s unpredictable. And it reinforced the lesson of diversification as a way to preserve wealth — not a way to build it, necessarily, but it’s definitely a way to preserve it.
And it really reinforced the value of relationships and the value of knowing other people, the clients. A lot of clients stayed with us partly because it was J.P. Morgan, but in part — especially in the months leading up to March of 2008 — because they had personal relationships with the advisors, and they trusted the advisors not to lead them astray, not to do anything that was not in the client’s best interest. And the good advisors who had developed those relationships didn’t do it because of their investment returns or because they were beating the index or because they were the best investment managers — although some of them were very good. It’s because they got to know the people, and they got to know their kids, and they got to know what they wanted their money to do for them. And they were able to remind them that, like, diversification didn’t work in 2008, right? Stocks were down 34%. Everything was down.
00:28:01 BARRY RITHOLTZ: Correlations all went to one. Everything went down. But you brought up a fascinating point about it’s not just about accumulating wealth, it’s about preserving wealth. Talk a little bit about that, because in my experience, that pivot from I’m working, I’m saving, I’m investing to, all right, now I have a big pile and I have to think about preserving it and maybe even spending some of it — what’s your experience like with that?
00:28:32 ADAM FRANK: It’s a change in mindset. And particularly for business owners who step back from the business, either because their kids are taking over, because they’ve sold it, or because they affirmatively want to do something else. It’s a very hard mindset shift to go from an owner-operator — whether that’s of a business or of your portfolio, right? You’re an owner-operator, or you’re accumulating, you’re focused on growth and accumulation, and you’re willing to take risks to grow that wouldn’t make sense if you were really trying to preserve and extend, or if you wanted to spend.
Making that shift, as I’ve observed it across the years, is very difficult for people. Some people do it better than others. Some people prepare for it for a couple years. And the best time to prepare with a plan — whether it’s a retirement plan or a financial plan or some kind of plan — is a few years before the event. And most people wait until, okay, I’m ready. I’m retiring in December.
00:29:41 BARRY RITHOLTZ: Let’s get something together.
00:29:42 ADAM FRANK: Let’s put a plan together, right? And, like, okay, the second best time, right? The best time would’ve been two years ago. The second best time is now. So let’s do it now, because it’s always better to have a plan than not, even if it would’ve been better to have a plan before.
But really thinking about stewardship of capital, and for families of significant wealth, where there’s going to be a generational wealth transfer and/or philanthropy, it’s thinking about how to preserve it, grow it — because you want to make sure it keeps pace with inflation. And most people who are successful at business, successful athletes, successful at whatever they do, aren’t content just treading water or keeping pace with inflation. They have competitive juices. Sure, they want to do better, but they want to do it thoughtfully and in service of their goals. Whereas I think a lot of people in earlier stages are doing it in service of growth for growth’s sake. And preservation — it’s not what you get, it’s what you keep.
So preservation’s important, and taxes come into it. You mentioned them before. But taxes are an important component, and it’s an important component for advisors to be thinking about. Even if we can’t give tax or legal advice, and we make sure that clients always work with their own tax advisors, the more you can help clients to minimize tax — whether it’s by asset location in tax-advantaged accounts, or by vehicle choice, or by the type of investment they have, or by various strategies — the more they have in their pocket, the more they have to keep. So it’s a combination of that. But for many people, it’s a very difficult transition.
00:31:42 BARRY RITHOLTZ: It’s kind of fascinating. Let’s stay with taxes. One of the biggest surprises I’ve experienced over the past decade: hey, if you’re 50 basis points ahead or behind the index, clients don’t even notice. But save someone 50 or a hundred thousand dollars in taxes — because you have a tax group that specializes in tax preparation for investors, which maybe the average CPA doesn’t know all the ins and outs of — you have a friend for life. It’s amazing to me how — I mean, I guess I shouldn’t be surprised that people hate paying taxes. And if you could just find — I’m not talking about, you know, Wesley Snipes or anything that’s going to get you in trouble. I mean just black-letter law. Here’s how we can reduce your total tax burden. It’s enormous. So talk a little bit about all the things around the investment portfolio that may matter as much or more.
00:32:43 ADAM FRANK: Well, it’s at least as much, right? If you think about an advisor’s charging a fee, and the fee’s basis points, right — it’s 20, 30, 40, 50, whatever the advisory fee is — if you can save a client several million dollars in taxes, which, you know, capital gains tax is 24%, you can really justify your fee. Because the fee isn’t just an investment management fee, it’s an overall advisory fee. And if you’re advising clients across the portfolio, including tax strategies — again, not giving tax advice, but thinking about tax strategies.
So there are products. There’s tax transition management, as you’re moving from — right, a new client comes to you, they want to move over, but they’ve got a lot of funds with built-in gains. They’ve got a lot of low-basis stocks. Well, how can they move into something that you’re recommending? There are ways to do it that are thoughtful, slow, right? Because you can’t realize all of the gains in one year or you’ll pay a lot of tax. But you can do it over time. You can generate losses to offset them. There are other strategies to harvest losses and be very thoughtful on a net basis.
And so there’s the income tax strategies, which usually focus on capital gains, because there’s very little you can do for ordinary income. And there are some financial products that work. And obviously asset location — putting high-turnover portfolios into your retirement accounts or into another tax-advantaged vehicle is a good strategy. Or something that generates ordinary income versus municipal bond income.
And then there’s the transfer tax strategies, which I think — the big headline, $30 million for wealth transfer, the lifetime exclusion, has gotten a lot of people thinking that they don’t have any exposure at all, because most families don’t have $30 million between two spouses. But at the federal level, that exemption’s portable between spouses: somebody dies, the other spouse can use the deceased spouse’s exemption. In New York, the exemption’s $7,350,000, not portable. In Massachusetts, it’s like $2 million. In Oregon, it’s a million dollars. In Illinois, it’s like four. So there are a lot of families who don’t consider themselves super wealthy. They’re not flying private, they’re not renting helicopters. They don’t have multiple homes in different countries. But they might be subject to those taxes. If you can save people those taxes just by retitling accounts or doing something else that’s very simple and doesn’t affect their life at all, right? Nothing’s going to change.
00:35:40 BARRY RITHOLTZ: It’s a little paperwork.
00:35:41 ADAM FRANK: A little paperwork, and that’s it. That’s the kind of thing where, especially if you can demonstrate that through some kind of software or Excel or something, where you could say, here’s what would happen if you do nothing, and here’s what happens if you just change the title on these three accounts, and you’re going to save a million dollars in tax to the state of Illinois or to the state of New York. To your point, it’s huge.
And helping somebody keep that money — now, they’re not keeping it, their kids are keeping it, right? Because they have to both die in order for that to take effect. But it’s money that they now have available for their legacy. So if they think about, well, I would’ve paid a million dollars in tax, now I don’t have to worry about that. I can spend a little more, right? Because my kids are going to get this extra million bucks. So it’s a way of thinking. And this word is so overused, but it’s a way of thinking very holistically about what people have — and not just what they have in their portfolios, but what do they have in their families? What do they have overall, and what do they want for it?
00:36:43 BARRY RITHOLTZ: So you mentioned tax loss harvesting. I’m curious what your approach is. Do you use direct indexing? Do you use the long-shorts, the 150/50 type stuff? What’s the approach to tax loss harvesting from your perspective?
00:36:59 ADAM FRANK: I’m old enough to remember the 130/30.
00:37:01 BARRY RITHOLTZ: 130/30.
00:37:02 ADAM FRANK: Right. That didn’t turn out that well.
00:37:04 BARRY RITHOLTZ: We’ve had great experience with it. It’s the other one that seems to have gotten into trouble, where you are using futures losses to offset ordinary income. When I first saw that — I’m an attorney also — I looked at him and go, that doesn’t make any sense to me. But the straight-up direct indexing and long-short seems to just be black-letter law.
00:37:26 ADAM FRANK: And just plain vanilla loss harvesting. So direct indexing, but plain vanilla loss harvesting. You know, the classic is you have a stock and it takes a loss, or it takes a dip one day, and you sell it and you buy a similar stock. I can’t use company names, or I’d be a little clearer in that example.
But there are a number of financial products that allow us to be very thoughtful about loss harvesting. And there have been a number of companies that have come down the road that specialize in tax management — not just loss harvesting within a portfolio, but transition management, overall ongoing tax management. And we’ve generally used all of those strategies — some of the financial products, some of them J.P. Morgan and some third party, right, because we have an open architecture platform — and then some things that are proprietary that we overlay onto client portfolios.
And it’s been successful. We are ramping up that capability currently, and I’m excited for where that’s going to go in the next six months to a year, I think.
00:38:47 BARRY RITHOLTZ: Yeah, there’s a lot of really interesting things happening there. Last question on this, because I can go down this rabbit hole and lose half our audience talking about taxes and loss harvesting. Typically, successful entrepreneurs arrive with a lot of concentrated risk. They became successful because they built up either their business or their stock options or whatever it is, and so much of this wealth is tied to just one stock or one business. How do you persuade somebody who has that concentrated wealth that, hey, if you want to preserve this, you have to think about diversifying? As you mentioned earlier, you’ve already won the game. Now let’s think about keeping it.
00:39:32 ADAM FRANK: So for some people it’s easy, because they recognize that they are heavily concentrated. I spoke to somebody a day or two ago, very concentrated in his employer’s stock — 95% of his net worth is tied up in it. He completely recognizes the overweight and is looking for ideas of how to get out, not trying to be convinced of whether he should get out or not.
I think he’s in the minority. More entrepreneurs and C-suite executives of public companies or private companies are very optimistic about the future of their company and prefer to retain their holdings. There are also a lot of restrictions on what executives can do, particularly public company executives.
00:40:24 BARRY RITHOLTZ: You can always file a plan and say, I’m going to sell X a quarter, and this way there’s no inside —
00:40:30 ADAM FRANK: No inside information. And 10b5-1 plans are very common. But there’s also investor perception. There’s the board of directors and their perception of a senior executive who’s selling rather than acquiring. And that plays into a lot of those decisions, again, more than the executives would like. And those executives are ones who understand that they’re concentrated, are trying to get out, and aren’t able to as much as they want to.
For people who need to be convinced — you can give them all the statistics in the world, show them, right, the Nifty Fifty, right? It was GE, Kodak, IBM, AT&T. All of those companies, they’re all gone, right? Or they’ve morphed into something else, and the stocks have declined significantly over time. But that’s never going to be my company, right? My company is not going to do that.
00:41:22 BARRY RITHOLTZ: Just look at GE after 2000. And they had the world’s most generous stock — I think they subsidized employee stock purchases by like 20%, a crazy number. So there were all these GE millionaires with one stock.
00:41:37 ADAM FRANK: Right. And the same thing happened with Microsoft in 1999, 2000, in the tech wreck. There were a number of companies that had those very generous reloads or ESOP stock grants, right?
00:41:50 BARRY RITHOLTZ: And RSUs.
00:41:51 ADAM FRANK: And the employees believed in the stock, as the executives did. And a lot of them ended up paying taxes on the value at exercise, holding the stock, and watching it decline to the point where they didn’t have enough cash to pay the tax, right? And so you can tell people that all day. For people who really believe in their stock, it’s very hard to convince them to diversify.
For people who understand that they have a concentration, they don’t necessarily want to sell everything, but they’re willing to take 10% off the table, 20%, 5%, whatever it is. Then it’s a question of how — what’s the most tax-efficient way to do it? What’s the most thoughtful way to do it? And then that’s where you get into things like qualified small business stock for private companies, where you can exempt up to $10 million of capital gain from taxes.
To your point earlier, a lot of CPAs don’t know about that rule. And so I’ve talked to clients and just mentioned, hey, your stock sounds like it might be eligible for this QSBS — qualified small business stock — treatment. Has your accountant mentioned it? No, he hasn’t. When did you buy it? Do you meet all these criteria? You know, you could save taxes on 10 million bucks. We just saved you $2.38 million in taxes. Isn’t that great?
00:43:15 BARRY RITHOLTZ: QSBS has come up time and time again, where you’re looking at somebody’s returns and, why isn’t this QSBS? Why are you paying capital gains on the sale of a small business? My accountant did it. It’s amazing.
Coming up, we continue our conversation with Adam Frank, head of wealth planning and advice at J.P. Morgan, talking about the state of wealth management today. I’m Barry Ritholtz. You’re listening to Masters in Business on Bloomberg Radio.
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00:43:48 BARRY RITHOLTZ: I’m Barry Ritholtz. You are listening to Masters in Business on Bloomberg Radio. My extra special guest this week is Adam Frank. He’s the head of wealth planning and advice at J.P. Morgan. So let’s talk a little bit about what’s going on today in wealth management. I’m intrigued by what you guys do with student athletes. Tell us a little bit about the board you guys have put together, and what is that space like today?
00:44:13 ADAM FRANK: So at a firm level, we put together an athlete council to help inform us how to engage with athletes across their careers. So at every stage: from student athlete to pro, and making that transition; then from pro to retired athlete, and making that transition; and really everything in between when you’re a pro, et cetera. And the council has been great at helping us think about how to talk to athletes — not because they’re different. They’re all people, right?
And that’s the one thing, again coming back to my psychology degree: everybody’s people. But a couple of the council members had said at one point, you have to be a little delusional to play at this level, to excel at a sport. And you can’t tell somebody, well, you can’t do that, don’t do that, don’t spend this, don’t do that. So it’s really helping us as advisors and planners frame what we’re talking about in a way that resonates with athletes.
And you know the statistics: there are millions of kids who play high school athletics. A small percentage of them go on to play at NCAA schools. And there’s hundreds of thousands of kids who play at NCAA schools. A small percentage of those — less than 5 or 10% — go on to play pro, right? So they’re going to be delusional for a while, and then that delusion is going to end pretty quickly.
Now, with NIL, some of the kids, even in high school and college, are able to monetize their name and their image, their likeness. They’re able to be paid some significant sums. And there are kids who are getting relatively smaller amounts — 10,000, 15, 20. And then there are kids who are getting 60,000 a month, or a couple million dollars over the course of a contract or a year. And helping them — not realize — helping them plan for the potential that they may not be in that small percentage that goes pro and, in the pros, gets a big contract. But helping them enjoy what they have, but really think about it as: they’re the CEO of their money. What do they need to do to make sure that it’s doing whatever it can — it’s maximizing its value for them while it’s working for them. Because at some point it might stop working. And in the same way that an athlete’s career can be ended unexpectedly by an injury or something else, we don’t want that to happen with their portfolio.
So it’s helping to educate the students in particular to think about money in a different way. And for a lot of the student athletes who are getting significant sums, they’re having to make really adult money decisions at a time when they don’t have significant background in it at all. And a lot of times their parents don’t have significant background. The parents are obviously one of the key advisors to these kids.
But we’re trying to use the council, as people who these athletes look up to, as a way to say, we are doing this because it’s important to us to give back to the athlete community. And we’re doing it here because J.P. Morgan’s made this commitment to provide education and advice to athletes at all stages of their careers. But really, we’re not looking only for the pro making a multimillion-dollar, hundred-million-dollar contract. We’re looking at the kids in D3 schools who maybe they’re getting NIL, maybe they’re not, but we know they need good money habits. They need to develop good skills at thinking about money and thinking about it as wealth. Because a lot of these kids — sometimes the kids who are earning the money are the first, like they’re going to have the most money of anybody in their family.
00:48:19 BARRY RITHOLTZ: So let’s stay with that a little bit, because I’m sure you remember the ESPN 30 for 30 — I don’t know, about a decade ago, 20 years ago — one in four NBA players filed bankruptcy, and I think it was one in three football players. The numbers were just shocking and horrifying. I know you don’t want to just scare the kids, but how do you make them aware that, hey, you know, there’s a right way to do it, there’s a not-so-right way to do it, and here’s what history has told us is the wrong way to do it. Look at the bankruptcies.
00:48:55 ADAM FRANK: We’ve tried that. I mean, the industry has tried that over the years. It’s very hard to go in and tell somebody who’s come to you for financial advice, like, guidance, to say, you can’t do this, you can’t do that, look at what might happen to you. Because again, if the kids are any good at their sport, they’re a little bit delusional, right, based on that comment from one of the council members. And so you’ve got to figure out a framework that works. And one of the components of that is, we know you’re going to spend some money. Let’s figure out what you’re going to spend.
Like, what do you want to spend the money on? You’ve got this big lump sum. You want to buy a car, you want to trick out your apartment. What do you want to do? Let’s put money aside for that. Now, do you have anything left? And actually, before that, it’s, okay, you’ve gotten this money — let’s say it’s $200,000. You’ve got to put aside — because you’re a 1099 person, you’re not getting a W-2, you’re not being withheld, right? You’ve got to put money aside for taxes. And, like, I remember my first paycheck, right? I was working for —
00:49:56 BARRY RITHOLTZ: Who was this FICA guy, right?
00:49:58 ADAM FRANK: And why am I giving him a third of my money? He really annoyed me. And so you’ve got to make sure that they know, like, if you have a deal for 200,000, you can’t commit to spend 200,000. You’ve got to commit to spend less than that. And here’s guidance as to, you know, sort of rates and everything. And then, you don’t know how long your career is going to last. Not telling them you could go bankrupt in five years, but you don’t know how long your career is going to last. Instead of committing to a three-year car lease for this great sports car, what about doing something like this? Or what about a different car? What about maybe a sponsorship with a local dealer, and you get something like that?
So it’s helping to reframe it. But the way that we do that is to be one of the people that the athletes trust. And right now, or when we’re introduced, they trust their parents, for the most part. They trust their agents, they trust their coaches, and they look up to the people who’ve been in their shoes before, who have made mistakes and been successful, been open about the mistakes they’ve made. And that’s the purpose of the council as well — to help us, by virtue of putting the council together, really sort of ride their coattails, but gain a little bit of trust that way. But also make sure that we’re there for the coaches, and we’re there for the parents, and we’re there for the agents, and make sure that the kids have a good team around them: an agent, attorney, accountant, and advisor, right?
00:51:35 BARRY RITHOLTZ: So who’s on the council? Tell us about the folks that are on that.
00:51:37 ADAM FRANK: Let’s see. Megan Rapinoe, Sue Bird, Tom Brady, Jalen Brunson.
00:51:43 BARRY RITHOLTZ: You couldn’t get anybody who won any championships?
00:51:46 ADAM FRANK: Sorry.
00:51:47 BARRY RITHOLTZ: That’s an amazing list already.
00:51:50 ADAM FRANK: Ally Love, Dwyane Wade, Alex Morgan — I knew I’d miss some — and Kayvon Thibodeaux. All, to a person, really committed to making sure that the student athletes, to the extent they can, didn’t make the mistakes that they did. Really wanting to give back and, like, pay it forward to some extent.
And Kayvon in particular, because he was in the first or second NIL class, he has firsthand experience and he knows what it’s like to have that money at a young age. Now, fast forward, he’s been very successful in his athletic career, but you’ve got to think that nine kids out of 10 who are following him, they’re not going to be the ones who end up on the Giants, right?
00:52:33 BARRY RITHOLTZ: To say the least. So let’s talk a little bit about — I keep hearing about this intergenerational wealth transfer that’s supposedly underway. There’s been a number of news stories and opinion pieces where people are saying, hey, you think the boomers are moving all this money? They’re going to spend a lot of it down. They’re going to spend it. They’re not downsizing, home-wise. They’re going to spend it on healthcare and other issues. Are we really looking at a 50 or a $75 trillion wealth transfer? And if we are, when is it really going to ramp up?
00:53:14 ADAM FRANK: Those are the numbers that you hear about. I hear about them like we all read about them. I’ve written about the great wealth transfer. We have some white papers out on the great wealth transfer. I believe it’s happening, as the boomers have started to pass away and transfer money. But if you think about what the transfer is, the first transfer is horizontal, right? It’s spouse one to spouse two, and then from spouse two, potentially, to the kids and grandkids and so forth. But I think you’re right. A lot of the money will be spent. Healthcare is very expensive, and more people who have the means are able to be cared for at home, and that costs a lot of money.
But I do think that there’s something to it. Given the bull market that we’ve participated in for the last 13 years or so, there’s a lot of wealth, and to a large extent it’s concentrated in older people who’ve had more time to accumulate and to have their portfolios grow. And so I think there’s something to it. I don’t know that it’s going to feel materially different. It means the same thing for advisors that we’ve always had. I think it’s a different way of framing it, which is: if you as an advisor are talking to Mom and Dad, and they’ve been clients of yours for 20 or 30 years — you grew up with them, or they grew up with you — they’re getting older. When they eventually pass away, if you don’t have a relationship with their kids, that money is likely to move somewhere else, as an advisor. So it’ll go to a self-directed platform, it’ll go to a competitor where the kids have a relationship, or where they know somebody they went to school with works.
So it’s important for advisors to develop those relationships with G2, G3, and for advisors to have potentially a multigenerational team, so that you’ve got somebody who can relate better to a 20-year-old than the people who are relating very well to the 60-year-olds. Because the cultural frames of reference are different, and it’s easier for people to relate to people who are more like them. But at the end of the day, people generally are going to do business with people they know, like, and trust — if you can develop that. So you have to know the people, and you have to know them for a while to develop that trust, and hopefully you’re likable, right?
00:55:47 BARRY RITHOLTZ: So let’s talk about what I think is the most interesting trend when it comes to wealth transfer, which is inter vivos. For those of you who don’t speak Latin: why wait until you’re dead? Why not enjoy your kids or grandkids spending their inheritance now, when you’re here to see it? How big of a trend is this? What are you seeing in this space?
00:56:12 ADAM FRANK: We’re seeing some. It’s still, for families who aren’t in the top, top echelon — where there’s plenty of money and it doesn’t matter what they do, right — there’s still a lot of concern, because your point earlier is exactly right. People have spent decades being savers and being told, don’t touch principal, right? Save it, accumulate growth, make sure you have enough. You always want to make sure you have enough. And they’re not spending what they could.
So it’s hard to shift people out of that mindset. And I don’t want to say easiest, but one of the ways to do it is, like, start small, right? I want to leave my kids millions — $2 million each. I’ve got three kids. Okay, great. But you don’t necessarily want to give them a million dollars now. That’s a lot of money. That’s $3 million off your balance sheet. Like, that’s scary. But could you start making annual gifts — 19,000 each? So maybe 38,000 to each kid, maybe 38 grand to their spouses, another 38 to their kids, to your grandkids. And that’s a more manageable number. That’s hundreds of thousands of dollars, depending on how big their family is, as opposed to millions.
And it’s a way to get people started with that idea. And if you do that for a couple years — especially over the last 13 years — the people who are giving the money away can see, well, my portfolio’s still growing, right? Even though I’m spending what I want to spend and I’m giving my kids a hundred, $200,000 total. Okay, now I’m ready to — now let’s talk about that gift that you talked about before. So I think it’s a gradual process, but you have to have the relationship and the trust.
00:57:59 BARRY RITHOLTZ: So before I get to my favorite questions, I have one last question, and you’re really the perfect person to ask this. So we’ve talked about estate planning and gift planning. We watched various permutations of the Tax Cuts and Jobs Act and the threatened 2026 sunset, then a higher exemption, then a lower exemption, then the hole in the donut — don’t die this year.
00:58:25 ADAM FRANK: Yep.
00:58:29 BARRY RITHOLTZ: Oh, good advice. I’ll try not to die in — what was it, 2023? Don’t die, otherwise it’ll cost you too much. How do you think about multi-decade plans for families when the tax code has, I don’t know, certainly no more than a 10-year life, and more often a two- or a four-year half-life?
00:58:47 ADAM FRANK: Unfortunately, you’ve got to plan for the tax code you have, not the tax code you want. And what I’ve seen practitioners do over the course of the last 30 years is really make plans more flexible. Disclaimer planning, planning with trusts where there’s a lot of flexibility as to who gets the money, when they get it, who can give it to them. So it’s building in flexibility. And it’s also — we tell clients, and we recommend, look at your plan every three to five years.
If there’s a major life event — you get a job, you lose a job, you win the lottery, something happens — check your plan, make sure it works. But if there’s not, like every five years, just look at it. Make sure that what you have on paper is actually what you want to happen. And then it goes back to what I said before. The paper can be fine.
You still need to make sure that the people who are involved — the people who are inheriting, the people who you put in charge of their money, if you have trusts, the trustees — you’ve got to make sure that those people want to do the job, are capable of doing the job, and have the same values around money. And, like, what you don’t want to do is put somebody in charge of your kids’ money and they never learned the lesson about spending, so they don’t want your kids to spend anything. So if your kids want a new car and they currently drive a Corolla, they can get another Corolla. But if they really want a Lexus, they want an Acura — no, they’re not going to do that. So it’s a lot about the people. But that’s it.
01:00:31 BARRY RITHOLTZ: Yeah. And throughout our conversation, you’ve spent a lot of time talking about litigation between siblings, across generations, fights, all the psychology, and all the things that I know from a distance just look foolish and wasteful. How do you guide people to make better decisions so that their kids aren’t fighting over the inheritance, or that there isn’t an expensive litigation that’s going to fritter away 20% of the estate?
01:01:08 ADAM FRANK: It goes back to having a plan, or making a plan early enough so that you, as the wealth owner, can have conversations. Because it’s about communication. It’s about making sure that your kids, or your inheritors, know what you expect of them — know what you expect of them with respect to the wealth that you are providing to them, but also with respect to the relationship that they have with each other. There are plenty of parents who have two kids, and one of them is not great with money and the other one’s terrific, and they want to put the terrific kid in charge of the spendthrift kid’s money.
Like, do you really want to have your daughter going to her brother and saying, can I have a thousand dollars for whatever? And he’s in a position to say no. Like, what happens at Thanksgiving that year? It’s really just thinking about, what are you telling your kids? How are you training them to think about money and wealth, and to think about what it can do for you? And we talk to athletes about this too, because we do a lot of athlete education as part of the athlete center of excellence. And it’s really thinking about, what do you want your money to do for you? Right? It needs to work for you. You shouldn’t be working for it. So having it grow is great. What is it going to do for you? What’s it going to do for your life? Is inheriting money going to change your life? Is it going to change your life? And is it going to change the relationship between you?
And this is common with business owners: the business owner has three kids. Two of them are in the business, one of them is not. Or one of them’s in the business, two of them aren’t. That one’s going to be in charge of the business. Is that sibling going to be working for her brothers and growing the business, and her brothers, who are taking no part in the business, benefit from it? And if so, maybe the answer is yes. But if it is, you’ve got to communicate that and make sure that everybody’s on the same page. So I think a lot of it goes back to communication and that family governance. What’s the framework within which we’re thinking about our money? How can we put people in the best position to make good decisions? But ultimately, there’s still going to be family fights and litigation, because that’s the way the world works.
01:03:38 BARRY RITHOLTZ: That’s how people are. All right, I only have you for a few moments more, so let’s jump to our speed round, starting with: who were your early mentors who helped shape your career?
01:03:48 ADAM FRANK: My dad. There was my biology teacher, Jim Van Tassel — not sixth grade, I guess he was eighth grade — and in my career, so much as, like, he gave me ideas about what I could do, what was possible. Lila Gleitman at Penn. A couple of my professors at law school. Jack Mishler — Judge Mishler. But there have been a bunch of people through my career who’ve sort of given me more life advice than career advice, necessarily. And most of the advice was just — it’s always thinking about people.
01:04:39 BARRY RITHOLTZ: That’s really interesting. Let’s talk about books. What are you reading currently? What are some of your favorites?
01:04:45 ADAM FRANK: What I’m reading currently — I can’t remember the name of it, but it’s the book about Alex Murdaugh, the guy from South Carolina who killed his family. Like, he was a terrible person. I didn’t realize quite how bad a person he was, because I was, like, tangential — I can’t remember the name of the book. Great book, really.
01:05:04 BARRY RITHOLTZ: Let’s see if I can find it while we’re —
01:05:06 ADAM FRANK: I’m sure you’ll be able to. Alex Murdaugh. M-U-R-D-A-U-G-H.
01:05:12 BARRY RITHOLTZ: Oh, there are tons of books on this.
01:05:17 ADAM FRANK: In the Heart of Evil, or —
01:05:20 BARRY RITHOLTZ: Blood on Their Hands. The Devil at His Elbow.
01:05:22 ADAM FRANK: The Devil at His Elbow. Yes.
01:05:27 BARRY RITHOLTZ: Alex Murdaugh and the Fall of a Southern something.
01:05:31 ADAM FRANK: That’s it. Fall of a Southern Dynasty, right? Fascinating book. Really fascinating. I just finished a book about the Belgian expedition to the South Pole — to Antarctica, I should say. Also can’t remember, but my memory is —
01:05:49 BARRY RITHOLTZ: The Belgian one? Terrible. Not — what was the famous Shackleton one?
01:05:54 ADAM FRANK: Not the Shackleton one.
01:05:58 BARRY RITHOLTZ: Which was an amazing, amazing book. That was Endurance.
01:06:00 ADAM FRANK: It was an amazing book. That was the Shackleton one, yeah. This was about a different guy who went, I think, before Shackleton. And he was sponsored by — he was Belgian, but half the crew was Dutch, I can’t remember. Again, not a great memory for titles of books, but a terrific book. Really gripping story about their trip and the problems they had, again because of the people who were trying to execute the plan.
01:06:27 BARRY RITHOLTZ: Dig it up and shoot it over.
01:06:28 ADAM FRANK: I’ll dig it up and let you know. Yeah.
01:06:30 BARRY RITHOLTZ: What about streaming these days? What’s entertaining you, either podcasts or Netflix or what have you?
01:06:36 ADAM FRANK: Oh, we just watched on YouTube — there was a documentary about The Villages, down in Florida, called The Bubble. Fascinating.
01:06:49 BARRY RITHOLTZ: Okay.
01:06:50 ADAM FRANK: Really interesting. Dutch filmmaker — I think she was Dutch or Swedish. She did a great job. We’re watching the fifth season of Ted Lasso. But we’re waiting. My wife is not interested anymore in waiting week after week, so we’re waiting till the whole thing drops, and then we’re going to go back.
01:07:04 BARRY RITHOLTZ: I’m in the exact same position. I can’t wait to watch that, and my wife is like — and we’ve been watching Reacher on Prime, and there was a giant cliffhanger, and she’s like, this is why I hate doing this. And I think it drops tonight, so we’ll find out. But she’s the same way. She won’t let me watch the new season of Lasso until they’re all out.
Our final two questions. What sort of advice would you give to a recent college grad interested in a career in either wealth management, advice, planning, or estate and trust law?
01:07:39 ADAM FRANK: I talk to a lot of kids in college about their careers. It’s really: think about what you want to do. Do you want to work with clients one-on-one? Like, do you want to be an advisor? Do you prefer to work with clients but not have that responsibility for decisions? Because there are plenty of ancillary careers on Wall Street or in law where you’re giving guidance and giving advice, but you’re not the primary person. You’re not the person they call up when there’s a crisis. Some people want to be that person; some people don’t.
And kids come in, they say, well, I want a career in investment banking. Okay, well, I don’t do investment banking. Do you want a career at a bank? Do you want to work with individuals or institutions? And there are some people who want to work with individuals because they like that — the thing that I loved about the casebook, the families fighting. There’s some people who want nothing to do with that. They don’t want the drama. They just want institutions, because they’re still people, but it’s people who are usually not as emotional, because they’re not as emotionally invested, because it’s not them, it’s their company.
And it’s really just understanding what’s out there and thinking about how what exists — which is hard, to find out everything that exists — aligns with what you’re interested in. And then just talk to as many people as possible who you know in the industry to understand what there is and what you could do.
01:09:07 BARRY RITHOLTZ: And our final question: what do you know about the world of planning and advice and wealth management today that might have been useful 30 years ago or so, when you were first getting started?
01:09:18 ADAM FRANK: Nobody cares about — not that nobody cares. It doesn’t matter where the numbers come from. People want you to make them feel good. And people don’t want you to lie to them, but people want you to make them feel good. They want you to talk to them like a person. They don’t want you to talk to them like a client, or to prove how smart you are.
It took me a while to make the transition from a legal career, where my job was to be smart and to write — like, speak in Latin, right? Talk about inter vivos, whatever, and everything else — to a career in wealth management, which is very different, even though I’m generally talking about the same topics. But I have to talk about them very differently. And it would’ve been useful to understand that before I went in. Instead, it just took me a couple years to get into it.
01:10:06 BARRY RITHOLTZ: Really interesting. Adam, thank you for being so generous with your time. This was really quite fascinating.
We have been speaking with Adam Frank. He is the head of wealth planning and advice at J.P. Morgan. If you enjoy this conversation, well, check out any of the 650 we’ve done over the past 12 years. You can find those at iTunes, Spotify, Bloomberg, YouTube, or wherever you get your favorite podcasts.
I would be remiss if I didn’t thank the crack team that helps us put these conversations together each week. Anna Luke is my producer. Sean Russo is my researcher. I’m Barry Ritholtz. You’ve been listening to Masters in Business on Bloomberg Radio.
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