The Future of Financial Advice

Plus, how Biden’s debate stumbles could change everything

Ric Edelman: It's Friday, June 28th. And oh, my goodness. Well, in case you missed it, the debate last night, President Biden had a raspy voice. He repeatedly tripped over his words. He gave rambling answers. He lost his train of thought, and the punishment was swift and severe.  

The Financial Times headline this morning says, “Democrats panic as Biden stumbles halting performance from president comes amid concern over age and fitness for office.” The Wall Street Journal headline said, “Democrats discuss replacing Biden on presidential ticket.” The New York Times said, quote, “A fumbling performance and a panicking party. The Washington Post headline said, “Democrats panic over Biden's debate performance doubt his future.” And USA Today said, “Sometimes it's hard to call a winner and loser in a debate. Not this time.”  

Even in his closing statement, the most scripted moment of the debate, Biden meandered. He briefly seemed to lose his train of thought. Wow. Yeah, there is now a wave of panic among Democrats. The media have been quoting top Democrats all night and all morning today, and all of these Democrats that they've been talking to are calling on President Biden to drop out of the race. 

Most of the comments have been off the record. One Democrat was quoted as saying, quote, “We need a new nominee.” Another one said, quote, “Biden needs to do the patriotic thing and step aside.” A third said, quote, “We need an open convention.” A fourth said, quote, “There is a higher level of panic than I've seen or thought possible.” Another Democrat said, quote, “He confirmed our worst fears.”  Another said Biden had quote, “a horrible night.” Another one said, “I'm very worried.” Another said, quote, “I'm on my knees praying that it's not too late to replace him.” Another said, quote, "Very disappointing and disturbing.” Another said, “merely awful.” Another said, quote, “Biden is about to face a crescendo of calls to step aside. Joe had a deep well of affection among Democrats, that well has run dry.” Another said, quote, “The man on the stage with Trump cannot win.” Another said, it is a quote, “disaster.”  

It has been so bad. In fact, that some Democrats are even talking on the record, and that never happens. That's how bad this is for the Democrats. David Axelrod, who is a senior advisor to President Obama, said, quote, “There are going to be discussions about whether Biden should continue.” And Obama's former campaign manager, David Plouffe, called Biden's debate performance a, quote, “DEFCON-1 moment.” and Claire McCaskill, who's a Democrat from Missouri, former Senator said, quote, “Joe Biden had one thing he had to do tonight, and he didn't do it. He had one thing he had to accomplish and that was to reassure America that he was up to the job at his age, and he failed at that.” Andrew Yang, who ran against Joe Biden for the nomination back in 2020, said, quote, “Guys, the Democrats should nominate someone else before it's too late.” And Maria Shriver, the former first lady of California, a member of the Kennedy family, said, quote, “Tonight was heartbreaking. There's panic in the Democratic Party.” 

Wow. So, of the four topics that I said yesterday that I wanted the moderators to ask about, did they ask? Student loans, AI, crypto, and Social Security? Well, the moderators did manage to ask about one of the four, Social Security. And if you had to pick one out of four, that was the right one to pick. Clearly the Social Security crisis is the most important of those four topics that I cited. And in response to their question, what would you do to solve the crisis? President Biden gave a rambling, nearly incoherent explanation of how he will tax wealthy Americans. While Donald Trump totally evaded the question, as he tended to do for much of the evening, he gave no answer at all to the question on how he would handle the Social Security crisis.  

And there was nothing of any sort by anybody. About student loans or AI or crypto. But you know what? It really doesn't matter. Joe Biden's debate performance last night was so bad that that is what trumps everything else. Sorry, bad use of words there. Joe Biden's debate performance last night was so bad that what he said is irrelevant. It was his inability to say it well that has captured everybody's attention. In fact, while it is pretty clear that Joe Biden lost the debate, the bigger issue, of course, now is whether Joe Biden will remain in the race. And this is where I think Donald Trump has to place himself in the be careful what you ask for camp, because it is very obvious that this could represent a significant change in the outcome of the election. 

In all of the polling up to the debate. Donald Trump has been in the lead. It has been very clear that if the election were held yesterday, prior to the debate, Joe Biden would lose, that Donald Trump was winning the key decisive states where that'll determine the election's outcome. And although the race is close, it appeared that Donald Trump would be the winner and yet everybody seems to be saying that they're not happy with either candidate, that everybody is an anti-vote rather than a for-vote. They're not voting for a candidate, they're voting against the other candidate. And that the only person that Donald Trump appears to be able to beat is Joe Biden. But if Biden drops out of the race or is forced out of the race, or if the Democrats merely have an open convention and pick somebody else, is that somebody else, someone who many will vote for who otherwise would not have voted for the Democrats? In other words, Donald Trump may just find himself facing a candidate he could lose to. Donald Trump may be in a position of wishing that the debate wasn't so lopsided last night. 

Meanwhile, before we get to today's conversation with Tim Whitney, which is a fascinating conversation I had with him in March at our Wealth Management Convergence that I really want you to hear. I do need to say to you, that today is your last chance, or at least this is the last time that I'm going to tell you about this, you have until Sunday. And this is your last chance to hear about it, to sign up for Double VISION. We have been talking about this and offering it to you for the past two weeks. We recorded all 18 of the sessions at our VISION conference in Austin earlier this month, and we have now recorded those videos and have posted them onto our website. You have the entire month of July to watch them, but only if you sign up to do so by Sunday. If you watch all 18 of them, and you don't have to, but if you do, you get up to 10.5 CE credits. It's just $24.99. You can watch the videos anytime you want, in any order you want. Choose only the ones that you want to watch. It'll give you the latest and greatest info on what's happening in blockchain technology, digital assets, and crypto. Bitcoin's impact on the economy, a fireside chat with Michael Saylor, with Congressman Wiley Nickel, with Dennis Cristallo, the head of JP Morgan's Onyx blockchain. Sessions on the spot bitcoin ETFs, what pension funds are doing with crypto, crypto and MPT, AI and crypto, and crypto taxation. Sign up now. The link is in the show notes. You have to do it by Sunday, but you have all month of July to watch them at your leisure.  

We'll be back right after this with a great conversation with Tim Whitney. You're going to want to hear this. The following interview is with Tim Whitney, the CEO of TradeWinds from my Wealth Management Convergence conference back in March. 

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Ric Edelman: Join me in welcoming Tim Whitney of Tradewinds. The focus of exponential technologies is something that people are paying a lot of attention to. We've seen an explosion in investment categories here. I invented the first exponential technologies ETF back in 2015 with Blackrock. We've been seeing the explosion with Cathie Wood and ARC, State Street, acquired Kensho, which has a huge suite. Global X is an ETF firm that is nothing but exponential technologies investments. Invesco's got a whole bunch of them. This is a pretty common theme now, of everybody focusing on the future. But, I think we need to take a little bit of a step back and explain exactly what do we mean by exponential technologies? So let's start there.  

Tim Whitney: That's an excellent question. I think the panel before did a great job and we dove right into AI and I think that's the buzzword that we all hear, but let's just take a step back. Define what exponential technology is. And we all know this. We just need to say it out loud. What actually is it? It's just rising and expanding over a period of time. That's what technology can do, right? It's something that we know when it breaks that it's a multiplier in effect. AI again is that buzzword. So if you take Moore's Law if you remember the semiconductor space, microchips, it was really how many transistors could you get, and having that cost, that was just a basic principle in law. And that's what the exponential thought came from. So processing power, computing power, if we take that into effect when computers first started and Moore's Law came, that is something that we are starting to use now with AI. 3D printing was a really cool example of that too. Why is that an exponential technology? Because it just started with initially a couple of metals, maybe some resin, some plastics, but then it becomes 750 types of products that you can use as far as material, and now you're making cars and houses and things of that nature. Does that kind of help?  

Ric Edelman: Yeah, so it's really, something that is growing, at the rate of the exponential growth curve, as opposed to iterative, and it's all because at the end of the day, as you said, Moore's Law and computing technology, the speed with which we're able to develop and deploy, innovation that has never been able to be done before. If it weren't for the computer chip, nanotechnology that is making everything smaller, faster, cheaper. And that's a pretty broad array of subjects.  

Tim Whitney: That's correct.  

Ric Edelman: What are the leading exponential technologies then? Because there are so many different categories in the XT ETF, for example, we've got nine different sleeves of categories and 200 companies globally represented. Global X has, 100 ETFs, highly specific that invest only in lithium or only in water, only in, you name it. And so, out of that huge list, what's leading today?  

Tim Whitney: Well, first, let me start. Why am I up here? Right? What's important for me? Yeah, why am I here? I represent a cross section of an independent advisor. So TradeWinds is my firm that I started and we are under a billion dollars, which accounts for 93% of the RIAs in the independent space have less than a billion. Now the money dominated Indian in space are the big super RIAs, but we represent how technology is going to be implemented for our clients. We, advisors here, need to know what this means and how to implement AI. I like the question before I wrote it down. Advisors, you said, how much longer will advisors be able to go? And I agree, it's yesterday. Sindhu and Ron, I say yesterday as well. You're going to have to pivot. There's just, there's no doubt. I don't care if you have 10 more years or five more years. Exponential means it's going to change tomorrow. And you have to learn it. You have to learn the language. So my question back to you, I'm actually interested, and then we'll get back to the question you had, is how do we as advisors become diligent and be able to talk to our clients, but also software developers? How do we speak that language? Do we use and lean on AI? Do we learn to become developers as well? That's the important question. Because if we're talking about the great wealth transfer, and I'm not a big fan of that concept because it forces advisors to go take care of the kids so we can catch the money, it's the wrong way to look at it. We have to be with the youth because the youth will inherit the rest of the planet. So, we need to be able to talk on that language with the youth, the younger advisors here, there are young people here, you're the driving factor for the survivability of the wealth management space in the independent world, right? Now, comma, that does not discount the age and wisdom of the advisors before us. And I'm right in the middle, I'm in the weird middle, right? I get to be between the boomers and the millennials. I'm right in the middle here. The wisdom of the elder advisor, you need to be able to give the humanity to the youth advisors. I think that's important. So, let me just stop. Thanks for letting me preface that. But what technologies really are? Does anybody here have the global data sphere? Does anybody know what that is? That is just all of the data that is generated by the planet. And it's really hard to calculate, but it's how much data is out there. There's a range of 120 to 150 zettabytes. That's one trillion gigabytes.  

Ric Edelman: So just to put it in context, we have produced more data in the last five years than humanity has created since humans have been on the planet. So we are roughly doubling the amount of data that we have every five years or so and that rate of doubling is accelerating exponentially. 

Tim Whitney: Hence exponential, exponential technologies. Internet of Things, that's what it is. It's everything connecting together. When you take AI, it's not just AI coming in and working with Redtail or your CRM, it's the interconnectivity of the case notes and then filing out here and then communicating and integrating with your other software systems. That's just within the wealth management space.  

Ric Edelman: So would that argue that big data, which is one of the sleeves of exponential technologies, is itself one of the leading, areas of this, that it's the creation, accumulation, storage analysis and distribution of that data. Is that one of the major areas you would say? 

Tim Whitney: Absolutely. And that's what we need to be very adept at understanding that we can't block them out. We have to invite that in.  

Ric Edelman: And we are at the end of the day, we are nothing but a data industry.  

Tim Whitney: That's correct.  

Ric Edelman: We collect data from the client, we analyze that data, and we churn it back to them with recommendations. 

Tim Whitney: And a little humanity behind it.  

Ric Edelman: With luck.  

Tim Whitney: So I'd like to know my client's dog's name. I really do. I think it's important to know the client's dog's name. That's the separator. That's where, the robot can't take over. I think that's the important part of it.  

Ric Edelman: Until the dog becomes a robot. 

Tim Whitney: Until the dog is a robot. But it just, it goes to show you how much data is being produced all the time. Jenny Johnson had told a quick story about the Apple Vision Pro, so picture this. Let's remove AI, because that buzzword, let's just set it down. Think of it like this. That Apple Vision, if you haven't had a chance to do it, go make a schedule to do it. You put your ski goggles on, it's got 10 cameras around it, so you're blind, but it's showing you a live stream in real time, right here. And then, because you're seeing a computer screen, you can open up a photo, or the internet, or play a music video. That is how you're going to start talking to your clients. It's not Zoom anymore, there is no camera coming. You're going to all have your goggles with your battery packed or whatever it's been evolved to and you're going to be able to bring up their screen with their accounts. You're going to be able to show the markets. We can pull Ric in right here of a video right in the middle and expand it and contract it. 

Ric Edelman: It's also the elimination of big screen TVs is in your living room.  

Tim Whitney: Absolutely.  

Ric Edelman: And also when you walk around the room in your living room wearing these, your perspective of the movie changes so that you're not just sitting there looking at a screen. You can walk around as though the movie was 3D in the center of the table and you can walk around the table changing your perspective. Different people watching the same movie will see different things the same way people going to a football game, see different things depending on where they're at in the stadium. So all this is here really not just coming, but here.  

Tim Whitney: So I'm interested here. How many people by show of hands are ready to embrace the technology? Hands up. Yeah, it was pretty. Kind of halfway. I don't know. Maybe. Yes.  

Ric Edelman: Well, you raised a dawning question about do we need to become programmers? Do we need to be able to talk the language of the scientists? And if the answer to that is yes, we're in trouble because that's not who we are. We're not those kinds of people. We're not wired that way. That's why we're financial planners, quite frankly, it's why we're CFPs and not CFAs. We're more interested in the human side of money than the numbers side of money.  

Tim Whitney: So challenge to you. We were stockbrokers back in the day. Well, I wasn't I didn't come out as a stockbroker, but we were stockbrokers. And then we moved in this holistic planning and then we came with the standards, the CFP and what we started to do. Is that just not an evolution of what our industry is?  

Ric Edelman: No I don't believe it is in the sense that, yes, we are using the tech. Just because I'm sitting in the airplane doesn't mean I need to learn avionics. So I think what I need to have happen is that the tech is adaptive to be able to include me without me having to learn it. And that's when we know that a technology has truly achieved, breakthrough level. And this is, for example, the comment that I have about, crypto, that you know, when a technology has reached escape velocity, where it is truly become mainstream, when people start talking about what it is instead of talking about what it isn't, for example, in the world of crypto, you hear it all the time that it is permissionless, that it is trustless. Don't tell me what it isn't. Think back to the horseless carriage. We don't call them that anymore. But that's what they were originally called. They described an automobile by what it wasn't. It was horseless. Now, we describe them as automobiles. And that is when it reached escape velocity. And suddenly, automobiles, there were more of them in New York than horses. 

Tim Whitney: So would you agree that the panel before did it precisely that?  

Ric Edelman: Yes, absolutely right. That it isn't, and Sindhu did a great job of really articulating it, that it isn't our obligation or requirement to be able to speak the language of the tech. It's the tech's responsibility to interface with me in a way I can interface with it. We're not really there yet in a lot of cases with technology because it remains difficult and cumbersome to use and therefore threatening, because we do want to get there, but the effort to get there is daunting considering the pressures we have in operating our practices every day and our clients who are the slowest to adapt, right? How hard was it to get a client to be willing to do a Zoom call as opposed to face to face and how many clients can be willing to put on those damn goggles?  

Tim Whitney: That's right. I think the adaptive nature of clients is much different than the adaptive nature of advisors. 

Ric Edelman: Well, it's that weak link in the chain thing right? If the client isn't willing to do it, then the fact you are is irrelevant.  

Tim Whitney: Right. You're not going to mail a Google goggles or the Apple goggles to somebody and they're going to push it, but we can't be afraid of that. And that's where my firm, much like the gentleman before, he's a really good job of owning code. We try to own our own data too. I think that's a power that advisors do have, that RIAs do have. You actually do drink in your data from your provider, whoever it is, First Clearing Corporation or Schwab, LPL, whoever they are, ask them for your data. Now ownership aside, that's your own conversation you're going to have, but you need to be able to ingest that and do something with it. If you put it on your own local server and you have a software dev team that comes in like he has, that's great. We have ours inside as well. We get interns from UNC Chapel Hill that are coders. I don't learn the language. I can speak enough. Just enough to be dangerous just so I can talk back and forth. That's my job, I'm the translator, but it is imperative to be able to have that data in and be able to build around it.  

Ric Edelman: Everything is now technology. And so your portfolios have to be built of the future, not of the past. It's what I call the Kodak moment. That was their big brand in the eighties, giving yourself a Kodak moment. Well, in 2012, Kodak went bankrupt because Instagram emerged and all of a sudden film photography was dead and it's all about digital photography and these big behemoths couldn't... 

Tim Whitney: Pivot. 

Ric Edelman: Right. Pivoting is dead. We talked yesterday with Jenny about the new PWC survey that 40% of CEOs say they're going to be out of business if they don't pivot over the next decade.  

Tim Whitney: I just read an article that just came out in RIA Biz that 700 people from Fidelity were laid off to make room for new people that are client facing and technology sound and driven.  

Ric Edelman: Which is exactly in sync also with the PWC survey that said they're all laying off 5% of their workforces internationally, but they're not having a reduction in workforce. They are rehiring people tech-focused, and they are now demanding that their people have technology understanding, in order to be able to do their jobs. 

Tim Whitney: So should we all now start to speak the language? That makes sense at this point, I think.  

Ric Edelman: We need, if not be able to speak the language, we need one hell of a good translator in the practice. So you'd mentioned, MedTech, AgTech, FinTech, EdTech. There's also InsureTech. You've actually, built a company in that space. Talk about InsureTech.  

Tim Whitney: Okay. Life insurance, annuities, long-term care. It is a behemoth industry. It is a chain not of the planet. There's so many people involved. There's so much data. It's convoluted and lost as you're trying to translate it. When we try to pull up a simple annuity contract, or life insurance contract, or long term care contract, we see a very, very small subset of data. Seven to eight data points. And most of it is a contract number, some basic principles, a death benefit, maybe a fee, what they're being charged, but that's about it. The funny thing is that the source of truth data file from your Prudentials and PAC LIFEs are rich with data. Thousands of data points, for some reason, it just, it doesn't come down the pipe to us. And that's when we built a company. As a side to try to open up the channel of data. So we called it Zool, Zool based upon Ghostbusters. For those who remember Ghostbusters, the gatekeeper of information. 

Ric Edelman: I thought that was like the Antichrist? 

Tim Whitney: We're not trying to be the Antichrist of the insure tech space. Right. We're just, we thought it was fun. We got to name our own company. Zool was kind of hip, and Gozer's the name of our processor, by the way. But the point is that we had to literally step in and build our own company because the system isn't going to change. 

Ric Edelman: What's the incentive for the insurance company to release the data?  

Tim Whitney: We are making a lot of people angry, that's for sure. The insurance companies, they don't care because they're already providing the data. In fact, they are pigeonholed by these big data network traffic providers right in the middle. DTCCs of the world and the DST fan mails and visions and things like that, they control the data flow or they do a direct link and they are paying gobs of money to use these network traffics, these highways. Well, Zool wants to get right in front of that. And we want to take it and distill it and make it a singular repeatable process that's for the advisors.  

Ric Edelman: So the fact that you're building this, as an advisory firm with under a billion in AUM... 

Tim Whitney: That's correct.  

Ric Edelman: Would suggest that, it doesn't require an IBM to create, Watson? The technology is available, inexpensive enough, accessible enough, programmers, readily available as well, that even a small RIA can home grow this in a way that in the past, that could never have happened.  

Tim Whitney: That's correct.  

Ric Edelman: You know, it used to take NASA to go to the moon and now NASA hired a private company to go to the moon. 

Tim Whitney: That's right. Moore's Law, if you're thinking theoretically, if things are getting faster and obviously there'll be a breaking point where you can't, put in number of transistors or tech on a microchip because the actual plane is going to be too small, but we need to be able to invent and create inside of the RIAs as well. 

Ric Edelman: So the message really is don't assume you got to sit back and wait for someone to build it. If you see a need that you've got and there isn't a product off the shelf that meets your needs. Build it. You'd be surprised that it's doable.  

Tim Whitney: Well, are we all kind of entrepreneurs in that sense? Most advisors here. You have that entrepreneurial spirit. At minimum, the gift of gab and you would assume that you would have some good feeling behind it. Some humanitarian part behind it.  

Ric Edelman: If you succeed, you're going to have a cool new service product for your clients. If you really succeed, you now have a business that you're going to be able to market, throughout the industry. How much of an investment would you say this is all, then? Is this something that is a 6-figure or 7-figure investment? Or is it something that really could be a side project, and you’re just goofing around? 

Tim Whitney: It’s a bootstrap effort of about $100,000 to get the technology up and the code written. 

Ric Edelman: That's not a significant investment. It's not bad at all. Final thoughts, Tim; what's your takeaway walkaway advice you'd give to the advisor?  

Tim Whitney: Sure. I think a big part is to really look at your infrastructure and look at owning your data or what does that mean? Really take a good view of your firm. Also, what’s your plan is to educate and learn? Take the DACFP license and certifications you can get. The education and certification makes sense. You have to continue to push that. Your age, it makes no difference. That's a cop out for youth saying that you can't get ahead because of your youth as a cop out age. I can't progress because I'm landing the plane in five to ten years as a cop out. Just keep moving forward. I would say that's it. 

Ric Edelman: That's Tim Whitney of TradeWinds. Thank you, Tim. 

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Ric Edelman: I’m glad you’re with me here on The Truth About Your Future. If you like what you're hearing, be sure to follow and subscribe to the show, wherever you get your podcasts, Apple, Spotify, YouTube – and remember leave a review on Apple podcasts. I read them all! Never miss an episode of The Truth About Your Future. Follow and subscribe on your favorite podcast app. 

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