Women, Money, Power: Morgan Stanley's Sherry Paul

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2:21Carol Massar:Bloomberg Audio Studios. Podcasts. Radio. News. You're listening to Bloomberg Business Week with Carol Masser and Tim Stenevek on Bloomberg Radio. It's time now for our weekly Women, Money, and Power segment. We speak with some of the most influential women from across the business world about investing, the great wealth transfer, and more. Joining us today, Sherry Paul. She's Managing Director and Private Wealth Advisor at Morgan Stanley Private Wealth Management. She leads an all-female private wealth team that specializes in life transitions. And a third of her client base, actually women, with us too is Bloomberg News Senior Editor Claire Obusen.

2:57They'll join us here in the Bloomberg Interactive Brokers Studio. Welcome to both of you. Sherry, I want to start with you and just talk a little bit about how you think differently having a female team, but also having a client base that is a third female. Yeah. From traditional wealth, you know, quote unquote, traditional wealth management. Well, I would say the biggest, so thank you for having me. I think the biggest lesson I've learned over time is that we need to meet clients where they are. And so in working with women, we're looking at more interdependent, collaborative working relationships with these clients instead of transactional solution driven meme trading.

3:37I can't imagine that much of the meme trading, you know, culture is women. And so what we have found in working with women and also what we refer to as female leads, right? So we work with a lot of suddenly single women for different reasons, is that they're looking to outperform in life. They're looking for a different ROI. They're looking for a return on impact. They're looking for return on influence and they are looking for return on investment. And so, um, with that then naturally comes what, what our specialty is, which is financial planning centric investing. I'm also a senior portfolio manager at Morgan Stanley.

4:15We build and construct custom portfolios for clients. And so we, we really want to lean into families that are also living in their money. They're also building the story of their family money tree. And that's very different than, hey, should I overweight tech over healthcare, as an example? And so having that dialogue is something that they really appreciate. Where do I get one of these money trees that she mentioned? Right here. Okay. Right here. Let's plant it together.

4:44Carol Massar:Sherry, what's fascinating is it just sounds like a completely different strategy. How many women, be it that they lose a husband or for whatever reason, divorce or whatever, completely want a different money manager? They want to totally do an overhaul of their portfolio. that is a great question. And honestly, in my experience, because the fastest rising part of our practice is actually ultra high net worth divorce. Yeah. Uh, over 50 gen X women and above part of that, I think just for myself is due to longevity and people are looking around going, really, I didn't do this until I'm 95. I don't know, but divorce and death carry the same weight of grief and loss and change.

5:23And stepping into a money identity that involves agency and authority requires a certain amount of knowledge and forgiveness, okay, regret. And in loss, there's always a measure of regret. And I know I'm getting a little philosophical here, but this is something that people bring to the table all the time. So more than 90 % of the time, women will change financial advisors in that moment if they've not been included in some meaningful way in their predecessor financial relationship with that spouse, even if they've been with them for years. And that is something I think the industry is missing.

6:03And I am in the business, honestly, I feel like I save marriages every day. My team and I, we talk about it all the time because we bring both spouses into the conversation. Because to your point, Tim, we're also, we're intertwining money stories. When you get married, you're not just merging hearts. You're merging money habits. And often that doesn't reveal itself until something happens. Claire, come on in.

6:27Carol Massar:So how is this changing expectations from the clients in terms of what they want from their advisors? Well, I think that the advisor of the future would really lean into relationship-oriented financial advice and guidance. Okay, something very different. I think that's like therapist and financial planner at the same time. Absolutely. Behavioral finance is a big deal. And I'll often say to clients that like money doesn't grow on trees, but money habits too. And so for ultra high net worth families, we're building, there's the family money, but then we want to, you know, we want to build the family orchard and have that be healthy too.

7:05So I think that there's a different level of cadence and patience in that conversation. I think you have to genuinely care for the outcome of people and then have a rigorous investment portfolio process that's married to the cadence of the family. Because it's not just the market volatility or geopolitical volatility that we are managing. We're managing the volatility of human behavior in their money system. and that often is the thing that actually eviscerates performances when people do things that they shouldn't do because they feel that way. I'd also like to myth bust a little bit if we're going to talk about this, about how exceptional women are at managing money and how exceptional they are at building portfolios and understanding risk and rates of return, which is different than trading or gambling.

7:55Yeah. Very different. Very goals-based.

7:58Carol Massar:Wait, say that again. Mm-hmm. Say that again, what you just said, the difference. Well, there's a big difference between investing, goals-based investing, and trading and gambling. Very different things. Because one, you can measure against an outcome that actually has influence and impact in your life. Oh, I was able to send my kid to college. Right. That's very different versus, hey, we were early in on AI, which we were in our portfolios. We're exceptional portfolio managers too. As much as we hug our clients, we deliver returns. I mean, that's the baseline. Yeah. And that matters on an equal basis, but that's different than the activity of trading.

8:35You know, I saw a very big culture shift when the online trading came on, just as a side note, especially from an identity standpoint, when men are retiring, as an example, men retire, their identity retires for working. Right. I mean, and so. Do you think that will, you know, I think of my own experience as a millennial. Yeah. And do you think that that identity, our identities are so tied to our jobs as our parents? No, that's not my experience. And like that's going to change with the next couple of generations. It does. You know, it's interesting because for millennials, first of all, this idea of collaborative cohabitation around money and savings, this is a highly educated group of financial consumers on an equal basis.

9:17We've got more young women millennials in college and finance than we ever did for Gen X women. And there's a presumption that you're both the millennials are all entering the workforce together. There is that presumption now. So, no, I don't see that. I see more openness and more transparency because of the tech, I think, is a part of that. But however, statistically, from a divorce standpoint, millennials that get married between the age of 24, I think, and 42 have like a 40 % divorce rate. Well, yeah, and I have to tell you, I don't know that that has anything to do with like not loving somebody.

9:52I really do believe that it's the complex intersection of money conversations and then family trees that come to bear on that, especially when they start having kids. That was a long answer to your question, Claire. I know.

10:06Carol Massar:That was great. Yeah. Can I ask you how many people when a woman comes to you and she's like, I had no idea what was going on. I was not involved. And I am curious if it is a certain age group or does it span older, younger? Well, yeah, I'm glad you asked that question because, you know, Gen X women were the first women to really be like, we're going to college. There are more of us in college. There were more of us in the workplace. We've now been eclipsed by millennial women, which is amazing. That's also why the wealth demographics is changing in America. More of us are in the workplace. I would say Gen X and above, you know, are like, I had no idea.

10:46because you have highly educated women that enter into what I call the divide and conquer marriage. And they're intellectually making that decision with a high earning partner and they're collaborating on what that financial life can look like, but they're abdicating their ability to earn money and their involvement with it. There's a very big difference between knowing that you have it and having a voice in it or having authority in it or control without permission. Very different concepts. I think that millennials have an opportunity and are leading the way from a money relationship standpoint.

11:21I also see with millennials that we can merge hearts, but we don't have to merge bank accounts. And that's okay too. That doesn't have to be the thing that says, I love you.

11:30Carol Massar:Yeah. That I'm going to put you on my single name account. Or if I inherit from my baby boomer parent, which is a separate asset, unless you commingle it in marriage, it's typically divorce protected, that it needs to become a part of us. it can be a part of we, but not necessarily like in this way. And I think that that's a healthy way. And prenups are like, it's like, you know, prenups should be like a natural thing. Yeah, it should, you know, it's just, Hey, you know, I've really do people come into relationships, especially after the age of 40 in some money equal posture. I don't see it that often.

12:03So there's always this dialogue. Yeah.

12:05Carol Massar:So I want to zoom out a little bit more. Cause one thing you said to me before this was, and that I want you to talk a little bit about it. You said that you know, women controlling more wealth can actually reshape the entire U.S. economy. Can you dive into that a little bit more? Yeah, I think it actually is more disruptive than AI. Wow. I think it's the big miss, you know, that we have this constituency of women. We are, you know, more than half the country. We've got, you know,$30 trillion worth of asset transfer, and we make 70 % of the purchasing choices. So in my opinion, if we're in a 70 % consumptive GDP in a capitalist democracy, whoever owns the economy really owns the politics, too, if you really think about it.

12:54And so if you've got women now, the primary consumers, we're really directing what the nature of consumption is. That's a very powerful moment in capitalism. Now, the flip side to that is that it's a billion dollars to run for president. So what we are now going to step into, I believe, is the political side of it. It's$50 million to run for Senate. It's$10 million to run for a House seat. What we've always lacked in the past that we've tried to pull together is the money system to capital raise to run candidates. Yeah. Okay. And so that's been a deficiency. That's something that we have, I think, women will have a big force in, whether they're inheriting it or not.

13:33It's why we've had our most successful female candidates have come into the money systems that their husbands have built prior in the baby boomer. Right. So I think that that's something that's really exciting, very powerful.

13:43Carol Massar:So this transition and impact by women because of the transfer of wealth and having more say in the consumption economy. How like how does this play or what's the time frame where you start to really feel that impact? Oh, I think we start to feel it within five years. Yeah. You know, and I'll give you another example is that I get AI disruption. I understand it. and we've invested in these themes for now over five years in my team's client portfolios. What you really have to think about is what kind of decision-making is someone willing to abdicate to an AI chatbot over wanting to have that intimate conversation?

14:21They're a baby boomer, they're getting a divorce, they didn't know that they had money or that they didn't. I've had cases where women thought that the family didn't have any money. Like you couldn't get a kitchen renovated and then they get divorced and there's$20 million. Like the kind of like, I mean, it goes both ways. So the, the, I know, I mean, I could, I could really tell you some stories, but it's interesting what people do around money and control, right? The money can, you can energize it for good. You can control people with it. You can denigrate them with it. You can celebrate them with it.

14:51It's all kinds of things you can do in a family tree. Um, but I think that we see that within, you know, within the next five years in a meaningful way and women are not going to self-direct on the internet they enjoy the partnership and that human collaboration and they want to be a participant not a recipient okay so the patronizing kind of cultural history of wall street has a has had a wake-up call on this okay what i call the language of alienation where someone says don't worry i got it yeah this is over it's over and that's exciting this is over

15:26Carol Massar:to and we are so sorry because we was loud. This was fascinating. Really interesting because I feel like we've talked about this a lot but your approach and your thinking through all this is wild. Sherry, come back soon. We would love it. Sherry Paul, Managing Director and Private Wealth Advisor at Morgan Stanley Private Wealth Management and of course our Claire Obusin. She is Bloomberg News Senior Editor. We so loved it. Thank you both. Really appreciate it. Great stuff.

15:56Support for the show comes from Public. Public is an investing platform that offers access to stocks, options, bonds, and crypto. And they've also integrated AI with tools that can assist investors in building customized portfolios. One of these tools is called Generated Assets. It allows you to turn your ideas into investable indexes. So let's say you're interested in something specific like biotech companies with high R &D spend, small cap stocks with improving operating margins, or the S &P 500 minus high debt companies. Chances are there isn't an ETF that fits your exact criteria. But on public, you just type in a prompt and their AI screens thousands of stocks and build a one-of-a-kind index.

16:36You can even backtest it against the S &P 500. Then you can invest in a few clicks. Go to public.com slash market and earn an uncapped 1 % bonus when you transfer your portfolio. That's public.com slash market. Ad paid for by Public Holdings. Brokered services by Public Investing, member FINRA SIPC. Advisory services by Public Advisors, SEC Registered Advisor. Crypto services by ZeroHash. Sample prompts are for illustrative purposes only, not investment advice. All investing involves risk of loss. See complete disclosures at public.com slash disclosures. Here's a paradox. We buy insurance for peace of mind, yet the very policies we trust can deliver the biggest financial shocks.

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