Investing In The Great Wealth Transfer: Masters in Business with Adam Frank

29:09and 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 company, 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 community bank, aligned with the branch advisors, who are, we're working, JPMorgan has worked very hard to get them more aligned to a planning framework.

30:01And so I think that on the whole, it was a good transition. it was just weird for a couple of years. And then, you know, the transition, it's different cultures that you're merging. And ultimately, I think the culture that's emerged is a very good one. 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. 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 and moved.

30:41I sold a couple hundred shares of Bear Stearns that I had because I had exercised some options. And I was just holding them because Bear Stearns is a great stock company. And the stock had done nothing but go up for decades. Right. And so I sold that stock at like$3.79 that Monday, the 17th. You left a little money on the table and went for$10. I know. I know. But Monday, I said, why is the stock trading at$3.50? It's a$2 deal. Just nobody believed. Enough people didn't believe it. Enough people didn't believe it, but the shorts were covering. There were a lot of market explanations like, oh, I'll go up and sell.

31:14So it reminds me, I don't know what I'm doing in terms of investments. Well, at least in terms of trading. 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. 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.

32:02and 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 are very good. It's because they got to know the people and they got to know their kids. They got to know what they wanted their money to do for them. and they were able to remind them that diversification didn't work in 2008. The stocks were down. Everything was down.

32:39Right. 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 experiences like with that? It has been, 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.

33:25It'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, 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 has, 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 of years. And the best time to prepare with a plan or whether it's a retirement plan or a financial plan or some kind of plan is a few years before the event.

34:15And most people wait until, okay, I'm ready to, I'm retiring in December. I'm 65, let's get something. Let's put a plan together. And like, okay, the second best time, right? The best time would have 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 have 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 transfer, 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.

34:58And 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. There's a competitive juices. 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 is important and taxes come into it. You mentioned them. The words will come out eventually. 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-advantaged legal advice and make sure that clients always work with their own tax advisors.

35:55But 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. 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 ,000 or$100 ,000 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.

36:50You 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 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. Well, it's at least as much, right? If you think about advisors charging a fee and the fees basis points, right? It's 20, 30, 40, 50, whatever the advisory fee is.

37:31If you can save a client several million dollars in taxes, which, you know, capital gains tax is 24%. Like you can really talk, you can 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, somebody, 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.

38:11Well, 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 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 advantage vehicle is a good strategy or something that generates ordinary income versus municipal bond income.

39:10And then there's the transfer tax strategies, which I think the big headline,$30 million for wealth transfer, the lifetime exclusion, has got 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 is portable between spouses. Somebody dies, the other spouse can use the deceased spouse's exemption. In New York, the exemption is$7 ,350 ,000, not portable. In Massachusetts, it's like$2 million. In Oregon, it's$1 million. In Illinois, it's like$4 million. So there are a lot of families who don't consider themselves super wealthy.

39:54They'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. It's a little paperwork. A little paperwork, and that's it. But 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 here's what it is.

40:34And 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. 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 have 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 do people have?

41:14And not just what do 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? 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? I'm old enough to remember the 130-30s. 130-30, right. That didn't turn out that well. We've had great experience with it. It's the other one that seems to have gotten into trouble where you're using futures losses to offset ordinary income, which when I first saw that, I'm like, I'm an attorney also.

41:56And 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. And just like plain vanilla loss, it's a 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'm not like I can't use company names or I would say something. 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, transition management, overall ongoing tax management.

42:51And we've generally used all of those strategies, some of the financial products, some of them JP 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. Yeah, no, 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.

43:37Typically, 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. 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.

44:2395 % 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 the exception or not the exception. 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. You can always file a plan and say, I'm going to sell X a quarter, and this way there's no inside.

45:07No inside information. 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 like you can give them all the statistics in the world show them right the nifty 50 right it was ge kodak it ibm at &t like all of those companies they're all gone right or they're 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 GE after 2000.

46:02I mean, talk it. 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. Right. And this is the thing that had Microsoft in like 2000, 1999, 2000, the tech wreck. There were a number of companies that had those very generous reloads or stock grants. And RSUs. 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 or investing, holding the stock and watching it decline to the point where they didn't have enough cash to pay the tax.

46:48Right. 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.

47:30And 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? Do you meet all these criteria? you know you could save taxes on$10 million. We just saved you$2.38 million in taxes. Isn't that great? That QSBS has come up time and time again where you're looking at somebody and it's like you're looking at a returns and why isn't this a QSBS? Why are you paying capital gains on the sale of a small business? My accountant did it. It's amazing.

48:09Coming up, we continue our conversation with Adam Frank, head of wealth planning and advice at JPMorgan. talking about the state of wealth management today. I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio. This is the Bloomberg Tech Minute brought to you by ChatGPT. Now with ChatGPT work. I'm Carol Masser. AI is creating a new path for musical stardom. As Bloomberg's Lucas Shaw and Ashley Carman report, Suno, an AI-generated music company, lets users generate a song in any style based on a text prompt. People can upload their own lyrics or start from scratch, record their own voices, or rely on ones provided by Suno.

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50:55At IBM, we work with our employees to integrate technology right into the systems they need. Now, a global workforce of 300 ,000 can use AI to fill their HR questions, resolving 94 % of common questions. Not noise, proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business, IBM. I'm Barry Ritholtz. You're 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 JPMorgan. So let's talk a little bit about what's going on today in wealth management.

51:35I'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? 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?

52:19And 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 that 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 five or ten percent go on to play pro now right so they're going to be delusional for a while and then they'll that delusion is going to end pretty quickly.

53:18Now 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 realize, not realize, helping them plan for the potential that they may not be in that small percentage that goes pro and in 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.

54:07What 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 can, their 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.

54:49And 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're 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, not only at all stages of their careers, but really we're not looking only for the pro making a multi-million 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.

55:37They 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. So let's stay with that a little bit because I'm sure you remember the, was it ESPN 30 under 30? Yeah. 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.

56:27Look at the bankruptcies. 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.

57:02What do you want to spend the money on? You get 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 got to put money aside for taxes. And like, I remember my first paycheck, right? I was working for - Who is this FICA guy? Right, and why am I giving him a third of my money? He really annoyed me.

57:35And 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 got to commit to spend less than that. And here's a 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 can 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?

58:12And 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 is to help us by virtue of putting the council together, really help us sort of ride their coattails, but gain a little bit of trust that way.

58:54But 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, you know, make sure that the kids have a good team around them and agent, attorney, accountant and advisor. Who's on the council? Tell us about the folks that are on that. Let's see, Meg Rapinoe, Sue Bird, Tom Brady, Jalen Brunson, Asia Wilson. You couldn't get anybody who won any championships? I, uh, sorry. That's an amazing list already. Allie Love, Dwayne Wade, Alex Morgan. I knew I missed that. And Kayvon Thibodeau. All to a person really committed to making sure that the student-athletes didn't, to the extent they can, didn't make the mistakes that they did, really wanting to give back and pay it forward to some extent.

59:43And KT, 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 ten who are following him, they're not going to be the ones who end up on the Giants. Right. To say the least. So so let's talk a little bit about what I keep hearing about this inter intergenerational wealth transfer that's supposedly underway. There's been a number of news stories and opinion pieces where people saying, hey, you think the boomers are moving all this money?

1:00:30They'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 health care and other issues. Are we really looking at a 50 or a 75 trillion dollar wealth transfer? And if we are, when is it really going to ramp up? 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 we have some white papers out on the great wealth transfer. I 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?

1:01:05It's spouse one to spouse two. And then from spouse two, potentially the kids and grandkids and so forth. But I think you're right. A lot of the money will be spent. Health care 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, 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.

1:01:55I don't know that it's going to feel materially different. It just, it, it means the same thing for advisors that we've always had it. I think it's a different way of framing it, which is if you, as an advisor, you're 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.

1:02:37So it's important for advisors to develop those relationships with G2, G3, and for advisors to have potentially multi-generational 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 frame of references 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 so let's talk about what i think is the most interesting trend when it comes to wealth transfer which is inter vivos um for those of you who don't speak latin why wait until you're dead why not enjoy your kids or grandkids uh spending their inheritance now when you're here to see it.

1:03:40How big of a trend is this? What are you seeing with this space? We're seeing some. It's still for families who aren't in the top, top echelon where there's plenty of money, it doesn't matter what they do. 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 principle, right? Save it, accumulate it, grow it, make sure you have enough. You always want to make sure you have enough. And they're not spending what they could.

1:04:21So it's hard to shift people out of that mindset. And I don't want to say easiest. One of the ways to do it is start small, right? I want to leave my kids millions,$2 million each. I 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.

1:05:00And it's a way to get people started with that idea. And if you do that for a couple of years, especially over the last 13 years, the people who are giving the money away can see, well, my portfolio is still growing. Even though I'm spending what I want to spend and I'm giving my kids$100 ,000,$200 ,000 total. Okay, now I'm ready to – like 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. So before I get to my favorite questions, I have one last question, and you're really the perfect person to ask this.

1:05:39So we've talked about estate planning and gift planning. We watched various permutations of the tax cuts and job acts and the threatened 2026 sunset and a higher exemption than a lower exemption than the hole in the donut. not don't die this year. Oh, good advice. I'll try not to die in, what was it, 2023? Don't die. Yeah. 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? Unfortunately, you've got a plan for the tax code you have, not the tax code you want.

1:06:25So, 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 trust, 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, And like, look at your plan every three to five years. If there hasn't been, 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.

1:07:06Make 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 trust, 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. What you don't want to do is put somebody in charge of your kid's money, and they never learn the lesson about spending. They don't want your kids to spend anything.

1:07:44so 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 Accurate no, they're not going to do that so it's a lot about the people but but that's it and you 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?

1:08:38Right. 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. Mm-hmm.

1:09:23Like, do you really want to have your daughter going to her brother and saying, can I have$1 ,000 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.

1:10:08So having it grow is great. What is it going to do for you? What's it going to do for your life and your life? Is inheriting money, is this going to change your life? Is it going to change your life? And is it going to change the relationship between you? if, and this is common with business owners, family, the business owner has three kids, two of them are in the business, one of them is not, or one of them is 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?

1:10:45And 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. 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?

1:11:21My dad. There was my sixth grade biology teacher, Jim Van Tassel. But not sixth grade, I guess he was eighth grade. And not my career so much as like he gave me ideas about what I could do, like what was possible. Lila Gleitman at Penn, a couple of my professors at law school, Jack Mishler, Judge Mishler.

1:11:59But it's just, you know, 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 always thinking about people. That's really interesting. Let's talk about books. What are you reading currently? What are some of your favorites? What I'm reading currently, I can't remember the name of it, but it's the book about Alex Murdoch, the guy from South Carolina who killed his family. He was a terrible person. I didn't realize quite how bad a person he was because I was like tangential. In the heart of, I can't remember the name of the book.

1:12:35Great book. Really? Let's see if I can find it while we're... I'm sure you'll be able to. Alex Murdaugh M-U-R-D-A-U-G-H oh there are tons of books on this In the Heart of Evil Blood on Their Hands The Devil at His Elbow The Devil at His Elbow The Devil at His Elbow Alex Murdaugh and the Fall of a Southern something Fall of a Southern Dynasty fascinating book Really? Yeah, really fascinating. I just finished a book about the Belgian expedition to the South Pole, to Antarctica, I should say. Also can't remember, my memory is terrible. A Belgian one, not, what was the famous? Shackleton. Not the Shackleton one, which was an amazing, amazing book.

1:13:31It was an amazing book. Endurance? That was the Shackleton one. This was about a different guy who went, I think, before Shackleton. And it was sponsored by the, he was Belgian, or 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. Dig it up and shoot me in the middle of it. I'll dig it up and let you know, yeah. What about streaming these days? What's entertaining you, either podcasts or Netflix or what have you?

1:14:09Oh, we just watched on YouTube. There was a documentary about the villages that was fascinating. Down in Florida. It's called The Bubble, yeah. Okay. 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, like week after weeks, we're waiting until the whole thing drops 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.

1:14:59What 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? 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.

1:15:43Some 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 are 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 making, they're not as emotional because they're not as emotionally invested because it's not them, it's their company.

1:16:20And 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. And our final question, what do you know about the world of planning and advice and wealth management today might have been useful 30 years ago or so when you were first getting started? Nobody cares about, not that nobody cares. It doesn't matter where the numbers come from. People want you to make them feel good.

1:17:03And 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 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 have been useful to understand that before I went.

1:17:36Instead, it just took me a couple of years to get into it. 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 JPMorgan. 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.

1:18:14Sean Russo is my researcher. I'm Barry Ritholtz. You've been listening to Masters in Business on Bloomberg Radio.

1:18:50We'll be right back. Find your rich together. Edward Jones, member SIPC. This is Robert Smith from Business History. If you're listening to this, there's a good chance you're a small business owner. And like every small business owner, you started with a dream to do what you love and watch it grow. What you probably didn't dream about? Keeping up with cyber threats. That's where MasterCard can help. With access to tools that help identify cyber threats to better protect your business. Building your dream business? Priceless. For cybersecurity in a changing world? There's MasterCard. Learn more at MasterCard.com slash smallbusiness.

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