The Most Invincible Career Path in Finance

0:17Today's show is brought to you by Betterment. What growth strategy are leading RIAs using that most firms don't? Segmentation. Some clients' needs are sophisticated and require deep, ongoing planning. Some clients' needs are simple, like those in the wealth accumulation stage. The smartest firms know planning shouldn't look the same for every client, but the experience should always be exceptional. Now it can be with Betterment Advisor Solutions. It's the platform built for segmenting your book and streamlining those smaller and simpler accounts. The onboarding experience is automated and paperless.

0:55The portfolio management is streamlined and tax efficient. The client experience is consistent and modern. And the impact isn't just felt by your clients. It's felt across your entire practice. Imagine a back office that's humming, a team that's thriving, and a service model ready to scale. Betterment Advisor Solutions. Your biggest regret will be not doing it sooner. Learn more at Betterment.com slash advisors. What is the future of college? Why is financial planning almost impervious to AI? And what the hell is going on in crypto? We are going to cover a lot of ground today. My friend Rick Edelman is back.

1:38Rick is one of my favorite repeat guests here on the show. He is the founder of Edelman Financial Engines, managing roughly$300 billion for over 1.3 million clients. Rick stepped back from day-to-day leadership at the firm and is now serving as a strategic advisor and board member. Rick has written 13 personal finance books and is an outspoken advocate of crypto and investing in exponential technologies. Rick, thank you so much for coming by. Great to be with you as always, Josh. Do you like New York? I love New York. I have an apartment here in the city. I come here as often as possible. How often do you come in a given year?

2:14Oh, at least once a month and for anywhere from several days to a couple of weeks. Okay. Well, we're thrilled to have you here in New York. You're here at a pretty, you're here at a high point for the city. For sure. I'm sure you watch the parades. Yeah. Okay. People are feeling pretty good about New York right now. And glad to see it. All right. I want to talk to you about the future of college. You have a new book. Is it out today? It came out in December. It debuted at number one on Amazon. Number 14, by the way. I haven't read it yet, but I've read a bunch of your books. Why should I read this one?

2:45You need to read it as an advisor because you have clients who have children of college-headed age. They're teens or tweens, or you're a grandparent of such kids. And we need to re-evaluate the entire college question, which no college book on the market does, which is why I wrote mine. Okay, what is it called? The Truth About College. Okay, what is The Truth About College in 2026? It is that we parents, grandparents, are viewing college incorrectly. The motive in American society is to get your kids into college. And every book, every tutor, every high school guidance counselor, every parent is all focused on how to get the kid in.

3:23How to choose the right school, how to pay for it, how to prep for the SAT, how to prepare the application. You're describing my life over the last three years. It's all designed about college. High school guidance counselors are often evaluated on how many high school seniors go to college. So there isn't an idea of any other course, of any other path. And yet what we need to recognize is that for today's environment, college is not the way it was when you and I went or when our parents went. Today, college is broken, meaning the fundamental assumption that kids ought to go is fundamentally flawed.

3:57And I've got the statistics to prove it. 24 % of college freshmen drop out. Less than 60 % graduate within six years. And 10 years after graduating, less than half are working in a job that required their degree. In fact, most are in a job that didn't require any degree. And yet the average cost of a school today is facing a quarter of a million dollars. The average undergrad graduates with$30 ,000 in student debt. It is severely interfering with their ability to buy a home, buy a car, live independently, get married, have children. We're seeing declines and delays in all those statistics. And here's the worst one of all.

4:3550 % of today's college students have been clinically diagnosed with depression. Can I argue with you on all this stuff? Absolutely. Okay. My household is singularly focused on getting both of my kids into a school, and not just any school, but a big school or a good school. And a lot of the reason why is the social opportunities that are created. Yes. I want my kids with other kids who have worked hard and didn't just wake up and happen to be in an institution but really had to fight to get in there. I think there's character that's built as part of that process. And I think there's a certain level of kids that I want my kids to associate with because it'll put them in a better position to begin their adult life.

5:26No argument. If I were to take your stats and then redo them for the types of schools that I want my kids to be at, would the outcomes change? No. That's the crazy thing is that even if you send your kids to the elites, to the Ivy Leagues, et cetera. We're not. Big 10 schools or SEC schools. You're going to still find those statistics. In other words, I'll give you two answers to this, Josh, because you're raising a really valid point. Number one is this, and you'll resonate with this a whole lot. An average kid who goes to a great school will have an average life. A great kid who goes to an average school will have a great life.

6:05In other words, it's more about the kid than the school. The second element is— Do you create above-average kids by putting that goal in front of them when they're in ninth grade? No, not necessarily. If the child— Don't make sure? No, we know it from the statistics. 85 % of incoming freshmen are undeclared, undecided. And this is why over 80 % changed their majors and 60 % changed schools. Because what the parents and they thought was the right place to go, the kid discovers in their second or third year, this place isn't right for me. It doesn't meet who I am or what I am. Isn't that good though?

6:38Isn't that a kid finding themselves? It's perfectly fine. Part of the point? For you, Josh, your family, the wealth you have, sure, it doesn't matter in that sense. But for the average student who is massing massive amounts of debt and recognize that whenever you change majors, you end up having to take extra credits because the old credits don't qualify. Or if you change schools, the new school rejects 43 % of the credits from the old school, which means you have to go to years five and six at more expense, more time. So for most Americans who are challenged financially, this is a path toward a problem.

7:11And therefore, here's the conclusion. While I painted a statistical picture of really bad issues, the real message is this. For most kids, you're right, college remains the best path. I'm not trying to say no to college, and my book is not anti-college. My premise is this. If you do it correctly, college is the greatest choice. The problem is too many parents are allowing too many children to go about it incorrectly. They're going to the wrong school. They're choosing the wrong major. They're going about it in the wrong way, amassing too much debt, and emerging unprepared for today's workforce.

7:47So the book has a simple premise to teach the kid how to graduate in four years debt-free on the dean's list with a degree ready for them to enter a field they love. So somebody buying this book will get that roadmap from you. Yes. How do I achieve an actual college education that matters? Yes, and it shows you how to minimize the cost of college to avoid going to debt, how to choose the right major, how to determine if college is right for your kid right now, and alternatives if not, such as the vocations or a gazillion other options that frankly didn't exist very much when you and I were in college.

8:24So it's basically a simple point of saying to the parent, it's different than it was when we were in school, and we can't assume that your child's experience will match yours because the environment is different. One of the things that's funny about the fact that it's different, it seems as though the schools that are the biggest are getting the highest amount of applications now. Yeah. And a lot of that is sort of like the polarity is shifting south, at least where we're from. Kids from the Northeast are increasingly choosing schools like Alabama, Clemson, University of Georgia, Tulane. these schools always got kids from New England and the New York metro area.

9:08But now I think they're getting a lot more. I don't know what that's about. And then I contrast that with Syracuse, which says it's not gonna hit any of its goals in applications this year or in enrollment this year. I've always thought of Syracuse as being on roughly the same tier as a Tulane, but there is a difference in preference. on why, why does that difference in preference exist? Is it about the weather? Is the thing that I keep hearing? Is it about post COVID just different lifestyle choices? Is it the Instagram effect? People see much better visuals for a Southern school than a school that's in upstate New York, or is it some combination of all these things?

9:49It's no doubt it's some combination. I'll add another factor and that's sports. Kids want to go to a school that has a great sports program. They always did, but more now? Yes, I think so. And for all the reasons you cited. And yet we have to recognize that the cost of going to that school, especially out of state, the tuition is so much higher, that half of parents today and half of high school seniors today say college is simply not worth the cost. Okay. What do you make then of the statistic that people will show where it's sort of like two lines and they diverge of income throughout your lifetime, people with a college degree versus people without?

10:29How do you explain that? These are some of the big advantages and the reasons for going to college. College graduates earn on average a million dollars over their lifetime more than non-grads. College grads are more likely to have stable marriages. They're less than half as likely to divorce. They live longer lives. They live healthier lives. They live happier lives. They have greater support and involvement in their communities. Their children grow up better because they're living in better neighborhoods. They're living in safer neighborhoods. The children are generally involved in a two-parent household as opposed to one.

11:03And we have seen lots of studies showing the advantages to children of that. So there are tremendous advantages for going to college and graduating with a degree. The challenge is that today it's not so much getting into college. That's increasingly easy because enrollment is down nationally by about 15 percent compared to 10 years ago. So schools are accepting far more students than ever. It's easier than ever to get in, but it's harder than ever to stay in and graduate. And that's the point of the book. It's not a question of going to college. It's a question of graduating from college. Okay.

11:34Which is the point. Right. Okay. You said you had a fireside chat and you told students that institutions should have a fiduciary obligation to their students, but they don't. Right. So that's a pretty damning thing to say when you're speaking at a school that you yourself are – which we're going to get to in a minute. You yourself are endowing. But like what do you mean by that? Is that a general thing for every school that they should consider adopting some sort of – They should. I think they feel it. No, they don't. You don't – really don't think so? Absolutely not. Business schools seem to be very obsessed with showing potential applicants, this is what percentage of our students end up in a career.

12:20I feel like they look at that as a point of pride. They play the same game that mutual funds play with survivor bias. They're not showing you how many dropped out. They're showing you of the graduates, here's what the percentage of graduates are working in that field. That's a huge distinction. Okay. Colleges are, I hate to put it this way, but they're nothing more than car salesmen. Their goal is to maximize sales and revenues, and without regard as to whether this vehicle is in the best interest of that buyer and whether or not they're getting the best price. Colleges are in the business of attracting students.

12:52They're going to do whatever it takes to do so, such as building lazy rivers. Seven schools in this country now offer one. They're going to have— I mean, you would like a lazy river if you were at school. If I were 17, I would go for it. But come on, you know, this is junk food and heroin for a 17-year-old. So we need to recognize that they're doing whatever it takes to admit students they frankly shouldn't admit. How else do you acknowledge? 24 % dropout. At some schools, they have food banks on campus because the students are food insecure. They can't even afford food. But if you can't afford food, what on earth are you doing there?

13:27So they've got to do a better job of evaluating, are you right for this campus? Why are so many schools offering remedial classes in English and math? Isn't that a way of saying you're not ready to be here? Yeah. And that's kind of the problem. So they're happy to accept you. And then there's the cartel issue where so many schools will say, oh, we're going to charge you an in-state student rate if you're a state school and we'll charge you a higher out-of-state rate. Well, guess what? They're going to go after the out-of-state student where they get higher tuition revenue. So all we end up having are students going to different states because they can't get admitted into their home state, forcing all these students to spend more than they otherwise should because of the game the schools are playing to maximize their tuition revenue.

14:10Florida seems to be going the other way. They have the schools have become a luxury item within Florida. They cost a lot, but they are also very focused on taking the top students and not having that brain drain and having those kids necessarily run up to the Ivy League. And we're also seeing - They seem to be turning things. And I'll give you another example. You're absolutely right. A lot of schools are now offering free tuition. And some of the elites, Brown, Harvard, Yale, MIT, and others, if you're earning under$100 ,000 a year, tuition, room, and board are free, under$200 ,000 a year for the family.

14:44Tuition is free. This is all wonderful. And it's another illustration that over the next 20 years, college will probably be free for everybody everywhere, just like K through 12 is. You think that's where this is going? Yes, no question. Okay. Where will we see that first away from Ivy League? We'll see that with state schools? Yeah, state schools. And we're already seeing this. Community colleges in almost every state are free right now. So your kid can get the associate's degree for the first two years, guaranteed transferability into the four-year state college or university. Why will it go that way?

15:16In whose interest is that taxpayers will decide they want to fund this? The taxpayers are already saying this. I'll change the word. The voters are already saying this. Mom and dad know how incredibly expensive college is. They can't afford it. And they're demanding that their state legislatures make college more affordable, translation free. And partly because schools have, many of them have abundant endowments. Others have resources from other methodologies that they are playing the game, again, attracting students by offering free or low cost or subsidized expenses. Okay. Tell us about Rowan University and what you're doing there?

15:54We announced a couple of months ago the creation of the School of Financial Planning. I'm going to be - Where is Rowan? Tell people what the school is. Rowan University is a state university in New Jersey. It's about 30 minutes outside of Philly, two hours from here in New York. And they're an R2 university. There'll be R1 next year, a leading research institution. They're one of the only schools in the country to have three medical schools. It's an astonishing institution. I went to Rowan, and that's where I met my wife, Jean. She's on the board of trustees. We've been heavily involved there for a very long time, and we just created the School of Financial Planning.

16:30As founding head, I'll be involved in creating the curriculum and hiring the faculty. Our goal is to produce 500 CFPs a year once we get fully up and running. We're going to offer a minor, a major, and a master's degree, also an online program. And the fundamental reason that I chose to do this is because we have a big problem in our country. Last year, business schools around the U.S., 1 ,500 of them, graduated over a quarter million business, finance, marketing, and accounting majors. Less than 200 schools offer a financial planning degree, and they produce less than 4 ,000 financial planners.

17:09Let's face it, what do we really need more of, marketing guys or financial planners? What are the biggest schools with financial planning programs that you can think of? Oh, Texas Tech and Kansas have two of the best programs in the country. There are lots of good ones, but not enough. We're producing far too few financial advisors relative to the need. We're all familiar with the McKinsey study that says 100 ,000 going to quit over the next 10 years. Okay, let's dive in on that. So McKinsey says we're going to be short 100 ,000 financial planners. We have 1 ,500 schools offering business degrees.

17:41Fewer than 200 offer financial planning. Why does that imbalance exist? For the simple reason that most people are unaware of the existence of the financial planning profession. Students have no clue at age 18 that you can go into financial planning. They've certainly heard of Wall Street. They know about brokerage and investment banking. They love to go in that direction. Everybody's familiar with accounting and finance and marketing. Their parents are unfamiliar with this. This is a first gen. It didn't exist when you and I were kids. I agree with that. So I spoke to somebody at the University of Ohio.

18:16They now have a financial planning program. It's under the home economics major. That's exactly the problem. It's not in the business school. That's right. So I guess they were doing personal finance that then became financial planning. Yeah, they treated it like home ec. It's home ec. Yeah, let's balance a checkbook. So a business school kid at Ohio State, which is a great school, does not have entree to financial planning as a profession unless they switch out of business. Right. And it's pejorative too. Because people think, you know, kids think, oh, you're talking about selling insurance and selling stocks and bonds.

18:51I don't want to be a salesman. They don't understand the fiduciary nature of what we do, how we improve people's lives. They have no clue because their parents very likely don't have a financial planner. Many parents themselves aren't doing very well with money. They're financially illiterate as adults. Kids are growing up financially illiterate because K through 12 doesn't teach them anything about this. And they have no idea what the rewarding nature of our profession is. And that's a big reason why kids aren't choosing it as a choice, partly because most schools don't offer it even when they do.

19:22As you pointed out, it's not in the business school. So we're doing it in the business school, the business college at Rowan University, where kids can not only major in it, they can choose to minor. So go ahead. Stick with your sociology or philosophy or history major. minor in financial planning. And now you can do it as an online course. You're a career changer in your 40s and 50s. Now, anywhere in the country, you can get this program online. And we're also going to be creating a couple of dozen certification programs. You don't want a full-blown career in financial planning. Here's a certificate in tax planning or estate planning or retirement planning or college planning to allow students and people in the workforce to add this as a new career path as their current careers are being threatened by AI.

20:04So one thing that I've noticed recently is kids are saying wealth management. When you add, so my daughter's 20, my son is 17. So I'm right in the thick of this. And I know all the parents of the kids and it's constant, like up until the last year, I think when I asked people like kids, what do you want to, I'm studying business what do you want to do private equity private equity private what is private equity i have no idea but everyone i know that works in private equity has a sick car that's like literally the decision process yes okay i'm hearing wealth now more and more and i don't know if that's because private equity stopped hiring but i am hearing kids talk about going into wealth they don't say financial planning right they say i'm going into wealth management and they still don't know what that and they want to go to morgan stanley or goldman sachs They have no idea that the most powerful people in wealth management are financial planners because they own the client.

21:04They own the client's allocation decisions. So if you go into wealth, you might become a wholesaler selling to wealth. And I don't know if that's what you would have intended if you understood. And they don't understand. They don't understand. The high school guidance counselors have no clue about this either. So they're just less likely to recommend it as a career path. And so our real mission first at Rowan University will begin with New Jersey, since it's a state school, of going to the high schools around the state to let these kids know of the career option. This exists, and it's a great career.

21:35Right. And it's in demand. And our next step will be to take this, put it in a bottle, and make it available to colleges and universities across the country. We're just going to replicate this on a national scale. So fast forward four years from now, the first class of School of Financial Planning at Rowan graduate. Where do you envision – obviously, everyone is different, but where do you envision a lot of them ending up in their first job? Is it answering phones at Schwab Vanguard Fidelity? Is it finding a local RIA near where they live that's like willing to mentor a 22-year-old, which most firms are not?

22:14You know this. Or is it some other way of getting it? Because it's really hard to understand the career path for a lot of people. And because of that, you're absolutely right, Josh. And because of that, it is really important that we establish the effective career path for these kids. And this is why Edelman Financial Engines has funded this program with a$10 million gift and is going to be creating internship opportunities and career opportunities for these kids using its national stature with 175 offices around the country. There aren't that many firms that have the size and scale to take a meaningful number of advisor trainees.

22:54Right. You know, Morgan Stanley and Merrill Lynch, they will still do that. But on the RIA side, what do you have, 10 RIAs of the wherewithal to not just big RIAs, but RIAs that actually have something to teach? And that's why our big focus, Edelman Financial is very heavily behind this, going to create these opportunities for these kids, not just in the Delaware Valley area, but on a national basis. And broadening this to other RAAs around the country, because our ultimate goal is to produce 500 CFP-ready graduates a year. And we're going to be trying to infuse this on a national scale and encouraging other schools around the country to replicate this model.

23:34We're going to give it to them in a box so that they can very easily create this without having to reinvent it. Can you tell the audience why you think financial planning is one of the more impervious professions in the age of AI? Why do you think of it that way? It's because at the end of the day, as we all know as advisors in this business, it's about the human relationship. Although we do know that AI will eventually be able to provide EQ, and some people are already getting therapy from online chatbots, we know that it's the human connection. If you have a personal relationship with someone, you're going to want to maintain and sustain that.

24:12And this is something that will be, I will phrase it as last man standing, that by the time AI does that, every other job will have already gone by the wayside. So I don't know when it'll occur, if ever, but it'll be a very long time from now, creating the job stability and career opportunity in this profession that simply doesn't exist elsewhere. Accounting will be history decades before the financial planning industry is. I have this, so I have this vision that I share with my financial planners here at the firm. Curious what you think about it. I sort of think of them as luxury goods, luxury items or luxury to the extent that AI is going to be at the forefront of our interactions, everyone's interactions all day long.

25:00The moment that you actually get the attention of a human being will actually be special. And having the attention of a human being that really knows you well and whose guidance you trust, that will feel like your luxury for that day. whereas every other interaction just boils down to a transaction. I need this, you give me this, thank you, I'll take it, goodbye. So I'm trying to sort of like instill in my financial planners, time spent with you is a luxury. Wealthy people will pay for that luxury and it will stand out in a sea of interactions they have with chatbots and software programs and it'll be even more meaningful in five years than it is today if you can imagine that.