Latest / Planning & Beyond® - Where financial planning meets human understanding / 22. Debunking The Great Wealth Transfer: Facts vs. Fiction with Dr. Jim Grubman

Transcript

22. Debunking The Great Wealth Transfer: Facts vs. Fiction with Dr. Jim Grubman · Planning & Beyond® - Where financial planning meets human understanding

• 0:00
  SPEAKER_01: And so the skills that you need on a very practical basis are human skills of being able to listen more than talk, being able to ask good questions during discovery that really bring out family issues.
• 0:14
  SPEAKER_01: The saying is, you know, performance gets people in the door, but relationship keeps them there.
• 0:19
  SPEAKER_01: And so the practical aspect of all this for advisors is don't worry about how much money is going to be coming or who has all that money or whatever.
• 0:28
  SPEAKER_01: Think about the work that you're doing now at the wealth segment that you're at and make sure that your skills for being a great advisor at the relational level are the best that they can be.
• 0:40
  SPEAKER_00: Welcome to Planning and Beyond, the show where financial planning meets human understanding.
• 0:46
  SPEAKER_00: As an exceptional financial advisor, you know that financial planning is about more than just numbers.
• 0:52
  SPEAKER_00: It's about giving clients the clarity they need to align their money with what matters most.
• 0:58
  SPEAKER_00: Which is why each episode is designed with that goal in mind.
• 1:02
  SPEAKER_00: You'll learn how to uncover the psychology behind client decisions and gain insights and behavioral strategies needed to create deeper, more meaningful client relationships.
• 1:12
  SPEAKER_00: You'll discover techniques for navigating emotional client situations, drain from conversations with leading industry experts in behavioral finance, psychology, communication, and more.
• 1:24
  SPEAKER_00: Whether it's mastering discovery meetings, handling sensitive client conversations, or understanding what is truly keeping your client stuck, you'll walk away with not only strategies that you can use in your next client meeting, but also the confidence to do so.
• 1:39
  SPEAKER_00: Oh, yeah.
• 1:40
  SPEAKER_00: Hi.
• 1:40
  SPEAKER_00: I should probably introduce myself.
• 1:42
  SPEAKER_00: I'm your host, Ashley Callney, a therapist who somehow wandered into the world of financial behavior and kind of decided to stay.
• 1:50
  SPEAKER_00: My mission is to help you bridge the gap between financial planning and human understanding.
• 1:56
  SPEAKER_00: Because remember, finances don't have feelings, but your clients do.
• 2:00
  SPEAKER_00: Let's dive in.
• 2:07
  SPEAKER_00: Welcome to Planning and Beyond, where financial planning meets human understanding.
• 2:11
  SPEAKER_00: I'm your host, Ashley Kwame.
• 2:13
  SPEAKER_00: Today I'm thrilled to welcome Dr.
• 2:16
  SPEAKER_00: Jim Grubman, an internationally recognized consultant to families of wealth and the advisors who serve them.
• 2:22
  SPEAKER_00: Dr.
• 2:22
  SPEAKER_00: Grubman brings decades of experience in psychology and wealth dynamics to our conversation about the great wealth transfer.
• 2:32
  SPEAKER_00: I feel like that I needed some kind of dramatic like emphasis on there.
• 2:35
  SPEAKER_00: I feel like you can't say the great wealth transfer and it just feels dramatic in nature there.
• 2:40
  SPEAKER_00: But for many of you listening right now, you have probably heard about this thing called the great wealth transfer.
• 2:48
  SPEAKER_00: And with widespread predictions about$84 trillion worth of money being changing hands over the coming decades, there's a lot of talk right now about it.
• 2:58
  SPEAKER_00: And some of that talk may or may not be true.
• 3:02
  SPEAKER_00: And so, in order to find out what is fact, what is fiction, how can we separate those so that advisors can better serve their clients?
• 3:10
  SPEAKER_00: I've brought in Dr.
• 3:11
  SPEAKER_00: Jim Grubman here to help us with that today.
• 3:14
  SPEAKER_00: Jim, thank you so much for being here.
• 3:16
  SPEAKER_00: Welcome to the show.
• 3:18
  SPEAKER_01: Thank you for having me, Ashley.
• 3:19
  SPEAKER_01: Uh, we've had some great planning calls, and I just really look forward to this conversation.
• 3:24
  SPEAKER_00: Yeah, likewise, likewise.
• 3:25
  SPEAKER_00: Well, before we dive in, I'd love, if you wouldn't mind, can you share with our listeners here just a little bit about your journey into the wealth psychology field?
• 3:36
  SPEAKER_01: Sure.
• 3:36
  SPEAKER_01: I've described it a few times that basically I come from a middle class family, then perhaps upper middle class in Northeast Ohio.
• 3:45
  SPEAKER_01: My father was a successful businessman in one of the more mundane aspects of life, the scrap metals business, which is typical of entrepreneurs and wealth creation and people who are high earning professionals, not very glamorous business.
• 4:00
  SPEAKER_01: And as I was about to go off to graduate school to be a psychologist, unfortunately, my father died of one day of a heart attack.
• 4:07
  SPEAKER_01: And I will tell you, Ashley, that sitting here now recording in the first week of March, that it's a little relevant because he died on Leap Year Day, February 29th of 1980.
• 4:20
  SPEAKER_01: So the anniversary of that was about four days ago.
• 4:23
  SPEAKER_01: So it's the what 45th anniversary of his death.
• 4:27
  SPEAKER_01: So it's kind of top of mind for me right now.
• 4:29
  SPEAKER_01: I still miss him.
• 4:30
  SPEAKER_00: Yeah, yeah.
• 4:31
  SPEAKER_01: I went off and became a psychologist, but in my personal life for our family, my mother inherited some money and there were some trusts, and I had my father's business head, and I sort of started learning about that in in my private life.
• 4:44
  SPEAKER_01: Through the 80s and 90s, things changed and grew.
• 4:47
  SPEAKER_01: My wife and I had three incredible children.
• 4:50
  SPEAKER_01: And by the mid-1990s, I was wondering, what do you do about raising kids with affluence?
• 4:56
  SPEAKER_01: And I started exploring some things.
• 4:58
  SPEAKER_01: What I did not know was that the field of wealth psychology was being born at the time.
• 5:03
  SPEAKER_01: And so I kind of got connected to it and I have become part of the field.
• 5:08
  SPEAKER_01: And I'm proud to say I've helped grow the field in many ways.
• 5:12
  SPEAKER_01: And that leads us to sitting here now talking together, you and I.
• 5:15
  SPEAKER_00: Absolutely.
• 5:16
  SPEAKER_00: I've I've said that I wish that I could have come into this field sooner than what I than what I did.
• 5:24
  SPEAKER_00: And I know I've shared this with you in a previous conversation, would have loved at least just the opportunity to have more time to learn from you and others.
• 5:33
  SPEAKER_00: And so it feels like our time kind of in this field, you know, me, you know, transferring from mental health now kind of into the space.
• 5:39
  SPEAKER_00: And as you're winding down your career, I'm saying winding down intentionally here.
• 5:45
  SPEAKER_00: You know, I would have loved to have been able to have had that overlap, be a little bit longer selfishly, very, very selfishly on my end.
• 5:53
  SPEAKER_01: I understand, but in many ways, I have a different view, perhaps more positive, which is in all fields, it goes in waves.
• 6:01
  SPEAKER_01: You know about my recent writing and speaking about understanding that I'm a child of wealth 2.0, which began around the 1980s with 1.0 being before that and actually still being very prominent in the industry with asset managers.
• 6:16
  SPEAKER_01: But yes, I came up in and helped form and influence wealth 2.0.
• 6:22
  SPEAKER_01: But now as we move into wealth 3.0 and in the modern era, you and people like you are going to be the ones.
• 6:29
  SPEAKER_01: You are the future.
• 6:30
  SPEAKER_01: You are going to be the ones to influence what's going to happen and carry the ball forward.
• 6:35
  SPEAKER_01: My time in helping to build some of the foundation of this and talking about the great wealth transfer, try and bring some intellectual rigor to the field that during the Wealth 2.0 era, a lot of things were transformative, but they didn't always have a lot of rigor to them.
• 6:53
  SPEAKER_01: And you know, my concerns about search sleeves to shirt sleeves and the terrible research data that supposedly proved it.
• 7:00
  SPEAKER_01: And so our conversation today, Ashley, is just a continuation of let's make sure that what we tell clients and what we tell ourselves is well founded and that we focus on what's really important and not the hype.
• 7:14
  SPEAKER_00: Yeah, yeah.
• 7:14
  SPEAKER_00: I love that and not the hype.
• 7:16
  SPEAKER_00: So with that, let's dive in.
• 7:18
  SPEAKER_00: I think many listeners, many advisors here have likely, I'm not going to make an assumption at all, but they have likely heard of this thing called the great wealth transfer.
• 7:29
  SPEAKER_00: And I would love to know from your lens, how do you define the great wealth transfer?
• 7:35
  SPEAKER_00: Maybe we can start there kind of high level and then work our way into understanding it, what it really is, the accuracy, yeah, and not the myths.
• 7:45
  SPEAKER_01: Yes.
• 7:45
  SPEAKER_01: Well, interestingly, the origins of the quote unquote, I feel like I have to be like Mike Myers or Austin Powers Dr.
• 7:54
  SPEAKER_01: Evil, of like putting my pinky finger to my mouth and say, the great wealth transfer.
• 7:59
  SPEAKER_01: Hundreds of trillions of dollars will be happening tomorrow in your neighborhood.
• 8:04
  SPEAKER_01: I actually was aware of it early on.
• 8:06
  SPEAKER_01: Many people don't realize the first analysis of that occurred around 1999, uh, toward the end of the dot-com era, with the Boston Center for Wealth and Philanthropy, run by Paul Shervish, a great guy, here in Boston.
• 8:21
  SPEAKER_01: Uh, I'm located in the Boston area.
• 8:23
  SPEAKER_01: And so that center actually did a groundbreaking study where, because of the wealth creation that had just occurred in the late 1990s, of course, which nobody knew was about to burst as a bubble in the early 2000s, that they looked at the amount of wealth that had been created, the demographics of who had wealth and what was going to be happening to it.
• 8:45
  SPEAKER_01: And they were the first ones to say, oh my God, if we look ahead, there's going to be a tremendous amount of wealth transferring to the next generation, to philanthropy.
• 8:56
  SPEAKER_01: And ironically, if you read it, it's like starting around 2020, 2025.
• 9:02
  SPEAKER_01: Oh my God, there's going to be so much money.
• 9:05
  SPEAKER_01: It was that initial study, which was often quoted, that began the ball rolling about realizing that the numbers were changing and the implications for families and therefore for advisors were tremendous.
• 9:20
  SPEAKER_01: I have continued to follow along over the years, and it's been partly humorous and partly discouraging to see how the numbers keep growing, but at the same time, how it also keeps getting pushed out to the future.
• 9:33
  SPEAKER_01: 10, 15 years ago, the numbers were, you know, double and they were in 2035.
• 9:39
  SPEAKER_01: Now we see numbers.
• 9:40
  SPEAKER_01: I think Cerule is uh just did a reevaluation study, and the numbers are even more massive.
• 9:47
  SPEAKER_01: And they're talking about 2040, 2070.
• 9:51
  SPEAKER_01: So this is one of those things.
• 9:53
  SPEAKER_01: Sometimes it's like springtime in New England.
• 9:55
  SPEAKER_01: It's like it's just around the corner.
• 9:58
  SPEAKER_00: Yeah.
• 9:59
  SPEAKER_00: Does the corner ever come?
• 10:00
  SPEAKER_00: Yeah.
• 10:01
  SPEAKER_01: Just around the corner.
• 10:03
  SPEAKER_01: Just keep waiting.
• 10:04
  SPEAKER_01: And so my perspective on this, having seen it from the beginning, is wait a minute.
• 10:09
  SPEAKER_01: First of all, it's not around the corner.
• 10:11
  SPEAKER_01: It's already happening to some degree.
• 10:13
  SPEAKER_01: Number two, it's a lot less dramatic in the present.
• 10:16
  SPEAKER_01: We're not talking about, oh my God, the numbers of what's passing right now are phenomenal.
• 10:21
  SPEAKER_01: It's like, no, the numbers that are passing now are consistent with regular life.
• 10:26
  SPEAKER_01: Well, just wait.
• 10:27
  SPEAKER_01: 2040,$80 trillion, which sounds like kind of a big number.
• 10:31
  SPEAKER_01: So the history of it is important to know that it's based upon a couple different things.
• 10:38
  SPEAKER_01: Number one, it's based upon the idea of the tremendous amount of asset creation that began in the late 1990s, actually in the 1980s, and has continued with at an accelerating rate.
• 10:50
  SPEAKER_01: It's also based on asset inflation and the tremendous difference in the numbers for what it constitutes being rich in modern life.
• 11:00
  SPEAKER_01: It was based upon assumptions, actuarial assumptions and demographics.
• 11:05
  SPEAKER_01: In 1999, they looked ahead and said the silent generation still had a lot of money, and they were going to start dying off, and then the baby boomers were going to inherit the great wealth transfer.
• 11:17
  SPEAKER_01: And they looked at when that was going to occur, which actually was going to be around now.
• 11:22
  SPEAKER_01: What they did not anticipate was number one, as I said, the tremendous acceleration and asset creation and the numbers that this is founded upon in terms of family wealth and an overall net worth.
• 11:34
  SPEAKER_01: Number two, longevity and the demographics have changed.
• 11:38
  SPEAKER_01: People are living longer.
• 11:40
  SPEAKER_01: And so some of those assumptions, if you go back and look at the original studies, have not come true because, as we know from other areas, people are living longer, they're extending.
• 11:50
  SPEAKER_01: And so that is extending when transfers occur, inheritances by testamentary means.
• 11:56
  SPEAKER_01: And so it's getting pushed out partly because of the changes in simply people living longer.
• 12:03
  SPEAKER_01: And then the transfer from the silent generation to the boomers, like me.
• 12:07
  SPEAKER_01: And guess what?
• 12:08
  SPEAKER_01: Boomers like me are living longer.
• 12:09
  SPEAKER_01: And so some of the original research assumptions in the Boston Center's study are responsible for pushing things out farther, the numbers getting bigger.
• 12:21
  SPEAKER_01: And I think that's where we need to talk about just how big the numbers really are getting.
• 12:25
  SPEAKER_00: Yeah.
• 12:26
  SPEAKER_00: So, Jim, how big are the numbers then?
• 12:29
  SPEAKER_00: Really, really, which by the way, we did not plan for Jim to like cue me up or tee me up with with with with that with that question.
• 12:38
  SPEAKER_00: But yeah, let's talk about maybe the accuracy of what those numbers are.
• 12:42
  SPEAKER_00: It feels maybe like a fish story.
• 12:45
  SPEAKER_00: Sometimes, like I wonder my husband, he's a fisherman, and you know, sometimes he likes to hunt.
• 12:50
  SPEAKER_00: And sometimes I'm like, man, I don't feel like that deer was that big when like the first time you shatter.
• 12:57
  SPEAKER_00: I don't feel like that fish was that big.
• 13:01
  SPEAKER_00: Like the first time.
• 13:02
  SPEAKER_00: So yeah, let's get into the numbers aspect of this.
• 13:05
  SPEAKER_01: Well, it's funny because as you know, I was involved in some journalists writing a story for the CFA Institute that came out uh some about a month ago or so, uh, talking about dispelling myths about the great wealth transfer.
• 13:19
  SPEAKER_01: And they showed a wonderful graphic.
• 13:22
  SPEAKER_01: The bottom line here, where we're going, is the great wealth transfer is a percentage that passes per year from overall net worth.
• 13:32
  SPEAKER_01: And the overall net worth, the number that it's basically benchmarked to, has grown way beyond what was anticipated.
• 13:41
  SPEAKER_01: In 1999, household net worth and distributions were much more around the$40 or$50 trillion range.
• 13:52
  SPEAKER_01: And again, it sounds like, well, that sounds like a lot of money,$50 trillion.
• 13:56
  SPEAKER_01: If the rate of wealth transfer, which is what we're going to watch, was around 1%, maybe 1.5% per year, that means maybe a half a trillion dollars was passing per year, which still sounds like a lot of money.
• 14:10
  SPEAKER_01: But as they say, just wait, there's more.
• 14:14
  SPEAKER_01: Currently, the estimates of the great wealth transfer are that somewhere around$1.5 to$2 trillion is being passed on per year.
• 14:25
  SPEAKER_01: A lot of the wealth transfer estimates always backend load.
• 14:28
  SPEAKER_01: Well, someday a lot of people are going to die and pass a lot more.
• 14:32
  SPEAKER_01: If you look at, well, what's passing this year?
• 14:34
  SPEAKER_01: Let's say it's around$1.5 trillion.
• 14:36
  SPEAKER_01: Guess what?
• 14:37
  SPEAKER_01: Total net worth, household wealth, and and what we're based on is around$150 trillion.
• 14:44
  SPEAKER_01: If you do the math, it's still around one and a half percent.
• 14:47
  SPEAKER_01: But the rate is not changed.
• 14:50
  SPEAKER_01: It's the baseline number of wealth creation, asset inflation that has changed, that it's based off of.
• 14:57
  SPEAKER_01: So that's why my skepticism about this great wealth transfer started to brew, which is the transfer really is not changing that much.
• 15:05
  SPEAKER_01: It's just that it's based on bigger and bigger numbers.
• 15:08
  SPEAKER_01: And, you know, in a moment we can go into what that means in some other areas.
• 15:11
  SPEAKER_01: But let me let me stop there for a second.
• 15:13
  SPEAKER_00: Yeah, let's talk a little, you know, we've talked a little bit about kind of the demographic here, right, between generations, right?
• 15:20
  SPEAKER_00: But I'm just curious, like, are there other like demographic factors here that you know, like that the research shows when when we talk about the facts about the great wealth transfer?
• 15:31
  SPEAKER_00: As opposed to the hype about as opposed to the hype, exactly.
• 15:34
  SPEAKER_00: Yes, yes, yes.
• 15:36
  SPEAKER_01: Well, the facts about it are again, who has this money when you look at household net worth and wealth?
• 15:43
  SPEAKER_01: That again, it's not even the top 1%, although certainly the top 1% has quite a bit.
• 15:48
  SPEAKER_01: I think it's like the top 5% of people have half of that 150 trillion or some equivalent number to that.
• 15:56
  SPEAKER_01: Don't hold me to that.
• 15:57
  SPEAKER_01: But the idea is it is ultra-high net worth families that have largely seen the tremendous power asset creation and asset inflation.
• 16:07
  SPEAKER_01: They're the ones who are going to be or are passing on that wealth.
• 16:11
  SPEAKER_01: This is not a trickle-down effect to the mass affluent under 5 million.
• 16:16
  SPEAKER_01: And even high net worth families, the statistics on what the average wealth, uh average inheritance in the high net worth range is is something like$200,000.
• 16:27
  SPEAKER_01: It used to be, I think,$80,000 or$90,000.
• 16:30
  SPEAKER_01: But again, guess what?
• 16:32
  SPEAKER_01: The rate stays the same, but the underlying number is much bigger.
• 16:35
  SPEAKER_01: And so it's not like there's a lot of people who are going to be seeing$200 million in their bank accounts tomorrow.
• 16:43
  SPEAKER_01: Most of it is at the family office level and the ultra-high net worth level at the very, very top.
• 16:49
  SPEAKER_01: And most of that is in ownership shares, the valuation of ownership shares, and most of it passes in trust.
• 16:56
  SPEAKER_01: At that level, inheritance is not what people think of of direct outright inheritance.
• 17:02
  SPEAKER_01: It's on paper transfers and often in control of trustees.
• 17:06
  SPEAKER_01: So when you really start digging down into it, the facts are very different than what many advisors are being told of just wait till you can get your fingers on a piece of this.
• 17:15
  SPEAKER_00: Yeah, or thinking I'm thinking about other things that I've heard around it's gonna be all women, right?
• 17:23
  SPEAKER_00: So focus like your marketing on like widows because they're the ones that are gonna be receiving all of receiving all of that.
• 17:31
  SPEAKER_00: So, you know, if I'm hearing you right correctly, right?
• 17:35
  SPEAKER_00: That, you know, some of this is not exactly what maybe everyone is thinking here in terms of where and or how these assets, where will they be and what will that look like?
• 17:46
  SPEAKER_01: Well, there is a truth to the idea that women in classic second-to-die estate planning situations actually do initially get much of the inheritance.
• 17:58
  SPEAKER_01: But again, there's a difference between sort of inheritance, but if you've had a marriage for 40 years or 50 years, and your spouse dies and that moves into you know your name, there's not a lot that's changed.
• 18:13
  SPEAKER_01: You know, you may now be what often advisors call the primary client, but you have been, uh you are familiar, Ashley, with my immigrants to the land of wealth metaphor.
• 18:24
  SPEAKER_01: That couple made the journey to wealth over many decades or possibly a liquidity event.
• 18:30
  SPEAKER_01: And so the transfer from, say, the patriarch who's the wealth creator to the spouse, it's not a big change.
• 18:37
  SPEAKER_01: It's really more after second to die and the idea that things then pass to the next generation.
• 18:43
  SPEAKER_01: You know, there are statistics that say 90% of that passes uh either into trust or is already in trust.
• 18:49
  SPEAKER_01: And again, for the highest levels of wealth, it's almost always family-owned businesses or enterprises.
• 18:55
  SPEAKER_01: Those ownership shares have a valuation to them.
• 18:59
  SPEAKER_01: It's not cash.
• 19:00
  SPEAKER_01: And the trustees for the trusts are the decision makers, not necessarily the beneficiaries.
• 19:06
  SPEAKER_00: I see, I see.
• 19:07
  SPEAKER_00: So one of the questions after reading the articles you mentioned at the um the CFA Institute that came out February 2025, if you're listening much later, talked about you know some of these myths and debunking them.
• 19:21
  SPEAKER_00: And one of the questions that I wanted to ask you was kind of you talked about that Mike Myers, like kind of asking you a trillion dollars.
• 19:31
  SPEAKER_00: I couldn't, I couldn't wait to ask you this.
• 19:34
  SPEAKER_00: And I know that you have some strong opinions, but also a great answer.
• 19:38
  SPEAKER_00: One of the statistics that we often hear is that 70% of wealthy families lose their wealth by the second generation and 90% by the third.
• 19:48
  SPEAKER_00: So I want to dive.
• 19:50
  SPEAKER_00: I know.
• 19:52
  SPEAKER_00: Let's go there, Jim.
• 19:54
  SPEAKER_00: Let's go there.
• 19:54
  SPEAKER_00: Let's let's break.
• 19:56
  SPEAKER_00: Let's break this down.
• 19:57
  SPEAKER_00: Please share, please share your wisdom.
• 19:59
  SPEAKER_00: Please take this time to get on your soapbox.
• 20:02
  SPEAKER_00: This is your TED talk here.
• 20:04
  SPEAKER_01: Well, you know all too well, Ashley.
• 20:06
  SPEAKER_01: My first major debunking was of the shirt sleeves to shirt sleeves uh antiquity adage and the supposedly true statistics that proved it that the Williams and Presser allegations of 70% of wealth transfers fail, family businesses don't survive, all sorts of things.
• 20:25
  SPEAKER_01: And I wrote an article called There is No 70% Rule.
• 20:29
  SPEAKER_01: I tracked down several years ago and traced back through original sources and looked at original citations and tracked those sources back down.
• 20:38
  SPEAKER_01: And what I discovered was it was all basically built on one small study from the early 1980s of around 200 businesses in one area in the Midwest, looking at companies that were family owned in 1924.
• 20:55
  SPEAKER_01: And whether you come back later in 1984, how many of those family-owned businesses are still on the books?
• 21:02
  SPEAKER_01: And that was it.
• 21:03
  SPEAKER_00: Wow.
• 21:04
  SPEAKER_01: Even the people who did the study, John Ward and his colleagues, who are great people, admonished people don't take this out of context and everything.
• 21:12
  SPEAKER_01: But it basically took on a life of its own as proof that family wealth transfers and family businesses don't last, therefore, short sleeves and shirt sleeves in three generations has been proven.
• 21:23
  SPEAKER_01: Once I saw that there was no there, there, as they say, there are no other studies whatsoever that support the three-generation rule, maybe what people talk about, the three-generation curse, and the fact that a lot of it was based upon demographics and family patterns that uh in the modern era we can question.
• 21:47
  SPEAKER_01: We now have, I mean, you are a good example of this, Ashley, you and me and the entire industry, where there's a lot more that's known about families with wealth, what to do about it.
• 22:00
  SPEAKER_01: Openness and communication and preparation that's required.
• 22:03
  SPEAKER_01: And that it's a changing world.
• 22:06
  SPEAKER_01: So not only is there no evidence of any value to support shirt sleeves to shirt sleeves, but actually we are seeing evidence through some new research studies that says the picture may be much more positive than we have led to believe, and that we have been telling clients.
• 22:23
  SPEAKER_00: Wow.
• 22:24
  SPEAKER_00: I feel like that's like a there's a lot to kind of digest then around that.
• 22:32
  SPEAKER_00: So some of this, you know, newer research here, right?
• 22:35
  SPEAKER_00: That you mentioned, the shirt sleeves, the shirt sleeve, right?
• 22:37
  SPEAKER_00: That that it's it's kind of taken on a life of its own and it's not, it's not accurate then, right?
• 22:43
  SPEAKER_00: And so maybe advisors have been misleading their clients unintentionally, right?
• 22:49
  SPEAKER_00: I'm sure it's not not, you know, not or maybe I'm gonna give them listen, my therapist heart wants to believe like the good in just like everyone, right?
• 22:59
  SPEAKER_00: I'm gonna I'll choose to believe that most it's it's not it's not intentional, just not taking the time maybe to understand the information where they're sharing.
• 23:08
  SPEAKER_00: So if the shirt sleeve, the shirt sleeve, if that's not true, then what are we seeing from a research standpoint in terms of the generations and how they're doing and managing and succeeding with that wealth transfer?
• 23:22
  SPEAKER_01: Well, I'm gonna give you a classic great response, which is we don't know, and we're not sure.
• 23:28
  SPEAKER_00: Sure.
• 23:28
  SPEAKER_01: So let's let's go into that.
• 23:30
  SPEAKER_00: Yeah.
• 23:31
  SPEAKER_01: First of all, there are some uh very, very few newer positive studies.
• 23:36
  SPEAKER_01: One, there was a great study that was done around 2011 that had much better research design.
• 23:42
  SPEAKER_01: And that actually, instead of looking at the business, because as businesses rise and fall, just because the business doesn't exist anymore doesn't mean it was a failure.
• 23:51
  SPEAKER_01: It could have been sold on purpose.
• 23:53
  SPEAKER_01: There could be many different reasons for it.
• 23:55
  SPEAKER_01: That actually, instead of looking at the business, researchers looked at the family, the business-owning family.
• 24:01
  SPEAKER_01: And what they found was a much more positive image.
• 24:05
  SPEAKER_01: They discovered that if you follow the family over time, enterprising families have a great success rate that any particular business, it can get harvested, it can get sold, it can get merged.
• 24:17
  SPEAKER_01: People can, I think that they said, I don't have it exact in my head right now, but you know, on average, if you over a long period of time, enterprising families were in like six different industries.
• 24:28
  SPEAKER_01: They had 3.4 different businesses.
• 24:32
  SPEAKER_01: That if you follow the family, not the business, it's a much more positive picture.
• 24:38
  SPEAKER_01: And that has been my experience in consulting to families both domestically and globally.
• 24:44
  SPEAKER_01: There was a great study uh by my colleague Dennis Jaffe that I was a small part of called the 100 Year Families Project, looking at families that have gone through at least two generational transitions.
• 24:56
  SPEAKER_01: And he found a much more positive picture that families who work not only on the business, but on the family, and they foster family cohesion, they pay attention to the opportunities for family members, they tend to survive quite well.
• 25:10
  SPEAKER_01: And so those are two studies that are positive.
• 25:14
  SPEAKER_01: But then, again, my my scientist's rigorous inclination uh head essentially says, and you know, for the rest, we really don't know.
• 25:24
  SPEAKER_01: There have been no good longitudinal, well-designed research studies that follow families over long periods of time to actually find out what happens to family wealth.
• 25:35
  SPEAKER_01: And we need those studies.
• 25:37
  SPEAKER_01: That's what I have advocated in describing wealth 3.0.
• 25:41
  SPEAKER_00: Yeah, we we absolutely, we absolutely do.
• 25:44
  SPEAKER_00: And you know, I guess I had a moment here like listening where I was like, well, there is some evidence if you watch reality TV show uh about some of those dynamics, you know, uh kind of there.
• 25:58
  SPEAKER_00: Yeah, we won't go down that rabbit hole.
• 26:00
  SPEAKER_01: No.
• 26:00
  SPEAKER_01: And anybody who mentions succession to me as an example of what happens for ultra-high net worth families, it's like, oh, kill me now.
• 26:07
  SPEAKER_00: Yeah.
• 26:08
  SPEAKER_00: Yeah.
• 26:08
  SPEAKER_00: But I think that's really interesting.
• 26:10
  SPEAKER_00: And, you know, as a therapist, I I guess I find it really fascinating just from a family dynamics systems standpoint, right?
• 26:18
  SPEAKER_00: If we follow the family and understand what's happening there within that, within that system, within that dynamic, and how is that set up?
• 26:25
  SPEAKER_00: There's a lot, obviously, to be learned from that, uh how to do that well.
• 26:29
  SPEAKER_00: And I guess maybe what's exciting is knowing that on the horizon, hopefully research will tell us a little bit more here about that.
• 26:38
  SPEAKER_00: So, Jim, we talked about the 70, 70% rule, right?
• 26:42
  SPEAKER_00: The shirt sleeve to shirt sleeve.
• 26:43
  SPEAKER_00: Are there any other myths out there that you hear or fiction that you feel like is important for advisors to know that you feel like it's important to debunk and kind of set the record straight here on this whole great wealth transfer bit?
• 26:58
  SPEAKER_01: Well, I think there was a great article recently in the Wall Street Journal talking about the number of what they called super billionaires, the people of our current time, because who knows when somebody will be listening to this, who have 200 billion, 300 billion, 400 billion dollars at the top of the Forbes 400 list and all that that never used to exist.
• 27:20
  SPEAKER_01: Ashley, in 1999, okay, we'll see your historical knowledge here.
• 27:25
  SPEAKER_01: In 1999, who was the number one person uh the richest man in the world, and what was his net worth?
• 27:34
  SPEAKER_01: Do you have any idea?
• 27:35
  SPEAKER_00: I could not tell you because in 1999 I was a teenager, and the only person I remember was Prince and singing the song like it's 1999.
• 27:45
  SPEAKER_00: So the art to date just to tell you, just and it's an unfortunate one, uh, but just to tell you a little bit about maybe where I am.
• 27:56
  SPEAKER_00: So please share with us who was it.
• 27:58
  SPEAKER_01: I recently pulled up the Forbes 400 list for 1999.
• 28:02
  SPEAKER_01: The number one person on that list was Bill Gates, and he had 90.
• 28:07
  SPEAKER_01: Yeah, I gotta do my Mike Myers imitation, 90 billion dollars.
• 28:12
  SPEAKER_01: Wow.
• 28:13
  SPEAKER_01: Wow.
• 28:14
  SPEAKER_01: 90.
• 28:14
  SPEAKER_01: That would like, I don't know what$90 billion would do in the current Forbes list, but it would absolutely not be at the top compared to 400 billion.
• 28:25
  SPEAKER_01: And, you know, they're soon talking about there's going to be the first trillionaire.
• 28:29
  SPEAKER_01: I think it's a great demonstration that the world has changed and that wealth is changing with it.
• 28:37
  SPEAKER_01: There's actually a lot more wealth around the world.
• 28:39
  SPEAKER_01: India is one of the fastest growing countries for wealth creation.
• 28:43
  SPEAKER_01: And so, in a sense, we got to come back down to earth.
• 28:46
  SPEAKER_01: And instead of focusing on all this money sloshing around, what can advisors do with your client sitting in front of you that is really going to make a difference and be the best way that you can be helpful to the client in front of you?
• 29:01
  SPEAKER_00: Yeah.
• 29:01
  SPEAKER_00: So with that, man, you're so great at like teeing me up with like just kind of direction here.
• 29:07
  SPEAKER_00: You're a natural gym.
• 29:08
  SPEAKER_00: We could take our show on the road.
• 29:10
  SPEAKER_00: Absolutely.
• 29:12
  SPEAKER_00: Okay, so with the show, I really do try to leave our listeners, advisors with some practical aspects here of how they can take maybe what we're talking about and integrate it into practice.
• 29:23
  SPEAKER_00: So you mentioned here like focusing on kind of the person in front of you.
• 29:28
  SPEAKER_00: What are some other ways that advisors can start to think about things differently, implement things differently?
• 29:34
  SPEAKER_00: What else can they do, Jim?
• 29:36
  SPEAKER_00: What would you tell them?
• 29:38
  SPEAKER_01: I think a lot depends, number one, at what wealth segment you are working at.
• 29:42
  SPEAKER_01: Are you working with retail clients?
• 29:44
  SPEAKER_01: Are you working with the mass affluent?
• 29:46
  SPEAKER_01: Are you working with high net worth between five and maybe 30 million?
• 29:51
  SPEAKER_01: Are you at the lower end of ultra high net worth?
• 29:53
  SPEAKER_01: That advisory work at the different levels looks very different.
• 29:56
  SPEAKER_01: For example, if you are working with people with a net worth under, say, five or ten million, you're largely working with an individual, maybe a couple.
• 30:06
  SPEAKER_01: In the high net worth range, more often you're working with a couple.
• 30:10
  SPEAKER_01: And you're also starting more often to work with somebody who may have a family business or maybe a high-earning professional.
• 30:16
  SPEAKER_01: Those are very different skills.
• 30:18
  SPEAKER_01: To be able, uh, and and I've talked with many advisors all the way up and down the food chain, there's some people who only like working with an individual client and they don't like working with couples.
• 30:30
  SPEAKER_01: There are people who can work with a couple, but when it starts to get into the ultra-high net worth range where you're working with families, they feel very uncomfortable having that many people to deal with, to think about, the potential for some family conflicts or dynamics.
• 30:44
  SPEAKER_01: And yet everybody wants to work with larger and larger account sizes.
• 30:48
  SPEAKER_01: Notice I said account sizes and not human beings.
• 30:51
  SPEAKER_01: It's sort of be careful what you wish for.
• 30:53
  SPEAKER_01: If you have somebody who actually does have$50 million, chances are they're a business owner, they're an immigrant to wealth, you're working with the parents and you should be working with the next generation as well.
• 31:07
  SPEAKER_01: And so the skills that you need on a very practical basis are human skills of being able to listen more than talk, being able to ask good questions during discovery that really bring out the family issues.
• 31:20
  SPEAKER_01: The saying is, you know, performance gets people in the door, but relationship keeps them there.
• 31:25
  SPEAKER_01: And so the practical aspect of all this for advisors is don't worry about how much money is going to be coming or who has all that money or whatever.
• 31:34
  SPEAKER_01: Think about the work that you're doing now at the wealth segment that you're at and make sure that your skills for being a great advisor at the relational level are the best that they can be.
• 31:46
  SPEAKER_00: I think that's brilliant.
• 31:47
  SPEAKER_00: So true.
• 31:48
  SPEAKER_00: I mean, I could not have said it, could not have said it better myself.
• 31:51
  SPEAKER_00: When it comes to, and I and I'm asking this because I know of your involvement and all of your work in the ultra-high net worth institute.
• 31:58
  SPEAKER_00: Like when it comes to, if if an advisor is like, you know, hey, I'm kind of teetering, you know, working with wealthier families, and I'm interested in in doing that, however that looks like in their practice.
• 32:11
  SPEAKER_00: Are there any tools or frameworks that you might recommend for an advisor that would help kind of guide them maybe through maybe some of the technical, the competency piece, but also the relational aspect as well?
• 32:26
  SPEAKER_01: Well, you mentioned my work at the Ultra Honey Worth Institute, which is a nonprofit think tank that has been around and is now growing, doing quite well.
• 32:34
  SPEAKER_01: It's been about five, six years old.
• 32:37
  SPEAKER_01: We developed a framework called the Ten Domains of Family Wealth.
• 32:41
  SPEAKER_01: And it looks at not services, these are domains of what are the family's needs.
• 32:47
  SPEAKER_01: And the importance of the model is to shift the thinking of advisors to the idea of you have to start with the idea that the hallmark of wealth is complexity.
• 32:59
  SPEAKER_01: And so understanding the complexity of life.
• 33:02
  SPEAKER_01: And even, I mean, if you have$15 or$20 million, or even$5 million, if you started off as a working class person, your life is a lot more complex than it was before.
• 33:12
  SPEAKER_01: It can feel overwhelming.
• 33:14
  SPEAKER_01: And so being able to understand all the domains that people have needs in, including estate planning, investment management, risk management and strategy, philanthropy, decision making in a family, education of the rising generation, health and well-being, uh, we saw during COVID.
• 33:34
  SPEAKER_01: Health issues in the wealthy are extremely important.
• 33:36
  SPEAKER_01: Learning, leadership development, and the central set of skills, which is just being a really good advisor, being able to explain things without jargon.
• 33:46
  SPEAKER_01: As I said, being able to listen, being able to ask empathic questions.
• 33:50
  SPEAKER_01: The more that an advisor builds their skills and learns these frameworks for managing the complexity of clients' lives, the more that they can be helpful.
• 34:03
  SPEAKER_01: And that's the bottom line.
• 34:05
  SPEAKER_00: Taking a look at those domains that you and others have, I know, been working on and mapping those out.
• 34:12
  SPEAKER_00: I will say that, you know, when you and I had a conversation several months, months ago and talking about it, I was blown away, right, in many ways by the attention to detail, I guess, with respect to this complete picture of planning.
• 34:26
  SPEAKER_00: And while I know it is for you guys and in your work on the, you know, the ultra-high net worth, you know, family governance aspect, for me, I kind of looked at it too and I was like, oh man, this is for every aspect though, in some ways of financial planning.
• 34:40
  SPEAKER_00: Like it's applicable to every advisor at least to kind of look at and and and to try and focus their their effort, energy, competency, and actions when it comes to working with clients, you know, looking at these 10 domains and saying, how am I incorporating some of this in my work, right?
• 34:57
  SPEAKER_00: Whether they have a million or whether they have, you know, a trillion.
• 35:01
  SPEAKER_01: That's right.
• 35:01
  SPEAKER_01: And you got to do that uh pinky to the mouth thing when you say trillion.
• 35:04
  SPEAKER_00: Trillion.
• 35:05
  SPEAKER_00: I'm not gonna be able to ever say trillion now without without without doing that.
• 35:11
  SPEAKER_01: What's interesting, uh I really like what you said.
• 35:14
  SPEAKER_01: And we often are asked, you know, what do the 10 domains look like at lower levels of wealth?
• 35:18
  SPEAKER_01: And I think it's a great question.
• 35:20
  SPEAKER_01: And the reality is actually all the 10 domains are still there.
• 35:25
  SPEAKER_01: They just have somewhat less complexity.
• 35:27
  SPEAKER_01: For somebody with$120 million in a major family enterprise, the financial and investment management domain is quite complicated.
• 35:36
  SPEAKER_01: If you have$12 million, you still have probably a portfolio and you need to look at asset allocation and various sorts of things in a much more complicated way than when you had six hundred thousand dollars.
• 35:50
  SPEAKER_01: And so another great one is the philanthropy, social impact and philanthropy domain.
• 35:55
  SPEAKER_01: That at the ultra net worth level, you may have a foundation, other sorts of things.
• 36:00
  SPEAKER_01: But you know, advisors need to ask questions, not about so let's do some charitable planning to make sure your tax advantages on wealth transfer are maximized.
• 36:11
  SPEAKER_01: That's not what people want to hear about.
• 36:13
  SPEAKER_01: It's now that you are in this position, let's talk about what's important to you and what are the ways in which some of this money might be put to work in the world.
• 36:23
  SPEAKER_01: What are your thoughts on how you might want to do that?
• 36:26
  SPEAKER_01: Those sorts of questions.
• 36:28
  SPEAKER_01: It's still in the philanthropy domain, but it's much less about tax-driven planning and much more about values and goals-driven planning.
• 36:38
  SPEAKER_01: And everybody wants to hear about that.
• 36:40
  SPEAKER_00: Yes, spot on.
• 36:41
  SPEAKER_00: You can preaching, preaching to the choir here about that.
• 36:45
  SPEAKER_00: Well, Jim, thank you so much, truly, for sharing everything that you did here today.
• 36:52
  SPEAKER_00: I I know we joked before we hit record here that I had way more questions than what we would actually have time to dive into.
• 37:01
  SPEAKER_00: And I was right.
• 37:02
  SPEAKER_00: It's one of those like, I don't want to be right, but I was I was right.
• 37:05
  SPEAKER_00: I knew that this, I knew this would happen, unfortunately.
• 37:09
  SPEAKER_00: But thank you truly for sharing everything that you have with respect to the history here of the great wealth transfer.
• 37:16
  SPEAKER_00: I learned so much there.
• 37:18
  SPEAKER_00: I can't wait to go back and re-listen to that because uh I know that I even learned uh, you know, some information there about that.
• 37:25
  SPEAKER_00: And also just debunking some of the myths here, like what's true, what's fact, what's fiction, what can advisors be doing?
• 37:31
  SPEAKER_00: And even like a little teaser into your work with the Ultra High Network Institute around these 10 domains.
• 37:37
  SPEAKER_00: Thank you for sharing everything that you have here with us today.
• 37:40
  SPEAKER_00: If listeners would like to learn more about you and your work, where can they find you?
• 37:45
  SPEAKER_00: Where can they connect with you?
• 37:46
  SPEAKER_01: Sure.
• 37:47
  SPEAKER_01: My website is jamesgrubman.com.
• 37:50
  SPEAKER_01: And if there are specific questions or something, there's the contact form that you can use.
• 37:55
  SPEAKER_01: The Ultra High Network Institute is at uhnwinstitute.org and has on its public site a variety of resources and materials, announcements about different things.
• 38:08
  SPEAKER_01: The 10 domains framework is there.
• 38:10
  SPEAKER_01: Then basically you just have to Google me and a whole bunch of stuff uh comes forward of articles I've written and commentaries about various things.
• 38:18
  SPEAKER_01: But I'm happy to communicate with anybody who's listening to this.
• 38:21
  SPEAKER_00: It's literally true.
• 38:22
  SPEAKER_00: If you type in Jim's name into Google, there's so much there uh that comes up uh for him, which is a testament really to his to his work and to the legacy that he's leaving into this field.
• 38:33
  SPEAKER_00: Well, thank you to all of you for tuning in and allowing Dr.
• 38:38
  SPEAKER_00: Jim Grubman and I into your ears and into your mind today.
• 38:41
  SPEAKER_00: If you found value in today's episode, I would also like to stay connected uh with you as well.
• 38:47
  SPEAKER_00: You can follow me on LinkedIn at Ashley Kwame, where I share weekly insights on the human side of planning.
• 38:52
  SPEAKER_00: You can also subscribe to our monthly newsletter at planningandbeyond.com, where we share not only show updates, but also resources and strategies that you can use in your practice.
• 39:03
  SPEAKER_00: And don't forget, probably the most important part, to follow the show wherever you get your podcast so that you never miss an episode like this one.
• 39:12
  SPEAKER_00: And remember, finances don't have feelings, but your clients do.
• 39:16
  SPEAKER_00: Until next time, keep planning, keep growing, and keep going beyond.
• 39:23
  SPEAKER_00: Thanks for joining me on this episode of Planning and Beyond.
• 39:26
  SPEAKER_00: I hope you found today's insights valuable and inspiring for both your practice and your personal growth.
• 39:32
  SPEAKER_00: If you enjoyed the show, please subscribe and leave a review on your favorite podcast platform.
• 39:38
  SPEAKER_00: Your feedback helps us reach more advisors like you who are dedicated to making a difference.
• 39:44
  SPEAKER_00: For more resources, tips, and to continue the conversation, visit our website at beyondthefp.com.
• 39:52
  SPEAKER_00: You will find articles, tools, and information about upcoming episodes designed to support your journey and practice.
• 39:59
  SPEAKER_00: Stay connected with us on social media and never miss an update.
• 40:02
  SPEAKER_00: Follow us on Twitter and LinkedIn.
• 40:05
  SPEAKER_00: And remember, the best way to grow is to keep learning and sharing.
• 40:09
  SPEAKER_00: Until next time, keep planning, keep growing, and keep going.