josh brown
Photo: Duncan Hill
Josh Brown used to believe that you had to fit into a certain mold to become a financial advisor.
Brown, a CNBC contributor, often comments in a casual and approachable manner to investors, but he has since learned that there is much more to the world of money than meets the eye.
With his new book, You Shouldn't Have Seen It: The Secrets Every Investor Should Know, Brown challenges investors to look beyond the surface level of financial advice found in traditional and social media. I recommend it to my home. Let's take the American Dream as an example.
“We've all been taught about the American Dream and why it works for everyone,” said Brown, CEO of Ritholtz Wealth Management, a New York City-based investment advisory firm. It will grow,” he said. “I still believe that to be true, but what we've learned in the pandemic is that it doesn't work for everyone at once, and that's something we shouldn't look at. ”
“The hidden truth of American capitalism is that if everyone is good at once, everything will fall apart. We need people who are successful, but who are still working hard to get there. We also need people who are willing to take on challenges.'' Put in the work and do what others won't do. ”
What the pandemic has taught us is that you can't make it work for everyone at the same time.
joshua brown
CEO of New York City-based advisory firm Ritholtz Wealth Management
CNBC spoke with Brown in early October about his experience in the field as a financial advisor and important lessons for investors across generations.
This interview has been edited and condensed for clarity.
“One of Wall Street's biggest lies”
Ana Teresa Sola: What inspired you to write this book?
Joshua Brown: I was writing a blog. [The Reformed Broker] There was a time when I wrote seven days a week for about 15 years. Then, as my career took over, the momentum started to slow down.
Late last year, I put an end to this and decided, “This is what I can do.'' But it was such a big part of my life that I didn't want to give it a proper send off.
When you put your heart and soul into writing this much for that long, you want to say, “Okay…these are the most important insights, these are the things that I thought were important at the time.” And let me do something that recognizes that. ”
I wanted to gather all these insights into one book, rethink some of my most hit works, and bring them into the present to make them valuable to today's readers.
ATS: You reiterate this idea in your book that you can't reap the benefits of the stock market without some influence.
JB: One of Wall Street's biggest lies is that investors can make money in any asset class, market, etc. while avoiding risk. It will always be the biggest lie because it is the easiest thing on the planet to sell.
Everyone wants it, but even people who understand logic and are intellectually secure can still fall for it.
One of the things you learn as a salesperson is to understand who you're talking to and what their buttons are and push those buttons.
CNBC's Josh Brown on the New York Stock Exchange.
Photo: James Mook
What we've done really well as a company in our content is how we convince people to do something, and how much human nature plays into that, and why we fight. I pointed out whether this is really important. As the market unfolds, those instincts kick in, whether it's fear or greed.
Don't lean too much into either of these buckets. You want to be right in the middle. Take enough risks that you can make money, but don't take so many risks that you're about to get a knockout punch.
The financial advice industry has 'come a long way'
ATS: There's a story in the book about when you walked into this financial advisor's office and her techniques weren't what you expected.
JB: This happened more than 10 years ago, and it was a real eye-opener for me. Up until then, I had been very intimidated by the idea of changing my career from being a personal stockbroker to being an investment advisor.
In my head, I thought all the people working as investment advisors were like serious, solid professionals who knew exactly what to do, but that's not really the case. It was. It turns out that many people are faking it.
The industry has come a long way since then. The average advisor is much better at dealing with clients and more professional than what I was seeing at the time.
It's like a relic from another era that no longer exists. I think it's not as easy to fake as it used to be. [Many advisors are] I don't think you can fool people anymore because you're acting on a fiduciary basis.
Gen Z doesn't need financial planning advice. They need asset allocation advice.
joshua brown
CEO of New York City-based advisory firm Ritholtz Wealth Management
ATS: You say that younger advisors have the expertise, but they lack what previous generations of advisors have. What is it?
JB: You have this new generation of incredibly talented financial planning talent. At age 23, they graduate college with more knowledge about the planning process than many 43-year-old advisors will ever learn.
This is my opinion – I'm sure people agree [will] They get angry when they hear this, but what they lack is the ability to convert an audience of prospects into a real relationship.
They have no life experience yet. Generationally, they have gotten away with doing much less in-person. They don't deal with as much rejection as Generation X, certainly Boomers.
Let them into some rooms where important meetings are taking place. They know what they're doing, so give them the opportunity for this face-to-face interaction.
What they lack is what my generation and older generations have: the ability to sell, persuade, make people feel comfortable, and deal with awkward social situations.
“Gen Z doesn't need financial planning advice”
ATS: What do you observe about Gen Z and how do they seek financial advice?
JB: Gen Z, they don't need financial planning advice. They need asset allocation advice. They have no accumulated assets. There are no property issues. There isn't really anything about taxes worth discussing.
Whatever they come across on TikTok is what the algorithm is going to feed them, and the algorithm is going to feed them the most outrageous content, shortcuts, facts, tricks, wild, bonanza-sized deals. We're going to tell you stories about people who do.
It's not advice…most of it is delivered by completely unqualified people who are unregistered, not held to any standards, and can just say whatever they want.
But I think what happens to that generation, like every generation before it, is that things in their lives become more complicated. Your level of responsibility increases, the amount of money you handle increases, and you now ask for help.
Then they start searching online.
