Eric Sontag: Solving for Intergenerational Challenges | Next Gen

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I went to ChatGPT. I told it I was going on the podcast. I told it what kind of questions I was going to be asked, and I said, please play the role. And it was pretty good.

I mean, I feel like I'm going to get replaced. Welcome to Barron's Advisor: The Way Forward Next Generation, a special series spotlighting the emerging leaders shaping the future of financial advice. Twice a month, we'll be digging into the strategies, insights, and game-changing moves that that will help you take your practice to the next level. I'm Allison Tucci, and today my special guest is Eric Sontag. Eric is COO and President of Wealthspire Advisors, an independent advisory firm with about $30 billion assets under management and approximately 385 professionals. Today, he's going to be talking about his role as COO and President, as well as how you can amplify your personal identity through technology and practice management. Skills. Welcome to the podcast.

Thanks for having me. Great to be here.

Can you share a little bit about the intergenerational challenges that you're seeing today with your staff? And then what are some of the challenges you're seeing with your clients and how are you approaching that?

With clients, I see it in two different ways. One is just different expectations that you have across different generations and expectations as just consumers and what they're used to, the speed of turnaround on things, but also how they do research. You know, what resonates with them is not going to be the same as what resonates with prior generations. Part of it is also having advisors of different ages, right? And I think as a larger firm, that's a benefit, is looking across our 25 offices. And if we have roughly 150 advisors, plus we have advisor associates, it really spans across demographics, across interests, locations, geographies, all of that. Having next-gen advisors and listening to their perspectives and understanding how they would approach members of their generation is a key place to start. From a digital engagement standpoint, I do see some strides being made there. I think RIAs are a little bit at the mercy of, like, the custodians that we work with. So we could build a really fancy digital-led web portal for our clients to look at for reporting and communications. But we still are going to rely on the custodian to, like, open up accounts.

That's it. You're still going to get the same paperwork for the account opening process. Yeah. And you're going to be reliant on that. If they change their process, what happens? Those downstream applications.

Exactly. But we are seeing strides there. So for example, there was DocuSign first, but then people realized, hey, DocuSign is still really tedious. You have to fill out all these fields. Yes, it's better for the client to sign, but now we're seeing the emergence of truly like electronic and built for digital. It doesn't feel like an old form that is just using digital signatures. It is much more of a true digital experience. And we are jumping on, on that train as fast as we possibly can. Also thinking about intergenerational challenges with clients is when you have families with multiple generations of wealth. Again, something that's been talked about in our industry for years is—

and still not solved, by the way.

Yeah. And I don't know that there's a silver bullet, right, to solve for how do you retain the next gen? Because next gen often doesn't want to work with their parent's advisor. And if they're married, I mean, if you're, if you're told you're going to work with your, the advisor of your in-laws, like, I don't, I don't think that's an exciting prospect. So we've been very intentional at our firm and we started this years ago where when we have those types of families, yes, we'll have one senior advisor that works with the matriarch and patriarch, but we're able to select advisors to work with the next gen so that the next gen really feels like they have their own relationship and they are their own client and they're not always just being viewed as the G2 of their parents. And we have seen that be really successful. Moving to the question on challenges for the team, I think there's, there's a confluence of a couple of factors going on. One is the industry is as competitive as it's ever been. My father will talk about this all the time, right? When he started, business in 1995 saying we're open architecture for fiduciaries. We sit on the same side of the table as the client. We're truly an advisor. We don't care what investment products you are in. We do wealth strategy planning. That was actually very differentiated at the time and now it's not. So like that alone is more table stakes, right? And so I just—

It's everyone's slogan.

Exactly. So there's— it's a highly competitive industry, which would make it harder for new entrants to go find clients. But I also think there's another dynamic, which is I think about the people that built the firms, started the firms of the prior generation who are on the cusp of retiring, and very few of them went to school or thought they were going to go into financial planning. I think most of them were coming out of either broker-dealer backgrounds, maybe some CPAs. It could be investment backgrounds. Insurance, right, where sales was part of that culture. And you knew if you were going into insurance that you're picking an industry that, you know, there's going to be sales involved. So you probably have some interest in it. When I look at a lot of the new hires, new entrants, not just for Wealthspire but across the industry for planning-led firms and RIAs, a lot of them are really coming from like a service tech-based background. It's they're really passionate about planning, about solving people's problems. And that is great for clients, but sales is often not top of mind and for some may even be like a dirty word. And we've really tried to send the message that, hey, if you really believe in what you are doing, then view sales as a lens through how do you expand the reach of the positive work that we are doing to more people. So I would list that as an intergenerational challenge, especially as the older advisors, many of whom have been the rainmakers, look to retire. And, you know, the next generation, I just— I know I'm very broadly speaking, but I'm not sure they're wired the same way towards sales.

So in terms of advising the next generation with business development and outreach, essentially, what are your top couple pieces of advice? Is it asking your existing clients for referrals? Is it going on LinkedIn? Is it using social? How would you say you would advise someone who walked into your office and said, great, I heard you, I want to go out and do business development and sales? Now what?

All of the above. There's multiple prongs to it. We have launched a program that we call Find Your People. First, it is working with advisors. So they, the marketing team will pick a cohort of advisors.

Okay.

Because they can only work with so many at a time and do a really deep dive with those advisors and understand what are you passionate about? Who is your target client and target profile more so than, hey, we as Wealthspire have a target client profile. So who are the types of clients that you work best with, that you enjoy working with most, that you think you deliver the most value? And that can be driven by any number of things, what they're passionate about, the types of complexities that they deal with, where they are in their life, industries that, that they are in, those types of things. So the marketing team will really help them hone in on, hey, you have to build this target client in your head, and then they will work through strategy. Some people are really prolific on social and LinkedIn. If that's the case, they will go through and look at how they can tailor it. Little, you know, small tweaks here and there can make a big difference that can really speak to the people you're targeting more. But it's also— it's not just if you build it, they will come like, oh, if you just start posting on this, suddenly you're going to get tons of clients. It is how do you actually go out and do outreach for these groups, right? So we have an advisor that very clearly established her target client profile as strong, ambitious women going through certain types of transitions in life, divorce being a primary one. And our marketing team saw a way to help supercharge that and launched a sisterhood summit that was put on. It was wildly successful. It was very local. Multiple clients came out of that. And now we're looking to expand that. Do we make that more national? Do we do that every year? So there's numerous examples like that.

I like that idea that you're thinking about of create your client persona. So if you're an advisor right now, go home and make that list of what that persona is for your ideal client and then start building your brand around it. And then the outreach comes almost secondary to who your ideal persona is.

Yep. Spot on. And that outreach isn't just direct to clients. It's okay if it is. If you have a CDFA and it is— you're focusing on women going through divorce, then there are COIs very clearly, right? Attorneys or CDFA who practice just as CDFA, right? Where you get fantastic referrals. And what is your strategy for approaching them as COIs? So it's really a multi-pronged approach. But it exactly as you said, it starts with know your, your persona, your target persona.

You're listening to Barron's Advisor, The Way Forward: Next Generation. We're going to take a short break. Stay with us.

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Welcome back. Let's get back to it. We talked a little bit about technology, and I want to pivot into that. Yeah. Artificial intelligence is something that our industry has talked about quite extensively. It means a lot of things to a lot of different people. So Let's just first start there. What does artificial intelligence mean to you, your company, and how are you approaching it?

So I'm focused on generative AI, right? The ChatGPT launch and everything that's come from it. We have an advisor summit that we do every year. I'm leading a panel there on AI, and I have panelists who are from our firm. There's an advisor, there's a member of our investment team, our chief compliance officer as well, because of course that has to be part of this.

Compliance has to be.

Absolutely. On just practical use cases using the tools that we have. And I've spoken with some advisors that have said on a busy day of client meetings, their use of AI has saved them up to an hour.

Can you give me an example of that? So what— give me a practical example that an advisor can go home right now and use AI and it's not, you know, specific for Wealthspire, something that maybe they can, they could do.

Sure. So as long as it's approved by the firm that you have these tools and capabilities, but Microsoft Teams, has Office Copilot at this point. Zoom also has an AI tool that's similar to what you would get in Teams, but getting meeting notes and if you transcribe the meeting, of course, with client consent, the immediate benefit is, of course, you get summarized notes. Now, can it make mistakes? Of course, but so can you as a human, right? Like if you don't have that tool, you there's errors of omission. You're trying to multitask. You're focused on engaging with your client while also trying to jot things down. I have not heard anyone say I started using it and it's not helpful. It's always, oh, this is 90% there. And because I was more focused on engaging with the client, it's very easy to go through and just edit those notes.

You should always edit your notes anyway.

Absolutely. From there, you can start drafting an email. And again, it's 85% of the way there, and you can give it instructions for how you generally write your emails and the kinds of tones. That alone is a ton of time.

So you mentioned something about client consent.

Yeah.

So how do you— how would an advisor approach that conversation with a client? Let's assume they might be hesitant to use AI, might be a little bit older from a demographic perspective. How would you get over that hurdle as an advisor?

We frame it as, look, a transcription is— think of it as someone who's taking notes throughout this conversation. Everything that we're doing is above board, right? There's no shady activities being discussed. And think of it as it's just helping me as your advisor to take notes. And we really haven't seen a lot of client pushback. We also highlight that it helps us focus more on the conversation, that it prevents things from falling through the cracks. Now, some of the tools allow for that type of meeting summary without needing to actually transcribe. So that's an option as well if there is sensitivity. But I find that video is very different, right? I mean, advisors are— it could be a very emotionally heavy topic. And if someone's going to have those emotions out and really be vulnerable and speak about these things, thinking that you're being videotaped about it, that can be very off-putting. But I think if it's just a transcription and it's not a person—

Especially if someone's talking about their divorce. Absolutely. Or something that's pivotal in their life that changed their financial plan.

Absolutely. So we find there's a very big difference between video recording versus just a transcription and note-taking.

And you said there's no client pushback. Has there been any advisor pushback and how have you come over those hurdles as well?

Sure. I think it's natural for any type of change. I think there's elements of, well, AI oftentimes— haven't you seen the article where it made up references to, you know, a law firm and it can get things wrong? I think that's probably been the biggest source of pushback. And again, my response to that would be we shouldn't be underestimating the degree to which we as humans also get things wrong and really view it as if you use it the right way, if you use it as a tool, and if you are never going to just take it verbatim and send it right, which no one should ever do with anything that's AI-generated, than, you know, just to think, frame it in a different way. And then of course, I always try to get out of the way, right? I'm not an advisor. So I've, I learned a long time ago that the best way to help convince an advisor to adapt something new is have them speak to another advisor who has done it successfully. So I try to really get out of the way of these conversations.

How do you stay up to date on the new advancements that are happening in AI? I mean, to your point, every other week there's a new type. How do you stay up to date and then how do you go through the compliance aspect of it?

First thing, any tool that you are using must be approved by your compliance and your cybersecurity department.

You were prepped well before this.

Like any, any tool, I think it would be very dangerous for any advisor to say, oh, I read about some great AI in the journal today and I'm going to download it on my phone and I'm going to bring it to a client meeting and use that to transcribe. That's a huge no-no. And you don't know where that information is being stored. For what we use through, because it's Microsoft and we're a Microsoft shop, we know exactly the data policies, we know that when we are using the chatbot, that any kind of PII or client information that's in there does not go out. It might be pulling things in to help respond to questions, but our data is never leaving the security of— it's not sharing it with the data model in order to make it better. So I think advisors have to be very, very careful about that. And so you'd really start with the tools that are available to you. I think you find a group of people that are really passionate about it. I spun up a Teams channel with 10 people that we called AI Innovation. I saw that they were engaged in it and learning because no one person can— and I'm not going to understand all the use cases because I'm not an advisor. I want to hear from the advisors that are using it. And so the 10 of us would chat about it. And now we're about to launch a more formal AI Innovation innovation committee across the firm, probably about 10 people where we're coming together quarterly formally, but of course informally chatting all the time. And I'd say we're focused more on how do we take our existing AI tools, which are constantly evolving. Like, I look at Copilot now versus a year ago, and it is a huge jump. We're focusing on how do we get the most out of that and what use cases can we use rather than trying to stay up with every single new AI that's being launched.

AI is changing, you know, constantly. How do you see it changing the advisor role in the next 5 years? And I'm thinking of, you know, that young advisor, they initially learned sitting there taking notes. Now that aspect is taken away from them because AI is doing it. You know, AI is going to be able to do some of the computations and some of the financial plans going forward. Some of these more tactical or rudimentary skill sets that advisors once did to learn sort of the ropes before stepping directly into that client relationship is, is being kind of taken away through AI. So how do you see the advisor role changing? How do you see the training changing if those things are not available anymore?

Yeah, so I actually view it Differently, I think for an advisor associate, advisor in training that is learning through taking notes, I'd say you're actually doing a disservice in certain ways because the subject matter expertise is critical and advisor associates need to gain education and expertise in these critical areas. However, you can't overestimate the importance of the EQ and interpersonal side of being an advisor and the art of being an advisor. So look, it's, it's not rocket science to run a financial plan and figure out that a client needs to sell their house, right? We have people straight out of school who can successfully run that plan, but delivering that successfully to a client in a way that they actually heed your advice, listen, how you work them through it. I mean, that's an art form. So taking notes doesn't help with that. If the notes are covering the basics of just what's being said and you as the junior advisor can focus more on how the lead advisor in the room is actually engaging, right? What is their tone? When do they choose to introduce things, right? How do they do it? What are they doing, right? Like, how are they connecting? How do they mirror their clients? If you could spend more time focusing on that, I actually think that's a much better set of training. So that'd be one response. The second would be, I think AI, there's a lot of possibilities with training on technical expertise as well. So you can use AI to, and we've showed this in some of our sessions, Build me a 20-question quiz around, you know, qualified small, like QSBS policies and put citations for everything, right? Which if you're using the right types of systems, it's not gonna make stuff up and will actually cite where you could go to articles. There's a lot of possibilities there. And it could also help with how you appear in Zoom meetings. There's feedback you could get Did you talk too much? Did you— were there certain filler words that you said too frequently? And actually, in getting ready for this podcast, I knew I wasn't going to be using any PII. So I went to ChatGPT. You can now talk to it, which is wild if you haven't tried it. I told it I was going on the podcast. I told it what kind of questions I was going to be asked, what the format was going to be. And I said, please, play the role. And Allison obviously did not hold a candle to you, but it was really helpful and it was pretty good. Like, it was a little scary how good my robot, you know, interviewer was. And then I had all the notes that came from it, and then I could ask it questions about the notes. What would be the length of my response? Like, So there's so many ways that people can use AI to actually help train themselves as well.

I mean, I feel like I'm going to get replaced now. That sounds— made me a little nervous right there. Well, thank you for coming here today. I appreciate your time.

Thanks for having me. It's been fun.

The production team for Barron's Advisor: The Way Forward: Next Generation is Ellie Ismailidou, Rebecca Bisdale, Paul LeBlanc, Kinga Rojek, Joseph Lesby, and Alexis Moore. Melissa Hagerty is the executive producer. Jenna Mathis is the Director of Programming for Barron's Advisor Programs. Greg Bartolus is the Editor-in-Chief of Barron's Wealth and Asset Management Group. We'll be back soon with another episode. Thanks for listening.

This podcast was brought to you by Wells Fargo Advisors. Looking for a firm your clients can't outgrow? Wells Fargo Advisors offers financial advisors full balance sheet solutions with wealth planning, investment products, banking, and lending that meet the needs of affluent to ultra-high net worth clients. Build your practice your way and on your schedule with independent and employee model options designed to meet your needs today and tomorrow. Learn more at joinwfadvisors.com.