ETF Edge - Crypto & Reddit Trading Risks

Episode Date: June 21, 2021

CNBC's Bob Pisani spoke with Ric Edelman, founder of Edelman Financial Engines – along with Jan van Eck, CEO of Van Eck Associates. They discussed the #1 RIA in the country, the current market environment, meme trades and the state of investing – plus, going big on crypto … are the odds of getting a bitcoin ETF this year lower now in light of the SEC and new regulatory regime? In the 'Markets 102' portion of the podcast, Bob continues the conversation with Ric Edelman from Edelman Financial Engines. Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.com for information about our collection and use of personal data for advertising.

The ETF Edge podcast is sponsored by InvescoQQQ, supporting the innovators changing the world. Investco Distributors, Inc. Welcome to ETF Edge, the podcast. If you're looking to learn the latest insights on all things, exchange, traded funds, you're in the right place. Every week, we're bringing you interviews, market analysis. We're breaking down what it all means for investors. I'm your host, Bob Fassani. Today on the show, we'll catch up with the number one registered investment advisor in the United States.

We'll get his take on the current market environment, meme trades, the state of investing. Plus, we're going big on crypto. Are the odds of getting a Bitcoin ETF this year lower now in light of the SEC or higher in spite of the new SEC regulatory regime? Here's my conversation with Rick Aedleman, founder of Aedelman Financial Engines, along with Jan Vaneck, CEO of Vanek Associates. Jan, last week, we've got to start with this again. The SEC again delayed that Bitcoin ETF. They now have a thumbs up or down date. August 3rd, I think, is the next one. Gary Gensler, the head of the CEO, has already expressed concerns about, concerns about fraud and manipulation,

even though he taught cryptocurrencies at MIT. Handicap for us, what's going on here? Are we going to see a Bitcoin ETF this year? Well, it doesn't sound like the chairman is putting it high on his agenda, so, you know, I don't have any inside information on this, but, you know, we've been through this application cycle, So they don't need to really make a decision in August. It's sort of an artificial deadline, as was the one last week.

So it is what it is. Other regulators are bank regulators internationally, the OCC, a lot of other regulators are looking at how banks can get involved. I would say that's interesting news. State Street has announced they've created a new division for digital assets, but the SEC is just not moving fast on this. Rick, maybe you can weigh in on this, number one, on Bitcoin ETF. But more importantly, you're going to be leaving your post, as head of Edelman Financial Engines.

Big news last week. I want to talk to you about that a little bit more. But you're going to be expanding the work in cryptocurrencies with the Digital Assets Council. You founded that three years ago. But tell me about blockchain and digital assets. What are you telling financial professionals about where that fits in with their portfolio? Well, it's the future. This is the first new asset class in 150.

years and it's not going away. And I think over the next couple of years, it'll be a routine part of any diversified portfolio. But you can't do that until you understand what it is and how it works and how you fit it into an asset allocation strategy. What are the investment opportunities, etc.? As Jan points out, it would be so much easier and simpler if there was a Bitcoin ETF. That's not here. And it's not going to be in the foreseeable near future. So you can't continue to sit on the sidelines waiting for it because by the time the SEC says yes to it, Bitcoin might be $100,000. You're going to miss out. So you've got to move on with the investment opportunities that do exist.

Yeah, it's a bit of a, it's amazing the crypto community. They sort of levitated themselves into believing somehow that because Gary Gensler taught cryptocurrency at MIT, therefore he gets it, therefore he's going to approve of it, but that logic is specious. Just because you teach about World War II doesn't mean you liked Hitler. You know, I'm not suggesting the SEC hates Bitcoin or the Gensler does, but the point is his knowledge of it is perhaps not necessarily equal to immediate approval of it. And as John points out, the SEC has more important.

urgent things to deal with. It's just not necessarily number one on their to do list. Yeah. Jan, if you have more to say about Bitcoin ETF, go ahead. But I just want to move on and ask you about commodities. You're one of the great expert in commodities. We've had a big run-up in commodities this year. Oil, of course, copper, aluminum. They've all topped out, though, about a month ago here. Your thoughts on commodities right now? Yeah, yeah, yeah. I mean, I think this commodities is not a short-term blip. I mean, if you have commodities in your asset class. I think the way to think about what's happening now is part of at least what we think is a five-year trend. And it's sort of like the beginning of the 2000s.

You had a decade-long bear market, which means there's a lot of contraction and supply. Basically, capital is not going to commodity producers. And at some point, you just hit rock bottom. And, you know, probably rock bottom was oil futures hit negative prices last summer. And so we don't think, you know, commodity, the financial markets move second to second. Commodity production takes years. A copper mine takes five years to get going. So it doesn't matter how much we talk about it. We do think that this commodity trend is not just a return to work trend. We think it's part of a five-year supply and demand cycle. And so it's not going away. And we wouldn't be surprised if we saw a $100 oil price. How fast it gets there is anyone's guess. The fact

that it's paused a little bit is fine. That's what happens in financial markets. You need to shake out some of the weekends, and it had overextended anyway. A hundred dollars? What makes you think it's going to go to $100? What's going to drive it to $100? I just think we have to move away from these old paradigms and old limits. It passed $100 in the last cycle, so it certainly can get there again. You've had a lot of rationalization, a lot of merger activity with oil companies, there's not that many base metals companies. You have more demand now coming for green metals, right, which is the electric vehicle trend.

And you're just not going to have, Wall Street is not letting companies add to supply quickly, even if they could. The way I think about it is these energy companies need to earn back their way into investor portfolios by paying dividends. This is a theme that we've been talking about for the last several years.

you know, they're probably not hyper-grossacks. You know, $100 has kind of startled me a little bit there, but I don't know if you have any thoughts on that. Is commodities an asset class for the average investor? We always debate it whether it should be. And should you, is there, how would you recommend or what are you telling your clients they should do with commodities? Yeah, Bob, if you believe in diversification, then commodities is an asset class that you ought to consider. You know, you don't have to like it. You don't have to like all the asset classes in your portfolio.

That's one of the fundamental arguments for Bitcoin and digital assets. I don't care if you like it. You already own assets in your portfolio you don't like. That has nothing to do with owning the asset because it adds diversification, which lowers the risk of the portfolio and provides the opportunity for outsized returns. So, sure, you should own a little bit of oil and gas and natural resources and precious metals and commodities as part of a diversified portfolio. So let me just segue a little bit here about commodities and inflation in general. What are you telling your clients about inflation right now? What's the right way to think about it?

Are we going to return to modest inflation of 2% or is higher inflation somehow stuck in the system and what would bring it down again? Well, I think everyone's pretty much resigned to the fact that there's going to be a return of inflation. As the economy heats up on a global basis, and demand heats up and we're moving more and more consumers worldwide into the middle class, they become literally that. Consumers. And as there's more demand for products, there's more need for raw materials and it gets more expensive to manufacture. manufacture, produce, deliver, supply chain issues. So it's reasonable to expect that we'll continue to see an increase in inflation. But does that mean it's going to be debilitating in the economy?

That it's going to destroy corporate profits? Is it going to wreck the economy? I don't know that it will, and I don't know that that would be a long-term scenario. So, yeah, there will likely be inflation that we're not used to. Don't let it freak you out. John, what about you? We're already seeing lumber and copper prices come down rather notably. It is supply and demand.

the Chinese are aggressively out saying we don't want these prices too high. Now you've got somebody on the other side, a government, the largest consumer of commodities in the world, basically saying he doesn't like the prices this high. Are we stuck with permanently higher levels of inflation? Well, what we do, we try to differentiate between commodity price inflation and wage inflation, right? Lumber will go up, lumber will go down. Commodities themselves are not a big expense item for any business. business, for most businesses, I should say, or for most consumers. But what does matter to sticky inflation is wage inflation. And so that's the raging debate, I think, that the markets are having,

but I don't think we'll know until 2022. Of course, there's a one time now everyone's trying to get more workers to their businesses, whether it's airline pilots or waitresses or what have you. The real question is, our expectation is going to keep rolling through the economy in 2022. or not. There's a big debate. You know, the other side of the debate is, no, technology keeps driving costs down, and we'll be back to this kind of tech-driven world in 2022, and people will forget this return from work cycle. So that's why we differentiate between commodity price inflation and the sticky wage inflation. He does have a point about wage. I mean, look, lumber, you know, if I'm a home builder, he's been furious about the price of lumber, but it's

coming down, and now he doesn't have to charge as much as it comes down. because of the home. But it's, when you're paying a guy, pick a number, $12 an hour, and then you raise it to $16, it's a lot tougher to say, oh, now you're making $12. You're not a lumber. You're not a piece of lumber. Absolutely right. So it is going to be an issue.

And of course, let's remember that's only one part of the Troika. In addition to inflation, you have related to that interest rates and tax rates. So all three are combining to create this perfect storm. Talk about triple witching that we have yet to face. So all of this is coming. We know it's coming. We just don't know when, how much, and on who it's going to hit, and how long it's going to have an impact. I know we're moving around a lot, folks, but we've got two big thinkers here.

So rather than be very, very nerdy with them, I want to be on the broad side with this. I want to get your thoughts on the whole Reddit, GameStop, Robin Hood thing. I get so many emails from old CNBC viewers saying, Bob, whatever happened to those fundamentals you use to talk about? Do they not matter anymore? What are you telling your clients? And again, folks, this is the number one registered investment advisor in the United States. What are you telling them about this? We're seeing a brave new world right now, Bob.

We have the democratization and the demonetization of Wall Street. When we grew up, we're both old white men, white-haired. When we grew up, you needed a lot of money to buy stocks, and you paid large commissions, 3% round-trip commissions to buy those stocks. Today, you can buy stocks commission-free, and you can do so on a fractional basis of just $5. Anybody anywhere literally can engage in the stock market, and that's what the Reddit chat rooms and message boards are facilitating with outfits like Robin Hood and Acorns and now virtually every discount broker in the country. So people who have no investment experience are now engaging in massive ways, and they are proudly proclaiming they don't know what they're doing. But in this past year, they've been creating massive increases in price.

They think this is how the market always works. Fundamentals, they don't even know how to spell it, let alone define it, and they don't care. so far, they've been proven correct. But this party's going to come to an end because the rest of us, with experience, understand how this game works. There do need to be fundamentals. There needs to be a sound basis economically for the pricing to be what it is. This party will end. A lot of it is being, frankly, a pump and dump scheme, in my opinion. Are you concerned about that? Are you concerned that there are people who are, when you say pumping up? You mean traders that are pumping this up? Not traders, influencers. You've got people who

are sending out tweets, some of them extremely well-known individuals who are running, some of the biggest billionaires on the planet, very well-known, who send out a tweet and then poof, the stock or the asset like doge-coin, doge coin, skyrockets, and a lot of people are buying at the highs. And then there's another tweet saying, get rid of it. So I think that we're seeing massive market manipulation. A lot of folks don't know what they're doing. This is going to end very badly, and a lot of folks are going to get really hurt. Yon, weigh in on this. I know you're a guy covers commodities, but you're an educator, too. You have wonderful stuff on your website educating people about investing in general, and you're a historian yourself.

He's got a point about the fundamentals. Ultimately, fundamentals, of course, matter, looking for the intrinsic value of a company based on cash flows. But short term, if enough people are investing on momentum, why would they care about fundamentals? If they're just trying to trade intraday or for a few days, you know, there's no reason to think the stock should trade on fundamentals or should price on fundamentals. And yet, long term, what Rick is saying makes some sense. Eventually the momentum people go away or the noise traders, whatever you want to call them, go away. And the stock should revert to its more fundamental value. Or are we just crazy?

I think my main – I agree with what Rick said. I think the main difference is I think that in the long term, the market will cure this. this problem. There's no doubt social media is much more important in our lives. And there's some dangerous things I'm actually vacationing here in Wyoming. And I ask every other person has a crypto portfolio since this was one of the crypto-friendly states. So there's no doubt I would include crypto in that kind of a little bit over-momentum hype. However, I just don't know how you can regulate it. And I would say as well, we have a we launched an ETF that sort of track social sentiment and it's done really well. It's outperform the S&P. The index has been around for six

years. It rotates between value and growth. So I'm not sure there's a there, but so far the evidence is, you know, and it doesn't chase the short term smaller cap stocks. It only invests in stocks over $5 billion. So I think there is something to social sentiment, but separately there's a lot of bad behavior. And hopefully people don't have too much of their savings lost in this kind of frenzy. And so, yeah, and Israel, we cannot regulate this away. We have to educate this away. And that's what I'm doing at the RAA Digital Assets Council. We are creating webinars. We have webinars this month, Bob, coming up on how to invest in your IRA in digital assets, understanding the volatility of the marketplace, and even Bitcoin mining. People have heard about this stuff.

They have no idea how to do it. And we've launched the first ever certificate in blockchain and digital assets for financial professionals so that you can get the knowledge you need to understand this landscape because it's new and totally different. And by educating people to understand how this works, both the technology and the investment opportunities, that's how we'll enable people to protect themselves against the idiocy that we see pervasive in the marketplace. Yeah, it's funny. First of, how can people partake in the R-A-D-A-D-A-C-com? R-A-Dac-A-C-com. R-A-D-A-C-Delman. Inside joke about the famous advertising, just to make sure you know how to get his name.

Rice Delman. Yeah, nobody knows how to spell Rick Edelman, so Rice Delman. But you've got a good point about, I don't know anything about whether there is any pump and dump. I know that Gensler himself has said, we are going to be investigating this as part of the overall look at GameStop Reddit slash Robin Hood. We are going to be looking at whether there were any attempts at Mark. And again, we have no information at all on this. You know, you heard from Rick. It looks like a duck.

It's a source of concern, right? If it looks like a duck, quacks like a duck. But hold on. But the trouble is hedge funds trade on momentum. There's ETFs that track nothing but momentum. So you can't just blame individual investors because they're following a momentum trading strategy. That's not fair, right? Yeah.

No. And I would also say that people like Yan and me who are focusing on the technology and how this is transformative for global commerce, the blockchain technology and the related corporations, and tokens that are being developed as a result of that tech. This is revolutionary, and it's wonderful investment opportunities for long term. That's totally different from the speculators who are literally trying to get rich quick based on a message board over which something they have no idea what they're talking about. I want to move on and ask you about silly investment advice.

You are, again, the number one registered investment advice here in America, and you have said to me repeatedly over the years, we've been friends for 15 years, folks, there's an amazing amount of silly investment advice out there. Give us an example of silly. What's bothering you right now about what people are saying or some people? Well, I would say two things. We've been dancing around them both here so far today. Number one is people trying to get rich quick on something new based on an influencer's comment on something or other,

and they're just trying to manipulate the marketplace, and they're looking, they're taking something very superficial and running with it to extreme degrees. We saw Ronaldo move two bottles of Coke off the desk, and all of a sudden, Coke falls 6% in value. That's silly, and that's one illustration. We see a tweet from Elon Musk or Mark Cuban, and all of a sudden, markets move. That's silly. On the other hand, we're seeing people saying, I don't understand this. Those old white guys you mentioned a few minutes ago, I don't understand what's going on. Therefore, it makes no sense, and they're sitting on the sidelines just because you don't get it.

That's your cue to go learn because you might be missing out on something. But, Jan, isn't it also the opposite true? I don't understand it. Therefore, I'm going to listen to Elon Musk or Mark Cuban. I don't know what's going on, but they must. Therefore, I'm just going to follow them. Now, of course, we don't know what they're doing. They're not telling us what their positions are, whether they're just leading everybody.

They don't know. We don't know. You've got Mark Cuban who touts a particular digital asset at $60, and a couple of days later, it's worthless. So just because he's tweeting about it doesn't necessarily mean he's right. Can I just make two comments? All new technologies from the railroad, you know, through the cars and everything, attracted a ton of speculative capital and the prices went up too high, but it attracted business activity towards a space that had a lot of technological promise

and ultimately a huge impact, positive impact on society. So we're just saying that, I think, now with crypto, assets and that I like. I will just say one last comment. The balancing between growth and value stocks has actually been very orderly over the last three to six months. And so I'm very happy about that because growth, people have gotten way off-sides growth. And I don't know, Frick has a comment on that, but that was something that was worrying me about six months ago. Well, thank you for your comment on the history. Yon's a great historian of the markets. He's got some wonderful educational materials up as you do. But he's right. There's a whole behavioral

economics part of this, is that new technologies attract excess enthusiasm. And in some cases, fraud and speculation. We saw it with the telegraph. We saw it with the railroads. We saw it with the radio. RCA was the internet of the day. We saw it. But that's great for the economy.

It's great for society and humankind. That's not necessarily great for the individual investor who bought high and sold low. So you need to protect yourself within this opportunity, within this ecosystem, so that you are personally benefiting and not merely to the benefit of society. I want to ask you one last point that you've been very vocal about, and that's about the whole retirement crisis. I call it a retirement crisis, and I'll tell you what I mean.

Vanguard just had its How America Save's Report out in 2021. They're the number one provider of 401K plans in the United States. Wonderful report. Great reading. The average 65-year-old has $250,000, $25,000 in his 401K. That sounds good. But the median, where half have more and half have less, and that's what you want, to look at is $82,000.

The average 65-year-old in a Vanguard retirement, 401K, has only $82,000. I think that's a sign that there's a real problem out there. You've been doing a number of things. I guess the question here is, what can we do? You proposed trying to get people to save more from the very beginning. You had a very interesting proposal, a savings bond program for newborns as a way of to at least start getting this people to save more when they're young, not when they're 65. Right. It's called Rise, the retirement income security for everyone proposal. You can learn about it at

we can rise.com. And it basically takes advantage of compound growth. In America, our retirement system is designed for people who are working. You can't join your 401K until you have a job. And then you've got to work for a boss who offers a 401K. Most workers don't join that 401K until they're in their 30s. So we grow and compound money for 20 or 30 years. We squander 30 years of compounding. So why not let people start saving for retirement when they're born? And that's what the rise proposal does and allows people to save, and by doing this, it will more than double the amount of retirement income Americans will get and eliminate income inequality in America. I'm hopeful that we're going to have creative ideas like that.

We've already see we're approaching a Social Security crisis. Congress isn't going to do anything until the last minute. It's running out of money. The trust fund, it's even earlier now due to the pandemic, they're projecting now that the trust fund will be to exploit, will be depleted by 2029. That's in eight years. And at that point, if Congress takes no action, Bob, benefits are going to be cut 25 percent. This is a real retirement crisis. Yeah. I know folks that we have been all over the place, but I rarely get two thinkers like this together. So then rather than focus

on the idiosyncrasies of the ETF business, I wanted a broad, high-level discussion. I promise. We'll get nerdy on ETFs again. Now it's time to round out the conversation with some analysis and perspective to help you better understand ETFs. This is our Market's 102 portion of the podcast. Today we'll be continuing the conversation with Rick Aedleman from Aedleman Financial Engines. Rick, thanks for staying with us. I wonder if we can get your take on the taxation situation. I have gotten an inordinate amount of emails from viewers concerned about the potential for higher taxes in 2021 or 2022.

What are you telling your advisors? How should they be thinking about this? Well, unfortunately, we have far too little information to know what the new taxes are going to be, and therefore it's making it really hard to do tax planning and even investment strategy related to it. That said, there are two primary themes that we think are realistic. Number one, it's increasingly unlikely that we're going to see new tax law prior to the elections of 2022 because no politician wants to go into an election or a re-election with tax increases that are fresh in everybody's mind. So it may be delayed.

Second, any tax increases that occur, Joe Biden has already said, they'll likely be retroactive to when he first started talking about his tax increases, which means it's too late to plan. You should have sold in March. And since you didn't to get the lower capital gains rate, you may very well be stuck with whatever capital gains rate the new law is going to have. So you're going to have to likely grin and bear it. Isn't that an additional negotiating point, the retroactive part?

People who might agree to it might refuse to make it retroactive. not necessarily going to happen. All that is subject to the give and take in terms of when does the law get passed and what is the date of inaction. They may defer the date of inaction to after 2022 for exactly the reason you're citing. We don't know. We also don't know what the new tax rules are going to be, who are they going to apply to, which taxes are going to rise by how much?

You know, when President Biden says nobody under $400,000 of income is going to have a tax increase, that's a little disingenuous. He's probably talking about the income tax. But what about the capital gains? tax? What about the step-up and basis? What about the Social Security tax? What about the estate tax? There are so many different kinds of taxes, it's unlikely that people under $400,000 will be immune to these increases. And what about the right investment vehicle for older folks like me? I've gotten an anordinate amount of emails on this as well from people who say, okay, most of my money's locked up in 401ks.

If I start taking it out, I'm in a higher tax bracket now. Should I take some out now and set up a Roth IRA? money and turn it into a Roth IRA? I mean, is there any advantage to moving from one to the other at this point? For most people, no. The amount of money you would withdraw from the account and not increase your current tax bracket is so low that you're not going to be able to move much to make it a material movement. Second, any money you do move will be subject to taxes right now, but think about it. What is your age?

If you're only in your 60s or early 70s, you're going to be alive for another 20 or 30 years. Why accelerate the tax liability when you could spread it out over the course of your lifetime, by which point for most of your life, Joe Biden will be gone, even if he's reelected? And you'll be making less money probably when you're 80 than when you're 65? I would not make such a draconian step. Chances are it'll hurt you more than help. The 60-40 stock bond ratio, I'm 65 now. Does that make any sense anymore, or even own bonds that are your age? Does that make any sense? It makes a lot less sense today than it has over the last quarter century. But that's a short-term thing.

If you are continuing to be a long-term investor, meaning you've got 20, 30, 40 years of your time horizon, this two shall pass. But for the moment, I have to agree with you with bonds paying 0.0. You have to wonder what the point is of putting a lot of money, 30, 40, 50, 60 percent of your assets into bonds. And the longer those maturity dates, the greater the interest rate risk. When interest rates go up, you can expect significant declines

in bond values in the marketplace. And if you chase higher yields, you're going to move to high yielding and therefore speculative junk-rated bonds. You're taking huge risks. So, yeah, you have to rethink the 60-40 portfolio if your time horizon is less and your risk aversion is high. Yeah. I don't quite get it myself. I mean, the real return on a 10-year, inflation adjusters, minus 0.4 percent right now. I don't understand. I understand ballast for your... But that seems like a bad investment. We have a high-net-worth client who just bought a 30-year, three-month treasury.

I'm sorry, a $30 million, three-month treasury, and earned $5. On $30 million, you have to say, what's the point of this? Yeah. We've talked before about retirement and the difference between baby boomers and millennials. Generally, you've noted millennials are saving more. They're not buying houses at the same rate as the baby boomers were, and they're getting married later. And they're having children later. And having children later.

Is this changing at all? I'm wondering particularly about the house buying part because it seems like there's a bit of a house buying frenzily going on right now. There is, but those millennials are largely getting shut out because the housing prices have skyrocketed, as we know, and they don't have the down payment of 20 percent needed to avoid private mortgage insurance. They don't have the cash needed for an all-cash offer. and they don't have the money needed to make these huge monthly payments based on these outsized home price values. So this is a crisis in America. We have a huge housing shortage, and we're finding younger Americans being priced out of the market literally.

Meanwhile, rents are beginning to rise as the economy recovers, and it's a double squeeze. So it's a problem. The good news is millennials are far more focused on their finances than their parents were, the boomers, at their age, due to the fact that they're witnessing their parents' experiences and that of their grandparents. So they're paying more attention to their personal finances. That's great. They're saving more, that's great. They're more likely to be invested in the stock market. That's great. Joining the 401k, that's great. The problem is they have a lot of headwinds that they're dealing with, not least of which made worse by the pandemic.

Yeah. And staying with the millennials college, you've called it the college scam. It is. It's a total rip-off. And tell me why it's a college, I mean, other than the crushing debt that you have when you get out, That's the issue. It is the fact that when the government increased the amount of student loan money available, so on a no qualification basis, anybody who wants a student loan can get one regardless of your ability to repay it. That allowed students to say, yeah, give me $100,000, no problem, and that allowed colleges to raise the price of tuition room and board because there was a huge market opportunity for it. As a result, students are now spending six years to get a degree, not four, one-third of college freshmen drop out, less than half graduate in six years.

graduate in six years, and the average debt of those students are $30,000, and for grad students, it's $100,000. And they have little ability to repay these debts in any meaningful way. It's contributing to their problem of being able to save, save for retirement, save to buy a house, save to buy a car, get married, have children, and all of this is having a huge crush of crisis on them financially, and the broader economy as a whole. So what should we do about, say, student debt, number one? And number two, what's the alternatives? Do we send all these kids to community colleges? Did they find another way to?

Yes, find other ways to get that degree. Recognize that today getting a college degree is all about leading to an opportunity to earn an income in a career. So you have to shop for a degree the way you shop for a car. Find the best deal. Go to community college for two years. Cut the cost of college in half. Take high school courses that qualify for college credit. Further reduce the cost of college.

Go to employers that will pay for your degree. Disney, Walmart. Starbucks and others will all pay for your college degree. Go into the military, they'll pay for your college degree. You need to look very carefully at the school you're going to, the degree you're going to obtain, and how you're going to do it so that you can emerge from college relatively debt-free so that you're not saddling your 20s and 30s with regret.

I want to close by just asking you some parting thoughts. You are leaving Edelman Financial Engines at the firm you founded. founded. This is a big operation, and you're the reason it's a big operation. You manage 270 billion in assets, 1.3 million clients. You got 340 advisors. What prompted this decision to leave the farm you found it? I'm 63 years old. My wife and I founded this business 36 years ago. It's our baby. It's been our life. And we recognize that with changing longevity, you know, I'm barely in middle age now. Life expectancy for me, in my 6th, is probably age 100 to 120.

So am I going to keep doing this for the next 20 or 30 or 50 years? And at what point, when I do leave, what impact will that have on the business? Our firm needs to demonstrate that it can operate successfully and serve our clients effectively without me. And I'm confident that they can do that with 1,500 employees. We've got a robust management team and a wonderful set of planners and staff. I'm confident that they can do it without us. And it's important that we show others that you can develop a life in your life.

your next chapter that you shouldn't have your self-worth tied up in the organization in the company you work for, and we're going to lead the way by example. We have several other businesses that we've created, including the focus on digital assets with the RIA, digital assets council, reedac.com, to teach financial professionals and consumers about blockchain and digital assets because it's the next big thing. It's going to transform global commerce. Most of us know little about it. And so Gene and I are focused on that, public policy to improve retirement security. We have a lot of emphasis on Alzheimer's. We've built a couple of companies to attack that scourge in American society. So we have a lot to keep

us busy. It's a big decision. It's been difficult, but we are confident that now the time is right. Well, other charismatic founders have also moved on quite successfully and still remained associated. You're still going to be the largest shareholder in Edelman? Yes, and I'm still going to stay on the board and still provide oversight. I'll be a strategic advisor to the firm. So we're not walking away entirely, but my day-to-day role will be over at the end of the year. And registered investment advisory industry, it's growing rapidly. I go to the ETF show every year. I see more new fresh faces in general, leaving the old wirehouses. What kind of future do you see in that industry?

The advisory industry is going to grow by leaps and bounds, because as Americans age, 10,000 people hit age 65 every day in America. It's already the number one demographic for wealth in this country. As life gets more complicated, the need for financial advice grows. It's easy when you're 25 to go open an account at Robin Hood and trade AMC stock or doggy coin, doge coin, whatever you want to call it. It's easy to do that when you're in your 20s when you're dealing the few hundred bucks. But when you're in your 50s and 60s and you've got a spouse, a house, and kids, and a couple of dogs, Life gets a lot more complicated and you've got serious decisions to make. And although there's a lot of information out there, the key is to analyze that information and determine the best course of action for you.

So the advisory industry is severely understaffed. There aren't enough advisors. It's a huge growth business. And that's why I'm very confident that Edelman Financial Engines will do very well and others like it. I have always said, I'm a Jack Bogle disciple, as you know, Rick, and I always go towards low cost. Right. even for active management, go for low cost. It's that higher cost that eats away at the alpha of any of this.

But if there's anything worth paying for, it's decent financial advice. If you have to pay up for something, that's what you ought to pay up for. And even Jack Bogle, as parsimonious as he was, always said that as well. Yeah, if you think that your financial advisor is only of value to you in the investment area, you need a new financial advisor because there's taxes and insurance and mortgages and retirement planning and estate planning and college planning that have nothing. to do with the investment strategy, but which color are the results that you're going to get overall. Rick, it has been a pleasure being your friend for the next 15 years, for the last 15 years.

I hope, of course, we remain friends for the next 15 years. I'm looking forward to it. I hope I can continue to draw upon your expertise and your new field of endeavors. Please stay in touch with us, would you? Thank you, Bob. I look forward to it. And thanks so much for letting me be your first guest here back in the New York Stock Exchange. It's been a great fun to be back.

It's been back a month, and the NYC is much like the rest of the country. It's slowly reopening, and the subways are getting more. crowded here in New York City. Rick Aedleman, head of founder of Aedleman Financial Engines. Thank you very much for joining us. Thanks, Bob. Investco QQ believes new innovations create new opportunities. Here's the greater possibilities together. Learn more at investco.com slash QQ. Investco distributors, Inc.