Capitalism is beautiful. Young prospects might disagree

Financial advisers should have this crucial conversation with next-gen clients

Dec 11, 2017 @ 3:55 pm

By Warren Stephens

Capitalism is one of the greatest things that ever happened to America.

This isn't just an idle thought for me. It's why we at Stephens launched the ongoing This Is Capitalism multimedia experience two years ago. Yet many Americans, including an outsize number of young people, worry that capitalism has run its course.

That's unfortunate, since capitalism is what gives us so many of the advantages we enjoy in the world. Comforts of home, convenient services and innovative technology all stem from capitalism. Same-day home delivery of everything from clothes to furniture to groceries? Capitalism. Smartphones, virtual reality goggles and social media? Again, capitalism.


As financial advisers, you know this. But you cannot take it for granted that the next generation of clients will too. Study after study shows that young people who inherit wealth from the older generation are at least as likely to leave their elders' financial advisers as stay with them.

Often, the reason is that the adviser failed to reach out to the next generation early, establish rapport and communicate that the adviser truly understands and cares about the next generation's values. In fact, those are the same reasons young prospects who build their own wealth choose to reject advisers.

(More: 9 ways advisers can attract millennial clients.)

Perhaps more than ever, young people care about things like socially responsible investing, charitable giving to help the disadvantaged and doing work that has a positive impact on society.

All those goals can fit in perfectly with a financial plan, and indeed are aided by capitalism. But next-generation prospects might not see that possibility at first. Advisers who assume so are taking a big risk.


Remember, prospects aged 25 to 40 saw their parents struggle to retire during the Great Recession, and may well have struggled to begin their own careers during the subsequent uneven economic recovery. People aged 18 to 30 never saw an America where "a rising tide lifts all boats." They saw debt and swindlers like Bernie Madoff.

Look no further right now than social media to see heated debates this age group is having online about the tax legislation that has progressed through Congress. Views about wealth and fairness are at the center of these arguments.

So what should you, as financial advisers, say to young prospects about capitalism, given our contentious times?

Begin by asking them what they think about capitalism. Ask them what they think it is, and whether they think it's a force for good. Ask them why they feel this way. Then ask them how they want their stated values to impact their financial plan.

Then, consider what your young prospect says in response.

Maybe he or she will say exactly what you had hoped. If so, you can smile and say, "I totally agree. Let's talk about how I can help you make that happen."

Or maybe he or she will say some things about capitalism and their own financial goals that could benefit from your informed perspective. Be careful here not to dismiss your prospect's values, or condescend on his or her knowledge.


Rather, take this as an opportunity to explain how so much of the country's philanthropy has come from businesspeople who built their wealth thanks to capitalism. So-called robber barons like John D. Rockefeller and Andrew Carnegie. Modern-day giants like the Gates Foundation and the Walton Family Foundation.

(More: What makes now an ideal time to talk about philanthropy?)

Personally, my family donates to numerous causes in Arkansas, including to help convert a former Little Rock saw mill into a school, comprising five buildings for 790 students from pre-K to 12th grade. I can see that complex from our corporate headquarters. We couldn't have done that without the money that our business generates, thanks to capitalism.

Advisers, go on to explain how capitalism allows for personal freedom and self-responsibility. How capitalism requires businesses to understand what the public needs and wants, in order to give them goods and services that solve problems and make life better.

Finally, and most importantly, explain how you will strive to do those same things for the prospect. This conversation will help your practice, your new clients and America.

Warren Stephens is Chairman, President and CEO of Stephens Inc., a financial services firm based in Little Rock, Arkansas.


What do you think?

View comments

Recommended for you

Upcoming Event

Nov 13


Best Practices Workshop

For the sixth year, InvestmentNews will host the Best Practices Workshop & Awards, bringing together the industry’s top-performing and most influential firms in one room for a full-day. This exclusive workshop and awards program for the... Learn more

Featured video


FPA's Shannon Pike: What's next for the financial advisory profession?

As we head toward 2019 and beyond, regulation and compensation will continue to dominate the headlines. Shannon Pike of the FPA explains.

Latest news & opinion

LPL rolls back recruiting policy aimed at driving more assets to its corporate RIA

LPL erases $50 million hurdle for new advisers to join so-called hybrid firms.

Don't be fooled by the numbers — the industry is in a dangerously vulnerable state

Last year's stock market gains helped advisers turn in solid growth in assets and revenue, but that growth could disappear in the next market downturn.

Divided we stand: How financial advisers view President Trump

InvestmentNews poll finds 49.2% approve of his performance, while 46.7% disapprove. How has that changed over the course of his presidency?

10 states with the most college student debt

Residents of these states have the most student debt when you consider their job opportunities.

Ex-Wells Fargo brokers sue for damages, claiming they lost business in wake of scandals

In a Finra arbitration complaint, two brokers allege that Wells Fargo's problems damaged their business.


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print