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

Upcoming event

Oct 22


San Francisco Women Adviser Summit

The InvestmentNews Women Adviser Summit, a one-day workshop now held in six cities due to popular demand, is uniquely designed for the sophisticated female adviser who wants to take her personal and professional self to the next level.... Learn more

Most watched


Young professionals see lots of opportunity to reinvent the advice experience

Members of the 2019 InvestmentNews class of 40 Under 40 have strategies to overcome the challenges of being young in a mature industry.


Young advisers envision a radically different business in five years

Fintech and sustainable investing are two factors being watched closely by some of the 2019 class of InvestmentNews' 40 Under 40.

Latest news & opinion

New Jersey fiduciary rule: Pressure leads to public hearing, comment deadline extension

Industry push results in chance to air grievances on July 17 and another month to present objections.

InvestmentNews' 2019 class of 40 Under 40

Our 40 Under 40 project, now in its sixth year, highlights young talent in the financial advice industry. These individuals illustrate the tremendous potential of those coming up in the profession. These stories will surprise, entertain, educate and inspire.

Galvin to propose fiduciary rule for Massachusetts brokers

The secretary of the commonwealth is proposing a fiduciary standard in response to an SEC investment-advice rule he views as too weak.

Summer reading recommendations from financial advisers

Here are some books that will keep you informed and entertained during summer's downtime

4 strategies for Roth conversions

There's never been a better time to do a Roth conversion, and here are several ways to go about it.


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