Kaden Bernstein: Key Ingredients for Success | Next Gen
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Capital Ideas isn't just a podcast. It's 90 plus years of data-driven insights from Capital Group, one of the world's largest active investment management firms. Available wherever you get your podcasts. Published by Capital Client Group, Inc.

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 will help you take your practice to the next level.

I'm your host, Allison Tucci, and today with me is Kaden Bernstein. Kaden is a financial advisor at Morgan Stanley on a team of nine people, managing over $1.5 billion assets under management. Today, we're going to be talking about her transition into finance and how you can transition into finance as well.

Kaden, welcome to the podcast. Thank you. Thanks so much for having me. Thank you for coming. So I saw a little bit about your background. You didn't go directly into finance. So can you tell me a little bit about that transition and what spurred really your desire to get into the field?

So my senior year of college, I had been working within a consignment store. I decided it was definitely the path that I wanted to take. So I actually launched a high-end or luxury consignment store during my senior year. Was not a finance major. Biology and Italian were my two majors.

And then I created the store within Mendham, New Jersey. It did fabulously. But like any good business owner, you kind of know when to close your doors. So I had made the decision that I was going to close my doors. But prior to that, when I was 18, my father passed away. I'm so sorry to hear. That's okay. But his Morgan Stanley financial advisor kind of stepped in and helped me understand how this business works.

He eventually retired, but the person who inherited his book was also fabulous. And when I was closing out my store, I was just looking to do something that I felt like I had started to know and was growing on. And I had asked two people in my life, that advisor being one, my CPA being the other, you know, what my next step should be. And a big one was I was thinking about becoming a CPA. They both told me I had too much character to do that job. Yeah.

You know, I asked them both about, you know, moving into this industry and they told me, you know, how it works. And the Morgan Stanley financial advisor was wonderful. He told me exactly the licensing I'd need to do, you know, how we'd interact with clients. He thought I'd be fabulous.

So I wound up just, you know, moving forward with that path and doing pre-hire licensing through Morgan Stanley. That's fantastic. And let's kind of break down the transition into becoming an F.A. There's a high failure rate. And if you look at it, the first year, it's really that initial transition into the field from outside. That second, you know, tranche is the first year of becoming an F.A. And there's about a 20 to 30 percent failure rate. Yeah.

And then that last sort of tranche is the first five years where there's actually an 80% and 90% failure rate. Right.

A lot of people drop out, and I would love to break this down with you. So that first sort of transitioning to finance, what were some of the reasons, besides your character, that you would want to do CFP as opposed to CPA? Yeah, I think it's significantly more hands-on. So I think being a CPA, obviously your clients are leaning on you more for tax advice, whereas as a financial advisor or CFP, you have to be so much more well-rounded, right? Right.

So we're making significant impact within clients' lives in every area, not just taxes. So I loved the idea of being very hands-on with clients, whether it be for a home purchase, obviously helping them manage their investments, getting involved with their kids, things that a CPA might not necessarily be doing. But a financial advisor, of course, that's an expected role that you're going to play. And you can...

You know, you don't have to get all your certifications up front with a CFP. You can kind of be on the job. You can still take in an income as you're getting your certifications. I think that's always really important for individuals thinking about getting into the career because with a CPA, you sometimes have to do almost like another degree. You do. Essentially. It's another degree. Whereas you can work in this industry, you know, certified financial planner is not a requirement. Right.

nor is any designation, but you have that flexibility to get that in your own time while still building your business. And you said that you weren't a finance major initially. No. So can you talk to me a little bit about that? Because I think there's a lot of people who have this preconceived notion that you have to be finance, economics, economics.

something hard, quant-driven to be able to get into finance? Yeah, no, absolutely. So I was on the path to pre-veterinarian. Okay. Yeah. And throw some Italian in there. Yes, yes. Just loved it so much, had enough credits. That's what happened. Yeah, absolutely. So I would say it's actually, it's great, like I talked about before, to be so well-rounded because

And to have experience from being a biology major, the Italian actually came in handy, as odd as that sounds. But then also having my business background, it gave me flexibility to be able to talk more to clients about all of these different areas rather than just one thing. I mean, I definitely encourage finance majors, you know, you kind of have a great understanding of how the business works, right?

But I think overall, it was very helpful for me to have all these different backgrounds and bring them to the table for our clients. ♪

So as you're transitioning into finance and then you're getting into that first year, you're starting to take those exams. Any tips or tricks with taking the CFP? Did you have a training program? Did you have a mentor? Did you have a study group? I did, yeah. So I would say I definitely took a path that maybe people aren't a fan of. But I would say, you know, I got through my coursework, which that's the first phase is just to get through the modules, get through the coursework.

And then the next phase is really to take three months of just complete, you know, study time. And I'll be honest, I did utilize Brett Danko for my CFP. He's known as the CFP guru. And he pretty much advised that we kind of throw our lives away for three months. And, I mean, I did it. My relationship was on the rocks. My dogs didn't get walked as much. Right.

But you passed. I passed, yes. And it is the advice that I give to others. They say just hold out for three months, really work hard, listen to it in the morning, listen to it in the evening, study it, take all of the practice exams, and you'll pass. I mean, that is the key.

Okay. And so you find this training module online or how'd you? I did. Yeah. So I did. I actually went through our firm. So Morgan Stanley has great resources for that. So I had reached out internally to see, you know, what was the best pass for me. And then I did have conversations with each of the different, you know, companies that offer the Certified Financial Plan designation.

And it sounds like you really have to be resilient and put your head down during that time period. You had some challenges, it sounds like, with, you know, relationships and your dogs. How did you really get through that on the personal side?

So I think it takes a lot of understanding. As I'm sure anyone knows within this industry, it's a lot of work. So just having a partner who's understanding. And I said to my family and friends, this is what I'm going to be doing. They would all be watching a movie. I would be studying. But everyone accepted that. And I think when I passed, it was like a moment of joy for not just me, but for everyone in my circle because everyone, including my team, had kind of carved out that time for me to be able to really put my head down and just do this.

And how do you celebrate? I'm sure you celebrated somehow. Amazingly, I didn't. Did you not have time? Did you have too many clients? No, I didn't have time. Yeah, but no, no. My team celebrated it, you know, and I think it just, it was just nice to get it done. I think I closed a chapter and at that point in time, I'll say the CFO

was giving results a month after. So you'd go in, you'd take the test, you had no idea if you passed. A little bit of anxiety. Yes, but it got to the point where I almost forgot about it. And one morning I woke up to a congratulations email. So at that point in time, I felt like I had passed so much that, you know, I really didn't think about it anymore. You're listening to Barron's Advisor, The Way Forward, Next Generation. We're going to take a short break. Stay with us.

Discover Capital Group's distinctive approach to investing with the Capital Ideas podcast series, where we go behind the scenes with portfolio managers, analysts, and economists as they navigate today's markets. Available wherever you get your podcasts. Published by Capital Client Group, Inc. Welcome back. Let's get back to it.

So let's transition to that last phase, that first five years of becoming a financial advisor. I mentioned earlier it's 80% to 90% dropout rate. And a lot of folks point to high rejection rate with clients, right?

They point to burnout. So how do you really cope with those activities and the issues that young advisors are really facing in those first five years? Absolutely. I will say you have to have a thick skin. It is hard. 2022, downturn in the market.

Whenever you see something like, you know, volatility within the markets, you're going to have, you know, issues with clients. So make sure you're reaching out to those clients first. That way you're not getting, you don't want to receive the call. You want to make the call, right? So you want to beat them to it.

And then burnout is absolutely real. I think we all face it. But I think it's also understanding that, you know, what we do, we're really business owners. So as a business owner, you're going to experience times like that. It's going to happen. It might mean that really good things are happening, which is fantastic, you know, and just I think pushing through is a wonderful thing, you know, just to make it continue to grow. But I also understand needing that time and everyone should know their limits. Right.

And it just – if you're, you know, feeling sick, if you need to take family time, you need to do that. You have to put those, you know, items first. Absolutely. And you mentioned that you have to figure out what clients you can call and be proactive. Yes. So how do you do that? Because I think sometimes people have –

broad strokes. What is a common misconception maybe with people that you think would not worry, that are worrying, or vice versa? I think the best advice is to assume most are going to worry and also have that conversation with their clients. How are you going to feel if the market goes down 5%, 10%, 20%? Are you going to feel good or are you going to feel upset?

And just knowing your client, right? Occasionally we'll get through a season where we've seen some volatility within the market and that client did call. Now we know in the future that's a person that I need to look out for. That's a person where we need to talk about, you know, does this is this the right allocation for you? But just making sure you know that that person is going to be concerned in the future.

And then you mentioned around burnout, around just making sure you know your limits. Oh, yes. I was told once to not have to look for large blocks of time for myself. Look for maybe carve out 30 minutes at a time or 15 minutes at a time. Try to not have to spend an entire half a day doing X or Y. Have you found – what sort of tips or tricks have you used to really prevent yourself from burning out?

Yeah, absolutely. So I would say setting routine. So just knowing what my day-to-day looks like, knowing what to expect, and then carving out something that means a lot to you. So every Sunday, you know, it's ritual. My family knows I go horseback riding. I do that for almost two hours, and that kind of calms me down. So just having something where it makes you feel good, it also takes your mind off of the business, trying to get away just a little bit from your day-to-day. ♪

Specifically to people who want to get into the industry that might be a little bit afraid to get into the industry because they didn't have that financial background. What sort of traits or characters made you successful that they should be looking for in themselves?

I would say just knowing the type of person you want to work with. So everyone is different. Everyone has a different personality. I found over the years that clients will always gravitate towards an advisor that has their personality. So no one should ever feel like I'm not smart enough. I don't know enough because you can always learn. Right. So that's the best part about this industry is we get to learn something new every day. I mean, headlines hit and the market completely changes.

So you have this flexibility to onboard clients that are similar to you, that you have similar experiences with. And that's one of the best parts about this. You know, no one should feel like they can't enter this industry. You can always learn, but also know that you'll have this ability to onboard people who are just like you in similar situations. You'll always be able to shed some light on a situation. You know, everyone's been through something.

So even if you don't think you can provide anything, you actually, at the end of the day, you can. You'd be surprised. So you've been in the industry now for how long? Six years. Six years. So now you're coming across that next phase. We talked about the transition. We talked about that first year. You're past that five-year hurdle of the 80% to 90% failure rate. You're now in that sixth year. Is there anything that you wish you would have known earlier that you could advise someone coming into finance? Yeah.

I would say pick resources that you can utilize and talk to other advisors. Don't just stay within your corner because everyone does something differently. I used to help another team. We utilize some of their materials in our new team. Talk to everyone because you find out more and more just by conversing with everybody what's available within your firm.

but also what people have built themselves that you could be utilizing and tapping into. So it's just making sure you're having those conversations outside of your bubble. It is so easy for us to stay in our bubble, and we're so used to it. But breaking out and having conversations with different teams, different advisors, you learn so much more about the industry, about yourself, and about really how to continue to just make a better practice.

And if someone was not even in a Morgan Stanley as an example and they're trying to break into a firm like that, what would be an actual next step for that individual to say, I listened to this podcast, Kate, and it sounds awesome. I want to get into financial advice and I want to make this pivot. I'm in picker industry. I'm in biology. I am a lawyer right now. I'm tired. How would you say they should approach entering into the business? I would say...

The key step would be to connect with market managers. Right. So your local market manager within any firm is going to know what's on the table. They're going to know what's available. How do you find them? That's it.

It's taking you all the way back. How do you find these people? Well, LinkedIn's probably our best resource, right? So I would hope everyone's using LinkedIn for everything because that's how, I mean, it looked you up. You know, that's how we find people now. So I would say looking someone up on LinkedIn, you know, finding your local Morgan Stanley, looking at, because it's going to be on the website, who's that market manager? Who's in charge? Who's the branch manager of that Morgan Stanley? And doing outreach to them directly because that person really is in the know.

They're going to tell you what teams are looking for somebody. They're going to know how many spots they have open. That person really is the person who heads up all of that information, all of that information that you need to utilize to get into the field. ♪

Before we wrap up, is there anything else that you want to leave the listeners with, piece of advice or anything we didn't cover that you want to touch on? I would say one piece of advice, which I learned very early on, is just making sure you have a firm understanding of what you are putting your clients in and know how to say it in a way where a client can understand it.

What do you mean by what do you put your clients in? Yes, exactly. So when I first started in the firm, I had a family friend who was let go from her job and she had to roll over a 401k, went to another firm, and she asked me about all these mutual funds she was holding. She didn't know what they were. I must have spent 30 minutes describing to her what they were. And she looked at me and said, I didn't understand a word that came out of your mouth. Can you say it in a different way?

And it clicked that most clients, you know, they don't have finance backgrounds. They don't maybe know what a mutual fund or an ETF or what the differences are, you know, and especially a complex product like an alternative investment.

If you can't describe it in everyday terms, maybe your client shouldn't be in it. You have to be able to describe it in a way where anyone on the street could understand exactly what you're investing in. I think that's key. It's a fantastic piece of advice to leave our listeners with. So thank you so much for today. I appreciate you swinging by the podcast studio and hopefully to see you soon. Yeah, thank you for having me. It's wonderful, Allison. Thank you.

The production team for Barron's Advisor, The Way Forward, Next Generation is Ellie Ismaladou, Rebecca Bisdale, Paul LeBlanc, Kinga Roy-Jacques, Joseph Lusby, and Alexis Moore. Melissa Haggerty is the executive producer. Jenna Mathis is the director of programming for Barron's Advisor Programs. Greg Bartalas is the editor-in-chief of Barron's Wealth and Asset Management Group. We'll be back soon with another episode. Thanks for listening.

Capital Ideas isn't just a podcast. It's 90 plus years of data-driven insights from Capital Group, one of the world's largest active investment management firms. Available wherever you get your podcasts. Published by Capital Client Group, Inc.