Closing the Confidence Gap in Financial Planning with John Roberts

[00:00:27] Doug Heikkinen: That's a lot of people. How did you get there?

[00:00:31] John Roberts: It is a lot of people. I mean, it's taken us 169 years to grow to this point. I've been with Northwestern Mutual for 20 of those 169 years. I started at the company in our institutional investment space, but through a great deal of fortune and luck had a little opportunity to work with our field force of financial advisors beginning about 15 years ago.

And I fell in love with the work they do and the passion they bring to the work every day, the impact they're creating with their clients, and wanted to get closer and closer to it. So I've been working with our advisors and our field force now for a decade and a half.

[00:01:06] Doug Heikkinen: That's fantastic. So Northwestern Mutual has been running this Planning & Progress Study for 18 years.

What stands out to you in the latest wave about how American's relationship with money is evolving, especially among younger generations?

[00:01:26] John Roberts: Yeah, Doug, this Planning & Progress Study is something we've done now for almost 20 years. We survey 4,000 to 5,000 consumers across the country, across all kinds of different demographics.

Not necessarily clients of ours, but we try to get an understanding of what's on the mind of the consumer. How are they feeling about the economy? How they feeling about their own personal financial plan? And some of the trends we saw this year are consistent with what we've seen in the last couple years, and there are some new trends emerging. Particularly as you asked, among our younger generations, we're seeing sort of a continuation of a epidemic of financial insecurity.

Unfortunately, half of our respondents told us they do not feel financially secure and they're not financially prepared for their future. And that, unfortunately, it gets even worse as you look at younger demographics, Gen Z and millennials, significantly greater portions of those populations, feeling insecure.

Now, the good news is as we think about our industry, the story's a little bit different for those consumers that work with an actual advisor. While the overall population is feeling insecure, those that work with a financial advisor, were over 70% likely to say, "Yeah, actually I'm feeling good about my financial plan. I'm feeling good about the future. I'm feeling more secure."

As opposed to those who don't work with a financial advisor, only 38% of them said, "Yeah, I think I've got a handle on what's coming around the corner." So the number one thing that jumped off the page for me, even with those younger generations, is the importance of having an advisor in your corner as you think about your financial plan.

Increasingly with this study, we saw financial planning is becoming more and more of a team sport. Everywhere we asked our respondents the impact of a financial advisor, there was a massive difference between the responses of those that don't work with an advisor and those that do in terms of how they feel about the general economy, which should be relatively universal, and about their own individual financial plan.

[00:03:29] Doug Heikkinen: Speaking of Gen Z and the millennials, your newest findings say they lean towards higher risk and speculative avenues like crypto, sports betting, and even prediction markets as a way to catch up financially. How should advisors interpret that behavior and where do you see the line between healthy risk taking and financial nihilism?

[00:03:53] John Roberts: Yeah, I think financial nihilism is the exact right term. So we surveyed our respondents around some of the higher risk savings, investments, or even betting vehicles, like prediction markets, like sports gambling. We looked at meme stocks, cryptocurrency, and we asked them, okay, are you investing or putting money into any of these vehicles?

And if so, why? And overall, when you look at prediction markets and sports betting in particular, there was a spike in Gen Z and millennials. Over one third of all Gen Z and Millennial respondents are active in prediction markets or in sports betting. And we initially said, okay, well we kind of get it.

Maybe there's, it's a little bit of discretionary fund money. It's a form of gambling. Maybe with a small portion of your budget that might be okay. But when we dug deeper, what we found is 73% of all of those who are active in sports betting or prediction markets are using it as a financial planning tool.

They said, I actually feel behind in my financial plan and I view these, I'm not even going to call them investments, these vehicles, these uses of dollars, as a way for me to catch up. So that's the nihilism. I'm kind of feeling like I'm way behind. I don't know what to do. I might as well just swing big and see what happens.

And unfortunately, that mindset is more prevalent in Gen Z and in millennials than it is in Gen X, in our baby boomer population. And, you're right, I think your example was the 28-year-old. That's where we need to focus the conversation. I think number one, our industry probably could do a little bit of a better job going after the younger demographic. Planting seeds with new clients and new households that maybe don't have as much in the way of AUM to oversee right now.

But they do have risk protection needs. They do have long-term saving needs they need to get started on. The average age of a new client at Northwestern Mutual. Last year was 33 years old. But we need to push even younger ourselves. I think the reframing of the conversation with that 28-year-old should really double down on the fact that they have a longer runway.

They're going to be able to benefit from compounding of returns in a way that older generations can't benefit. So they've got a built in advantage, but how do we help them delay a little of that gratification and take advantage of that long-term compounding through a comprehensive, solid financial plan.

They may not be as fun to talk about at Saturday night, at the party you're going to, but it's going to get you your goals with more certainty.

[00:06:32] Doug Heikkinen: So based upon that thinking, how are you coaching an advisor who has that 28-year-old client saying exactly that? How do you recommend they reframe the conversation towards long-term planning and protection?

[00:06:45] John Roberts: Yeah. Well, it's first and foremost, it's about calling these, pointing to these things, as what they are. They are not investment vehicles. They are not saving vehicles. So let's put them in a different category. And we use Monte Carlo analysis in our planning is so many in the industry do to show, okay, if you use these vehicles to build towards your long-term goals, here's the range of outcomes that we think are going to happen.

And I think as an industry we could probably do a better job to think about what's the volatility or what's the likelihood that these vehicles are going to get you to where you want to go? But for us, we talk to our advisors about, sit down, talk with the client about framing where their dollars are going, if they're going into those higher risky, call them vehicles, set them off to the side, call them discretionary expenses. Take the rest of the savings and build that into an actual long-term plan. Build the scenarios of that plan to show this individual, Hey, look, you're going to get to that goal of saving for a down payment. You're going to have risk protection for your family in place.

You're going to start putting money away for retirement. And if you stay committed to this plan long term, there's a tremendous likelihood you're going to hit all those goals, and then some.

[00:07:55] Doug Heikkinen: You found that more Americans are feeling financially secure, yet many still admit they focus too much on growing wealth and not enough on protecting it.

How can advisors turn that planning gap into a tangible value proposition in their client meetings this year?

[00:08:12] John Roberts: It was really interesting, Doug. Half of our respondents said, you know, I know I'm taking too much risk in my portfolio. I know I'm taking too much risk in my plan, but I'm still doing it because I need to catch up.

I need to build wealth faster. As we all know, taking more risk is not a bulletproof method to building your wealth. So for us, it's really, again, it goes back to that holistic planning start with the broader foundation. And it's okay to take risk with portions of your portfolio as long as you have the kind of lower yielding, kind of lower volatility securities. As long as you have a risk protection foundation like life insurance. You're protecting your ability to earn an income and you've got that cash reserve so that you can weather some of the volatility of the markets. The way we think about it longer term with our clients is we say, if you've got that cash reserve, if you've got the long-term savings vehicle, something that's steadily accumulating value, able to provide you with some guaranteed income, you can actually afford to take more risk with your equity portfolio.

But you have to have those other components in place first.

[00:09:21] Doug Heikkinen: There's been a lot of narrative that younger generations are giving up on home ownership, but your research points to a strong interest in owning the home and an increasing role for parents and making that possible. What should advisors be doing to help families navigate multi-generational strategies for getting kids into the first home?

[00:09:40] John Roberts: Yeah, we saw this loud and clear in our data this year with this study. And it was a little bit of an about face from what we saw last year. In our 2025 study, we saw sort of despair setting in as it related to home ownership, particularly with younger generations. They just thought housing costs, affordability.

It just wasn't possible for them to ever own a home. And we saw at about face this year and we saw a larger portion of Gen Z saying, okay, I think I can get there someday. Now maybe that has to do with interest rates. At the time we did the survey in late 2025, lower than they were in late 2024. Probably has to do with slower growth in the housing market in terms of prices.

But we also saw an interesting dynamic this year. Parents are stepping up in a different way and. This is probably the second team member in financial planning now. So you've got the advisor, and now parents are playing a different role. We asked parents who have children at home, whether they are already or whether they plan to save to help their child buy a home someday.

And almost 75% of those parents said, yes, I am saving for a down payment or a home purchase for my child. Or I plan to save, for my child. So parents stepping up in a big way, sort of the acceleration of wealth transfer, right? Instead of waiting until there's an estate transfer, I'm going to help you take advantage of some of my my savings, now.

Now here's an interesting follow on. Almost 85% of those parents who said, yeah, I'm, helping save for a home purchase for my child, they believe that savings is more important or just as important as helping pay for their child's college tuition. So we kinda call this in our study, we're seeing house keys over degrees.

And maybe the reality is AI is changing our perception of the importance or the role of a college education, or the certainty of what a college education is going to do for us. But we're seeing a resurgence in building wealth through home ownership. That continues to be a bedrock, not only of the American dream, but of a long-term financial plan.

So we're having our, Our advisors talk with the Gen Xers who have kids perhaps that may be still at home, but maybe thinking about home purchasing. And we're thinking about, okay, what are the non-qualified savings vehicles you can consider that give you a little more optionality in how you might want to deploy those assets for your children?

We are seeing among our clients. A little bit lower rate of investment in 529 plans. So even millennial generations lower investing in 529 plans. A little bit higher in terms of mix in non-qualified assets. Meaning again, maybe they're saying, listen, I want to save for my child, but maybe I don't want to be locked into something that needs to be used for tuition.

I want to think about something that could be a little bit more of a Swiss Army knife that they can use in different places. I mean, as a life insurance company, I'm not ashamed to say whole life insurance is one of those vehicles that we're talking about a lot with our advisors. And our advisors are having a lot of success talking about with their clients to say, this is a tax deferred savings vehicle that you can tap into as needed for more than just a down payment for a lot of different expenditures, assuming you're saving over 10, 20 years.

So we're having a lot of success with that conversation right now.

[00:13:22] Doug Heikkinen: That's great. Let's turn to the advisory business itself. Why does succession planning become so much harder and more expensive when firms wait too long, and what are the early moves you're encouraging Northwestern Mutual advisors to make if they want options later?

[00:13:40] John Roberts: Yeah, this is certainly a central topic for our industry. It's an important topic for us at Northwestern Mutual as well. I read recently that the average age of the financial advisory in the United States right now is 57 years old, and that roughly one third of all advisors in this country are going to retire by 2030.

And we all know we're not replacing that talent fast enough in our industry. We had a decline in the number of advisors in this country in 2025. We've been moving in the wrong direction for a number of years now. So succession planning is critical. It's critical, I think, to start early. One of the challenges that we've seen where we've gotten stuck with some firms that are having trouble passing the business from one generation to another is they didn't start selling their equity early enough.

And you get to a point where now, boy, the debt service on a loan to buy the business is too high relative to the cash flow of that business. And it just doesn't work financially for that advisor to really be able to sell their business at a full market value to their G2 advisors inside of their firm.

Where we've had more success and where we're working with our advisors to help them think about a longer term succession, is you say, 10 years before you're really desiring to step out of the business or sell a majority of your equity ownership, begin selling in tranches every year or every other year and allow your next gen to buy some of the business, pay down the debt, then afford to be able to buy more of the business.

You're kind of dollar cost averaging that G2 into the business. The downside for the selling advisor, of course, is that if you're still growing organically and maybe you're selling your equity before you get to its maximum value. But the upside is you have that next generation bought in, hopefully they're going to be more energized about growing that business because now they're an equity owner as well. And we're seeing that play out in our transition support for our advisors.

[00:15:39] Doug Heikkinen: So what are the core elements you see in the most successful success succession strategies across your field force of more than 22,000 professionals, as we said, and how is Northwestern Mutual equipping those advisors with tools, structures, or programs to execute those transitions well.

[00:15:57] John Roberts: Yeah. You know, just like financial planning for clients is a team sport, I think so is succession planning for advisors in our industry. We're fortunate to have some great industry partners who bring in specific expertise on succession planning. You team with our own internal practice management consultants where we identify, okay, who are those advisors that have concentrated equity ownership, they may be approaching a point where they're thinking more and more about succession planning. We proactively reach out to them and have a discussion around, okay, let's see your succession plan.

If you don't have one, let's start one. If you have one, but it's not fully built out, let's get to work with these partners at filling out the details of what this plan could look like. We recently, launched a program where we provide capital for these advisors. In fact, we took $1 billion from our insurance general account and put it in a vehicle to support advisor transitions.

So we're investing in these transitions with long data debt capital to help the G2 with the affordability of these businesses. And we're launching this spring a matching program, which we're really excited about, kind of like match.com, but internally where we can help advisors find successors inside of this ecosystem of 22,000 people, even if they're not within their own firm.

[00:17:19] Doug Heikkinen: What's different about the next generation of talent and how does the industry need to evolve to appeal to them?

[00:17:27] John Roberts: Well, we're seeing this every year. we bring on in the neighborhood of 3000 new full-time advisors every year at Northwestern Mutual. And the profile of that talent is changing significantly year to year.

And the interests or the needs of that talent is also evolving. Our model, as a lot of the industry has focused, used to be kind of on the entrepreneurial spirit of wealth management, building your own business, a level of independence. While that resonates with a big segment of the talent we're going after, we're seeing more and more talent interested in joining a team. Being part of an existing entity, having a little bit of a runway to learn and grow and develop their skills as a part of an organization that's giving them a little more certainty. So that the notion of recruiting right into a team, recruiting right into being a G2 or G3 is a little bit newer for us, but we're finding great success with talent looking for that career path.

Second, we're finding that talent today wants more career optionality. We used to kind of have one track. You come in, you build your business, you grow your business, you hire some staff, you teach them to do some of it, you scale yourself. And now we're finding, well, there's an opportunity to come in and build your business or come in and join a team, but we want to create different branches as you grow your career. You can join a team midway through that career. You could decide that you want to branch out and become a full-time advisor and build your own business. You want to take on a role where you're specializing in a certain product set or a certain part of the sales cycle.

So creating more optionality, it seems to be resonating with current talent as well. One thing we know is continuing to be true though, is this generation of talent is continuing to look for a cross between mission driven and sort of being fully focused on being a merchant.

We want some kind of blend. But this generation of talent is looking for a mission they can get behind. They're looking for something greater than just themselves. They want to be a part of a team, but they want to be a part of an organization that is doing good and having a positive impact.

And that message, I think, is resonating really well right now.

[00:19:40] Doug Heikkinen: Yeah, so it's a really tight talent market. Have you had to make a lot of shifts in how you recruit, develop, and position the next generation of advisors so that the career really resonates with them?

[00:19:51] John Roberts: Yeah, we're definitely seeing more job hugging, right?

Those, that have a salaried position tend to be holding onto that position a lot more closely. We're seeing less transitions in the labor market from employer to employer. But we're also seeing a lot of disruption in the labor market right now. And every day you seem to open up the paper and find another company that says, well, because of the advances of AI, we think we're going to reduce our head count a little bit.

And I think that disruption is likely to continue. It's an opportunity for our industry to reach out and help that talent think about a career where they can build something for themselves, maybe not by themselves, but really make a difference. And so we are thinking about where we target our recruiting efforts.

We're targeting some of those areas that we think might be more likely to be impacted by AI disruption this year. And we're trying to figure out how we show that talent the different options that are available inside of our ecosystem. Join a team, come in as an advisor, come in as an apprentice, right?

And have that career optionality at the front end.

[00:20:54] Doug Heikkinen: Alright, last one for you. For advisors who want to evolve from a lifestyle practice to a true growth enterprise that can serve more high net worth households, what traits do you see consistently in your fastest growing teams and how are they balancing deeper engagement with the next generation of clients while still driving profitable growth today?

[00:21:17] John Roberts: You know, our advisors who are at the top of the heap for Northwestern Mutual, number one, they're relentlessly focused on their own development and their own skills as both advisors, getting more designations, kinda staying abreast of products and services. But also, frankly, as leaders. As our advisors are scaling their businesses, more and more of their time is spent on building a firm and running an organization.

Unfortunately, a little less time on client service. Now, we've had some advisors who have said, you know, what I want to do is focus on clients. So they hire professional managers, which we love. But we're seeing skill development really be a big differentiator for our top firms. Focused on like, how am I doing, not as an advisor alone, but as a leader.

Second, our top growing firms are doing a better job bringing in talent into their firms. They're active in the human capital market. They are finding not just talent that can serve clients, but finding talent that wants to hunt a little bit and find new households and new clients. And they're matching those kind of younger advisors, that new talent, with the children and the referrals of some of their longstanding clients who may have connections either the next generation that our G1 founder advisors either kind of wouldn't resonate with as well or maybe don't have as much time for. So that next generation of talent, we think is a real separator for our top teams. It's helping them continue their organic household growth. I think those top teams are doing themselves a favor because those are the future successors and the buyers of their business that are coming in and helping them grow their business today.

So skill development, leader development, and talent development have been the big separators for our top firms.

[00:23:11] Doug Heikkinen: John, this has been fascinating. I've really enjoyed the conversation and thanks so much for being with us.

[00:23:17] John Roberts: It was great to be with you, Doug. Thanks for the conversation. Really enjoyed it.

[00:23:21] Doug Heikkinen: To learn more about Northwestern Mutual, please visit NorthwesternMutual.com.

We are on all social media platforms @Advisorpedia. Please give us a follow. For our producer Tory Miller, and everyone at Advisorpedia, thank you so much for listening.