Why you need to have a conversation with your kids
Ric Edelman: It's Friday, March 24th. I want to talk about old people today. Yeah, those who are 65 plus, we're talking about a group of the US population that represents 17% of everybody in the US, but they have 75% of all the wealth in the US. We're talking about $70 trillion that are owned and controlled by people 65 and older over the next 20 years.
All that money, $70 trillion, is going to be transferred to their children and other heirs. If you're 65 or older, have you told your kids about your money and what you plan to do with it? A new survey by Cerulli Associates says, no, you haven't. 80% say they plan to talk to their kids, but only 46% actually have.
This show is all about telling you about the future. So let me tell you three things about your future. First, you're going to die. Sorry, but you are. That means your kids or other relatives are going to get your money. Now, don't tell me you're leaving everything to your spouse because eventually your spouse is going to die. We're right back where we started. Your generation - sorry, our generation, because I'm part of it with you - is going to be gone. The greatest generation is almost already gone. Over the next 20 to 30 years, the baby boom generation, we're going to be gone too. That means you, me, and your spouse. So the first thing that's going to happen is that your kids, your nieces, your nephews, they're going to get your money.
Second, because you haven't told them what they're going to get, they're going to be angry, sad, upset or confused. I've seen it all in my 40 years as being a financial advisor. Parents die and they leave more money to one child than they do to another. They leave less to the children than the children had anticipated they were going to get, or they are not given the money as quickly because it's in a trust where the money is doled out as an allowance.
All this happens because nobody knows what the parents are doing because the parents never explained to their children what they're planning. And third, as a result of that point, the surviving family relationships are often destroyed. Think about it. If you're not around to explain your actions or take the heat, your kids are going to take it out on each other. Oh, you think your kids love each other?
Well, they're all married and the in-laws are going to voice their own opinions. In the best cases, they maybe will just stop talking to each other. The worst case is they're going to start suing each other and they're going to sue the estate, your executor, your trustee - who, by the way, might be one of the children. Only 26% of affluent people over the age of 65 said their heirs were well informed about what to expect. You can't stop the future from coming, but what you can do is help decide how happy a future it'll be for your heirs.
Now, I'm not suggesting that you necessarily give all of your money to your children equally. That's not my point. You might have a legitimate reason for giving more of an inheritance to one child than another. Some parents say, look, I've got one child who's a neuroscientist. Another one is a schoolteacher. A schoolteacher needs more money than the neuroscientist; I'll give the schoolteacher more of the inheritance. I'm not arguing that that's right or wrong. I'm simply saying if you don't explain your rationale, the neuroscientist may be left wondering if you didn't love them, if they had somehow offended you. You simply need to explain so they understand why it is you're doing whatever it is you're choosing to do. You might have a spendthrift in the family. You might have somebody with a drug or alcohol problem. You might have somebody in a bad marriage or a troubled business. There could be a lot of reasons for not giving money to children, equally or at all.
The key is simply to explain, because if you give all your money to one child and none of it to the other child who's a spendthrift, that child who got zero inheritance will turn to the child who got all the inheritance and treat them like a new surrogate parent. 'Mom and Dad gave you all the money. I got nothing. It's therefore up to you to help me out.'
Is that a situation that you want to put the two of them in? If you're thinking of leaving that beach house to your five children and the collectively 20 grandchildren because you think they're all going to enjoy it, what happens if one of those children lives a thousand miles away and never has an opportunity to use the house? Or what if three of them want to sell the house and two of them don't? What if they all want to use the property on the same 4th of July weekend? But the house isn't big enough to accommodate everybody? What happens when there are repairs needed? Who's going to be responsible for getting the repairs done and who's going to be responsible for paying the bill? If you're going to leave assets to children without explaining to them what you're planning to leave, how you're planning to leave it, and why you're thinking the way you're thinking.
You're setting the stage for a series of family fights you won't be around to referee or judge. Don't create that kind of a scenario for your family. This is why estate planning is something best brought out into the open. To begin, talk with your financial advisor and a state attorney for guidance on all the above. Planning to see the kids this weekend? I just gave you something to talk about.
Ric talks crypto with Lee Schneider of Global Blockchain Convergence
Ric Edelman: I'm really excited to bring on to the program Lee Schneider. He bills himself as general counsel and general nuisance at Ava Labs. There aren't very many lawyers able to make fun of themselves. Lee is indeed a lawyer. He focuses on financial services and technology with extensive experience in blockchain. He co-hosts the Appetite for Disruption podcast with Troy Parades, and he's the contributing editor for the Chambers and Partners FinTech Practices Guide. Lee is also one of the organizers of the Global Blockchain Convergence, which I'm a member of. That's how we got to know each other. Lee, great to have you on the podcast.
Lee Schneider: Thanks a lot for having me here, Ric.
Ric Edelman: So there aren't very many people aware of the fact that there are lots of lawyers paying a lot of attention to crypto regulation and in fact trying to get crypto to have regulation on a global scale. First, talk about the Global Blockchain Convergence. What does the GBC do? What are you trying to accomplish?
Lee Schneider: Sure. So, look, obviously, I'm not going to give anybody any legal advice on the show just to make that 100% clear, notwithstanding that I am a lawyer. So what we're trying to do is have a loosely affiliated group of people - it's a combination of lawyers like myself, people like yourself on the investment side, people who are technologists, people who are otherwise doing all kinds of interesting things in blockchain, and it's just designed to be a loose collaboration network so that people have experts in different areas, in different parts of the world. I think we cover virtually every time zone from California to Sydney, Australia, and we get a pretty good group of people together. It's a lot of fun to have the conversations because it's a great exchange of ideas.
Ric Edelman: Every one of the monthly meetings is held twice, once late at night, once in the morning because of those time zones. And last count, it was almost 200 lawyers from around the world all working together collaboratively to move and advance the development of regulation in countries worldwide. So what is the approach that you want governments to take when they do write their rules for crypto?
Lee Schneider: Well, we have - I personally have and I think many of the people that I talk with have - a couple of core principles that we think are important. The first one is to recognize that crypto assets are not just some homogeneous asset class. There's Bitcoin on one hand, and then there's NBA top shots, which are effectively like digital baseball cards, on the other hand. In the regular world, we don't regulate things like Bitcoin the same as we regulate things like baseball cards. And we believe we shouldn't be doing that just because it's on blockchain. So we really stress how important it is to understand the nature of the asset, that is to say, its functions and features before you decide how you're going to regulate. The second big tenant that we have is to recognize that decentralization is a real thing and that there are important reasons for it. What many non-computer scientists are unaware of is that blockchain actually solves a continuing problem that has existed in computer science, which is how do you get a whole bunch of computers located all around the world to agree on a common data set? Now everybody will have heard of Amazon Web Services and other kind of cloud services products. There's a centralized party there. There's typically a small group of computers that tell all the other computers what the data is. But with the Internet where it's dispersed and there is no central organizing force, that's not possible. And so what traditional computer science said is we do what Amazon Web Services does- one computer tells everybody else. What Satoshi Nakamoto realized was there's actually a better way to do that, and that is blockchain. And so with those two things, right, blockchains as core infrastructure for the Internet and the diversity of crypto assets that has already been created and will continue to be created, those are the two core principles that we advocate very strongly for.
Ric Edelman: Let me let me challenge you on one point, Lee. You said that blockchain is superior to Amazon Web Services, for example, because Amazon is centralized and blockchain is decentralized. But so what? If you go the blockchain route, you're threatening the supremacy of Amazon, you're interfering with their business model, threatening the very core of that economic engine. So is blockchain a solution in search of a problem? I mean, what's wrong with just continuing to rely on Amazon?
Lee Schneider: Well, look, Ric the short answer is Amazon Web Services isn't going anywhere. And we have a great relationship with them through the avalanche of public blockchain. The goal with blockchain is not to displace all of the existing players in the world. The goal of blockchain is to improve the overall infrastructure of the internet, so it's a benefit to everybody. Now there's always going to be room for the Amazons of the world. There's always going to be room for other centralized players. That's not going to change. What is going to change is that there is now a new layer to the Internet that allows us to formalize ownership digitally. And then therefore transfer value digitally anywhere in the world over the Internet, and everybody can use that.
Blockchain Technology in Action
Ric Edelman: So give me a practical example of this. Tell me something that I'll be able to do with blockchain technology that I currently can't do with the centralized services of a company like Amazon or something that I can't do as well as I do at Amazon.
Lee Schneider: So there's a couple of things. First, I'll say something that you can't do and then I'll say something that I think you can do better. And let's take Amazon out of the equation because they're really just an infrastructure provider, right? That's what Amazon Web Services is. Let's move over into another area which is trading of assets. So people may have bought and sold, stocks may have bought and sold bonds or mutual funds. And there is a process involved for that where the different brokers and exchanges and custodians are all part of a large industry that has technologies that pass information back and forth and make transactions happen. Blockchain can make all of that easier. It can make all of that better. It can allow for the kind of straight through processing that many people in the securities industry have been seeking for years and years and years. And so all of that activity can happen on better technology because of blockchain, because you can establish a stock on blockchain, prove its ownership on blockchain and transfer it on blockchain in a much faster way. So that's an example of something you can do better.
Ric Edelman: And I assume in addition to faster, you can do it cheaper and you can do it safer.
Lee Schneider: And anywhere around the world all at the same time, right? The example I like to give is both of my daughters are in college in the UK. So when I send them money, I have to arrange for a wire and go through complicated processes so that my dollars come in and pounds come out the other side and it gets into their bank account and it always takes at least a day for that to happen. With blockchain, if my daughters would start using it (hint, hint), literally I could get all of that done in a matter of minutes because it's very easy. With the blockchain infrastructure, I don't need the bank to do anything. I just send something from my wallet to their wallet and they go ahead and use it in the UK.
Ric Edelman: You know everybody thinks that digital assets are all for the young folks and the older folks are oblivious to it. But you've demonstrated a complete reversal of that.
Lee Schneider: My daughters still think that what I do is for nerds, which is entirely appropriate because they're in college. And when I was in college, I thought everything my parents did was for nerds.
Ric Edelman: So you mentioned one example of how blockchain does things better. Now talk about an example that blockchain lets you do something that currently we can't do.
Lee Schneider: Sure. So the example I would use there is non-fungible tokens. So things like the NBA top shots, right? You can establish ownership over a particular thing using an NFT, a non-fungible token. And not only can you establish that ownership and then trade it on the Internet, but you can also program what that ownership means. And so if I am an artist and I create a work of digital art, I sell you the NFT of that digital art. I can program that NFT so that if you resell it, I get a royalty payment from your resale and then the next person who buys it from you can get a royalty. The artist would get a royalty payment again from that resale. And so it's that program ability of crypto assets that is something new, that is something that is not really capable of being done in the more traditional sort of Web 2.0 world.
Ric Edelman: And it's because of these innovations that the tech is allowing that this is so exciting, why it's getting so much attention by so many around the world, why it isn't going away while we end up really not having a choice but to pay attention to this. But along the way, this tech does require rules because as you mentioned, if you're if you're going to be selling that NFT, for example, that you've invented, it's called being minted. If you mint an NFT and you sell it to someone who lives in another country and there's a dispute over that transaction, over some reason or other, somebody gets in an argument - whose laws, whose jurisdictions apply if you're living in different countries.
Lee Schneider: It's a great question. And it's not one where there's an easy answer yet. We are still in many jurisdictions struggling to figure out what the basic laws are about blockchain just for within the country. So to US citizens, you and me, in that original example, the law is not clear on what it means for me to create that NFT and sell it to you with the programmability that allows me to collect royalty when you resell it. And so that's one of many areas that a lot of really smart lawyers are thinking about and trying to understand what the law should be.
Sensible crypto regulation is needed
Ric Edelman: One of the complaints that people have about crypto is that there are intermediaries that are not regulated. For example, in the world of brokerage that you mentioned earlier, if I wanted to buy a stock, I don't go to the New York Stock Exchange to buy it. I go to Charles Schwab. And Charles Schwab on my behalf, acquires the stock for me, deposits it into my account. Charles Schwab has a huge array of rules, regulations, legislation that it must adhere to, that it must follow to stay in conformance with the law. These rules, of course, are all designed for consumer protection. Coinbase is a newfangled company kind of similar to Schwab. Schwab is helping me buy and sell stocks. Coinbase is helping me buy and sell crypto assets. But Coinbase doesn't have the same level of regulation that Schwab has. And some people are arguing that's not fair, that's not good. It's not safe for consumers and that as an intermediary, Coinbase ought to have the same rules that Schwab has. What's your view on all that?
Lee Schneider: My basic view is sensible regulation is definitely needed. Now, remember my first two principles that I talked about. One is all crypto assets are not the same and all crypto assets are not financial instruments that are regulated the way that securities are regulated in your Charles Schwab example. And so we need to just spend some time thinking about what all of that means. We need to spend some time thinking about the implications there. Europe has done some of that thinking. They have the market in crypto assets regulation. It should be passed by the European Parliament next month and it will start to go into effect in 2024. And what they did was they looked at crypto assets and said, you know what, there's a bunch of different categories here and the ones that are financial instruments, those are not subject to our market and crypto assets regulation, even if they're on blockchain. And the reason for that is because they're financial instruments. They're already regulated under a whole other set of regulations. And whether they're on blockchain, they're still financial instruments, we're still going to treat them like financial instruments. So that's just one example of something that the market and crypto assets regulation has done to differentiate between the types of assets, between the types of crypto assets. And it's that kind of thinking that many of us believe is needed in the US and other jurisdictions around the world so that we don't just lump everything together.
Ric Edelman: And you mentioned that Europe has its MiCA set of rules that are going to be implemented - we're all confident - early next year. Are they operating, you know, all by themselves without regard to Asian countries, without regard to the US? Or is there coordination? Is there activity among these governments to work together to try to create a cohesive set of rules? I mean, after all, crypto is a global thing 24/7. You know, it doesn't really matter a whole lot if the British decide to create rules so the cars drive on the left instead of the right side of the road. But with crypto, that'd be a problem. So is there coordination going on or are we going to have 150 sets of rules with 150 different countries?
Lee Schneider: At least in the short-term, we're probably going to have 150 different sets of rules with 150 different countries. There will be variations, right? It's not going to be wildly different. And look, I would argue that that is not necessarily a bad thing so long as there's a bunch of basic principles that all of those regulatory regimes follow. And there is coordination happening at a global level. In fact, one of the things that me and others often advocate for is that kind of global coordination and collaboration by regulators. The regulations don't have to all be exactly the same, but we do think it's important that various core principles are in all of the regulations - things like market integrity, things like disclosure requirements, things like anti-fraud provisions, things like customer privacy, those kinds of things we think are very important. And we think that all of the jurisdictions who look at these issues and think about how to regulate crypto assets should take those things into account.
Ric Edelman: So if at the moment we're going to have in the short-term, you know, different rules being created by different countries, that means by definition that these countries are varying in their levels of speed with which they're adopting, creating these new rules. Some are going to have them in place faster than others. Where would you put the US? Are we ahead of the curve or are we moving faster than others, or are we behind the curve? Where are we?
Lee Schneider: So that's a little bit of a politically charged question. It depends on how you look at things. I think overall I would say that the US is a little bit behind the curve. There has not been, for example, much in the way of rule proposals from the SEC, from the CFTC, from the FTC, the Federal government consumer regulator. There has not been that much in the way of proposals from many of the states which have strong consumer regulatory functions and whatnot. And so that's something that people are working on in the US, but there just hasn't been anything that people have rallied around as sort of the standard. Various states have done things. There have been some minor things done at the federal level, but mostly what's going on is studying and thinking about the best way to have a regulatory regime. Do I wish it was going faster? Yes. You know, I spend time and energy talking with people about this all the time. It's one of the reasons that we created Global Blockchain Convergence. But there's many other groups that I'm part of and work closely with, so I do wish it was happening faster in the US. But, you know, sometimes taking our time may mean that we get it maybe a little bit better than some other jurisdictions. But I'm a big fan of what they've done in Europe and what they've done with MiCA. It's not perfect by any stretch of the imagination, but it's very solid. It's a good beginning so that they can start to see how different businesses in crypto assets and using crypto assets are able to develop and putting in place some basic ground rules so that they don't do bad things to consumers so that they don't steal money and other things like that.
Ric Edelman: Has the FTX scandal had any impact on regulatory action? Are people feeling this proves crypto ought to be banned or are people feeling this proves crypto has got to get regulated?
Lee Schneider: I think there's a split. I think there are some people, I hope it's a small minority, who think that crypto should be banned. I do think that it has hastened a lot of people's, especially in the US, thinking about how to regulate crypto. But look, the whole thing was an awful situation. I don't want to be part of a community that's engaged in fraud. I don't want the people to come off as a pillar of my community. And yet in the background, all they are is a fraudster who's stealing money. That's not the people that are by and large in blockchain and crypto. And so I think if this results in some kind of a total ban in the US, A) it's going to hurt the US economy, but B) it's not fair to those of us who have been working long hours and thoughtfully about how to build the technology, how to regulate the activities, how to create good investment opportunities and business opportunities, etc. There's a whole world growing up around blockchain and crypto, and if that gets shut off by the US government or by a state government, I think that's a bad result on many levels.
Ric Edelman: And you mentioned economic impact. Why is crypto important for economic growth? Is it? I mean, that's the argument that a lot of people make, including me, that crypto has tremendous potential for economic growth. What's your view on that and why do you feel that way?
Lee Schneider: So notwithstanding that, I graduated with a degree in economics from the University of Michigan many, many, many years ago, I have forgotten all of the econ that I was taught back then, and it's probably all too old to be mentioned in any serious economics context these days. Look, I think what's happening here is similar to what has been happening with the Internet over the course of time. The new technology is making people think of creative ways to use it, to think of creative solutions to problems that they see in the world. And if the technology can facilitate that, then I think that's great. I the other thing about the technology, though, is it is open for anybody to use. Anybody with a computer and access to the Internet can, for example, run a validator node on the avalanche network or on Ethereum or some other network. Anybody with a computer and Internet access can program a smart contract and create their own crypto assets and create a business around those crypto assets. Remember my example of the artist, right? So that, I think, openness of blockchain and crypto I think will enable a lot of really positive economic activity.
Ric Edelman: You've referred to Web 3.0 as the transfer of value over the Internet, which we've talked about with NFTs, for example. I've heard you say that as a result of all this tech, communications, commerce and recreation will never be the same. I get the communications. I get the commerce. Recreation?
Lee Schneider: Well, you know, occasionally I engage in a little bit of hyperbole. But let me give you a good example of recreation. Gaming is - and I don't mean gambling, I mean gaming. You know, World of Warcraft. Fruit Ninja. Any games that people play. That industry is really embracing blockchain and in particular, it's embracing NFTs. And the reason it's embracing it is because you can create that digital uniqueness, right? Remember the example of, I create a piece of digital art and sell it to you using an NFT. You can do that in games and by creating that digital uniqueness in games, making those digital goods portable from one game to another within the same universe, etc., that's part of recreation. You know, all of us spend time on different types of games for recreational purposes. More and more people are doing that online gaming, video gaming, whatever you want to call it. eSports. All of that is happening very much online. And those companies, by the way, that's like a $45 billion a year business, right? So we may sort of snicker about games, Oh, that's just for kids, but it's a $45 billion a year business. So there's a lot of adults doing it as well. And so using the blockchain infrastructure again to help improve the gaming experience on the Internet is one way that recreation is going to be changed using blockchain.
Ric Edelman: We've been talking with Lee Schneider. He's the general counsel at Ava Labs. Lee, thanks so much for sharing your wisdom with us.
Lee Schneider: No, this was great. And I'm glad I didn't have to give any legal advice. My job is only to give legal advice at Ava Labs. So this was the general nuisance part, not the general counsel part.
Ric Edelman: Well, glad to have you both ways. That was Lee Schneider, general counsel and, yes, general nuisance at Ava Labs.
How to Empower Yourself and Others with Empathy
Your human capacity is boundless
Jean Edelman: Wonderful to be with you today. Today I want to talk about empathy. Most days, the harshness of life is when others are judging us. The judgment comes from close mindedness and not having empathy for others. When we judge another, we are missing the most important part of the equation: the other person's history and personal path.
I recently had an experience that I do wish to share because it was something due to my asthma and my bronchitis earlier this year. I wear a mask. I wear a mask to protect my lungs. Well, we happened to be out of town and I went into a food store and I chose all my items and I was at checkout. And this clerk, I noticed all of a sudden she was throwing my items to the end of the bagging area, not even attempting to bag them. People are starting to collect behind me and that's making me nervous. So I quickly put my credit card in the machine and then I run around to the bagging area and I start bagging all the groceries that I just picked out. It was very surreal because I actually didn't say anything. I'm just watching this woman throw my items.
I'm watching people collect behind me and I'm watching them watch me to see how I'm going to react to all of this. I was getting a little nervous about it. Once I bagged everything up, she literally threw the receipt at me. And oh, to add to that, because I was bagging, I didn't pull my credit card out. She literally threw the credit card at me. So it really was quite upsetting at the moment.
Here I am trying to protect my lungs because I have asthma and this bronchitis that I'm still trying to heal from, and here this person doing her job is judging me, judging me because I'm wearing a mask and then choosing to react to it. I could see if she had an opinion, but she didn't have to throw my groceries, make me bag, and then throw my receipt and credit card at me. When I got home, I did call the store manager and had a nice chat there.
So here's the action item for the week. Can we just check in with ourselves? Are we passing judgment on someone? Can we stop and ask ourselves why? Can we stop and try to see the situation through their eyes? Now, it's first quarter of the year and there's not that much Covid around, but there are still people wearing masks. And if it was a kind, compassionate person, maybe they just would have said, “Hey, I hope you're feeling better or hope you're feeling okay,”… because obviously there's a reason why I was wearing a mask.
I ask that when we stop and we think and we try to evaluate the situation, are we treating others as we wish to be treated? That's the big question in all interactions with all people.
So my word of the week is to SEE.
The S is to See, to see the world through the other person's eyes. Treat others as we wish to be treated.
The E is to Engage. You know what? Start a conversation, ask some questions. All people love to talk about themselves. They'll be happy to tell the story. And then we can say, Oh, now I understand.
And the other E is for Easy, to be easy with others and ourselves. What is so important that we must ruin someone's day because we are judging them?
As I reflect on the moment, I can't imagine what others were thinking as that person was being so rude. Let us have empathy. Let us stop and think and ask some questions and try to see through the other person's eyes, the other person's journey. This person made me sad and that was really unfair to affect my day that way. So let's think about how we're treating people and how we're making them feel. Have a great week everyone and have empathy.