Warren Stephens on politics, the economy and retirement

Billionaire businessman Warren Stephens – chairman and CEO of Stephens Inc., philanthropist, and golf aficionado – has made headlines in the past week.

He was recognized for his contributions to economics education in Arkansas and revealed more details of how his golf club, the Alotian, came to host the 2019 Arnold Palmer Cup. Earlier this year, he was inducted into the Arkansas Business Hall of Fame.

Stephens, 62, was available for interviews following the Palmer Cup announcement at the Alotian on Wednesday (March 27). Talk Business & Politics CEO Roby Brock discussed politics, the economy, and Stephens’ “plan” for retirement from the company he’s led since he was 29 years old.

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Roby Brock: I know that there is this capitalism versus socialism debate that’s raging in the country. You’ve been very vocal about that. Are we using the right phraseology on all of this, because I think you would probably be in favor of lightly-regulated capitalism. I see a lot of what’s being pushed from what some people are calling socialist is just a more heavily-regulated capitalism. Maybe it’s just a difference in how tax money should be used. Is capitalism versus socialism really the clearest way to describe that?

Warren Stephens: When you look at socialism, and Bernie Sanders declares he’s a socialist, AOC [Alexandria Occasio-Cortez] says the same thing. I mean, I know what socialism is: it’s state control of resources. That compared to the market or the consumer dictating through their purchases what gets produced and what services get offered, the state will determine that.

That’s just not a good system. It’s never worked, right? I mean, I’ve never really seen a place where it works. Somebody said, “Well, Sweden works.” I did a little research on that, and they went much further, and they had to backtrack to change it so they could have some market-based part of their economy. I am for certainly having regulations. But, socialism is not regulation.

Socialism is when they say, “Companies have to stop these share buybacks. We’ve got to do this, we’ve got to do that. We’re gonna take away your healthcare and give free healthcare for all.” Well, who pays for that?

Brock: Is that socialism or is that just a difference in how government should be spending tax money and setting policy?

Stephens: They describe it as socialism. I didn’t do that. They describe themselves [and] you need to take people at their word. They’re telling you what they believe in, and once you get the state controlling industries and resources, it’s just not going to work out well for the consumer.

Brock: Give me a grade on the economy. Between the Fed’s moves, Trump’s policies, the trade wars, what you’re seeing percolating in terms of consumer and economic activity – what’s moving in the right direction, what’s moving in the wrong direction?

Stephens: Just kind of talking to businesspeople, I think things did slow down in January and February, and maybe the first part of March. But, what I’m hearing now is things are picking back up. I certainly hope that’s the case.

The Feds certainly seem worried. No more rate increases this year, and maybe one next year. They have more data than I do. I can’t get myself there to be worried yet. Maybe they know more than I do and it’ll become more apparent. The yield curve is slightly inverted and that’s never a good sign. In fact, I think it’s the most accurate predictor of a recession out there. But, it’s just slightly inverted… it may turn out to be we’re headed for a recession, but so far I’m not really seeing it.

Brock: Last question for you: there was a video of you at the Economics Arkansas event that showcased how you came to take over as CEO at the age of 29, when your father handed you the reins. You have some kids who are about in that range.

Stephens: Yeah, they are.

Brock: I know Miles is taking over Stephens Insurance as CEO. Do you have plans for a potential transition? Is that something you’ve been thinking about? What will be your approach to handing over some of the leadership roles?

Stephens: Well, we’re fortunate that all three of our children are bright and hardworking and they all get along. The answer to your question is, yes, in terms of handing over the reins.

I don’t think it’ll be different than – of course, we’re a much different organization than when Dad did it. It’ll be different, and in a way, it’s kind of happening.

Miles is now running Insurance, and son John is over in our London operation. He’s very involved in what’s going on in London, which is tough with Brexit and the uncertainty around that. We have great people there, but that’s been a tough environment. My daughter, Laura, is really the driving force behind the “This is Capitalism” video series. So it’s just happening, and it’s great.

I certainly would like to spend a little more time doing exactly what I want to do. Not that I don’t like what I do at work, because I do. But, I’ll never fully retire. It’s kind of like my Dad, he never really retired. He was always around and available and there were some areas he was more involved in than others. But, day-to-day and whatnot, yeah, there’s got to be a transition.

Brock: Good luck and thanks.

Stephens: Thank you, Roby.