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Speaker 1: This is Masters in Business with Barry Ridholts on Bloomberg Radio.

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Speaker 1: This week we have an extra special bonus podcast. Last

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Speaker 1: month I went to the t D Elite Link Conference,

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Speaker 1: which is a small gathering of about two hundred advisory

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Speaker 1: firm executives that run over three hundred billion dollars. This

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Speaker 1: is an annual event goes from city to city each year.

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Speaker 1: This year it was in lovely Dana Points. If you

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Speaker 1: know that part of California, next to Laguna, It's just

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Speaker 1: spectacular ocean front. As lovely a location for a conference

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Speaker 1: as you'll find. I had the privilege of interviewing Tim Hockey.

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Speaker 1: He is the CEO and president of td A merrit Trade,

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Speaker 1: a company that serves both individual investors and independent r

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Speaker 1: i A s. They have total client assets of about

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Speaker 1: one point three trillion dollars as of the end of

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Speaker 1: the second quarter. They are the custodian of choice for

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Speaker 1: a number of r A r i A s UH.

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Speaker 1: They are one of my two custodians we work with

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Speaker 1: t D and Schwab at r W M and UM.

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Speaker 1: The other person I interviewed was Tom Nallly. He is

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Speaker 1: the president of td A Merritrade institutional which provides custody

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Speaker 1: and brokerage services to more than seven thousand UH independent

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Speaker 1: r i A s. That's about six hundred and fifty

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Speaker 1: billion dollars under custody. This is very much an inside

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Speaker 1: baseball conversation. If you are an r i A, if

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Speaker 1: you're interested in the investment management or financial planning business,

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Speaker 1: then this really is uh inside baseball stuff that is

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Speaker 1: must listen. So, with no further ado, my interview with

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Speaker 1: Tim Hockey and Tom Nally. So the real brief introduction.

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Speaker 1: When I was doing the homework for this, t D

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Speaker 1: manages or custodies one point three trillion in total client assets,

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Speaker 1: eight hundred and sixty thousand average clients trades per day UM,

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Speaker 1: generating about a billion and a half revenues a year.

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Speaker 1: That is a really substantial set of data UM, and

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Speaker 1: it says a lot about what this organization is about. So,

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Speaker 1: so let's start with some questions, beginning with Tim, So,

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Speaker 1: what does it mean to be a CEO of such

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Speaker 1: an enormous organization? How do these challenges differ from other

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Speaker 1: roles you've played within the company. Well, I was talking

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Speaker 1: to the advisor panel this morning and I've said it's

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Speaker 1: now been three and a half years since UH, since

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Speaker 1: I took on the job as CEO UH and having

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Speaker 1: come from the TD Bank in Canada. It's very dramatic difference. UM.

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Speaker 1: The dramatic difference is you know the phrase the buck

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Speaker 1: stops here. You feel that in spades UH in in

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Speaker 1: this job and this rule in particular, an enormous sense

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Speaker 1: of responsibility UH to the all of the constituents. Doesn't

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Speaker 1: matter whether it's your associates, or your clients, or your

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Speaker 1: your shareholders or frankly the communities that that all of

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Speaker 1: our people work in. It's just that sort of UM.

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Speaker 1: Don't want to let people down. I guess is the

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Speaker 1: UH is the largest issue, the biggest shift from the job.

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Speaker 1: If you graduate into this rule and to see role

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Speaker 1: and get promoted in is is literally the time horizon.

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Speaker 1: Your time arizing, by definition has to shift out. UM.

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Speaker 1: If you want a geek out on management theory for

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Speaker 1: a second, the basic premises, organizational hierarchies, levels of an

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Speaker 1: organization six, seven, eight, nine, whatever it is, UM, they

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Speaker 1: all depend on what sort of time arising you have.

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Speaker 1: So if you're a if you're a bank teller, you

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Speaker 1: know you've got a time arising in one day, right,

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Speaker 1: it's your shift. If you are processing a piece of

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Speaker 1: paper as an administrator, it's a one day time arising.

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Speaker 1: If you're an entry level supervisor that second level, then

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Speaker 1: it's a very short period of time, probably a week,

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Speaker 1: maybe a couple of weeks. As you go up your organization,

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Speaker 1: your time arising apps to shift out. So if you

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Speaker 1: go from Tom's level six seven levels in your organization,

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Speaker 1: you can have a time arising up saying how do

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Speaker 1: I transform the institutional business with five to ten years

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Speaker 1: of time rising? And then at the CEO of the

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Speaker 1: firm level you should be running from ten to twenty

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Speaker 1: years and that that means you've got to try and

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Speaker 1: keep all your balls moving to be able to um,

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Speaker 1: you know, hit those objectives a long way out with

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Speaker 1: a lot of variabilities. So anyway, enough geeking out. But

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Speaker 1: that's that's the biggest difference in this job. So let

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Speaker 1: me pull it back from the geek side. When when

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Speaker 1: you find out um, you're going to be CEO, you

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Speaker 1: say to yourself, I don't think people really know who

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Speaker 1: I am. Maybe I should write a bo look and

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Speaker 1: tell a little bit about myself, explain the thought process there. Uh. Well,

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Speaker 1: thankfully it wasn't a book that would have taken too long.

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Speaker 1: But after being at a TD for thirty two years

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Speaker 1: and pretty much knowing everybody knowing me, when I came

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Speaker 1: to TD and merit right, I realized it was going

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Speaker 1: to be an unknown quantity. And anytime you have a

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Speaker 1: new boss, what does everybody think? They say, all right, well,

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Speaker 1: what's he or she like? You know, what's their management style?

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Speaker 1: What do they value? And we generally with a new boss,

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Speaker 1: will spend literally months or years trying to figure that

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Speaker 1: person out. And so what I did when I got

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Speaker 1: here was to recognize that that was what you know,

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Speaker 1: Tom and the rest of the team was thinking about.

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Speaker 1: And I actually spent some time on a very rainy

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Speaker 1: weekend at my place in South Carolina and pen something

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Speaker 1: I called it was the User's Manual to Tim or

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Speaker 1: Users Guide to Tim. Uh and it just basically it

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Speaker 1: was an open book. I said, here's what I what

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Speaker 1: I think about management, Here's what I believe, here's you know,

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Speaker 1: everything you would want to know about me, and and

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Speaker 1: you know, taking glass of red wine and and read

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Speaker 1: it and hopefully it'll be helpful, and then hold me

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Speaker 1: accountable to it. Uh. And that's that's the that's the trick.

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Speaker 1: And so then I sent it out to my leadership

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Speaker 1: team and they then said, well, can we send it

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Speaker 1: to our leadership team? And they said, and we send

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Speaker 1: it to our leadership team. And that was the theory

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Speaker 1: behind it. Very very good practice to go through. I

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Speaker 1: would highly recommended it, not just because I think it's

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Speaker 1: helpful for as a new leader in an organization. H

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Speaker 1: I actually went through with my wife and my two boys,

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Speaker 1: and they're the harshest critic and so they read the

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Speaker 1: first draft in the second draft and they said, yeah,

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Speaker 1: that's that's not right, so change that, fix that. Um.

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Speaker 1: But it does force you to be crystal clear and

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Speaker 1: your expectations of yourself and and live up to those

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Speaker 1: with your team. And I could say it was incredibly

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Speaker 1: helpful for somebody who was trying to understand, Okay, who

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Speaker 1: is this guy that just you know has shown up

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Speaker 1: on the scene that based upon a relationship with t

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Speaker 1: D kind of have some level of familiarity with him

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Speaker 1: because of his previous role and you get to see

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Speaker 1: him once a year and this big giant convention speak.

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Speaker 1: But then to actually see this and understand who he

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Speaker 1: is as a person. It just gives you a nice

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Speaker 1: roadmap to to figure out, Okay, how do I interact

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Speaker 1: with him? And it was really incredibly helpful. So Tom,

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Speaker 1: let's let's talk a little bit um about you. You've

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Speaker 1: helped rant t D up to seven thousand independent r

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Speaker 1: I a s tusting in with two D America Merritrade

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Speaker 1: Internet Institutional Um. That's a giant success by any measure.

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Speaker 1: What was that process like and where did you encounter

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Speaker 1: major road roadblocks? I would say it was a long slog.

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Speaker 1: We've been at this for you know, more than two

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Speaker 1: decades now, and uh I think it all started with

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Speaker 1: just having a really keen focus on understanding, you know,

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Speaker 1: what the needs of the advisor actually are and trying

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Speaker 1: to craft a value proposition that delivers on those needs

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Speaker 1: and make sure it was able to evolve over time

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Speaker 1: as those needs change, as the market change, and so

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Speaker 1: on and so forth. And it's been uh an incredible,

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Speaker 1: you know, right. I mean, we've been trying to take

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Speaker 1: advantage of this massive secular trend towards the independent are

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Speaker 1: a model that is we don't think going to slow

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Speaker 1: down anytime soon. It's great for our industry. It's it's

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Speaker 1: great for UH financial services in general. You know, it's

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Speaker 1: amazing when you see the beauty of just putting the

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Speaker 1: client first, what can happen, and that goes for us,

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Speaker 1: it goes for you. It's been a wonderful road and

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Speaker 1: you know, we feel like we're just getting some momentum

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Speaker 1: here as people become more aware of what it is

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Speaker 1: are as actually do and how it's doing the right

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Speaker 1: thing for for clients, which is fantastic. So what were

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Speaker 1: the big surprises on the road to seven thousand and

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Speaker 1: and beyond. Well, I think just the change that's taken

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Speaker 1: place in our space. You know how advisors businesses have

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Speaker 1: have evolved in change. When I first started, most are

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Speaker 1: A firms were portfolio allocation shops, and then they started

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Speaker 1: to become comprehensive wealth management firms, adding on more and

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Speaker 1: more services. And today basically, you know, all of you

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Speaker 1: are being asked by your clients to be all things,

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Speaker 1: you know, give me advice on all things that have

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Speaker 1: to do with money in my life, and think about that.

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Speaker 1: I mean, it's basically everything. So we're trying to keep

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Speaker 1: up with the evolution of what your clients are demanding

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Speaker 1: from you and enable you to deliver great client experience,

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Speaker 1: you know, at scale, high quality. So it's it's it's

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Speaker 1: been amazing just to watch that happen and see how

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Speaker 1: the industry has evolved. The other thing is just the

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Speaker 1: shift and the trend towards are as versus the wire houses.

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Speaker 1: You know, in the last ten years, wire houses have

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Speaker 1: lost about eleven points of market share and the ra

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Speaker 1: A channel has captured about eight eight points of that,

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Speaker 1: which is which is spectacular. And the more and more

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Speaker 1: consumers get smarter about the relationships that they enter into,

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Speaker 1: you know, that will continue to change. The more advisors

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Speaker 1: recognize that I can do this better on my own

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Speaker 1: rather than being in a captive environment, will continue to

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Speaker 1: see advisors shift and and go independent and join existing firms.

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Speaker 1: We've seen an enormous amount of capital flow in So

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Speaker 1: it's it's it's been an amazing, amazing ride. So, Tim,

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Speaker 1: you have to balance your your attention on two different groups.

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Speaker 1: On the one hand, you have all of your R

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Speaker 1: I A clients. On the other hand, there are shareholders

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Speaker 1: and there are owners of TV that UM need to

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Speaker 1: be satisfied. How do you balance the two of those

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Speaker 1: where's the focus and do you ever, um find the

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Speaker 1: place where it's sometimes challenging to strike the exact right tone.

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Speaker 1: I don't think it's actually a trade off between the two. Um.

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Speaker 1: You know, my general philosophy and I think I wrote

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Speaker 1: it down down that book was you take care of

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Speaker 1: your associates, they take care of your clients, and the

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Speaker 1: clients then take care of the shareholders in that sort

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Speaker 1: of sequence. UM. Actually I can I can draw a

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Speaker 1: little bit on your last question of Tom to sort

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Speaker 1: of make the point everybody in this room is participated

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Speaker 1: in this extraordinary shift to the r A channel of

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Speaker 1: the last ten years, said this morning, it's it's tripled

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Speaker 1: in size and um in ten years. But Tom's business

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Speaker 1: he started stuffing envelopes in institutional business, you know how

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Speaker 1: many years ago? And now was it twenty five years?

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Speaker 1: I wasn't gonna out it, but okay, but it was

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Speaker 1: twenty five years ago. He started in the institutional business

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Speaker 1: for for T d A. And we've grown six times.

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Speaker 1: And so you have that sort of focus on doing

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Speaker 1: right by your clients and helping them be successful, and

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Speaker 1: the shareholder gets massively rewarded. And UM, I also you

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Speaker 1: know shared this story with the panel this morning. I

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Speaker 1: thought it was a great one because we actually went

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Speaker 1: and did a long term view of our of our

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Speaker 1: performance as a company. Here we are as a as

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Speaker 1: a wealth management firm, we should take a look at

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Speaker 1: our own performance and say how have we done? So

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Speaker 1: here's here's other MathWorks and I think it's a fun story.

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Speaker 1: We I pot as a company in adjusted price a

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Speaker 1: buck fifty, so here we are now at fifty and change.

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Speaker 1: So there were forty six hundred public companies back in

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Speaker 1: those h in interveting years. Twenty four hundred of those

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Speaker 1: forty six hundred, uh were bought, so they consolidated into

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Speaker 1: the others. Eleven hundred of those hundred companies basically, UM,

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Speaker 1: we're delisted and so they're got so about eleven hundred

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Speaker 1: companies left. We're still one of the eleven hundred. Then

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Speaker 1: if you say, all right, what was the size of

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Speaker 1: those companies? Of those eleven hundred, there was about six

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Speaker 1: hundred that had this similar market cap to we did

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Speaker 1: when we I POD about two hundred million dollar market cap.

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Speaker 1: Now we're thirty billion. So out of those six hundred

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Speaker 1: companies that remain, UM, we rank ordered them in terms

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Speaker 1: of total shareholder return, and we are number eleven out

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Speaker 1: of six hundred over those twenty two years since our

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Speaker 1: I p O. No big surprises to uh, who's number

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Speaker 1: one Apple? But I think that's long term success and

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Speaker 1: performance as a company going back from the I p

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Speaker 1: O days, comes from being a combination of the right things.

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Speaker 1: Great leadership. You know, I've only been here three years,

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Speaker 1: but you know, guys like Tom twenty five years and

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Speaker 1: Fred and Joe and our founder UM riding a wave

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Speaker 1: of success focusing on your clients and the value you

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Speaker 1: can deliver, and the shareholder gets intensely rewarded for that.

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Speaker 1: So this has just been a great right for us.

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Speaker 1: So Tom, let's talk a little bit about some of

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Speaker 1: the elements that have led to this success, starting with technology.

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Speaker 1: If there's a question I hear from advisors more than

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Speaker 1: anything else, it's how can I be cutting edge UH

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Speaker 1: and provide the technology I need to run my business

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Speaker 1: and my clients want without getting distracted by every new

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Speaker 1: shiny object that comes along. Yeah, I mean it's a

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Speaker 1: great question. I think you know. Our view is technology

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Speaker 1: is the great enabler, right. It enables you to deliver

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Speaker 1: more services to your clients and you know, have a

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Speaker 1: more robust value proposition. And I think you almost need

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Speaker 1: to break that into two different things, right. The first

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Speaker 1: thing is there's probably a lot that are mature technologies

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Speaker 1: that are out there that you can take advantage of

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Speaker 1: now in the immediate term to improve your efficiency your

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Speaker 1: client experience. Many times that's you know, one and the

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Speaker 1: same and work on implementation. On the second half of it,

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Speaker 1: you really need to keep your ear to the tracks

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Speaker 1: around what are consumer trends, What are you know, the

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Speaker 1: expectations of the consumer, not just in financial services, but

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Speaker 1: in just the way they interact in their life. You know,

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Speaker 1: with Amazon, Google, you know, Apple, a lot of the

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Speaker 1: top companies, to see how those trends are evolving, and

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Speaker 1: then work with the firm like ours to give us

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Speaker 1: insights into what it is that you need what you need.

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Speaker 1: What we're seeing is a lot of firms getting pushed

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Speaker 1: into adding these additional services. So how can we partner

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Speaker 1: together to deliver your you technology you know at scale

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Speaker 1: l that you might not be able to do on

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Speaker 1: your own. So I think there's a commodation of factors

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Speaker 1: that you need to focus on there. But technology really

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Speaker 1: is the biggest opportunity out there because if you think

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Speaker 1: about everything in your business is pretty much going to

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Speaker 1: be automated, which is a good thing. Technology is a

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Speaker 1: tool for all of us to utilize across every facet

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Speaker 1: of of whether it's trading, rebalancing, you know, risk management, CRM, portfolio,

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Speaker 1: you know, reporting, the whole nine yards, and that just

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Speaker 1: frees you up to spend more time deepening relationships with

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Speaker 1: your clients, which is what clients really care about. You know,

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Speaker 1: we have one advisor to say to me one time,

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Speaker 1: and it really stuck with me, and I continue to

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Speaker 1: bring this up. Nobody ever walks in the offense says

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Speaker 1: I want to beat the SMP by five points. They

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Speaker 1: walk in and say, am I gonna be okay? And

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Speaker 1: technology enables you to have all of those tactical things

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Speaker 1: done in an automated fashion, so you can spend the

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Speaker 1: time really getting to understand what are the hope stream

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Speaker 1: spheres of those clients and make sure that you're you're

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Speaker 1: meeting those needs and and delivering on what they're most

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Speaker 1: concerned about. So, so you mentioned rebalancing is a technology,

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Speaker 1: how do you decide internally, hey, we can build something

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Speaker 1: that will push a button and automatically rebalance and do

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Speaker 1: some tax loss harvesting, or oh maybe there's a company

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Speaker 1: out there that might be much more mature and further

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Speaker 1: along and it will be faster and more efficient to

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Speaker 1: buy it like I Rebound. How does that decision build

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Speaker 1: your by be made and what sort of elements are

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Speaker 1: you thinking about? See from our perspective when we go

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Speaker 1: through that you know, uh equation. I mean, we really

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Speaker 1: are looking if we're gonna make an acquisition where there's

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Speaker 1: got to be white space where we can be an

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Speaker 1: industry leader and it fits within our core capabilities of

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Speaker 1: the services that we type, we try and deliver and

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Speaker 1: get strategic advantage like with I Rebound. Now, I rebould

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Speaker 1: has you know, probably more than fifty market share in

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Speaker 1: that rebalancing space, so there was an opportunity there. If

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Speaker 1: we don't think that we can can carve that out

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Speaker 1: for ourselves, we would rather have an open up which

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Speaker 1: our technology platform is very open architecture, you can plug

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Speaker 1: in many different types of systems. Um we'd rather partner

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Speaker 1: with industry leaders and then work to give advisors advisors

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Speaker 1: guidance on how do you put the best technology stack

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Speaker 1: together that meets your and your client's needs, so it's

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Speaker 1: more it's a build by partner type arrangement. Now from

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Speaker 1: a from a build at yourself perspective, we do try

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Speaker 1: and be very focused around sticking within our swim lane

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Speaker 1: so that we can, you know, not have to spread

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Speaker 1: our resources too thin and make sure that we're not

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Speaker 1: leaking into areas where some of our technology partners within

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Speaker 1: the space are going to do a better job than us.

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Speaker 1: So it's being really focused and understanding, you know, how

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Speaker 1: you're going to deliver value. Just to add on a

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Speaker 1: little bit um, Really three types of decisions, three types

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Speaker 1: of acquisitions you want to make. The first is when

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Speaker 1: you need to do a strategic pivot. There's just a

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Speaker 1: you know your end of life with your particular business

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Speaker 1: model and say okay, I've got the capital, I've got

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Speaker 1: the cash cow, and now let me buy something that

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Speaker 1: gives me a brand new capability, no synergies. You invariably

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Speaker 1: pay too much for it, but in the long term

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Speaker 1: it pays off because you're safe. The second one is

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Speaker 1: a scale play, right um. And the third one is

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Speaker 1: that capability ad. I remember, back when we did the

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Speaker 1: scott Trade deal, a couple of years ago. The Wall

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Speaker 1: Street Journal article the day after that was announced was

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Speaker 1: written by an article by a journalist who said, oh,

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Speaker 1: they they're investing too much in the old model, as

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Speaker 1: in the consolidation the scale play of Scott Trade in ourselves,

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Speaker 1: they should have bought a robo advisor And of course

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Speaker 1: at the time they were saying we should have spent

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Speaker 1: five million dollars or thereabouts for uh in a robo

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Speaker 1: advisor player with you know, no assets to speak of.

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Speaker 1: We looked at that and we and I sort of

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Speaker 1: laughed because this the creation of the of the value

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Speaker 1: by doing the Scott Trade deal was enormous and to

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Speaker 1: all to make the equation of buying a robo player

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Speaker 1: at five million versus building it yourself in terms of

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Speaker 1: the capability at about five million, right, so you would

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Speaker 1: have paid you know, a hundred times what the what

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Speaker 1: it would take you because we already had the capability

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Speaker 1: to put the pieces together and spend a fraction of

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Speaker 1: the price. So that's sort of the equation. So so

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Speaker 1: since you bring up robo, let's talk a little bit

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Speaker 1: about swab has an automated solution vanguard across the hundred

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Speaker 1: billion in that what do you think of this space?

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Speaker 1: Is this the sort of thing UM Betterment recently pivoted

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Speaker 1: and began offering a white label version of their robo

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Speaker 1: to advisors. What do you guys think of this space?

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Speaker 1: Is something we could see UM a little higher profile

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Speaker 1: or not not in your swim lane. Yeah, so we've

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Speaker 1: long thought that robo isn't a business model. It's a

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Speaker 1: technology that is just another version of what Tom was

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Speaker 1: talking to. It's a tool that comes along and it

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Speaker 1: provides yet more automated versions of services and UM so

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Speaker 1: there are different versions of that if you go fully automated.

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Speaker 1: The current maturity of of our space and our client's

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Speaker 1: desire is most people try the fully automated model and

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Speaker 1: then realize, you know, you need to bolt on a

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Speaker 1: human element to make it really successful. Because of the

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Speaker 1: pricing that of the business models. My view is you

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Speaker 1: can't really get to scale until you're at a fifty

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Speaker 1: or sixty billion dollar asset level, and that's really tough

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Speaker 1: for the soul providers and and the the fintech upstarts.

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Speaker 1: To get to that level, there'll be one or two

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Speaker 1: survivors of In my view of robos as a as

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Speaker 1: a business model. But what you see is the maturation

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Speaker 1: in the industry, which is all the established players come

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Speaker 1: to the party, usually a little later, and they offer

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Speaker 1: that capability and they already have the distribution strength, they

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Speaker 1: have the brand, they have the client perception, and then

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Speaker 1: they tend to gather assets a lot faster. It's really

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Speaker 1: interesting though, just to add on too, that we were

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Speaker 1: because we have an open architecture technology platform, we were

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Speaker 1: one of the first adopters to go out there and

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Speaker 1: partner with about a dozen, you know, different robo technology

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Speaker 1: firms that some were going directly after the consumer and

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Speaker 1: we're going to be an r A themselves, and found

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Speaker 1: because of all the challenges that Tim dis mentioned, they

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Speaker 1: don't have the distribution, the brand, the capability. They quickly

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Speaker 1: pivoted to, hey, now we're going to distribute through advisors.

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Speaker 1: And they were expecting advisors to have a bifurcated business

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Speaker 1: model where they were going to go down market and

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Speaker 1: utilize the robo as the solution while they're keeping their

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Speaker 1: high net worth offering the same and they didn't really

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Speaker 1: see that materialize. So we saw very low adoption and

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Speaker 1: we actually have a product for our retail clients and

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Speaker 1: was built with the ability to pivot and deliver those

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Speaker 1: capabilities to advisors if the demand is surfaced, and it

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Speaker 1: really hasn't come to fruition. We haven't seen a lot

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Speaker 1: of advisor adoption of that type of technology because they

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Speaker 1: just haven't figured out how to you know, biflicate the

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Speaker 1: market and so on and so forth. So both of

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Speaker 1: you have made reference to what's going on in fees.

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Speaker 1: There's been a transition to some degree from active to passive,

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Speaker 1: but the bigger transition seems to be from expensive too cheap?

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Speaker 1: How much lower can fees get? How cheap is cheap? YEA, Uh, well,

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Speaker 1: I think there's a pressure on um price. Period. It

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Speaker 1: doesn't matter what sector you are in industry, let alone

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Speaker 1: in wealth management, whether it be asset management, whether it

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Speaker 1: be commissions on trades. There's a constant pressure. So why

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Speaker 1: is that, Well, because they're clearly excess rents. They're being

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Speaker 1: earned um. If a competitor can enter the space eke

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Speaker 1: out a profit, a rational profit or a reasonable profit,

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Speaker 1: and a return on their capital and at a lower price,

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Speaker 1: they're going to do that, That is absolutely a That's

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Speaker 1: a good thing for consumers. That's a good thing for

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Speaker 1: the economy to have price competition. UM, so what does

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Speaker 1: it force you to do? Well? It forces you to

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Speaker 1: get big enough so that you can have scale to

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Speaker 1: be able to match that. On the way down, it

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Speaker 1: forces consolidation in the industry, which is not always good. Um,

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Speaker 1: but it certainly keeps everybody on their toes. I don't

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Speaker 1: think the pressure is going to abate, because it hasn't

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Speaker 1: to date the h you know we were formed. I'd

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Speaker 1: like to say back to that date when our industry

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Speaker 1: was formed, when the regulation has changed. Think about the

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Speaker 1: regulation that was changed was allowing price competition amongst brokers. UM.

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Speaker 1: I had a chance to to get a copy of

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Speaker 1: It's a galley copy. It's not yet published. It's the

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Speaker 1: it's the autobiography from our founder, and so I'm reading

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Speaker 1: through it and I'm getting these sort of interesting little

432
00:23:48,720 --> 00:23:52,920
Speaker 1: anecdotes from uh when uh you know pre I P

433
00:23:53,040 --> 00:23:55,520
Speaker 1: O and in nineteen seventy five, and the reason why

434
00:23:55,600 --> 00:23:59,240
Speaker 1: the term discount brokerage actually got coined. I didn't realize this.

435
00:23:59,400 --> 00:24:02,480
Speaker 1: It was a risory term that was coined by the

436
00:24:02,560 --> 00:24:07,000
Speaker 1: full service firms because it was supposed to be negotiated commissions.

437
00:24:07,040 --> 00:24:09,320
Speaker 1: But they do said another, you're a discount broker, you know,

438
00:24:09,440 --> 00:24:13,119
Speaker 1: you're just you're just discount notably cheap as in no

439
00:24:13,359 --> 00:24:17,000
Speaker 1: value add and the time has happened or you know,

440
00:24:17,080 --> 00:24:19,200
Speaker 1: and and back down because of course it was trades

441
00:24:19,240 --> 00:24:21,720
Speaker 1: were fifty bucks and sixty bucks of trade and seventy

442
00:24:21,760 --> 00:24:25,760
Speaker 1: five bucks of trade, and that was a that was

443
00:24:25,840 --> 00:24:29,720
Speaker 1: the discounted price in and here we are at you know,

444
00:24:30,480 --> 00:24:34,320
Speaker 1: now call it off that price point or that price

445
00:24:34,400 --> 00:24:36,600
Speaker 1: point in the intervening period of time, and we're still

446
00:24:36,640 --> 00:24:38,960
Speaker 1: talking about the prices are going down to you know,

447
00:24:39,160 --> 00:24:42,439
Speaker 1: four or three two one zero. UM. My own view

448
00:24:42,560 --> 00:24:44,280
Speaker 1: is there's no such thing as a free lunch. There

449
00:24:44,320 --> 00:24:48,440
Speaker 1: never has been. Uh, there will always be, UM a

450
00:24:48,560 --> 00:24:50,879
Speaker 1: margin that needs to be eked out if there is

451
00:24:50,960 --> 00:24:53,639
Speaker 1: value provided to clients, and clients will happily pay for

452
00:24:54,560 --> 00:24:56,719
Speaker 1: for that value. So so let's talk a little bit

453
00:24:56,760 --> 00:25:00,560
Speaker 1: about that because I love that topic. I think people

454
00:25:00,640 --> 00:25:04,600
Speaker 1: get so enthusiastic about cheap, which is great, they don't

455
00:25:04,680 --> 00:25:09,760
Speaker 1: realize free is misleading because nothing is free. You're paying somewhere.

456
00:25:10,440 --> 00:25:14,920
Speaker 1: Some of your competitors will go without being mentioned, UM

457
00:25:15,280 --> 00:25:20,320
Speaker 1: offer free asset allocation, free robo adviser, and then there's

458
00:25:20,320 --> 00:25:23,200
Speaker 1: a little asterisk, and it turns out that free is

459
00:25:23,280 --> 00:25:27,160
Speaker 1: kind of expensive. You've discussed this in public in the past.

460
00:25:27,320 --> 00:25:31,480
Speaker 1: What what are your thoughts on free? Yeah, so again,

461
00:25:32,840 --> 00:25:35,000
Speaker 1: theory from my point of view is you don't want

462
00:25:35,040 --> 00:25:39,240
Speaker 1: to just compete on absolute price, because price itself is

463
00:25:39,280 --> 00:25:40,720
Speaker 1: a race to the bottom, and it just means you

464
00:25:40,800 --> 00:25:44,120
Speaker 1: have to be cheap, cheap, cheap, cheap. If if you're

465
00:25:44,400 --> 00:25:47,520
Speaker 1: if you're having a choice between competing only on price,

466
00:25:47,640 --> 00:25:50,840
Speaker 1: or primarily on price, or on product or on the

467
00:25:50,920 --> 00:25:53,720
Speaker 1: client experience, and it is a race to the bottom.

468
00:25:53,800 --> 00:25:55,840
Speaker 1: You know, I've said to my team many times, we

469
00:25:55,960 --> 00:25:59,920
Speaker 1: think we can create the most value and stand out

470
00:26:00,040 --> 00:26:01,720
Speaker 1: from a client experience point of view in terms of

471
00:26:01,800 --> 00:26:03,920
Speaker 1: all the capabilities we had for our clients. If we

472
00:26:03,960 --> 00:26:06,879
Speaker 1: had enough value, you will pay a reasonable price for

473
00:26:06,960 --> 00:26:13,720
Speaker 1: that value, UM by investing that return, if you will

474
00:26:13,880 --> 00:26:16,480
Speaker 1: for for the next little while, if prices go down

475
00:26:16,520 --> 00:26:18,400
Speaker 1: to zero, let's just imagine that. You know, five years

476
00:26:18,440 --> 00:26:21,080
Speaker 1: from now, UM, prices are gonna go down to zero.

477
00:26:21,760 --> 00:26:25,280
Speaker 1: Now there's two ways to compete, product and the client experience,

478
00:26:25,320 --> 00:26:29,120
Speaker 1: because prices now equated to zero for everybody. And if

479
00:26:29,160 --> 00:26:32,240
Speaker 1: that's the case, you better have wished you've differentiated yourself

480
00:26:32,320 --> 00:26:34,679
Speaker 1: on the client experience in needs reading time, because now

481
00:26:34,760 --> 00:26:37,640
Speaker 1: how do the cheap players compete? Right, they've been very cheap.

482
00:26:37,680 --> 00:26:41,080
Speaker 1: They probably don't have the differentiating factors. Uh, and as

483
00:26:41,080 --> 00:26:43,760
Speaker 1: a result, they're going to be stuck a little bit

484
00:26:44,160 --> 00:26:47,960
Speaker 1: making a difference. So having said that, there is no

485
00:26:48,400 --> 00:26:51,480
Speaker 1: zero there is no absolute free lunch. And as you said,

486
00:26:51,520 --> 00:26:54,440
Speaker 1: there are different pricing models, some of straight up front

487
00:26:54,800 --> 00:26:57,720
Speaker 1: and some of it has got hidden costs that the

488
00:26:57,800 --> 00:27:00,560
Speaker 1: client does end up playing somewhere your champion. Yeah, I

489
00:27:00,600 --> 00:27:02,919
Speaker 1: mean just two things. I mean from an r A perspective,

490
00:27:03,040 --> 00:27:06,160
Speaker 1: what's interesting is it's one of the areas and financial

491
00:27:06,200 --> 00:27:09,000
Speaker 1: services where you haven't seen a lot of price compression,

492
00:27:09,320 --> 00:27:12,959
Speaker 1: But what you've actually seen is just being advisor being

493
00:27:13,000 --> 00:27:16,239
Speaker 1: forced to add more services in order to differentiate their

494
00:27:16,320 --> 00:27:20,280
Speaker 1: value proposition, which adds expense, which makes technology and efficiency

495
00:27:20,440 --> 00:27:23,560
Speaker 1: that much more important so that you can maintain profitability

496
00:27:23,600 --> 00:27:26,040
Speaker 1: and so on and so forth. So technology really is

497
00:27:26,080 --> 00:27:28,720
Speaker 1: the key, and we think that's going to continue to happen.

498
00:27:29,119 --> 00:27:31,360
Speaker 1: I think you also need to look at relative value.

499
00:27:31,520 --> 00:27:33,399
Speaker 1: It's amazing to me when you see one of the

500
00:27:33,480 --> 00:27:37,399
Speaker 1: major Wirehouses just lowered the cost of their you know,

501
00:27:37,840 --> 00:27:41,120
Speaker 1: basic out of the box separate account program from two

502
00:27:41,240 --> 00:27:43,680
Speaker 1: hundred and seventy five basis points to two hundred and

503
00:27:43,760 --> 00:27:46,800
Speaker 1: fifty basis points is the max fitting. And they didn't

504
00:27:46,840 --> 00:27:49,480
Speaker 1: go to one fifty, right, so you lets you know

505
00:27:49,600 --> 00:27:52,200
Speaker 1: that people are still paying that price. And if you

506
00:27:52,280 --> 00:27:55,200
Speaker 1: think about what a consumer is getting when they're going

507
00:27:55,280 --> 00:27:57,440
Speaker 1: to an r A firm that uses t d A

508
00:27:58,119 --> 00:28:00,960
Speaker 1: and the services that they get in the fact that

509
00:28:01,000 --> 00:28:03,240
Speaker 1: their advisors sitting on the same side of the tables

510
00:28:03,320 --> 00:28:05,960
Speaker 1: them and the technology experience they're able to have on

511
00:28:06,040 --> 00:28:09,520
Speaker 1: a relative basis, they're basically paying less than half for

512
00:28:09,720 --> 00:28:12,640
Speaker 1: a much better experience. It's it's all about relative value,

513
00:28:12,680 --> 00:28:15,879
Speaker 1: I think. So you raise a valid point and I

514
00:28:16,000 --> 00:28:21,560
Speaker 1: want to throw it towards the audience. How should advisors

515
00:28:21,640 --> 00:28:25,840
Speaker 1: who are more or less charging similar fees communicate their

516
00:28:26,000 --> 00:28:29,639
Speaker 1: value add to both clients and perspective clients. It's one

517
00:28:29,680 --> 00:28:32,160
Speaker 1: of the biggest challenges that we have because what's happening

518
00:28:32,800 --> 00:28:36,639
Speaker 1: is as advisors add more and more services, some of

519
00:28:36,720 --> 00:28:39,760
Speaker 1: those services become commoditized depending on what type of business

520
00:28:39,800 --> 00:28:41,719
Speaker 1: you run. You know, there are many firms out there

521
00:28:41,760 --> 00:28:44,840
Speaker 1: that are just not trying to generate alpha, just utilizing

522
00:28:44,920 --> 00:28:47,200
Speaker 1: index funds and so on and so forth. But yet

523
00:28:47,320 --> 00:28:50,680
Speaker 1: they are still charging a percentage of assets under management.

524
00:28:50,960 --> 00:28:53,200
Speaker 1: But where clients find the most value is in the

525
00:28:53,280 --> 00:28:56,280
Speaker 1: comprehensive wealth management and that financial planning and a state

526
00:28:56,320 --> 00:28:58,360
Speaker 1: planning and so on and so forth. So we're seeing

527
00:28:58,440 --> 00:29:00,960
Speaker 1: firms start to figure out, hey, we need to experiment

528
00:29:01,080 --> 00:29:04,320
Speaker 1: with minimum fees. We need to think about maybe broadening

529
00:29:04,400 --> 00:29:07,360
Speaker 1: should it be based upon total net worth rather than

530
00:29:07,480 --> 00:29:11,320
Speaker 1: just investable assets, because you're you're advising on so much

531
00:29:11,360 --> 00:29:14,480
Speaker 1: more of a holistic, uh, you know, view of the

532
00:29:14,600 --> 00:29:17,160
Speaker 1: client's life and their wealth. So there's a lot of

533
00:29:17,240 --> 00:29:20,840
Speaker 1: challenges out there, especially with the introduction of the robos,

534
00:29:20,880 --> 00:29:23,280
Speaker 1: where you hear, hey, this robo will do everything for

535
00:29:23,360 --> 00:29:27,240
Speaker 1: twenty five basis points. That's tough to market against. But

536
00:29:27,480 --> 00:29:30,320
Speaker 1: it's the new client that you have to be worried about.

537
00:29:30,440 --> 00:29:33,600
Speaker 1: The existing client already realizes, oh my gosh, my advisor

538
00:29:33,680 --> 00:29:35,840
Speaker 1: does so much for me. My life is in order.

539
00:29:35,840 --> 00:29:38,440
Speaker 1: I couldn't imagine not having the services that they provide.

540
00:29:38,800 --> 00:29:42,240
Speaker 1: I would never go to a robo that's charging, you know,

541
00:29:42,360 --> 00:29:46,000
Speaker 1: so articulating that value proposition and the differentiation is is

542
00:29:46,080 --> 00:29:48,040
Speaker 1: one of the big challenges you have out there. So

543
00:29:48,720 --> 00:29:51,160
Speaker 1: Vanguard wrote a piece a couple of years ago. I'm

544
00:29:51,200 --> 00:29:54,840
Speaker 1: sure half the room is familiar with Advisors Alpha, and

545
00:29:54,960 --> 00:30:00,200
Speaker 1: it raises the perspective of the behavioral counseling is worth

546
00:30:00,280 --> 00:30:02,640
Speaker 1: more than the asset allocation, more than the stock picking,

547
00:30:03,000 --> 00:30:06,120
Speaker 1: more than all those things. Because if in a down

548
00:30:06,200 --> 00:30:09,600
Speaker 1: draft you panic and sell, and we know tons of

549
00:30:09,680 --> 00:30:13,600
Speaker 1: people who dump stocks in MARCHO nine and didn't get

550
00:30:13,640 --> 00:30:16,520
Speaker 1: back for years. Um, none of that matters if your

551
00:30:16,600 --> 00:30:21,960
Speaker 1: behavior is inappropriate. So how significant is the behavioral side

552
00:30:22,480 --> 00:30:25,000
Speaker 1: of what everyone in this room does for their clients.

553
00:30:25,040 --> 00:30:28,360
Speaker 1: I mean, that's where the juice is squeeze, That's where

554
00:30:28,480 --> 00:30:30,400
Speaker 1: you know the money is made, That's where the value

555
00:30:30,520 --> 00:30:33,120
Speaker 1: is delivered. Um, whatever you want to say. I mean,

556
00:30:33,200 --> 00:30:35,520
Speaker 1: it's it's amazing. There's a great staff from morning start

557
00:30:35,560 --> 00:30:39,400
Speaker 1: to A client can have twenty nine more income and

558
00:30:39,480 --> 00:30:42,280
Speaker 1: retirement if they hire a financial planner. I mean that

559
00:30:42,480 --> 00:30:45,400
Speaker 1: is an unbelievable stat And and think about most people

560
00:30:45,520 --> 00:30:48,120
Speaker 1: hire a financial planner of twenty years too late, right,

561
00:30:48,120 --> 00:30:51,560
Speaker 1: They've already made so many mistakes in their lives that

562
00:30:51,960 --> 00:30:54,040
Speaker 1: all of a sudden, they're forty five years old and

563
00:30:54,120 --> 00:30:56,040
Speaker 1: now it's time to go hire a financial planner. If

564
00:30:56,080 --> 00:31:00,240
Speaker 1: we can get people engaged earlier and getting to avoid

565
00:31:00,320 --> 00:31:02,600
Speaker 1: some of those mistakes, make the right decisions, I mean,

566
00:31:02,680 --> 00:31:05,280
Speaker 1: that value will go up exponentially. So I think it's

567
00:31:05,400 --> 00:31:08,000
Speaker 1: it's all about the you know, the coaching, you know,

568
00:31:08,120 --> 00:31:10,240
Speaker 1: don't worry like we're playing the long game. When we

569
00:31:10,320 --> 00:31:13,920
Speaker 1: see what happens during periods of volatility, most advisory firms

570
00:31:14,000 --> 00:31:17,080
Speaker 1: shift from going out there and going after organic growth

571
00:31:17,160 --> 00:31:19,160
Speaker 1: to hey, we've got to placate the base. We've got

572
00:31:19,240 --> 00:31:22,160
Speaker 1: to make sure that our existing clients are keeping their

573
00:31:22,240 --> 00:31:24,840
Speaker 1: eye focused on the longer time horizon in a long

574
00:31:24,960 --> 00:31:28,120
Speaker 1: term goal. We should anticipate peri into this market volatility,

575
00:31:28,160 --> 00:31:30,120
Speaker 1: but it's not going to knock us off track. So

576
00:31:30,320 --> 00:31:33,840
Speaker 1: that is invaluable. It's it's almost a measurable Yeah, I

577
00:31:33,880 --> 00:31:37,800
Speaker 1: can't can't reinforce that point enough. The power of a

578
00:31:38,000 --> 00:31:41,800
Speaker 1: discipline process that you work through with your clients are

579
00:31:41,880 --> 00:31:45,680
Speaker 1: just generally all of us in life. It's the compounding

580
00:31:45,720 --> 00:31:49,360
Speaker 1: effect of those incremental things that you can do that

581
00:31:49,400 --> 00:31:51,880
Speaker 1: will make the dramatic difference in the longer term. And

582
00:31:52,000 --> 00:31:55,400
Speaker 1: that to your point, is largely holding people accountable. It's

583
00:31:55,440 --> 00:31:58,760
Speaker 1: that coach. It's that uh, it's that discipline that all coaches,

584
00:31:58,840 --> 00:32:00,800
Speaker 1: whether it be your financial code tree, your sports coach,

585
00:32:00,880 --> 00:32:02,640
Speaker 1: or whatever else that enables you to do. Because left

586
00:32:02,680 --> 00:32:06,160
Speaker 1: to our own devices, clients and ourselves as individual humans

587
00:32:06,600 --> 00:32:09,360
Speaker 1: won't follow that same discipline. It's just human nature to

588
00:32:09,400 --> 00:32:11,920
Speaker 1: shoot ourselves in the foot, and the advisor there to

589
00:32:12,040 --> 00:32:16,120
Speaker 1: stop that. So speaking of um shooting yourself in the foot,

590
00:32:16,840 --> 00:32:20,560
Speaker 1: we we know lots of advisors like bells and whistles,

591
00:32:20,800 --> 00:32:23,360
Speaker 1: and they want more and more and more on their

592
00:32:23,960 --> 00:32:27,280
Speaker 1: um front ends and back ends of the technology. What

593
00:32:27,560 --> 00:32:30,280
Speaker 1: is the biggest request you're seeing from some of the

594
00:32:30,360 --> 00:32:33,920
Speaker 1: new tech What what is this room asking from t

595
00:32:34,120 --> 00:32:37,360
Speaker 1: d well. I would say there's two two things. One

596
00:32:37,480 --> 00:32:41,640
Speaker 1: is around just automating all of the processing right, making

597
00:32:41,720 --> 00:32:45,160
Speaker 1: sure that we can no longer have to be doing

598
00:32:45,320 --> 00:32:48,040
Speaker 1: data entry to open a new account or changing your

599
00:32:48,080 --> 00:32:50,080
Speaker 1: address or anything like that. How can we have a

600
00:32:50,360 --> 00:32:54,800
Speaker 1: digital environment because that creates efficiency for all of us

601
00:32:54,880 --> 00:32:56,880
Speaker 1: both at t d A and for advisors, but it

602
00:32:56,960 --> 00:32:59,640
Speaker 1: also leads to a better client experience. You know Tim

603
00:32:59,680 --> 00:33:01,840
Speaker 1: has meant in earlier we spoke to the advisor panel

604
00:33:01,920 --> 00:33:03,960
Speaker 1: where it's one of the first times you have the

605
00:33:04,040 --> 00:33:09,600
Speaker 1: intersection of investing inefficiency and improving your client experience are

606
00:33:09,800 --> 00:33:11,719
Speaker 1: kind of one and the same. So those investments are

607
00:33:11,800 --> 00:33:13,920
Speaker 1: are really paying off. It's a it's a great way

608
00:33:13,960 --> 00:33:16,200
Speaker 1: to to look at it because that's the kind of

609
00:33:16,240 --> 00:33:19,080
Speaker 1: stuff that nobody likes to do, that data entry work.

610
00:33:19,160 --> 00:33:21,320
Speaker 1: It's kind of silly in the technology world that we

611
00:33:21,400 --> 00:33:23,440
Speaker 1: have today the capabilities, we shouldn't have to do that.

612
00:33:23,560 --> 00:33:26,240
Speaker 1: So so that's a short immediate term. The second thing

613
00:33:26,360 --> 00:33:29,480
Speaker 1: is as folks are getting pulled into these adjacencies that

614
00:33:29,600 --> 00:33:31,920
Speaker 1: maybe they didn't give guidance on in the past, things

615
00:33:31,960 --> 00:33:36,040
Speaker 1: like long term care and elder care and college planning

616
00:33:36,080 --> 00:33:39,320
Speaker 1: and things like that, you know, even around you know,

617
00:33:39,440 --> 00:33:42,240
Speaker 1: just managing your your healthcare. What what plans should I

618
00:33:42,320 --> 00:33:46,440
Speaker 1: sign up for? These are expertise that advisors didn't necessarily

619
00:33:46,520 --> 00:33:49,320
Speaker 1: have in the past. So looking for ways to deliver

620
00:33:49,440 --> 00:33:52,440
Speaker 1: those services at scale with high quality, that's the thing

621
00:33:52,520 --> 00:33:54,920
Speaker 1: that we're really exploring now. So we'd love to hear,

622
00:33:55,320 --> 00:33:57,240
Speaker 1: you know from the audience, you know, over the last

623
00:33:57,280 --> 00:33:59,200
Speaker 1: couple of days, what are the things that your clients

624
00:33:59,240 --> 00:34:01,160
Speaker 1: are pulling you in too, as they ask you to

625
00:34:01,280 --> 00:34:04,800
Speaker 1: help you navigate everything within their financial lives and how

626
00:34:04,880 --> 00:34:07,440
Speaker 1: can we help you, you know, solve some of those problems.

627
00:34:08,080 --> 00:34:12,440
Speaker 1: So when Vanguard's new CEO started recently, Tim Buckley, I

628
00:34:12,520 --> 00:34:15,520
Speaker 1: got to do a ten question Q and A and

629
00:34:15,680 --> 00:34:19,000
Speaker 1: one of the questions was what keeps you up most

630
00:34:19,080 --> 00:34:22,600
Speaker 1: at night? His answer kind of startled me. It was

631
00:34:23,239 --> 00:34:27,799
Speaker 1: cybersecurity and hacken So first is what keeps you up

632
00:34:27,880 --> 00:34:31,720
Speaker 1: at night? And how concerns should we all be about

633
00:34:31,840 --> 00:34:36,040
Speaker 1: digital security? Yeah, I would say if you asked any CEO,

634
00:34:36,360 --> 00:34:40,120
Speaker 1: very n of them today would say that exact same

635
00:34:40,160 --> 00:34:43,080
Speaker 1: answer and be included. And you have to ask yourself why.

636
00:34:43,360 --> 00:34:45,919
Speaker 1: It's because it's one of those nightmare scenarios that even

637
00:34:45,960 --> 00:34:49,120
Speaker 1: though we all we spend literally hundreds of millions of

638
00:34:49,120 --> 00:34:52,879
Speaker 1: dollars on this, it's an arms race and the other

639
00:34:53,040 --> 00:34:56,840
Speaker 1: side is very much incentive to try and keep you

640
00:34:56,920 --> 00:34:59,040
Speaker 1: on your toes because if they find a little crack

641
00:34:59,120 --> 00:35:02,120
Speaker 1: in the door, they can they can not only rob

642
00:35:02,320 --> 00:35:07,839
Speaker 1: you and your clients, but you have an idiosyncratic reputational event. Right,

643
00:35:07,920 --> 00:35:10,360
Speaker 1: So it's one thing to be uh, I don't know,

644
00:35:10,440 --> 00:35:12,680
Speaker 1: we have a market meltdown, and then anybody that's in

645
00:35:12,719 --> 00:35:16,000
Speaker 1: the wealth manager space space basically rides that wave UM

646
00:35:16,920 --> 00:35:20,600
Speaker 1: onto the onto the rocks. If you have a cybersecurity event,

647
00:35:20,760 --> 00:35:23,320
Speaker 1: it's usually you have been attacked and your clients have

648
00:35:23,440 --> 00:35:28,520
Speaker 1: been exposed. And that's just a nightmare, an absolute nightmare scenario.

649
00:35:28,840 --> 00:35:31,160
Speaker 1: Now I can tell you the counter argument to that. UM.

650
00:35:32,520 --> 00:35:34,640
Speaker 1: It might seem a little bit a little strange, but

651
00:35:36,000 --> 00:35:38,360
Speaker 1: as time goes on and there are a number of

652
00:35:38,400 --> 00:35:43,240
Speaker 1: these data breaches, UM, I think consumers are becoming immune

653
00:35:43,400 --> 00:35:46,040
Speaker 1: to the next headline that sort of says, hey, a

654
00:35:46,160 --> 00:35:49,120
Speaker 1: hundred thousand cards here or you know, a million records here,

655
00:35:49,520 --> 00:35:51,640
Speaker 1: and you know, my the I R S database was

656
00:35:51,680 --> 00:35:54,480
Speaker 1: breached and the target data and people sort of go, wow,

657
00:35:54,560 --> 00:35:57,160
Speaker 1: you had another one. But it's like all things, even

658
00:35:57,200 --> 00:36:00,640
Speaker 1: though these these incredibly bad events happened to the company,

659
00:36:00,840 --> 00:36:03,880
Speaker 1: I think consumers are actually becoming numb to that effect.

660
00:36:03,960 --> 00:36:07,840
Speaker 1: And partly it's because you don't often see that the

661
00:36:07,920 --> 00:36:10,480
Speaker 1: next follow up article to that, you know, target has

662
00:36:10,520 --> 00:36:13,359
Speaker 1: a billion you know whatever it is credit cards being

663
00:36:13,400 --> 00:36:17,279
Speaker 1: breached and a hundred and fifty thousand clients had their

664
00:36:17,440 --> 00:36:22,600
Speaker 1: you know, financial records erased or money stolen. So the

665
00:36:23,120 --> 00:36:26,320
Speaker 1: headline risk is huge to c e O s and

666
00:36:26,440 --> 00:36:28,319
Speaker 1: so we never want to be in that. And yet

667
00:36:28,680 --> 00:36:31,520
Speaker 1: what's fascinating is you don't actually see as many of

668
00:36:31,640 --> 00:36:35,480
Speaker 1: the downstream implications of those breaches coming to fruition and

669
00:36:35,640 --> 00:36:38,200
Speaker 1: as I've always sort of curious as to what's happening

670
00:36:38,239 --> 00:36:39,880
Speaker 1: to all that data and why is it not being

671
00:36:39,960 --> 00:36:44,520
Speaker 1: exploited much greater degree. Are we seeing advisors and clients

672
00:36:44,560 --> 00:36:47,400
Speaker 1: becoming a little more sophisticated about security. I think we

673
00:36:47,480 --> 00:36:50,320
Speaker 1: absolutely are. I think it keeps a lot of advisors

674
00:36:50,480 --> 00:36:52,719
Speaker 1: up at night as well. And one of the things

675
00:36:52,760 --> 00:36:56,640
Speaker 1: that we've seen is we've seen the perpetrators move from

676
00:36:57,120 --> 00:37:00,319
Speaker 1: going after a t d A to going after advisor firm.

677
00:37:00,400 --> 00:37:03,120
Speaker 1: And now the weakest, you know, link in the chain

678
00:37:03,239 --> 00:37:05,440
Speaker 1: is the end client itself. And we see on a

679
00:37:05,600 --> 00:37:09,200
Speaker 1: daily basis, you know, clients that have their emails hacked

680
00:37:09,800 --> 00:37:12,640
Speaker 1: and they send an email to the advisor the bad

681
00:37:12,719 --> 00:37:15,560
Speaker 1: guy and saying, hey, you know, I'm in you know

682
00:37:15,800 --> 00:37:19,359
Speaker 1: Spain for my sisters, you know, wedding, and I need

683
00:37:19,600 --> 00:37:22,600
Speaker 1: you know, a hundred thousand dollars wired immediately to this

684
00:37:22,760 --> 00:37:26,320
Speaker 1: bank account. And it's amazing how many people will just

685
00:37:26,640 --> 00:37:29,880
Speaker 1: send those instructions in and you know, next thing, you know,

686
00:37:30,320 --> 00:37:32,560
Speaker 1: the money has gone. So you've got to be really

687
00:37:32,719 --> 00:37:35,920
Speaker 1: you know, vigilant and making sure that you are verbally

688
00:37:36,040 --> 00:37:38,600
Speaker 1: confirming with the client that this is in fact you

689
00:37:38,760 --> 00:37:41,600
Speaker 1: because email hacks are happening dozens of times a day

690
00:37:41,680 --> 00:37:45,000
Speaker 1: that we see. Luckily, we're able to prevent most of

691
00:37:45,080 --> 00:37:48,920
Speaker 1: them because Advisor's awareness has has has has gotten much better.

692
00:37:49,000 --> 00:37:51,360
Speaker 1: But it's a it's a serious issue. Yeah. The the

693
00:37:51,960 --> 00:37:56,400
Speaker 1: social engineering way of hacking in is way more productive

694
00:37:56,440 --> 00:37:58,000
Speaker 1: in the sense that they find out the name of

695
00:37:58,040 --> 00:38:00,359
Speaker 1: the principle of the firm or the CEO and find

696
00:38:00,400 --> 00:38:03,120
Speaker 1: a way to spoof your email get that information. People

697
00:38:03,200 --> 00:38:05,160
Speaker 1: just say, well, obviously it's not a hack. Per se

698
00:38:05,280 --> 00:38:07,040
Speaker 1: might just got an email from the CEO saying why

699
00:38:07,080 --> 00:38:10,520
Speaker 1: are this money or whatever it is. The alternative is

700
00:38:12,080 --> 00:38:14,600
Speaker 1: broad scale. You've got to you've got a breach that

701
00:38:14,680 --> 00:38:18,600
Speaker 1: people get directly in so you know, as firms, we

702
00:38:18,920 --> 00:38:20,680
Speaker 1: we are now doing much more. We first of all,

703
00:38:20,960 --> 00:38:23,120
Speaker 1: we're starting with an assumption that says the bad guy

704
00:38:23,280 --> 00:38:27,400
Speaker 1: is in the walls m and what do you do

705
00:38:27,840 --> 00:38:31,279
Speaker 1: knowing that you've already been breached? Now that's a supposition

706
00:38:31,360 --> 00:38:34,040
Speaker 1: because we can't find them, but it changes your mindset

707
00:38:34,160 --> 00:38:35,880
Speaker 1: is a firm from a security point of view if

708
00:38:35,880 --> 00:38:39,000
Speaker 1: you assume they're already inside the moat. That's the first thing.

709
00:38:39,080 --> 00:38:42,600
Speaker 1: Second thing is we started actually doing um bug bounties,

710
00:38:43,280 --> 00:38:45,680
Speaker 1: which is literally unlike having a red hat team or

711
00:38:45,680 --> 00:38:47,320
Speaker 1: a white hat team black hat, depending on how you

712
00:38:47,400 --> 00:38:50,520
Speaker 1: define them, of internal players to try and find your bugs.

713
00:38:50,960 --> 00:38:52,600
Speaker 1: You just pay money to people who tell you they

714
00:38:52,640 --> 00:38:57,600
Speaker 1: found one, and we're actually finding that We've I think

715
00:38:57,640 --> 00:39:01,120
Speaker 1: we've taken the cost of detecting a bug down by

716
00:39:01,160 --> 00:39:05,560
Speaker 1: about two thirds, and we're just essentially incenting bad guys

717
00:39:05,600 --> 00:39:07,520
Speaker 1: to come in and poke at us and then come

718
00:39:07,520 --> 00:39:10,120
Speaker 1: and tell us and we'll pay them. Way more effective

719
00:39:10,200 --> 00:39:13,279
Speaker 1: than just waiting for a very small subset of people

720
00:39:13,320 --> 00:39:15,440
Speaker 1: with technical skills to actually breach you and find their way.

721
00:39:15,440 --> 00:39:18,439
Speaker 1: All the way in sounds like it's it's working. Let's

722
00:39:18,480 --> 00:39:21,480
Speaker 1: let's shift gears a little bit and talk about cash,

723
00:39:21,600 --> 00:39:26,920
Speaker 1: because people have been discussing raising cash, carrying cash, cash

724
00:39:27,040 --> 00:39:30,480
Speaker 1: is king. It used to be that cash had a

725
00:39:30,600 --> 00:39:34,360
Speaker 1: fairly decent yield on it. Some of your competitors have

726
00:39:34,520 --> 00:39:38,760
Speaker 1: changed the rules that their cash sweeps no longer yield

727
00:39:38,920 --> 00:39:40,920
Speaker 1: much more than a few BIPs. If you want to

728
00:39:41,680 --> 00:39:43,560
Speaker 1: see a return, you have to actually go out and

729
00:39:43,640 --> 00:39:46,680
Speaker 1: buy some short term bonds, typically through E t F.

730
00:39:47,280 --> 00:39:49,719
Speaker 1: Tell us about what's going on with cash sweeps, what

731
00:39:49,840 --> 00:39:52,279
Speaker 1: are you guys gonna do, and what do you think

732
00:39:52,320 --> 00:39:55,279
Speaker 1: about what some of your competitors are doing. So let mean,

733
00:39:55,360 --> 00:39:57,399
Speaker 1: let me start with just the macro trends. It goes

734
00:39:57,440 --> 00:40:01,640
Speaker 1: back to the point about how does arm get paid.

735
00:40:02,760 --> 00:40:04,920
Speaker 1: And in a world where let's go all the way back,

736
00:40:04,960 --> 00:40:06,759
Speaker 1: in a world where you're getting paid three or four

737
00:40:06,800 --> 00:40:10,440
Speaker 1: or fifty dollars a trade um and interest rates are

738
00:40:10,520 --> 00:40:13,920
Speaker 1: on an absolute level higher, then you've got a more

739
00:40:14,040 --> 00:40:17,520
Speaker 1: varied revenue stream. And when you have a rate in

740
00:40:18,000 --> 00:40:20,319
Speaker 1: a period of rising interest rates, your beta betas tend

741
00:40:20,360 --> 00:40:25,320
Speaker 1: to be higher. What we've seen now with other revenue forms,

742
00:40:25,360 --> 00:40:28,239
Speaker 1: as we said a few minutes ago ago being compressed

743
00:40:29,160 --> 00:40:33,120
Speaker 1: and an ultra long period of low interest rates than

744
00:40:33,400 --> 00:40:35,719
Speaker 1: what we've found this most recent cycle, as interest rates

745
00:40:35,719 --> 00:40:37,719
Speaker 1: start to rise, is the betas have been quite low,

746
00:40:38,480 --> 00:40:43,000
Speaker 1: and now they've been higher. In forms of cash where

747
00:40:43,120 --> 00:40:45,279
Speaker 1: there is a higher degree of customer sensitivity to the

748
00:40:45,520 --> 00:40:48,880
Speaker 1: putting that cash to to work, and in our particular space,

749
00:40:49,680 --> 00:40:52,160
Speaker 1: because it tends to be transactional cask waiting for the

750
00:40:52,200 --> 00:40:54,480
Speaker 1: next opportunity to make a trade. If you're in retail,

751
00:40:55,040 --> 00:40:57,680
Speaker 1: then that is very sticky cash and it is is

752
00:40:57,840 --> 00:41:00,839
Speaker 1: it's largely the way that the m has become more

753
00:41:00,880 --> 00:41:05,480
Speaker 1: and more compensated for the services provided. And so if

754
00:41:05,520 --> 00:41:08,600
Speaker 1: you imagine a world where if commissions were to be

755
00:41:09,000 --> 00:41:11,359
Speaker 1: zero in the brokerage space, cash would be even more

756
00:41:11,440 --> 00:41:13,359
Speaker 1: important as a way of getting paid and you'll find

757
00:41:13,440 --> 00:41:17,040
Speaker 1: even less um beta in terms of the value of

758
00:41:17,120 --> 00:41:20,120
Speaker 1: that cash, which push actually the industry at great strategic

759
00:41:20,239 --> 00:41:25,320
Speaker 1: risk because uh, interest rates fluctuate and you can have

760
00:41:25,640 --> 00:41:30,120
Speaker 1: you know, three basis point um short term rates or

761
00:41:30,200 --> 00:41:33,320
Speaker 1: five hundred or as we know zero for a period

762
00:41:33,360 --> 00:41:35,920
Speaker 1: of time. So that's the that's the trend that's been

763
00:41:36,200 --> 00:41:39,399
Speaker 1: happening in a macro basis. Now, what we do from

764
00:41:39,480 --> 00:41:43,120
Speaker 1: a cash perspective, we actually look at the differentiation between

765
00:41:43,200 --> 00:41:47,480
Speaker 1: transactional cash and invest in cash, recognizing that some advisors

766
00:41:47,520 --> 00:41:50,160
Speaker 1: want to keep a portion of the client's portfolio. So

767
00:41:50,560 --> 00:41:53,880
Speaker 1: the sweep is the b d A, the bank deposit account,

768
00:41:54,200 --> 00:41:56,920
Speaker 1: But you can actually go out and buy a purchased

769
00:41:57,080 --> 00:42:00,320
Speaker 1: money fund, which yields considerably higher, but you have to

770
00:42:00,360 --> 00:42:03,600
Speaker 1: go out and actually, you know, take action to put

771
00:42:03,640 --> 00:42:06,359
Speaker 1: that allocation in place. So let's talk a little about

772
00:42:06,600 --> 00:42:09,279
Speaker 1: E s G. We've been hearing that this is the

773
00:42:09,400 --> 00:42:12,320
Speaker 1: new wave now for I don't know ten years. It

774
00:42:12,360 --> 00:42:14,759
Speaker 1: seems there's a lot of chatter about it, but there

775
00:42:14,840 --> 00:42:18,799
Speaker 1: hasn't been a whole lot of uptake from the either

776
00:42:18,920 --> 00:42:21,600
Speaker 1: the end investor or the advisor. What are your thoughts

777
00:42:21,719 --> 00:42:26,040
Speaker 1: on environmental, social and governance? Why has it been lagging?

778
00:42:26,160 --> 00:42:30,280
Speaker 1: When we look at Europe, they're far more aggressively invested

779
00:42:30,320 --> 00:42:34,040
Speaker 1: in that space then than the US is. Well, let

780
00:42:34,120 --> 00:42:36,719
Speaker 1: me start from from a public company point of view.

781
00:42:37,960 --> 00:42:42,000
Speaker 1: We are feeling it from our investor base, and so

782
00:42:42,320 --> 00:42:44,320
Speaker 1: they just to focus on what are you doing and

783
00:42:44,400 --> 00:42:47,080
Speaker 1: wanting to understand what td Meri trades position in this

784
00:42:47,200 --> 00:42:52,160
Speaker 1: space is actually causing us to spend more time putting

785
00:42:52,239 --> 00:42:54,400
Speaker 1: energy into it. So it shows you that the underlying

786
00:42:54,400 --> 00:42:57,560
Speaker 1: trend is absolutely there, and you could say that there

787
00:42:57,680 --> 00:43:00,160
Speaker 1: has been albeit slower than elsewhere in the world. Old

788
00:43:00,160 --> 00:43:02,440
Speaker 1: there has absolutely been a trend more to E s

789
00:43:02,520 --> 00:43:05,320
Speaker 1: G investing. Remember ten fifteen years ago When this was

790
00:43:05,840 --> 00:43:09,400
Speaker 1: it was very nascent. The constant argument was you can

791
00:43:09,440 --> 00:43:12,880
Speaker 1: make those choices, but you will be sub sub performing

792
00:43:13,080 --> 00:43:15,799
Speaker 1: on your investments as a result of having traded your

793
00:43:16,040 --> 00:43:19,760
Speaker 1: your your moral case off against your just maximizing your returns.

794
00:43:20,480 --> 00:43:24,160
Speaker 1: Um That's less true now and the trend, certainly with

795
00:43:24,280 --> 00:43:26,400
Speaker 1: the younger investor has been very much to put their

796
00:43:26,400 --> 00:43:29,440
Speaker 1: money where their their morals. And so it's I think

797
00:43:29,480 --> 00:43:31,239
Speaker 1: it's growing, it will continue to grow, and I'm as

798
00:43:31,280 --> 00:43:33,000
Speaker 1: I say, I'm feeling it as a public company CEO,

799
00:43:33,080 --> 00:43:34,959
Speaker 1: and we're seeing it in our business as well. It's growing,

800
00:43:35,120 --> 00:43:37,720
Speaker 1: and we are starting to see advisors, you know, especially

801
00:43:37,800 --> 00:43:41,720
Speaker 1: once it serve a younger demographic, trying incorporate that into

802
00:43:41,840 --> 00:43:45,080
Speaker 1: their value proposition without a doubt. I mean, if you

803
00:43:45,200 --> 00:43:47,560
Speaker 1: look at you know, some of the things that are

804
00:43:47,600 --> 00:43:50,880
Speaker 1: really important to younger associates, even you know, when you

805
00:43:51,000 --> 00:43:53,000
Speaker 1: go apply for a job somewhere, they want to know

806
00:43:53,120 --> 00:43:55,840
Speaker 1: what your company stands for, what your mission, your values,

807
00:43:55,920 --> 00:43:59,120
Speaker 1: your purpose, I would say more so than previous generations.

808
00:43:59,160 --> 00:44:01,440
Speaker 1: And I think that you know leaks over into their

809
00:44:01,480 --> 00:44:04,000
Speaker 1: investing philosophies and and so on and so forth. So

810
00:44:04,080 --> 00:44:08,240
Speaker 1: I think you know, the trend will continue to evolve

811
00:44:08,480 --> 00:44:11,800
Speaker 1: in gain more momentum as some of those younger folks

812
00:44:12,000 --> 00:44:14,640
Speaker 1: gain more assets on a go for a basis, they

813
00:44:14,719 --> 00:44:18,840
Speaker 1: will challenge leadership as they should on what value you

814
00:44:19,080 --> 00:44:22,760
Speaker 1: bring to your clients? Are you on the right side

815
00:44:22,840 --> 00:44:26,359
Speaker 1: of causes and issues? Are you on do you take

816
00:44:26,400 --> 00:44:31,399
Speaker 1: a stand the The express desire for leadership to take

817
00:44:31,480 --> 00:44:35,080
Speaker 1: stands on issues by your own associates, let alone your clients,

818
00:44:35,120 --> 00:44:38,360
Speaker 1: but much more by your own associates is is stronger

819
00:44:38,400 --> 00:44:40,319
Speaker 1: and stronger, and I don't think it's abating. And I'll

820
00:44:40,360 --> 00:44:42,400
Speaker 1: tell you I mean just from an advisor perspective or

821
00:44:42,480 --> 00:44:48,160
Speaker 1: serving advisors, it's been an incredibly motivating factor for our associates,

822
00:44:48,600 --> 00:44:50,040
Speaker 1: you know, to know that they pop up at a

823
00:44:50,120 --> 00:44:52,480
Speaker 1: better in the morning to help the best people in

824
00:44:52,600 --> 00:44:56,000
Speaker 1: financial services do the right thing for their clients. It

825
00:44:56,239 --> 00:44:58,160
Speaker 1: really makes a big difference. And if you want to

826
00:44:58,239 --> 00:45:01,480
Speaker 1: get associates to feel good out what they do, you know,

827
00:45:02,080 --> 00:45:03,800
Speaker 1: just talk about what you do for your clients and

828
00:45:03,840 --> 00:45:07,360
Speaker 1: obviously your your associates get it. But it's incredibly motivating

829
00:45:07,400 --> 00:45:09,400
Speaker 1: just to be able to serve you guys, when you're

830
00:45:09,440 --> 00:45:11,959
Speaker 1: sitting on the right side of the table and sitting

831
00:45:12,000 --> 00:45:14,160
Speaker 1: on the right side of history. It's it's really motivating.

832
00:45:14,719 --> 00:45:17,839
Speaker 1: So I was originally a bit of a skeptic when

833
00:45:17,920 --> 00:45:21,279
Speaker 1: it came to the issue of direct indexing. I've been

834
00:45:21,320 --> 00:45:23,600
Speaker 1: hearing about this for a couple of years. My friend

835
00:45:23,840 --> 00:45:26,879
Speaker 1: Dave Natig at et F dot com has been talking

836
00:45:26,880 --> 00:45:29,560
Speaker 1: about this for a while, and then over the past

837
00:45:29,680 --> 00:45:33,280
Speaker 1: year or two, I've noticed we have a client who's

838
00:45:33,360 --> 00:45:36,120
Speaker 1: the general counsel of a big oil company. His whole

839
00:45:36,200 --> 00:45:38,960
Speaker 1: life is exposed to oil and energy. Wouldn't it be

840
00:45:39,000 --> 00:45:42,040
Speaker 1: great if we can just dial down the energy in

841
00:45:42,239 --> 00:45:46,840
Speaker 1: his portfolio. We have another client who works in finance

842
00:45:46,880 --> 00:45:50,040
Speaker 1: who's a value manager. His whole life is small cap

843
00:45:50,280 --> 00:45:53,760
Speaker 1: value really exposed to that. What are your thoughts about

844
00:45:53,960 --> 00:45:59,520
Speaker 1: direct indexing and is this something that could basically challenge

845
00:45:59,600 --> 00:46:02,279
Speaker 1: et fs. I think you'll see two things. I think

846
00:46:02,320 --> 00:46:04,600
Speaker 1: you're going to see E t F that are specifically

847
00:46:04,719 --> 00:46:08,320
Speaker 1: focused on They already are out there eliminating some of

848
00:46:08,360 --> 00:46:13,239
Speaker 1: the sin stocks and exactly you know, with there will

849
00:46:13,239 --> 00:46:15,400
Speaker 1: be some that are just more broad based, and then

850
00:46:15,520 --> 00:46:18,480
Speaker 1: you're gonna have very specific things that people can pick to,

851
00:46:19,040 --> 00:46:22,200
Speaker 1: you know, eradicate from their portfolios. But then I think

852
00:46:22,680 --> 00:46:24,640
Speaker 1: what we're also looking at, and I think the whole

853
00:46:24,680 --> 00:46:27,000
Speaker 1: industry is exploring this, how do you do this through

854
00:46:27,080 --> 00:46:30,080
Speaker 1: technology in a cost effective way so you can have

855
00:46:30,239 --> 00:46:33,200
Speaker 1: clients do that on a custom basis. And we see

856
00:46:33,200 --> 00:46:34,759
Speaker 1: a lot of our clients are starting to do that,

857
00:46:34,960 --> 00:46:37,400
Speaker 1: you know, manually and figuring that out and it's becoming

858
00:46:37,440 --> 00:46:39,520
Speaker 1: part of their value prop and it's some of the

859
00:46:39,600 --> 00:46:41,359
Speaker 1: things that we're having a lot of discussion around within

860
00:46:41,440 --> 00:46:44,360
Speaker 1: our organization on how can we help with that and

861
00:46:44,520 --> 00:46:47,520
Speaker 1: any thoughts about that direction? Is that something you know,

862
00:46:47,600 --> 00:46:51,200
Speaker 1: if if you have an individual with a thousand stocks

863
00:46:51,280 --> 00:46:54,040
Speaker 1: instead of ad T F S, I have to imagine

864
00:46:54,400 --> 00:46:56,440
Speaker 1: there's a whole lot more complexity and a whole lot

865
00:46:56,520 --> 00:47:00,239
Speaker 1: more cost that goes into that. True, but again back

866
00:47:00,280 --> 00:47:03,680
Speaker 1: to Tom's point, first of all, understanding what is the

867
00:47:03,760 --> 00:47:06,160
Speaker 1: unmet need that the client has, what problem are they

868
00:47:06,200 --> 00:47:09,000
Speaker 1: trying to solve for, and then leverage technology to make

869
00:47:09,040 --> 00:47:12,200
Speaker 1: it cost sufficient to provide It's that simple whatever the

870
00:47:13,080 --> 00:47:15,760
Speaker 1: need of the particular day is, Yes, it can be costly,

871
00:47:16,280 --> 00:47:18,680
Speaker 1: but if you can actually deliver a better solution and

872
00:47:18,920 --> 00:47:22,480
Speaker 1: you apply the assets and the capabilities you already have

873
00:47:22,640 --> 00:47:24,759
Speaker 1: to do that in a way that needs a need.

874
00:47:25,320 --> 00:47:28,440
Speaker 1: There's a margin there to be had. So what is

875
00:47:28,480 --> 00:47:31,560
Speaker 1: the most This has clearly been a period of giant

876
00:47:32,040 --> 00:47:36,240
Speaker 1: change over the past ten years, certainly since the financial crisis.

877
00:47:37,560 --> 00:47:39,880
Speaker 1: We in this room see it from a certain angle.

878
00:47:40,040 --> 00:47:43,680
Speaker 1: I have to imagine your perspective is slightly different. What

879
00:47:43,840 --> 00:47:46,440
Speaker 1: has been the biggest surprise of the best decade? What

880
00:47:46,680 --> 00:47:49,719
Speaker 1: really kind of made you step back and say, wasn't

881
00:47:49,760 --> 00:47:56,239
Speaker 1: expecting that? Hm? Well, when the financial crisis happened, I

882
00:47:56,360 --> 00:47:58,560
Speaker 1: remember it very acutely, as I'm sure everybody else in

883
00:47:58,760 --> 00:48:00,800
Speaker 1: this room does. My My respective was I was a

884
00:48:00,840 --> 00:48:05,040
Speaker 1: Canadian banker at the time UH and Canadian banks largely

885
00:48:06,560 --> 00:48:10,520
Speaker 1: avoided the accident UH and so we had a sort

886
00:48:10,560 --> 00:48:16,880
Speaker 1: of a view on what caused the accident largely elsewhere

887
00:48:16,920 --> 00:48:19,560
Speaker 1: in the world. You know, what he called the mortgage crisis,

888
00:48:19,640 --> 00:48:23,120
Speaker 1: whatever you you thought was the case CDs as another UM.

889
00:48:24,040 --> 00:48:26,840
Speaker 1: Since then, there was a lot of things that happened

890
00:48:26,880 --> 00:48:31,520
Speaker 1: that we're completely knowable in advance. The size of the

891
00:48:32,280 --> 00:48:36,920
Speaker 1: the event itself being the second greatest UH financial event

892
00:48:37,200 --> 00:48:40,520
Speaker 1: in our history certainly or UM. And you know, if

893
00:48:40,560 --> 00:48:44,200
Speaker 1: you look back through history, all of the regulatory agencies

894
00:48:44,360 --> 00:48:47,160
Speaker 1: that are in the Western civilization were created as a

895
00:48:47,239 --> 00:48:50,320
Speaker 1: result of those accidents, and the greater the accident, the

896
00:48:50,400 --> 00:48:54,560
Speaker 1: more the regulatory repercussions. And so you could see that

897
00:48:54,760 --> 00:48:58,800
Speaker 1: happening from day one that there will be implications. What

898
00:48:58,960 --> 00:49:04,160
Speaker 1: we probably didn't see happening was just the sheer flatness

899
00:49:04,239 --> 00:49:06,839
Speaker 1: of the rebound. I mean, here we are ten years later.

900
00:49:07,160 --> 00:49:09,120
Speaker 1: Most if you see all of the data for all

901
00:49:09,160 --> 00:49:11,560
Speaker 1: of the other recessions, they're they're deep, but they're they're

902
00:49:11,600 --> 00:49:15,440
Speaker 1: basically a v This one's looked like this, and so

903
00:49:15,640 --> 00:49:18,759
Speaker 1: here we are literally this month and makes it the

904
00:49:18,800 --> 00:49:22,839
Speaker 1: longest recovery, and there's lots of debates and discussions about okay, well,

905
00:49:22,920 --> 00:49:25,120
Speaker 1: can can you go for ten years plus a month

906
00:49:25,520 --> 00:49:28,200
Speaker 1: without having a bullmarket tip over because all the other

907
00:49:28,239 --> 00:49:31,960
Speaker 1: ones have. My own view is that because of the

908
00:49:32,080 --> 00:49:35,960
Speaker 1: sheer flatness of this recovery, um there there is a

909
00:49:36,080 --> 00:49:38,040
Speaker 1: chance that it could we could eat through the next

910
00:49:38,080 --> 00:49:40,640
Speaker 1: little while. That's not my base case, I should say,

911
00:49:40,680 --> 00:49:42,480
Speaker 1: my base cases that we're actually going to be going

912
00:49:42,560 --> 00:49:44,480
Speaker 1: into a bit of recession, but there's a chance that

913
00:49:44,560 --> 00:49:48,560
Speaker 1: we could actually slide through this with this inexorable climb

914
00:49:48,640 --> 00:49:52,200
Speaker 1: back to the levels we are at um. So that's

915
00:49:52,320 --> 00:49:56,800
Speaker 1: the surprise to me is just how long it takes

916
00:49:56,960 --> 00:49:59,920
Speaker 1: for this country and for the world to get back

917
00:50:00,040 --> 00:50:02,880
Speaker 1: on its feet to where it was after you have

918
00:50:03,080 --> 00:50:05,560
Speaker 1: that size of an impact. And yet you know, that's

919
00:50:05,560 --> 00:50:07,520
Speaker 1: been our history. We we have. There's a great thing

920
00:50:07,520 --> 00:50:10,640
Speaker 1: about capitalism. It has this amazing sort of wealth creation,

921
00:50:10,719 --> 00:50:13,120
Speaker 1: and then there are big crashes that happened every once

922
00:50:13,120 --> 00:50:14,520
Speaker 1: in a while and then you and you have to

923
00:50:14,760 --> 00:50:16,520
Speaker 1: pick your feet back up and off you go. You know,

924
00:50:16,520 --> 00:50:18,560
Speaker 1: I would say a little closer to home is you know,

925
00:50:18,680 --> 00:50:22,520
Speaker 1: the financial crisis was kind of an accelerant for the

926
00:50:22,760 --> 00:50:25,000
Speaker 1: r a flame if you think about it. Those big

927
00:50:25,120 --> 00:50:29,360
Speaker 1: wirehouse brands were significantly damaged as a result of that.

928
00:50:29,960 --> 00:50:33,320
Speaker 1: You know, consumers started to become far more aware of,

929
00:50:33,680 --> 00:50:37,000
Speaker 1: you know, the relationships that they had and how advisors

930
00:50:37,040 --> 00:50:40,719
Speaker 1: were getting paid. Advisors that were in those captive environments

931
00:50:40,760 --> 00:50:42,640
Speaker 1: said hey, I can do this better on my own

932
00:50:43,080 --> 00:50:45,080
Speaker 1: and my clients more loyal to me than they are

933
00:50:45,160 --> 00:50:47,239
Speaker 1: to the brand on the roof. So I think this

934
00:50:47,520 --> 00:50:50,719
Speaker 1: The momentum that came out of the financial crisis for

935
00:50:50,880 --> 00:50:54,879
Speaker 1: our space, you know, was really dramatic and it's it's

936
00:50:55,080 --> 00:50:57,960
Speaker 1: you know, it's been fantastic. So so let's talk about

937
00:50:58,000 --> 00:51:01,480
Speaker 1: the space and the shift from the broker dealer model

938
00:51:01,520 --> 00:51:07,040
Speaker 1: to the r i A model. There's been um new regulation.

939
00:51:07,200 --> 00:51:10,759
Speaker 1: It's not quite finished, but the word is that regulation

940
00:51:10,920 --> 00:51:14,680
Speaker 1: best interest is coming forward. It turns out it's neither

941
00:51:14,960 --> 00:51:18,960
Speaker 1: a regulation nor best interest, but it's a challenge to

942
00:51:19,040 --> 00:51:22,000
Speaker 1: the fiduciary rule that's on our side. Talk a little

943
00:51:22,000 --> 00:51:24,399
Speaker 1: bit about the fiducial rule and what does it mean

944
00:51:25,080 --> 00:51:28,840
Speaker 1: when the brokered side is trying desperately to sound like

945
00:51:29,480 --> 00:51:33,600
Speaker 1: they're under a fiduciary obligation. So tomorrow, uh, the SEC

946
00:51:33,840 --> 00:51:36,680
Speaker 1: is going to vote on this and skips in Washington

947
00:51:37,040 --> 00:51:40,920
Speaker 1: and he'll be there at the at the event, and uh,

948
00:51:41,080 --> 00:51:44,320
Speaker 1: it's it's it's pretty pretty incredible. But you know, we

949
00:51:44,600 --> 00:51:48,400
Speaker 1: believe right that there's still you know, delineation between the

950
00:51:48,520 --> 00:51:51,240
Speaker 1: forty Act and you know reg b I or however

951
00:51:51,360 --> 00:51:55,000
Speaker 1: brokers are are governed in the future. And we do

952
00:51:55,200 --> 00:51:59,200
Speaker 1: think that there should be a heightened standard for for

953
00:51:59,400 --> 00:52:03,560
Speaker 1: the way poker's behave, But we're very thoughtful around making

954
00:52:03,560 --> 00:52:05,879
Speaker 1: sure that the waters don't get muddied, because that could

955
00:52:05,920 --> 00:52:07,960
Speaker 1: be a bad thing, right, you don't want a situation

956
00:52:08,200 --> 00:52:12,400
Speaker 1: where a broker who's really acting as a salesperson is

957
00:52:12,640 --> 00:52:16,120
Speaker 1: positioning themselves as an advisor and saying, yeah, I have

958
00:52:16,239 --> 00:52:19,000
Speaker 1: to put your best interests, you know first, and maybe

959
00:52:19,080 --> 00:52:22,200
Speaker 1: they they're not. So we're concerned about consumer you know,

960
00:52:22,360 --> 00:52:24,880
Speaker 1: confusion and what that may bring to the table. But

961
00:52:25,000 --> 00:52:27,080
Speaker 1: of course we want to make sure that there's elevated

962
00:52:27,200 --> 00:52:30,040
Speaker 1: standards out there as well. And you know, one of

963
00:52:30,120 --> 00:52:32,080
Speaker 1: the challenges we saw even with the d o L.

964
00:52:32,400 --> 00:52:36,839
Speaker 1: It's great in spirit, but implementation was, you know, really

965
00:52:36,920 --> 00:52:38,680
Speaker 1: going to be a challenge. I mean, we're actually in

966
00:52:38,840 --> 00:52:41,279
Speaker 1: this room a few years ago where we had somebody

967
00:52:41,320 --> 00:52:43,000
Speaker 1: give a presentation for an hour and a half and

968
00:52:43,360 --> 00:52:45,680
Speaker 1: one of the leading attorneys on what the d OL

969
00:52:45,760 --> 00:52:47,799
Speaker 1: rules gonna look like, and people walked out of here

970
00:52:47,920 --> 00:52:50,520
Speaker 1: more confused, you know than they were when they walked in.

971
00:52:50,920 --> 00:52:53,200
Speaker 1: So I think keeping it simple is is something that

972
00:52:53,719 --> 00:52:56,759
Speaker 1: that will be very important. I know, there's the four

973
00:52:56,840 --> 00:53:00,560
Speaker 1: page disclosure document that's going to be required, so we'll

974
00:53:00,600 --> 00:53:03,600
Speaker 1: see what tweaks ultimately, you know, get made. They're talking

975
00:53:03,600 --> 00:53:07,560
Speaker 1: about potentially making tweaks to incidental advice. What does that

976
00:53:07,680 --> 00:53:09,759
Speaker 1: really mean? Seems a little bit like the Merrill Lynch

977
00:53:09,840 --> 00:53:12,400
Speaker 1: rule that we saw, you know, some years ago. But

978
00:53:12,520 --> 00:53:14,520
Speaker 1: ultimately I do think it's a good thing to raise

979
00:53:14,560 --> 00:53:16,239
Speaker 1: the standard on brokers, but we want to make sure

980
00:53:16,280 --> 00:53:19,520
Speaker 1: we keep that clear delineation between the fiduciary standard and

981
00:53:19,560 --> 00:53:21,920
Speaker 1: the forty Act and whatever it is that's going to

982
00:53:22,040 --> 00:53:25,520
Speaker 1: ultimately govern macro level. I'd say it's going to be

983
00:53:25,640 --> 00:53:29,000
Speaker 1: a better thing generally for consumers, not as good a

984
00:53:29,120 --> 00:53:32,040
Speaker 1: thing for the r A space. And what I mean

985
00:53:32,120 --> 00:53:36,640
Speaker 1: by that is the confusion that consumers will have about

986
00:53:37,360 --> 00:53:41,279
Speaker 1: the advice and what is advice. Again, we think of

987
00:53:41,360 --> 00:53:43,920
Speaker 1: it because we're all inside baseball here, we all know

988
00:53:44,120 --> 00:53:47,040
Speaker 1: the regulations. We know the consumers don't care or they

989
00:53:47,160 --> 00:53:51,279
Speaker 1: just assume, they assume that the advisor starts with their

990
00:53:51,320 --> 00:53:54,799
Speaker 1: best interest. You say the word fiduciary and they don't

991
00:53:54,800 --> 00:53:57,000
Speaker 1: really get what that is. It just it muddies the water.

992
00:53:57,160 --> 00:54:01,840
Speaker 1: So the distinction for the r A from the broker

993
00:54:01,880 --> 00:54:04,120
Speaker 1: dealer model is going to be, if it passes, it's

994
00:54:04,120 --> 00:54:05,520
Speaker 1: going to be, in my view, a little bit muddy,

995
00:54:05,640 --> 00:54:07,680
Speaker 1: which again you could say the consumer would better be

996
00:54:07,760 --> 00:54:11,560
Speaker 1: better off if it drags the brokerage on the community

997
00:54:11,600 --> 00:54:14,879
Speaker 1: if you will closer to doing better for the client

998
00:54:14,960 --> 00:54:16,920
Speaker 1: and more in their best interests, but it won't be

999
00:54:17,000 --> 00:54:21,480
Speaker 1: necessarily as distinctive and offering for the I R A industry.

1000
00:54:21,800 --> 00:54:24,800
Speaker 1: Am I too cynical when I say RAG best interest

1001
00:54:25,320 --> 00:54:28,040
Speaker 1: is designed to muddy the water's on purpose? It's not

1002
00:54:28,239 --> 00:54:31,800
Speaker 1: best interest, it's cluely not fiduciary. It sounds like that

1003
00:54:32,000 --> 00:54:35,759
Speaker 1: name was designed to be confusing. I don't know that

1004
00:54:35,840 --> 00:54:37,759
Speaker 1: that's the case. I think there was. It was a

1005
00:54:38,040 --> 00:54:40,600
Speaker 1: was very much a reaction to look at the Department

1006
00:54:40,640 --> 00:54:45,200
Speaker 1: of Labor. Rule was well intentioned, but it was flawed

1007
00:54:45,239 --> 00:54:48,880
Speaker 1: and execution it created more confusion because you were dividing

1008
00:54:48,920 --> 00:54:51,600
Speaker 1: it down the aristo line as opposed to across UM

1009
00:54:52,280 --> 00:54:55,200
Speaker 1: across all types of investments. And so this is an

1010
00:54:55,239 --> 00:54:59,600
Speaker 1: attempt to try and find UM, frankly, a compromise solution.

1011
00:54:59,680 --> 00:55:01,600
Speaker 1: And we know what you know you get when you

1012
00:55:01,640 --> 00:55:04,399
Speaker 1: get a compromise solution. That's uh, what do they say

1013
00:55:04,480 --> 00:55:08,759
Speaker 1: of UM? A camel is a horse designed like there

1014
00:55:08,800 --> 00:55:12,240
Speaker 1: you go, that's that's that's the best example of exactly

1015
00:55:12,280 --> 00:55:14,000
Speaker 1: what you'll end up getting. But I think also if

1016
00:55:14,000 --> 00:55:15,960
Speaker 1: you look at what's happening in the states, right, I

1017
00:55:16,000 --> 00:55:19,560
Speaker 1: mean you're seeing states now start to you know, propose

1018
00:55:19,760 --> 00:55:22,960
Speaker 1: fiduciary rules, which shows you there's an appetite, you know,

1019
00:55:23,040 --> 00:55:27,200
Speaker 1: there's a demand, something's got to happen. And in the States,

1020
00:55:27,719 --> 00:55:30,439
Speaker 1: that's actually a little bit scary because imagine if you're

1021
00:55:30,480 --> 00:55:33,320
Speaker 1: all of a sudden dealing with fifty two you know,

1022
00:55:33,560 --> 00:55:37,960
Speaker 1: different standards, you know, especially for advisors that operated multiple states.

1023
00:55:38,239 --> 00:55:40,840
Speaker 1: Firms like td A you know obviously, that operate in

1024
00:55:40,880 --> 00:55:44,520
Speaker 1: every state, and even services that we provide to our

1025
00:55:45,160 --> 00:55:47,880
Speaker 1: you know, clients that want to be in control and

1026
00:55:48,360 --> 00:55:52,000
Speaker 1: do it themselves, things like research that we provide, our

1027
00:55:52,080 --> 00:55:56,319
Speaker 1: education materials could potentially fall under a fiduciary standard, which

1028
00:55:56,320 --> 00:55:57,759
Speaker 1: doesn't make a lot of sense, and then you start

1029
00:55:57,800 --> 00:56:01,000
Speaker 1: limiting consumer choice. So uh so we have to be

1030
00:56:01,080 --> 00:56:04,359
Speaker 1: careful of how this move is going forward. So now

1031
00:56:04,440 --> 00:56:06,600
Speaker 1: let's in the last five minutes or so we have

1032
00:56:06,840 --> 00:56:11,359
Speaker 1: let's look forward. What does this industry look like five, ten,

1033
00:56:11,560 --> 00:56:14,360
Speaker 1: twenty years in the future. So I think you're going

1034
00:56:14,440 --> 00:56:18,840
Speaker 1: to continue to see the r A s grow and mature.

1035
00:56:19,040 --> 00:56:22,239
Speaker 1: I think you'll see far more automation that we see

1036
00:56:22,280 --> 00:56:25,920
Speaker 1: too than we see today. I think basically everything from

1037
00:56:26,000 --> 00:56:30,080
Speaker 1: a tactical perspective or a day to day operational perspective

1038
00:56:30,160 --> 00:56:32,560
Speaker 1: will be done on an automated basis, and the real

1039
00:56:32,719 --> 00:56:35,400
Speaker 1: value that's going to get delivered is going to be

1040
00:56:36,040 --> 00:56:40,239
Speaker 1: with that person to person relationship. You know, that empathetic

1041
00:56:40,320 --> 00:56:42,600
Speaker 1: human relationship is really where I think the value gets

1042
00:56:42,640 --> 00:56:44,239
Speaker 1: delivered today, and I think that that's going to be

1043
00:56:44,480 --> 00:56:47,320
Speaker 1: exacerbated in the future. I think it's going to change,

1044
00:56:47,600 --> 00:56:51,680
Speaker 1: you know, where we make our strategic investments as business leaders.

1045
00:56:51,719 --> 00:56:54,000
Speaker 1: I think it's going to change who we hire based

1046
00:56:54,040 --> 00:56:55,879
Speaker 1: upon their skill sets. We talked about this a little

1047
00:56:55,880 --> 00:56:58,480
Speaker 1: bit earlier. You know, it's no longer going just to

1048
00:56:58,560 --> 00:57:01,480
Speaker 1: the business schools and hiring that person who's a quant

1049
00:57:01,560 --> 00:57:04,400
Speaker 1: type thinker. It's about going through the humanity schools and

1050
00:57:04,520 --> 00:57:07,560
Speaker 1: put pulling in the psychology majors, the sociology majors, the

1051
00:57:07,600 --> 00:57:11,720
Speaker 1: people that have a knackt for developing relationship with clients

1052
00:57:12,000 --> 00:57:13,919
Speaker 1: to deliver on those services. So I think there's gonna

1053
00:57:13,960 --> 00:57:15,759
Speaker 1: be a lot of change in the space. I think

1054
00:57:15,840 --> 00:57:19,160
Speaker 1: demographics is something that we need to take a serious

1055
00:57:19,240 --> 00:57:21,400
Speaker 1: look at. How do we make sure that our industry

1056
00:57:21,480 --> 00:57:25,320
Speaker 1: is more reflective of the trends of the population in

1057
00:57:25,320 --> 00:57:27,800
Speaker 1: the United States and where wealth is concentrated is going

1058
00:57:27,880 --> 00:57:29,880
Speaker 1: to shift. So there's gonna be a lot of change

1059
00:57:30,280 --> 00:57:32,960
Speaker 1: over the next five to ten, fifteen years. But I

1060
00:57:33,080 --> 00:57:35,360
Speaker 1: do think you know, this space is going to continue

1061
00:57:35,400 --> 00:57:38,200
Speaker 1: to win because it's just a better business model. Put

1062
00:57:38,240 --> 00:57:41,320
Speaker 1: the client first, and good things will happen. Tim, what

1063
00:57:41,400 --> 00:57:45,000
Speaker 1: are your thoughts looking out a few more ads, Um,

1064
00:57:45,680 --> 00:57:49,080
Speaker 1: there will continue to be consolidation in this space because

1065
00:57:49,360 --> 00:57:52,760
Speaker 1: the investment required to deliver on what Tom was just

1066
00:57:52,800 --> 00:57:54,200
Speaker 1: saying is going to get more and more and more,

1067
00:57:54,240 --> 00:57:55,800
Speaker 1: and it's going to be want to you want to

1068
00:57:55,840 --> 00:57:58,880
Speaker 1: spread it over more and more clients because that's the

1069
00:57:58,920 --> 00:58:00,600
Speaker 1: other big trend, which is it will continue to get

1070
00:58:00,680 --> 00:58:04,720
Speaker 1: cheaper for clients. Um. And so if you have the scale,

1071
00:58:04,880 --> 00:58:08,200
Speaker 1: you can continue to provide those uh, those additional value

1072
00:58:08,200 --> 00:58:11,400
Speaker 1: added services for the clients, and they will demand with

1073
00:58:11,560 --> 00:58:16,520
Speaker 1: greater transparency. Uh you all of us collectively working in

1074
00:58:16,560 --> 00:58:20,320
Speaker 1: their best interest for for low price. It's just what

1075
00:58:20,440 --> 00:58:22,400
Speaker 1: they will demand. That will be the inexorable trend, and

1076
00:58:22,520 --> 00:58:26,400
Speaker 1: technology is going to drive that. When you say consolidation,

1077
00:58:26,560 --> 00:58:30,080
Speaker 1: you're talking at the Crestonian level, the advisor level, or

1078
00:58:30,160 --> 00:58:33,800
Speaker 1: across the board yes, yes, it requires scale, and we're

1079
00:58:33,840 --> 00:58:37,080
Speaker 1: going to continue to see fulk development. That's that's what's

1080
00:58:37,080 --> 00:58:40,080
Speaker 1: absolutely not they think about starting up any size company

1081
00:58:40,120 --> 00:58:42,720
Speaker 1: now that's trying to compete in that milieu of of

1082
00:58:43,520 --> 00:58:45,360
Speaker 1: a price point that is maybe a third of what

1083
00:58:45,440 --> 00:58:47,600
Speaker 1: it would have been, you know, ten or fifteen years ago.

1084
00:58:47,640 --> 00:58:50,560
Speaker 1: It's tough, and so I think it will just continue

1085
00:58:50,600 --> 00:58:52,959
Speaker 1: to be. You'll you'll be driving more and more value.

1086
00:58:52,960 --> 00:58:57,240
Speaker 1: You can create scale quickly through the UH through technology

1087
00:58:57,600 --> 00:59:00,640
Speaker 1: and what it can provide you just you can just pieces.

1088
00:59:00,760 --> 00:59:02,400
Speaker 1: You know, we often use the case that you've got

1089
00:59:03,000 --> 00:59:05,480
Speaker 1: the Ubers of the world and the Airbnbs of the world,

1090
00:59:05,520 --> 00:59:08,439
Speaker 1: of these massive global scale scale players and they didn't

1091
00:59:08,480 --> 00:59:11,520
Speaker 1: exist five or ten years ago because they needed together, um,

1092
00:59:12,000 --> 00:59:15,960
Speaker 1: you know, assets and and through technology. Um. But you know,

1093
00:59:17,000 --> 00:59:19,680
Speaker 1: scale from for lower and lower and lower price is

1094
00:59:19,720 --> 00:59:22,320
Speaker 1: going to be incredibly important. And I saved this from

1095
00:59:22,360 --> 00:59:24,960
Speaker 1: my last question because I get it all the time

1096
00:59:25,000 --> 00:59:27,520
Speaker 1: from clients, and I know I do a terrible job

1097
00:59:27,600 --> 00:59:32,120
Speaker 1: answering this. Can you explain the historical relationship between t

1098
00:59:32,280 --> 00:59:35,840
Speaker 1: D merrit Trade and t D Bank? Ah? Yeah, well,

1099
00:59:35,840 --> 00:59:37,520
Speaker 1: actually it's a great point. It is a point of

1100
00:59:37,560 --> 00:59:40,840
Speaker 1: confusion for us, right. Um, So back in twenty fifteen

1101
00:59:41,040 --> 00:59:44,800
Speaker 1: when uh T D that had TV Waterhouse, of course

1102
00:59:45,240 --> 00:59:49,880
Speaker 1: sold its d I business direct investing business to a

1103
00:59:49,960 --> 00:59:52,720
Speaker 1: Merrit Trade and took back of the ownership. So now

1104
00:59:52,800 --> 00:59:58,120
Speaker 1: TD Bank hasent of the ownership. Um. And you're right

1105
00:59:58,120 --> 01:00:02,640
Speaker 1: about the confusion, because we often have clients walking into

1106
01:00:02,720 --> 01:00:04,720
Speaker 1: our branches and saying, hey, I want to deposit a

1107
01:00:04,800 --> 01:00:07,600
Speaker 1: check for my bank account, and they have clients walking

1108
01:00:07,640 --> 01:00:09,560
Speaker 1: into their bank branches on the East Coast and saying, hey,

1109
01:00:09,560 --> 01:00:11,760
Speaker 1: I want to talk to my advisor about my uh

1110
01:00:12,320 --> 01:00:17,360
Speaker 1: my brokerage account. And so the historic relationship is powerful

1111
01:00:17,400 --> 01:00:19,720
Speaker 1: in the sense that what it allows us to do

1112
01:00:19,840 --> 01:00:23,640
Speaker 1: TD merrit Trade is to be focused and we have

1113
01:00:23,800 --> 01:00:25,920
Speaker 1: what we call a capital lite model, and by taking

1114
01:00:25,960 --> 01:00:28,320
Speaker 1: these deposits sweeping them over to a bank, it has

1115
01:00:28,360 --> 01:00:30,920
Speaker 1: meant that we haven't needed to become a bank. And

1116
01:00:31,000 --> 01:00:33,560
Speaker 1: if you think about that environment we've been over, especially

1117
01:00:33,600 --> 01:00:37,840
Speaker 1: since the financial crisis, the regulatory scrutiny and pressures on

1118
01:00:38,640 --> 01:00:40,960
Speaker 1: the banks, and some of our competitors have felt that

1119
01:00:41,120 --> 01:00:45,000
Speaker 1: sting quite acutely over the last decade or so. UM,

1120
01:00:45,280 --> 01:00:48,400
Speaker 1: we've avoided much of that accident we've we've avoided the

1121
01:00:48,640 --> 01:00:53,800
Speaker 1: additional regulatory pressures. We can be generating higher return on

1122
01:00:53,880 --> 01:00:56,920
Speaker 1: our our equity by having this relationship, not becoming a bank,

1123
01:00:57,000 --> 01:00:59,000
Speaker 1: and it just allows my management team to very much

1124
01:00:59,000 --> 01:01:02,280
Speaker 1: focus on being a better provider of of our institutional

1125
01:01:02,360 --> 01:01:05,080
Speaker 1: services and and being a better retail broker. That's my

1126
01:01:05,200 --> 01:01:08,280
Speaker 1: conversation with Tim Hockey and Tom Nally. It really was

1127
01:01:08,400 --> 01:01:11,440
Speaker 1: quite interesting and I learned a lot meaning a lot

1128
01:01:11,480 --> 01:01:13,920
Speaker 1: of people who have been with t D as a

1129
01:01:13,960 --> 01:01:18,280
Speaker 1: custodian for quite a number of years. Not very often

1130
01:01:18,360 --> 01:01:20,640
Speaker 1: we get to stop and think about how our assets

1131
01:01:20,680 --> 01:01:24,360
Speaker 1: are custodied and really, uh, it's a key part of

1132
01:01:24,680 --> 01:01:29,680
Speaker 1: of asset management, especially from the registered investment advisor side.

1133
01:01:30,400 --> 01:01:32,760
Speaker 1: If you enjoy this conversation, we'll be showing to look

1134
01:01:32,840 --> 01:01:36,080
Speaker 1: up an inch or down an inch on Apple iTunes, Spotify,

1135
01:01:36,320 --> 01:01:41,240
Speaker 1: Google podcast, Stitcher, overcast wherever you're finer podcasts are sold

1136
01:01:41,280 --> 01:01:44,080
Speaker 1: and you can see any of the previous two hundred

1137
01:01:44,080 --> 01:01:47,280
Speaker 1: and fifties such episodes that we have done over the

1138
01:01:47,400 --> 01:01:51,680
Speaker 1: previous five years. Be sure and check out our podcast

1139
01:01:51,760 --> 01:01:54,360
Speaker 1: in the coming weeks. July twelve is the five year

1140
01:01:54,400 --> 01:01:57,360
Speaker 1: anniversary of Masters in Business and We have some special

1141
01:01:57,440 --> 01:02:00,440
Speaker 1: things planned. We think you're gonna like them. Uh, be

1142
01:02:00,600 --> 01:02:03,400
Speaker 1: sure and check out my daily column on Bloomberg dot

1143
01:02:03,440 --> 01:02:06,320
Speaker 1: com slash Opinion. You could follow me on Twitter at

1144
01:02:06,440 --> 01:02:10,640
Speaker 1: Rid Halts. We love your comments, feedback and suggestions. Write

1145
01:02:10,680 --> 01:02:14,240
Speaker 1: to us at m IB podcast at Bloomberg dot net.

1146
01:02:14,760 --> 01:02:16,560
Speaker 1: I would be remiss if I did not thank the

1147
01:02:16,680 --> 01:02:20,280
Speaker 1: crack staff that helps put these conversations together each week.

1148
01:02:20,400 --> 01:02:23,920
Speaker 1: Attica val Bron is our project director. Michael Batnick is

1149
01:02:24,000 --> 01:02:28,440
Speaker 1: my head of research. Michael Boyle is our producer slash booker.

1150
01:02:28,960 --> 01:02:32,800
Speaker 1: I'm Barry Ridhults. You've been listening to Nast's business on

1151
01:02:32,920 --> 01:02:33,840
Speaker 1: Bloomberg Radio