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Speaker 1: This is Master's in Business with Barry Ridholts on Bloomberg Radio.

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Speaker 1: This week on the podcast, we have a special guest.

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Speaker 1: Her name is Kathleen Fisher. She is the head of

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Speaker 1: Wealth and Investment Strategies and Alliance Bernstein. Bernstein manages about

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Speaker 1: five d forty billion dollars. They're they're just a giant

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Speaker 1: company in twenty two countries employees. I think they have

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Speaker 1: something like two hundred analysts and a hundred and fifty

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Speaker 1: portfolio managers. Uh, they're just a behemoth, and she runs

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Speaker 1: all of her wealth and investment strategies. If you're at

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Speaker 1: all interested in asset management and what it's like working

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Speaker 1: at a giant firm, or what it's like to be

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Speaker 1: a woman at a very senior level, and really Wall

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Speaker 1: Street still is a male dominated profession. Um, this is

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Speaker 1: really an interesting conversation. Uh. There are a few people

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Speaker 1: who know this business and know the human side of

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Speaker 1: it as well as Kathy. She's just tremendously knowledgeable and insightful,

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Speaker 1: UM and and full of all sorts of intelligent commentary.

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Speaker 1: I think, Uh, this is the sort of conversation. So

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Speaker 1: if you're at all interested in asset management, wealth strategies

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Speaker 1: investment portfolio strategies. Uh, this is the podcast for you,

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Speaker 1: with no further ado. Here is my conversation with Alliance

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Speaker 1: Bernstein's Kathleen Fisher. My guest this week is Kathleen Fisher.

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Speaker 1: She is the head of Wealth and Investment Strategies at

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Speaker 1: Alliance Bernstein, a firm that manages about five hundred and

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Speaker 1: forty billion dollars with thirty undred employees in twenty two countries.

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Speaker 1: She joined the firm as a senior portfolio manager and

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Speaker 1: member of Bernstein's private client Investment policy Group. Before joining Bernstein,

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Speaker 1: she spent fifteen years at JP Morgan, most recently as

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Speaker 1: managing director, advising banks on acquisitions, divestitures, and financing techniques.

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Speaker 1: She graduated from Bates College and has an MBA from

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Speaker 1: n y U. Kathleen Fisher, Welcome to Bloomberg. Glad to

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Speaker 1: be here, and I'm gonna call you Kathy instead. I

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Speaker 1: know that's your everyday name. You started as an equity analyst.

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Speaker 1: What attracted you to finance in the first place? You

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Speaker 1: know me back up and say I started as a

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Speaker 1: young economist. I started the Federal Reserve Bank of New York.

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Speaker 1: I was there for three years, I did monetary research

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Speaker 1: as well as GDP research. It was an amazingly wonderful

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Speaker 1: learning experience to do high quality research. It was very academic,

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Speaker 1: but I learned the importance of getting your facts right,

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Speaker 1: which today is more relevant than ever, isn't it when

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Speaker 1: we have a word that's called fake news. But it

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Speaker 1: was a great learning exp various about the importance of footnotes,

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Speaker 1: about citing your sources. That has followed me and everything

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Speaker 1: I've done since then. UM. Having come to New York

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Speaker 1: though to do that job, I did start meeting people

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Speaker 1: who were an investment banking and equity research, and long

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Speaker 1: and behold, someone I met gave me an opportunity to

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Speaker 1: go to Morgan Stanley to be a bank stock analyst,

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Speaker 1: and that's how I get into equity research, which UM

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Speaker 1: back then it was still a relatively new field, very

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Speaker 1: exciting and for me very intellectually rewarding to focus on

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Speaker 1: relative valuations, but to also learn that what you think

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Speaker 1: is so right often takes the market much longer to

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Speaker 1: agree with or perhaps never agree with. So it was

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Speaker 1: a great learning experience. Any particular example stand out as

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Speaker 1: this was quite quite the memorable experience. UM I was.

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Speaker 1: I was covering bank stocks at a time when bank

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Speaker 1: stocks were very much out of favor, and therefore no

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Speaker 1: one wanted to hear a word I said for quite

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Speaker 1: some time. So let's just say that and of itself

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Speaker 1: was a great experience. So you spent a lot of

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Speaker 1: your career at JP Morgan after Morgan Stanley, What was

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Speaker 1: that experience like? What did you do for them? My

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Speaker 1: timing at JP Morgan was incredibly fortuitous because I did

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Speaker 1: a lot of bank m and A at a time

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Speaker 1: when bank m and A was absolutely a huge trend

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Speaker 1: in the late eighties, early nineties, mid nineties. So it

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Speaker 1: was a very active space and tons of activity. So

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Speaker 1: it was a really a wonderful experience and one that

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Speaker 1: captured both all that one does in M and A

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Speaker 1: and corporate finance about valuations and the right price to

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Speaker 1: pay for a deal. But also it brought in the

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Speaker 1: human side of things because with bank mergers, needless to say,

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Speaker 1: cost reduction and people reduction and um. You had to

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Speaker 1: get your head around that UM. And the important thing

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Speaker 1: is in a world that makes sense over time, it

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Speaker 1: did make sense for the banking industry to shrink. Those

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Speaker 1: job cuts would come eventually those mergers accelerated them, but

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Speaker 1: it was something that you had to stand back and say,

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Speaker 1: you know, it's going to happen over time, regardless of when.

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Speaker 1: So your tenure at JP Morgan, I believe that predated

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Speaker 1: the Jamie Diamond era is very much predated. It was

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Speaker 1: pre Chase Merger. Actually, yes, so I was going to

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Speaker 1: ask you how much time you spent working with Jamie,

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Speaker 1: but obviously quite a long time ago, obviously not so

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Speaker 1: what led you to Alliance Bernstein, although if memory serves,

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Speaker 1: when you joined it was Bernstein still right now, I

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Speaker 1: joined in two thousand one. The merger occurred in two thousands,

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Speaker 1: so I came post the Alliance Bernstein merger. I joined

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Speaker 1: Alliance Bernstein because several of my colleagues from JP Morgan

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Speaker 1: had migrated to Alliance Bernstein over time, and therefore they

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Speaker 1: enticed me to join the firm. And you've been there

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Speaker 1: ever since, been there ever since since two thousand and one.

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Speaker 1: So your current title is Head of Wealth and Investment Strategies.

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Speaker 1: What does the head of Wealth and Investment Strategies do well?

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Speaker 1: I am blessed to work with a team of thirty

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Speaker 1: five extraordinary experienced professionals who are in two separate groups.

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Speaker 1: One is the Wealth Strategies group, which develops the models

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Speaker 1: that help our clients pre experience the likely financial outcomes

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Speaker 1: of decisions they can make, whether those decisions are around

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Speaker 1: wealth transfer strategies or retirement or chartable. Giving the idea

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Speaker 1: that you have many variables that you can control and

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Speaker 1: therefore how to think about different asset allocations different structures,

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Speaker 1: we help our clients think through all those options. Are

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Speaker 1: you running Monty Carlos some relations or or what are

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Speaker 1: you actually doing to to derive those variable outputs based

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Speaker 1: on different decisions. Our core model does indeed utilize the

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Speaker 1: Monte Carlo engine, but it's one that we have developed

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Speaker 1: ourselves over the years because we, as a research based firm,

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Speaker 1: want to make sure we are informed by history and

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Speaker 1: therefore we want to take responsibility for embedding relationships that

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Speaker 1: make sense over time. So it's our model, but using

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Speaker 1: a lot of the important quantitative techniques that are important

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Speaker 1: to getting that right. The other team is um the

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Speaker 1: team the Private Clients and Policy Group, which works on

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Speaker 1: ATHID allocation advice and strategies for clients once they have

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Speaker 1: made the appropriate decisions about their goals and objectives UM,

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Speaker 1: and also the specific execution strategies using the different investment

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Speaker 1: portfolios that we offer at our firm. So one side

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Speaker 1: of the group is planning, the other side is actually

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Speaker 1: asset management, and you want the portfolio to match the plants,

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Speaker 1: and am I over simplying that's very good? And it's

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Speaker 1: actually we're not the we're not the portfolio managers ourselves.

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Speaker 1: We're making the asset allocation advice using the portfolios that

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Speaker 1: are managed at the firm. So all internal. So in

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Speaker 1: other words, you're creating the salad from ingredients made within.

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Speaker 1: Is that too? Sexis good? Analogy good? And no no, no, no,

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Speaker 1: that's that We all eat salads. That's good. Yeah, some

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Speaker 1: of us less than we should, that's good. So so

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Speaker 1: it's in house portfolios that are created from it's an

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Speaker 1: in house asset allocation model using various funds and assets

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Speaker 1: that are also managed in house. So really you do

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Speaker 1: you use outside managers? So we we use we offer,

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Speaker 1: we use et f s were appropriate, UM, but the

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Speaker 1: bulk of our services are indeed managed in house. Let's

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Speaker 1: talk a little bit about last year was kind of

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Speaker 1: an unusual year. We had very high returns in the

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Speaker 1: United States, even better returns overseas, especially dollar denominated, and

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Speaker 1: incredibly low volatility and very very low draw douns. What

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Speaker 1: do you make of the way played out? You captured

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Speaker 1: all the anomalies, and no one knew going into two

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Speaker 1: thousand and seventeen that they would occur. So it's a

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Speaker 1: great reminder that you don't know, and they've given here

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Speaker 1: what's going to happen, especially the overseas returns for dollar

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Speaker 1: based investors. We started the year with all the focus

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Speaker 1: on the US, but the global synchronous recovery, the benefit

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Speaker 1: to earnings around the world, all of these were very

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Speaker 1: positive surprises that led equities to do quite well. But

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Speaker 1: the fact that there was such calm around the globe

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Speaker 1: despite the geopolitical issues, which the market really has absorbed

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Speaker 1: very nicely. The calm made the sharp ratio for the

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Speaker 1: year probably one of the highest on record. Right returns

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Speaker 1: relatively unit of risk given the volatility in the market

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Speaker 1: was really quite remarkable. So it was an extraordinary year.

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Speaker 1: Was actually probably rad a perfect year, and that we

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Speaker 1: had no months when there was a negative return on

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Speaker 1: the global stock market, so um lots of record breaking

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Speaker 1: events in two thousand and seventeen UM and when we

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Speaker 1: look forward, we think a lot of those good things

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Speaker 1: are still in place. The challenge, though, is we would

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Speaker 1: also argue that a lot of the good news is

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Speaker 1: already in the market already then. So one of the

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Speaker 1: things I find fascinating is when you have, as you

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Speaker 1: folks do, a global allocation, and do you get pushed

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Speaker 1: back from clients, not in seventeen, but in a hey,

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Speaker 1: U S stocks are doing great? Why are we wasting

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Speaker 1: all this time with all these overseas haul things? What

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Speaker 1: what sort of pushback does the diversified portfolio generate? I

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Speaker 1: will say we spend a lot of time with clients

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Speaker 1: reminding why you have diversification right. You never know when

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Speaker 1: things will change, and therefore we remind there will always

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Speaker 1: be times when you hold something that is out of

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Speaker 1: favor or doing less well than you would like. And

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Speaker 1: certainly holding non U S stocks ever since the financial

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Speaker 1: crisis has been a drain on returns until two thousand

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Speaker 1: and seventeen, But we know that over time they will

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Speaker 1: trade places they do they have. Two thousand and seventeen

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Speaker 1: showed that this year non U S stocks continue to

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Speaker 1: outpace the U s for dollar based investors, and that

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Speaker 1: is the power of diversification for long term investors. And

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Speaker 1: our clients are long term investors, so they do embrace

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Speaker 1: the idea that diversification will help them get the returns

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Speaker 1: they spect but the amount of risks they're willing to

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Speaker 1: tolerate over time. What about the general trend towards indexing.

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Speaker 1: How do you You You guys are an active set of managers,

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Speaker 1: although you do use e t f s, how do

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Speaker 1: you see this overall trends away from active management and

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Speaker 1: towards indexing playing out. Especially your client base tends to

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Speaker 1: be a fairly sophisticated, high net worth group of investors. Clearly,

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Speaker 1: active and passive should and can coexist. There is a

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Speaker 1: role for passive, and as a research based firm, we

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Speaker 1: have to acknowledge as we do that the cheapness of passive,

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Speaker 1: which has come down a lot in the past forty years,

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Speaker 1: means that investors Kennedy get very cheap access to all

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Speaker 1: many pockets of the market they couldn't before. So for

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Speaker 1: clients who have relatively short time frames who are very

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Speaker 1: focused on getting market returns, there's nothing wrong with passive.

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Speaker 1: But for clients who want a chance about performing over

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Speaker 1: time and do have a longer time horizon where are

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Speaker 1: active has time to play out, have more I think

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Speaker 1: it needs more options now than they had before. In

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Speaker 1: that active managers know they need to really show their value.

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Speaker 1: They can't be index huggers. They need to have high

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Speaker 1: conviction in their strategies and have to be able to

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Speaker 1: communicate why they should play out over time. But you

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Speaker 1: do need time for active strategies to work. And concentrated

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Speaker 1: portfolios high conviction portfolios that look very different than the

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Speaker 1: market are high active, share very little correlation with the benchmarks.

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Speaker 1: In fact, we have servicesor benchmark agnostic equity services. Were saying,

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Speaker 1: you know, you don't even think about benchmarking us. We

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Speaker 1: have some concentrated portfolios stocks and when you have that

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Speaker 1: conviction and the time to have at work, um, those

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Speaker 1: are nice satellites to have around core portfolios. So you

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Speaker 1: are a broad allocator. Let's talk a little bit about

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Speaker 1: the other half of the portfolio, the fixed income portion.

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Speaker 1: I have legitimately been hearing for ten years that this

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Speaker 1: bond bull market is over, it's dead, it's done, and

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Speaker 1: then next year I guess maybe this is the year

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Speaker 1: we've seen rates start to tick up. What does that

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Speaker 1: mean for fixed income? And are we really at the

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Speaker 1: end of the bond bull market? You are right, We've

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Speaker 1: been talking about it for a long time. I think

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Speaker 1: some clients are beginning to think it's a broken record. Um.

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Speaker 1: But when you think of how strong the global economy is,

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Speaker 1: and although remember inflation has been the mystery here, inflation

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Speaker 1: has been so low for so long. If the economy

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Speaker 1: continues to be as robust as it has been, it

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Speaker 1: is likely inflation will take up a bit, and even

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Speaker 1: a little bit will encourage central banks to become less accommodative.

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Speaker 1: We expect rates to move up gradually and modestly over time.

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Speaker 1: We can't wait, though this is getting a little bit

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Speaker 1: tiresome to have these have rates day as low as

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Speaker 1: they have. We've already seen some signs of inflation ticking

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Speaker 1: up around the world, and fairly recently. Early there are signs,

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Speaker 1: and late there are some signs of small amounts of

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Speaker 1: wage pressure. Is that going to continue? What? How do

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Speaker 1: you look at that and integrate that into a portfolio.

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Speaker 1: We do think the pockets of stress and the job

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Speaker 1: market indicate that wage pressure can develop, But we were not.

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Speaker 1: You know, none of us have a crystal ball on this,

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Speaker 1: but we do expect that to be a source of

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Speaker 1: upward pressure. So we do think that rates will be rising.

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Speaker 1: But as I said, gradually, our current forecast though, is

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Speaker 1: for four FED rate hikes in two thousand and eighteen,

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Speaker 1: and we do think we'll start to see rates picking

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Speaker 1: up a bit from here, especially as the central banks

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Speaker 1: and other parts of the world fall into step as well.

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Speaker 1: So I see a lot of pushback on bond funds

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Speaker 1: versus individual bonds. Is that an issue you ever deal

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Speaker 1: with with clients? There's there seems to be some sort

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Speaker 1: of confusion around do I own individual bonds or am

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Speaker 1: I better off and a fund and not have to

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Speaker 1: pick individual bonds? How do you manage that in your portfolios?

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Speaker 1: And what do you think of the difference. There has

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Speaker 1: been enormous press over the years about problems with bond funds,

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Speaker 1: which um Our clients understand are are not true. I e.

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Speaker 1: Um people who hold individual bonds usually don't mark their

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Speaker 1: bonds to market and therefore are not paying attention to

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Speaker 1: the actual price loss they may have when rates rise.

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Speaker 1: Bond funds, in contrast, especially intermediate bond funds that are

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Speaker 1: intentionally diversified across the term structure are looking to take

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Speaker 1: advantage of changing um yield curve shapes, are looking to

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Speaker 1: take advantage of short term rates rise and you name it,

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Speaker 1: so they can reinvest coupons in higher yielding bonds when

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Speaker 1: rates rise. And therefore, bond funds are very flexible, especially

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Speaker 1: when rates rise, to let you take advantage of the

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Speaker 1: changes that occur. Uh. There's another factor which is very important.

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Speaker 1: It's the bond liquidity is no longer as as broad

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Speaker 1: as it was pre crisis, and therefore bond funds are

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Speaker 1: much better for clients who need to pull many out

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Speaker 1: of their funds as opposed to selling an individual bond

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Speaker 1: at a very poor price in a less liquid market.

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Speaker 1: Let's talk a little bit about what it's like for

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Speaker 1: you as a woman working in a field that's been

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Speaker 1: so male dominated for so long. Have you seen any

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Speaker 1: improvement of things gotten better? Are there more opportunities for

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Speaker 1: women in this field? Things have definitely gotten better that

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Speaker 1: It's very obvious that the industry wants women for the

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Speaker 1: right reasons, i e. We want diverseit for diversity of thought.

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Speaker 1: We want women, We want people of color. We want

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Speaker 1: to have much more um, different kinds of input. UM.

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Speaker 1: So many studies have shown how much better teams are

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Speaker 1: when they are diverse, and we want to have that

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Speaker 1: advantage and also our clients expected, which is which is good.

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Speaker 1: I think you get, you get a lot of positive reinforcement.

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Speaker 1: And I do think one of the reasons things are

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Speaker 1: getting better is that companies are so much more flexible

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Speaker 1: than they ever were before, and and that's good for

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Speaker 1: men and women right. The fact that there is much

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Speaker 1: what you can work remotely. These are all good things

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Speaker 1: that encourage a fluid and adaptive workforce that benefits everyone.

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Speaker 1: The pay differential between men and women is as bad

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Speaker 1: as it was, is it getting better? Problem with any

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Speaker 1: kind of pay measurements is that it's very hard to

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Speaker 1: actually look at identical jobs. I would argue that certainly

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Speaker 1: at my firm and at every firm I know, people

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Speaker 1: get the same pay for identical jobs. It's really that's

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Speaker 1: the challenge is actually saying each job, how you measure

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Speaker 1: each job? UM. Michelle Myers of Bank America Merrill Lynch

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Speaker 1: specifically cited a lack of women at the top of

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Speaker 1: the industry as a challenge for women in finance. And

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Speaker 1: I'm assuming she means a lack of role models, a

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Speaker 1: lack of mentors. What was your experience coming up through

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Speaker 1: Morgan Stanley, JP, Morgan and now alongst so let me

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Speaker 1: started saying, I'm a partner at our firm, and that

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Speaker 1: is wonderful, and that I and my other senior female colleagues,

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Speaker 1: UM are very focused on coaching, mentoring, and sponsorship of

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Speaker 1: young women. That is absolutely a dominant force. When I

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Speaker 1: was younger, UM, I was kind of lucky in that

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Speaker 1: I never felt the need to fit in and and

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Speaker 1: and that meant that I wasn't looking as much for

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Speaker 1: female role models as perhaps some people might have been

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Speaker 1: back then. UM. And therefore, UM, it didn't stiny me

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Speaker 1: because I always thought that if you had good ideas

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Speaker 1: and were contributing, you would be rewarded. So I was

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Speaker 1: very lucky that it didn't trouble me me too much.

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Speaker 1: But I think it's too much into this. So you

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Speaker 1: suggesting you stood out as a woman and there was

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Speaker 1: an advantage to that, I can I will not go

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Speaker 1: that far. UM. I will say that the UM that

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Speaker 1: I think some of the frustrations that some people may

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Speaker 1: have had in their careers. I didn't have UM and

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Speaker 1: and was very fortunate in every firm I worked for

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Speaker 1: not have had those. So what do you think is

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Speaker 1: the current state of affairs in gender relations? This past

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Speaker 1: year is really feels like a major turning point in

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Speaker 1: the roles of genders and what is and isn't acceptable behavior?

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Speaker 1: Am I overstating that? I think the fact that conversations

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Speaker 1: are being held at the company level in public forms

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Speaker 1: is really good, and everyone's having conversations they might not

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Speaker 1: have had before, and openness leads to good results and

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Speaker 1: good outcomes and much more honesty, candor and effectiveness. So

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Speaker 1: I think this is indeed a good, good, good spot

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Speaker 1: to be in. UM. The time will tell, but I

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Speaker 1: am most focused on how exciting the brilliant young women

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Speaker 1: that are coming up are doing and the impact I

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Speaker 1: think they will have because there is so much more

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Speaker 1: conversation about women making sure their voices are heard, about

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Speaker 1: taking care and not to in any way make it

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Speaker 1: make anything seem like it's male oriented, and I think

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Speaker 1: there's a lot of good things that are happening because

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Speaker 1: of that. Holding aside, what what's the right thing to do?

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Speaker 1: The social issue aspect of it. When you look at

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Speaker 1: the recent financing at uber, which is known as a

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Speaker 1: sort of frat house bro mentality. It costs them tens

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Speaker 1: of billions of dollars, both the founders, the employees, the

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Speaker 1: outside investors because of that, you know, juvenile frat house approach.

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Speaker 1: Have we reached a point where Corporate America has said

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Speaker 1: enough is enough, This is real money and we have

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Speaker 1: to get serious about it. Oh? We yet that stage yet?

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Speaker 1: You know, you raised a really good point, which is

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Speaker 1: that the transparency that the Internet has permitted has made

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Speaker 1: it hard for companies to hide. And that's a good thing.

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Speaker 1: Uh So, I do think there's a much greater awareness

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Speaker 1: that good behavior is necessary, and I think that's going

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Speaker 1: to be very helpful in enforcing more good behavior down

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Speaker 1: the road. Let's talk a little bit about what you

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Speaker 1: see as head of wealth management and investment strategies. You

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Speaker 1: work with a big spectrum of investors, from individuals to

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Speaker 1: institutions to everything in between. How do these different investors

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Speaker 1: differ and in what ways are they the same? Well,

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Speaker 1: I'm going to focus just on the private client business,

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Speaker 1: and um, what's what's interesting there is that it has

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Speaker 1: nothing to do with assets sized people are people, and

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Speaker 1: everyone has their own personal preference for risk and return.

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Speaker 1: And you could have two people exactly the same amount

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Speaker 1: of money, and they could have a whole different view

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Speaker 1: as whether they have enough or or they're going to

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Speaker 1: run out of money, and both could be in very

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Speaker 1: good places, but they each have a very different perspective.

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Speaker 1: So um, we clearly focus a lot on making people

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Speaker 1: understand the likely financial outcomes of all the decisions they

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Speaker 1: can make, uh, and so that they have the confidence

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Speaker 1: in the understanding to actually make very good judgments about

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Speaker 1: long term planning. That fear of running out of money,

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Speaker 1: I've heard that. I'm sure you've heard that from people

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Speaker 1: who really, unless they start accumulating picassos, will never run

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Speaker 1: out of money. Why is this such a significant concern

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Speaker 1: from people who you would otherwise think are totally financially secure.

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Speaker 1: It has nothing to do with intellectual knowledge. It has

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Speaker 1: everything to do with embedded psychology. And and as I've said,

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Speaker 1: there's there's you don't know until the person explains you

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Speaker 1: know there's something, whether it's something in their background or

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Speaker 1: just their personal makeup, which makes them very conservative and

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Speaker 1: fearful that terrible things could happen. That could indeed wipe

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Speaker 1: out their their financial nest act. How do you respond

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Speaker 1: to that? Um, it really gets to what I said

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Speaker 1: before about modeling. Um, if we can show that even

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Speaker 1: in very poor market conditions they will be in a

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Speaker 1: good place, that is very reassure to people. So we do,

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Speaker 1: indeed do our planning to the ninety percent confidence level

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Speaker 1: to make sure people know that even in very poor

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Speaker 1: conditions they will be fine. What about inflation? What sort

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Speaker 1: of inflation assumptions do you build into those sort of plants?

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Speaker 1: We let inflation is a variable. We are not saying

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Speaker 1: we know we're inflation will go. We we do what

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Speaker 1: we when we do forecast, we do ten thousand trials,

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Speaker 1: and inflation is one of the factors that does unfold

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Speaker 1: over time. It can be very high, can be very low.

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Speaker 1: And remember, deflation can be as bad as inflation. But um,

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Speaker 1: we want to show a range of expected outcomes for

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Speaker 1: inflation as well, because you're so right, inflationary environments that

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Speaker 1: are extreme can be very dangerous. Huh, that's that's that's

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Speaker 1: quite interesting. So tell us about your day to day

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Speaker 1: what does that look like? Are you because you work

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Speaker 1: with two different groups of both planners and the asset

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Speaker 1: management side. You're working with clients. What what's the Dame

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Speaker 1: life of Kathleen fisherlike? Well, yes, I have. I have

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Speaker 1: the incredible luxury of a lot of diversification my daily life.

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Speaker 1: My team is working on long term asset allocation projects.

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Speaker 1: We're working on long term planning projects. Were publishing for

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Speaker 1: both our clients. We're creating communications for advisors. We're meeting

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Speaker 1: with clients if our perspective can be useful to a

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Speaker 1: client meeting. So we have a vast array of different

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Speaker 1: things going on. Again, even time we speak in front

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Speaker 1: of public forums in terms of groups. Um, So, lots

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Speaker 1: of diversification. But what what's good about all of it

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Speaker 1: is that we have a lot of interaction with clients

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Speaker 1: and therefore can see, um what issues really matter to

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Speaker 1: people and where we can be helpful and more clear

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Speaker 1: in communicating. So we mentioned outliving their money. What are

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Speaker 1: some of the other large concerns clients have these days? Well,

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Speaker 1: we didn't talk too much about out living money, but

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Speaker 1: I'm glad you raised that because that indeed, longevity risk

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Speaker 1: is we always remind clients the biggest risk they have

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Speaker 1: nothing in longevity risk is the biggest risk clients have.

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Speaker 1: People worry about market returns, but just think that nothing

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Speaker 1: in in human history has prepared people for a world

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Speaker 1: where they work for forty years and then may have

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Speaker 1: to live on what they say for the next thirty

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Speaker 1: or forty years. Now for very wealthy people, it's a

433
00:25:22,680 --> 00:25:26,640
Speaker 1: different dynamic, but still it's a very different thing when

434
00:25:26,680 --> 00:25:30,159
Speaker 1: you're talking about living perhaps as long as you have worked.

435
00:25:30,280 --> 00:25:32,959
Speaker 1: Right when you go back to why social security was created,

436
00:25:32,960 --> 00:25:35,120
Speaker 1: people used to die a few years after they retire,

437
00:25:35,240 --> 00:25:38,560
Speaker 1: So it's a very different ballot ball game. So the

438
00:25:38,640 --> 00:25:41,800
Speaker 1: dynamics have changed dramatically, and it's very important how to

439
00:25:41,880 --> 00:25:46,160
Speaker 1: think about, you know, money lasting for many, many decades.

440
00:25:46,680 --> 00:25:51,919
Speaker 1: So we have technologies and health and healthcare changing. We

441
00:25:52,040 --> 00:25:54,720
Speaker 1: have all sorts of things taking place in terms of

442
00:25:54,800 --> 00:25:59,360
Speaker 1: genomics and oncology and down the road, what happens when

443
00:25:59,440 --> 00:26:03,480
Speaker 1: human life spends, when a hundred is in a rarity,

444
00:26:03,480 --> 00:26:07,440
Speaker 1: when that becomes run for the ordinary and we start

445
00:26:07,520 --> 00:26:11,480
Speaker 1: seeing a hundred, ten hundred, twenty as not tremendous outliers.

446
00:26:11,480 --> 00:26:14,880
Speaker 1: So we can eventually have a problem or we're gonna

447
00:26:14,880 --> 00:26:19,080
Speaker 1: have to reconfigure how we think about our portfolios. When

448
00:26:19,080 --> 00:26:22,720
Speaker 1: we turn sixty eight or seventy and not shift to

449
00:26:23,000 --> 00:26:26,880
Speaker 1: that much more of a conservative portfolio, absolutely, and that's

450
00:26:26,920 --> 00:26:28,760
Speaker 1: been the case for at least a decade now with

451
00:26:28,760 --> 00:26:31,159
Speaker 1: with rates interest rates being so low. You know, the

452
00:26:31,200 --> 00:26:34,000
Speaker 1: old the decades ago when people used to talk about

453
00:26:34,000 --> 00:26:36,440
Speaker 1: switching to bonds, bond returns were in the mid single

454
00:26:36,480 --> 00:26:38,320
Speaker 1: digit and of course at these levels that would be

455
00:26:38,400 --> 00:26:40,760
Speaker 1: unconscionable to have a heavy bond weight if you need

456
00:26:40,800 --> 00:26:43,720
Speaker 1: the money to work for decades to come. So most

457
00:26:43,760 --> 00:26:47,160
Speaker 1: firms have indeed encourage clients to maintain a good equity

458
00:26:47,200 --> 00:26:51,040
Speaker 1: weight when they retire. It's ever more important because of longevity.

459
00:26:51,160 --> 00:26:53,399
Speaker 1: And the other thing that's important is to assume that

460
00:26:53,440 --> 00:26:56,680
Speaker 1: your expenses grow with inflation over time, so you capture

461
00:26:56,760 --> 00:26:59,280
Speaker 1: the risk of living for quite quite a long time.

462
00:26:59,720 --> 00:27:03,840
Speaker 1: So we talked earlier about the shift from active to

463
00:27:04,080 --> 00:27:08,560
Speaker 1: passive and how they could coexist, but underlying that has

464
00:27:08,600 --> 00:27:11,600
Speaker 1: been the shift from price to cheap, and and we've

465
00:27:11,640 --> 00:27:15,760
Speaker 1: seen what some people call the vanguard effects pressuring fees

466
00:27:15,880 --> 00:27:19,280
Speaker 1: across the whole industry. What's your take on this and

467
00:27:19,280 --> 00:27:23,159
Speaker 1: and what do you see happening going forward in terms

468
00:27:23,320 --> 00:27:29,680
Speaker 1: of fee compression? And everything will associated with that. It's

469
00:27:29,680 --> 00:27:31,800
Speaker 1: a It's a really interesting topic because I do think

470
00:27:31,800 --> 00:27:35,560
Speaker 1: there's gonna much more segmentation in that UM. Getting cheap

471
00:27:35,600 --> 00:27:39,000
Speaker 1: exposure is a good thing for many people, but paying

472
00:27:39,119 --> 00:27:43,760
Speaker 1: fees for a broader advice model also makes sense. I

473
00:27:43,800 --> 00:27:48,359
Speaker 1: think there will be an appropriate demand for transparency of

474
00:27:48,440 --> 00:27:52,800
Speaker 1: fees and for clear value in what client is getting

475
00:27:52,840 --> 00:27:55,080
Speaker 1: for those fees. So I think there's these are these

476
00:27:55,119 --> 00:28:00,080
Speaker 1: are good trends for for clients, So transparency, value you

477
00:28:00,280 --> 00:28:03,679
Speaker 1: And what was the third? I think the feasts have

478
00:28:03,720 --> 00:28:06,280
Speaker 1: to be appropriate to the value offered. Yeah, that makes

479
00:28:06,359 --> 00:28:09,359
Speaker 1: that makes perfect sense. So you've seen some changes that

480
00:28:09,440 --> 00:28:13,000
Speaker 1: have taken place in the financial industry over the past

481
00:28:13,040 --> 00:28:16,000
Speaker 1: few years. What do you think is the most significant

482
00:28:16,160 --> 00:28:19,399
Speaker 1: change that has occurred so far and what should we

483
00:28:19,480 --> 00:28:22,080
Speaker 1: be on the lookout in the future. I would have

484
00:28:22,119 --> 00:28:26,280
Speaker 1: to say speed and information. UM. I love looking at

485
00:28:26,359 --> 00:28:30,480
Speaker 1: video clips from the seven market crash because you see

486
00:28:30,480 --> 00:28:32,680
Speaker 1: reporters standing at the top of the New York Stock

487
00:28:32,720 --> 00:28:35,440
Speaker 1: Exchange with pages giving them handwritten notes about what was

488
00:28:35,480 --> 00:28:38,880
Speaker 1: happening on the floor. Nowadays, obviously we all know that

489
00:28:38,920 --> 00:28:41,800
Speaker 1: everyone can get real time quotes on their phones. UM,

490
00:28:41,840 --> 00:28:44,360
Speaker 1: there's a ton of information you can look at all

491
00:28:44,440 --> 00:28:46,840
Speaker 1: day long. The problem is a lot of it's not

492
00:28:47,040 --> 00:28:51,800
Speaker 1: very good. So information is not judgment, information is not assessment,

493
00:28:51,840 --> 00:28:55,560
Speaker 1: it's not perspective. And so the challenge is is cutting

494
00:28:55,560 --> 00:28:59,240
Speaker 1: through all the information to get to truly good advice. UM.

495
00:28:59,320 --> 00:29:01,680
Speaker 1: So it's that that's created actually more of a challenge

496
00:29:01,760 --> 00:29:04,520
Speaker 1: because the more information people have, the easier it is

497
00:29:04,560 --> 00:29:07,280
Speaker 1: to react to it, as opposed to keeping their eye

498
00:29:07,720 --> 00:29:11,080
Speaker 1: on the long term, which for most individuals is indeed

499
00:29:11,120 --> 00:29:14,200
Speaker 1: the right thing to do. Do we suffer from information overload?

500
00:29:14,240 --> 00:29:19,480
Speaker 1: Is there is there just two fire hose of not judgment,

501
00:29:19,560 --> 00:29:24,720
Speaker 1: assessment or perspective, but just raw news and headlines and

502
00:29:25,240 --> 00:29:30,000
Speaker 1: political volatility. What does that do to an investor's attitude

503
00:29:30,120 --> 00:29:33,680
Speaker 1: and how does that affect their tendency to shoot themselves

504
00:29:33,680 --> 00:29:37,200
Speaker 1: in the foot? Well, it does create those new risks, um.

505
00:29:37,280 --> 00:29:39,760
Speaker 1: You know, studies have shown that back in the day,

506
00:29:39,760 --> 00:29:42,960
Speaker 1: when people could only look at their accounts once a year,

507
00:29:43,120 --> 00:29:46,160
Speaker 1: maybe once a quarter, they stayed long term investors. But

508
00:29:46,200 --> 00:29:49,280
Speaker 1: now that they have daily information, they tend to do

509
00:29:49,360 --> 00:29:54,160
Speaker 1: more things more quickly. So continually keeping the eye on

510
00:29:54,200 --> 00:29:58,640
Speaker 1: the long term UM is really important. And and and

511
00:29:58,680 --> 00:30:01,640
Speaker 1: I I tease about everything we're doing here today, and

512
00:30:01,760 --> 00:30:05,880
Speaker 1: that because there is seven News, there's gonna be a

513
00:30:05,920 --> 00:30:08,160
Speaker 1: lot of talking heads all the time telling people what

514
00:30:08,240 --> 00:30:10,560
Speaker 1: to do, what to buy, what to sell. Um, and

515
00:30:10,920 --> 00:30:14,200
Speaker 1: you have to stay away from taking that advice too seriously.

516
00:30:15,080 --> 00:30:17,320
Speaker 1: So one of the things I noticed, since since you

517
00:30:17,400 --> 00:30:23,720
Speaker 1: brought up the information flow after the election, in all

518
00:30:23,880 --> 00:30:27,520
Speaker 1: investors seem to want to ask was what is Trump

519
00:30:27,560 --> 00:30:29,680
Speaker 1: going to do for my portfolio? And if you remember

520
00:30:29,680 --> 00:30:32,560
Speaker 1: early on, oh, this guy is gonna kill my portfolio,

521
00:30:32,640 --> 00:30:34,840
Speaker 1: and then that very quickly became oh, this guy is

522
00:30:34,880 --> 00:30:38,040
Speaker 1: gonna be great for my portfolio. How do you respond

523
00:30:38,120 --> 00:30:45,080
Speaker 1: to questions about politics when is a perfect example, probably

524
00:30:45,120 --> 00:30:48,840
Speaker 1: the most politically volatile year in my lifetime, and at

525
00:30:48,840 --> 00:30:52,880
Speaker 1: the same time the lowest volatility in the markets. It

526
00:30:53,000 --> 00:30:56,840
Speaker 1: is a fascinating situation, isn't it. Um. We actually looked

527
00:30:56,840 --> 00:30:59,840
Speaker 1: back over time at all the geopolitical events back to

528
00:31:00,120 --> 00:31:04,440
Speaker 1: World War two to show that it actually has always

529
00:31:04,520 --> 00:31:07,080
Speaker 1: been the case that geopolitical events get a lot of

530
00:31:07,080 --> 00:31:10,120
Speaker 1: headlines but have very little impact on the markets. Um.

531
00:31:10,160 --> 00:31:13,560
Speaker 1: The only time they do is when something political works

532
00:31:13,600 --> 00:31:16,960
Speaker 1: into the real economy. So for example, the Opec oil

533
00:31:17,000 --> 00:31:19,720
Speaker 1: embargo in the seventies, which did affect the economy, of course,

534
00:31:20,200 --> 00:31:23,320
Speaker 1: but many other things that we think of, the Cuban

535
00:31:23,360 --> 00:31:25,680
Speaker 1: missile crisis, you name it, they really had very little

536
00:31:25,720 --> 00:31:27,920
Speaker 1: impact on the market. And I think that as time

537
00:31:27,960 --> 00:31:30,720
Speaker 1: has gone on, there's been more appreciation of that, which

538
00:31:30,760 --> 00:31:33,680
Speaker 1: is one of the reasons markets have been relatively complacent

539
00:31:33,720 --> 00:31:37,920
Speaker 1: through lots of scary headlines, because what matters over time,

540
00:31:37,960 --> 00:31:41,200
Speaker 1: of course, is what companies are doing, uh in terms

541
00:31:41,240 --> 00:31:44,240
Speaker 1: of earnings growth, in terms of um, you know, getting

542
00:31:44,280 --> 00:31:47,640
Speaker 1: getting momentum for the long run, and that's what investors

543
00:31:47,680 --> 00:31:50,240
Speaker 1: really have been focusing on this year. We have been

544
00:31:50,280 --> 00:31:54,440
Speaker 1: speaking with Kathleen Fisher of Alliance Bernstein. If you enjoy

545
00:31:54,520 --> 00:31:57,520
Speaker 1: this conversation, be sure and hang around for the podcast extras,

546
00:31:57,520 --> 00:32:00,440
Speaker 1: where we keep the tape rolling and continue to guessing

547
00:32:00,480 --> 00:32:05,840
Speaker 1: all things investment. We love your comments, feedback and suggestions

548
00:32:06,400 --> 00:32:09,760
Speaker 1: right to us at m IB podcast at Bloomberg dot net.

549
00:32:10,320 --> 00:32:12,840
Speaker 1: You could follow me on Twitter at rit Halts. Check

550
00:32:12,840 --> 00:32:16,560
Speaker 1: out my daily column on Bloomberg View dot com. I'm

551
00:32:16,640 --> 00:32:20,760
Speaker 1: Barry Hults. You're listening to Master's in Business on Bloomberg Radio.

552
00:32:34,600 --> 00:32:37,040
Speaker 1: Welcome to the podcast. Kathleen, thank you so much for

553
00:32:37,040 --> 00:32:39,560
Speaker 1: doing this. I'm I'm We've been looking forward to this

554
00:32:40,160 --> 00:32:42,840
Speaker 1: since I saw you having a conversation. I think it

555
00:32:42,880 --> 00:32:46,160
Speaker 1: was with Tom Keane, might have been uh some time ago.

556
00:32:46,760 --> 00:32:51,840
Speaker 1: So Bernstein is a giant firm. I mean, you're half

557
00:32:51,840 --> 00:32:55,880
Speaker 1: a trillion dollars plus, it's what almost four thousand employees?

558
00:32:55,960 --> 00:33:02,040
Speaker 1: Is that about, right? So that's a substantial firm. What's

559
00:33:02,080 --> 00:33:05,280
Speaker 1: it like working in a shop that large as a

560
00:33:05,320 --> 00:33:08,920
Speaker 1: person who's as visible as you are for the company

561
00:33:09,200 --> 00:33:12,360
Speaker 1: Bernstein Alliance Bernstein, And I'm saying Burnstein, that's a brand

562
00:33:12,360 --> 00:33:15,880
Speaker 1: we surprise started, So you started after the mergery. I

563
00:33:15,880 --> 00:33:18,680
Speaker 1: don't realize the merger was two thousand and the Alliance

564
00:33:18,720 --> 00:33:20,960
Speaker 1: Burnstey merge was two thousand and Actually our brand now

565
00:33:21,040 --> 00:33:24,040
Speaker 1: is a B which is which is great, um, nice

566
00:33:24,040 --> 00:33:28,840
Speaker 1: and snappy, and it's a wonderful firm and that everyone

567
00:33:28,880 --> 00:33:31,480
Speaker 1: in the firm is focused on one thing, which is

568
00:33:31,480 --> 00:33:34,000
Speaker 1: providing great outcomes for our clients, because that's we only

569
00:33:34,040 --> 00:33:36,680
Speaker 1: do one thing, right, We do investment, research and management.

570
00:33:37,160 --> 00:33:40,160
Speaker 1: So that's a real luxury relative to being in a

571
00:33:40,200 --> 00:33:44,960
Speaker 1: financial conglomerate that has tons of different unrelated businesses. You

572
00:33:45,000 --> 00:33:47,440
Speaker 1: don't have to cross sell insurance or bank accounts or

573
00:33:47,440 --> 00:33:50,720
Speaker 1: any of that. We focus on providing great financial returns

574
00:33:50,880 --> 00:33:55,120
Speaker 1: and the appropriate risk adjusted returns for our clients, whether

575
00:33:55,160 --> 00:33:59,360
Speaker 1: they be institutional, private clients, or retail channel. So it's

576
00:33:59,480 --> 00:34:03,440
Speaker 1: it's a really um wonderful place to be working since

577
00:34:03,520 --> 00:34:06,680
Speaker 1: everyone knows our goals and objectives and how we apply

578
00:34:06,800 --> 00:34:10,400
Speaker 1: resources to achieve them. So um, I think that's a

579
00:34:10,480 --> 00:34:13,160
Speaker 1: it's a great model because I do believe strongly that

580
00:34:13,239 --> 00:34:16,560
Speaker 1: companies should have a core competency to exploit in a

581
00:34:16,600 --> 00:34:20,640
Speaker 1: world where depth and bradth matter more than ever. So

582
00:34:20,840 --> 00:34:26,560
Speaker 1: I remember Bernstein back in the nineties when constantly top

583
00:34:26,640 --> 00:34:30,799
Speaker 1: ranked on Institutional Investor in terms of the research team,

584
00:34:30,880 --> 00:34:33,960
Speaker 1: the individual analysts. I could pull some names out. Paul

585
00:34:34,040 --> 00:34:40,280
Speaker 1: s Agawa was on telecommunications. I remember him downgrading Lucin,

586
00:34:41,120 --> 00:34:45,160
Speaker 1: uh Cisco, a bunch of telecoms in and people thinking

587
00:34:45,160 --> 00:34:49,960
Speaker 1: he's crazy and all those stocks then drop. So Bernstein

588
00:34:50,120 --> 00:34:55,560
Speaker 1: was known for their research. Following the merger with Alliance,

589
00:34:56,080 --> 00:34:59,480
Speaker 1: has the business changed all that much? I'm trying to remember,

590
00:34:59,480 --> 00:35:01,399
Speaker 1: do you guys do syndication I p O as those

591
00:35:01,400 --> 00:35:05,160
Speaker 1: sort of stuff or is it purely investment management and planning?

592
00:35:05,280 --> 00:35:08,640
Speaker 1: It is investment management and research and our sell side

593
00:35:08,680 --> 00:35:12,719
Speaker 1: Santacy Bernstein continues to win accolades in the quality of

594
00:35:12,760 --> 00:35:17,320
Speaker 1: the research they provide. Now that business model is undergoing

595
00:35:17,400 --> 00:35:20,400
Speaker 1: some pretty serious changes. At one point in time that

596
00:35:20,480 --> 00:35:23,400
Speaker 1: was a big profit center for the big banks. Now

597
00:35:23,680 --> 00:35:26,839
Speaker 1: it is the research department there in service of the

598
00:35:26,920 --> 00:35:30,719
Speaker 1: rest of the asset management firm. How how is that

599
00:35:30,760 --> 00:35:36,000
Speaker 1: working these days? Um? The Bernstein sell side research group is,

600
00:35:36,520 --> 00:35:40,440
Speaker 1: as I said, incredibly well regarded and well positioned to

601
00:35:40,560 --> 00:35:43,320
Speaker 1: gain market share in a world their pressures are indeed

602
00:35:43,440 --> 00:35:47,400
Speaker 1: changing the nature of the business quite substantially. Yeah, that

603
00:35:47,560 --> 00:35:49,720
Speaker 1: there's been a lot of feed compression in that space,

604
00:35:49,920 --> 00:35:53,920
Speaker 1: and you mentioned the lack of liquidly on the bond side.

605
00:35:54,280 --> 00:35:57,840
Speaker 1: That half of the sell side business has changed dramatically also.

606
00:35:58,400 --> 00:36:01,520
Speaker 1: But you guys are fortunate that your focus is pretty

607
00:36:01,520 --> 00:36:06,120
Speaker 1: single minded, and that's relatively unusual in this In this industry,

608
00:36:06,160 --> 00:36:07,880
Speaker 1: I think it's a real advantage to clients to have

609
00:36:07,920 --> 00:36:10,279
Speaker 1: a firm that really does know what it's doing and

610
00:36:10,280 --> 00:36:13,239
Speaker 1: why it's doing it, to say the least. So let

611
00:36:13,280 --> 00:36:16,160
Speaker 1: me jump to my favorite questions. These are the questions

612
00:36:16,200 --> 00:36:20,319
Speaker 1: I ask all of our guests, what's the most important

613
00:36:20,360 --> 00:36:24,920
Speaker 1: thing that people don't know about your background? Well, you

614
00:36:25,000 --> 00:36:27,240
Speaker 1: might have gotten a sense. I'm a pretty disciplined person.

615
00:36:27,400 --> 00:36:31,400
Speaker 1: I work a lot. Um I don't my young colleagues. No,

616
00:36:31,520 --> 00:36:36,319
Speaker 1: I'm not on any social media social media at all,

617
00:36:36,760 --> 00:36:38,960
Speaker 1: which makes me a bit of a lutite, I admit.

618
00:36:39,120 --> 00:36:42,600
Speaker 1: But but the but the thing they are learning sometimes

619
00:36:42,640 --> 00:36:45,120
Speaker 1: is that I read a lot about what's going on.

620
00:36:45,160 --> 00:36:47,319
Speaker 1: So I'm actually much more up to date on what's

621
00:36:47,360 --> 00:36:50,040
Speaker 1: trending than they would expect me to be. And the

622
00:36:50,080 --> 00:36:52,800
Speaker 1: other really interesting thing for most of my younger colleagues

623
00:36:52,880 --> 00:36:55,960
Speaker 1: is that I do believe that we're in a golden

624
00:36:56,000 --> 00:36:58,840
Speaker 1: age of television. I do think that the Sopranos unleashed

625
00:36:58,920 --> 00:37:03,520
Speaker 1: the most amazing sets of programs ever. And so when

626
00:37:03,520 --> 00:37:06,359
Speaker 1: I have any free time on long holiday weekends, I

627
00:37:06,400 --> 00:37:09,160
Speaker 1: do binge watch everything that I haven't seen, just like

628
00:37:09,200 --> 00:37:11,799
Speaker 1: a teenager mind. Okay, so give me some names. I

629
00:37:11,880 --> 00:37:15,560
Speaker 1: have my favorites. Um, tell me what what you're watching

630
00:37:15,560 --> 00:37:18,040
Speaker 1: and enjoying. Well, to keep it nice and light. I

631
00:37:18,080 --> 00:37:20,440
Speaker 1: did do the Crown over the holidays. One of the

632
00:37:20,480 --> 00:37:22,640
Speaker 1: guys in my office loves that I can't get into

633
00:37:22,680 --> 00:37:24,359
Speaker 1: it now. I think a lot of people think it's slow,

634
00:37:24,400 --> 00:37:25,799
Speaker 1: but I think it's riveting because I am a bit

635
00:37:25,800 --> 00:37:29,960
Speaker 1: of an anglophile. I do love House of Cards. You know,

636
00:37:29,960 --> 00:37:33,520
Speaker 1: I'll probably still love it without Kevin spacey. Um. I

637
00:37:33,560 --> 00:37:36,000
Speaker 1: love Oranges and New Black, so I could go on.

638
00:37:36,120 --> 00:37:38,680
Speaker 1: But Oranges in New Black is a tough watch. I

639
00:37:38,719 --> 00:37:41,439
Speaker 1: find that's like a little gritty. I think I think

640
00:37:41,640 --> 00:37:44,680
Speaker 1: men have a harder time with it than women did. Maybe, Um,

641
00:37:44,880 --> 00:37:47,799
Speaker 1: have you seen the marvelous miss Maple on em I've

642
00:37:47,840 --> 00:37:50,960
Speaker 1: read about it and I know she was the young

643
00:37:51,000 --> 00:37:55,080
Speaker 1: woman on on House of Cards, so I want to

644
00:37:55,080 --> 00:37:57,759
Speaker 1: see that. My wife and I binge through the whole

645
00:37:57,760 --> 00:38:02,200
Speaker 1: thing over the holidays, and it's really tremendous. Um, tell

646
00:38:02,280 --> 00:38:04,600
Speaker 1: us about some of your early mentors. You talked about

647
00:38:04,680 --> 00:38:09,560
Speaker 1: what you're doing at a b now mentoring women who

648
00:38:09,560 --> 00:38:12,879
Speaker 1: were your mentors. You know. I wish I could say

649
00:38:12,960 --> 00:38:16,160
Speaker 1: I had a couple of incredibly important ones. I really didn't,

650
00:38:16,200 --> 00:38:18,800
Speaker 1: and I regret that because I do think it's so important.

651
00:38:18,840 --> 00:38:20,719
Speaker 1: The one thing I did learn, though, is to make

652
00:38:20,760 --> 00:38:25,160
Speaker 1: sure I got diverse opinions from people, because everyone has

653
00:38:25,200 --> 00:38:29,000
Speaker 1: biases and everyone has UM some blind spots. So I

654
00:38:29,040 --> 00:38:33,440
Speaker 1: have found it's really good to ask multiple people questions

655
00:38:33,480 --> 00:38:37,560
Speaker 1: over time to get help. What investors influenced your approach

656
00:38:38,000 --> 00:38:41,759
Speaker 1: to asset management? One thing I love about investing is

657
00:38:41,800 --> 00:38:47,480
Speaker 1: connecting the dots UM. Everything's interconnected, Everything can have unintended consequences.

658
00:38:48,200 --> 00:38:51,240
Speaker 1: When I was young and at Morgan Stanley, Barton Biggs

659
00:38:51,440 --> 00:38:55,040
Speaker 1: was Martin. He's since passed away, and Barton Biggs used

660
00:38:55,080 --> 00:38:58,239
Speaker 1: to take a big trip every year and write about it.

661
00:38:58,880 --> 00:39:02,640
Speaker 1: And the reason and I'm highlighting that is that UM

662
00:39:02,680 --> 00:39:06,200
Speaker 1: clients loved it because it reminded them of the big picture,

663
00:39:06,280 --> 00:39:08,920
Speaker 1: reminded them to keep focusing on the long term and

664
00:39:09,000 --> 00:39:12,960
Speaker 1: recognize all these interconnected issues as opposed to being very

665
00:39:13,040 --> 00:39:15,680
Speaker 1: you know, focused on one particular stock or something that

666
00:39:15,719 --> 00:39:19,279
Speaker 1: was really quite ephemeral as opposed to the longer term.

667
00:39:19,440 --> 00:39:23,000
Speaker 1: So I gave him enormous credit for helping people think broadly.

668
00:39:23,520 --> 00:39:27,000
Speaker 1: This is everybody's favorite question. What are some of your

669
00:39:27,000 --> 00:39:31,239
Speaker 1: favorite books, be they investing or non investing related fiction, nonfiction?

670
00:39:31,520 --> 00:39:34,600
Speaker 1: What are you reading? I confess I'm not reading anything now.

671
00:39:34,640 --> 00:39:36,680
Speaker 1: I tend to be in a high work mode this

672
00:39:36,760 --> 00:39:39,520
Speaker 1: time of the year. But I love books again that

673
00:39:39,600 --> 00:39:41,680
Speaker 1: help connect the dots. A book that I read that

674
00:39:41,719 --> 00:39:45,400
Speaker 1: I recommended to many people is Gotham, which is I

675
00:39:45,400 --> 00:39:48,719
Speaker 1: think it's Gotham A History of New York to so

676
00:39:48,719 --> 00:39:52,960
Speaker 1: I think was written maybe twenty years ago. Um, I

677
00:39:53,000 --> 00:39:55,959
Speaker 1: forget the author's names, but there's a second version coming out,

678
00:39:56,000 --> 00:39:59,479
Speaker 1: but it is. It is a very big book and

679
00:39:59,680 --> 00:40:02,880
Speaker 1: the re and it's so wonderful is it actually goes

680
00:40:03,000 --> 00:40:06,120
Speaker 1: through the first three hundred years of New York City

681
00:40:06,280 --> 00:40:10,560
Speaker 1: and highlights both the all the accidental forces that made

682
00:40:10,600 --> 00:40:13,440
Speaker 1: New York become what it is today. And the primary

683
00:40:13,480 --> 00:40:17,960
Speaker 1: one is that the Dutch influence on New York is

684
00:40:18,000 --> 00:40:21,080
Speaker 1: really what made it such a commercial center from inception.

685
00:40:21,680 --> 00:40:23,680
Speaker 1: We tend to think of us, I think we tend

686
00:40:23,680 --> 00:40:26,920
Speaker 1: to think about the English uh influence, but you know,

687
00:40:26,960 --> 00:40:29,560
Speaker 1: the Dutch influence was really much more important to what

688
00:40:29,600 --> 00:40:32,839
Speaker 1: the city became over time. Gotham A History of New

689
00:40:32,920 --> 00:40:36,560
Speaker 1: York to eight Edwin Burrows and Mike Wallace, Yes, and

690
00:40:36,600 --> 00:40:39,239
Speaker 1: Mike Wallace now that has just created just done a

691
00:40:39,320 --> 00:40:44,960
Speaker 1: second book which goes from I think to nineteen seventeen

692
00:40:45,040 --> 00:40:48,240
Speaker 1: or something like that. So it's a much shorter time frame,

693
00:40:48,280 --> 00:40:51,719
Speaker 1: but gets into the next next period. Greater Gotham, A

694
00:40:51,800 --> 00:40:55,560
Speaker 1: History of New York City from eight to nine. By

695
00:40:55,560 --> 00:40:57,480
Speaker 1: the way, I don't know any of this. Google and

696
00:40:57,520 --> 00:41:01,520
Speaker 1: Amazon are my backup our drive. What else? What else

697
00:41:01,560 --> 00:41:03,400
Speaker 1: have you been reading? Or let me tell you another

698
00:41:03,440 --> 00:41:05,600
Speaker 1: book that I recommend to everyone, which used to be

699
00:41:05,719 --> 00:41:08,479
Speaker 1: quite well known. I don't think anyone under fifty knows

700
00:41:08,520 --> 00:41:11,200
Speaker 1: of it. But um, All the King's Men by Robert

701
00:41:11,239 --> 00:41:15,480
Speaker 1: Penn Warren. Does that ring about with you? Yeah? Well

702
00:41:15,480 --> 00:41:17,759
Speaker 1: it was, But the book is the book is much

703
00:41:17,800 --> 00:41:21,680
Speaker 1: more important than the film in that UM. I think

704
00:41:21,680 --> 00:41:23,240
Speaker 1: it was written in the forties, but it was written

705
00:41:23,239 --> 00:41:26,200
Speaker 1: about the thirties. UM. It was a little bit based

706
00:41:26,200 --> 00:41:30,680
Speaker 1: on Huey Long. But more importantly, it's about it's it's

707
00:41:30,719 --> 00:41:33,920
Speaker 1: got so many themes, but it's about history. It's about

708
00:41:34,280 --> 00:41:36,480
Speaker 1: how you can't you have to You have to accept

709
00:41:36,520 --> 00:41:40,480
Speaker 1: and learn to accept your history but also change. UM.

710
00:41:40,560 --> 00:41:44,520
Speaker 1: Unintended consequences of actions is a big theme of the book.

711
00:41:45,040 --> 00:41:51,239
Speaker 1: It's it's magnificent and I it also reminds that geography

712
00:41:51,320 --> 00:41:54,359
Speaker 1: and climate um are something we don't think about as

713
00:41:54,400 --> 00:41:56,319
Speaker 1: much anymore. But when you read that book, about the

714
00:41:56,360 --> 00:41:59,640
Speaker 1: South and the thirties. You feel the heat and the

715
00:42:00,080 --> 00:42:03,000
Speaker 1: city and the dust, and you realize how that affected

716
00:42:03,040 --> 00:42:05,080
Speaker 1: the way people lived in ways that we are sort

717
00:42:05,080 --> 00:42:08,400
Speaker 1: of immune from today. So it's a great American novel

718
00:42:08,520 --> 00:42:11,920
Speaker 1: that brings in many important social themes. I just finished

719
00:42:11,960 --> 00:42:15,760
Speaker 1: How We Got to Now, and one of the six

720
00:42:15,920 --> 00:42:20,520
Speaker 1: factors that led to modernity was simply air condition I

721
00:42:20,560 --> 00:42:23,359
Speaker 1: would say air conditioning is the most important invention of

722
00:42:23,480 --> 00:42:27,080
Speaker 1: the modern era. It's changed where people live, It's changed

723
00:42:27,080 --> 00:42:30,799
Speaker 1: the computing power. We couldn't have computers that, right, It's

724
00:42:30,800 --> 00:42:33,240
Speaker 1: really you don't think about that. We take it for granted,

725
00:42:33,320 --> 00:42:36,480
Speaker 1: but that's a huge innovation. So we talked earlier about

726
00:42:36,520 --> 00:42:41,800
Speaker 1: how things have improved for women in the industry. Generally speaking,

727
00:42:41,920 --> 00:42:44,719
Speaker 1: what do you think is the most significant changes we've

728
00:42:44,719 --> 00:42:49,200
Speaker 1: witnessed in finance over the past twenty five years, you know,

729
00:42:49,320 --> 00:42:53,640
Speaker 1: like with UM, with most industries, I think the power

730
00:42:53,680 --> 00:42:58,120
Speaker 1: of the consumer is really a big trend, right, UM.

731
00:42:58,200 --> 00:43:01,440
Speaker 1: You see it on every industry. Right, sumer preferences have

732
00:43:01,600 --> 00:43:03,719
Speaker 1: to be met. They have so many choices, and that's

733
00:43:03,719 --> 00:43:07,759
Speaker 1: certainly true in private wealth management, right there are many

734
00:43:07,800 --> 00:43:11,280
Speaker 1: different choices, and I think it's it's really good for clients,

735
00:43:11,280 --> 00:43:16,080
Speaker 1: and that they are seeing a broad array of different models,

736
00:43:16,320 --> 00:43:18,359
Speaker 1: and every firm is therefore going to have to figure

737
00:43:18,360 --> 00:43:20,719
Speaker 1: out what's the model that works best for them and

738
00:43:20,760 --> 00:43:23,520
Speaker 1: the clients they want to serve. Makes makes a lot

739
00:43:23,560 --> 00:43:26,399
Speaker 1: of sense. So given that, what do you think the

740
00:43:26,440 --> 00:43:30,919
Speaker 1: next shifts that we're going to see are going to be? Yeah? So, UM,

741
00:43:31,080 --> 00:43:34,320
Speaker 1: you figure there's technology coming sort of from the bottom,

742
00:43:34,400 --> 00:43:39,319
Speaker 1: and that the robo advisors have highlighted the opportunity to

743
00:43:39,480 --> 00:43:43,839
Speaker 1: use technology to give clients quick information and let them

744
00:43:43,920 --> 00:43:46,799
Speaker 1: do a little of iterative work on their own. But

745
00:43:46,920 --> 00:43:50,760
Speaker 1: at the higher end, UM, you're seeing that there's actually

746
00:43:50,960 --> 00:43:56,319
Speaker 1: more need for good advice than ever before. Tax code changes, UM,

747
00:43:56,440 --> 00:44:00,200
Speaker 1: lots of different issues, as the investing landscape changes. All

748
00:44:00,239 --> 00:44:04,880
Speaker 1: these things demand that good advice be available. Tell us

749
00:44:04,920 --> 00:44:08,160
Speaker 1: about a time you failed and what you learned from

750
00:44:08,160 --> 00:44:13,200
Speaker 1: the experience. You know, I think you're looking for something

751
00:44:13,400 --> 00:44:16,520
Speaker 1: very idiosyncratic there, But I got to tell you the

752
00:44:17,239 --> 00:44:20,080
Speaker 1: most important thing that ever happened to me was getting

753
00:44:20,120 --> 00:44:22,600
Speaker 1: through two thousand and eight and nine with private clients

754
00:44:22,680 --> 00:44:25,200
Speaker 1: because and the reason I know how important that was, UM,

755
00:44:25,880 --> 00:44:29,240
Speaker 1: I realized I don't remember anything about that year except

756
00:44:29,239 --> 00:44:32,239
Speaker 1: for work, because we basically dropped everything to make sure

757
00:44:32,239 --> 00:44:35,120
Speaker 1: we could work with our clients. UM. As you know,

758
00:44:35,200 --> 00:44:37,879
Speaker 1: it was a stunning time and anybody in stocks are

759
00:44:37,880 --> 00:44:42,279
Speaker 1: their stocks go down? UM. Happily our clients often had

760
00:44:42,560 --> 00:44:47,040
Speaker 1: high quality municipal bonds that really helped offset those losses.

761
00:44:47,560 --> 00:44:50,759
Speaker 1: But it was a time when UM, the faith and

762
00:44:51,160 --> 00:44:53,920
Speaker 1: the way the world worked was shaken to its core,

763
00:44:54,640 --> 00:44:57,640
Speaker 1: and that affected me as well. I had to say,

764
00:44:57,760 --> 00:44:59,719
Speaker 1: you know, is everything I believe to be true but

765
00:44:59,840 --> 00:45:02,839
Speaker 1: in testing still true? And really had to work through

766
00:45:02,880 --> 00:45:06,320
Speaker 1: that UM and and and it was a very important

767
00:45:06,360 --> 00:45:09,600
Speaker 1: experience to UM to say, yes, indeed, the words the

768
00:45:09,640 --> 00:45:13,600
Speaker 1: world does still work UM. But it did require UM

769
00:45:14,000 --> 00:45:17,560
Speaker 1: uh that our firm and many others really focused on

770
00:45:17,680 --> 00:45:20,640
Speaker 1: risk control in ways that we hadn't had to do

771
00:45:20,760 --> 00:45:24,520
Speaker 1: before that. UM. So we developed some very powerful risk

772
00:45:24,520 --> 00:45:28,719
Speaker 1: control tools that have been very added to our clients

773
00:45:28,880 --> 00:45:32,759
Speaker 1: ever since then. It's hard to stop and realize it

774
00:45:32,800 --> 00:45:35,960
Speaker 1: was only ten years ago. It feels like it's so

775
00:45:36,040 --> 00:45:41,200
Speaker 1: much further away, but it's it's just a mirror ten

776
00:45:41,280 --> 00:45:44,600
Speaker 1: years later that isn't that at Many people are still

777
00:45:44,600 --> 00:45:48,600
Speaker 1: scarred by it. But there's a post traumatic stress disorder

778
00:45:48,680 --> 00:45:52,560
Speaker 1: amongst investors who. I can't tell you how many times

779
00:45:52,640 --> 00:45:55,719
Speaker 1: I speak to people, what do you mean you're in

780
00:45:55,760 --> 00:46:00,000
Speaker 1: fifty percent cash? Well, i'm cash. I was a percent

781
00:46:00,000 --> 00:46:04,640
Speaker 1: in cash through Really that that's some serious scarring. Well,

782
00:46:04,640 --> 00:46:06,160
Speaker 1: it's like it's like we used to talk about the

783
00:46:06,160 --> 00:46:09,359
Speaker 1: people the depression era mentality, right, it's the same thing,

784
00:46:09,520 --> 00:46:11,399
Speaker 1: people that lost a lot of money in a eight

785
00:46:11,480 --> 00:46:14,120
Speaker 1: and will never trust markets again. It takes a long

786
00:46:14,160 --> 00:46:17,879
Speaker 1: time to get over that. The line I remember from

787
00:46:17,920 --> 00:46:21,960
Speaker 1: many years ago is when you look at nineteen nine,

788
00:46:22,360 --> 00:46:25,400
Speaker 1: you did not get back above those levels till nineteen

789
00:46:25,440 --> 00:46:28,400
Speaker 1: fifty four. It was twenty five years later, and someone

790
00:46:28,480 --> 00:46:31,879
Speaker 1: said you needed a whole generation of people to be born,

791
00:46:32,000 --> 00:46:35,279
Speaker 1: grow up, and start working again before you even had

792
00:46:35,280 --> 00:46:38,480
Speaker 1: a chance to to breach those levels. Tell us what

793
00:46:38,520 --> 00:46:41,080
Speaker 1: you do to relax outside of the office. What do

794
00:46:41,120 --> 00:46:46,880
Speaker 1: you do to stay either mentally or physically sharp? Sou

795
00:46:47,080 --> 00:46:49,800
Speaker 1: Having been a working mother for most of my career,

796
00:46:49,880 --> 00:46:53,880
Speaker 1: my children are now adults thirty one and thirty two

797
00:46:53,920 --> 00:46:58,920
Speaker 1: and twenty eight, um, I always had to really focus

798
00:46:59,000 --> 00:47:01,719
Speaker 1: on my job and my family and kind of let

799
00:47:01,719 --> 00:47:04,240
Speaker 1: other things fall by the wayside, and that luckily worked

800
00:47:04,320 --> 00:47:06,799
Speaker 1: for me. I'm also on some boards that are very

801
00:47:06,800 --> 00:47:10,120
Speaker 1: important to me, but them I don't have a high

802
00:47:10,120 --> 00:47:13,080
Speaker 1: need for fun, which is really good. UM. I've fun?

803
00:47:13,200 --> 00:47:15,760
Speaker 1: Is is it? My family? UM? I have a wonderful

804
00:47:15,840 --> 00:47:20,080
Speaker 1: husband and wonderful children and now a grandson. UM, So

805
00:47:20,480 --> 00:47:23,200
Speaker 1: I spend most of my time focusing on seeing them

806
00:47:23,200 --> 00:47:26,520
Speaker 1: as much as I can. UM. I do have a trainer.

807
00:47:26,560 --> 00:47:29,239
Speaker 1: I have a trainer once a week who pushes me

808
00:47:29,280 --> 00:47:31,560
Speaker 1: to do things that I would never do by myself,

809
00:47:31,600 --> 00:47:35,160
Speaker 1: which I think is wonderful. UM. But I will tell

810
00:47:35,200 --> 00:47:40,120
Speaker 1: you I don't have any dramatically interesting outside hobbies like

811
00:47:40,160 --> 00:47:43,560
Speaker 1: bungee jumping or anything like that. You didn't strike me

812
00:47:43,600 --> 00:47:48,080
Speaker 1: as a bungee jump It wasn't the first thing to discipline. So. UM.

813
00:47:48,200 --> 00:47:50,840
Speaker 1: You mentioned you work with some younger women in the firm.

814
00:47:50,880 --> 00:47:53,960
Speaker 1: If a millennial or recent college graduate came to you

815
00:47:54,000 --> 00:47:57,440
Speaker 1: and said they were interested in a career in finance,

816
00:47:57,920 --> 00:48:01,279
Speaker 1: what sort of advice would you give them. I would

817
00:48:01,320 --> 00:48:03,919
Speaker 1: give the same advice I've been giving for decades, which

818
00:48:04,000 --> 00:48:06,880
Speaker 1: is you have to love the content of what you do.

819
00:48:07,160 --> 00:48:09,879
Speaker 1: You you will always be competing with people who do

820
00:48:10,239 --> 00:48:12,680
Speaker 1: love that content. So if you don't, they're going to

821
00:48:12,719 --> 00:48:15,200
Speaker 1: have an edge. So you have to know why you're

822
00:48:15,200 --> 00:48:18,080
Speaker 1: in the field and find if you if you like finance,

823
00:48:18,120 --> 00:48:20,440
Speaker 1: if you like markets, you know, find the spot that

824
00:48:20,600 --> 00:48:24,480
Speaker 1: really likes your fire, because um, it is competitive, it

825
00:48:24,480 --> 00:48:27,279
Speaker 1: should be, and therefore you want to love what you

826
00:48:27,360 --> 00:48:30,800
Speaker 1: do and the rest will come. And our final question,

827
00:48:31,080 --> 00:48:34,120
Speaker 1: what is it that you know about investing and markets

828
00:48:34,160 --> 00:48:40,279
Speaker 1: today that you wish you knew thirty years ago? I

829
00:48:40,360 --> 00:48:45,760
Speaker 1: think um, patients, um, and and never never ever letting

830
00:48:45,760 --> 00:48:48,359
Speaker 1: yourself get swayed by the short term is something that

831
00:48:48,400 --> 00:48:51,440
Speaker 1: you know when you're younger. It's hard to do sometimes. UM.

832
00:48:51,480 --> 00:48:53,080
Speaker 1: I look back at some of the things I did

833
00:48:53,280 --> 00:48:55,320
Speaker 1: back then, and if only I had held on to

834
00:48:55,440 --> 00:48:57,520
Speaker 1: certain positions that I didn't, it would have been a

835
00:48:57,520 --> 00:49:01,200
Speaker 1: whole different story. To say the very least. We have

836
00:49:01,360 --> 00:49:04,360
Speaker 1: been speaking with Kathleen Fisher. She is the head of

837
00:49:04,440 --> 00:49:09,920
Speaker 1: Wealth and investing Strategies at Alliance Bernstein. If you enjoy

838
00:49:10,000 --> 00:49:12,239
Speaker 1: this conversation, be sure and look up an inch or

839
00:49:12,360 --> 00:49:18,160
Speaker 1: down an inch on Apple, iTunes, SoundCloud, overcast, or wherever

840
00:49:18,360 --> 00:49:21,080
Speaker 1: final podcasts are sold, and you could see any of

841
00:49:21,120 --> 00:49:25,040
Speaker 1: the other hundred and eighty or so such conversations we've had.

842
00:49:25,840 --> 00:49:29,719
Speaker 1: We enjoy your comments, feedback and suggestions right to us

843
00:49:29,760 --> 00:49:33,880
Speaker 1: at m IB podcast at Bloomberg dot net. I would

844
00:49:33,880 --> 00:49:36,560
Speaker 1: be remiss if I did not thank the crack staff

845
00:49:36,600 --> 00:49:40,840
Speaker 1: who helps me put together this conversation every week. Taylor

846
00:49:40,920 --> 00:49:44,440
Speaker 1: Riggs is our booker, Michael Batnick is our head of research.

847
00:49:44,880 --> 00:49:50,680
Speaker 1: Medina Parwana is our audio engineer slash producer extraordinaire. I'm

848
00:49:50,719 --> 00:49:53,960
Speaker 1: Barry Rich Hults. You've been listening to Masters in Business

849
00:49:54,280 --> 00:50:02,400
Speaker 1: on Bloomberg Radio. I don't think it so