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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. This is Masters in

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Speaker 1: Business with Barry Ritholts on Bloomberg Radio.

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Speaker 2: This week on the podcast, I have another extra special guest.

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Speaker 3: Brian Lake is.

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Speaker 2: Chief Transformational Officer at Goldman Sachs's Asset Management. He got

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Speaker 2: a start at power Shares in the ETF industry early

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Speaker 2: and really has spent most of his career at the

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Speaker 2: vanguard of disruption. First at power Shares, they're eventually bought

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Speaker 2: by Invesco. He rises to become head of international ETFs

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Speaker 2: with them and for a couple of years was based

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Speaker 2: out of London, then comes back to New York and

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Speaker 2: gets tagged to run ETFs for JP Morgan Asset Management.

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Speaker 2: He just is one of these people that has, through

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Speaker 2: a combination of luck in Smart's, has been in the

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Speaker 2: right place at the right time and has very much

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Speaker 2: observed what it takes to satisfy clients to reach a

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Speaker 2: particular outcome and to use the latest greatest technology, whether

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Speaker 2: it cannibalizes your prior business or not, to help achieve

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Speaker 2: those outcomes. I found this conversation to be fascinating and

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Speaker 2: if you want to have some insight into what's going

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Speaker 2: on at Goldman Sachs three trillion dollars asset management business.

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Speaker 3: You'll find this conversation to be fascinating.

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Speaker 2: With no further ado, my discussion with Goldman Sachs Asset

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Speaker 2: Managements Brian Link Barry.

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Speaker 4: It's a pleasure to be here. Thanks for having me.

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Speaker 2: So I saw in one of the news outlets you

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Speaker 2: get hired with this completely wacky title. Like our mutual friends,

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Speaker 2: Dave Nadig was a chief futurist. So we'll get to

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Speaker 2: the title in a bit, but I want to start

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Speaker 2: with a little bit of your background that led you

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Speaker 2: to the CTO position. Starting with bachelors from Taylor University

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Speaker 2: International Business, Economics and Finance.

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Speaker 3: What was the original career plan.

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Speaker 4: Yeah, no, you know, I think I had read a

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Speaker 4: Warren Buffett book early on. So I loved investing, I

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Speaker 4: liked watching stocks, and you know, i'd read the Wall

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Speaker 4: Street Journal that was always around in the home, and

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Speaker 4: so I was able to really look into that. But

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Speaker 4: I didn't realize that the entire asset management industry existed

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Speaker 4: in the way in the way that it did. I

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Speaker 4: think it's one of those that because the asset management

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Speaker 4: industry often is working with financial advisors or other institutions.

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Speaker 4: It's not as consumer of a business, whereas financial advisors

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Speaker 4: obviously work with individuals. And so I didn't know the

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Speaker 4: asset management industry existed in the way that it did.

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Speaker 4: So I didn't know that. But you know, growing up,

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Speaker 4: my parents were intentional about exposing us to international you know,

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Speaker 4: traveling internationally. We were fortunate enough to do some trips

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Speaker 4: throughout Europe and had just always been amazed by, you know,

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Speaker 4: the different cultures and the different things that go into

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Speaker 4: to that. And so as we'll get into I'm sure

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Speaker 4: that that did end up playing out in my career.

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Speaker 4: I think to be international business at Taylor, you just

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Speaker 4: had to take a language, which of course I took,

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Speaker 4: you know, eight years of Spanish and I can speak

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Speaker 4: maybe fifteen words. But you know, that's that's how we

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Speaker 4: kind of ended up with that one.

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Speaker 2: So you start your career after college as an office

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Speaker 2: manager at Fifth third Bank office manager.

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Speaker 4: What branching up? It was in a branch so so

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Speaker 4: so now there's some some history there. My dad worked

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Speaker 4: at Comerica Bank in Detroit co America Park, you know,

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Speaker 4: the tigers field is named after k America it's one

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Speaker 4: of the largest banks and uh in the in the country,

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Speaker 4: and and you know, some of the formidable years I remember,

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Speaker 4: you know, spending time, you know, the quality time I

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Speaker 4: would spend with my dad. We'd be going to sporting events,

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Speaker 4: right and you know, sometimes he'd bring somebody from work

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Speaker 4: and I'd just sit in the back back of the

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Speaker 4: car and listen to them talk shop. And you know,

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Speaker 4: those things were just kind of even if I didn't

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Speaker 4: understand was what they were talking about. The cadence and

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Speaker 4: the perspective, the professional kind of interactions that they were

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Speaker 4: having just kind of always always fascinated me. So my

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Speaker 4: dad was as it was at co America Bank. I

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Speaker 4: got a job at Fifth third Bank is literally a

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Speaker 4: branch manager, and what I distinctly remember from that time

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Speaker 4: is you'd get there at about seven thirty in the

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Speaker 4: morning and you'd pull all the deposits that came from,

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Speaker 4: you know, the previous nights, and there was a bunch

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Speaker 4: of restaurants in the area and I would handcount three hundred,

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Speaker 4: four hundred, five hundred thousand dollars worth of bills cash

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Speaker 4: this was a little while ago now, and and you'd

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Speaker 4: strap it up and then you'd and then you'd have

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Speaker 4: to like, I mean, oh, we're talking a full Duffel

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Speaker 4: two too. Me's next to each other, right, like two

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Speaker 4: major suitcases they go into. That's four hundred thousand dollars

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Speaker 4: something something like that. Because this is from a restaurant.

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Speaker 4: You got small bills and all this sort of stuff,

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Speaker 4: and as and and and as interesting as that was,

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Speaker 4: I was like, this is not the forever thing. And

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Speaker 4: then at the end of the day you're helping, you know,

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Speaker 4: the teller's balance out there, drawers and all this sort

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Speaker 4: of stuff, and I was like, this is this is

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Speaker 4: not the finance that I was that I was really picturing,

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Speaker 4: And so that didn't last forever, but I do. That

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Speaker 4: was exactly where it started at a fifth third at

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Speaker 4: a fifth third branch and Lavonia, Michigan, not far from

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Speaker 4: where I grew up.

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Speaker 2: How did you find your way to investo?

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Speaker 4: So I went to Taylor University. As we talked about,

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Speaker 4: that's in the middle of Indiana. It's called Upland, Indiana.

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Speaker 4: It's the highest point above sea level between Fort Wayne

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Speaker 4: and Indianapolis's ten feet above sea level. This is corn.

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Speaker 4: This is corn. This is cornfield.

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Speaker 3: You must have a great view from there.

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Speaker 4: You can see it all. You can see as far

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Speaker 4: as the eye can can see a rose of corn.

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Speaker 4: But they had a great finance program, and like I say,

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Speaker 4: the culture at that university, which I'm still very connected with,

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Speaker 4: you know, race some really interesting people. And so I

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Speaker 4: graduate from there, I go back home to Plymouth, Michigan,

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Speaker 4: just outside Detroit, and I'm living there kind of the

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Speaker 4: post college thing. This is when I'm working at Fifth Third.

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Speaker 4: But there was a girl that I had met at

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Speaker 4: Taylor University who lived in Chicago, and so I really

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Speaker 4: wanted to find my way over to Chicago. So I

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Speaker 4: find I find my way over to Chicago, and I

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Speaker 4: get introduced to a gentleman by the name of Bruce Bond.

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Speaker 4: And you probably know Bruce, but you know, for people listening,

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Speaker 4: Bruce founded power Shares originally, which was which was a

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Speaker 4: startup ETF business he now runs into which is another

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Speaker 4: ETF business. And and this was, you know, over twenty

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Speaker 4: years ago. The entire ETF industry was less than one

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Speaker 4: hundred billion dollars. And I was interviewing with Bruce and

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Speaker 4: he just so happened to be a Taylor grad as well.

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Speaker 4: And another one of my mentors is in the room,

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Speaker 4: Ben Fulton, who also has been a very successful entrepreneur

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Speaker 4: and was early on it at power Shares. And I

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Speaker 4: distinctly remember I was, I was interviewing, and I was

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Speaker 4: I was telling Bruce, Oh, I think ETFs could you know,

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Speaker 4: really change the investment landscape, and this is really interesting.

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Speaker 4: I was just parroting this article. And at the time,

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Speaker 4: the article started with startup power Shares next to the

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Speaker 4: petting zoo in Wheaton, Illinois, so it doesn't exactly scream

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Speaker 4: high finance, right, And so I'm interviewing with Bruce will Oh,

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Speaker 4: why do you want to be here? Oh, I'm really

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Speaker 4: excited about this, and Ben interrupts. He says, who's the girl?

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Speaker 4: And I said, well, their name's Casey, and I really

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Speaker 4: like her. And so now Casey and I are married,

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Speaker 4: four kids later, we got a dog as well. But

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Speaker 4: that was how I got to power Shares.

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Speaker 3: And so this was five.

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Speaker 4: So five yep, and and so like I said, the

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Speaker 4: ETF industries one hundred billion dollars. Now, as you know,

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Speaker 4: it's fifteen.

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Speaker 2: Billions that spy, right, half of that half of that.

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Speaker 4: Spy, and it's a it's an amazing kind of story.

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Speaker 4: The idea behind power Shares was they were going to

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Speaker 4: be the non market cap weighted ETF provider. So what

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Speaker 4: we now call smart beta, what we now call thematic,

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Speaker 4: what we now call you know, some of these other

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Speaker 4: things that you know, different exposures that nobody was really

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Speaker 4: thinking about at the time. Power Shares was really the

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Speaker 4: innovator in launching many of those. And so I had

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Speaker 4: the really good fortune of sitting in a very small group.

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Speaker 4: So I was a twelfth employee at power Shares. I

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Speaker 4: had a very you know, I was very fortunate to

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Speaker 4: sit with these people as they were building this business.

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Speaker 4: The industry was going from you know, like I say,

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Speaker 4: the whole industry is about one hundred million to your point, spy.

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Speaker 4: Spy was kind of fifty. I'd probably had ten thousand

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Speaker 4: conversations about ETFs within the first three years of my career,

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Speaker 4: between the phone and then covering you know, a territory

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Speaker 4: and working with with financial advisors, which was which was

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Speaker 4: such an edge, as you know, you learned so much

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Speaker 4: just having these conversations repetitively, and so that was kind

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Speaker 4: of how I got to Chicago.

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Speaker 2: So Invesco becomes a significant player in ETF's by acquiring

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Speaker 2: power Shares the very next year. So you're there for

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Speaker 2: a year, suddenly you're acquired. What's your new role like

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Speaker 2: at Invesco.

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Speaker 4: Well, this is you know, this is a really interesting

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Speaker 4: time for me. And so you know, I know you

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Speaker 4: like to ask your guests what books they like to read.

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Speaker 4: I'm gonna I'm going to share a book early on.

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Speaker 4: I got I got multiple books for you today, Barry.

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Speaker 4: But the book that I that I like to read

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Speaker 4: is there's a book called Innovator's Dilemma by Clinton Christians.

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Speaker 4: Christians are right, and so think about what's happening now.

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Speaker 4: So you have a large asset manager and Invesco, which

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Speaker 4: was growth shop of the nineties, a you know, hundreds

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Speaker 4: of billions of dollar asset manager acquiring this At the time,

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Speaker 4: I think PowerShares was six billion dollar ETF fast grow,

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Speaker 4: new technology, changing the game on what we're doing.

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Speaker 3: Very disruptive, very disruptive.

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Speaker 4: But as you know, in the Innovator's Dilemma, the legacy,

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Speaker 4: the incumbent technology really tries to protect what they're doing

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Speaker 4: while the up and comer is trying to disrupt what's

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Speaker 4: happening and so Invesco acquires the power shares business, They're

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Speaker 4: gonna they're gonna expand their offerings from traditional mutual funds

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Speaker 4: to now include exchange traded funds.

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Speaker 2: It's pretty pretty forward looking at a time where there

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Speaker 2: was a lot of skepticism. I remember the early days

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Speaker 2: where you and I first met at some ETF conferences

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Speaker 2: and you're just genuinely shocked at how much skepticism and yeah, yeah,

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Speaker 2: the kids are playing with this new fangled ETF thingy.

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Speaker 4: Yeah, which is which is how so many of the

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Speaker 4: new technologies come about. Right, But what's so Invesco acquires it.

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Speaker 4: Various dude on their part. But but what was amazing

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Speaker 4: for me is I had this unique opportunity. I was

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Speaker 4: the first person that they put on the plane from Wheaton, Illinois,

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Speaker 4: down to Houston, Texas or Atlanta, which is where Invesco

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Speaker 4: head offices, and I was the one training them on ETFs,

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Speaker 4: and so we were having this interesting conversation. The light

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Speaker 4: bulb went off for me. It was like holy smokes.

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Speaker 4: I could see both perspectives. These were these were incredibly

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Speaker 4: success full asset management financial service individuals that were trying

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Speaker 4: to digest and understand which now in hindsight looks so obvious,

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Speaker 4: but at the time, to your point, looked like, I

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Speaker 4: don't know if this thing's really gonna happen. And so

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Speaker 4: that was a really a really formative time for me.

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Speaker 2: And you know, when you think about certain companies that

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Speaker 2: have been really successful, they're the ones who have at

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Speaker 2: full over long periods of time, they've figured out innovator's dilemma.

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Speaker 2: They're willing to disrupt themselves. I'm thinking about you know,

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Speaker 2: the original iPod was a huge winner for Apple, and

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Speaker 2: they just kept making it faster, cheaper, smaller, with more capacity.

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Speaker 2: And you could just hear someone saying, guys were selling

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Speaker 2: a ton of these with a gig capacity at five

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Speaker 2: hundred dollars. You now want to introduce a three gig

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Speaker 2: capacity at two hundred dollars.

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Speaker 3: You're going to kill our old sales.

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Speaker 2: Didn't matter, better we do it than someone else.

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Speaker 4: Right, That's exactly right. You know. One of the quotes

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Speaker 4: that we'd throw around a lot at that point is

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Speaker 4: that if you didn't like change, you were going to

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Speaker 4: like irrelevance even less. Right, And if you think about

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Speaker 4: that was what was going to happen. This innovation and

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Speaker 4: this this whole story is about innovation and continuing to

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Speaker 4: look for new ideas. And you know, as you think

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Speaker 4: about how product gets developed, as you think about how

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Speaker 4: distribution happens, these are all things that inform all of

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Speaker 4: those all of those things. But yeah, that was an

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Speaker 4: amazing time that then evolved into Hey, we've got investors

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Speaker 4: from Asia, from Europe, from South America that are buying

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Speaker 4: our ETFs listed on the New York Stock Exchange because,

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Speaker 4: by the way, it's a security and so all these

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Speaker 4: firms that had trading lines open in New York, we're

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Speaker 4: happy to buy an ETF off the exchange. In that way, Hey, Brian,

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Speaker 4: would you mind getting on a plane and going and

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Speaker 4: talking to some of these people and figure out what's

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Speaker 4: going on in these areas?

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Speaker 2: So you go to Europe, in the Middle East, you

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Speaker 2: go to Asia. Eventually, after twelve years of work at

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Speaker 2: Vesco Power Shares, you're running e f E in terms

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Speaker 2: of ETFs. Tell us about that experience.

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Speaker 4: That was an amazing thing. I had been doing this

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Speaker 4: global business development and so you know, combine a couple

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Speaker 4: of things that we've talked about here, So I had

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Speaker 4: had you know, tens of thousands of conversations around ETFs.

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Speaker 4: I had been given the fortunate opportunity to talk to

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Speaker 4: incumbent asset managers and how they then are digesting ETFs

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Speaker 4: in their portfolios and how that's going to change the

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Speaker 4: the industry and what's happening there. I had done that

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Speaker 4: then globally, so you understand the overall ecosystem. What's the

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Speaker 4: value proposition to investors to buy these? How are they

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Speaker 4: using them in portfolios? And then investor says, hey, would

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Speaker 4: you would you be interested in moving to moving the

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Speaker 4: family to London and running our international business everything kind

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Speaker 4: of xus. I jumped at the opportunity. I could have

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Speaker 4: been more excited. I didn't know when we talked about

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Speaker 4: my degree earlier international finance, I didn't know I was

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Speaker 4: going to move. But we were very open to it,

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Speaker 4: and you know, credit to my wife for being willing

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Speaker 4: to help raise the family.

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Speaker 2: What was it like bringing the kids to London and

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Speaker 2: sort of hey, you're leaving everything behind at least for

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Speaker 2: a couple of years, but it's going to be a

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Speaker 2: great adventure.

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Speaker 4: What were their react We moved over with a three

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Speaker 4: year old and eighteen month old and like a six

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Speaker 4: month old, and so the house hunt was all looking

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Speaker 4: for a flat in London that had a entryway level

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Speaker 4: with the sidewalk so that we could push the stroller

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Speaker 4: in right. That was and in London, I have you

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Speaker 4: been there, Like, there's a lot of steps and so

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Speaker 4: we like everything that we were but that was kind

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Speaker 4: of how we were. That was kind of how we

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Speaker 4: were thinking about but it was but it was an

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Speaker 4: amazing opportunity to go over there and understand the business

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Speaker 4: landscape now. At the time, in Vesco had two of

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Speaker 4: the most successful mutual fund managers, Neil Woodford being one

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Speaker 4: of them. And and and there was this pull away

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Speaker 4: from ETF because you'll remember ETF at the time meant

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Speaker 4: passive and the passive active debate was raging on and

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Speaker 4: people didn't quite realize yet that the ETF is a technology.

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Speaker 4: What you put inside of it is the investment engine, right.

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Speaker 2: And it's a it's a vastly superior technology if for

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Speaker 2: no other reason there are no phantom capital gains taxes

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Speaker 2: like we see in most mutual funds, but especially active mutual.

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Speaker 4: To name just one of the many, many, many benefits.

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Speaker 4: But you know you mentioned the MP three player earlier.

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Speaker 4: And this is the analogy that I always love to use.

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Speaker 4: You know, MP three is the evolution from the CD,

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Speaker 4: from the tape player, from the eight track, from the

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Speaker 4: vinyl record. Right. What you put on all of those

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Speaker 4: is the music, right, And so we love the benefits

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Speaker 4: of the MP three player. Now what we stream on

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Speaker 4: our phone, right, it gives us convenience, It gives us control,

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Speaker 4: it gives us variety. We now have every single see,

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Speaker 4: every single song that's ever been invented is in our pocket.

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Speaker 4: Plus podcasts like this, plus audio books, plus all of

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Speaker 4: these other things. So the convenience for the consumer, it's

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Speaker 4: the better technology. And then what we're having is this

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Speaker 4: interesting debate is so okay, So go back. I'm a

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Speaker 4: you know, think about an active portfolio manager saying, wait

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Speaker 4: a second, these indexes are eating my lunch. What's going

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Speaker 4: on with this thing? These ETFs and everything was synonymous.

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Speaker 4: The media was singing synonymous, index passive, ETF all the

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Speaker 4: same thing. So we had to break that apart. We

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Speaker 4: had to make it very clear to investors that the

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Speaker 4: ETF was the livery mechanism. What you put inside of

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Speaker 4: it was the investment engine that.

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Speaker 2: Makes a lot of sense. So how long were you

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Speaker 2: in London with Invesco.

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Speaker 4: For so with Invesco that was four.

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Speaker 2: Years and then JP Morgan comes a knock in and

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Speaker 2: they say, hey, we're looking for someone to head up

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Speaker 2: our international ETFs and since you're here in London anyway,

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Speaker 2: let's have a conversation. Tell us how you've found your

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Speaker 2: way over to JP Morgan?

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Speaker 4: Yeah, you know, And it was it was one of

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Speaker 4: those interesting things where there had been about a thirteen

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Speaker 4: year run there where I was at Startup power Shares,

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Speaker 4: Fast Growth Power Fast Growth power Shares and then Investco

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Speaker 4: power Shares, And even though I had never made a change,

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Speaker 4: those were three distinct cultures, three distinct different cycles of

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Speaker 4: the of the business, if you will. And we were

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Speaker 4: starting to get to this point and some of the

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Speaker 4: things that I've explained now in hindsight are vary intuitive

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Speaker 4: at the point, they were just starting to dawn on me.

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Speaker 4: Wait a second, If you could go into an established

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Speaker 4: asset manager deliver the disruption, but combine that with great

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Speaker 4: investment capabilities, combine that with great distribution capabilities, combine that

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Speaker 4: with a great brand, you can really change the landscape

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Speaker 4: and build something incredible and I like building. You know,

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Speaker 4: I said that some of the mentors that we talked

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Speaker 4: about earlier they were builders, and so I made the

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Speaker 4: difficult decision to, you know, go to JP Morgan at

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Speaker 4: that point in time.

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Speaker 2: Huh really really interesting. So you're head of International ETFs

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Speaker 2: in London for JPM. How did you end up back

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Speaker 2: in New York running America's ETF.

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Speaker 4: Yeah, we loved our time in London. And if I

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Speaker 4: really want to get New Yorker's riled up, I'll say

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Speaker 4: that that New York is a great city. London is

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Speaker 4: a world class city. The quality of life is high,

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Speaker 4: You've got parks, you can you know, the weekends are

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Speaker 4: a little bit slower than the intensity. Now, New York's

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Speaker 4: the alpha city, I'll give it that, But you do

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Speaker 4: have this kind of contrast between the two.

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Speaker 2: Is that generally true in Europe? Europe is a lot

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Speaker 2: more kicked back. Like I tell a story all the

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Speaker 2: time about being there in the midst of the dot

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Speaker 2: com implosion, and you could walk down the street in

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Speaker 2: New York and everybody's stressed out, and oh, yeah, the

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Speaker 2: economy is collapsing, But I have healthcare and retirement.

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Speaker 3: I'll be okay. It's a different headspace.

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Speaker 4: I feel that the human nature is true across both.

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Speaker 4: They're still you know, using our industry's language, there's still

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Speaker 4: fear and greed that they drive almost everything that happens.

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Speaker 4: The culture and the approach is different. So, you know,

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Speaker 4: I used to tell people if the objective was to

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Speaker 4: climb that mountain. In Europe, you said, we're going to

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Speaker 4: climb that mountain. Why do we want to climb that mountain.

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Speaker 4: That mountain looks high, what would what would be the

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Speaker 4: purpose of climbing the mountains? What's in it for me

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Speaker 4: to climb the mountain. In the US, you'd say, let's

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Speaker 4: climb the mountain. People say, let's go, and they're halfway

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Speaker 4: up the mountain and they crash and they roll back down.

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Speaker 4: And then half they up the mountain, they crash, they

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Speaker 4: roll back down. Both reach the top of the mountain

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Speaker 4: at about the same time. The approach of how you

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Speaker 4: get to the top of the mountain with, you know,

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Speaker 4: European culture versus US culture is always a little bit

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Speaker 4: of an interesting one. Of course, dramatic generalization there, but

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Speaker 4: there is a little bit too kind of that thoughtfulness

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Speaker 4: that that kind of comes uh, that kind of comes

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Speaker 4: through it in that So so you know, we moved

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Speaker 4: back to the US. We've got family back in the US,

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Speaker 4: and it just it just made sense for us. At

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Speaker 4: that time, we'd had our fourth child in the UK,

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Speaker 4: so we're we're moving back. And you know, I was

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Speaker 4: fortunate that, you know, I'd had international experience very early on,

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Speaker 4: so I understood the x US stuff. I had grown

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Speaker 4: up in the US, and and and knew that marketplace.

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Speaker 4: And so it was really a combination of those two.

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Speaker 4: Those two things. The really important thing that was happening

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Speaker 4: was investors were now starting to acknowledge and understand the

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Speaker 4: difference between ETF rapper and active and those those really

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Speaker 4: started to be the interesting conversations.

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Speaker 3: Where they're not mutually exclusive.

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Speaker 4: They're not mutually exclusive and and and you had a

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Speaker 4: lot of the passive providers that were going to do

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Speaker 4: their thing, and it was becoming quite obvious that that

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Speaker 4: was a commoditized product and a bit of a race

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Speaker 4: to the bottom as far as fees. And that's great

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Speaker 4: for investors, but if you have differentiated investment capabilities that

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Speaker 4: you can deliver through the ETF technology, that starts to

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Speaker 4: really bring you to an interesting to an interesting space.

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Speaker 2: So you're back in New York. What's that initial conversation

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Speaker 2: with Goeman Sachs? Like I wanna and my motivation for

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Speaker 2: asking that question is how do we get to the

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Speaker 2: title Chief Transformation Office, Sir? They could have just said, hey,

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Speaker 2: you're ahead of etf' us or head of whatever whatever

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Speaker 2: they wanted.

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Speaker 3: You to do.

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Speaker 2: This seems like it's a little more comprehensive.

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Speaker 4: Yeah, that's fair. So we've kind of unpacked my journey,

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Speaker 4: you know, and I've been fortunate a bunch of those turns.

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Speaker 4: I've tried to point some of those turns out through

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Speaker 4: the conversation, and when you log those, you kind of

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Speaker 4: understand that how the world is constantly changing and you

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Speaker 4: need to constantly kind of stay out in front of that. Okay,

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Speaker 4: And our industry is I always say this the best

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Speaker 4: industry in the world. We literally get to wake up

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Speaker 4: every day helping investors meet their financial goals, whether they're

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Speaker 4: paying for health care, whether they're trying to retire with dignity.

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Speaker 4: Like that's something that really motivates me about our industry,

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Speaker 4: and I get really excited about when we think about

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Speaker 4: how the industry is evolving. There is innovation happening in

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Speaker 4: so many places beyond just ETFs. I could wax lyrical

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Speaker 4: bt ETFs for a very long time, but now technology

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Speaker 4: is unlocked SMAs direct indexing models. You know, we're hearing

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Speaker 4: a lot of influential people talk about privates and how

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Speaker 4: those go into portfolios now, so private equity, private credit,

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Speaker 4: alternatives like real estate, infrastructure, and when you take a

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Speaker 4: step back, I had the great opportunity to kind of

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Speaker 4: learn this cross section of the entire asset management industry

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Speaker 4: through my kind of earlier years, different chapters doing the

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Speaker 4: ETF thing. But now I realize I can apply that

433
00:20:50,920 --> 00:20:54,479
Speaker 4: across an entire asset manager. And so Goldman's at an

434
00:20:54,480 --> 00:20:58,360
Speaker 4: interesting spot. Everybody knows Goldman we are a three point

435
00:20:58,440 --> 00:21:00,200
Speaker 4: two trillion dollar asset manager.

436
00:21:00,320 --> 00:21:04,200
Speaker 2: Which is a giant. Like there are only so many companies.

437
00:21:03,920 --> 00:21:06,080
Speaker 4: With the largest asset manager in the world.

438
00:21:05,920 --> 00:21:08,760
Speaker 2: Right, there's only so many firms that have trillions of

439
00:21:08,840 --> 00:21:10,760
Speaker 2: dollars as a wealth manager.

440
00:21:11,480 --> 00:21:14,959
Speaker 4: It's a big number. That's not lost on us. We're

441
00:21:15,240 --> 00:21:20,600
Speaker 4: top five on active public, we're top five on private investing.

442
00:21:20,840 --> 00:21:23,840
Speaker 4: So we've got this combination of public and private capabilities.

443
00:21:23,840 --> 00:21:28,679
Speaker 4: We've got some of these technology underpinnings, and the conversation

444
00:21:29,000 --> 00:21:31,560
Speaker 4: is really you and I both know. I think a

445
00:21:31,600 --> 00:21:34,040
Speaker 4: lot of people would agree with us. Our industry is

446
00:21:34,080 --> 00:21:36,760
Speaker 4: going to look very different five years from now than

447
00:21:36,800 --> 00:21:40,000
Speaker 4: it does today. That's the innovator's dilemma that we it

448
00:21:40,040 --> 00:21:44,560
Speaker 4: never stops. There's always this reinvention. There's always a new

449
00:21:44,600 --> 00:21:47,679
Speaker 4: technology that comes along that is driving this. And so

450
00:21:48,359 --> 00:21:51,040
Speaker 4: we really are focused to make sure that we are

451
00:21:51,080 --> 00:21:54,439
Speaker 4: positioned to serve our clients five years from now, and

452
00:21:54,520 --> 00:21:56,399
Speaker 4: to do that, we need to transform our business. The

453
00:21:56,560 --> 00:21:59,920
Speaker 4: industry is transforming and Golden needs to transform along with it.

454
00:22:00,880 --> 00:22:03,800
Speaker 4: And so there comes my title. Now. You know, I

455
00:22:03,880 --> 00:22:07,280
Speaker 4: like to joke like the nickname Optimus Prime hasn't hasn't

456
00:22:07,359 --> 00:22:09,320
Speaker 4: kicked in the way that I really really thought it

457
00:22:09,400 --> 00:22:11,080
Speaker 4: might have. At this point. I didn't get that gift

458
00:22:11,080 --> 00:22:13,159
Speaker 4: sent to me by by some of my friends in

459
00:22:13,200 --> 00:22:16,040
Speaker 4: the way that I that i'd wanted. But it's it's

460
00:22:16,080 --> 00:22:17,840
Speaker 4: really on the nose of what we're trying to do,

461
00:22:17,880 --> 00:22:21,240
Speaker 4: which is we feel very good about the investment capabilities

462
00:22:21,240 --> 00:22:23,040
Speaker 4: we have, but we know we need to transform our

463
00:22:23,080 --> 00:22:25,000
Speaker 4: business to serve clients five years from now, and if

464
00:22:25,040 --> 00:22:28,280
Speaker 4: we aren't intentional about how we're doing that, we're going

465
00:22:28,359 --> 00:22:31,359
Speaker 4: we may miss that. And and because I was able

466
00:22:31,400 --> 00:22:35,360
Speaker 4: to live that as ETFs did that at Invesco, as

467
00:22:35,359 --> 00:22:38,240
Speaker 4: ETFs did that at JP Morgan, I can now apply

468
00:22:38,320 --> 00:22:41,920
Speaker 4: that across the entire franchise at Goldman Sachs, which I'm

469
00:22:41,960 --> 00:22:45,080
Speaker 4: having a blast now. It's it's still build. There's a

470
00:22:45,080 --> 00:22:46,800
Speaker 4: lot of work that we have to do that goes

471
00:22:46,800 --> 00:22:48,959
Speaker 4: into that, but that's what I wake up every day

472
00:22:49,000 --> 00:22:49,480
Speaker 4: thing about.

473
00:22:49,560 --> 00:22:54,080
Speaker 3: So I'm hearing two things from you. They're kind of fascinating. First,

474
00:22:53,720 --> 00:22:55,680
Speaker 3: you've lived through.

475
00:22:55,520 --> 00:22:59,680
Speaker 2: The innovator's dilemma and recognized how important it is to

476
00:23:00,359 --> 00:23:03,119
Speaker 2: keep up, to be an agent of change, to not

477
00:23:03,320 --> 00:23:05,440
Speaker 2: let some hey we're gonna eat our own lunch before

478
00:23:05,440 --> 00:23:06,240
Speaker 2: someone else does.

479
00:23:06,600 --> 00:23:07,480
Speaker 3: Totally get that.

480
00:23:08,080 --> 00:23:11,960
Speaker 2: Now you come in to this role at Goldman, tell

481
00:23:11,960 --> 00:23:15,640
Speaker 2: me about the team you're putting together. What areas are

482
00:23:15,680 --> 00:23:20,080
Speaker 2: you looking at? Because that that's sounded like kind of

483
00:23:20,080 --> 00:23:22,960
Speaker 2: a goofy title when I first heard it, but now

484
00:23:22,960 --> 00:23:26,240
Speaker 2: that I'm hearing you describe it, it's it sounds like

485
00:23:27,680 --> 00:23:31,280
Speaker 2: management at Goldman has said, hey, this is really changing quick,

486
00:23:31,320 --> 00:23:33,000
Speaker 2: and we have to be on the on the no

487
00:23:33,119 --> 00:23:35,720
Speaker 2: pun intended at the at the vanguard of change. We

488
00:23:35,800 --> 00:23:37,840
Speaker 2: have to be at the cutting edge or someone else

489
00:23:37,960 --> 00:23:38,879
Speaker 2: is going to eat our lunch.

490
00:23:39,000 --> 00:23:42,960
Speaker 4: Yeah. No, that that's exactly right. And and to your point,

491
00:23:43,000 --> 00:23:45,960
Speaker 4: if you're intentional about transforming your own business and making

492
00:23:46,000 --> 00:23:48,960
Speaker 4: those tough decisions, you stay out in front of this

493
00:23:49,200 --> 00:23:52,920
Speaker 4: and and so you know, I got excited about that role.

494
00:23:53,040 --> 00:23:59,000
Speaker 4: The platform the organization is incredible. When I step back

495
00:23:59,040 --> 00:24:02,720
Speaker 4: and think about world class asset managers, they really have

496
00:24:02,920 --> 00:24:06,000
Speaker 4: kind of four things that that are kind of pillars

497
00:24:06,040 --> 00:24:08,399
Speaker 4: that they that they need to be successful at. They

498
00:24:08,440 --> 00:24:11,600
Speaker 4: need to have really good foundations, so so operations, engineering,

499
00:24:11,640 --> 00:24:13,960
Speaker 4: all the all the platform that it lock in tech

500
00:24:14,160 --> 00:24:18,280
Speaker 4: locking and tackling UH. They need to have modern UH

501
00:24:18,320 --> 00:24:21,159
Speaker 4: and innovative products that what you build on top of

502
00:24:21,160 --> 00:24:24,400
Speaker 4: those that the the the investment outcomes for investors performance

503
00:24:24,440 --> 00:24:27,600
Speaker 4: needs to be exceptional and and we're fortunate at Goldman

504
00:24:27,680 --> 00:24:30,959
Speaker 4: to have some incredible investors and in some great areas

505
00:24:31,000 --> 00:24:33,399
Speaker 4: that really help unlock that for us on the public

506
00:24:33,440 --> 00:24:36,119
Speaker 4: and the and the private side. You need to have

507
00:24:36,200 --> 00:24:38,679
Speaker 4: a way to deliver that to the marketplace. You need

508
00:24:38,720 --> 00:24:41,400
Speaker 4: to talk to investors about that, so you know how

509
00:24:41,400 --> 00:24:44,800
Speaker 4: you market, how you distribute that that that needs to

510
00:24:44,800 --> 00:24:46,760
Speaker 4: come in because you know, I've seen a lot of

511
00:24:46,760 --> 00:24:49,640
Speaker 4: great products that nobody knew existed, and so it doesn't

512
00:24:49,680 --> 00:24:52,159
Speaker 4: go anywhere. And then you know, the fourth thing is

513
00:24:52,160 --> 00:24:54,119
Speaker 4: you kind of have to have operating rhythm. You need

514
00:24:54,160 --> 00:24:56,639
Speaker 4: to know what your identity is as an asset manager.

515
00:24:56,680 --> 00:24:59,600
Speaker 4: You need to know what your identity is as as

516
00:24:59,640 --> 00:25:01,960
Speaker 4: you know as an executive that these firms and and

517
00:25:02,080 --> 00:25:05,240
Speaker 4: have a way to execute against that in a in

518
00:25:05,280 --> 00:25:08,560
Speaker 4: a process oriented way. So those are the things that

519
00:25:08,600 --> 00:25:11,320
Speaker 4: I really, I really think about as you frame that conversation.

520
00:25:11,520 --> 00:25:14,280
Speaker 2: So, Golman is a big shop. You're obviously not doing

521
00:25:14,280 --> 00:25:16,920
Speaker 2: all this heavy lifting yourself. Tell us about your team.

522
00:25:17,400 --> 00:25:19,639
Speaker 4: Yeah, no, we've got We've got an incredible team across

523
00:25:19,680 --> 00:25:24,280
Speaker 4: all all of those areas. So who you're working directly with, Well,

524
00:25:24,320 --> 00:25:26,240
Speaker 4: that's one of the beautiful things about my role is

525
00:25:26,720 --> 00:25:29,080
Speaker 4: I can work across all four of those pillars and

526
00:25:29,119 --> 00:25:31,600
Speaker 4: so I you know, we've got incredible people on the

527
00:25:31,600 --> 00:25:33,439
Speaker 4: oup side that are that are thinking about the foundation,

528
00:25:33,520 --> 00:25:36,040
Speaker 4: incredible people on the technology side that are thinking about

529
00:25:36,280 --> 00:25:38,840
Speaker 4: you know, the nervous system of the of the asset manager.

530
00:25:39,240 --> 00:25:43,560
Speaker 4: You know, our product team is incredibly innovative. The investors.

531
00:25:43,920 --> 00:25:45,880
Speaker 4: You've had some of some of the investors on here before.

532
00:25:46,200 --> 00:25:49,320
Speaker 4: Asias was on who who's an incredible And he's an

533
00:25:49,359 --> 00:25:52,960
Speaker 4: incredible investor, He's got a great story and and and

534
00:25:53,000 --> 00:25:55,199
Speaker 4: so working very closely with him and thinking about, you know,

535
00:25:55,240 --> 00:25:56,840
Speaker 4: what types of strategies do we need to bring and

536
00:25:56,960 --> 00:25:59,120
Speaker 4: and so on and so forth, I mean, it does

537
00:25:59,240 --> 00:26:00,880
Speaker 4: it does? You know? The what's this cool thing about

538
00:26:00,920 --> 00:26:03,399
Speaker 4: this title is it does give me some nice scope

539
00:26:03,400 --> 00:26:06,200
Speaker 4: to execute across really the entire leadership team of the

540
00:26:06,280 --> 00:26:06,960
Speaker 4: of the first.

541
00:26:06,760 --> 00:26:09,480
Speaker 2: So you're not looking When I initially heard this, I

542
00:26:09,560 --> 00:26:12,240
Speaker 2: with my initial thought is Goldman just want to be

543
00:26:12,280 --> 00:26:13,040
Speaker 2: a bigger player in.

544
00:26:13,080 --> 00:26:14,280
Speaker 3: The ETF space.

545
00:26:14,320 --> 00:26:17,040
Speaker 2: But this sounds much bigger and more comprehensive.

546
00:26:17,080 --> 00:26:19,080
Speaker 4: So when I step back and think about what are

547
00:26:19,080 --> 00:26:24,000
Speaker 4: the fast growing product areas of our industry, there's there's

548
00:26:24,320 --> 00:26:29,560
Speaker 4: three that are worth calling out. So alternatives, there's going

549
00:26:29,640 --> 00:26:34,040
Speaker 4: to be more alternatives and private investments in particularly particularly

550
00:26:34,359 --> 00:26:36,760
Speaker 4: retail portfolios going forward.

551
00:26:36,880 --> 00:26:41,720
Speaker 2: And when you say privates, we're talking credit, equity, debt,

552
00:26:41,840 --> 00:26:43,479
Speaker 2: real estate, the whole gamut.

553
00:26:43,520 --> 00:26:46,640
Speaker 4: Yeah, and and you know better than I, but there's

554
00:26:46,800 --> 00:26:50,200
Speaker 4: companies that are staying private for longer. You know, there's

555
00:26:50,240 --> 00:26:53,359
Speaker 4: companies that can access plenty of funding while staying private.

556
00:26:53,400 --> 00:26:56,520
Speaker 4: So the impetus to go public isn't necessarily there anymore.

557
00:26:56,760 --> 00:26:59,159
Speaker 4: But people want to own these world class companies and

558
00:26:59,240 --> 00:27:01,720
Speaker 4: so you know, that's an important thing now on the

559
00:27:01,720 --> 00:27:03,639
Speaker 4: credit side, if you can enhance your yield a little bit.

560
00:27:03,840 --> 00:27:07,120
Speaker 4: So okay, So so alternatives as portfolio is that own

561
00:27:07,119 --> 00:27:09,600
Speaker 4: both public and private is going to be a big thing.

562
00:27:09,640 --> 00:27:14,439
Speaker 4: So alternatives is growing to grow exceptionally. Separately managed accounts

563
00:27:14,480 --> 00:27:16,840
Speaker 4: and direct indexing. Again, we're you know, now we're talking

564
00:27:16,840 --> 00:27:19,959
Speaker 4: about investor outcomes. Am I getting a better tax outcome?

565
00:27:20,000 --> 00:27:22,640
Speaker 4: Can can we use technology to help improve my outcome?

566
00:27:22,720 --> 00:27:24,960
Speaker 4: On this? Direct indexing allows you to do that.

567
00:27:25,280 --> 00:27:27,520
Speaker 2: Did you guys build a direct index product or buy

568
00:27:27,560 --> 00:27:28,280
Speaker 2: a director.

569
00:27:27,960 --> 00:27:29,800
Speaker 4: In We've built We've been doing this for years and

570
00:27:30,080 --> 00:27:32,240
Speaker 4: this is one of the things that I think makes

571
00:27:32,280 --> 00:27:34,480
Speaker 4: us unique is we've got a lot of these capabilities

572
00:27:34,480 --> 00:27:37,640
Speaker 4: that that were that were home grown within Goldman and

573
00:27:37,680 --> 00:27:40,119
Speaker 4: that in house that we're that we're now delivering to

574
00:27:40,200 --> 00:27:42,600
Speaker 4: the marketplace. On the alt side, we've been doing that

575
00:27:42,640 --> 00:27:45,800
Speaker 4: for three decades. Sometimes it was for Goldman's own balance sheet.

576
00:27:45,800 --> 00:27:48,160
Speaker 4: Sometimes it was a proprietary thing, but now we've made

577
00:27:48,240 --> 00:27:50,720
Speaker 4: that available to investors around the world, so that it's

578
00:27:50,720 --> 00:27:53,119
Speaker 4: really an access story there. And then of course ETFs

579
00:27:53,119 --> 00:27:54,400
Speaker 4: are going to continue to grow. And as we think

580
00:27:54,400 --> 00:27:57,959
Speaker 4: about you know, public equities, you know, ETF probably has

581
00:27:58,000 --> 00:28:02,680
Speaker 4: the biggest addressable market and one of the largest kaggers,

582
00:28:02,880 --> 00:28:05,560
Speaker 4: but you've got to have all three of those. I

583
00:28:05,600 --> 00:28:07,680
Speaker 4: really think those three. So so those are the three

584
00:28:07,720 --> 00:28:09,760
Speaker 4: that I that I really, I really spend a lot

585
00:28:09,760 --> 00:28:12,000
Speaker 4: of time thinking about. And when we think about the

586
00:28:12,000 --> 00:28:16,080
Speaker 4: general generational wealth transform uh, that's going to happen over

587
00:28:16,080 --> 00:28:18,840
Speaker 4: the next couple of years, that's that's going to be

588
00:28:19,000 --> 00:28:21,159
Speaker 4: really profound, and I know that's definitely something that you

589
00:28:21,240 --> 00:28:22,960
Speaker 4: spend a lot of time because it's gonna go to

590
00:28:22,960 --> 00:28:24,639
Speaker 4: the next generation. The next generation is going to want

591
00:28:24,680 --> 00:28:27,359
Speaker 4: to use their new modern r than the new modern

592
00:28:27,720 --> 00:28:30,080
Speaker 4: investment capabilities, and so these are gonna these are gonna

593
00:28:30,080 --> 00:28:31,800
Speaker 4: feed right into that. There will be tens of trillions

594
00:28:31,800 --> 00:28:35,119
Speaker 4: of dollars in motion. And how we think about, you know,

595
00:28:35,160 --> 00:28:38,240
Speaker 4: providing those services to clients is really important.

596
00:28:38,520 --> 00:28:41,120
Speaker 2: So I really have always thought of you as a

597
00:28:41,240 --> 00:28:45,160
Speaker 2: public markets guy, But you're what I'm hearing is, yeah,

598
00:28:45,200 --> 00:28:47,120
Speaker 2: public markets are going to be a key part of this,

599
00:28:47,520 --> 00:28:50,240
Speaker 2: But there's a lot more beyond just stocks and bonds

600
00:28:50,240 --> 00:28:53,320
Speaker 2: that are publicly traded, and a lot more beyond ETFs

601
00:28:53,320 --> 00:28:57,640
Speaker 2: and mutual funds. Where do you see Goldman going with

602
00:28:57,840 --> 00:29:01,480
Speaker 2: privates in GSAM within the asset management group?

603
00:29:01,760 --> 00:29:04,200
Speaker 4: Yeah, No, I think it's one of our top priorities.

604
00:29:04,200 --> 00:29:09,720
Speaker 4: So we've got decades experience in doing private investments, and

605
00:29:09,520 --> 00:29:11,120
Speaker 4: and and I do want to be careful because a

606
00:29:11,160 --> 00:29:14,640
Speaker 4: lot of times people talk alternatives writ large, and there's

607
00:29:14,960 --> 00:29:16,280
Speaker 4: a lot of specifics in that, you know.

608
00:29:16,280 --> 00:29:17,280
Speaker 3: Not talking about hedge fund.

609
00:29:17,320 --> 00:29:19,760
Speaker 4: We talked about private equity, we talked about private credit.

610
00:29:20,080 --> 00:29:23,160
Speaker 4: You've got infrastructure, real estate. You would use all of

611
00:29:23,160 --> 00:29:26,320
Speaker 4: those in your portfolio for different outcomes, real estate and infrastructure.

612
00:29:26,320 --> 00:29:29,240
Speaker 4: Maybe a low correlation or increased yield private credit like

613
00:29:29,280 --> 00:29:32,040
Speaker 4: slightly increased yield off public credit. Private equity maybe gives

614
00:29:32,080 --> 00:29:37,120
Speaker 4: you different upside, you know, opportunity versus versus public equities,

615
00:29:37,120 --> 00:29:39,600
Speaker 4: and so you can use those in your portfolios. And

616
00:29:39,600 --> 00:29:42,640
Speaker 4: so but again it's just an innovation story. And these

617
00:29:43,600 --> 00:29:47,520
Speaker 4: these types of investments have been available to investors for decades,

618
00:29:47,720 --> 00:29:50,800
Speaker 4: but not available to all investors and not available through

619
00:29:51,080 --> 00:29:54,520
Speaker 4: the format that investors wanted to access that. And I

620
00:29:54,720 --> 00:29:56,600
Speaker 4: you know, ETFs taught us not only the what, but

621
00:29:56,640 --> 00:29:58,320
Speaker 4: the how how do I get access to those? ETFs

622
00:29:58,400 --> 00:30:00,520
Speaker 4: unlocked that And I think we're going to continue to

623
00:30:00,560 --> 00:30:02,800
Speaker 4: see that on the alternative side as we as we

624
00:30:02,840 --> 00:30:05,680
Speaker 4: have breakthroughs on technology, if we have breakthroughs on access,

625
00:30:06,840 --> 00:30:10,000
Speaker 4: those will become increasingly available to more and more investors

626
00:30:10,040 --> 00:30:12,680
Speaker 4: so they can build more specific portfolios. Going back to

627
00:30:12,720 --> 00:30:14,200
Speaker 4: the purpose of why we do all of this to

628
00:30:14,240 --> 00:30:17,360
Speaker 4: get the outcomes that they're looking for, and if you

629
00:30:17,360 --> 00:30:20,120
Speaker 4: can incorporate those into your portfolio to drive those outcomes,

630
00:30:20,120 --> 00:30:24,440
Speaker 4: that really is a differentiator with that, and it's important

631
00:30:24,440 --> 00:30:27,080
Speaker 4: for us to do that, and so we're really focused

632
00:30:27,120 --> 00:30:28,120
Speaker 4: in those areas.

633
00:30:27,840 --> 00:30:31,800
Speaker 2: So private alternatives have scaled up over the past few

634
00:30:31,840 --> 00:30:36,120
Speaker 2: decades from a few billion dollars to a few trillion dollars.

635
00:30:36,480 --> 00:30:41,080
Speaker 2: How large can this sector expand to over the next decade?

636
00:30:41,400 --> 00:30:48,520
Speaker 4: So alternatives and privates substantially ten tens of trillions of dollars.

637
00:30:49,520 --> 00:30:51,760
Speaker 2: Tens of trillions, Yeah, like this could be a twenty

638
00:30:51,840 --> 00:30:53,040
Speaker 2: thirty trillion dollars space.

639
00:30:53,120 --> 00:30:56,360
Speaker 4: Yeah, I mean think think about the companies. You know,

640
00:30:56,800 --> 00:30:58,400
Speaker 4: there's there's a couple of companies that come to mind

641
00:30:58,480 --> 00:31:00,760
Speaker 4: right now that are staying private, that are that are huge,

642
00:31:01,080 --> 00:31:02,800
Speaker 4: you know, trillion dollar companies around the way to being

643
00:31:02,880 --> 00:31:05,960
Speaker 4: multi trillion, just a couple of companies, let alone the

644
00:31:06,040 --> 00:31:07,800
Speaker 4: entire thing. And then when you pull in private credit

645
00:31:07,840 --> 00:31:10,479
Speaker 4: into that, when you pull in some of these other areas,

646
00:31:10,520 --> 00:31:13,200
Speaker 4: I think this will be massive. And ten years is

647
00:31:13,200 --> 00:31:15,160
Speaker 4: a really long time. And that's another thing that we've

648
00:31:15,240 --> 00:31:17,480
Speaker 4: learned in this industry is that you know, even when

649
00:31:17,480 --> 00:31:19,480
Speaker 4: markets wabble a little bit, once you stretch out and

650
00:31:19,480 --> 00:31:23,600
Speaker 4: look over the long haul these things, it's barely barely

651
00:31:23,640 --> 00:31:26,360
Speaker 4: registers on the chart. And so these these things do

652
00:31:26,560 --> 00:31:29,479
Speaker 4: grow in that way. And you know, I'm bullish on markets.

653
00:31:29,520 --> 00:31:32,960
Speaker 4: I'm bullish on you know, innovation, and you know, as

654
00:31:33,000 --> 00:31:37,880
Speaker 4: technology unlocks these these wealth capabilities for more and more investors,

655
00:31:38,320 --> 00:31:39,880
Speaker 4: that is only going to be a positive thing to.

656
00:31:40,120 --> 00:31:42,880
Speaker 2: So I'm with you every step of the way so far.

657
00:31:43,360 --> 00:31:47,520
Speaker 2: But but let's take off our sonny sonny goggles and

658
00:31:47,560 --> 00:31:51,000
Speaker 2: say what are the challenges going to be? How what

659
00:31:51,040 --> 00:31:53,800
Speaker 2: are the heavy lifting ahead in order to bring these

660
00:31:53,840 --> 00:31:57,560
Speaker 2: sort of full suite of services, all these different products,

661
00:31:57,680 --> 00:32:02,720
Speaker 2: especially these new fangled private it's into a core portfolio

662
00:32:02,920 --> 00:32:06,240
Speaker 2: and a basic model. What's the challenge here?

663
00:32:08,160 --> 00:32:08,560
Speaker 4: Education?

664
00:32:09,120 --> 00:32:09,520
Speaker 3: Mm hmm.

665
00:32:10,280 --> 00:32:14,240
Speaker 4: And we've seen this play out. Use my use my

666
00:32:14,280 --> 00:32:17,120
Speaker 4: past experience in ETFs. I can't tell you how many.

667
00:32:17,760 --> 00:32:19,400
Speaker 4: Oh I don't know if I'm never buy an ETF.

668
00:32:19,520 --> 00:32:21,440
Speaker 4: I don't know if, however, buy a fixed income ETF.

669
00:32:21,600 --> 00:32:23,560
Speaker 4: Come on, Like you know, I used to keep a

670
00:32:23,600 --> 00:32:25,040
Speaker 4: list of people that tell me they would never buy

671
00:32:25,040 --> 00:32:27,120
Speaker 4: an ETF that eventually call hey, Brian, could you come

672
00:32:27,120 --> 00:32:28,600
Speaker 4: tell me a little bit more about those ETFs? And

673
00:32:28,640 --> 00:32:33,920
Speaker 4: so this there's always the early adopters, the mavericks, and

674
00:32:33,960 --> 00:32:35,760
Speaker 4: then there's the and then there's the bulk and and

675
00:32:35,880 --> 00:32:37,680
Speaker 4: it kind of pulls through and so, you know, I

676
00:32:37,680 --> 00:32:42,000
Speaker 4: think it's incoming upon folks like our firm, Goldman, you know,

677
00:32:42,760 --> 00:32:46,000
Speaker 4: things like this where investors, you know, are educated about

678
00:32:46,000 --> 00:32:48,360
Speaker 4: what's available to them. I know your your firm does

679
00:32:48,360 --> 00:32:51,240
Speaker 4: a lot of work around that as well. Education. Here's

680
00:32:51,240 --> 00:32:54,320
Speaker 4: the benefits, here's how it works, here's how here's the

681
00:32:54,360 --> 00:32:56,440
Speaker 4: concerns that you should think about. You know, whether it's

682
00:32:56,440 --> 00:32:59,440
Speaker 4: the liquidity or whether it's the return profile, the timings

683
00:32:59,440 --> 00:33:01,600
Speaker 4: of those things, is the cash flow? These are all

684
00:33:01,600 --> 00:33:03,680
Speaker 4: things that people need to be educated on. But but

685
00:33:03,840 --> 00:33:07,400
Speaker 4: you know, let's use let's use active fixed income ETFs

686
00:33:07,400 --> 00:33:10,680
Speaker 4: as a proxy. Okay, there was there was years investors. Wow,

687
00:33:10,840 --> 00:33:14,240
Speaker 4: like a bond isn't isn't tradable on the exchange, and

688
00:33:14,240 --> 00:33:17,280
Speaker 4: there's a liquidity mismatch, So gosh, what do I do? Well, Now,

689
00:33:17,360 --> 00:33:20,560
Speaker 4: what we know is that when you put fixed income

690
00:33:20,560 --> 00:33:24,239
Speaker 4: in an ETF, you basically take an analog vehicle and

691
00:33:24,280 --> 00:33:27,480
Speaker 4: make it digital. We've taken these clunky bonds and we've

692
00:33:27,480 --> 00:33:30,160
Speaker 4: made them digital. Not only that, but we've diversified it.

693
00:33:30,200 --> 00:33:33,280
Speaker 4: So you buy one ETF ticker that diversifies you across

694
00:33:33,280 --> 00:33:36,560
Speaker 4: one hundred bonds. Often those bonds will trade it a

695
00:33:36,600 --> 00:33:38,840
Speaker 4: tighter spread than if you went and bought the basket

696
00:33:38,840 --> 00:33:41,480
Speaker 4: of the bonds separately. So you've got this innovation effect

697
00:33:41,720 --> 00:33:44,880
Speaker 4: that happens on the exchange. You can buy one share,

698
00:33:44,960 --> 00:33:46,760
Speaker 4: sell one share. You're not buying big one hundred thousand

699
00:33:46,760 --> 00:33:47,360
Speaker 4: dollars bond at a.

700
00:33:47,360 --> 00:33:49,600
Speaker 3: Time, so fractional share you can.

701
00:33:49,680 --> 00:33:51,720
Speaker 4: You can, you can do all sorts of things, and

702
00:33:52,400 --> 00:33:55,880
Speaker 4: but it took education for people to understand how that

703
00:33:56,120 --> 00:33:57,920
Speaker 4: was was going to work, and I and I think

704
00:33:57,920 --> 00:34:00,840
Speaker 4: there's a really easy corollary there for the alternative space,

705
00:34:00,840 --> 00:34:03,360
Speaker 4: which we need to continue to do that. I want

706
00:34:03,400 --> 00:34:05,120
Speaker 4: to live in a good neighborhood. I respect a lot

707
00:34:05,160 --> 00:34:07,360
Speaker 4: of the firms that we compete with that are also

708
00:34:07,880 --> 00:34:10,520
Speaker 4: leaning in and trying to educate around around this space.

709
00:34:11,040 --> 00:34:13,440
Speaker 4: And so I think the industry needs to do a

710
00:34:13,440 --> 00:34:15,600
Speaker 4: good job of coming together and making sure that we're educating.

711
00:34:15,800 --> 00:34:19,560
Speaker 4: But we need to be intentional about that. We can't

712
00:34:19,560 --> 00:34:20,840
Speaker 4: just let it happen. We need to lean in and

713
00:34:20,880 --> 00:34:22,120
Speaker 4: we need to invest in. We need to make sure

714
00:34:22,120 --> 00:34:23,279
Speaker 4: that we're educating people around that.

715
00:34:23,760 --> 00:34:27,560
Speaker 2: Fast forward ten years in the future, what does success

716
00:34:27,640 --> 00:34:29,560
Speaker 2: look like in this space? And I'm not just talking

717
00:34:29,560 --> 00:34:32,759
Speaker 2: about AUM. Yeah, three becomes four, becomes seven, becomes ten.

718
00:34:33,160 --> 00:34:38,399
Speaker 2: Hold that aside, what does GSM look like ten years

719
00:34:38,400 --> 00:34:42,000
Speaker 2: from now? If you've been successful in your role as

720
00:34:42,120 --> 00:34:43,600
Speaker 2: chief transformation officer.

721
00:34:46,000 --> 00:34:49,680
Speaker 4: Outcomes for clients are what they were intending to be.

722
00:34:50,160 --> 00:34:53,560
Speaker 4: So there was a clear understanding of what they wanted

723
00:34:53,560 --> 00:34:59,040
Speaker 4: to achieve and we were able to deliver that for them.

724
00:34:59,280 --> 00:35:01,480
Speaker 4: Tying it back to this conversation. There's going to be

725
00:35:01,520 --> 00:35:03,040
Speaker 4: some bumps in the road. There's going to be some

726
00:35:03,120 --> 00:35:06,600
Speaker 4: turns that we need to make, getting getting as many

727
00:35:06,640 --> 00:35:10,600
Speaker 4: of those rights as we possibly can, educating well, making

728
00:35:10,680 --> 00:35:13,440
Speaker 4: sure that we're communicating extremely clearly on what it is

729
00:35:13,480 --> 00:35:18,560
Speaker 4: that we're delivering to investors. I might even stop there

730
00:35:18,960 --> 00:35:23,360
Speaker 4: if we can. If investors are are pleased with the outcome,

731
00:35:23,400 --> 00:35:26,120
Speaker 4: and we and we match their expectations on that, and

732
00:35:26,280 --> 00:35:28,720
Speaker 4: we get a couple of these tough calls right along

733
00:35:28,760 --> 00:35:31,120
Speaker 4: the way, I think I think that would be success

734
00:35:31,120 --> 00:35:33,120
Speaker 4: for us. I don't think we need to go deeper

735
00:35:33,120 --> 00:35:35,040
Speaker 4: than that. And you know, wax lyrical about some of

736
00:35:35,120 --> 00:35:36,560
Speaker 4: these other things. I think those are the things that

737
00:35:36,600 --> 00:35:38,200
Speaker 4: we need to be focused on.

738
00:35:39,000 --> 00:35:42,680
Speaker 3: And sort of a broader question.

739
00:35:43,280 --> 00:35:45,880
Speaker 2: So you've worked in New York, We've you've worked in Chicago,

740
00:35:45,920 --> 00:35:50,040
Speaker 2: you've worked in London. What are the differences with these

741
00:35:50,120 --> 00:35:55,840
Speaker 2: total solutions for US investors and overseas investors? How do

742
00:35:55,880 --> 00:35:58,319
Speaker 2: they look at highlight, look at ETFs, how do they

743
00:35:58,320 --> 00:35:59,880
Speaker 2: look at the world of investing? How do they look

744
00:35:59,880 --> 00:36:03,600
Speaker 2: at privates? There used to be a giant difference. You know,

745
00:36:03,680 --> 00:36:07,160
Speaker 2: occasionally there were ADRs trading on the New York socc Exchange.

746
00:36:07,760 --> 00:36:11,399
Speaker 2: Has the world come together and it's similar or are

747
00:36:11,440 --> 00:36:15,479
Speaker 2: there still big differences between someone putting money to work

748
00:36:15,640 --> 00:36:19,560
Speaker 2: in Berlin or Paris versus New York in Chicago.

749
00:36:19,680 --> 00:36:21,800
Speaker 4: I remember the first time I listened to Masters and

750
00:36:21,840 --> 00:36:25,800
Speaker 4: Business podcasts. I was running through Battersea Park in London

751
00:36:26,280 --> 00:36:28,560
Speaker 4: and thinking, Wow, this is this is this is great.

752
00:36:28,640 --> 00:36:31,120
Speaker 4: And Barry always says his guests are extra special. Man,

753
00:36:31,160 --> 00:36:33,239
Speaker 4: that must feel really good, and I was watching them

754
00:36:33,239 --> 00:36:35,239
Speaker 4: back I was wondering if I was going to get

755
00:36:35,239 --> 00:36:37,680
Speaker 4: the extra special today or the special or where that

756
00:36:37,760 --> 00:36:40,839
Speaker 4: was going to go. You raise an interesting point. You know,

757
00:36:40,920 --> 00:36:44,520
Speaker 4: our world is increasingly global, Information increasingly travels globally, so

758
00:36:44,560 --> 00:36:47,840
Speaker 4: there is a convergence that's happening where portfolios are starting

759
00:36:47,880 --> 00:36:51,200
Speaker 4: to look more and more similar. You still do have

760
00:36:51,239 --> 00:36:55,279
Speaker 4: some home bias things that play into portfolios that I

761
00:36:55,280 --> 00:36:56,960
Speaker 4: think will always be the case. Some of that's just

762
00:36:57,040 --> 00:37:00,480
Speaker 4: driven by currency, some of that's driven by cultural differ diferences,

763
00:37:00,800 --> 00:37:03,520
Speaker 4: but there is a convergence. The conversations that I'm having

764
00:37:03,600 --> 00:37:06,880
Speaker 4: around the world are on the institutional side. They're a

765
00:37:06,880 --> 00:37:09,960
Speaker 4: little bit further ahead on the alts thing. They've been

766
00:37:10,080 --> 00:37:13,880
Speaker 4: using over there. Globally, I would say globally, institutions are

767
00:37:13,920 --> 00:37:16,960
Speaker 4: closer to twenty percent of their portfolio alternatives, whereas you know,

768
00:37:17,000 --> 00:37:19,719
Speaker 4: a typical retail investor is less than five percent, and

769
00:37:20,239 --> 00:37:22,520
Speaker 4: I think the retail investor goes closer to that twenty

770
00:37:22,560 --> 00:37:26,440
Speaker 4: percent number. And that's true, that's true really globally.

771
00:37:26,880 --> 00:37:30,680
Speaker 2: Five years ago, right before the pandemic, I was having

772
00:37:30,680 --> 00:37:34,640
Speaker 2: a conversation with people in Europe and there was sort

773
00:37:34,680 --> 00:37:40,160
Speaker 2: of perplexed by the passive craze in the US. And now,

774
00:37:40,239 --> 00:37:43,040
Speaker 2: admittedly we had a lot more scandals in the two thousands,

775
00:37:43,080 --> 00:37:47,440
Speaker 2: everything from IPO spinning, anim spinning right up to Bernie Madoff.

776
00:37:47,880 --> 00:37:52,040
Speaker 2: But they kind of scratched their head and looked at

777
00:37:52,440 --> 00:37:57,520
Speaker 2: low cost passive indexing as like a distinkly American phenomena.

778
00:37:58,200 --> 00:37:59,719
Speaker 2: Is that still the case? Have they?

779
00:37:59,840 --> 00:38:00,080
Speaker 3: Like?

780
00:38:01,080 --> 00:38:03,880
Speaker 2: How much of that is is tax differences? How much

781
00:38:03,920 --> 00:38:07,280
Speaker 2: of that is they just want a hand on the tiller?

782
00:38:07,520 --> 00:38:08,840
Speaker 2: What's the gap?

783
00:38:08,880 --> 00:38:10,960
Speaker 4: So you land in London Heathrow, and you've got options

784
00:38:10,960 --> 00:38:14,600
Speaker 4: to get to Midtown. You can take a taxi, you

785
00:38:14,640 --> 00:38:17,440
Speaker 4: can take the Heathrow Express, you can now take the

786
00:38:17,480 --> 00:38:20,040
Speaker 4: Elizabeth Line. I suppose you could walk if you wanted

787
00:38:20,080 --> 00:38:23,240
Speaker 4: to the point being, there's a lot of different ways,

788
00:38:23,280 --> 00:38:26,680
Speaker 4: and really the point is is what outcome are you

789
00:38:26,719 --> 00:38:31,359
Speaker 4: looking for? And I would say that investors now are

790
00:38:31,400 --> 00:38:36,000
Speaker 4: saying the best portfolios have active and passive capabilities within them.

791
00:38:36,160 --> 00:38:39,399
Speaker 4: They both play a role. There's a sliding scale where

792
00:38:39,400 --> 00:38:42,880
Speaker 4: sometimes different asset classes should be more attractive on the

793
00:38:42,880 --> 00:38:46,040
Speaker 4: passive side, sometimes more on the active side. We had

794
00:38:46,040 --> 00:38:48,880
Speaker 4: this with the mag seven where you saw such concentration

795
00:38:49,000 --> 00:38:51,560
Speaker 4: risk in some of those names on the indexes that

796
00:38:51,640 --> 00:38:55,480
Speaker 4: investors may maybe we're managing risk by just going moving

797
00:38:55,480 --> 00:38:59,600
Speaker 4: away intentionally from owning all those names. I like to

798
00:38:59,600 --> 00:39:02,239
Speaker 4: remind people the S and P five hundred was launched

799
00:39:02,239 --> 00:39:04,560
Speaker 4: in nineteen twenty three, had two hundred and thirty three

800
00:39:04,560 --> 00:39:06,759
Speaker 4: stocks in it at the time. It didn't expand to

801
00:39:06,800 --> 00:39:10,520
Speaker 4: five hundred until the fifties. It didn't become an investable

802
00:39:10,520 --> 00:39:14,160
Speaker 4: product until until Vanguard and Bogel put it into a

803
00:39:14,239 --> 00:39:16,560
Speaker 4: into basically a fund at the time in seventy four

804
00:39:16,840 --> 00:39:19,560
Speaker 4: seventy I had I had early seventies in my head

805
00:39:19,560 --> 00:39:22,160
Speaker 4: as well, not available in an ETF until nineteen eighty three.

806
00:39:23,480 --> 00:39:26,839
Speaker 4: So if if that was the best investment. Why did

807
00:39:26,840 --> 00:39:29,200
Speaker 4: it take seventy years for it to be made available

808
00:39:29,239 --> 00:39:32,880
Speaker 4: to investors? And and and what's telling us that we

809
00:39:32,880 --> 00:39:35,040
Speaker 4: should stop that? So I'm a huge believer in innovation

810
00:39:35,160 --> 00:39:38,640
Speaker 4: going forward. Then the great investments are being in you know,

811
00:39:38,719 --> 00:39:42,359
Speaker 4: great investment strategies are being invented every day. I think

812
00:39:42,400 --> 00:39:45,640
Speaker 4: investors are more and more aware of outcomes as opposed

813
00:39:45,640 --> 00:39:48,560
Speaker 4: to inputs than than they ever have been. And so

814
00:39:49,680 --> 00:39:52,279
Speaker 4: all of these tools, and you know, there's thousands of

815
00:39:52,320 --> 00:39:54,400
Speaker 4: ETFs now there's gonna be you know, there's gonna be

816
00:39:54,400 --> 00:39:57,360
Speaker 4: a lot of alternative capabilities. These are these are just

817
00:39:57,520 --> 00:40:00,440
Speaker 4: they're they're like the songs on our You can put

818
00:40:00,480 --> 00:40:04,240
Speaker 4: the perfect playlist together for yourself, and you can combine

819
00:40:04,239 --> 00:40:06,880
Speaker 4: all these things to get that playlist, maybe for the workout,

820
00:40:06,920 --> 00:40:10,799
Speaker 4: maybe for the commute, whatever that is. And so this optionality,

821
00:40:10,800 --> 00:40:13,440
Speaker 4: it's great for investors. It's a good outcome. Yes, they

822
00:40:13,440 --> 00:40:14,920
Speaker 4: need to weighe through it a little bit more. I'm

823
00:40:14,920 --> 00:40:17,200
Speaker 4: sure there's great songs that I haven't heard yet. But

824
00:40:17,280 --> 00:40:20,000
Speaker 4: that's how's that's where this thing is going. As all

825
00:40:20,040 --> 00:40:21,919
Speaker 4: these these investments become available in that way.

826
00:40:22,120 --> 00:40:27,080
Speaker 2: We were talking earlier about that title and how encompassing

827
00:40:27,120 --> 00:40:32,200
Speaker 2: it is, and that your charge is essentially to revamp

828
00:40:32,840 --> 00:40:37,200
Speaker 2: and innovate in the entire suite of Goldman's Sachs asset

829
00:40:37,239 --> 00:40:41,080
Speaker 2: management products, everything from what goes into them, the sort

830
00:40:41,120 --> 00:40:46,399
Speaker 2: of outcomes you're looking for. It sounds pretty comprehensive. What

831
00:40:46,520 --> 00:40:50,799
Speaker 2: is it about today that has led to so many

832
00:40:50,840 --> 00:40:54,280
Speaker 2: companies saying, hey, you know, we really are a danger

833
00:40:54,280 --> 00:40:58,560
Speaker 2: of falling behind, and rather than rest on our laurels,

834
00:40:59,040 --> 00:41:02,640
Speaker 2: we have to become edge and be the change as

835
00:41:02,640 --> 00:41:05,920
Speaker 2: opposed to being affected by the change. Like tell us

836
00:41:05,960 --> 00:41:07,279
Speaker 2: a little bit about your thoughts there.

837
00:41:07,800 --> 00:41:11,839
Speaker 4: So, investors have made it quite clear what they're trying

838
00:41:11,840 --> 00:41:14,759
Speaker 4: to accomplish in their in their portfolio. So when you

839
00:41:14,800 --> 00:41:16,799
Speaker 4: see things that are growing as fast as they are,

840
00:41:16,840 --> 00:41:18,800
Speaker 4: like direct indexing, which is growing at a kager of

841
00:41:18,840 --> 00:41:21,360
Speaker 4: north of twenty percent a year, When you see things

842
00:41:21,400 --> 00:41:24,000
Speaker 4: like SMAs that are growing at the rate that they're growing,

843
00:41:24,320 --> 00:41:26,239
Speaker 4: when you see ETFs that are growing at that rate,

844
00:41:27,480 --> 00:41:30,480
Speaker 4: some firms lead, Some firms are responding to that, but

845
00:41:31,040 --> 00:41:36,120
Speaker 4: ultimately it's the investors that are that are leading that conversation. Now,

846
00:41:36,160 --> 00:41:39,480
Speaker 4: once we realize that stuff like an SMA or direct

847
00:41:39,480 --> 00:41:43,640
Speaker 4: indexes the delivery mechanism. ETF is the delivery mechanism, and

848
00:41:43,680 --> 00:41:46,920
Speaker 4: then what you put inside it is the investment capability.

849
00:41:47,680 --> 00:41:51,040
Speaker 4: That actually becomes an interesting conversation. So many asset management firms,

850
00:41:51,120 --> 00:41:53,680
Speaker 4: using ETFs as the example, are now saying, hey, we've

851
00:41:53,719 --> 00:41:56,520
Speaker 4: got great investment capabilities, we just need to make those

852
00:41:56,520 --> 00:42:00,120
Speaker 4: available in the ETF technology, which is which is how

853
00:42:00,200 --> 00:42:02,680
Speaker 4: investors are trying to get that exposure.

854
00:42:02,280 --> 00:42:05,239
Speaker 2: And define SMAs for people who don't know the shorthands.

855
00:42:05,440 --> 00:42:08,200
Speaker 4: So, a separately managed account is an account where you

856
00:42:08,239 --> 00:42:12,640
Speaker 4: as an individual can allocate to a strategy and you

857
00:42:12,680 --> 00:42:14,759
Speaker 4: actually own the individual names and then they can trade

858
00:42:14,800 --> 00:42:17,840
Speaker 4: it on behalf of you as an individual, as opposed

859
00:42:17,880 --> 00:42:21,279
Speaker 4: to owning a co mingled vehicle like an ETF for

860
00:42:21,520 --> 00:42:22,279
Speaker 4: or a mutual fund.

861
00:42:22,440 --> 00:42:24,600
Speaker 2: All right, so let's talk about some new products that

862
00:42:24,600 --> 00:42:27,560
Speaker 2: have come out buffer ETFs. Tell us a little bit

863
00:42:27,560 --> 00:42:28,000
Speaker 2: about that.

864
00:42:28,360 --> 00:42:30,560
Speaker 4: Yeah, I mean this this just continues on the on

865
00:42:30,600 --> 00:42:33,520
Speaker 4: the spectrum as we think about innovation. You know, so

866
00:42:33,600 --> 00:42:35,600
Speaker 4: a quote comes to mind from Rick Rubin. I don't

867
00:42:35,600 --> 00:42:37,440
Speaker 4: I don't know if anybody's ever quoted Rick Rubin here,

868
00:42:37,440 --> 00:42:38,399
Speaker 4: but you know, how do you.

869
00:42:38,560 --> 00:42:41,280
Speaker 3: They have the new book. Definitely a lot of people.

870
00:42:41,320 --> 00:42:42,879
Speaker 4: It's great, right and and you know, so the one

871
00:42:42,880 --> 00:42:44,680
Speaker 4: that that stuck out to me. And obviously he's famous

872
00:42:44,680 --> 00:42:46,359
Speaker 4: for producing the Beastie Boys, which is, you know, great

873
00:42:46,360 --> 00:42:47,000
Speaker 4: New York and.

874
00:42:47,080 --> 00:42:49,520
Speaker 2: A ton of other arts, a ton of artist range

875
00:42:49,600 --> 00:42:50,480
Speaker 2: is kind of incredible.

876
00:42:50,520 --> 00:42:53,160
Speaker 4: I love it and and it's it's absolutely amazing. But

877
00:42:53,440 --> 00:42:55,799
Speaker 4: you know, he he makes two important points. One is,

878
00:42:56,320 --> 00:42:59,040
Speaker 4: it's not like serendipity happens in lightning strikes. You've got

879
00:42:59,040 --> 00:43:01,319
Speaker 4: to grind it out. Like these artists that have made

880
00:43:01,320 --> 00:43:04,800
Speaker 4: some of the most creative and best music, they're grinding

881
00:43:04,840 --> 00:43:06,839
Speaker 4: it out and sometimes it hits, and sometimes you really

882
00:43:06,880 --> 00:43:08,680
Speaker 4: got to work it. And he's asked, how do you

883
00:43:08,719 --> 00:43:11,160
Speaker 4: put together an album of twelve hits? You write twenty songs,

884
00:43:11,160 --> 00:43:13,920
Speaker 4: you pick the twelve best ones, and so you know,

885
00:43:13,960 --> 00:43:16,879
Speaker 4: that's something that comes to mind for me. I think, really,

886
00:43:16,920 --> 00:43:19,360
Speaker 4: what you're trying to do is find the tension between

887
00:43:19,920 --> 00:43:24,120
Speaker 4: innovation and solving an investor need. And you and I

888
00:43:24,160 --> 00:43:26,800
Speaker 4: could dream up something crazy from an innovation standpoint and

889
00:43:26,840 --> 00:43:29,040
Speaker 4: wouldn't solve an investor need and be a waste of

890
00:43:29,040 --> 00:43:32,720
Speaker 4: time and energy. There's also needs that are going unmet

891
00:43:32,800 --> 00:43:35,239
Speaker 4: right now where people need to solve those and so

892
00:43:35,280 --> 00:43:39,160
Speaker 4: you're constantly looking for that tension between the two. And

893
00:43:39,320 --> 00:43:41,560
Speaker 4: it really is a team sport. You work with investors

894
00:43:41,560 --> 00:43:43,560
Speaker 4: that are experts at that you work at, You look

895
00:43:43,600 --> 00:43:46,440
Speaker 4: at the data, You talk to clients and understand what

896
00:43:46,440 --> 00:43:49,080
Speaker 4: it is that they're trying to achieve. You know, the

897
00:43:49,160 --> 00:43:51,040
Speaker 4: way I think about it at Goldman is, you know,

898
00:43:51,080 --> 00:43:53,279
Speaker 4: to use our music analogy earlier. We make a lot

899
00:43:53,280 --> 00:43:55,239
Speaker 4: of great rock and roll. We want to make sure

900
00:43:55,239 --> 00:43:57,480
Speaker 4: that it's available in the MP three rapper, you know,

901
00:43:57,520 --> 00:43:59,680
Speaker 4: the ETF rapper, and so you know, we launched active

902
00:43:59,719 --> 00:44:02,440
Speaker 4: munich capabilities, which we think is a differentiator. We're leaders

903
00:44:02,440 --> 00:44:03,000
Speaker 4: in that space.

904
00:44:03,239 --> 00:44:05,840
Speaker 2: And then the bustle Active UNY tell us about active meetas.

905
00:44:05,600 --> 00:44:07,600
Speaker 4: Yeah, active met. I mean, you know, so if you're

906
00:44:07,600 --> 00:44:09,960
Speaker 4: thinking about the high net worth or the ultra high

907
00:44:09,960 --> 00:44:12,480
Speaker 4: networth space, they think a lot about taxes, and so

908
00:44:12,560 --> 00:44:14,799
Speaker 4: when you think about the MUNI space right now, you

909
00:44:14,840 --> 00:44:17,799
Speaker 4: get the tax benefits of owning those. When you can

910
00:44:17,840 --> 00:44:19,400
Speaker 4: do all the things that we talked about earlier with

911
00:44:19,440 --> 00:44:23,080
Speaker 4: fixed income ETFs and muni's delivered, you know, you have

912
00:44:23,200 --> 00:44:25,480
Speaker 4: like a great combination. So we launched the different spectrum

913
00:44:25,480 --> 00:44:28,239
Speaker 4: of those longer durations, short duration, high yield, et cetera,

914
00:44:28,280 --> 00:44:30,360
Speaker 4: et cetera. And so those are those are really interesting things.

915
00:44:30,560 --> 00:44:32,200
Speaker 4: On the buffer side, I think this is also a

916
00:44:32,239 --> 00:44:36,600
Speaker 4: really fascinating space. Embedding options and strategies isn't a new thing.

917
00:44:37,160 --> 00:44:41,240
Speaker 4: Sophisticated investors, insurance companies have been doing this for years.

918
00:44:41,280 --> 00:44:43,640
Speaker 4: Covered call strategies. You know, I used to work with

919
00:44:43,640 --> 00:44:46,160
Speaker 4: Financial Advice. They did that themselves on some of the

920
00:44:46,200 --> 00:44:49,360
Speaker 4: names that were in the portfolios. But now that the

921
00:44:49,440 --> 00:44:51,440
Speaker 4: industry has developed to the way that it has and

922
00:44:51,480 --> 00:44:53,719
Speaker 4: you can deliver these ETFs the way that we do,

923
00:44:54,239 --> 00:44:56,279
Speaker 4: you can start to give investors the outcomes that they're

924
00:44:56,320 --> 00:44:57,799
Speaker 4: looking for, and when you put them into a big

925
00:44:57,880 --> 00:45:01,920
Speaker 4: uma or a broader portfolio, these can really play an interesting,

926
00:45:02,160 --> 00:45:04,680
Speaker 4: an interesting role. So buffers are great. You can get

927
00:45:04,680 --> 00:45:07,759
Speaker 4: invested a lot of people nervous, there's uncertainty whether you

928
00:45:07,800 --> 00:45:10,359
Speaker 4: know the headline risk of the day right whatever that is,

929
00:45:10,640 --> 00:45:12,480
Speaker 4: and you say, hey, you know, these are designed to

930
00:45:12,520 --> 00:45:15,040
Speaker 4: protect you to the downside five to ten percent, fifteen percent,

931
00:45:15,200 --> 00:45:17,040
Speaker 4: but you could still participate in the upside, so you

932
00:45:17,040 --> 00:45:19,959
Speaker 4: can keep yourself inequities and if that helps you sleep

933
00:45:20,000 --> 00:45:22,560
Speaker 4: at night and it helps you stay invested, you are

934
00:45:22,600 --> 00:45:24,440
Speaker 4: going to get a better outcome in the long run.

935
00:45:24,520 --> 00:45:27,200
Speaker 4: And so they're a tool that investors can use along

936
00:45:27,200 --> 00:45:30,080
Speaker 4: with the other tools we launched three. They're designed to

937
00:45:30,080 --> 00:45:32,360
Speaker 4: reset on a quarterly basis, and so there's some thoughtfulness

938
00:45:32,360 --> 00:45:33,879
Speaker 4: around that. You know, at the beginning of each month,

939
00:45:33,880 --> 00:45:34,800
Speaker 4: you've got one that's resetting.

940
00:45:34,880 --> 00:45:38,800
Speaker 2: So we're recording this literally first day of the new quarter. Yeah,

941
00:45:39,080 --> 00:45:41,880
Speaker 2: Q one, twenty twenty five. If it's going to be

942
00:45:41,960 --> 00:45:45,360
Speaker 2: known for anything, it's going to be all about the volatility.

943
00:45:46,480 --> 00:45:50,399
Speaker 2: That that felt like the craziest five percent rowdown we've

944
00:45:50,440 --> 00:45:52,680
Speaker 2: ever experienced. Wait, that was just five percent?

945
00:45:52,719 --> 00:45:53,880
Speaker 3: Why did it feel like it was?

946
00:45:54,320 --> 00:45:57,280
Speaker 2: You know, between the news flows and all the mayhem

947
00:45:57,320 --> 00:46:05,319
Speaker 2: around tariffs. How do you see market volatility influencing investor behavior?

948
00:46:06,120 --> 00:46:11,160
Speaker 2: Is the move into products like buffered ETFs just a

949
00:46:11,280 --> 00:46:15,200
Speaker 2: short term reaction to the volatility we're experiencing or is

950
00:46:15,239 --> 00:46:17,360
Speaker 2: this a more longer lasting phenomena.

951
00:46:17,480 --> 00:46:21,400
Speaker 4: Yeah, this is the Warren Buffett you near term voting machine,

952
00:46:21,400 --> 00:46:24,480
Speaker 4: long term weighing machine. Right, the volatility the markets interer

953
00:46:24,600 --> 00:46:27,680
Speaker 4: day that's just bouncing around based on the headlines. I

954
00:46:27,680 --> 00:46:30,880
Speaker 4: think we're in an increasingly headline driven marketplace. There's more

955
00:46:30,920 --> 00:46:33,160
Speaker 4: information available than ever, whether you're on X, whether you're

956
00:46:33,200 --> 00:46:35,600
Speaker 4: watching Bloomberg, whether you're listening to something. But at the

957
00:46:35,600 --> 00:46:38,479
Speaker 4: same time, investors need to be reminded that just because

958
00:46:38,520 --> 00:46:41,120
Speaker 4: they're more informed doesn't mean they need to make new decisions.

959
00:46:41,239 --> 00:46:43,120
Speaker 4: You need to have a strategy. There's a lot of

960
00:46:43,120 --> 00:46:44,880
Speaker 4: strategies that work, by the way, but you need to

961
00:46:44,920 --> 00:46:48,200
Speaker 4: have a strategy and stick to that strategy. And if

962
00:46:48,239 --> 00:46:49,680
Speaker 4: you do that and you keep an eye on your

963
00:46:49,680 --> 00:46:52,200
Speaker 4: expenses and you rebalance on a regular basis, you and

964
00:46:52,280 --> 00:46:53,959
Speaker 4: I both know the outcomes are going to be good.

965
00:46:54,360 --> 00:46:56,640
Speaker 4: If you are panicked in a scenario where the market's

966
00:46:56,680 --> 00:46:59,000
Speaker 4: drawn down five percent, you maybe weren't in the right

967
00:46:59,040 --> 00:47:02,760
Speaker 4: strategy to begin with. And so these things are common.

968
00:47:02,840 --> 00:47:05,120
Speaker 4: The market has a ten percent draw down pretty much

969
00:47:05,120 --> 00:47:08,319
Speaker 4: every single year, so you should expect these things. And

970
00:47:08,400 --> 00:47:11,200
Speaker 4: so to me, it's all about the preparation. If you're

971
00:47:11,280 --> 00:47:13,640
Speaker 4: panic making a decision the day that the SMP is

972
00:47:13,680 --> 00:47:16,239
Speaker 4: down one percent, you're doing it at the wrong time.

973
00:47:16,239 --> 00:47:17,520
Speaker 4: You're not in the right headspace to do that. You

974
00:47:17,520 --> 00:47:20,080
Speaker 4: should have made that decision six months prior, when you're

975
00:47:20,160 --> 00:47:22,560
Speaker 4: when you were you know, thinking, you know, soundly about

976
00:47:22,560 --> 00:47:24,600
Speaker 4: what was going to happen. And I do think that

977
00:47:24,640 --> 00:47:26,680
Speaker 4: all these tools that are available, whether it's buffer ETFs,

978
00:47:26,680 --> 00:47:28,680
Speaker 4: are active munis, or you know, some of the other

979
00:47:28,719 --> 00:47:32,000
Speaker 4: strategies that we're delivering, those those can benefit Now we

980
00:47:32,000 --> 00:47:36,080
Speaker 4: think about direct indexing, it benefits from these drawdowns because

981
00:47:36,160 --> 00:47:39,360
Speaker 4: the way the technology can embed losses in your portfolio

982
00:47:39,440 --> 00:47:41,560
Speaker 4: can help offset some of the gains that you're going

983
00:47:41,600 --> 00:47:43,520
Speaker 4: to have at some point down down the road. And so,

984
00:47:44,080 --> 00:47:45,680
Speaker 4: you know, I think investors are starting to wake up

985
00:47:45,719 --> 00:47:47,279
Speaker 4: to that factor as well as like, oh, hold on

986
00:47:47,320 --> 00:47:50,640
Speaker 4: a second. Over time, if as long as this thing

987
00:47:50,680 --> 00:47:54,359
Speaker 4: continues to go up, this intra month, intra day volatility

988
00:47:54,600 --> 00:47:57,080
Speaker 4: may actually benefit me in a way because now these

989
00:47:57,120 --> 00:47:59,960
Speaker 4: different capabilities are available to me. And again that's something

990
00:48:00,200 --> 00:48:02,880
Speaker 4: that's a relatively new phenomenon that's been unlocked by technology

991
00:48:02,920 --> 00:48:03,920
Speaker 4: that just didn't exist before that.

992
00:48:04,160 --> 00:48:06,560
Speaker 2: So let's talk a little bit about direct indexing. We're

993
00:48:06,640 --> 00:48:10,160
Speaker 2: big direct indexers. I was skeptical about this, I don't know,

994
00:48:10,239 --> 00:48:14,360
Speaker 2: ten fifteen years ago because the technology was so cludgy.

995
00:48:14,800 --> 00:48:18,000
Speaker 2: You would literally get these you know, stacks of reports.

996
00:48:18,600 --> 00:48:23,319
Speaker 2: But today, because of a free trading and b software,

997
00:48:23,920 --> 00:48:27,160
Speaker 2: it's fast, easy, you could tilt it and whatever factor

998
00:48:27,400 --> 00:48:31,360
Speaker 2: style you want. But but my initial thought on direct

999
00:48:31,400 --> 00:48:34,640
Speaker 2: indexing was, oh, some people aren't going to want tobacco

1000
00:48:34,960 --> 00:48:37,840
Speaker 2: or don't want guns, or you go through all the

1001
00:48:37,880 --> 00:48:41,120
Speaker 2: list of don'ts. But that hasn't been the biggest driver.

1002
00:48:41,200 --> 00:48:44,560
Speaker 2: It seems like the biggest driver is managing capital gains,

1003
00:48:44,600 --> 00:48:47,040
Speaker 2: taxes and tax loss servicing. Tell us a little bit

1004
00:48:47,040 --> 00:48:50,600
Speaker 2: about Goldman Sax asset managements direct indexing products.

1005
00:48:50,800 --> 00:48:53,399
Speaker 4: People want to avoid taxes, they want to defer them, right,

1006
00:48:53,440 --> 00:48:54,480
Speaker 4: and so these are.

1007
00:48:54,560 --> 00:48:58,000
Speaker 2: But these aren't deferring taxes. These are these being able

1008
00:48:58,040 --> 00:49:01,160
Speaker 2: to offset gains. So you're not it's not like you're

1009
00:49:01,200 --> 00:49:04,000
Speaker 2: kicking the can down the road. You are actually paying

1010
00:49:04,080 --> 00:49:08,040
Speaker 2: less taxes. According to black Letter IRS law, there's nothing

1011
00:49:08,280 --> 00:49:12,759
Speaker 2: exactly bechu. This is well understood and perfectly.

1012
00:49:12,280 --> 00:49:15,839
Speaker 4: Legit really really well put and that's super clear. And

1013
00:49:15,880 --> 00:49:19,040
Speaker 4: so you know basically what happens is you manage it

1014
00:49:19,040 --> 00:49:20,279
Speaker 4: back to an index. So let's call it the S

1015
00:49:20,360 --> 00:49:22,520
Speaker 4: and P five hundred and so the ideas we're trying

1016
00:49:22,520 --> 00:49:24,040
Speaker 4: to give you the S and P five hundred outcome.

1017
00:49:24,080 --> 00:49:26,000
Speaker 4: But at any given point in time, some of the

1018
00:49:26,080 --> 00:49:27,360
Speaker 4: names in the S and P might be up, some

1019
00:49:27,400 --> 00:49:29,719
Speaker 4: of the names might be down, and if you can

1020
00:49:29,880 --> 00:49:32,080
Speaker 4: trade and take some of the losses on the names

1021
00:49:32,120 --> 00:49:34,480
Speaker 4: that are down, you can offset some of the gains

1022
00:49:34,480 --> 00:49:36,879
Speaker 4: that are on the up stuff. You know, later on

1023
00:49:37,440 --> 00:49:40,359
Speaker 4: our technology we developed again in house. You know, we

1024
00:49:40,400 --> 00:49:43,120
Speaker 4: think it's a really modern and dynamic technology because it'll

1025
00:49:43,120 --> 00:49:45,680
Speaker 4: trade on a daily basis. This isn't a monthly thing

1026
00:49:45,920 --> 00:49:48,960
Speaker 4: or or some like set rigid time. We can actually

1027
00:49:49,040 --> 00:49:52,000
Speaker 4: take take advantage of some of the the inter day

1028
00:49:52,040 --> 00:49:55,360
Speaker 4: volatility and intra month volatility that we've been seeing lately.

1029
00:49:55,719 --> 00:49:58,120
Speaker 4: And so you know, it's a fast growing space for

1030
00:49:58,239 --> 00:50:00,480
Speaker 4: US where I think number one number two in the

1031
00:50:00,480 --> 00:50:04,360
Speaker 4: country on you know, direct indexing solutions. And to your

1032
00:50:04,400 --> 00:50:10,399
Speaker 4: point is it is helping individuals improve their tax outcomes. Now, internationally,

1033
00:50:10,840 --> 00:50:13,640
Speaker 4: you know, direct indexing was a little bit more you know,

1034
00:50:13,719 --> 00:50:17,319
Speaker 4: this customization thing, right, and we do still see that

1035
00:50:17,360 --> 00:50:20,080
Speaker 4: with some of our institutional accounts in the US. It's

1036
00:50:20,080 --> 00:50:21,840
Speaker 4: really a tax story. Internationally, it's a little bit more

1037
00:50:21,840 --> 00:50:22,680
Speaker 4: of a customization story.

1038
00:50:22,719 --> 00:50:24,680
Speaker 2: Well, when you say customization, I tend to think of

1039
00:50:24,760 --> 00:50:30,080
Speaker 2: value driven. So jim O'Shaughnessy told the story of I

1040
00:50:30,120 --> 00:50:32,960
Speaker 2: think they were managing money for the New York Bishop's

1041
00:50:33,520 --> 00:50:37,239
Speaker 2: retirement plan. And of course if you're managing money for

1042
00:50:37,280 --> 00:50:41,880
Speaker 2: the Catholic bishops, no abortificance and no companies that are

1043
00:50:41,920 --> 00:50:46,239
Speaker 2: paying for things like that, like they're following a specific

1044
00:50:46,280 --> 00:50:49,759
Speaker 2: set of These are our five key principles and we

1045
00:50:49,880 --> 00:50:53,359
Speaker 2: can't violate them and express that in a portfolio.

1046
00:50:53,360 --> 00:50:55,279
Speaker 3: You can do that with direct index.

1047
00:50:55,520 --> 00:50:59,239
Speaker 4: Technology allows customization and that that's really what we're talking

1048
00:50:59,280 --> 00:51:01,480
Speaker 4: about there is there's a customization based on that in

1049
00:51:01,520 --> 00:51:05,120
Speaker 4: that sense values driven and investing, and that technology has

1050
00:51:05,200 --> 00:51:07,680
Speaker 4: unlocked that. And because maybe one size doesn't fit all,

1051
00:51:08,040 --> 00:51:09,880
Speaker 4: and so now that we have that technology, you can

1052
00:51:09,920 --> 00:51:12,680
Speaker 4: develop specific strategies, as you know, to drive the outcomes

1053
00:51:12,680 --> 00:51:14,319
Speaker 4: and the exposures that people are looking for.

1054
00:51:14,400 --> 00:51:16,359
Speaker 2: So look around the corner for me, what are some

1055
00:51:16,400 --> 00:51:19,560
Speaker 2: of the new technology Like ETFs are fairly well established,

1056
00:51:19,600 --> 00:51:23,520
Speaker 2: still not very well adapted, but that's coming along. What

1057
00:51:23,560 --> 00:51:26,400
Speaker 2: are some of the other technologies we're looking at down

1058
00:51:26,400 --> 00:51:29,560
Speaker 2: the road? Where are the next areas that are ripe

1059
00:51:29,640 --> 00:51:31,800
Speaker 2: for innovation and disruption?

1060
00:51:32,560 --> 00:51:34,839
Speaker 4: I think the client experience is going to be a

1061
00:51:34,880 --> 00:51:37,680
Speaker 4: big part of that. How frequently can you get that information?

1062
00:51:38,080 --> 00:51:41,080
Speaker 4: You know, one of the hallmarks of ETFs, of the

1063
00:51:41,120 --> 00:51:44,680
Speaker 4: separate managed accounts that we've talked about direct indexing is transparency.

1064
00:51:45,239 --> 00:51:48,000
Speaker 4: It used to be buyer beware. The you know, the

1065
00:51:48,000 --> 00:51:50,560
Speaker 4: financial services company and their Ivory tower had more information

1066
00:51:50,600 --> 00:51:52,719
Speaker 4: than you, and so buyer beware. Now it's the other

1067
00:51:52,760 --> 00:51:56,960
Speaker 4: way around. Investors have more information available to them than

1068
00:51:57,040 --> 00:51:58,840
Speaker 4: ever before. It's a bit like you know here in

1069
00:51:58,840 --> 00:52:01,040
Speaker 4: New York City. You know, you go to a restaurant,

1070
00:52:01,280 --> 00:52:03,080
Speaker 4: you pull up you know, your favorite app, and you

1071
00:52:03,120 --> 00:52:05,000
Speaker 4: won't go to a restaurant it's got less than four stars,

1072
00:52:05,040 --> 00:52:06,920
Speaker 4: it's got less than a thousand people that have rated it.

1073
00:52:06,960 --> 00:52:10,000
Speaker 4: You have that information as a consumer available to you.

1074
00:52:10,320 --> 00:52:13,040
Speaker 4: And that's true in the financial services industry as well.

1075
00:52:13,400 --> 00:52:16,360
Speaker 4: And so that's that's the thing that's really exciting to me,

1076
00:52:16,600 --> 00:52:20,600
Speaker 4: is that the transparency that we're delivering to investors is

1077
00:52:20,640 --> 00:52:22,680
Speaker 4: helping them get that outcomes and they're and they're more

1078
00:52:23,000 --> 00:52:25,520
Speaker 4: they're more aware of that than ever and I think

1079
00:52:25,560 --> 00:52:29,440
Speaker 4: that's just going to continue to increase. We acknowledge that

1080
00:52:29,800 --> 00:52:32,680
Speaker 4: we need to be providing real time information we acknowledge

1081
00:52:32,680 --> 00:52:34,160
Speaker 4: that holdings need to be on the website on a

1082
00:52:34,160 --> 00:52:36,960
Speaker 4: real time basis. If you want access to portfolio managers,

1083
00:52:36,960 --> 00:52:39,080
Speaker 4: they're more than willing to talk. That's the type of

1084
00:52:39,080 --> 00:52:41,040
Speaker 4: innovation that I think we're going to be seeing.

1085
00:52:41,880 --> 00:52:43,440
Speaker 3: I want to throw a curveball out.

1086
00:52:43,440 --> 00:52:48,839
Speaker 2: Okay, you've spoken about doing the dirty work early in

1087
00:52:48,880 --> 00:52:52,160
Speaker 2: your career. Yeah, which I think of as you know,

1088
00:52:52,280 --> 00:52:54,759
Speaker 2: get the reps in, do the heavy lifting. But but

1089
00:52:55,000 --> 00:52:57,840
Speaker 2: tell us about the dirty work and how that helped

1090
00:52:57,960 --> 00:52:59,400
Speaker 2: shape your work ethic today.

1091
00:52:59,520 --> 00:53:01,719
Speaker 4: You got to ain't the fence, Mister Miyagui told us

1092
00:53:01,800 --> 00:53:05,040
Speaker 4: right like, there was a method to the madness. There

1093
00:53:05,560 --> 00:53:07,960
Speaker 4: A lot of times I'll talk to people and it's

1094
00:53:08,280 --> 00:53:09,960
Speaker 4: you know, they're they're, oh, what about this? I'm trying

1095
00:53:10,000 --> 00:53:12,000
Speaker 4: to I'm thinking about my career, and basically what they're

1096
00:53:12,040 --> 00:53:13,759
Speaker 4: asking me is what's the minimum I can do to

1097
00:53:13,760 --> 00:53:16,480
Speaker 4: get promoted or get paid more money? Wax wax on,

1098
00:53:16,560 --> 00:53:19,160
Speaker 4: wax off, right, right, And of course we want those

1099
00:53:19,160 --> 00:53:21,520
Speaker 4: outcomes for people, But if you get your mindset to

1100
00:53:21,640 --> 00:53:24,120
Speaker 4: the spot of I want to deliver excellence, I want

1101
00:53:24,120 --> 00:53:27,000
Speaker 4: to do this job the best that I can and

1102
00:53:27,120 --> 00:53:30,439
Speaker 4: whether that's just wrapping up the day's reports, whether that's

1103
00:53:30,440 --> 00:53:32,480
Speaker 4: taking your call notes, whether that's making sure that you're

1104
00:53:32,600 --> 00:53:36,359
Speaker 4: entering your CRM information correctly and accurately. There's all sorts

1105
00:53:36,400 --> 00:53:39,000
Speaker 4: of things that you can do excellently. And we see

1106
00:53:39,040 --> 00:53:42,440
Speaker 4: these people all the time. Whether it's professional athletes or

1107
00:53:42,480 --> 00:53:44,480
Speaker 4: whether it's some of the great artists that we're aware of.

1108
00:53:45,120 --> 00:53:48,560
Speaker 4: These are people that want to be professionals and excellent

1109
00:53:48,560 --> 00:53:50,279
Speaker 4: at what they do. They're not doing the minimum to

1110
00:53:50,280 --> 00:53:52,920
Speaker 4: get promoted to the next thing. And so that to

1111
00:53:52,920 --> 00:53:54,360
Speaker 4: me is the dirty work you got to do. You

1112
00:53:54,480 --> 00:53:56,239
Speaker 4: got to do the work, and you've got to be

1113
00:53:56,239 --> 00:53:58,239
Speaker 4: willing to push yourself to do that work, have the

1114
00:53:58,280 --> 00:54:01,719
Speaker 4: discipline and carry carry through on that. You don't get

1115
00:54:01,719 --> 00:54:03,840
Speaker 4: the virtue if you haven't done the hard work. And

1116
00:54:04,239 --> 00:54:06,759
Speaker 4: so you have to put in the work to get

1117
00:54:06,840 --> 00:54:09,799
Speaker 4: the outcome that you want. And what you'll find is

1118
00:54:10,600 --> 00:54:14,080
Speaker 4: that those things increase I found exponentially. And so once

1119
00:54:14,120 --> 00:54:16,400
Speaker 4: you start to put in the work, it starts to

1120
00:54:16,400 --> 00:54:17,920
Speaker 4: grow exponentially and you start to see that.

1121
00:54:18,280 --> 00:54:21,600
Speaker 2: Are you suggesting that hard work compounds over time?

1122
00:54:21,719 --> 00:54:24,120
Speaker 4: I absolutely think I think it does. And I'll add

1123
00:54:24,200 --> 00:54:27,360
Speaker 4: to that, you build your talent stack over time. And

1124
00:54:27,680 --> 00:54:30,520
Speaker 4: I've referred to that phrase throughout the conversation. But you know,

1125
00:54:30,520 --> 00:54:32,080
Speaker 4: I had the good opportunity to have a lot of

1126
00:54:32,400 --> 00:54:36,520
Speaker 4: client conversations. Then I learned international, Then I learned you know,

1127
00:54:36,640 --> 00:54:39,160
Speaker 4: how to work with people that think about things differently

1128
00:54:39,200 --> 00:54:41,640
Speaker 4: than you do. Like, once you add up all these things,

1129
00:54:42,120 --> 00:54:44,760
Speaker 4: you you can make connections and you can think about

1130
00:54:44,800 --> 00:54:46,560
Speaker 4: things in a way that maybe people that don't have

1131
00:54:46,600 --> 00:54:48,479
Speaker 4: the same talent stack haven't thought about.

1132
00:54:48,680 --> 00:54:51,880
Speaker 2: Huh, really really really fascinating stuff. So let's jump to

1133
00:54:51,960 --> 00:54:55,759
Speaker 2: our favorite questions. We ask all of our guests starting

1134
00:54:55,800 --> 00:54:58,520
Speaker 2: with what's been keeping you entertaining these days? What are

1135
00:54:58,520 --> 00:55:00,839
Speaker 2: you watching or listening to? Okay, so, oh the way,

1136
00:55:00,880 --> 00:55:06,040
Speaker 2: this is a pandemic holdover question that I keep finding.

1137
00:55:06,239 --> 00:55:11,000
Speaker 4: Everybody's still stuff. Okay, so let's keep with the theme.

1138
00:55:11,239 --> 00:55:14,520
Speaker 4: And and so a big, a big thread that's pulled

1139
00:55:14,520 --> 00:55:20,560
Speaker 4: through our conversation is innovation and music. So the defiant

1140
00:55:20,600 --> 00:55:24,240
Speaker 4: ones that you haven't seen it, I'm recognizing your faces.

1141
00:55:24,360 --> 00:55:26,319
Speaker 3: No, I've seen the preview for.

1142
00:55:26,320 --> 00:55:30,520
Speaker 4: It, Jimmy Ivine and doctor Dre. So the you know

1143
00:55:30,520 --> 00:55:31,400
Speaker 4: you want to talk about like.

1144
00:55:31,440 --> 00:55:33,480
Speaker 2: An Apple documentary, Well, you.

1145
00:55:33,520 --> 00:55:36,280
Speaker 4: Think about these two individuals. They basically have produced almost

1146
00:55:36,320 --> 00:55:39,120
Speaker 4: every artist that we've heard for the last twenty years. Right,

1147
00:55:39,719 --> 00:55:43,360
Speaker 4: it's first hand interviews with them and their artists talking about, Oh,

1148
00:55:43,440 --> 00:55:44,840
Speaker 4: you know, Tom Petty, what was it like when you

1149
00:55:44,880 --> 00:55:46,600
Speaker 4: were singing that song and Jimmy Ivine was in the

1150
00:55:46,600 --> 00:55:48,520
Speaker 4: studio with you yelling at you and do it again

1151
00:55:48,600 --> 00:55:50,840
Speaker 4: in another cut? Or what about what about this? Or

1152
00:55:51,000 --> 00:55:52,840
Speaker 4: you know doctor Dre when you were in Compton in

1153
00:55:53,000 --> 00:55:55,399
Speaker 4: la early on, like, you know, tell me about what

1154
00:55:55,440 --> 00:55:58,759
Speaker 4: the first record scratch on a hip hop album sounded like. Right,

1155
00:55:58,760 --> 00:56:01,239
Speaker 4: So they're talking about that now. It culminates in the

1156
00:56:01,239 --> 00:56:04,280
Speaker 4: building of the Beats headphones, which was of course acquired

1157
00:56:04,320 --> 00:56:07,960
Speaker 4: by app. Right, that's even another meta thing for me

1158
00:56:08,000 --> 00:56:12,160
Speaker 4: as well. So there's this amazing creative juice they're grinding

1159
00:56:12,160 --> 00:56:13,680
Speaker 4: it out. Both of them tell a story of like

1160
00:56:13,719 --> 00:56:17,160
Speaker 4: grinding it out, they create amazing music, and then it

1161
00:56:17,200 --> 00:56:19,160
Speaker 4: culminates with hey, wait a second, like there's not high

1162
00:56:19,239 --> 00:56:21,439
Speaker 4: quality headphones out there for people to Okay, so that's

1163
00:56:21,480 --> 00:56:24,480
Speaker 4: one the defiant ones. It's not on Netflix anymore, so

1164
00:56:24,480 --> 00:56:25,840
Speaker 4: you've got to go to Amazon Prime and buy it

1165
00:56:25,880 --> 00:56:31,000
Speaker 4: and buy it there at least sas Rogue Warriors. Another

1166
00:56:31,120 --> 00:56:32,000
Speaker 4: one on two for two.

1167
00:56:32,200 --> 00:56:33,080
Speaker 3: I never heard of that.

1168
00:56:33,000 --> 00:56:37,920
Speaker 4: One, sas Rogue Warriors World War two. The UK builds

1169
00:56:37,960 --> 00:56:41,960
Speaker 4: an off record kind of rogue Warrior group, the original

1170
00:56:42,040 --> 00:56:43,920
Speaker 4: kind of Seal Team six. Think about them like this,

1171
00:56:44,120 --> 00:56:47,480
Speaker 4: and these guys they start in North Africa and they

1172
00:56:47,480 --> 00:56:50,680
Speaker 4: would do secret missions overnight. They'd go on to German

1173
00:56:50,880 --> 00:56:53,879
Speaker 4: aircraft camps and blow up planes overnight, or they'd really

1174
00:56:53,880 --> 00:56:56,480
Speaker 4: disrupt their fuel flow, or they would do these things

1175
00:56:56,480 --> 00:56:59,319
Speaker 4: that were more targeted strikes to disrupt the flow. So

1176
00:56:59,480 --> 00:57:03,160
Speaker 4: sas Rogue Warriors, I think that's maybe is a BBC.

1177
00:57:03,360 --> 00:57:05,279
Speaker 4: It's more international. You got to get one of these

1178
00:57:05,719 --> 00:57:07,719
Speaker 4: one of these other apps to watch that one. Those

1179
00:57:07,760 --> 00:57:10,239
Speaker 4: are the things I'm I'm watching. I like to listen

1180
00:57:10,239 --> 00:57:13,160
Speaker 4: to audiobooks, so right now I'm listening, like listening to

1181
00:57:13,200 --> 00:57:16,520
Speaker 4: Go Like Hell, which was four versus Ferrari is the

1182
00:57:16,520 --> 00:57:18,880
Speaker 4: movie that you've seen, but that was great. It's based

1183
00:57:18,920 --> 00:57:21,920
Speaker 4: on this book, and how's the book. It's excellent. It

1184
00:57:22,520 --> 00:57:25,080
Speaker 4: goes to many many different layers of detail than you

1185
00:57:25,120 --> 00:57:28,120
Speaker 4: can get across in the In the movie, quotes Fromenzo

1186
00:57:28,200 --> 00:57:30,040
Speaker 4: Ferrari about you know you want to go fast find

1187
00:57:30,040 --> 00:57:32,479
Speaker 4: good competition, find somebody that's willing to die out there,

1188
00:57:32,600 --> 00:57:34,520
Speaker 4: like these are these are great things right? That are

1189
00:57:34,560 --> 00:57:37,320
Speaker 4: that are driving and innovation there as well. Right, So

1190
00:57:37,360 --> 00:57:40,120
Speaker 4: Shelby comes up with the GT forty, which I just

1191
00:57:40,120 --> 00:57:42,080
Speaker 4: took my son to a museum over the last week

1192
00:57:42,120 --> 00:57:43,760
Speaker 4: and we were seeing one of the original GT four

1193
00:57:44,040 --> 00:57:44,760
Speaker 4: forty of courses.

1194
00:57:44,800 --> 00:57:46,960
Speaker 3: The shockingly that people don't really.

1195
00:57:47,840 --> 00:57:50,360
Speaker 4: Forty inches tall, and one of the drivers was was

1196
00:57:50,400 --> 00:57:52,080
Speaker 4: six foot two. So they built a little bubble the

1197
00:57:52,160 --> 00:57:54,880
Speaker 4: game next verse in over his over his head on that.

1198
00:57:54,840 --> 00:57:57,400
Speaker 2: Right, just so the helmet will fit into thought.

1199
00:57:57,520 --> 00:57:59,800
Speaker 4: Just so the helmet would would fit on that. Now

1200
00:57:59,800 --> 00:58:03,320
Speaker 4: this is interesting, right, So Ferrari Independent Auto shopped in

1201
00:58:03,440 --> 00:58:06,280
Speaker 4: you know, northern Italy, and then Big Ford. You know,

1202
00:58:06,320 --> 00:58:08,880
Speaker 4: they're telling this story of like a big corporate bureaucracy

1203
00:58:08,880 --> 00:58:10,880
Speaker 4: and all these things and how do they compete? And

1204
00:58:10,920 --> 00:58:13,320
Speaker 4: then here's here's my last book for you, Barry, How

1205
00:58:13,440 --> 00:58:14,680
Speaker 4: Music Got Free.

1206
00:58:14,960 --> 00:58:16,960
Speaker 2: I recall seeing the title go by.

1207
00:58:17,000 --> 00:58:19,920
Speaker 4: How Music Got Free? So to really bring all this

1208
00:58:19,960 --> 00:58:23,080
Speaker 4: home for us today. So the MP three, in fact,

1209
00:58:23,080 --> 00:58:25,600
Speaker 4: the MP one, MP two, MP three and MP four

1210
00:58:26,440 --> 00:58:29,520
Speaker 4: are invented in Germany. What they discover is that the

1211
00:58:29,600 --> 00:58:32,360
Speaker 4: human ear can't understand the fidelity of the MP four,

1212
00:58:32,440 --> 00:58:34,560
Speaker 4: so they don't need that much information, so they drop

1213
00:58:34,600 --> 00:58:37,439
Speaker 4: it back down to an MP three. The MP three

1214
00:58:37,720 --> 00:58:41,640
Speaker 4: then launches things like ready Napster. Right, So now Napster

1215
00:58:41,760 --> 00:58:43,840
Speaker 4: is out there, and all of a sudden, the entire

1216
00:58:44,000 --> 00:58:47,080
Speaker 4: music industry, the bottom has fallen out on all of

1217
00:58:47,160 --> 00:58:50,320
Speaker 4: their revenues because instead of spending eighteen dollars to buy

1218
00:58:50,320 --> 00:58:53,840
Speaker 4: a CD, everybody is stealing music off of Napster. And

1219
00:58:53,920 --> 00:58:56,240
Speaker 4: this is this is the parallel to the conversation we

1220
00:58:56,240 --> 00:58:59,360
Speaker 4: were having earlier the delivery mechanism. We're all listening to

1221
00:58:59,360 --> 00:59:01,560
Speaker 4: the same music. We're also listening to the same rock

1222
00:59:01,560 --> 00:59:04,760
Speaker 4: and roll, but this invention. So it tells the story

1223
00:59:04,800 --> 00:59:07,040
Speaker 4: of you know, guys that are working at the pressing

1224
00:59:07,080 --> 00:59:09,760
Speaker 4: plan of the CD sneaking out, sneaking the major the

1225
00:59:09,920 --> 00:59:11,919
Speaker 4: what do they call them, the master excuse me right

1226
00:59:12,040 --> 00:59:15,520
Speaker 4: out ripping it onto the computer and throwing it onto Napster.

1227
00:59:15,600 --> 00:59:17,600
Speaker 4: And then it talks about the Sony executive sitting here

1228
00:59:17,640 --> 00:59:20,080
Speaker 4: in midtown saying, oh my gosh, my revenues are down

1229
00:59:20,160 --> 00:59:23,360
Speaker 4: forty percent this year because nobody's buying CDs. Anymore, and

1230
00:59:23,400 --> 00:59:27,280
Speaker 4: it informs like this real life story of how the

1231
00:59:27,360 --> 00:59:28,560
Speaker 4: entire music industry.

1232
00:59:28,200 --> 00:59:31,160
Speaker 2: Got, how music got free, how music got I'm definitely

1233
00:59:32,480 --> 00:59:35,760
Speaker 2: tell us about your mentors who helped shape your career.

1234
00:59:36,080 --> 00:59:38,200
Speaker 4: You know, so I mentioned my dad, you know that

1235
00:59:38,200 --> 00:59:40,040
Speaker 4: that you know, I learned so much from him and

1236
00:59:40,080 --> 00:59:41,840
Speaker 4: he guided in that way. I was fortunate my mom

1237
00:59:41,920 --> 00:59:43,840
Speaker 4: and dad, you know, very loving home, and we were

1238
00:59:43,880 --> 00:59:46,000
Speaker 4: you know, we were great there. You know, we talked

1239
00:59:46,000 --> 00:59:49,439
Speaker 4: about Ben Fulton, we talked about Bruce Bond to stick

1240
00:59:49,440 --> 00:59:51,280
Speaker 4: with the Bees, Bobby Brooks, like these are these are

1241
00:59:51,320 --> 00:59:53,000
Speaker 4: individuals that are in the industry that I've got the

1242
00:59:53,080 --> 00:59:55,800
Speaker 4: utmost respect for. I've also been fortunate to have some

1243
00:59:55,840 --> 01:00:00,040
Speaker 4: really good bosses throughout the years that I learned a

1244
01:00:00,040 --> 01:00:02,280
Speaker 4: little bit something different from each of them. You know,

1245
01:00:02,280 --> 01:00:04,919
Speaker 4: Bruce is an incredible entrepreneur. Bends an incredible product person

1246
01:00:05,000 --> 01:00:08,000
Speaker 4: and an entrepreneur. In the UK, I'd work with some

1247
01:00:08,040 --> 01:00:10,440
Speaker 4: people that had consulting backgrounds, and you know, at the

1248
01:00:10,440 --> 01:00:12,720
Speaker 4: time I wasn't so sure, but you know, the way

1249
01:00:12,720 --> 01:00:17,560
Speaker 4: that they think thoroughly and logically is a real differentiator.

1250
01:00:17,720 --> 01:00:19,439
Speaker 4: And you know, and then some of the client people

1251
01:00:19,480 --> 01:00:21,320
Speaker 4: that I've worked with over the way that they can

1252
01:00:21,320 --> 01:00:26,080
Speaker 4: connect with people and and really build rapport and ultimately

1253
01:00:26,120 --> 01:00:28,959
Speaker 4: trust those I've been very fortunate to have those people

1254
01:00:28,960 --> 01:00:29,360
Speaker 4: in my life.

1255
01:00:29,360 --> 01:00:30,080
Speaker 3: Some great names.

1256
01:00:30,320 --> 01:00:33,520
Speaker 2: Our final two questions, what sort of advice would you

1257
01:00:33,560 --> 01:00:36,840
Speaker 2: give to a recent college grad interested in a career

1258
01:00:36,880 --> 01:00:39,400
Speaker 2: and either investing or finance.

1259
01:00:39,600 --> 01:00:41,240
Speaker 4: You know, we talked a little bit about this, but

1260
01:00:41,280 --> 01:00:44,480
Speaker 4: if you're more likely, if you're fresh out of college,

1261
01:00:45,040 --> 01:00:49,240
Speaker 4: you are rich in time and potentially poor in life,

1262
01:00:50,160 --> 01:00:54,160
Speaker 4: and so that is a distinct advantage where you can

1263
01:00:54,920 --> 01:00:58,440
Speaker 4: take that time and invest in yourself develop that stack

1264
01:00:58,520 --> 01:01:01,240
Speaker 4: that we talked about earlier. The other thing that I

1265
01:01:01,280 --> 01:01:04,200
Speaker 4: would say is I wouldn't be a Goldman if I

1266
01:01:04,200 --> 01:01:06,440
Speaker 4: didn't start at Power Shares years ago, and I had

1267
01:01:06,440 --> 01:01:09,400
Speaker 4: the opportunity to be a small fish in a small pond,

1268
01:01:09,920 --> 01:01:11,520
Speaker 4: and then I grew to be a medium sized fish

1269
01:01:11,520 --> 01:01:13,120
Speaker 4: and a small pond, and then I had an opportunity

1270
01:01:13,120 --> 01:01:14,360
Speaker 4: to go to some of these other firms that I've

1271
01:01:14,360 --> 01:01:16,840
Speaker 4: been and now ultimately at Goldmansacs. And so I do

1272
01:01:16,840 --> 01:01:19,360
Speaker 4: think sometimes people look for the biggest pond and the

1273
01:01:19,360 --> 01:01:22,240
Speaker 4: biggest brand, and I think if you can get into

1274
01:01:22,240 --> 01:01:25,560
Speaker 4: a small pond, you get exposure to more skills in

1275
01:01:26,000 --> 01:01:27,919
Speaker 4: a slightly different way, and you can build that skill

1276
01:01:27,960 --> 01:01:30,560
Speaker 4: stack in a different way. You know. I often find

1277
01:01:30,560 --> 01:01:32,040
Speaker 4: people you know they want to start on the you know,

1278
01:01:32,080 --> 01:01:34,800
Speaker 4: the analyst programming and go. That's great. And firms like

1279
01:01:34,840 --> 01:01:37,000
Speaker 4: ours train people and they do an amazing job. But

1280
01:01:37,040 --> 01:01:40,560
Speaker 4: there are nonlinear ways to access some of these things.

1281
01:01:40,720 --> 01:01:43,040
Speaker 2: And our final question, what do you know about the

1282
01:01:43,080 --> 01:01:49,000
Speaker 2: world of investing ETF's products, innovation and disruption today that

1283
01:01:49,040 --> 01:01:51,600
Speaker 2: would have been useful thirty years ago when you were

1284
01:01:51,600 --> 01:01:52,560
Speaker 2: first starting out.

1285
01:01:53,160 --> 01:01:55,720
Speaker 4: Ultimately comes back to being a people business. You can

1286
01:01:55,760 --> 01:01:57,800
Speaker 4: have the best innovation, you can have the best product,

1287
01:01:57,880 --> 01:02:00,400
Speaker 4: you can do all like the biggest marketing campaign, all like.

1288
01:02:01,320 --> 01:02:04,480
Speaker 4: It's all about keeping the purpose at the center as

1289
01:02:04,480 --> 01:02:07,000
Speaker 4: your north star of what you're doing. Outcomes for investors

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01:02:07,000 --> 01:02:09,760
Speaker 4: we talked about this help them achieve their financial goals,

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01:02:09,760 --> 01:02:13,160
Speaker 4: retire with dignity, pay for healthcare, keeping that at the

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01:02:13,200 --> 01:02:17,480
Speaker 4: center and making sure that you're aligned with your purpose

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01:02:18,120 --> 01:02:21,120
Speaker 4: around the people. I've been so fortunate, you know, you

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01:02:21,160 --> 01:02:23,240
Speaker 4: and I have been friends now for going on a decade,

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01:02:23,280 --> 01:02:26,640
Speaker 4: little bit more probably others in the industry. It's the

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01:02:26,760 --> 01:02:29,760
Speaker 4: people that really make this thing, this thing go. You know,

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01:02:29,800 --> 01:02:31,480
Speaker 4: I know that sounds kind of cliche, but twenty five

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01:02:31,520 --> 01:02:33,120
Speaker 4: years ago, when you're just trying to make it happen,

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01:02:33,160 --> 01:02:35,680
Speaker 4: you know, maybe it's this next thing and it's really

1300
01:02:35,680 --> 01:02:38,080
Speaker 4: sitting down, listening and connecting with people.

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Speaker 2: I think that's a great answer. We have been speaking

1302
01:02:41,840 --> 01:02:45,280
Speaker 2: with Brian Lake. He is a partner and Chief Transformation

1303
01:02:45,360 --> 01:02:51,000
Speaker 2: Officer at Goldman Sachs Asset Management. If you enjoy this conversation,

1304
01:02:51,200 --> 01:02:53,000
Speaker 2: well be sure and check you out any of the

1305
01:02:53,120 --> 01:02:57,520
Speaker 2: five hundred somewhat we've done over the past eleven years.

1306
01:02:57,920 --> 01:03:02,480
Speaker 2: You can find those at iTunes, Spotify, YouTube, Bloomberg, wherever

1307
01:03:02,600 --> 01:03:06,000
Speaker 2: you find your favorite podcasts, And be sure and check

1308
01:03:06,000 --> 01:03:10,680
Speaker 2: out my new book How Not to Invest The ideas, numbers,

1309
01:03:10,680 --> 01:03:14,400
Speaker 2: and behaviors that destroy wealth and how to avoid them

1310
01:03:14,640 --> 01:03:17,760
Speaker 2: How Not to Invest, wherever you buy your books at.

1311
01:03:18,560 --> 01:03:20,240
Speaker 2: I would be remiss if I do not thank the

1312
01:03:20,240 --> 01:03:23,640
Speaker 2: Cracked team who helps him put these conversations together each week.

1313
01:03:23,960 --> 01:03:28,440
Speaker 2: John Wasserman is my audio engineer. Anna Luke is my producer.

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01:03:28,720 --> 01:03:33,400
Speaker 2: Sean Russo is my researcher. I'm Barry Reynolds. You've been

1315
01:03:33,440 --> 01:03:42,440
Speaker 2: listening to Masters in Business on Bloomberg Radio,