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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 an extra special guest.

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Speaker 2: Kristin Olsen is Goldman Sachs's global head of Alternatives for Wealth.

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Speaker 2: She's a self described Goldman Sachs lifer. She went to

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Speaker 2: the firm straight out of Georgetown twenty seven years ago.

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Speaker 3: She's been running the Alts.

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Speaker 2: Group for the past twenty four years. There aren't many

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Speaker 2: people in the world of either wealth management or alternatives

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Speaker 2: that are as knowledgeable and experienced as Kristin is. I

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Speaker 2: thought this conversation about everything from private equity to private

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Speaker 2: credit to real assets including real estate and infrastructure investing

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Speaker 2: was absolutely fascinating, and I think you will also with

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Speaker 2: no further ado my conversation with Kristin Olsen. Kristin Olsen,

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Speaker 2: Welcome to Bloomberg.

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Speaker 4: Thanks for having me, Barry.

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Speaker 2: Well, I've been looking forward to having this conversation. Alts

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Speaker 2: are obviously a super hot topic these days, but before

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Speaker 2: we get into that, let's talk a little bit about

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Speaker 2: your background. You arrived at Goldman Sachs directly from undergraduated Georgetown.

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Speaker 2: What led you to finance and what led you to Goldman.

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Speaker 5: So I would say, you know, corraduating from Georgetown, I

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Speaker 5: actually wasn't sure what I want to do. I was

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Speaker 5: interested in corporate finance, but I was particularly drawn to

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Speaker 5: the idea of joining a big analyst class with great

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Speaker 5: training at one of the big investment banks. And then

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Speaker 5: I'd say I was fortunate enough through the in unity

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Speaker 5: process to land at Goldman Sacks and that turned out

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Speaker 5: to be a fantastic place to start my career in

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Speaker 5: investment banking in the Financial Institutions group.

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Speaker 2: And you started as an analyst in investment banking, did

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Speaker 2: you go the whole CFA route one, two, and three.

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Speaker 4: Nope, just two years.

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Speaker 5: I got my CFA as an analyst at Goldman Sachs.

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Speaker 5: That was my that was my training, two years in FIG.

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Speaker 2: And then how did you end up pivoting to ALTS?

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Speaker 2: It seems so different to go from transactional banking, especially

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Speaker 2: when you started heading right into two thousand.

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Speaker 3: What was the appeal of ALT?

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Speaker 5: Well, it's funny I didn't go directly into ALTS. It

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Speaker 5: took a little segue. So in two thousand, as a

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Speaker 5: third year analyst, I wanted to do something different. It's

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Speaker 5: hard to think. Way back then, that was the dawn

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Speaker 5: of the Internet, and you know, everyone was going to

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Speaker 5: work on different dot coms, different startups, and I took

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Speaker 5: a little bit of a safer route and decided to

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Speaker 5: work on the Goldman dot Com.

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Speaker 2: Project, which is what which was really their own build

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Speaker 2: out of their own website exactly.

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Speaker 5: That's how long ago it was, if you think about it,

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Speaker 5: we didn't have an online ability for our clients to

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Speaker 5: access their accounts, to trade stocks, to access information as.

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Speaker 2: Late as two thousand, Hey maybe we should get a website.

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Speaker 4: That was the start of it.

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Speaker 5: And also thinking about what kind of business we could

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Speaker 5: evolve around self directed investors going to Goldman dot com

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Speaker 5: versus at that time, E Trades, schwab right, all the

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Speaker 5: online access that was happening, and so I decided to

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Speaker 5: spend my third year focused on that business endeavor, and

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Speaker 5: then that led right to the DOCM bubble bursting, which was,

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Speaker 5: you know, pretty much I was pretty much done with

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Speaker 5: my third year analyst program.

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Speaker 4: I had a few more months.

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Speaker 5: That was kind of February March of one, and so

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Speaker 5: when that happened, they went to the you know, US

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Speaker 5: poor third year analysts and said, you've got a few

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Speaker 5: more months on your program, why don't you move into

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Speaker 5: this investment management division at Goldman Sachs, which I knew

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Speaker 5: nothing about at the time. And you're going to interview

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Speaker 5: with a bunch of people. And it was sort of

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Speaker 5: a group interview. And this is funny, but.

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Speaker 2: Meaning you with a bunch of people or what person

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Speaker 2: with a bunch of people.

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Speaker 5: At a bunch of analysts? Wow, and funny story. My

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Speaker 5: mentor and longtime boss. I heard this after the fact.

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Speaker 5: We'll say I won Kristen and the analyst lottery or

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Speaker 5: the analyst draft. He drafted me. And I didn't know

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Speaker 5: anything about alternatives. I didn't know anything about investment management.

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Speaker 5: I didn't know anything about wealth management. And the seat

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Speaker 5: I got put into at the time was called our

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Speaker 5: Special Investments group. So that's what we called alternatives back then.

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Speaker 5: Special investment.

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Speaker 3: Huh.

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Speaker 2: Really interesting? And to be clear, Goldman has long had

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Speaker 2: a reputation as very savvy traders and very savvy participants

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Speaker 2: in public markets, and very very savvy in terms of seating. Hey,

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Speaker 2: we have this great trader, but he wants to leave

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Speaker 2: and start his own hedge fund. Let's be his prime

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Speaker 2: broker and let's see them and participate in the upside.

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Speaker 2: So I typically think of Goldman as a big public player.

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Speaker 2: This has been developing for you know, longer than you've

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Speaker 2: been there. What's the total assets that Goldman runs in

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Speaker 2: terms of privates.

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Speaker 4: Over five hundred million dollars.

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Speaker 3: That's real money.

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Speaker 5: Yeah, I mean, I think it's one of the things

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Speaker 5: that people don't realize, which is you talk about going

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Speaker 5: back twenty seven years ago. We've had a private investing

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Speaker 5: business going back well over three decades wow, and over

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Speaker 5: five hundred million assets today. We are one of the

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Speaker 5: largest managers of alternative assets.

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Speaker 4: So people don't know.

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Speaker 2: So how has this space changed over the twenty three

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Speaker 2: twenty four years you've been working in.

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Speaker 4: Alts incredibly, right?

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Speaker 5: I mean I think if you thought about the expansion

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Speaker 5: of the different asset classes that sit under alternatives, right,

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Speaker 5: So that's a broad word that describes lots of different

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Speaker 5: types of strategies.

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Speaker 2: Break it down for us, what are the key.

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Speaker 5: You were starting with hedge funds, So that's one sector.

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Speaker 5: But if you actually think about where we focus more,

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Speaker 5: it's much more on the private side than the public alls.

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Speaker 5: So if you think about under that umbrella, it's private equity.

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Speaker 5: But again, under private equity, let's think about the different

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Speaker 5: strategies there, everything from buy out through growth equity, through

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Speaker 5: venture capital, then the advent up a big private credit

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Speaker 5: asset class with an alternatives right, and even within that

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Speaker 5: everything from direct lending to hybrid capital solutions to distress right,

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Speaker 5: all of that falls under this private credit bucket. And

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Speaker 5: then you have real assets, real estate, infrastructure, and so

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Speaker 5: the asset class has become much more mature and much broader.

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Speaker 5: And then obviously we've seen tremendous inflows over the last

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Speaker 5: two three decades, and it's.

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Speaker 2: It's still a fraction of the size of the public market.

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Speaker 2: So I think that kind of gets lost in all

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Speaker 2: the enthusiasm. Well, it's relatively small compared to stocks, bonds,

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Speaker 2: or any other private.

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Speaker 5: Exactly, Yet a lot of the economy is driven by

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Speaker 5: private companies, right, And so I think that's part of

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Speaker 5: the impetus right now as we see kind of the

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Speaker 5: aperture opening for alternatives to individual investors, right, is how

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Speaker 5: do you tap into other sources of growth in the

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Speaker 5: economy if you're only investing in public markets? Right? So

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Speaker 5: I think there's an imperative for a lot of investors

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Speaker 5: to learn more and start to invest in private markets.

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Speaker 2: So some of the drivers of the growth in the

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Speaker 2: space are obviously privates are the majority of economic activity

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Speaker 2: in the country. At the same time, we've seen the

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Speaker 2: number of public companies shrinking between buybacks and mergers and

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Speaker 2: the limited number of IPOs, the total number of public

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Speaker 2: companies are becoming smaller as privates get bigger. I'm going

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Speaker 2: to ask you to speculate what might reverse that shrinkage

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Speaker 2: in the number of US public companies.

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Speaker 5: Well, look, I think high quality, high growth companies are

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Speaker 5: many of them are still going to revert back to

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Speaker 5: the public markets, right, and hopefully we're starting to see

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Speaker 5: a pick up an IPO activity. I think you'll see

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Speaker 5: some of the marque growth companies, tech companies, AI companies

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Speaker 5: that need massive amounts of capital to fund themselves.

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Speaker 3: There's no alternative to go back to.

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Speaker 4: The IPO markets, right.

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Speaker 5: But you've seen a lot of innovation in the private

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Speaker 5: markets to allow companies to say private for a lot longer, right,

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Speaker 5: And so I think average time to IPO now is

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Speaker 5: ten years. But what you're seeing the interim are secondary

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Speaker 5: funds doing things like continuation vehicles right to allow to

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Speaker 5: change the investor base but stay private for a.

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Speaker 4: Longer period of time.

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Speaker 5: There's just a lot more liquidity in private markets to

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Speaker 5: allow these companies to maybe not have to ever go

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Speaker 5: public if they don't want to.

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Speaker 2: You know, it felt like in the nineties there was

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Speaker 2: this mad rush to go public, very often with flimsy

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Speaker 2: business models, clicks and eyeball stuff like that, And now

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Speaker 2: it seems like we've swung the pendulum completely in the

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Speaker 2: other direction, where there is no rush to go. But

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Speaker 2: at a certain point, some of these companies get so large,

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Speaker 2: really there's no alternatives there. So at that point size

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Speaker 2: matters and you have to go public once you're looking

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Speaker 2: for Well, we just sort of take private for fifty

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Speaker 2: five billion, So maybe that IPO line is higher than

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Speaker 2: I imagine, maybe it's seventy five billion. Let's bring this

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Speaker 2: back to alternatives. What was it about the alternative investment

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Speaker 2: world that you found so compelling versus your early experience

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Speaker 2: with public stocks and bonds.

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Speaker 5: Well, I think one of the fortunate things that I

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Speaker 5: had with that pivot into alternatives was it was the

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Speaker 5: intersection of not just alternatives, but alternatives and wealth management, right,

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Speaker 5: thinking about how we deliver alternative investments to our Goldman

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Speaker 5: Sacks wealth management clients, right, and you think about the industry,

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Speaker 5: it really started alternatives focused on big institutions, pension funds, endowments,

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Speaker 5: sovereign wealth funds. But actually at Goldman Sachs, we've been

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Speaker 5: investing in alternatives for our wealth clients for over thirty years.

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Speaker 5: So that intersection has been really interesting, and obviously, you know,

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Speaker 5: fast forward to today. You know, the intersection of wealth

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Speaker 5: and alts is a topic that you hear about pretty

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Speaker 5: much every day.

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Speaker 3: Right.

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Speaker 2: When I think about the original institutions, you think of

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Speaker 2: the Yale model and David Swinson and what was that

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Speaker 2: the early nineteen eighties something like that, So that's forty

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Speaker 2: something years ago. You guys have been doing this for

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Speaker 2: thirty years. Not only has that market change, but there's

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Speaker 2: been strategy and culture changes over the same period. Explain

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Speaker 2: what you've observed and how you've helped shape this.

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Speaker 5: Yeah, So, look, I think the process of allocating to

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Speaker 5: alternatives for individual investors we've sort of honed and shaped

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Speaker 5: over the last you know, twenty five years. Part of

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Speaker 5: that starts with what do we advocate in terms of

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Speaker 5: how much our clients should have in alternatives. Right, So

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Speaker 5: go back to you know, when I started doing this

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Speaker 5: in two thousand and one, for a moderate risk client,

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Speaker 5: we already had at that point of twenty percent or

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Speaker 5: so allocation alternatives. Fast forward to today, we would tell

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Speaker 5: a moderate risk client they should have closer to twenty

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Speaker 5: seven percent of their.

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Speaker 2: I've heard some people say sixty twenty twenty is the

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Speaker 2: new sixty forty. Is that just a cute line or

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Speaker 2: is there anything.

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Speaker 3: To those No?

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Speaker 5: No, I think we're heading in that direction, right. I

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Speaker 5: think for the clients that can withstand the liquidity, which

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Speaker 5: we should talk about and understand kind of the risk

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Speaker 5: return of alternatives, the idea of having a twenty percent

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Speaker 5: or so allocation to alternatives is something I think we're

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Speaker 5: going to talk about a lot more across all levels

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Speaker 5: of investors.

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Speaker 2: And it sounds like given that even where current rates are,

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Speaker 2: it's still historically relatively low, which means we're not seeing

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Speaker 2: a lot of yield on the fixed income side of

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Speaker 2: the ledger. If we're talking sixty twenty twenty, it sounds

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Speaker 2: like all or most of the shift into alts are

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Speaker 2: coming from low yielding bonds.

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Speaker 5: So look, I think the twenty percent is the part

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Speaker 5: that I think I'm convicted on in the Alts piece.

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Speaker 5: The question of where you fund it from, I think

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Speaker 5: there's debate around, right, You've heard people say fifty thirty,

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Speaker 5: twenty sixty, twenty twenty. I think that depends a little

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Speaker 5: bit on where where are you going within alternatives?

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Speaker 4: Right?

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Speaker 5: Are you leaning into private credit to your point and

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Speaker 5: looking for a high single digit yield in private credit?

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Speaker 5: Then yes, then maybe you're funding it out of the

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Speaker 5: fixed income bucket, or if you're leaning more into equity

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Speaker 5: related strategies right, than maybe the funding source comes a

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Speaker 5: little more of equities.

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Speaker 4: Right. So I think the part that I'm focused on

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Speaker 4: is the.

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Speaker 5: Idea that people should have that twenty percent in there, right,

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Speaker 5: And then I think it's a bespoke conversation about is

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Speaker 5: it fifty or sixty equities?

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Speaker 4: You know, where's it fun from?

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Speaker 2: And last question about your career, you describe yourself as

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Speaker 2: a Goldman lifer. What's kept you there for almost three decades?

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Speaker 5: So the number one thing is definitely the people, right,

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Speaker 5: I mean going somewhere for twenty seven years, which I

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Speaker 5: never thought I would be doing. You know at the

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Speaker 5: same firm. It's all about the quality of the people

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Speaker 5: and the engagement. I think it's high quality people I

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Speaker 5: enjoy working with every day. I think the second part

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Speaker 5: is I think I got lucky falling into a really

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Speaker 5: interesting part of Goldman's Acts where I get to watch

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Speaker 5: the evolution of the alternative investment's asset class and the

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Speaker 5: growth of our wealth business. And I think that dynamism

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Speaker 5: of that has also kept me engaged for.

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Speaker 2: That interesting super fast growing and constantly evolving. I would

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Speaker 2: imagine that no week is the same over the past

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Speaker 2: twenty three twenty four years running ALTS exactly.

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Speaker 5: And I think the other interesting part about it is

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Speaker 5: when you have a dislocation in the markets in the world,

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Speaker 5: alternatives is actually a part of the portfolio where you

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Speaker 5: usually go to capitalize on that, Right.

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Speaker 4: So I think that's also really interesting. Right.

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Speaker 5: So you have a dislocation, well, let's look at special

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Speaker 5: situations or distress managers, right, or Wow, you have incredible

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Speaker 5: innovation happening in technology, You're going to do private growth

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Speaker 5: equity investing, right, And so I think that that's the

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Speaker 5: dynamism I'm talking about in terms of tapping into dislocations,

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Speaker 5: tapping into innovation.

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Speaker 4: A lot of that happens in the private market.

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Speaker 2: Really super interesting. Coming up, we continue our conversation with

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Speaker 2: Kristin Olsen, Goldman Sachs, Global head of Alternatives for Wealth

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Speaker 2: clients describing the Goldman Sachs alternative wealth experience.

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Speaker 3: I'm very rich Helts.

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Speaker 2: You're listening to Masters in Business on Bloomberg Radio.

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Speaker 3: I'm Barry red Halts.

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Speaker 2: You're listening to Masters in Business on Bloomberg Radio. My

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Speaker 2: extra special guest this week is Kristen Olsen. She is

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Speaker 2: Goldman's global head of Alternatives for Wealth. She's been with

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Speaker 2: the firm for twenty seven years, and she's been running

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Speaker 2: the old Capital Markets group for twenty four of those

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Speaker 2: twenty seven years. So we were talking earlier about sixty

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Speaker 2: twenty twenty or fifty thirty twenty. How do you think

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Speaker 2: about those allocation ranges? How do you determine what's the

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Speaker 2: best recommendation for an ultra high networth portfolio line portfolio

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Speaker 2: who maybe they're not all that familiar with alternatives, but

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Speaker 2: they want to diversify and have a little bit more

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Speaker 2: of non correlated returns.

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Speaker 5: So I think we are blessed at Goldman Sachs to

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Speaker 5: have the benefit of our CIO and our investment strategy group.

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Speaker 5: So that's sort of where we start writing a conversation

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Speaker 5: with a client, which is how much of the portfolio

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Speaker 5: should we have in alternatives? And we need to look

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Speaker 5: a lot of factors in terms of risk tolerance, tolerance

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Speaker 5: for illiquidity, what are they looking to derive from that

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Speaker 5: portion of the portfolio. But sort of as a starting point,

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Speaker 5: we talked a little about this earlier. We would talk

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Speaker 5: to a client who has a moderate risk appetite about

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Speaker 5: having twenty seven percent alternatives, and so we'd have that

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Speaker 5: conversation around does that feel right? Is that the number

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Speaker 5: that we want to get to? And then once we're there,

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Speaker 5: then it becomes how do we get there? Because that's

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Speaker 5: actually the really hard part and alternatives.

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Speaker 3: When you say how do we get there?

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Speaker 2: How do we over time allocate from some other bucket

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Speaker 2: into the Olds buck exactly.

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Speaker 5: And the complication is traditional private alternatives are capital commitments

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Speaker 5: that generally call down capital and make investments over five

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Speaker 5: to ten years, and so there's a lot of art

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Speaker 5: and science of how do you get to twenty seven percent?

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Speaker 5: In alt right, it's going to take you five, seven,

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Speaker 5: ten years to get to that target as you sort

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Speaker 5: of ladder into these different commitments that you make. So

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Speaker 5: we spend a lot of time with clients talking about

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Speaker 5: that process.

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Speaker 2: So I'm very familiar with capital calls, typically from venture

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Speaker 2: capital funds, occasionally for some oversubscribe funds, that you do

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Speaker 2: all the docks and then you wait for a window

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Speaker 2: to open up where they'll take your money. I don't

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Speaker 2: usually think of private equity of private credit in those terms,

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Speaker 2: but you have a whole lot more experience in this

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Speaker 2: space than I do. Is that what typically takes place

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Speaker 2: Someone says, hey, I want to commit up to ten

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Speaker 2: million dollars to this fund.

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Speaker 3: How long does it take for those capital calls to

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Speaker 3: come in?

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Speaker 2: How long is the client waiting? And then what are

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Speaker 2: they sitting in while they're waiting? Are they just sitting

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Speaker 2: in treasuries?

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Speaker 5: And this is where alternatives are complicated, right? So if

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Speaker 5: you thought we'll talk a little bit about where alternatives

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Speaker 5: are going, right and when we talk about evergreens and

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Speaker 5: open ended which kind of get rid of that capital

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Speaker 5: called dynamic, But if you thought about ultrahigh network clients

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Speaker 5: who historically and continue to really invest in traditional closed

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Speaker 5: down alternatives. You need to be very close to that

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Speaker 5: client and how you build that portfolio year and year

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Speaker 5: out making commitments they are going to call capital in

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Speaker 5: private equity, in private traditional private credit funds, in real

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Speaker 5: asset funds. General is a ten year fund and they're

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Speaker 5: making investments over the first five years and trying to

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Speaker 5: harvest those over the second five years. And so our

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Speaker 5: job as advisors to our clients is how do we

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Speaker 5: build that laddered portfolio. How do we commit every single

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Speaker 5: year so that when we get to five to six

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Speaker 5: years in you hopefully have a self funding portfolio and

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Speaker 5: hopefully you have money you're invested. Capital is getting you

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Speaker 5: to that twenty seven percent of your portfolio in the ground,

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Speaker 5: but it's hard to get there, and so we spend

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Speaker 5: a lot of time advising clients on how to how

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Speaker 5: to build those portfolio.

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Speaker 2: So typically, all right, I have fifty million dollars, I'm

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Speaker 2: going to put ten million. I'm going to commit ten

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Speaker 2: to this. How long will it take before about five

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Speaker 2: years before that's fully general? And then what are am

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Speaker 2: I sitting in treasuries or money markets?

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Speaker 3: What am I doing in the meeting?

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Speaker 4: Then you're diluting your return right. And so this is

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Speaker 4: the other part.

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Speaker 5: You need to be really fully invested other than what

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Speaker 5: you think the short term capital call needs are. So again,

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Speaker 5: this is where the complexity comes in, which is how

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Speaker 5: do I not have drag and make sure I'm fully

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Speaker 5: invested right, but still have liquidity to fund a capital

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Speaker 5: that might come up the next month. And so that's

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Speaker 5: where our advisors spend a lot of time with clients

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Speaker 5: on making sure that we're not sitting in cash while

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Speaker 5: we're waiting for capital calls.

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Speaker 2: So ten million over five years sounds like two per year.

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Speaker 2: So in other words, it's not like I'm going to

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Speaker 2: allocate that money to this, correct I just am anticipating

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Speaker 2: a call for each of the next five years for

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Speaker 2: about two million, and the money is already invested rather

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Speaker 2: than sitting around waiting for this exactly.

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Speaker 3: It's a lot of moving parts.

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Speaker 4: It's a lot of moving parts.

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Speaker 5: But by the way, but that's what leads to when

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Speaker 5: you think about opening up the aperture and trying to

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Speaker 5: make alternatives more accessible. What you've seen over the last

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Speaker 5: few years is this incredible innovation around different structures that

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Speaker 5: are catering to individual investors. So if you think about

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Speaker 5: evergreen and open ended alternatives, you take away the complexity

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Speaker 5: of capital calls and distributions and managing liquidity because that

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Speaker 5: all gets done then within the vehicle, and there's trade

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Speaker 5: offs to that. But that's where you're seeing over the

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Speaker 5: last five years a tremendous amount of growth in alternatives

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Speaker 5: targeted at individual investments.

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Speaker 2: So you might be giving up some performance in exchange

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Speaker 2: for a whole lot more simplicity exactly. So let's shift

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Speaker 2: from the process of allocating and getting calls to the

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Speaker 2: actual ALT managers. I'm assuming you have dozens and dozens

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Speaker 2: of not hundreds on your platform, some in house, some

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Speaker 2: outside of the firm. How do you start the process

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Speaker 2: of figuring out what do we want this spread of

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Speaker 2: managers to look like?

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Speaker 5: Yeah, so that's what I think we spend a lot

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Speaker 5: of time focused on. I think our north star is

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Speaker 5: how do we have the best platform of opportunities for

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Speaker 5: our clients, and so one I think that starts with

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Speaker 5: diversification right across a number of different vectors. So one

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Speaker 5: is we talked about the different strategies under the ALT banner.

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Speaker 5: We need to have different opportunities in each of those

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Speaker 5: lanes buy out, growth, venture, private credit, real assets, right.

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Speaker 5: And then we want to be open architecture for our clients, right,

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Speaker 5: so meaning.

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Speaker 3: Not just gold Man, not just gold Man.

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Speaker 5: So product we have, as we talked about, a phenomenal

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Speaker 5: alternative capability over five hundred million dollars in assets under management.

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Speaker 5: We have a thirty plus year track record, and we

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Speaker 5: have strategies that span all those various alternabasset classes. So

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Speaker 5: that's one way we implement for clients. The other is

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Speaker 5: open architecture. So we have vehicles where clients can invest

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Speaker 5: in different fund of funds, different strategies like our Secondari's funds,

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Speaker 5: our co investment vehicles, and then lastly curating direct access

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Speaker 5: to some of the best alts managers out there on

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Speaker 5: a single name basis. And so there's different ways that

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Speaker 5: clients can actually implement their portfolio right across those three

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Speaker 5: different implementation methods.

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Speaker 2: So it's interesting we're talking about diversification and lack of correlation,

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Speaker 2: and I'm really hearing two distinct types of diversification. One is, hey,

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Speaker 2: these aren't public stocks, they don't follow that cycle, so

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Speaker 2: you should get some sort of non correlated returns. But

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Speaker 2: within each of the major subgroups of alternatives, and then

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Speaker 2: across those groups, this should be somewhat non correlated. Is

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Speaker 2: that is that affair of someone uncorrelated?

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Speaker 3: Yeah?

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Speaker 5: Look, I think what clients are looking for in alternatives

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Speaker 5: is diversification, so different return drivers than what they're getting

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Speaker 5: from public markets, hopefully, a lack of correlation to those markets,

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Speaker 5: and alpha to those markets, meaning outperformance relative to what

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Speaker 5: they otherwise would have gotten had they gone in the

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Speaker 5: public markets.

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Speaker 4: Right.

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Speaker 5: So, when we think about returns and alternatives, some of

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Speaker 5: it is absolute, right, so what type of returns are

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Speaker 5: those managers underwriting to in the portfolio? And that's an

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Speaker 5: absolute target, But then there's also a relative target, which

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Speaker 5: is how do we think about the premium you're getting

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Speaker 5: for that illiquidity? Right, So, if I'm going to tie

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Speaker 5: my money up for in a ten year private equity fund,

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Speaker 5: I want to be paid for that illiquidity. And so

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Speaker 5: then we think about am I getting several hundred basis

444
00:22:41,880 --> 00:22:45,800
Speaker 5: points a year better return then had I put that

445
00:22:45,880 --> 00:22:48,040
Speaker 5: money in at the same time and we're taking the

446
00:22:48,040 --> 00:22:50,600
Speaker 5: money out at the same time from the relevant public

447
00:22:50,600 --> 00:22:53,840
Speaker 5: market benchmark, Right, then I think I've been rewarded if

448
00:22:53,880 --> 00:22:56,200
Speaker 5: I've gotten three hundred basis points a year or something

449
00:22:56,240 --> 00:23:00,159
Speaker 5: in that ballpark better than the public alternative, and then

450
00:23:00,160 --> 00:23:01,359
Speaker 5: maybe you would say it was worth it for that.

451
00:23:01,400 --> 00:23:02,919
Speaker 4: Inliquidity, well, that's the.

452
00:23:02,920 --> 00:23:07,040
Speaker 2: Whole idea of the liquidity premium, right that not only

453
00:23:07,119 --> 00:23:10,520
Speaker 2: are you getting paid for illiquidity, but it becomes a

454
00:23:10,600 --> 00:23:14,080
Speaker 2: somewhat less efficient market, which means there's greater opportunity for

455
00:23:14,160 --> 00:23:15,080
Speaker 2: upside exactly.

456
00:23:15,160 --> 00:23:17,400
Speaker 5: I mean, look, the private markets, they have a lot

457
00:23:17,400 --> 00:23:22,120
Speaker 5: more information than the public markets. Many strategies they have control, right,

458
00:23:22,160 --> 00:23:25,840
Speaker 5: so they can actually change the outcome at their portfolio companies.

459
00:23:25,880 --> 00:23:29,400
Speaker 5: They can change management, they can change strategy, a lot

460
00:23:29,400 --> 00:23:32,480
Speaker 5: of different ways to drive return that are not available

461
00:23:32,720 --> 00:23:33,720
Speaker 5: in the public markets.

462
00:23:33,760 --> 00:23:33,960
Speaker 4: Right.

463
00:23:34,480 --> 00:23:38,159
Speaker 2: So, given the fact that information is so important and

464
00:23:38,240 --> 00:23:42,840
Speaker 2: so different than publicly traded stocks and or bonds, how

465
00:23:42,840 --> 00:23:45,760
Speaker 2: do you start out doing the due diligence that has

466
00:23:45,800 --> 00:23:48,800
Speaker 2: to be like a giant lift, especially if you have

467
00:23:48,840 --> 00:23:50,960
Speaker 2: a few hundred managers on the platform.

468
00:23:51,160 --> 00:23:51,480
Speaker 4: Yeah.

469
00:23:51,600 --> 00:23:55,280
Speaker 5: Look, I think most investors need to seek the help

470
00:23:55,440 --> 00:23:58,800
Speaker 5: of a professional organization that can help them do that diligence.

471
00:23:59,200 --> 00:24:00,960
Speaker 5: So I think for us we have a group called

472
00:24:01,000 --> 00:24:04,200
Speaker 5: our External Investing Group it's over four hundred people globally,

473
00:24:04,680 --> 00:24:08,359
Speaker 5: it's two hundred and fifty people doing manager selection and diligence.

474
00:24:08,840 --> 00:24:12,680
Speaker 5: And so we like to deploy that team to do

475
00:24:12,760 --> 00:24:15,760
Speaker 5: the fiduciary diligence and all the outside managers that we're

476
00:24:15,800 --> 00:24:18,640
Speaker 5: partnered with, and that's a pretty intense process, right, Each

477
00:24:18,720 --> 00:24:21,480
Speaker 5: manager is going to take a couple months to do

478
00:24:21,520 --> 00:24:24,280
Speaker 5: the diligence. It's going to go through an investment committee process.

479
00:24:24,880 --> 00:24:26,520
Speaker 5: And as you know, like you look at a track

480
00:24:26,520 --> 00:24:28,679
Speaker 5: record from a manager, you really need to dig in

481
00:24:28,720 --> 00:24:31,720
Speaker 5: and understand kind of what's behind that track record, right,

482
00:24:31,840 --> 00:24:34,560
Speaker 5: lots of caveats sometimes, and so that's the work that

483
00:24:35,160 --> 00:24:37,960
Speaker 5: they're doing and going to their investment committees and getting approval.

484
00:24:38,240 --> 00:24:41,400
Speaker 5: So we work with that team to diligence the managers

485
00:24:41,400 --> 00:24:42,719
Speaker 5: that we think makes sense for our clients.

486
00:24:42,800 --> 00:24:45,440
Speaker 2: So I'm going to guess there's some analysts, some lawyers,

487
00:24:45,480 --> 00:24:49,600
Speaker 2: some compliance people, some regulatory specialists. Like this isn't the

488
00:24:49,640 --> 00:24:51,920
Speaker 2: sort of thing that the average investor.

489
00:24:51,760 --> 00:24:52,920
Speaker 3: Can undertake on their own.

490
00:24:52,960 --> 00:24:55,639
Speaker 2: You really need a team of professionals to dive in.

491
00:24:55,800 --> 00:24:57,960
Speaker 5: I think you want to have the advice of professionals.

492
00:24:58,280 --> 00:25:00,640
Speaker 5: The other part that we've found as we talk about

493
00:25:00,640 --> 00:25:02,800
Speaker 5: diversification being so important. So when we think about an

494
00:25:02,840 --> 00:25:05,800
Speaker 5: individual investor, I always think there's a couple of vectors

495
00:25:05,800 --> 00:25:09,320
Speaker 5: of diversification for them. One is diversification of strategy, which

496
00:25:09,359 --> 00:25:12,240
Speaker 5: you talked about under the al umbrella number two, diversification

497
00:25:12,320 --> 00:25:14,680
Speaker 5: by manager, right you want to work with different managers,

498
00:25:15,280 --> 00:25:18,040
Speaker 5: and then diversification by vintage year. So we think it's

499
00:25:18,400 --> 00:25:22,280
Speaker 5: very important for clients to be pretty programmatic about making

500
00:25:22,359 --> 00:25:25,359
Speaker 5: allocations every single year, because again, you don't want to

501
00:25:25,400 --> 00:25:28,119
Speaker 5: market time. You don't know when the best opportunities are

502
00:25:28,119 --> 00:25:30,160
Speaker 5: going to be, and actually it's usually when times feel

503
00:25:30,200 --> 00:25:32,880
Speaker 5: the worst is probably the best time to be allocating, right,

504
00:25:33,640 --> 00:25:36,520
Speaker 5: And so you know, and then when you dial that back,

505
00:25:36,640 --> 00:25:38,960
Speaker 5: you might be needing to make ten commitments a year,

506
00:25:39,200 --> 00:25:42,400
Speaker 5: fifteen commitments a year. How can you diligence enough managers

507
00:25:42,920 --> 00:25:44,840
Speaker 5: to decide that you've picked us the best one, right,

508
00:25:44,960 --> 00:25:47,680
Speaker 5: And so it gets very challenging and very complicated, and

509
00:25:47,760 --> 00:25:50,280
Speaker 5: that's why you see a lot of individual investors partnering

510
00:25:50,320 --> 00:25:53,080
Speaker 5: with an advisor or an advisor that has diligence capabilities

511
00:25:53,080 --> 00:25:55,560
Speaker 5: to help navigate them through who are the best managers

512
00:25:55,760 --> 00:25:57,119
Speaker 5: in each of their each of those lanes.

513
00:25:57,160 --> 00:26:02,160
Speaker 2: So diligence is the first step, and that is all

514
00:26:02,240 --> 00:26:04,560
Speaker 2: the legal and the paperwork that has to be done.

515
00:26:04,880 --> 00:26:07,800
Speaker 2: Let's talk about risk assessment. How do you figure out

516
00:26:08,160 --> 00:26:11,240
Speaker 2: when you're looking at a variety of different investment strategies

517
00:26:11,280 --> 00:26:16,320
Speaker 2: and managers, Hey, how much bang am I getting relative

518
00:26:16,359 --> 00:26:19,760
Speaker 2: to the risk the client is assuming in this investment?

519
00:26:19,800 --> 00:26:22,440
Speaker 2: It would it would seem that's really challenging.

520
00:26:22,520 --> 00:26:24,919
Speaker 4: Also, yeah, look, I mean there's things that you need

521
00:26:24,960 --> 00:26:25,359
Speaker 4: to look at.

522
00:26:25,359 --> 00:26:27,480
Speaker 5: Obviously, you're going to look at the track record over time,

523
00:26:27,560 --> 00:26:29,159
Speaker 5: and you're going to look at the stability of the

524
00:26:29,160 --> 00:26:31,719
Speaker 5: team and do they have all the fundamental things that

525
00:26:31,800 --> 00:26:36,159
Speaker 5: lead to a repeatable investment process, right, which should argue

526
00:26:36,160 --> 00:26:38,760
Speaker 5: that you can rely on that track card as being

527
00:26:38,760 --> 00:26:40,639
Speaker 5: hopefully something that you could look at that could be

528
00:26:40,640 --> 00:26:41,719
Speaker 5: repeatable in the future.

529
00:26:41,880 --> 00:26:42,080
Speaker 4: Right.

530
00:26:43,040 --> 00:26:45,119
Speaker 5: I think the other important part is what's the concentration

531
00:26:45,359 --> 00:26:46,200
Speaker 5: of that strategy?

532
00:26:46,280 --> 00:26:46,440
Speaker 1: Right?

533
00:26:46,440 --> 00:26:49,520
Speaker 5: How many investments are they making? Is it highly concentrated,

534
00:26:49,640 --> 00:26:53,040
Speaker 5: is it more diversified. So, for example, one thing that

535
00:26:53,080 --> 00:26:57,400
Speaker 5: our clients have been long time investors in is secondary

536
00:26:57,440 --> 00:27:00,520
Speaker 5: private equity. And one of the interesting things about sexonies

537
00:27:00,680 --> 00:27:05,040
Speaker 5: is underneath one single fund, you may have thousands of companies,

538
00:27:05,119 --> 00:27:09,040
Speaker 5: so you have a tremendous amount of diversification. And because secondaries,

539
00:27:09,080 --> 00:27:12,400
Speaker 5: if you thought it secondary private equity, it's already partially invested.

540
00:27:12,720 --> 00:27:16,280
Speaker 5: So most traditional private equity funds it's a blind pool. Right,

541
00:27:16,320 --> 00:27:18,040
Speaker 5: you're committing capital that's going to investor in the next

542
00:27:18,040 --> 00:27:20,560
Speaker 5: five years. Secondaries allows you to take a look at

543
00:27:20,600 --> 00:27:23,000
Speaker 5: some of the money that's already in the ground and

544
00:27:23,080 --> 00:27:26,520
Speaker 5: actually buy that theoretically at a discount to it fair values.

545
00:27:26,600 --> 00:27:26,719
Speaker 4: Right.

546
00:27:26,800 --> 00:27:29,600
Speaker 2: So there are two types of secondaries that I'm familiar with,

547
00:27:29,640 --> 00:27:32,080
Speaker 2: and I want you to comment on this. One of

548
00:27:32,080 --> 00:27:36,560
Speaker 2: them is, Hey, a co investor in a fund suddenly

549
00:27:36,600 --> 00:27:39,479
Speaker 2: has a change in their liquidity needs, and hey, we

550
00:27:39,480 --> 00:27:41,800
Speaker 2: will want to sell this for you know, fifteen percent

551
00:27:41,840 --> 00:27:45,760
Speaker 2: discount from what the last closing date was, so you

552
00:27:45,800 --> 00:27:49,200
Speaker 2: get to buy in an earlier vantage at a discount.

553
00:27:49,520 --> 00:27:53,840
Speaker 2: That's one secondary you Is that something you were talking about.

554
00:27:53,680 --> 00:27:55,160
Speaker 4: Yes, So that's an LP secondary.

555
00:27:55,240 --> 00:27:55,480
Speaker 3: Right.

556
00:27:55,520 --> 00:27:58,120
Speaker 5: Could be a big institution that for whatever reason wants

557
00:27:58,119 --> 00:28:00,679
Speaker 5: to do so that earlier this year he bounce their portfolio,

558
00:28:01,080 --> 00:28:04,280
Speaker 5: big university that as liquidity needs, right, we'll look to

559
00:28:04,320 --> 00:28:06,760
Speaker 5: go and get liquitting in the secondary market be individuals,

560
00:28:06,960 --> 00:28:09,280
Speaker 5: So that's sort of a traditional LP secondary.

561
00:28:09,520 --> 00:28:13,240
Speaker 2: So the other thing I occasionally see is, hey, one

562
00:28:13,240 --> 00:28:17,280
Speaker 2: of our portfolio companies suddenly is adding this or pivoting

563
00:28:17,320 --> 00:28:20,520
Speaker 2: in this direction, and we're comfortable with how much US

564
00:28:20,560 --> 00:28:23,400
Speaker 2: as a fund they're putting into this company, and we're

565
00:28:23,440 --> 00:28:27,360
Speaker 2: going to continue maintaining this investment, but they need additional capital.

566
00:28:27,440 --> 00:28:29,360
Speaker 3: Do you want to do well one off.

567
00:28:29,400 --> 00:28:32,359
Speaker 2: Side pocket or people call it all sorts of different things.

568
00:28:32,920 --> 00:28:34,440
Speaker 2: How often you see that sort of thing coming?

569
00:28:34,520 --> 00:28:35,680
Speaker 5: Yeah, So the other so when you look at the

570
00:28:35,720 --> 00:28:38,040
Speaker 5: secondary market, you have the LP secondaries, which you just

571
00:28:38,080 --> 00:28:41,479
Speaker 5: talked about. The other would be GP led secondaries. So

572
00:28:41,520 --> 00:28:43,600
Speaker 5: that's not initiated by the LP of the fund. It's

573
00:28:43,600 --> 00:28:45,600
Speaker 5: actually the manager of the fund to your point, saying, hey,

574
00:28:45,600 --> 00:28:47,520
Speaker 5: we have a company that we don't want to sell

575
00:28:47,600 --> 00:28:50,120
Speaker 5: right now. We want to continue to own, but we

576
00:28:50,160 --> 00:28:51,880
Speaker 5: need to find new capital to fund it. Right So

577
00:28:51,920 --> 00:28:53,719
Speaker 5: you might want to take out some of the old investors,

578
00:28:53,960 --> 00:28:56,600
Speaker 5: the GP might want to roll their capital, roll their

579
00:28:56,640 --> 00:29:00,160
Speaker 5: incentive fee. So that's the GP LED secondary also to

580
00:29:00,200 --> 00:29:03,120
Speaker 5: continuation vehicle. Many times you're hearing a lot about this

581
00:29:04,080 --> 00:29:06,320
Speaker 5: and so that's another part of what we do within

582
00:29:06,360 --> 00:29:09,080
Speaker 5: our secondary franchise that our clients have exposure.

583
00:29:08,680 --> 00:29:10,280
Speaker 3: To really really interesting.

584
00:29:10,800 --> 00:29:14,520
Speaker 2: Coming up, we continue our conversation with Kristin Olsen, Goldman's

585
00:29:14,560 --> 00:29:18,320
Speaker 2: global head of Alternatives for wealth, discussing the state of

586
00:29:18,400 --> 00:29:20,160
Speaker 2: alternative investing today.

587
00:29:20,640 --> 00:29:21,760
Speaker 3: I'm Bury Results.

588
00:29:21,840 --> 00:29:38,280
Speaker 2: You're listening to Masters in Business on Bloomberg Radio. I'm

589
00:29:38,280 --> 00:29:41,720
Speaker 2: Bury Results. You're listening to Masters in Business on Bloomberg Radio.

590
00:29:42,040 --> 00:29:45,719
Speaker 2: My extra special guest is Kristin Olsen. Kristen is the

591
00:29:45,760 --> 00:29:50,200
Speaker 2: global head of Alternatives for wealth management clients at Goldman Sachs,

592
00:29:50,560 --> 00:29:53,920
Speaker 2: a position she's held for twenty four of her twenty

593
00:29:53,920 --> 00:29:58,200
Speaker 2: seven years at Goldman. So before we get into the

594
00:29:58,520 --> 00:30:03,360
Speaker 2: state of altern of investing today, I'm fascinated by this

595
00:30:03,400 --> 00:30:06,960
Speaker 2: big survey you guys do each year. Over a thousand

596
00:30:07,080 --> 00:30:10,920
Speaker 2: clients and other people participat in it, and some of

597
00:30:10,960 --> 00:30:13,800
Speaker 2: the answers that come along are kind of expected, some

598
00:30:13,840 --> 00:30:17,040
Speaker 2: are really kind of surprising. Let's go over a few

599
00:30:17,040 --> 00:30:21,120
Speaker 2: of these because they're really fascinating. So, first, your survey

600
00:30:21,200 --> 00:30:28,280
Speaker 2: reveals wealthy individuals adopt alternative investments as their net worth grows.

601
00:30:28,800 --> 00:30:32,320
Speaker 2: That wasn't a surprise surprising but some of the specifics,

602
00:30:32,320 --> 00:30:36,000
Speaker 2: some of the percentages were really really like wow, look

603
00:30:36,000 --> 00:30:39,000
Speaker 2: at that. Tell us a little bit about the response

604
00:30:39,040 --> 00:30:40,280
Speaker 2: you get to that survey question.

605
00:30:40,480 --> 00:30:42,200
Speaker 5: Yeah, so well, first I would say, this is our

606
00:30:42,240 --> 00:30:45,160
Speaker 5: inaugural survey, So this is the first time that we're

607
00:30:45,200 --> 00:30:47,600
Speaker 5: actually surveying a broad universe.

608
00:30:47,880 --> 00:30:48,760
Speaker 3: Put me on that list.

609
00:30:48,880 --> 00:30:50,640
Speaker 2: I want to see that data every year. I'm a

610
00:30:50,720 --> 00:30:52,520
Speaker 2: junkie for that sort of stuff, and I think.

611
00:30:52,440 --> 00:30:54,120
Speaker 5: Part of the impetus for that too is just what

612
00:30:54,120 --> 00:30:57,000
Speaker 5: we've talked about, sort of the incredible interest by individual

613
00:30:57,000 --> 00:31:00,640
Speaker 5: investors and figuring out should they invest in alternative how

614
00:31:00,640 --> 00:31:02,560
Speaker 5: do they invest in alternatives? And so that was sort

615
00:31:02,560 --> 00:31:05,000
Speaker 5: of the impetus to this, you know, opening the door

616
00:31:05,040 --> 00:31:08,360
Speaker 5: to alternatives survey that we just did. I think the

617
00:31:08,680 --> 00:31:11,400
Speaker 5: data that you mentioned is not surprising, obviously from my seat,

618
00:31:11,440 --> 00:31:13,120
Speaker 5: starting with ultra high net worth clients.

619
00:31:13,160 --> 00:31:14,080
Speaker 4: Sure, it's been.

620
00:31:14,000 --> 00:31:18,239
Speaker 5: Investing alternatives for you know, twenty five plus years. I

621
00:31:18,360 --> 00:31:21,520
Speaker 5: was surprised by down the well spectrum, the fact that

622
00:31:21,560 --> 00:31:23,960
Speaker 5: there's a fair amount of participation all the way down

623
00:31:24,000 --> 00:31:26,560
Speaker 5: to the you know, one to five million dollar clients, right,

624
00:31:27,280 --> 00:31:30,800
Speaker 5: And I think as it becomes easier for these individuals

625
00:31:30,880 --> 00:31:34,600
Speaker 5: to invest in alternatives, and as there's more education around it,

626
00:31:34,640 --> 00:31:36,280
Speaker 5: those numbers are going to continue to go up.

627
00:31:36,480 --> 00:31:40,280
Speaker 2: So I'll tell you what surprised me at first, blush,

628
00:31:40,360 --> 00:31:42,240
Speaker 2: and then as I thought about it, made a lot

629
00:31:42,240 --> 00:31:46,560
Speaker 2: of sense. Millennials are at the forefront of a significant

630
00:31:46,560 --> 00:31:50,280
Speaker 2: shift in investment behavior towards ALTZ. And as I began

631
00:31:50,400 --> 00:31:52,960
Speaker 2: to think about it, hey, these are the kids who

632
00:31:53,040 --> 00:31:55,920
Speaker 2: more or less came of age right into the Great

633
00:31:55,920 --> 00:31:59,760
Speaker 2: Financial Crisis. They're like, wait, stocks can go down also,

634
00:32:00,280 --> 00:32:03,000
Speaker 2: So I'm not terribly surprised by that once I thought

635
00:32:03,040 --> 00:32:06,480
Speaker 2: about it. But still, how significant of a shift is this?

636
00:32:07,000 --> 00:32:08,880
Speaker 5: Look, I think we're it's fun to watch. Obviously we're

637
00:32:08,920 --> 00:32:10,960
Speaker 5: just starting to see it and you know, digesting the

638
00:32:11,000 --> 00:32:13,160
Speaker 5: survey results. But you know what I one part I

639
00:32:13,200 --> 00:32:17,800
Speaker 5: think about as millennials is their interest in accessing innovation, right,

640
00:32:17,880 --> 00:32:21,800
Speaker 5: Like this is a digital first generation, no doubt. And

641
00:32:21,880 --> 00:32:24,760
Speaker 5: so when you think again to our earlier comments, how

642
00:32:24,760 --> 00:32:28,600
Speaker 5: do you access innovation in healthcare in tech? A lot

643
00:32:28,600 --> 00:32:30,440
Speaker 5: of that is in the private markets, right, And so

644
00:32:30,800 --> 00:32:32,840
Speaker 5: I think part of that also might be the reason

645
00:32:32,920 --> 00:32:36,400
Speaker 5: why you see millennials, you know, being more inclined to

646
00:32:36,560 --> 00:32:40,240
Speaker 5: alternatives and being sort of kind of this shift in behavior.

647
00:32:41,000 --> 00:32:45,080
Speaker 2: So let's talk about the percentage of people whose wealth

648
00:32:45,280 --> 00:32:48,880
Speaker 2: is professionally managed. And obviously the data set that this

649
00:32:49,000 --> 00:32:53,080
Speaker 2: question goes to is pretty significant. But fifty nine percent

650
00:32:53,120 --> 00:32:58,160
Speaker 2: of wealth amongst a thousand individual surveyed were professionally managed.

651
00:32:58,480 --> 00:33:01,600
Speaker 2: And I kind of scratched my head that because my

652
00:33:01,720 --> 00:33:05,800
Speaker 2: assumption has been amongst the ultra wealthy, it's even higher

653
00:33:06,440 --> 00:33:08,080
Speaker 2: just as a matter of a and I have time

654
00:33:08,160 --> 00:33:11,640
Speaker 2: or interest in this. Amongst most people, they're running their business,

655
00:33:11,680 --> 00:33:16,040
Speaker 2: they're continuing to accumulate more wealth. But I'm curious about

656
00:33:16,200 --> 00:33:18,520
Speaker 2: who was the data set this one went to, and

657
00:33:18,680 --> 00:33:20,800
Speaker 2: what do you think of that fifty nine percent number?

658
00:33:21,160 --> 00:33:22,760
Speaker 3: High, low, somewhere in between.

659
00:33:22,920 --> 00:33:26,600
Speaker 5: Well, so it went to one thousand investors million dollars

660
00:33:26,640 --> 00:33:31,160
Speaker 5: of investable assets plus and twenty five years old or older.

661
00:33:31,360 --> 00:33:33,800
Speaker 3: So not necessarily Goldman Sachs call.

662
00:33:33,480 --> 00:33:34,840
Speaker 4: Not necessarily the ultra high networth.

663
00:33:34,840 --> 00:33:36,880
Speaker 5: And frankly, part of the intention was to try to

664
00:33:36,880 --> 00:33:39,560
Speaker 5: get a better sense for the broader individual market, not

665
00:33:39,640 --> 00:33:42,160
Speaker 5: just the ultra high networth market. I think, you know,

666
00:33:42,160 --> 00:33:43,960
Speaker 5: we have a long history in our wealth business. We

667
00:33:44,040 --> 00:33:46,680
Speaker 5: know the ultra high network space very very well. And

668
00:33:46,760 --> 00:33:48,400
Speaker 5: I think in that space, if we were to run

669
00:33:48,400 --> 00:33:52,760
Speaker 5: the survey, I mean very high percent ninety exactly right.

670
00:33:52,840 --> 00:33:55,880
Speaker 5: So my guess is that not professionally managed peace are

671
00:33:56,400 --> 00:33:58,400
Speaker 5: more self directed at the lower end of the well

672
00:33:58,480 --> 00:34:00,840
Speaker 5: spectrum would be my gaes and maybe younger.

673
00:34:01,120 --> 00:34:04,760
Speaker 2: Right when you see black Rocket twelve trillion and Vanguard

674
00:34:04,800 --> 00:34:07,840
Speaker 2: at eleven trillion, Hey, someone's running their own portfolio. So

675
00:34:07,880 --> 00:34:11,040
Speaker 2: what would make sense forty one percent or so of people,

676
00:34:11,800 --> 00:34:15,160
Speaker 2: if not more doing it. It's really interesting to think

677
00:34:15,200 --> 00:34:18,360
Speaker 2: about what is the mass affluent doing, what is the

678
00:34:18,440 --> 00:34:20,719
Speaker 2: high net worth doing, what is the ultra high net

679
00:34:20,760 --> 00:34:23,799
Speaker 2: worth and multi family office doing. I think as you

680
00:34:23,840 --> 00:34:26,439
Speaker 2: go up that scale, is it's safe to say most

681
00:34:26,440 --> 00:34:29,239
Speaker 2: of them are working with professional advisors? Is that that

682
00:34:29,280 --> 00:34:29,560
Speaker 2: would be?

683
00:34:29,640 --> 00:34:32,479
Speaker 5: That would be my guess for sure. The other part

684
00:34:32,520 --> 00:34:34,840
Speaker 5: is if they're self directed. And there's some of the

685
00:34:34,840 --> 00:34:38,000
Speaker 5: other survey data that also shows that, I think something

686
00:34:38,080 --> 00:34:41,040
Speaker 5: less than fifty percent of advisors have even brought up

687
00:34:41,040 --> 00:34:43,480
Speaker 5: alternatives with some of that's really interesting, right, And so

688
00:34:43,520 --> 00:34:46,400
Speaker 5: you have the self directed that probably are not accessing alternatives,

689
00:34:46,520 --> 00:34:49,520
Speaker 5: could very hard to do that without an advisor. And

690
00:34:49,560 --> 00:34:51,880
Speaker 5: then you only have something less than fifty percent of

691
00:34:51,920 --> 00:34:55,000
Speaker 5: advisors bring up alternatives like this is where the opportunity

692
00:34:55,080 --> 00:34:58,280
Speaker 5: is right on educating the advisors to feel more comfortable

693
00:34:58,320 --> 00:35:01,600
Speaker 5: talking to investors about altern internatives, and obviously the educating

694
00:35:02,000 --> 00:35:03,360
Speaker 5: the investor and investors.

695
00:35:03,600 --> 00:35:06,279
Speaker 2: So one of the questions you ask led to an

696
00:35:06,360 --> 00:35:12,440
Speaker 2: answer that I adore because I'm constantly saying to not

697
00:35:12,480 --> 00:35:12,960
Speaker 2: only the.

698
00:35:12,880 --> 00:35:15,120
Speaker 3: People I work with, other people.

699
00:35:15,360 --> 00:35:17,920
Speaker 2: Your clients aren't telling you the truth. They have money

700
00:35:17,920 --> 00:35:20,200
Speaker 2: away from you. Your wild share is much lower than

701
00:35:20,239 --> 00:35:23,680
Speaker 2: you realize until you're with the same advisor for five

702
00:35:23,760 --> 00:35:27,240
Speaker 2: or ten years and the client is comfortable in shares.

703
00:35:27,280 --> 00:35:31,280
Speaker 2: But I love this data point. Households with ten million

704
00:35:31,320 --> 00:35:36,160
Speaker 2: dollars and up in investable assets typically engage two different

705
00:35:36,239 --> 00:35:40,440
Speaker 2: advisors compared with one advisor at the mass affluent and

706
00:35:40,760 --> 00:35:43,759
Speaker 2: high net worth groups. Tell us a little bit about

707
00:35:43,800 --> 00:35:47,480
Speaker 2: that dual advisor approach. These are We're not saying two

708
00:35:47,480 --> 00:35:49,840
Speaker 2: people at the same firm. These could be two completely

709
00:35:49,880 --> 00:35:50,560
Speaker 2: different firms.

710
00:35:51,160 --> 00:35:52,800
Speaker 5: You know, I think as people go up the well spectrum,

711
00:35:52,880 --> 00:35:56,719
Speaker 5: they want to have different options, different viewpoints. You know,

712
00:35:56,840 --> 00:35:59,239
Speaker 5: have some capital at different organized, different.

713
00:35:58,920 --> 00:36:01,760
Speaker 2: Firms, a little diverse internally exactly.

714
00:36:02,760 --> 00:36:05,120
Speaker 5: I do think though from my experience on the well

715
00:36:05,160 --> 00:36:08,080
Speaker 5: side Altra Hinder recite at Goldman, it does tend to

716
00:36:08,120 --> 00:36:11,680
Speaker 5: be that over time though, there is a lead relationship, right,

717
00:36:11,760 --> 00:36:13,799
Speaker 5: And I think as you get higher up the well

718
00:36:13,840 --> 00:36:17,600
Speaker 5: spectrum and you have more complexity in your portfolio, a

719
00:36:17,600 --> 00:36:20,919
Speaker 5: lot of that, namely coming from alternatives, it becomes more

720
00:36:20,960 --> 00:36:24,719
Speaker 5: and more imperative to have somebody that's the quarterback or

721
00:36:24,760 --> 00:36:28,480
Speaker 5: the driver, you know, in the pole position, as opposed to,

722
00:36:28,560 --> 00:36:31,600
Speaker 5: you know, as opposed to two people both managing parts

723
00:36:31,600 --> 00:36:32,320
Speaker 5: of the portfolio.

724
00:36:32,480 --> 00:36:33,360
Speaker 3: No one overlap.

725
00:36:33,440 --> 00:36:35,560
Speaker 2: You don't want, you know, one overlap.

726
00:36:35,040 --> 00:36:37,000
Speaker 5: And you also want you know, we talked about how

727
00:36:37,000 --> 00:36:40,120
Speaker 5: hard it is to build these alternative portfolios, you know,

728
00:36:40,200 --> 00:36:42,600
Speaker 5: doing that in two places, and how are you managing

729
00:36:42,600 --> 00:36:45,680
Speaker 5: the liquidity and how are you knowing how you're actually allocated? Overall,

730
00:36:45,960 --> 00:36:48,480
Speaker 5: I think you start to see this shift to one

731
00:36:48,520 --> 00:36:51,760
Speaker 5: advisor really being the lead advisor and the other advisor

732
00:36:51,760 --> 00:36:53,120
Speaker 5: maybe being a secondary advisor.

733
00:36:53,239 --> 00:36:55,759
Speaker 2: So as much as I thought that was a fascinating

734
00:36:55,840 --> 00:37:00,400
Speaker 2: data point, this one kind of terrifies me. Millennials site

735
00:37:00,520 --> 00:37:05,320
Speaker 2: social media more often, while boomers rely on traditional media

736
00:37:05,320 --> 00:37:11,600
Speaker 2: outlets for their investing and financial planning information. Social media

737
00:37:12,000 --> 00:37:13,880
Speaker 2: really well.

738
00:37:13,719 --> 00:37:15,000
Speaker 5: You know one of the things that I say, and

739
00:37:15,000 --> 00:37:17,480
Speaker 5: I'm not definitely not a millennial, but you know, if

740
00:37:17,520 --> 00:37:21,239
Speaker 5: you going on your LinkedIn feed, you see videos or

741
00:37:21,280 --> 00:37:24,920
Speaker 5: you know, on Instagram from major alternativesting firms, right, and

742
00:37:24,960 --> 00:37:27,359
Speaker 5: so you can see why. I don't know what percent

743
00:37:27,400 --> 00:37:30,080
Speaker 5: of their time they're spending on social media, but naturally

744
00:37:30,320 --> 00:37:33,440
Speaker 5: these ads and these videos are getting served up to

745
00:37:33,480 --> 00:37:36,000
Speaker 5: them there, so it seems logical to me then that

746
00:37:36,000 --> 00:37:36,759
Speaker 5: that's where they're going to.

747
00:37:37,160 --> 00:37:40,960
Speaker 2: Well. LinkedIn is probably the most credible of all the

748
00:37:41,000 --> 00:37:45,120
Speaker 2: social media outlets, but I think of TikTok and Instagram

749
00:37:45,239 --> 00:37:49,160
Speaker 2: and Twitter. A couple of years ago, the IRS put

750
00:37:49,200 --> 00:37:53,239
Speaker 2: out a list of forty tax statements that they had

751
00:37:53,360 --> 00:37:58,480
Speaker 2: culled from various social media that were wrong, some of

752
00:37:58,520 --> 00:38:02,600
Speaker 2: which would lead to penalties, interest or jail time if

753
00:38:02,600 --> 00:38:05,400
Speaker 2: you followed them. And they literally forty here are forty

754
00:38:05,400 --> 00:38:08,360
Speaker 2: one things that we got from social media. Do not

755
00:38:08,560 --> 00:38:10,919
Speaker 2: do any of these things. So that's why I say,

756
00:38:10,920 --> 00:38:12,840
Speaker 2: I get a little nervous when I see millennials with

757
00:38:12,920 --> 00:38:17,120
Speaker 2: citing social media. LinkedIn, of all the places, seem to

758
00:38:17,120 --> 00:38:21,719
Speaker 2: be the most credible because it's business oriented, not some

759
00:38:21,960 --> 00:38:24,840
Speaker 2: wacky guy telling you that if you're on a boat

760
00:38:24,960 --> 00:38:28,080
Speaker 2: offshore on April fifteenth, you don't know any taxes. That

761
00:38:28,239 --> 00:38:30,960
Speaker 2: was the one that really stayed out with me, right,

762
00:38:31,000 --> 00:38:32,360
Speaker 2: all right, So that's all I have to do is

763
00:38:32,440 --> 00:38:35,120
Speaker 2: just be out on the water at fifteenth could save

764
00:38:35,160 --> 00:38:35,919
Speaker 2: myself a lot of money.

765
00:38:35,920 --> 00:38:37,400
Speaker 5: I mean, look, I think it all goes back to

766
00:38:37,560 --> 00:38:40,759
Speaker 5: the number one thing that I think we're focused on

767
00:38:40,800 --> 00:38:45,800
Speaker 5: with respect alternatives and individual investors, which is education, right absolutely,

768
00:38:45,880 --> 00:38:48,320
Speaker 5: and so you know, hopefully they're not getting their education

769
00:38:48,880 --> 00:38:51,920
Speaker 5: off of TikTok, but you know, all of all of

770
00:38:51,960 --> 00:38:54,120
Speaker 5: us need to think about how do we better educate

771
00:38:54,239 --> 00:38:57,960
Speaker 5: around the role of alternatives, the risk of alternatives, how

772
00:38:58,000 --> 00:38:59,839
Speaker 5: you invest in alternatives. And so I think we're spending

773
00:38:59,840 --> 00:39:03,400
Speaker 5: a lot of time thinking about advisor education and client

774
00:39:03,520 --> 00:39:06,359
Speaker 5: education and by the way, education that we roll out

775
00:39:06,520 --> 00:39:08,960
Speaker 5: on social media, right because if that's where they are.

776
00:39:08,960 --> 00:39:10,160
Speaker 3: Right, you got to meet them where they are.

777
00:39:10,360 --> 00:39:12,160
Speaker 4: That's where we're going to have to put the education.

778
00:39:12,239 --> 00:39:15,359
Speaker 2: So let's bring this back around to alts today. Let's

779
00:39:15,400 --> 00:39:17,799
Speaker 2: talk about themes. What are you most excited about in

780
00:39:17,840 --> 00:39:22,680
Speaker 2: private markets? What's new? Interesting and you know thrilling. Can

781
00:39:22,719 --> 00:39:24,800
Speaker 2: I use the word thrilling about alts?

782
00:39:24,800 --> 00:39:27,359
Speaker 5: Well, look, I think when you say thrilling, I think

783
00:39:27,400 --> 00:39:30,839
Speaker 5: about all what are you enthusiasts innovation that's happening right

784
00:39:30,880 --> 00:39:33,480
Speaker 5: now in technology? Obviously, how can we have a podcast

785
00:39:33,520 --> 00:39:36,279
Speaker 5: and not mention AI on any topic.

786
00:39:37,000 --> 00:39:39,000
Speaker 3: I'm not familiar with it. Tell me a little bit.

787
00:39:39,160 --> 00:39:40,320
Speaker 3: I haven't heard enough about that.

788
00:39:40,400 --> 00:39:42,799
Speaker 5: But look, I think that what we're seeing in terms

789
00:39:42,800 --> 00:39:45,160
Speaker 5: of the incredible advances in AI is bringing back a

790
00:39:45,200 --> 00:39:49,040
Speaker 5: lot of risk appetite to invest in venture and in

791
00:39:49,200 --> 00:39:51,920
Speaker 5: growth and to participate in what they think is going

792
00:39:51,960 --> 00:39:56,279
Speaker 5: to be you know, transformational technology advancements you know around AI,

793
00:39:56,600 --> 00:39:58,839
Speaker 5: and that permeates not just the venture tech and growth space,

794
00:39:58,880 --> 00:40:03,120
Speaker 5: but how AI is going to transform additional businesses. Right,

795
00:40:03,880 --> 00:40:08,080
Speaker 5: So I think that segment is quite interesting. And then

796
00:40:08,200 --> 00:40:09,319
Speaker 5: a lot of the other things that we think are

797
00:40:09,360 --> 00:40:12,480
Speaker 5: interesting are a little more not thrilling, which was the

798
00:40:12,520 --> 00:40:13,239
Speaker 5: word you use.

799
00:40:13,440 --> 00:40:16,440
Speaker 2: Maybe that's the wrong word, but what's really interesting with

800
00:40:16,520 --> 00:40:18,960
Speaker 2: great growth potential? Well, look that's thrilling too.

801
00:40:19,280 --> 00:40:22,000
Speaker 5: So look, I would say we talked a little about secondaries.

802
00:40:22,480 --> 00:40:25,360
Speaker 5: We really like secondaries because again, if you think about

803
00:40:25,480 --> 00:40:29,440
Speaker 5: the primary alter markets growing right, more money is going

804
00:40:29,480 --> 00:40:32,719
Speaker 5: to alternatives. That naturally means the secondary market's going to

805
00:40:32,760 --> 00:40:35,160
Speaker 5: grow right to spill over. It's correlated to the growth

806
00:40:35,160 --> 00:40:37,480
Speaker 5: of the primary markets and alternatives. So there's me more

807
00:40:37,480 --> 00:40:40,520
Speaker 5: opportunity there, and we really like the risk return for

808
00:40:40,600 --> 00:40:43,160
Speaker 5: clients there in that segment. So I think that's one

809
00:40:43,160 --> 00:40:47,400
Speaker 5: space that we very much like. What else would I say?

810
00:40:48,280 --> 00:40:52,799
Speaker 2: You mentioned real assets, and very often when you talk

811
00:40:52,800 --> 00:40:56,560
Speaker 2: about real assets I think that has morphed over the

812
00:40:56,640 --> 00:40:59,719
Speaker 2: past decade and evolved. I used to think of real

813
00:40:59,760 --> 00:41:05,120
Speaker 2: ass that says timber or coal or whatever, but now

814
00:41:05,160 --> 00:41:10,240
Speaker 2: it's things like infrastructure and data centers, laboratories and healthcare.

815
00:41:10,239 --> 00:41:13,000
Speaker 2: Tell us a little bit about what the real assets loft.

816
00:41:13,040 --> 00:41:13,920
Speaker 4: Yeah, that's where I was going to go.

817
00:41:13,920 --> 00:41:15,360
Speaker 5: I would say for our clients, I think for a

818
00:41:15,400 --> 00:41:19,040
Speaker 5: long time, real assets was real estate, right. I think today,

819
00:41:19,040 --> 00:41:20,440
Speaker 5: if you wanted to talk about some of the more

820
00:41:20,440 --> 00:41:22,560
Speaker 5: interesting parts, it's the things you alluded to, which is

821
00:41:22,560 --> 00:41:25,759
Speaker 5: what's happening in infrastructure. Infrastructure is one we're spending a

822
00:41:25,760 --> 00:41:28,680
Speaker 5: lot of time with our clients on. Because institutions have

823
00:41:28,760 --> 00:41:32,279
Speaker 5: invested for a long time in infrastructure assets. Individuals less

824
00:41:32,280 --> 00:41:34,960
Speaker 5: so and so trying to understand the rule of infrastructure

825
00:41:35,000 --> 00:41:37,680
Speaker 5: and a portfolio which has a lot of unique benefits.

826
00:41:37,719 --> 00:41:37,839
Speaker 4: Right.

827
00:41:37,880 --> 00:41:40,520
Speaker 5: A lot of times it's not correlated to GDP growth. Right,

828
00:41:40,560 --> 00:41:42,840
Speaker 5: This is a lot of times critical infrastructure things that

829
00:41:42,880 --> 00:41:46,479
Speaker 5: we need to do. It has inflation protection benefits, right,

830
00:41:46,680 --> 00:41:48,799
Speaker 5: something we didn't need to talk about inflation ten years ago,

831
00:41:48,800 --> 00:41:50,160
Speaker 5: but now, you know, how do we think about things

832
00:41:50,160 --> 00:41:53,240
Speaker 5: that are inflation protected with long term contracts with built

833
00:41:53,280 --> 00:41:57,120
Speaker 5: in escalators. And then the other part is educating around

834
00:41:57,360 --> 00:42:01,080
Speaker 5: It's not your grandfather's infrastruct sure, right, people tend to

835
00:42:01,120 --> 00:42:04,760
Speaker 5: think right about bridges and toll roads, right, exactly Today

836
00:42:04,840 --> 00:42:07,480
Speaker 5: it's the things you talked about. It's digital infrastructure, it's

837
00:42:07,560 --> 00:42:12,440
Speaker 5: data centers to support AI, you know, right, it's energy transition, right,

838
00:42:12,480 --> 00:42:14,239
Speaker 5: It's a lot of the very I guess maybe the

839
00:42:14,280 --> 00:42:18,640
Speaker 5: more thrilling parts of investing are actually in the infrastructure

840
00:42:18,640 --> 00:42:20,520
Speaker 5: asset class, and so that is part of the real

841
00:42:20,520 --> 00:42:22,879
Speaker 5: assets that's grown a lot and where there's a lot

842
00:42:22,880 --> 00:42:23,320
Speaker 5: of interest.

843
00:42:23,480 --> 00:42:26,160
Speaker 2: I wish I can remember where I read this somewhat

844
00:42:26,160 --> 00:42:29,279
Speaker 2: technical piece because we always talk about AI, but you

845
00:42:29,360 --> 00:42:33,760
Speaker 2: alluded to AI plus another sector of all the different

846
00:42:33,760 --> 00:42:37,160
Speaker 2: parts of the economy that AI is going to have

847
00:42:37,160 --> 00:42:41,040
Speaker 2: a big impact. This author had made the claim. I

848
00:42:41,120 --> 00:42:44,640
Speaker 2: read it like two weeks ago. So it's gone that

849
00:42:44,760 --> 00:42:49,400
Speaker 2: AI and genomics, oncology and healthcare are going to be

850
00:42:49,440 --> 00:42:54,080
Speaker 2: amazing because what you can do with AI in terms

851
00:42:54,120 --> 00:42:58,719
Speaker 2: of testing new molecules and new treatment regimes is just

852
00:42:59,200 --> 00:43:03,080
Speaker 2: a whole other less Are you looking at AI plus

853
00:43:03,080 --> 00:43:06,279
Speaker 2: another sector or is it just all AI all the time?

854
00:43:06,360 --> 00:43:09,840
Speaker 5: No? Definitely plus other sectors. And you're completely on point

855
00:43:09,920 --> 00:43:12,880
Speaker 5: that life sciences hows that can be impacted by AI

856
00:43:13,120 --> 00:43:15,960
Speaker 5: healthcare right and by the way, every sector in the

857
00:43:16,000 --> 00:43:18,880
Speaker 5: economy is likely going to be impacted. So you know,

858
00:43:18,880 --> 00:43:21,479
Speaker 5: how do when you look at this best your diligence question,

859
00:43:21,800 --> 00:43:24,440
Speaker 5: you look at private equity firms that you're diligencing today,

860
00:43:24,920 --> 00:43:27,319
Speaker 5: how what kind of value creation playbook do they have

861
00:43:27,400 --> 00:43:30,320
Speaker 5: for their portfolio companies and how are they thinking about

862
00:43:30,760 --> 00:43:34,720
Speaker 5: the AI opportunity or threat for their portfolio companies?

863
00:43:34,800 --> 00:43:34,920
Speaker 4: Right?

864
00:43:34,960 --> 00:43:38,239
Speaker 5: So it's going to infuse really all the different sectors

865
00:43:38,320 --> 00:43:39,799
Speaker 5: of investing within alternatives.

866
00:43:40,640 --> 00:43:43,800
Speaker 2: So what other alternative strategies are you seeing the most

867
00:43:43,840 --> 00:43:49,239
Speaker 2: demand for clients? Like I'm enthusiastic about AI and life sciences.

868
00:43:49,920 --> 00:43:53,440
Speaker 2: Are people asking for real assets or for infrastructure or

869
00:43:53,520 --> 00:43:56,120
Speaker 2: for sec Like, what are you hearing from the bottom up?

870
00:43:56,280 --> 00:43:57,920
Speaker 4: Well, that would be private credit.

871
00:43:58,600 --> 00:44:03,120
Speaker 2: Really yeah, response to a relatively low rate and correct.

872
00:44:02,920 --> 00:44:05,719
Speaker 5: What I would say, what we're hearing from clients for

873
00:44:05,719 --> 00:44:07,959
Speaker 5: the last few years has been a search for yield.

874
00:44:08,080 --> 00:44:10,719
Speaker 5: It desire for yield, and that's led to a lot

875
00:44:10,760 --> 00:44:13,640
Speaker 5: of interest from the bottom up in private credit. Right

876
00:44:13,680 --> 00:44:16,640
Speaker 5: a place where you can be top of the capital structure,

877
00:44:16,719 --> 00:44:19,400
Speaker 5: so a lot of protection below you and get yields

878
00:44:19,400 --> 00:44:23,160
Speaker 5: that are high single digits with quarterly cash flow. That's

879
00:44:23,280 --> 00:44:27,279
Speaker 5: been an area of pretty broad interest across the well

880
00:44:27,360 --> 00:44:29,080
Speaker 5: spectrum in alternatives.

881
00:44:29,200 --> 00:44:30,560
Speaker 3: Huh really really interesting.

882
00:44:30,920 --> 00:44:33,640
Speaker 2: So last question before I get to my favorite questions

883
00:44:33,680 --> 00:44:37,319
Speaker 2: that I ask all my guests when it comes to alternatives.

884
00:44:37,360 --> 00:44:41,719
Speaker 2: What are investors not talking about or thinking about, but

885
00:44:42,000 --> 00:44:45,320
Speaker 2: perhaps should be. What sort of it could be asset

886
00:44:45,520 --> 00:44:49,719
Speaker 2: data point policy, what's important that they might be overlooking?

887
00:44:51,120 --> 00:44:53,040
Speaker 5: I guess the thing that comes to mind for me

888
00:44:53,200 --> 00:44:55,719
Speaker 5: right now and we think about the advent of all

889
00:44:55,719 --> 00:45:02,239
Speaker 5: these evergreen, open ended perpetual perpetual f funds, and there's

890
00:45:02,280 --> 00:45:04,600
Speaker 5: been a lot of enthusiasm a lot of growth in

891
00:45:04,640 --> 00:45:07,160
Speaker 5: some of the sectors. Our investors spending a lot enough

892
00:45:07,200 --> 00:45:10,280
Speaker 5: time thinking about how big some of these vehicles are getting,

893
00:45:10,680 --> 00:45:12,719
Speaker 5: and then what does that actually mean in terms of

894
00:45:12,760 --> 00:45:15,600
Speaker 5: how much origination that they need to have to be

895
00:45:15,600 --> 00:45:18,200
Speaker 5: able to deploy the capital? Right, because in these evergreens,

896
00:45:18,280 --> 00:45:20,640
Speaker 5: if you don't actually have if you have more capital

897
00:45:20,680 --> 00:45:22,800
Speaker 5: coming in then you can actually invest, You're going to

898
00:45:22,840 --> 00:45:24,920
Speaker 5: start diluting your returns, right, You're going to have cash drag.

899
00:45:25,120 --> 00:45:27,680
Speaker 5: And so you know, our investors spending time and thinking

900
00:45:27,680 --> 00:45:29,879
Speaker 5: about who they're investing with and do they have enough

901
00:45:29,920 --> 00:45:34,919
Speaker 5: origination capabilities to be fully invested in high quality investments.

902
00:45:35,160 --> 00:45:36,839
Speaker 5: So I think that'd be one thing that I would

903
00:45:36,840 --> 00:45:39,719
Speaker 5: think about. The other thing that I'm interested to see

904
00:45:39,760 --> 00:45:42,520
Speaker 5: how it evolves is, you know, we're new in this

905
00:45:42,640 --> 00:45:46,759
Speaker 5: perpetual evergreen alt space, you know, last five years. You know,

906
00:45:46,920 --> 00:45:50,000
Speaker 5: how do we start to see performance divergence over the

907
00:45:50,080 --> 00:45:50,800
Speaker 5: next five years?

908
00:45:50,880 --> 00:45:51,000
Speaker 1: Right?

909
00:45:51,080 --> 00:45:53,319
Speaker 5: I don't think we've seen a lot yet because we're

910
00:45:53,320 --> 00:45:56,040
Speaker 5: still in the early innings, and so I'll be curious

911
00:45:56,080 --> 00:46:00,920
Speaker 5: to see how investors react to performance divers or negative

912
00:46:00,960 --> 00:46:03,560
Speaker 5: performance on some of these and what happens do we

913
00:46:03,600 --> 00:46:07,239
Speaker 5: see redemptions or are investors long term minded? And do

914
00:46:07,280 --> 00:46:08,480
Speaker 5: they stay the course?

915
00:46:08,719 --> 00:46:10,240
Speaker 3: Huh? Really really interesting.

916
00:46:10,640 --> 00:46:13,399
Speaker 2: Let me jump to my favorite questions that I ask

917
00:46:13,920 --> 00:46:17,160
Speaker 2: all of my guests, starting with something that you hinted

918
00:46:17,200 --> 00:46:20,640
Speaker 2: at but didn't expand on. Tell us about your mentors

919
00:46:20,719 --> 00:46:22,640
Speaker 2: who helped shape your career.

920
00:46:23,280 --> 00:46:26,640
Speaker 5: So I have to mention Eric Lane. So he was

921
00:46:26,680 --> 00:46:30,520
Speaker 5: the one who won me in the Analyst draft and

922
00:46:30,960 --> 00:46:34,440
Speaker 5: I then worked with him for decades and I owe,

923
00:46:34,800 --> 00:46:39,359
Speaker 5: you know a lot of my success to Eric, and

924
00:46:39,400 --> 00:46:41,720
Speaker 5: part of it is we sat in like a trading

925
00:46:41,719 --> 00:46:45,480
Speaker 5: desk type of format when I started, and the benefit

926
00:46:45,520 --> 00:46:47,680
Speaker 5: of that was just getting to hear him on the

927
00:46:47,680 --> 00:46:51,200
Speaker 5: phone every day with clients and see how he managed

928
00:46:51,200 --> 00:46:54,080
Speaker 5: difficult situations, how he explained things. You know, there's an

929
00:46:54,120 --> 00:46:56,719
Speaker 5: ability to sort of really apprenticeship right next to him.

930
00:46:57,520 --> 00:46:59,480
Speaker 5: And the other thing that I just really loved about

931
00:46:59,480 --> 00:47:01,759
Speaker 5: working with Aaron, and maybe maybe I hate it at

932
00:47:01,760 --> 00:47:05,160
Speaker 5: the time, was he would throw you into situations that

933
00:47:05,200 --> 00:47:07,640
Speaker 5: you felt ill prepared for, but he knew you could.

934
00:47:07,520 --> 00:47:10,080
Speaker 4: Handle deep into the pool exactly.

935
00:47:10,280 --> 00:47:13,120
Speaker 5: And sort of just forced you to go into the

936
00:47:13,200 --> 00:47:15,160
Speaker 5: situations that you may have not thought you're ready for.

937
00:47:15,840 --> 00:47:17,800
Speaker 5: And that really allowed you to sort of step function

938
00:47:17,880 --> 00:47:20,640
Speaker 5: I think, improve in your job and really learn, and

939
00:47:20,800 --> 00:47:22,800
Speaker 5: then he was always there to support you if it

940
00:47:22,800 --> 00:47:23,440
Speaker 5: didn't go as well.

941
00:47:23,440 --> 00:47:27,120
Speaker 3: As you really really super interesting. Let's talk about books.

942
00:47:27,120 --> 00:47:28,680
Speaker 3: What are some of your favorites? What are you reading

943
00:47:28,719 --> 00:47:29,160
Speaker 3: right now?

944
00:47:29,480 --> 00:47:33,959
Speaker 5: So I've really been enjoying the Walter Isaacson biographies, and

945
00:47:34,160 --> 00:47:36,160
Speaker 5: we talked a little about life sciences.

946
00:47:35,719 --> 00:47:38,000
Speaker 3: And one that I I was going to say, which

947
00:47:38,040 --> 00:47:38,480
Speaker 3: one of you?

948
00:47:38,960 --> 00:47:45,080
Speaker 2: So I have Leonardo sitting on a night table out

949
00:47:45,120 --> 00:47:47,279
Speaker 2: east waiting for me to have gotten to that one.

950
00:47:47,360 --> 00:47:48,720
Speaker 3: What it's like, it's a giant.

951
00:47:48,840 --> 00:47:51,720
Speaker 4: Yeah. So I actually just finished the one on Elon Musk.

952
00:47:51,960 --> 00:47:52,120
Speaker 3: Huh.

953
00:47:52,160 --> 00:47:56,280
Speaker 5: But the one that I really liked was Codebreaker about

954
00:47:56,600 --> 00:47:58,400
Speaker 5: Jennifer DOWDNA discovered Crisper.

955
00:47:58,520 --> 00:48:02,080
Speaker 2: All right, next question, what are you streaming these days?

956
00:48:02,080 --> 00:48:05,439
Speaker 2: Give us your favorite podcast? Netflix, Amazon Prime? What's keeping

957
00:48:05,440 --> 00:48:06,160
Speaker 2: you entertained?

958
00:48:07,400 --> 00:48:09,560
Speaker 5: I just started watching an old series I'm only two

959
00:48:09,600 --> 00:48:11,880
Speaker 5: episodes in, which is Scandal. So that's what I'm watching

960
00:48:12,000 --> 00:48:19,360
Speaker 5: right now, Little Washington, d C Intrigue. In terms of podcasts,

961
00:48:19,400 --> 00:48:22,399
Speaker 5: of course, all the Bloomberg podcasts, and you don't have.

962
00:48:22,600 --> 00:48:24,040
Speaker 2: You don't have to do that.

963
00:48:23,840 --> 00:48:27,479
Speaker 5: That's if I were to say one that I listened

964
00:48:27,480 --> 00:48:30,080
Speaker 5: to from time to time just for some comedy, SmartLess.

965
00:48:30,280 --> 00:48:30,799
Speaker 3: I love that.

966
00:48:30,960 --> 00:48:34,040
Speaker 2: I'm a big fan of just Justin Batement, Jason Bateman,

967
00:48:34,120 --> 00:48:35,200
Speaker 2: you his sister Justine.

968
00:48:35,239 --> 00:48:37,560
Speaker 4: It was a great guest and they're so funny.

969
00:48:37,840 --> 00:48:41,720
Speaker 2: So I've interviewed Michael Lewis a million times, and after

970
00:48:41,800 --> 00:48:44,359
Speaker 2: his daughter was killed in a car accident, they had

971
00:48:44,480 --> 00:48:48,240
Speaker 2: him on and it was a few months later and

972
00:48:48,440 --> 00:48:52,759
Speaker 2: he describes the grief process. He's just such an extraordinary

973
00:48:52,800 --> 00:48:55,960
Speaker 2: human being. To listen to someone share that it was,

974
00:48:56,000 --> 00:49:00,880
Speaker 2: it was both amazing and terrible the same time. But

975
00:49:01,280 --> 00:49:04,799
Speaker 2: they're always fun and they all seem to torment each other.

976
00:49:05,400 --> 00:49:09,880
Speaker 2: They're very amusing. Final two questions, what sort of advice

977
00:49:09,880 --> 00:49:13,440
Speaker 2: would you give to a recent college grad interested in

978
00:49:13,480 --> 00:49:16,200
Speaker 2: a career in either alternatives or wealth management.

979
00:49:16,719 --> 00:49:19,800
Speaker 5: Well, I think that the benefit that a recent college

980
00:49:19,840 --> 00:49:22,279
Speaker 5: grad has is there's so much information at their fingertips

981
00:49:22,320 --> 00:49:24,799
Speaker 5: to get smart and to get be interested, and to

982
00:49:25,000 --> 00:49:27,200
Speaker 5: learn about the industry before they come into it, and

983
00:49:27,239 --> 00:49:29,320
Speaker 5: to be really well educated. You know, it was a

984
00:49:29,360 --> 00:49:32,520
Speaker 5: lot harder twenty seven years ago. Right now, everything's at

985
00:49:32,520 --> 00:49:35,640
Speaker 5: their fingertips. So I think be prepared and then don't

986
00:49:35,680 --> 00:49:40,319
Speaker 5: be scared to network right, user relationships, meet people, reach out.

987
00:49:40,480 --> 00:49:41,960
Speaker 4: I think that would be the best advice.

988
00:49:41,880 --> 00:49:43,120
Speaker 3: Really really good.

989
00:49:43,880 --> 00:49:46,239
Speaker 2: Final question, what do you know about the world of

990
00:49:46,280 --> 00:49:49,919
Speaker 2: alternative investing today would have been helpful back in two

991
00:49:49,960 --> 00:49:51,840
Speaker 2: thousand when you were moving into this space.

992
00:49:51,920 --> 00:49:54,160
Speaker 5: Well, I think about it a little bit personally, which

993
00:49:54,239 --> 00:49:56,799
Speaker 5: is you know, we have evolved a lot in how

994
00:49:56,840 --> 00:49:59,400
Speaker 5: we advise clients to INVESTMENTULTI where we talked about the process,

995
00:49:59,440 --> 00:50:01,319
Speaker 5: how do you think about sizing and building it out

996
00:50:01,360 --> 00:50:02,960
Speaker 5: year and year out? And if I look back to

997
00:50:03,040 --> 00:50:05,520
Speaker 5: what I started, I definitely didn't have that rigor in

998
00:50:05,600 --> 00:50:08,640
Speaker 5: my own personal investing in alts and definitely undersized, was

999
00:50:08,680 --> 00:50:11,640
Speaker 5: not diversified enough. And so I think I wish all

1000
00:50:11,680 --> 00:50:13,359
Speaker 5: of the rigor we've put into it I had known

1001
00:50:13,400 --> 00:50:16,040
Speaker 5: back then in terms of how we were building portfolios

1002
00:50:16,239 --> 00:50:17,719
Speaker 5: personally and for our clients.

1003
00:50:18,000 --> 00:50:21,720
Speaker 2: Really super interesting, Kristin, Thank you for being so generous

1004
00:50:21,719 --> 00:50:25,280
Speaker 2: with your time. We have been speaking with Kristin Olsen.

1005
00:50:25,400 --> 00:50:30,160
Speaker 2: She's Goldman Sachs's global head of Alternatives for Wealth. If

1006
00:50:30,200 --> 00:50:32,839
Speaker 2: you enjoy this conversation, well, be sure to check out

1007
00:50:32,880 --> 00:50:35,720
Speaker 2: any of the five hundred and sixty eight we've done

1008
00:50:35,760 --> 00:50:40,000
Speaker 2: before over the past eleven years. You can find those

1009
00:50:40,080 --> 00:50:45,200
Speaker 2: at Bloomberg iTunes, Spotify, or here on YouTube or wherever

1010
00:50:45,400 --> 00:50:48,239
Speaker 2: you find your favorite podcasts. And be sure and check

1011
00:50:48,280 --> 00:50:52,200
Speaker 2: out my new book How Not to Invest The Ideas, numbers,

1012
00:50:52,200 --> 00:50:55,560
Speaker 2: and behaviors that destroy Wealth and how to avoid them

1013
00:50:55,800 --> 00:50:58,719
Speaker 2: How Not to Invest at your favorite bookseller.

1014
00:50:59,200 --> 00:50:59,600
Speaker 3: I would be.

1015
00:50:59,640 --> 00:51:01,680
Speaker 2: Remember if I do not thank the Crack team that

1016
00:51:01,719 --> 00:51:06,759
Speaker 2: helps with these conversations together each week. Alexis Noriega is

1017
00:51:06,840 --> 00:51:11,200
Speaker 2: my video producer. Anna Luke is my audio producer. Sean

1018
00:51:11,360 --> 00:51:14,319
Speaker 2: Russo is my head of research. Sage Bauman is the

1019
00:51:14,360 --> 00:51:16,080
Speaker 2: head of podcasts here at Bloomberg.

1020
00:51:16,920 --> 00:51:18,160
Speaker 3: I'm Barry Ridholts.

1021
00:51:18,320 --> 00:51:32,520
Speaker 2: You've been listening to Masters in Business on Bloomberg Radio.