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Speaker 2: This is well timed and we could easily have him
Speaker 2: mine once a week. John Writing was definitive at bear
Speaker 2: Stearn's for writing brilliant international US economics with a trenchant
Speaker 2: view towards a world of higher interest rates. He has
Speaker 2: absolutely nailed this call of higher yields with Breen. We're
Speaker 2: thrilled that John Writing could join us this morning. John Writing,
Speaker 2: I see the thirty year inflation adjusted yield truly back
Speaker 2: up to near record highs. What does that signal to you?
Speaker 3: Well, it signals to me that the said is going
Speaker 3: to have to do more work than the last set
Speaker 3: of SEP's suggestion, which still had a rate cut in
Speaker 3: for twenty twenty six, which I just don't see happening.
Speaker 3: That neutral is knocked down at one point one percent
Speaker 3: in real terms, but it's significantly higher, and it you know,
Speaker 3: I mean not not to pick on any bad member,
Speaker 3: but bigal Fed President Polson's speech earlier this week, and
Speaker 3: she asserted at a couple of points speached, which is
Speaker 3: generally a good speech with policy. I think it was
Speaker 3: modestate restriction and restricted. There is no defense. It's an
Speaker 3: assertion that policy is restricted and the inflation data are
Speaker 3: going higher, which argues against Chair Palse. I think relatively
Speaker 3: famous expression now that they're no neutral by its works, Well,
Speaker 3: we're seeing iron so we wouldn't appear to be neutral,
Speaker 3: and the markets have a much higher real yield than
Speaker 3: the Fed asserting, and I think this is a good
Speaker 3: area for when Kevin comes in and take shobers FED
Speaker 3: chair to look at what is the point of guiding
Speaker 3: markets to a number that you have no idea?
Speaker 2: What right?
Speaker 3: So to me it's sickly high.
Speaker 2: High was your service to your Bank of England and
Speaker 2: your service and knowing that Arsenal would win with your
Speaker 2: service to the federal Reserve system as well. When you
Speaker 2: were back at Cambridge, the inflation had a wage spiral
Speaker 2: feel to it. Does this inflation feel like a redux
Speaker 2: of your years at Cambridge?
Speaker 3: Not at all, Not at all. Fact, I still have
Speaker 3: many of I have all of my books back then,
Speaker 3: and you're right that the one of the main policy
Speaker 3: tools that was tried very ineffectively in the UK tried
Speaker 3: somewhat in the US under President Nixon, but was wage controls,
Speaker 3: and they had no real influence other than to distort markets.
Speaker 3: This is very different. This is not a wage driven
Speaker 3: inflation event. Wages are lacking, and moreover, productivity is very strong.
Speaker 3: So what wage gains are seeing, much of those are
Speaker 3: being absorbed. So corporations in this inflation are experiencing wider
Speaker 3: profit margins and we're seeing part of that in the
Speaker 3: equity market. It's the strangest inflation, but it is not
Speaker 3: a wage cost puts a factor absolutely, Oil now a factor, absolutely,
Speaker 3: but not wages.
Speaker 2: I can't say enough, folks about how gen writing handles
Speaker 2: the ambiguous dynamics of all this. He's been doing it
Speaker 2: for decades. A timeless back with David Malpass and Genre
Speaker 2: writing a bare years ago. Got a treat for you today,
Speaker 2: Damian Sasaur.
Speaker 4: Well, John, I mean the leak reach of me can
Speaker 4: I mean, you know, we got to focus on what
Speaker 4: he'd be focused on, which is who is buying the paper?
Speaker 4: Here is who is buying us treasuries? In this market.
Speaker 4: I've seen China shed four hundred and twenty billion dollars
Speaker 4: of their US treasury exposure since twenty twenty. Talk to
Speaker 4: us about who is the incremental buyer of US treasuries
Speaker 4: in this market.
Speaker 3: Well, it's a very good question, because a few days
Speaker 3: ago we were set at the highest yield level since
Speaker 3: July two thousand and seven. I'm looking at a long bond.
Speaker 3: I think, you know, our yield is like five eight percent.
Speaker 3: We've had a rally since then.
Speaker 2: We don't know.
Speaker 3: It could just simply be shortcovering. It could be that
Speaker 3: there is interest from real money buyers because that kind
Speaker 3: of yield level ought to be attractive to companies with
Speaker 3: long duration liabilities like insurance companies, and perhaps that is
Speaker 3: pulled something in. But we're talking here about the ten
Speaker 3: basis point move amidst the sell off since September of
Speaker 3: twenty twenty four. Right, the net has been one hundred
Speaker 3: and twenty two basis points in the long bomb, but
Speaker 3: meanwhile the Fed has cut one hundred and seventy five
Speaker 3: basis points are the front end. So for me, the
Speaker 3: question isn't who's the marginal buyer? The question is where
Speaker 3: have the buyers been in total. As the FED has
Speaker 3: cut interest rates over the last year and a half,
Speaker 3: they haven't been there.
Speaker 4: Well, John, you rately point out that a lot of
Speaker 4: hikes are now pires. They're not just in the US,
Speaker 4: but the ECB, the BOE, the BOJA, you name it,
Speaker 4: certainly in emerging markets. Talk to us about the seventy
Speaker 4: five percent probability of a FED hike a twenty five
Speaker 4: bit pike now and the end of the year. Do
Speaker 4: you think that Sharewash delivers.
Speaker 3: It's going to depend on the data. I think that
Speaker 3: cabin is absolutely committed to price stability. I don't think
Speaker 3: he's going to simply deliver on rate cuts because that's
Speaker 3: what sixteen hundred Pennsylvania Avenue wants. I think that he's
Speaker 3: going to look at the data, and that's going to
Speaker 3: depend on the conflict. Because behind all of these financial
Speaker 3: moves that we are talking about here, those are real
Speaker 3: physical shortage of oils that continues. You're extremely useful function
Speaker 3: decanhold moves that I look at every day. That tracks
Speaker 3: will try to track tankers going through the golf basically
Speaker 3: not there, and that is one thing of the world's oil.
Speaker 3: Now we can substitute part of that. But there's still
Speaker 3: about thirteen percent of the world daily oil consumption is
Speaker 3: not being moved. Now we just go back to basic
Speaker 3: economics and the pricing lispice to give demand for crude
Speaker 3: oil or russy speaking, he can played on said research.
Speaker 3: You've got a ten times moving twice for a long
Speaker 3: time moving volume. So you know, tell me when a
Speaker 3: Middle East clears up, tell me when the straight up
Speaker 3: home moves is open. Probably when we've replenished the inventories,
Speaker 3: which leads at a rapid rate, and then we'll know.
Speaker 3: But right now I think we should be thinking more
Speaker 3: about a rate increase than a rate time. That's what
Speaker 3: I was talking about.
Speaker 2: Impultant speech got to run just a huge schedule this morning,
Speaker 2: John writing, Thank you, thank you, thank you. Can't wait
Speaker 2: to get you back in the studio again with Breen.
Speaker 2: John writing, Stay with us. More from Bloomberg Surveillance coming
Speaker 2: up after this.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live
Speaker 1: weekday afternoons from seven to ten am Eastern Listen on
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Speaker 2: What a treat year on a Friday parachuting in after
Speaker 2: World Travels, dan Ives joins us are Dan, I'm supposed
Speaker 2: to talk about Apple and Nvidia. Forget about it. Here's
Speaker 2: the zeitgeist this morning, folks and Duckcash. Thank you for
Speaker 2: sending this on Trumany. Jeff Curri's out on the Twitter
Speaker 2: on this as well. Guess what tokens costs money? OMG,
Speaker 2: look at the cfo's bill for doing AI in your company,
Speaker 2: dan Ives. Deloitte wrote this up in January, like eighty pages. OMG,
Speaker 2: this is going to be expensive. You see Microsoft limiting
Speaker 2: use of cloud because it's too expensive. How is this
Speaker 2: going to play out? Dan Ives?
Speaker 5: I mean, look, it just speaks to we're still in
Speaker 5: the early stage. Agreed, there's more data centers being built.
Speaker 5: In active data centers, costs over time will come down,
Speaker 5: but right now in this arms raise, no company, whether
Speaker 5: it's large cap TAC, small cap international, could basically not
Speaker 5: go down this out because eventually what's going to happen
Speaker 5: is the cost and the monizition they'll flip flop over
Speaker 5: the next few years, and that's why companies are spending
Speaker 5: at this peace.
Speaker 2: I agree on that, but on a macro basis in
Speaker 2: your world famous on this Does that mean we see
Speaker 2: a consolidation within the industry? And is that in the
Speaker 2: second inning? Year? Is a Red Sox try to get
Speaker 2: to fourth of July? Or is it in the eighth
Speaker 2: inning and the Yankees are ready to lose to the
Speaker 2: Blue Jays again? Which is it? It's second and third inning?
Speaker 5: Because this is look it speaks to like the bears
Speaker 5: in their caves hibernation mood that have missed every transmissional
Speaker 5: in techtoc the last twenty years. They'll continue to miss
Speaker 5: the AI trade underestimating the scale and scope of what
Speaker 5: the spending looks like. And I've seen it, you know,
Speaker 5: just even a few weeks ago in Taiwan. In Asia,
Speaker 5: demand of spy is what twelve to one, and that
Speaker 5: is going to continue to drive this massive cap backs
Speaker 5: and the ripple effects across tech, energy and everything else.
Speaker 2: Damien Torsten Slock, publishing moments ago for a pull of
Speaker 2: global management it capex now accounts for more than one
Speaker 2: third of S and P five hundred capex spending.
Speaker 4: Well, I mean I have to, I mean wow, I mean,
Speaker 4: but I have to, you know, let's just ship the
Speaker 4: way here we have the world's largest I mean, on
Speaker 4: record IPO coming out in SpaceX here, and I just
Speaker 4: got to ask you, Dan, I mean, what are your
Speaker 4: thoughts here on Musk and shareholder rights and minority rights
Speaker 4: and control? I mean, is this unusual the type of
Speaker 4: structure we're seeing here.
Speaker 5: Bomba is betting against Musque. It's been the historically wrong
Speaker 5: move for investors, right, and I think many were in
Speaker 5: that betting against Tesla.
Speaker 2: You're betting on Musk.
Speaker 5: And I get some of the in terms of voting
Speaker 5: rights and things like that. Book Space actually talking about
Speaker 5: one of one relative to what's going to really create
Speaker 5: a whole new category of investing. And as you've seen
Speaker 5: in the private markets, you know, as more stock has
Speaker 5: come veb over the last you know, call it three
Speaker 5: or six months. And we're talking about a watershed moment,
Speaker 5: not just for Musque, not just for SpaceX, but as
Speaker 5: we've talked that we think a year from now over
Speaker 5: an eighty percent chance SpaceX and Tessa merge.
Speaker 2: Wow.
Speaker 4: So if that happens, I mean, we're how do investor's position,
Speaker 4: how do you take advantage of that? Let's put our
Speaker 4: merger armat on.
Speaker 5: Well, you buy Tasa. I mean to some extent because
Speaker 5: from evaluation respective, I think, Tessa, we've talked about it
Speaker 5: is almost a double from here relative to the pure
Speaker 5: opportunities became autonomous robotics and where this is all going
Speaker 5: in terms of the next level of AA. And that's
Speaker 5: why Musk is doing this to bring this all under onehood.
Speaker 2: On a Friday of Memorial Day, did could you see
Speaker 2: Dan Ives out in the backyard with a grill? I
Speaker 2: mean not Michael Barr. Do you think he's doing like
Speaker 2: the whole thing, the grilled chicken, the long time it's
Speaker 2: got a long time one at the grill. I could see.
Speaker 2: I could just see him, you know, you know, with
Speaker 2: the Milwaukee Best in his hand and the whole thing
Speaker 2: Dan give me. Microsoft is just you know, a stock idea.
Speaker 2: You're on it, Acpans on it. I get it. What's
Speaker 2: the why the distinction? The differential of Microsoft look.
Speaker 5: Kind of right now because of Google and the success
Speaker 5: massive that they've had in Amazon, there's a view, especially
Speaker 5: with open Ai, that sort of competition and Microsoft's starting
Speaker 5: to lose in the game. I just strongly disagree because
Speaker 5: as enterprises move to Azure and they move on the
Speaker 5: AI stack. They're going to move in Microsoft. Look, Microsoft
Speaker 5: and Apple are the two most I viewed table pound
Speaker 5: their large cap names relative to where their trade. We've
Speaker 5: talked about one hundred and fifty dollars upside of Microsoft here.
Speaker 5: They will prove themselves over the next six to twelve months.
Speaker 5: They will be the Google of twenty twenty five. That's
Speaker 5: where I view Microsoft in terms of that. You know
Speaker 5: that prove it moment generous.
Speaker 2: If you have to be with us on this Friday,
Speaker 2: dain I is with web Bush Securities. Thank you, stay
Speaker 2: with us. More from Bloomberg Surveillance coming up after this.
Speaker 1: You're listening to the Bloomberg Surveillance Podcast. Catch us live
Speaker 1: weekday afternoons from seven to ten am Eastern Listen on
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Speaker 2: Tush Saren's at the Budget Lab at Yell. They were
Speaker 2: my think tank of the year last year. They were
Speaker 2: exquisite on tariffs, but they do much more and they
Speaker 2: have just set off a firestorm of study on your
Speaker 2: infernal revenue service and also on carried interest. Natasha, why
Speaker 2: are people screaming about the Budget Lab at Yelle's work.
Speaker 6: Well, I hope Tom that we managed to be your
Speaker 6: think tank of the Year this year too, and we're
Speaker 6: very grateful to get to spend time with you always.
Speaker 6: The sort of interesting thing about carried interest is it
Speaker 6: does have this massively beneficial tax tree. So if you
Speaker 6: are a wage your salary earner in this country, you
Speaker 6: on your income are paying ordinary income rates. If you
Speaker 6: happen to be a fund manager who classifies some of
Speaker 6: your wage income really as carried interest, you get this
Speaker 6: preferential capital gains treatment. And for a long time that
Speaker 6: sort of loophole has been existed in the code, been
Speaker 6: well understood that it exists, but it wasn't really clear
Speaker 6: that there was all that much money there. So as
Speaker 6: you're thinking about the trade off with respect to what
Speaker 6: types of legislation you draft, you don't focus on it.
Speaker 6: But it turns out our report shows that there really
Speaker 6: is a lot of revenue here and it should sort
Speaker 6: of make policymakers pay attention.
Speaker 2: Is the question here the emotion democrats Republicans of getting
Speaker 2: rid of it, or is the question an amendment to
Speaker 2: a common ground?
Speaker 6: Yeah, I think that the sort of I guess my
Speaker 6: answer is like anything would be better than status quo.
Speaker 6: There ever, in lots of industries in your industry, and
Speaker 6: journalism in my industry, and the academy and in every
Speaker 6: other one too, if you get paid a sort of
Speaker 6: performance bonus, that income is taxed just like their salary
Speaker 6: is taxed. So it is hard for me from a
Speaker 6: policy perspective to come up with a rationale where you
Speaker 6: have some classes of industries that happen to be highly
Speaker 6: wealthy fund managers who are operating in them, or that
Speaker 6: type of tax treatment just doesn't operate. And so I
Speaker 6: think that there's a lot of different ways in which
Speaker 6: you could try to think about exactly how to structure
Speaker 6: the provision, But in general, I find it hard to
Speaker 6: defend on its status quo.
Speaker 4: Natasha, just for our audience, I wonder if he could
Speaker 4: just help us out. I mean, what does President Trump?
Speaker 4: Where's the administration stand on carried interest? I think my
Speaker 4: interpretation is that they want to actually change the law, right,
Speaker 4: They want to basically start tax and carry it interest
Speaker 4: as income.
Speaker 2: Is that is that correct?
Speaker 3: Well?
Speaker 6: You know what's so interesting is that President Trump campaigned
Speaker 6: on ending the carried interest loophole, and so this has
Speaker 6: been an area of deep interest for him. This has
Speaker 6: been an area of frankly bipartisan interest for a long time,
Speaker 6: but it's and I kind of experienced it as we
Speaker 6: put out this report for Budget Lab. Every time you
Speaker 6: get somewhat close to a policy conversation around carried there
Speaker 6: are and you both can well appreciate why that is
Speaker 6: really significant lobbying efforts that push against exactly the types
Speaker 6: of changes that would equalize this tax treatment. And so
Speaker 6: something that I worry about and will continue to watch
Speaker 6: as we watch these policy debates evolve, is the ways
Speaker 6: in which industry is going to try to shape these
Speaker 6: provisions in order to preserve this tax benefit, and the
Speaker 6: ways in which policy needs to be well informed to
Speaker 6: push back against that.
Speaker 4: So, Natasha, then here's my question, right, because it's all
Speaker 4: fun and games, you know, I think some of the
Speaker 4: projections that if they if they close the carried interest loophole,
Speaker 4: it's something like ninety billion dollars can be generated over
Speaker 4: the next ten years, you know, Collecting that revenue is
Speaker 4: the question I have. How easy will it be for
Speaker 4: tax authorities here in the US to actually get their
Speaker 4: hands on those dollars, on those carried interest dollars if indeed,
Speaker 4: you know, the rule changes totally.
Speaker 6: And that's exactly our estimate, which is that you can
Speaker 6: raise around ninety billion dollars over a decade from a
Speaker 6: closing and carried interest loopole. But I'll say to your point,
Speaker 6: one of the pieces of doing that estimate that's pretty
Speaker 6: challenging is there's no like line item on the tax
Speaker 6: return that is how much carry you have, And so
Speaker 6: it's actually kind of challenging from the perspective of the
Speaker 6: IRS to be able to say what is your tax
Speaker 6: liability because this isn't an area where they have perfect visibility.
Speaker 6: They get some information from the K one partnership return,
Speaker 6: and the hope is that that's going to enable them
Speaker 6: to do better with respect to collectingness if we change
Speaker 6: the tax treatment. But two things, we need an IRS
Speaker 6: that's actually able to be functional, and second, it would
Speaker 6: help to have much more information.
Speaker 2: Natasha, let me get out front of work. What's the
Speaker 2: tariff update? Are we living a double digit tariff right now?
Speaker 2: Ten eleven twelve percent?
Speaker 6: We are. Our effective tariff rate is nearly ten percent
Speaker 6: at the moment, But we're in a situation, by the way,
Speaker 6: where there's a ton of legal uncertainty with respect to
Speaker 6: what's going to happen to the tariffs over the course
Speaker 6: of the next many months, because we just had an
Speaker 6: adverse court ruling with respect to some of the Section
Speaker 6: one twenty two tariffs that the administration is trying to
Speaker 6: deploy presently.
Speaker 2: I mean, I was up in Montreal watching the Canadians'
Speaker 2: folks is they took another victory a number of months ago, Natasha,
Speaker 2: and all the talk in Quebec was over their tariff
Speaker 2: system with America. There was frankly no other issue, including
Speaker 2: the Montreal Canadians Natasha in Canada, how is our discussions going?
Speaker 6: Yeah, But so part of the thing that I am
Speaker 6: grappling with as I wonder about what the future of
Speaker 6: tariffs really holds, is we're in a situation right now where,
Speaker 6: because of tariff and also frankly because of the war,
Speaker 6: inflation is outpacing wage growth, and so now in a
Speaker 6: moment where people are looking and not being able to
Speaker 6: afford what they could last month three months ago on
Speaker 6: their salaries as a result of this inflationary moment. And
Speaker 6: so I have to wonder, and I wonder this with Canada.
Speaker 6: I wonder this with Europe. I wonder this with all
Speaker 6: of our allies. Whether there are no magic buttons. The
Speaker 6: administration can press to lower prices tomorrow, but one thing
Speaker 6: that they could do is start to roll back these
Speaker 6: adverse trade policies, particularly with respect to our allies, in
Speaker 6: ways that will immediately benefit the American consumer. And so
Speaker 6: I hope that that is what is on the horizon
Speaker 6: with respect to many of our trading partners.
Speaker 2: Natasha, thank you so much the Budget lab. Stay with us.
Speaker 2: More from Bloomberg Surveillance coming up after this.
Speaker 1: Listening to the Bloomberg Surveillance podcast. Catch us live weekday
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Speaker 2: This is a joy. One of the gut people that
Speaker 2: have really really supported me in this lark that I'm
Speaker 2: on is Michael Spence. He is a Nobel Prize winner
Speaker 2: and before that revolutionized, and I mean revolutionized how we
Speaker 2: teach graduate school. This is at Stanford in their GSB program.
Speaker 2: The predecessor was our J. Miller Ford Motor and we
Speaker 2: have with Thiss Rick Stein my right now from LPL
Speaker 2: Financial you lived it. You lived the Stanford GSB of
Speaker 2: Michael Spence and all that. What was it like because
Speaker 2: nobody It's like Dylan Plane, Electricaitar at Newport. Nobody did
Speaker 2: what Stanford GSB did before Stanford GSB did it.
Speaker 7: It's a very special place. So yeah, I think what
Speaker 7: you got is a community thatallenged how to become great leaders.
Speaker 7: And I think for me that was I had gone
Speaker 7: to Wharton undergrad and so I learned the discipline of
Speaker 7: how to evaluate companies, how to build strategies, but getting
Speaker 7: there was about how to lead people, how to create followership,
Speaker 7: how to look at interpersonal dynamics in the context of
Speaker 7: business in a place where the professors were off the
Speaker 7: charts exceptional talented, as were the students.
Speaker 2: But then, I mean, now everybody's talking just what you talk.
Speaker 2: It's like in the concern entire global industry is well,
Speaker 2: how do you take that at LPL and do that
Speaker 2: every day? How do you delegate authority at LPL Financial? Yeah?
Speaker 7: Largely for me, delegating authority is about having a shared vision.
Speaker 7: You actually have to work really hard upfront to craft
Speaker 7: a vision that people can collectively align to so that
Speaker 7: when you delegate. You're delegating against knowing you're headed to
Speaker 7: the same direction, and so the decision making upfront is
Speaker 7: probably more important.
Speaker 2: What's the biggest myth of wealth management right now? With
Speaker 2: financial advisors? What's the thing that most gets wrong?
Speaker 7: I think the misnomer in the marketplace right now is this.
Speaker 7: The overarching story is that AI is going to displace
Speaker 7: financial advisors and it's going to deliver you know, AI
Speaker 7: driven advice, and I think you're going to see more
Speaker 7: decisions being made by humans but enabled through technology.
Speaker 2: We welcome you on YouTube today to understand that this
Speaker 2: is not Paul Sweeney with us. Is Damien SaaS hours
Speaker 2: with this ruffled and this is great? How can you, Damian?
Speaker 2: Have your people come in.
Speaker 4: Yes with your rice Chrispy trising.
Speaker 2: Two of them? Oh thank you?
Speaker 4: It's too much rich, you know, I mean, enough of
Speaker 4: with my breakfast, my choice of breakfast. Let's talk about
Speaker 4: the impact of AI on wealth management. I find that
Speaker 4: so fascinating. I mean, look, LPO, you're I mean two
Speaker 4: point three trillion in assets up thirty percent year every year.
Speaker 4: You guys have done a great job. Talk to us
Speaker 4: about continuing that growth. Is AI play a factor in that.
Speaker 7: It plays a tremendous factor in it, because I think
Speaker 7: what you're going to actually see is the underpinnings of
Speaker 7: the way that advice is delivered and the actual infrastructure
Speaker 7: and supportive advisors is going to be automated in ways
Speaker 7: that really enable much more, much more personalized advice delivery
Speaker 7: from advisors. But the infrastructure that needs to be built
Speaker 7: is going to be built on the foundations of AI.
Speaker 7: Think about workflows completely reimagined.
Speaker 4: Well, I mean, Rich, That's what I'm hearing from a
Speaker 4: lot of my peers. I'm fifty two years old and
Speaker 4: I have friends who are basically now finally training Claud,
Speaker 4: cleaning their chat or training their chatbot, and you know,
Speaker 4: consolidating their emails and I mean Claud's telling it which
Speaker 4: email is drafting response email to something that came in.
Speaker 4: I mean, are you working with your clients on that
Speaker 4: type of stuff?
Speaker 2: Are you trying to bring them along?
Speaker 4: Do you find that they're a little bit behind the
Speaker 4: curve or are your clients ahead of the curve? Are
Speaker 4: they looking for more from LPL, more from you and
Speaker 4: the AI set.
Speaker 7: Yeah, so our clients are advisors and the advisors in
Speaker 7: many cases especially when you live in the independent advisor segment,
Speaker 7: are looking for help. They're looking for a perspective on
Speaker 7: what is the role that AI should play in the
Speaker 7: advice deliver remarket. And so that's where we're trying to
Speaker 7: step in, not only with solutions, but with intelligence to
Speaker 7: help them understand how the tools can help them deliver
Speaker 7: better outcomes for their clients.
Speaker 2: How is AI going to help me with not enough
Speaker 2: diversification or too much diversification in a world of ETFs.
Speaker 2: Is it going to be part of the choice set
Speaker 2: or is it about the operational strategy of wealth management?
Speaker 7: Yeah, it's going to be about the operational strategy, probably
Speaker 7: more so than the choice set. What you're going to
Speaker 7: get is a personalized set of solutions that are going
Speaker 7: to be enabled through AI. So you're going to be
Speaker 7: able to create and craft personalized portfolios down to the
Speaker 7: mass affluent. The things that were initially reserved for high
Speaker 7: net worth ultra you're going to be able to drive
Speaker 7: that through direct indexing that's driven through AI, and so
Speaker 7: you get a personalized portfolio against a family's goals. And
Speaker 7: that's going to allow advisors instead of having to craft
Speaker 7: all of those strategies and spend hours per week on that.
Speaker 7: They're going to be able to automate that and what
Speaker 7: you're going to get as a shift from IQ to EQ.
Speaker 2: And what LPL Financial's done over the year with great respect,
Speaker 2: just a simple question, is there still this trend from
Speaker 2: the major shops and banks over to LPO or is
Speaker 2: that yesterday's story.
Speaker 7: No, that's yesterday's story and tomorrow's story. The move from
Speaker 7: the major financially why are they're moving because the economics
Speaker 7: are disruptive. They're moving because they actually if you think
Speaker 7: about what happens at most firms, the advisors are told
Speaker 7: how to deliver advice. At a firm like ours, and
Speaker 7: at LPL, we actually asked the advisors, how do you
Speaker 7: want to deliver advice? And we craft the firm malleable
Speaker 7: around them.
Speaker 2: It's just the exactly office of appliance given this the
Speaker 2: sprawl of LPL.
Speaker 7: Yeah, so compliance needs to be done on a personalized basis, right,
Speaker 7: and so we actually group different types of advisors, different
Speaker 7: sophistication of advisors and applied rules. You obviously have to
Speaker 7: hit the standards, but compliance also is a craft that
Speaker 7: is an art, not a science.
Speaker 2: Thank you so much for coming in today. Really really
Speaker 2: happy to be here. I I appreciate it. We're going
Speaker 2: to see you again, I'm sure. Rich Steinmeier with a
Speaker 2: CEO LPL Financial.
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