1
00:00:02,200 --> 00:00:06,800
Speaker 1: This is Masters in Business with Barry Ridholts on Bloomberg Radio.

2
00:00:07,440 --> 00:00:10,640
Speaker 1: This week on the podcast, I have an extra special guest,

3
00:00:10,840 --> 00:00:14,560
Speaker 1: and once again it was a tour to fourth. Katherine

4
00:00:14,640 --> 00:00:19,079
Speaker 1: Keating has quite the storied history UH in the financial

5
00:00:19,120 --> 00:00:23,160
Speaker 1: services world. She's not only the CEO of the B

6
00:00:23,360 --> 00:00:27,640
Speaker 1: and Y Melon's wealth management group, she is a regular

7
00:00:27,920 --> 00:00:30,880
Speaker 1: on all of the most Powerful Women in Finance lists.

8
00:00:31,560 --> 00:00:37,720
Speaker 1: Previously she was CEO UM. Previously she was Chief executive

9
00:00:37,760 --> 00:00:42,199
Speaker 1: Officer of Common Funds and Head of Investment Management and

10
00:00:42,440 --> 00:00:46,360
Speaker 1: CEO of the U s US Private Bank at JP Morrigan.

11
00:00:46,600 --> 00:00:50,839
Speaker 1: She has really a fascinating background. They are one of

12
00:00:50,880 --> 00:00:55,960
Speaker 1: the larger asset managers, and so what B and Y

13
00:00:56,040 --> 00:01:00,880
Speaker 1: Melon does when it comes to UM, generational wealth transfer,

14
00:01:00,880 --> 00:01:05,640
Speaker 1: and philanthropic planning and all these other areas related to

15
00:01:05,720 --> 00:01:09,200
Speaker 1: the core of of wealth management. They are very much

16
00:01:09,400 --> 00:01:13,160
Speaker 1: a thought leader in the space and and there actions

17
00:01:13,200 --> 00:01:16,720
Speaker 1: have ripple effects throughout the industry. I found this to

18
00:01:16,800 --> 00:01:22,440
Speaker 1: be just an absolutely fascinating conversation. We definitely went deep

19
00:01:22,480 --> 00:01:26,280
Speaker 1: into the weeds discussing things like certain types of retaining

20
00:01:26,400 --> 00:01:30,960
Speaker 1: test guarante r trusts, but generally everything was very accessible

21
00:01:31,000 --> 00:01:35,000
Speaker 1: and quite fascinating. If you're remotely interested in the asset

22
00:01:35,040 --> 00:01:38,800
Speaker 1: management business or financial planning, will strap yourself in because

23
00:01:38,840 --> 00:01:42,559
Speaker 1: this is going to be absolutely fascinating. With no further ado,

24
00:01:43,080 --> 00:01:49,680
Speaker 1: my conversation with Katherine Keating. This is Masters in Business

25
00:01:49,920 --> 00:01:54,360
Speaker 1: with very Ridholts on Bloomberg Radio. My extra special guest

26
00:01:54,400 --> 00:01:57,840
Speaker 1: this week is Kathleen Keating. She is the CEO of

27
00:01:57,920 --> 00:02:01,640
Speaker 1: B and Y Melon's Wealth Management Group, which runs about

28
00:02:01,680 --> 00:02:05,600
Speaker 1: two hundred and sixty five billion dollars in assets. Uh

29
00:02:05,880 --> 00:02:09,080
Speaker 1: B and Y Melon manages two trillion dollars and has

30
00:02:09,120 --> 00:02:14,320
Speaker 1: over thirty eight trillion dollars in assets custodied. The firm

31
00:02:14,520 --> 00:02:19,560
Speaker 1: was founded in seventeen eighty four by Alexander Hamilton's. Keating

32
00:02:19,680 --> 00:02:24,280
Speaker 1: previously was CEO at Common Funds and head of Investment

33
00:02:24,320 --> 00:02:29,400
Speaker 1: management at the US private bank for JP Morgan. Katherine Keating,

34
00:02:29,800 --> 00:02:32,919
Speaker 1: Welcome to Bloomberg. Thank you very great to be here.

35
00:02:33,280 --> 00:02:36,680
Speaker 1: So you have a fascinating background and I want to

36
00:02:36,720 --> 00:02:40,040
Speaker 1: start out delving into it. You were the first woman

37
00:02:40,200 --> 00:02:43,960
Speaker 1: to be CEO at B and Y Melon Wealth Management,

38
00:02:44,600 --> 00:02:48,200
Speaker 1: and you were one of the only women running investment

39
00:02:48,240 --> 00:02:51,920
Speaker 1: management or the private banquet at JP Morgan tell Us

40
00:02:51,960 --> 00:02:54,840
Speaker 1: about your journey. Well, thank you for asking it. You know,

41
00:02:54,919 --> 00:02:57,000
Speaker 1: it's never about being the first. It's always about not

42
00:02:57,040 --> 00:02:59,440
Speaker 1: being the last, right in anything you do. So let

43
00:02:59,480 --> 00:03:01,920
Speaker 1: me stay with that. Let me start with that. You

44
00:03:01,919 --> 00:03:05,560
Speaker 1: know here at UM at B and Y Melan. Interestingly enough,

45
00:03:05,600 --> 00:03:08,200
Speaker 1: you mentioned Alexander Hamilton's You know, we've worked with strong

46
00:03:08,240 --> 00:03:11,320
Speaker 1: women throughout our history. His widow, Eliza, was actually our

47
00:03:11,320 --> 00:03:14,240
Speaker 1: first client. People don't know that she was a powerhouse

48
00:03:14,240 --> 00:03:16,320
Speaker 1: in her own right, sounded the first orphanage here in

49
00:03:16,320 --> 00:03:19,640
Speaker 1: New York City. Uh So we've worked with strong women

50
00:03:19,680 --> 00:03:23,360
Speaker 1: throughout our history. You know, as as far as my career,

51
00:03:23,440 --> 00:03:27,640
Speaker 1: I guess like those people, I've gravitated to UM what

52
00:03:27,760 --> 00:03:30,200
Speaker 1: interests me? Right, We work hard in this industry. We

53
00:03:30,200 --> 00:03:32,440
Speaker 1: want to make a difference. I've had a tremendous passion

54
00:03:32,520 --> 00:03:36,520
Speaker 1: for trying to help clients, whether it's individuals or institutions,

55
00:03:36,520 --> 00:03:39,920
Speaker 1: have better financial outcomes. And that's really our purpose that

56
00:03:40,040 --> 00:03:41,880
Speaker 1: this company. We log it every day and we see

57
00:03:41,880 --> 00:03:46,360
Speaker 1: on our computers. Our our purpose is to power individuals

58
00:03:46,440 --> 00:03:49,960
Speaker 1: and institutions to succeed in the financial world. And so

59
00:03:50,320 --> 00:03:53,280
Speaker 1: UM that's a large part of what has motivated me.

60
00:03:53,880 --> 00:03:56,240
Speaker 1: I also think that I just had experiences in my

61
00:03:56,320 --> 00:04:03,320
Speaker 1: life that have demonstrated how important found financial advice is. Again,

62
00:04:03,360 --> 00:04:06,360
Speaker 1: whether you're an institution or an individual. Um, when I

63
00:04:06,400 --> 00:04:10,520
Speaker 1: was a young youngster, eight years old, my dad died

64
00:04:10,600 --> 00:04:12,360
Speaker 1: very suddenly, and I watched my mom, I was the

65
00:04:12,360 --> 00:04:14,960
Speaker 1: oldest of three kids. I watched her have to go

66
00:04:15,040 --> 00:04:17,880
Speaker 1: back to work and then go back to school. She

67
00:04:17,880 --> 00:04:19,880
Speaker 1: she was a school teacher, and she decided she wanted

68
00:04:19,920 --> 00:04:22,920
Speaker 1: to go back to school and become a librarian. Um,

69
00:04:23,240 --> 00:04:25,159
Speaker 1: that was a career that she loved so much. She

70
00:04:25,320 --> 00:04:27,919
Speaker 1: just retired a couple of years ago at seventy nine,

71
00:04:28,040 --> 00:04:32,839
Speaker 1: And so I've kind of watched how important good financial

72
00:04:32,839 --> 00:04:35,000
Speaker 1: advice is. Obviously, she had to do things like by

73
00:04:35,040 --> 00:04:37,800
Speaker 1: her own first car. She took us all to the

74
00:04:37,839 --> 00:04:40,880
Speaker 1: Bolvo dealer. Had done her research Bolbo station wagons with

75
00:04:40,960 --> 00:04:43,960
Speaker 1: a Sacist cars back in the nineteen seventies. She took

76
00:04:44,000 --> 00:04:46,560
Speaker 1: us all to the car dealer, and I remember walking

77
00:04:46,560 --> 00:04:49,560
Speaker 1: in and having the dealer look at her and say, um,

78
00:04:49,600 --> 00:04:52,320
Speaker 1: where's Mr Kessler, And of course there wasn't a Mr Kesler.

79
00:04:52,360 --> 00:04:55,600
Speaker 1: So again I've just seen you know how important um,

80
00:04:55,880 --> 00:05:00,760
Speaker 1: sound financial planning, investment planning and decisions are in people's lives.

81
00:05:01,200 --> 00:05:03,400
Speaker 1: I've also seen it an institution. You know, I was

82
00:05:03,480 --> 00:05:05,839
Speaker 1: lucky enough to go to the college that paid for everything.

83
00:05:05,920 --> 00:05:08,960
Speaker 1: I served on the board for years, including through the

84
00:05:09,000 --> 00:05:13,960
Speaker 1: financial crisis, and I know how important sound financial management

85
00:05:14,000 --> 00:05:17,240
Speaker 1: is institutions too. It enables them to make it through

86
00:05:17,279 --> 00:05:21,520
Speaker 1: cycles and continue to accomplish their missions. So, um, a

87
00:05:21,560 --> 00:05:23,200
Speaker 1: lot of it is just sort of the basics. What

88
00:05:23,240 --> 00:05:25,880
Speaker 1: motivates you in the morning and how can you contribute

89
00:05:26,080 --> 00:05:28,760
Speaker 1: to people's lives through your career. So let's talk about

90
00:05:28,839 --> 00:05:32,479
Speaker 1: institutions for a moment. You spent a good part of

91
00:05:32,520 --> 00:05:36,039
Speaker 1: your career as CEO of Common Fund, which was a

92
00:05:36,160 --> 00:05:41,480
Speaker 1: nonprofit asset manager serving endowments, foundations and other financial institutions.

93
00:05:42,040 --> 00:05:45,719
Speaker 1: How has that experience colored how you view the world

94
00:05:45,720 --> 00:05:49,479
Speaker 1: of institutions. So couple of things are important to know

95
00:05:49,560 --> 00:05:53,120
Speaker 1: about institutional investors versus individuals. The first one is that

96
00:05:53,200 --> 00:05:56,480
Speaker 1: every institutional investor knows what its goal is. So if

97
00:05:56,480 --> 00:05:59,080
Speaker 1: you think about a college endowment, the goal of the

98
00:05:59,120 --> 00:06:02,800
Speaker 1: college endowment is to earn enough on it's portfolio so

99
00:06:02,960 --> 00:06:05,800
Speaker 1: that it can make distributions to support the mission. You know,

100
00:06:05,839 --> 00:06:08,120
Speaker 1: typically four four and a half maybe five percent a

101
00:06:08,200 --> 00:06:13,000
Speaker 1: year and still exceed inflation right, so called that you

102
00:06:13,000 --> 00:06:15,080
Speaker 1: know it's inflations two percent and you want to distribute

103
00:06:15,120 --> 00:06:16,520
Speaker 1: four and a half or five you want to have

104
00:06:16,600 --> 00:06:19,760
Speaker 1: returns of over seven percent. They know what their goal is.

105
00:06:20,880 --> 00:06:24,040
Speaker 1: The second thing about institutions that might be different than

106
00:06:24,080 --> 00:06:27,320
Speaker 1: individuals is that they have governance and process right, boards

107
00:06:27,320 --> 00:06:30,640
Speaker 1: and committees. When you think about individuals, neither of those

108
00:06:30,680 --> 00:06:33,440
Speaker 1: things is necessarily the case. Nobody tells an individual what

109
00:06:33,480 --> 00:06:35,040
Speaker 1: their goal has to be. They have to figure that

110
00:06:35,080 --> 00:06:36,800
Speaker 1: out for themselves, and we spend a lot of time

111
00:06:36,839 --> 00:06:41,000
Speaker 1: with clients about that, and you don't necessarily have the

112
00:06:41,080 --> 00:06:44,080
Speaker 1: governance of a board and an investment committee standing in

113
00:06:44,120 --> 00:06:46,760
Speaker 1: between you and making those decisions. So I think the

114
00:06:46,800 --> 00:06:50,640
Speaker 1: two things about institutions that are so different is very

115
00:06:50,680 --> 00:06:54,359
Speaker 1: focused on goals, very well defined, and have governance and

116
00:06:54,440 --> 00:06:57,840
Speaker 1: process in place to help support it. So let's do

117
00:06:57,880 --> 00:07:01,520
Speaker 1: a compare and contrast. What when you're working with an institution,

118
00:07:02,360 --> 00:07:04,520
Speaker 1: you know who's the head of investing there, and you

119
00:07:04,560 --> 00:07:08,840
Speaker 1: know who's managing a particular committee. What's that like when

120
00:07:08,960 --> 00:07:12,160
Speaker 1: you are working with the family, where there might be

121
00:07:12,320 --> 00:07:15,200
Speaker 1: very different group dynamics, there's going to be often a

122
00:07:15,280 --> 00:07:19,480
Speaker 1: husband and a wife. Sometimes there's an active second generation

123
00:07:19,600 --> 00:07:24,040
Speaker 1: or even third generation. How different is working with individuals

124
00:07:24,160 --> 00:07:27,920
Speaker 1: versus institutions, So it's it's very different. And in fact,

125
00:07:27,960 --> 00:07:30,800
Speaker 1: one of having worked in asset management with institutions and

126
00:07:30,880 --> 00:07:33,400
Speaker 1: also in wealth management for the individuals, one of the

127
00:07:33,480 --> 00:07:35,800
Speaker 1: things that I try to do is to bridge that

128
00:07:35,920 --> 00:07:39,960
Speaker 1: gap and take the best practices that institutions have and

129
00:07:40,040 --> 00:07:42,240
Speaker 1: try to adapt them to families. And so let me

130
00:07:42,240 --> 00:07:46,040
Speaker 1: give you two real life examples, right, because two and

131
00:07:46,080 --> 00:07:49,120
Speaker 1: eight a great example. Um, and I'll give you another one.

132
00:07:49,760 --> 00:07:51,280
Speaker 1: So what happened in two thousand and eight? We all

133
00:07:51,320 --> 00:07:54,800
Speaker 1: know the financial crisis, and I was on the board

134
00:07:54,840 --> 00:07:57,360
Speaker 1: of my college at that time, and just by luck

135
00:07:57,400 --> 00:07:59,920
Speaker 1: of the calendar, we happen to be having a board

136
00:08:00,000 --> 00:08:04,200
Speaker 1: meeting and an investment committee meeting on Columbus Day in October,

137
00:08:04,360 --> 00:08:06,239
Speaker 1: which if you take your mind back to two thousand

138
00:08:06,280 --> 00:08:08,440
Speaker 1: and eight, you might remember that was the day that

139
00:08:08,560 --> 00:08:11,160
Speaker 1: all the CEOs from the banks went down to Washington

140
00:08:11,280 --> 00:08:14,000
Speaker 1: to take the tart money. So there we were having

141
00:08:14,000 --> 00:08:16,560
Speaker 1: our regular board meeting and our investment committee meeting, and

142
00:08:16,600 --> 00:08:19,160
Speaker 1: we had had we had done an enormous amount of

143
00:08:19,200 --> 00:08:23,080
Speaker 1: work on asset allocation and the strategy for our portfolio,

144
00:08:23,280 --> 00:08:25,560
Speaker 1: and we had done stress testing and all the things

145
00:08:25,560 --> 00:08:28,360
Speaker 1: that you do as an institution. And so here we

146
00:08:28,360 --> 00:08:31,480
Speaker 1: were in the depths of the financial crisis, with thanks

147
00:08:31,480 --> 00:08:34,600
Speaker 1: CEO taking tart money, and we had to decide as

148
00:08:34,600 --> 00:08:36,559
Speaker 1: a board and an investment committee, what were we going

149
00:08:36,600 --> 00:08:39,160
Speaker 1: to do. We're we going to do what our policy

150
00:08:39,240 --> 00:08:42,800
Speaker 1: portfolio told us we ought to do, which is rebalance

151
00:08:43,120 --> 00:08:46,360
Speaker 1: and continue to buy stocks as the market was going down,

152
00:08:47,200 --> 00:08:49,760
Speaker 1: because that's what our policy had been tested for. And

153
00:08:50,200 --> 00:08:53,320
Speaker 1: sure enough, we had to lock arms and um do

154
00:08:53,480 --> 00:08:55,520
Speaker 1: something that was very hard, which was to buy and

155
00:08:55,559 --> 00:08:58,120
Speaker 1: rebalance when the market was down. And you tend to

156
00:08:58,160 --> 00:09:01,720
Speaker 1: see institutions do exactly that because of all of the

157
00:09:01,760 --> 00:09:04,679
Speaker 1: time that has been spent on the policy portfolio, and

158
00:09:04,720 --> 00:09:08,400
Speaker 1: because they know time and market is one of their

159
00:09:08,400 --> 00:09:11,880
Speaker 1: biggest advantages. It's more important than timing the market. On

160
00:09:11,920 --> 00:09:14,840
Speaker 1: the other hand, when you look at individuals, they don't

161
00:09:14,880 --> 00:09:20,840
Speaker 1: necessarily have that governance and policy in place, and that's

162
00:09:20,880 --> 00:09:22,440
Speaker 1: one of the things that we try to do with

163
00:09:22,480 --> 00:09:24,640
Speaker 1: our clients. We have all of our clients adopt an

164
00:09:24,679 --> 00:09:27,560
Speaker 1: investment policy statement and wealth management, just as if they

165
00:09:27,600 --> 00:09:30,480
Speaker 1: were institutions, and then we try to help them stick

166
00:09:30,520 --> 00:09:33,280
Speaker 1: with it when it's hardest. And you know, we can

167
00:09:33,360 --> 00:09:36,600
Speaker 1: watch the industry fund flows and we can see whether

168
00:09:36,720 --> 00:09:39,600
Speaker 1: clients actually do it. And in fact, interestingly enough, what

169
00:09:39,720 --> 00:09:42,600
Speaker 1: you saw this year as the market was going down

170
00:09:42,640 --> 00:09:44,440
Speaker 1: and you watch the flows as we do, right, you

171
00:09:44,480 --> 00:09:47,040
Speaker 1: saw money flowing into cash. We saw record amounts of

172
00:09:47,080 --> 00:09:50,480
Speaker 1: cash and money market funds. We saw money flowing into

173
00:09:50,520 --> 00:09:53,319
Speaker 1: bond funds. Um, we really didn't see a lot of

174
00:09:53,360 --> 00:09:56,840
Speaker 1: money flowing into equity funds when the market was down

175
00:09:56,840 --> 00:09:59,760
Speaker 1: in March, and so we know how hard it is

176
00:10:00,440 --> 00:10:03,280
Speaker 1: to stay with your portfolio through the cycle. We told

177
00:10:03,280 --> 00:10:06,160
Speaker 1: our clients to do that and um, you know, if

178
00:10:06,200 --> 00:10:10,080
Speaker 1: they did, they participated as the market has has come

179
00:10:10,080 --> 00:10:12,800
Speaker 1: back to reach all time hives. So let me follow

180
00:10:12,880 --> 00:10:16,319
Speaker 1: up with a question about exactly what you just described.

181
00:10:16,920 --> 00:10:21,360
Speaker 1: When your investment committee and institution, which has a perpetual

182
00:10:21,440 --> 00:10:27,120
Speaker 1: time horizon, is looking at a period like March oh

183
00:10:27,280 --> 00:10:30,960
Speaker 1: nine or more recently this this past down draft in

184
00:10:32,760 --> 00:10:37,080
Speaker 1: they're precluded from doing something silly because they have an

185
00:10:37,120 --> 00:10:41,599
Speaker 1: investment policy statement which prevents them from market timing or

186
00:10:42,000 --> 00:10:45,400
Speaker 1: there's no upside to a committee to say, sure, what

187
00:10:45,480 --> 00:10:47,080
Speaker 1: the hell, let's jump in and out and see if

188
00:10:47,120 --> 00:10:49,600
Speaker 1: we can pick up a couple extra basis points. There's

189
00:10:49,640 --> 00:10:53,360
Speaker 1: no financial incentive, there's no glory. It violates their own rules,

190
00:10:53,440 --> 00:10:57,120
Speaker 1: so they sort of are forced to behave. Well, how

191
00:10:57,160 --> 00:11:02,120
Speaker 1: do you translate that better behavior to an individual when

192
00:11:02,120 --> 00:11:05,360
Speaker 1: you're working with them and they're nervous in a period

193
00:11:05,440 --> 00:11:10,560
Speaker 1: like February or March. Yeah, so it's a great question, Barry.

194
00:11:10,600 --> 00:11:13,240
Speaker 1: And again, what we really try to do here is

195
00:11:13,360 --> 00:11:17,679
Speaker 1: we really try to court from the institutional asset management

196
00:11:17,880 --> 00:11:23,440
Speaker 1: industry over into wealth management. The same institutional processes and

197
00:11:23,559 --> 00:11:27,160
Speaker 1: tools been felt institutions for so long. So, as I said,

198
00:11:27,240 --> 00:11:29,560
Speaker 1: every one of our wealth management clients, we've spent a

199
00:11:29,600 --> 00:11:32,760
Speaker 1: lot of time with them to actually develop an investment

200
00:11:32,760 --> 00:11:36,079
Speaker 1: policy statement, just as an institution would have. And how

201
00:11:36,080 --> 00:11:38,720
Speaker 1: do we do that. We do that by by first

202
00:11:38,760 --> 00:11:41,360
Speaker 1: and foremost having to figure out what their goal is, Right,

203
00:11:41,440 --> 00:11:43,520
Speaker 1: every family is different. There's an adage that we can't

204
00:11:43,520 --> 00:11:45,880
Speaker 1: see one wealthy family. You've seen one wealthy family, and

205
00:11:45,880 --> 00:11:49,600
Speaker 1: that's true. Every family is different. Every family has a

206
00:11:49,640 --> 00:11:53,040
Speaker 1: different near term and long term goal. So the first

207
00:11:53,080 --> 00:11:56,120
Speaker 1: thing we try to do is really be clear on

208
00:11:56,160 --> 00:11:58,000
Speaker 1: what that goal is. And most of the time we

209
00:11:58,040 --> 00:12:00,480
Speaker 1: find that there's two aspects to a US like number

210
00:12:00,480 --> 00:12:02,640
Speaker 1: one has to do with lifestyle. They want a certain

211
00:12:03,280 --> 00:12:06,360
Speaker 1: um amount of income to support, you know, a lifestyle,

212
00:12:06,440 --> 00:12:09,560
Speaker 1: particularly as they move into retirement. And then the second

213
00:12:09,559 --> 00:12:11,520
Speaker 1: tends to be about legacy. What are the things that

214
00:12:11,600 --> 00:12:13,559
Speaker 1: you want to preserve in your family and they could

215
00:12:13,600 --> 00:12:16,280
Speaker 1: be financial or they could be not financial, um to

216
00:12:16,480 --> 00:12:20,040
Speaker 1: preserve from one generation to the next. Because our clients

217
00:12:20,040 --> 00:12:22,960
Speaker 1: have wealth set out with them, and so we focused

218
00:12:23,480 --> 00:12:27,200
Speaker 1: very very hard on what is that goal, and then

219
00:12:27,400 --> 00:12:29,800
Speaker 1: we use a lot of modeling tools to show all

220
00:12:29,840 --> 00:12:33,000
Speaker 1: the variables that will impact that goal. Some of them

221
00:12:33,000 --> 00:12:36,480
Speaker 1: are obvious, right the market and asset allocation right so

222
00:12:36,559 --> 00:12:40,559
Speaker 1: well will trigger back and forth between different asset allocations

223
00:12:40,600 --> 00:12:43,440
Speaker 1: to show the impact of them over time. Some of

224
00:12:43,480 --> 00:12:47,280
Speaker 1: them are uniquely in your control spending rates. Every institutional

225
00:12:47,320 --> 00:12:51,920
Speaker 1: investor has a policy on spending. Nobody requires an individual

226
00:12:52,000 --> 00:12:54,480
Speaker 1: to have a policy or even a philosophy on spending,

227
00:12:54,480 --> 00:12:57,600
Speaker 1: and yet it has an enormous amount of impact on

228
00:12:57,720 --> 00:13:01,320
Speaker 1: the wealth that you accumulate over time. Increasingly we take

229
00:13:01,360 --> 00:13:05,120
Speaker 1: into account borrowing, right, our clients don't have to borrow,

230
00:13:05,200 --> 00:13:07,959
Speaker 1: but just like major companies, that might make sense from

231
00:13:08,000 --> 00:13:11,520
Speaker 1: a capital allocation perspective. Another thing that we have to

232
00:13:11,520 --> 00:13:15,360
Speaker 1: take into account is after tax returns. Institutions don't pay taxes.

233
00:13:15,400 --> 00:13:18,320
Speaker 1: Our clients pay taxes every year and every generation. So

234
00:13:18,360 --> 00:13:21,520
Speaker 1: you have to keep an eye on after tax returns.

235
00:13:21,559 --> 00:13:24,920
Speaker 1: And so we've built models that help us to integrate

236
00:13:24,960 --> 00:13:27,679
Speaker 1: all of these things and allow us to kind of

237
00:13:27,720 --> 00:13:33,760
Speaker 1: show clients perspectively the impact of choices on asset allocations,

238
00:13:33,760 --> 00:13:38,360
Speaker 1: on spending, on borrowing, on taxes, to try to help

239
00:13:38,400 --> 00:13:41,920
Speaker 1: them chart not only the goal, but what are the

240
00:13:41,960 --> 00:13:44,040
Speaker 1: things that I have to do to get there. Catherine,

241
00:13:44,120 --> 00:13:47,600
Speaker 1: let's talk a little bit about the clients of of

242
00:13:47,720 --> 00:13:50,960
Speaker 1: B and Y. Who who is the typical wealth management customer?

243
00:13:51,760 --> 00:13:55,320
Speaker 1: Tell us about them? Sure, Berry, our typical client is

244
00:13:55,320 --> 00:13:59,400
Speaker 1: a wealthy family. It might also be entities that you

245
00:13:59,600 --> 00:14:03,600
Speaker 1: think of is being associated with wealthy families. Foundations, endowment's

246
00:14:03,640 --> 00:14:10,080
Speaker 1: family offices, family businesses, even retirement plans potentially related to

247
00:14:10,160 --> 00:14:13,280
Speaker 1: families and family entities. So think about the whole ecosystem

248
00:14:13,400 --> 00:14:17,320
Speaker 1: surrounding wealthy families, the people, and the entities and that's

249
00:14:17,320 --> 00:14:19,960
Speaker 1: really our clientation. So you guys have been around for

250
00:14:20,040 --> 00:14:25,960
Speaker 1: quite a long time. Is a fantastic run. Most of

251
00:14:26,000 --> 00:14:31,240
Speaker 1: your current clients, are they legacies of of B and

252
00:14:31,360 --> 00:14:33,480
Speaker 1: Y being around as long as it has been? Are

253
00:14:33,520 --> 00:14:38,920
Speaker 1: they referrals generational transfers? Where does the typical clients come

254
00:14:39,000 --> 00:14:43,040
Speaker 1: from within the B and Y melon Um family? So

255
00:14:43,160 --> 00:14:46,440
Speaker 1: great question, Barry about mostly half of our clients are

256
00:14:46,440 --> 00:14:50,960
Speaker 1: referred to us from other clients or advisors to UM clients.

257
00:14:50,960 --> 00:14:52,960
Speaker 1: So think about its half and then the other half

258
00:14:52,960 --> 00:14:55,800
Speaker 1: comes from all sorts of sources, right just you know,

259
00:14:55,840 --> 00:14:58,440
Speaker 1: the dynamism of the market wealth is being created around

260
00:14:58,520 --> 00:15:02,960
Speaker 1: us all the time. UM. We're obviously pursuing those opportunities.

261
00:15:02,960 --> 00:15:05,160
Speaker 1: And we do have a combination of clients that have

262
00:15:05,280 --> 00:15:07,840
Speaker 1: been with us many years. UM. We have a couple

263
00:15:07,880 --> 00:15:09,600
Speaker 1: of families that have been with a six or seven

264
00:15:09,600 --> 00:15:13,920
Speaker 1: generations now, which is just truly remarkable and something that

265
00:15:13,960 --> 00:15:16,320
Speaker 1: we appreciate and try to earn every day. And then

266
00:15:16,360 --> 00:15:18,440
Speaker 1: we have clients that you know, have just taken their

267
00:15:18,440 --> 00:15:21,360
Speaker 1: companies public and our brand new clients this year. So

268
00:15:21,400 --> 00:15:23,720
Speaker 1: it's really all the sources that you would expect in

269
00:15:23,760 --> 00:15:28,000
Speaker 1: a long tenure in institution like ours, and and how

270
00:15:28,080 --> 00:15:32,680
Speaker 1: have clients expectations changed over the years in terms of

271
00:15:33,280 --> 00:15:36,560
Speaker 1: what they're looking for from you guys, in terms of communication,

272
00:15:37,080 --> 00:15:40,680
Speaker 1: what they're expecting in terms of performance. Has that shifted

273
00:15:41,440 --> 00:15:46,360
Speaker 1: over the past decade or two? So that's yes. The

274
00:15:46,400 --> 00:15:49,160
Speaker 1: answer to that, barr Is is yes. You know, when

275
00:15:49,200 --> 00:15:51,720
Speaker 1: I think about when I started my career in this

276
00:15:51,800 --> 00:15:55,680
Speaker 1: industry back in the nine you know, the typical client

277
00:15:55,920 --> 00:16:00,160
Speaker 1: might have been a CEO, a CFO with C, a

278
00:16:00,280 --> 00:16:05,600
Speaker 1: senior corporate executive, and when that client retired, chances are

279
00:16:05,680 --> 00:16:07,680
Speaker 1: he or she and very often it was the heat

280
00:16:08,120 --> 00:16:12,240
Speaker 1: retired with a corporate pension plan, right, an annuity for

281
00:16:12,280 --> 00:16:16,440
Speaker 1: the rest of his life and his spouses life, and

282
00:16:16,480 --> 00:16:20,120
Speaker 1: also anything else that they've accumulated in their savings. So

283
00:16:20,280 --> 00:16:22,080
Speaker 1: when I think of the nineties, I think of wealth

284
00:16:22,080 --> 00:16:24,560
Speaker 1: management is kind of an and you had your you

285
00:16:24,600 --> 00:16:27,800
Speaker 1: had your pension plan, and you had any savings that

286
00:16:27,840 --> 00:16:31,600
Speaker 1: you've accumulated on your own. Well, fast forward to this

287
00:16:31,680 --> 00:16:33,680
Speaker 1: decade that we're in, and what we see is that,

288
00:16:34,160 --> 00:16:37,480
Speaker 1: you know, there are very few company provided pension plans

289
00:16:37,480 --> 00:16:41,080
Speaker 1: anymore in corporate America. Corporate America is shifted from company

290
00:16:41,120 --> 00:16:45,720
Speaker 1: provide attention plans to employee funded savings plans. So today

291
00:16:45,800 --> 00:16:49,840
Speaker 1: everybody is responsible for their own financial futures. And that's

292
00:16:49,880 --> 00:16:53,000
Speaker 1: a fundamental shift, and that's another reason very that we

293
00:16:53,080 --> 00:16:56,640
Speaker 1: try to pour over into wealth management. All of the

294
00:16:56,720 --> 00:17:00,480
Speaker 1: institutional asset management disciplines that you would have seeing a

295
00:17:00,560 --> 00:17:05,120
Speaker 1: chief financial officer or a chief investment officer used when

296
00:17:05,200 --> 00:17:08,760
Speaker 1: they were actually providing for people's long term retirements. That's

297
00:17:08,880 --> 00:17:11,800
Speaker 1: much less common today. And so our mantra for clients is,

298
00:17:11,840 --> 00:17:13,760
Speaker 1: you have to be your own CFO, you have to

299
00:17:13,800 --> 00:17:15,960
Speaker 1: be your own c i O, and we're here to help.

300
00:17:17,240 --> 00:17:21,240
Speaker 1: H Quite interesting, the past couple of decades have seen

301
00:17:21,960 --> 00:17:27,400
Speaker 1: a big flow of capital into passive products and indexes.

302
00:17:27,920 --> 00:17:30,719
Speaker 1: What do you see from your perspective, how is that

303
00:17:30,880 --> 00:17:34,880
Speaker 1: change in what's going on in the ultra high net

304
00:17:34,880 --> 00:17:39,760
Speaker 1: worth investment family. So before we look at active or passive,

305
00:17:39,920 --> 00:17:43,080
Speaker 1: we look at the ecosystem that we're investing in. Right,

306
00:17:43,200 --> 00:17:45,760
Speaker 1: what's going on in the global economy, because that's really

307
00:17:45,760 --> 00:17:48,919
Speaker 1: the ecosystem that we invest in. And in fact, at

308
00:17:48,920 --> 00:17:51,439
Speaker 1: the beginning of this year, I sent a letter to

309
00:17:51,480 --> 00:17:53,520
Speaker 1: all of our clients, not knowing of course, in the

310
00:17:53,520 --> 00:17:56,600
Speaker 1: beginning of January what was going to hold for us.

311
00:17:56,640 --> 00:17:59,480
Speaker 1: But recognizing that we were starting a new decades and

312
00:17:59,520 --> 00:18:03,399
Speaker 1: as we've started this new decade, we looked at global economy,

313
00:18:03,520 --> 00:18:07,720
Speaker 1: we looked at capital markets, and we we had forecap

314
00:18:07,920 --> 00:18:09,480
Speaker 1: for our clients, you know, what do we think market

315
00:18:09,480 --> 00:18:12,000
Speaker 1: returns are going to be in the next decade? And

316
00:18:12,040 --> 00:18:15,000
Speaker 1: I actually quoted Bill Gates in that letter. He says,

317
00:18:15,440 --> 00:18:18,320
Speaker 1: we always overestimate what's going to happen in the next

318
00:18:18,359 --> 00:18:20,720
Speaker 1: two years and underestimate what's going to happen in the

319
00:18:20,720 --> 00:18:23,640
Speaker 1: next ten. And one of the things that we said

320
00:18:23,680 --> 00:18:26,320
Speaker 1: to our clients about the next ten years is that

321
00:18:26,359 --> 00:18:29,240
Speaker 1: we thought that market returns we're going to be lower,

322
00:18:29,600 --> 00:18:34,560
Speaker 1: incrementally lower, not significantly lower, but incrementally lower going forward.

323
00:18:34,960 --> 00:18:38,320
Speaker 1: And there was one major reason for that, and that

324
00:18:38,560 --> 00:18:41,720
Speaker 1: is that all of the largest economies in the world

325
00:18:41,800 --> 00:18:47,080
Speaker 1: are aging at the same time, China, Europe, and the

326
00:18:47,160 --> 00:18:51,960
Speaker 1: United States. And we know what happens when economy's age.

327
00:18:52,560 --> 00:18:56,000
Speaker 1: Inflation tends to go down, interest rates tend to go down,

328
00:18:56,640 --> 00:19:00,280
Speaker 1: yield curves tend to flatten, GDP growth tends to go down,

329
00:19:00,320 --> 00:19:03,280
Speaker 1: and eventually market returns tend to go down. And we

330
00:19:03,440 --> 00:19:07,919
Speaker 1: pointed out to our clients, but actually we've been seeing

331
00:19:07,960 --> 00:19:12,000
Speaker 1: that through this whole new century we're in, I think

332
00:19:12,040 --> 00:19:14,520
Speaker 1: about it right. Inflation has been coming down, interest rates

333
00:19:14,560 --> 00:19:17,560
Speaker 1: have been coming down, GDP growth has been coming down,

334
00:19:18,359 --> 00:19:21,080
Speaker 1: and market returns have come down incrementally. So what we

335
00:19:21,119 --> 00:19:24,800
Speaker 1: said to our clients is that's the ecosystem that we

336
00:19:24,920 --> 00:19:27,880
Speaker 1: think we're going to be in over this next decade.

337
00:19:28,400 --> 00:19:33,000
Speaker 1: We still do. We've had some really unexpected and very

338
00:19:33,040 --> 00:19:37,439
Speaker 1: important eventstasy are obviously with the global pandemic and the

339
00:19:37,520 --> 00:19:42,040
Speaker 1: influence of Congress, the Cisco stimulus, and the Federal Reserve

340
00:19:42,119 --> 00:19:45,199
Speaker 1: with monetary stimulus, and we actually think that that monetary

341
00:19:45,240 --> 00:19:49,200
Speaker 1: stimulus and the low interest rates for longer are very

342
00:19:49,320 --> 00:19:53,920
Speaker 1: very important to the outlets going forward. Interesting, We're gonna

343
00:19:53,960 --> 00:19:56,919
Speaker 1: talk more about interest rates in a little bit, but

344
00:19:57,040 --> 00:20:00,520
Speaker 1: I want to ask you um something that I found

345
00:20:00,560 --> 00:20:06,600
Speaker 1: fascinating in my research, which was your description of five

346
00:20:06,760 --> 00:20:12,719
Speaker 1: active wealth practices invests, spend, manage, borrow, protect. Tell us

347
00:20:12,720 --> 00:20:15,439
Speaker 1: a little bit about what that group of five is

348
00:20:16,119 --> 00:20:21,000
Speaker 1: and how does it manifest itself in a client's portfolio

349
00:20:21,280 --> 00:20:25,480
Speaker 1: and their relationship with their advisor at B and Y. Melon.

350
00:20:25,920 --> 00:20:27,639
Speaker 1: Thanks for asking Barry, and we have a lot of

351
00:20:27,680 --> 00:20:31,200
Speaker 1: passion around this because again, as I said, Um, we

352
00:20:31,280 --> 00:20:33,800
Speaker 1: believe that part of our job, being you know, one

353
00:20:33,840 --> 00:20:36,960
Speaker 1: of the largest institutional firms out there, is to help

354
00:20:36,960 --> 00:20:41,560
Speaker 1: our clients benefit from the best institutional practices around those

355
00:20:41,600 --> 00:20:43,639
Speaker 1: five things we took. You know, we have the great

356
00:20:43,760 --> 00:20:46,399
Speaker 1: fortune of having a lot of experience working with wealthy

357
00:20:46,440 --> 00:20:49,119
Speaker 1: families at this firm, all the way back to the

358
00:20:49,119 --> 00:20:52,320
Speaker 1: Hamilton's family, as I said, and so you know, our

359
00:20:52,359 --> 00:20:56,200
Speaker 1: brain trust of people have put their heads together and said,

360
00:20:56,240 --> 00:20:58,320
Speaker 1: what have we learned over the years, what are the

361
00:20:58,440 --> 00:21:00,200
Speaker 1: five things? And we didn't know if it was gonna

362
00:21:00,200 --> 00:21:01,480
Speaker 1: be five. It could have been three, it could have

363
00:21:01,480 --> 00:21:04,960
Speaker 1: been far. It turns out it's five that we see

364
00:21:05,160 --> 00:21:09,399
Speaker 1: allow families to sustain their success every time. First and

365
00:21:09,440 --> 00:21:13,239
Speaker 1: foremost investing your financial assets, your portfolio, having the right

366
00:21:13,280 --> 00:21:17,280
Speaker 1: ASSEID allocation, and most importantly, sticking to it when it's hard.

367
00:21:18,119 --> 00:21:22,040
Speaker 1: Number two, UM, spending. As I said, every institutional investor

368
00:21:22,359 --> 00:21:25,760
Speaker 1: has a spending rate of spending policy. Understanding the impact

369
00:21:25,800 --> 00:21:29,720
Speaker 1: of spending on long term returns is very very important.

370
00:21:30,040 --> 00:21:33,159
Speaker 1: Number Three borrowing. Our clients don't typically have to borrow,

371
00:21:33,520 --> 00:21:35,119
Speaker 1: but they can. And one of the things that we

372
00:21:35,200 --> 00:21:38,960
Speaker 1: joke about is that we you can date yourself, um

373
00:21:39,160 --> 00:21:42,400
Speaker 1: by saying what the interest rate was on the first

374
00:21:42,400 --> 00:21:45,000
Speaker 1: mortgage you took out on a house. If it was

375
00:21:45,040 --> 00:21:47,360
Speaker 1: in the double digits, cancers are, it was in the

376
00:21:47,440 --> 00:21:50,040
Speaker 1: late eighties, early nineties. If it was in the mid

377
00:21:50,040 --> 00:21:52,280
Speaker 1: single digits, it was in the nineties. If it, you know,

378
00:21:52,359 --> 00:21:56,040
Speaker 1: drops even lower, it was sometime in this new um

379
00:21:56,320 --> 00:21:58,359
Speaker 1: century we're in. And if it's below three percent, you

380
00:21:58,400 --> 00:22:01,080
Speaker 1: took it out this year. So you know, our clients

381
00:22:01,119 --> 00:22:04,920
Speaker 1: don't have to borrow, but they make capital allocation decisions

382
00:22:04,960 --> 00:22:07,520
Speaker 1: just like any major company does, and so thinking about

383
00:22:07,560 --> 00:22:10,280
Speaker 1: their balance sheets and thinking about when it might make

384
00:22:10,359 --> 00:22:14,480
Speaker 1: sense to borrow, particularly when rates are low, for estate

385
00:22:14,480 --> 00:22:18,639
Speaker 1: planning purposes, for liquidity purposes, for purchases, that's become a

386
00:22:18,680 --> 00:22:24,320
Speaker 1: more important discipline. And that that's the third one for investing, sending, borrowing,

387
00:22:25,000 --> 00:22:28,320
Speaker 1: managing for after tax returns because our clients do pay taxes,

388
00:22:28,359 --> 00:22:30,680
Speaker 1: and part of that is related to your question about

389
00:22:30,680 --> 00:22:34,240
Speaker 1: active and passive right passive vehicles um lower costs but

390
00:22:34,320 --> 00:22:37,200
Speaker 1: also very tax efficient. And what we say to our

391
00:22:37,240 --> 00:22:40,000
Speaker 1: clients is again with our investment outlook, you've got to

392
00:22:40,040 --> 00:22:43,760
Speaker 1: eke out excess returns wherever you can, and there are

393
00:22:43,760 --> 00:22:47,159
Speaker 1: certain classes where that may be less likely. You know,

394
00:22:47,160 --> 00:22:50,520
Speaker 1: the US large cap market is very very efficient. Um,

395
00:22:50,600 --> 00:22:54,120
Speaker 1: we would say, um, you can actually add tax alpha

396
00:22:54,240 --> 00:22:57,840
Speaker 1: in the US large cap markets, perhaps more effectively and

397
00:22:57,880 --> 00:23:01,280
Speaker 1: consistently than you can add invest an alpha. But then

398
00:23:01,280 --> 00:23:03,639
Speaker 1: there are other classes as at classes where markets are

399
00:23:03,720 --> 00:23:05,880
Speaker 1: much less efficient, and we do encourage them to go

400
00:23:06,240 --> 00:23:09,920
Speaker 1: um for access returns. And then the last discipline protect

401
00:23:09,960 --> 00:23:14,000
Speaker 1: what you have. And that's everything from good cyber practices

402
00:23:14,600 --> 00:23:19,000
Speaker 1: to estate planning and trusts and things that protect assets

403
00:23:19,040 --> 00:23:22,639
Speaker 1: to protecting them unfinancial assets. What are the qualities and

404
00:23:22,720 --> 00:23:25,800
Speaker 1: disciplines in your family that you want to see survived

405
00:23:25,800 --> 00:23:32,080
Speaker 1: to the next generation. So it's it's invest, send, borrow, manage, protect,

406
00:23:32,320 --> 00:23:37,560
Speaker 1: as you said, mhm, quite quite intriguing. Let's talk a

407
00:23:37,560 --> 00:23:41,800
Speaker 1: little bit about what a year we've been living through

408
00:23:43,400 --> 00:23:49,240
Speaker 1: of virus induced economic shutdown, a thirty decline in the SMP,

409
00:23:50,480 --> 00:23:57,000
Speaker 1: tons of volatility. How has this mayhem this year affected clients?

410
00:23:57,480 --> 00:24:01,080
Speaker 1: Were you guys forced to respond on with new policies

411
00:24:01,080 --> 00:24:05,800
Speaker 1: and procedures or how did you deal with great question Barry,

412
00:24:05,880 --> 00:24:09,400
Speaker 1: I mean, how has this pandemic not impacted our business

413
00:24:09,440 --> 00:24:11,320
Speaker 1: to here in a way? I think it's the question

414
00:24:11,400 --> 00:24:13,640
Speaker 1: because if you go back to the beginning of March,

415
00:24:14,760 --> 00:24:16,840
Speaker 1: of the people in my division worked in our offices

416
00:24:17,480 --> 00:24:21,280
Speaker 1: and we had to transition over a three week period

417
00:24:21,760 --> 00:24:26,200
Speaker 1: to them working at home. So, you know, first and foremost, um,

418
00:24:26,240 --> 00:24:29,080
Speaker 1: you know, kudos to the company for all of the

419
00:24:29,119 --> 00:24:32,119
Speaker 1: work that it has done over the years in resiliency

420
00:24:32,280 --> 00:24:35,000
Speaker 1: and in technology, because it actually enabled us We didn't

421
00:24:35,000 --> 00:24:37,720
Speaker 1: expect us to happen, but it actually enabled us to

422
00:24:38,119 --> 00:24:42,720
Speaker 1: very very rapidly shift our employees and wealth management from

423
00:24:42,720 --> 00:24:47,480
Speaker 1: working full time in the offices to working at home. So, um,

424
00:24:47,520 --> 00:24:49,679
Speaker 1: you know, Fortunately, it turns out in hindsight we were

425
00:24:49,720 --> 00:24:51,919
Speaker 1: more prepared than we thought. But apart from that, it

426
00:24:51,960 --> 00:24:54,119
Speaker 1: meant we had to change our days and so at

427
00:24:54,160 --> 00:24:56,760
Speaker 1: b M. Y Melon what that meant in March, in

428
00:24:56,800 --> 00:24:58,640
Speaker 1: April and May, when we were really in the thick

429
00:24:58,720 --> 00:25:01,480
Speaker 1: of this, the exact a committee of senior leadership group

430
00:25:01,520 --> 00:25:04,359
Speaker 1: of the company met early every single morning, and in

431
00:25:04,359 --> 00:25:06,600
Speaker 1: fact some days we met more than once to kind

432
00:25:06,600 --> 00:25:09,480
Speaker 1: of take a look across the markets, the landscape. What

433
00:25:09,520 --> 00:25:12,199
Speaker 1: did we see what's happening. Then. In wealth management, we

434
00:25:12,240 --> 00:25:15,879
Speaker 1: start our mornings now every single morning together on a

435
00:25:15,960 --> 00:25:18,360
Speaker 1: market call, kind of guiding our people to what we're

436
00:25:18,359 --> 00:25:21,280
Speaker 1: seeing in the markets, what changes are we making the portfolios,

437
00:25:21,320 --> 00:25:25,919
Speaker 1: what advice are we sharing with clients. During the spring

438
00:25:26,080 --> 00:25:29,000
Speaker 1: when markets were changing so rapidly, every single Monday, at

439
00:25:29,000 --> 00:25:31,600
Speaker 1: four o'clock after the markets closed, we held a call

440
00:25:31,680 --> 00:25:34,080
Speaker 1: for our all of our clients, sharing with them what

441
00:25:34,119 --> 00:25:36,720
Speaker 1: we were observing and what we were doing UH to

442
00:25:36,800 --> 00:25:40,159
Speaker 1: help them. On Tuesdays at four o'clock, we closed our

443
00:25:40,240 --> 00:25:44,119
Speaker 1: days together with another meeting internally, just gathering people together

444
00:25:44,200 --> 00:25:46,439
Speaker 1: and talking about some of the new things that UM

445
00:25:46,600 --> 00:25:48,480
Speaker 1: we have to learn and absorb the fee or whether

446
00:25:48,520 --> 00:25:51,280
Speaker 1: it's around low interest rates that we have, whether it's

447
00:25:51,280 --> 00:25:54,360
Speaker 1: around new planning techniques under the Cares Act or other

448
00:25:54,440 --> 00:25:57,920
Speaker 1: things UM. And on Fridays for much of this year,

449
00:25:58,000 --> 00:26:00,679
Speaker 1: we've actually closed our days together and while management four

450
00:26:00,680 --> 00:26:04,359
Speaker 1: o'clock with a very short call fifteen minutes just reflecting

451
00:26:04,400 --> 00:26:06,040
Speaker 1: on what the week is meant to all of us

452
00:26:06,280 --> 00:26:09,320
Speaker 1: personally and professionally. So we've really changed the way we

453
00:26:09,359 --> 00:26:13,199
Speaker 1: spend our time because we're going through this crisis in

454
00:26:13,320 --> 00:26:17,040
Speaker 1: such a different way than any other crisis in our history,

455
00:26:17,040 --> 00:26:20,480
Speaker 1: which is we're going through it together, but we're sitting separately,

456
00:26:20,800 --> 00:26:24,200
Speaker 1: and so we're really trying to recreate occasions to come together.

457
00:26:25,640 --> 00:26:30,720
Speaker 1: So so now we've gotten pretty close to FDA approvals

458
00:26:30,760 --> 00:26:36,960
Speaker 1: on three separate vaccines that all look extremely promising. What

459
00:26:37,040 --> 00:26:39,320
Speaker 1: do you think this is going to do? Not just

460
00:26:39,440 --> 00:26:44,240
Speaker 1: to reopening generally, but how has this experience changed what

461
00:26:44,400 --> 00:26:46,320
Speaker 1: the future of the workplace is going to be. Are

462
00:26:46,320 --> 00:26:50,520
Speaker 1: we're going to go back to en or has twenty

463
00:26:50,600 --> 00:26:55,119
Speaker 1: left a lasting impression that will change how financial services

464
00:26:55,160 --> 00:26:59,680
Speaker 1: firm are going to operate in the future. That's a

465
00:26:59,720 --> 00:27:02,480
Speaker 1: great question, Barry, and I think the answer is that

466
00:27:02,600 --> 00:27:06,919
Speaker 1: this has fundamentally changed our working model for the future.

467
00:27:07,000 --> 00:27:08,960
Speaker 1: And so let me talk about the business model. First

468
00:27:09,000 --> 00:27:11,159
Speaker 1: of all, how we work with clients. You know, I

469
00:27:11,160 --> 00:27:13,640
Speaker 1: would have said that for many, many years we had

470
00:27:13,640 --> 00:27:16,640
Speaker 1: a two legged business model. Part of it was physical,

471
00:27:16,760 --> 00:27:18,480
Speaker 1: meeting with the client in person, and part of it

472
00:27:18,520 --> 00:27:21,960
Speaker 1: was digital, the client interacting with us digital at using

473
00:27:21,960 --> 00:27:24,399
Speaker 1: our tools. I would say that this year we have

474
00:27:24,560 --> 00:27:27,560
Speaker 1: permanently added a third leg to that business model, which

475
00:27:27,560 --> 00:27:31,560
Speaker 1: is virtual. So they'll be physical, they'll be digital, but

476
00:27:31,600 --> 00:27:34,600
Speaker 1: they'll also be virtual because what we found is it's

477
00:27:34,640 --> 00:27:38,000
Speaker 1: a very efficient way to meet with people. It's an

478
00:27:38,000 --> 00:27:40,160
Speaker 1: efficient way to get a family together that may not

479
00:27:40,400 --> 00:27:43,520
Speaker 1: be living together, they might be living in different states. Um,

480
00:27:43,560 --> 00:27:46,200
Speaker 1: it's a very very efficient way to get large groups

481
00:27:46,200 --> 00:27:49,960
Speaker 1: of people together, right just for an hour meeting time. Um,

482
00:27:49,960 --> 00:27:52,680
Speaker 1: we've we've actually done some virtual events for our clients,

483
00:27:52,720 --> 00:27:55,359
Speaker 1: given you virtual tours of the Metropolitan Museum of Art

484
00:27:55,480 --> 00:27:58,639
Speaker 1: that people from all over the country are taking part in,

485
00:27:58,880 --> 00:28:01,000
Speaker 1: even without trying to in to New York. Same thing

486
00:28:01,080 --> 00:28:03,199
Speaker 1: for for the moment as our museums here in the

487
00:28:03,200 --> 00:28:05,680
Speaker 1: city of Rios m So, I think we have added

488
00:28:06,280 --> 00:28:10,040
Speaker 1: virtual as the third leg of the business model permanently,

489
00:28:10,080 --> 00:28:13,600
Speaker 1: and I think that's a really good thing. Huh. Quite

490
00:28:13,680 --> 00:28:18,320
Speaker 1: quite interesting. So it seemed was an election year and

491
00:28:18,560 --> 00:28:22,760
Speaker 1: all clients wanted to ask about was what our thoughts

492
00:28:22,800 --> 00:28:25,240
Speaker 1: were on the outcome of the election and what it

493
00:28:25,320 --> 00:28:29,440
Speaker 1: might mean. What was your experience pre election, how are

494
00:28:29,480 --> 00:28:34,520
Speaker 1: you looking at possible changes, and how um curious and

495
00:28:34,560 --> 00:28:40,760
Speaker 1: concerned was your client base. So I would say that

496
00:28:41,600 --> 00:28:43,520
Speaker 1: certain an election year, I would say it's even bigger

497
00:28:43,520 --> 00:28:45,520
Speaker 1: than that. Twenty twenty a year for the history books

498
00:28:45,600 --> 00:28:48,600
Speaker 1: when you think about what we've gone through, right, historic

499
00:28:49,240 --> 00:28:52,560
Speaker 1: actions in the markets, historic actions by central banks, historic

500
00:28:52,920 --> 00:28:56,400
Speaker 1: global pandemic, historic election. It's just been a year for

501
00:28:56,480 --> 00:28:58,760
Speaker 1: the history books, and we're all going to look back

502
00:28:58,800 --> 00:29:01,680
Speaker 1: on this um and remember what it was like to

503
00:29:01,720 --> 00:29:04,720
Speaker 1: go through it together. I think specifically with respect to

504
00:29:04,760 --> 00:29:09,400
Speaker 1: the election, our clients have had questions really about two things, um,

505
00:29:09,480 --> 00:29:12,720
Speaker 1: leading into the election and after. The first is, you know,

506
00:29:12,760 --> 00:29:15,880
Speaker 1: elections are really about policies, right, what do we think

507
00:29:15,920 --> 00:29:20,360
Speaker 1: the policies of the new administration the new Congress might adopt.

508
00:29:20,400 --> 00:29:22,720
Speaker 1: And so our clients are business people, they were concerned

509
00:29:22,720 --> 00:29:26,960
Speaker 1: about policies related to different industry segments, and also about

510
00:29:27,000 --> 00:29:29,360
Speaker 1: taxes because, of course, as I said before, our clients

511
00:29:29,360 --> 00:29:32,480
Speaker 1: pay taxes every year and every generation. So those were

512
00:29:32,560 --> 00:29:36,040
Speaker 1: really the two areas that we were spending time on

513
00:29:36,120 --> 00:29:38,640
Speaker 1: with clients. And with respect the taxes, our clients have

514
00:29:39,320 --> 00:29:42,680
Speaker 1: you know, an understanding that really tax rates in this

515
00:29:42,800 --> 00:29:46,160
Speaker 1: country have been declining, you know since the nineteen seventy

516
00:29:46,920 --> 00:29:49,880
Speaker 1: right when we look at federal tax rates, income tax rates,

517
00:29:49,920 --> 00:29:53,120
Speaker 1: couple of themes, tax rates, corporate tax rates, you know,

518
00:29:53,160 --> 00:29:55,680
Speaker 1: they have been coming down. So our clients have been

519
00:29:55,720 --> 00:29:59,040
Speaker 1: awareness that we are at you know, sort of multi

520
00:29:59,160 --> 00:30:01,959
Speaker 1: decade low on tax rights, and they also have an

521
00:30:02,000 --> 00:30:05,360
Speaker 1: awareness that we've got you know, deficit spending and pressures

522
00:30:05,400 --> 00:30:08,479
Speaker 1: on on the budget, so they focus very very keenly

523
00:30:09,120 --> 00:30:13,320
Speaker 1: on tax rates. And I think, um, you know, we

524
00:30:13,400 --> 00:30:16,160
Speaker 1: we wait to see what the outcome of the Georgia

525
00:30:16,280 --> 00:30:20,520
Speaker 1: elections will be. Um to clee, you know, what's the

526
00:30:20,560 --> 00:30:24,160
Speaker 1: more likely outcome on passing some of the policies and

527
00:30:24,560 --> 00:30:28,680
Speaker 1: related to taxes and other things in the Biden Harris administration.

528
00:30:29,520 --> 00:30:33,280
Speaker 1: We will see, we will see. So so that raises

529
00:30:33,400 --> 00:30:37,000
Speaker 1: questions we've we've already seen the certification and the transition

530
00:30:37,800 --> 00:30:41,080
Speaker 1: um phase begin. That was sort of up in the

531
00:30:41,120 --> 00:30:44,560
Speaker 1: air for a while. But as you referred, we don't

532
00:30:44,560 --> 00:30:46,960
Speaker 1: know what's going to happen in the runoff election and

533
00:30:47,000 --> 00:30:50,360
Speaker 1: whether or not there'll be a change in control in

534
00:30:50,440 --> 00:30:54,720
Speaker 1: the Senate. But given that, what sort of things should

535
00:30:54,800 --> 00:31:02,240
Speaker 1: investors be doing in to prepare for potential changes or

536
00:31:02,600 --> 00:31:07,040
Speaker 1: should they not are there even if the Senate flips?

537
00:31:07,680 --> 00:31:10,160
Speaker 1: Does it matter what's done now? Can it wait till?

538
00:31:11,400 --> 00:31:15,520
Speaker 1: How are you advising clients? So what we would tell

539
00:31:15,560 --> 00:31:20,800
Speaker 1: our clients is to take the step that makes sense

540
00:31:21,320 --> 00:31:26,080
Speaker 1: for your long term plans. If it makes sense to diversify.

541
00:31:26,160 --> 00:31:28,880
Speaker 1: Many of our clients their wealth is created in concentration,

542
00:31:29,000 --> 00:31:31,320
Speaker 1: right they found the company. They have a concentration and

543
00:31:32,040 --> 00:31:34,560
Speaker 1: a single stock. That's how wealth is created in this country.

544
00:31:34,560 --> 00:31:36,760
Speaker 1: We can think of the wealthiest people in the country

545
00:31:36,800 --> 00:31:39,120
Speaker 1: and we know how Jeff Bezos and everybody else created

546
00:31:39,160 --> 00:31:41,160
Speaker 1: their wealth. So we tell them, if it makes sense

547
00:31:41,200 --> 00:31:44,920
Speaker 1: for your long term plan to be making some changeup

548
00:31:44,960 --> 00:31:49,560
Speaker 1: to your investment portfolio, perhaps to diversifying, perhaps to taking

549
00:31:49,600 --> 00:31:52,760
Speaker 1: some capital gains, that you should do that. If it

550
00:31:52,840 --> 00:31:55,040
Speaker 1: makes sense for the long term, you should stick with

551
00:31:55,160 --> 00:31:58,720
Speaker 1: that long term plan. You know, in the meantime, markets

552
00:31:58,720 --> 00:32:01,760
Speaker 1: tend to like divide. It is government. Markets have done

553
00:32:01,840 --> 00:32:04,600
Speaker 1: very well with divided government. And we've had divided government

554
00:32:04,640 --> 00:32:08,800
Speaker 1: actually for much of the last twenty years. So um

555
00:32:08,920 --> 00:32:11,400
Speaker 1: and and that's what the market is tending to expect

556
00:32:11,520 --> 00:32:14,240
Speaker 1: right now, is divided government. You've had, you have lower

557
00:32:14,320 --> 00:32:18,600
Speaker 1: you will have lower democratic majorities in the House. The

558
00:32:18,640 --> 00:32:22,320
Speaker 1: Senate will be very close. So the market is expecting

559
00:32:22,360 --> 00:32:25,440
Speaker 1: a relatively balanced outcome. And what we say to our

560
00:32:25,520 --> 00:32:28,360
Speaker 1: clients is, you know, stick with that long term plan,

561
00:32:28,400 --> 00:32:30,720
Speaker 1: and if there are decisions that you make that you

562
00:32:30,720 --> 00:32:32,760
Speaker 1: would make for the long term, you should make them.

563
00:32:33,160 --> 00:32:35,800
Speaker 1: There are things that are highly tactical right now. Right

564
00:32:35,920 --> 00:32:39,120
Speaker 1: interest rates to the lowest that we've seen in our lifetimes,

565
00:32:39,160 --> 00:32:43,480
Speaker 1: and that includes for the state planning right, inter family gifts,

566
00:32:43,640 --> 00:32:48,640
Speaker 1: lit interests, trust, interfamily loans, lowest interest rates ever. So

567
00:32:48,680 --> 00:32:51,920
Speaker 1: there's a very tactical aspect of that. And the other

568
00:32:52,000 --> 00:32:56,600
Speaker 1: thing that's tactical is that the estate tax exemption is scheduled,

569
00:32:56,600 --> 00:33:00,240
Speaker 1: which is currently roughly twenty three million approximately. I lost

570
00:33:00,280 --> 00:33:04,600
Speaker 1: a husband and a wife that is tended to reduce

571
00:33:05,000 --> 00:33:08,560
Speaker 1: in the so, you know, using things that are going

572
00:33:08,600 --> 00:33:12,040
Speaker 1: to go away makes a lot of sense. Let's talk

573
00:33:12,080 --> 00:33:16,040
Speaker 1: a little bit about alternatives. UH. They play a huge

574
00:33:16,160 --> 00:33:20,560
Speaker 1: role in the institutional world, especially UH in the endowment space.

575
00:33:21,400 --> 00:33:25,560
Speaker 1: We're seeing more and more interest in that space, especially

576
00:33:25,720 --> 00:33:29,720
Speaker 1: private equity UH these days. How is this going to

577
00:33:29,840 --> 00:33:34,360
Speaker 1: play out? What sort of interest are you seeing from

578
00:33:34,600 --> 00:33:38,160
Speaker 1: your client group, and what do you think the future

579
00:33:38,240 --> 00:33:41,560
Speaker 1: of alternatives are going to be in the investment management space?

580
00:33:41,760 --> 00:33:45,200
Speaker 1: Good question. You know, our clients are business people and

581
00:33:45,280 --> 00:33:48,320
Speaker 1: so as a as a baseline, they're very comfortable with

582
00:33:48,440 --> 00:33:50,920
Speaker 1: private businesses and private markets because that tends to be

583
00:33:51,000 --> 00:33:54,560
Speaker 1: how many of them have become successful. So they understand

584
00:33:54,600 --> 00:33:57,360
Speaker 1: that as as business people. You know, when we think

585
00:33:57,400 --> 00:34:00,840
Speaker 1: about portfolios and again, trying to have individ digital investors

586
00:34:00,880 --> 00:34:04,000
Speaker 1: achieved the kinds of long term returns and institution paths

587
00:34:04,680 --> 00:34:08,600
Speaker 1: alternatives is very much a part of that. And capital

588
00:34:08,640 --> 00:34:11,839
Speaker 1: market structure has changed a lot over the last twenty years.

589
00:34:11,840 --> 00:34:14,799
Speaker 1: If we think about capital markets and what's happened, you know,

590
00:34:14,880 --> 00:34:17,720
Speaker 1: you've seen a steady decline in the number of public

591
00:34:17,760 --> 00:34:20,200
Speaker 1: companies in this country. We now have fewer than five

592
00:34:20,239 --> 00:34:22,719
Speaker 1: thousand public companies. At one time that was as many

593
00:34:22,719 --> 00:34:25,279
Speaker 1: as eight thousands. And at the same time, you've seen

594
00:34:25,280 --> 00:34:28,799
Speaker 1: a very large increase in the number of private companies

595
00:34:29,160 --> 00:34:33,120
Speaker 1: that are backed by private equity and venture capital funds,

596
00:34:33,120 --> 00:34:35,279
Speaker 1: to the point where you now have more of those

597
00:34:35,320 --> 00:34:38,400
Speaker 1: private companies that are backed by private equity funds and

598
00:34:38,480 --> 00:34:42,319
Speaker 1: venture capital funds then you have public companies, So you

599
00:34:42,360 --> 00:34:46,960
Speaker 1: have a much bigger investment universe in the private equity space.

600
00:34:47,360 --> 00:34:50,200
Speaker 1: And you we also see that companies tend to be

601
00:34:50,440 --> 00:34:54,879
Speaker 1: staying public longer, particularly to venture backed companies and so

602
00:34:55,320 --> 00:35:00,200
Speaker 1: there's a very large alternative universe out there where lot

603
00:35:00,200 --> 00:35:02,560
Speaker 1: of value is being created, and we think it's very

604
00:35:02,600 --> 00:35:05,640
Speaker 1: important for our clients to have exposure to that for

605
00:35:05,719 --> 00:35:09,600
Speaker 1: the long term, because what you've seen over time is

606
00:35:09,640 --> 00:35:12,160
Speaker 1: that when you give up the daily liquidity of a

607
00:35:12,320 --> 00:35:16,719
Speaker 1: public markets, you tend to earn a liquidity premium and

608
00:35:16,800 --> 00:35:19,239
Speaker 1: private markets, and that liquidity premium could be as much

609
00:35:19,239 --> 00:35:22,080
Speaker 1: as three four five percent a year. And so if

610
00:35:22,120 --> 00:35:24,760
Speaker 1: I go back to you know, kind of our outlook

611
00:35:24,800 --> 00:35:26,840
Speaker 1: for markets for the next decade, and the fact that

612
00:35:26,880 --> 00:35:29,279
Speaker 1: we think public market returns are probably going to be

613
00:35:29,320 --> 00:35:33,440
Speaker 1: incrementally lower, speaking out, those excess returns that you can

614
00:35:33,480 --> 00:35:36,480
Speaker 1: get in private markets are going to be even more

615
00:35:36,600 --> 00:35:40,600
Speaker 1: important for wealthy clients. Let's talk a little bit about

616
00:35:40,640 --> 00:35:47,360
Speaker 1: the traditional sixty forty portfolio stocks, bonds. You have called

617
00:35:47,400 --> 00:35:51,680
Speaker 1: it a quote relic of the past. Tell us why so?

618
00:35:51,760 --> 00:35:57,400
Speaker 1: The sixty forty portfolio for many, many decades gave clients

619
00:35:57,400 --> 00:36:02,880
Speaker 1: a combination of um good returns and equity markets you know,

620
00:36:02,960 --> 00:36:06,200
Speaker 1: call it high single digit returns and equity markets, and

621
00:36:06,280 --> 00:36:09,880
Speaker 1: good returns and fixed income markets call it mid single

622
00:36:09,960 --> 00:36:13,279
Speaker 1: digit returns. In the fixed income markets, you know, as

623
00:36:13,320 --> 00:36:17,759
Speaker 1: we look ahead, for the reasons that we've we've been discussing,

624
00:36:17,840 --> 00:36:21,960
Speaker 1: we've see modestly lower returns and public equity markets, and now,

625
00:36:22,120 --> 00:36:25,480
Speaker 1: particularly this year after the actions of the Federal Reserve

626
00:36:25,520 --> 00:36:28,880
Speaker 1: and reducing interest rates, we see lower returns and fixed

627
00:36:28,880 --> 00:36:31,840
Speaker 1: income markets as well. And so the question is what

628
00:36:32,000 --> 00:36:35,440
Speaker 1: is that sixty forty portfolio becomes in it? And the

629
00:36:35,480 --> 00:36:41,080
Speaker 1: answer is it really depends upon you, your long term objectives,

630
00:36:41,120 --> 00:36:44,880
Speaker 1: your needs for liquidity. But at a minimum, it probably

631
00:36:44,960 --> 00:36:48,880
Speaker 1: isn't the sixty forty for almost anybody anymore. Right, It

632
00:36:48,960 --> 00:36:51,279
Speaker 1: might become a sixty five thirty five. It might be

633
00:36:51,320 --> 00:36:55,320
Speaker 1: a seventy thirty. It could even be an eight d twenty,

634
00:36:55,520 --> 00:37:00,000
Speaker 1: depending on your age, your outlook, your needs, your objectives,

635
00:37:00,040 --> 00:37:02,600
Speaker 1: and those are the that's the modeling that we're going

636
00:37:02,680 --> 00:37:05,440
Speaker 1: through with every client right now, because we would look

637
00:37:05,480 --> 00:37:11,640
Speaker 1: at that portfolio that might have fairly reliably delivered call

638
00:37:11,719 --> 00:37:14,840
Speaker 1: it a seven percent, you know, annualized return over the

639
00:37:14,920 --> 00:37:17,480
Speaker 1: last couple of decades, and we would say, you know,

640
00:37:17,520 --> 00:37:20,759
Speaker 1: our outlook right now, it's probably that that's more like

641
00:37:20,840 --> 00:37:24,320
Speaker 1: five percent. If you leave left to its own devices,

642
00:37:24,520 --> 00:37:26,719
Speaker 1: is probably more like five percent. It could even be

643
00:37:26,760 --> 00:37:31,080
Speaker 1: a little lower. How do we help to capture those

644
00:37:31,120 --> 00:37:33,120
Speaker 1: additional returns? And it will be some of the things

645
00:37:33,120 --> 00:37:36,520
Speaker 1: that we've talked about, right, It'll be things like um

646
00:37:36,560 --> 00:37:41,720
Speaker 1: diversifying into private markets. It will also be about diversifying

647
00:37:41,719 --> 00:37:44,320
Speaker 1: a bit away from the United States. The United States

648
00:37:44,719 --> 00:37:48,240
Speaker 1: equity markets have led the world since the financial crisis.

649
00:37:48,280 --> 00:37:49,920
Speaker 1: We actually think that we might see a bit of

650
00:37:49,920 --> 00:37:53,399
Speaker 1: a rotation they're going forward, So diversifying the way from

651
00:37:53,440 --> 00:37:56,799
Speaker 1: the United States. In your bond portfolio, it probably means

652
00:37:56,840 --> 00:38:01,120
Speaker 1: having a smaller allocation to bond because the yield will

653
00:38:01,120 --> 00:38:05,120
Speaker 1: be lower, but it also means finding some other things

654
00:38:05,160 --> 00:38:08,279
Speaker 1: that you can sort of reliably sleep at night with.

655
00:38:08,520 --> 00:38:13,360
Speaker 1: Maybe it's more like absolute return hedge funds, for example

656
00:38:14,040 --> 00:38:17,880
Speaker 1: um so's. It's a tweaking of that portfolio. It is

657
00:38:17,960 --> 00:38:21,919
Speaker 1: not a huge rewrite. It's a tweak and it's being

658
00:38:21,920 --> 00:38:26,680
Speaker 1: tweaked every day, slightly differently for every client. Huh, what

659
00:38:26,800 --> 00:38:29,520
Speaker 1: do you think in the fixed income space of things

660
00:38:29,560 --> 00:38:33,960
Speaker 1: like high quality corporates, muni bonds, and we are occasionally

661
00:38:34,000 --> 00:38:37,800
Speaker 1: getting questions about preferred what are your thoughts there? You know,

662
00:38:37,960 --> 00:38:41,440
Speaker 1: for us, the fixed income portfolio is the is the

663
00:38:41,560 --> 00:38:43,960
Speaker 1: balance right to the to the risk that you take

664
00:38:44,000 --> 00:38:46,759
Speaker 1: in the rest of your portfolio. So we do tend

665
00:38:46,800 --> 00:38:51,000
Speaker 1: to focus a lot on quality, right, higher quality. UM,

666
00:38:51,080 --> 00:38:55,080
Speaker 1: we actually focus very much right now on duration because UM,

667
00:38:55,120 --> 00:38:58,080
Speaker 1: you know, duration has actually extended, meaning that there's more

668
00:38:58,400 --> 00:39:02,560
Speaker 1: duration risk in portfolio. So, UM, those are the two

669
00:39:02,560 --> 00:39:05,759
Speaker 1: things that were most focused on in fixed income right now.

670
00:39:06,239 --> 00:39:08,400
Speaker 1: I have to ask you a couple of questions about

671
00:39:09,200 --> 00:39:12,680
Speaker 1: philanthropy and your clients. I know you're on the investment

672
00:39:12,719 --> 00:39:16,920
Speaker 1: committee of the Howard Used Medical Institute and the Helmsley

673
00:39:17,000 --> 00:39:21,040
Speaker 1: Charitable Trust, and you were on a couple of of

674
00:39:21,080 --> 00:39:25,920
Speaker 1: your alma materas on the investment committees. Uh, how are

675
00:39:26,040 --> 00:39:31,239
Speaker 1: clients thinking about philanthropy these days? What what issues seem

676
00:39:31,320 --> 00:39:34,839
Speaker 1: to be dominated Tving make two points about philanthropy. One

677
00:39:34,960 --> 00:39:37,760
Speaker 1: is that we are a very very generous country and culture,

678
00:39:38,040 --> 00:39:40,360
Speaker 1: and we've seen that this year. We've seen that across

679
00:39:40,400 --> 00:39:43,920
Speaker 1: our client base. We've seen charitable giving going up, and

680
00:39:44,120 --> 00:39:48,319
Speaker 1: donor advise funds and outright gifts and trust gifts and

681
00:39:48,400 --> 00:39:53,680
Speaker 1: planned giving. So we are a very very generous country

682
00:39:53,719 --> 00:39:56,560
Speaker 1: and culture and that's very inspiring. The other thing that

683
00:39:56,760 --> 00:40:00,080
Speaker 1: I think has been just amazing to watch into a

684
00:40:00,080 --> 00:40:02,520
Speaker 1: certain extent to be part of this year is to

685
00:40:02,640 --> 00:40:09,080
Speaker 1: watch how philanthropic resources have gotten together and just attacked

686
00:40:09,120 --> 00:40:12,160
Speaker 1: where the needs are. Right. So you mentioned Howard Hughes.

687
00:40:12,200 --> 00:40:15,040
Speaker 1: You mentioned helpfully they both focus on healthcare and they

688
00:40:15,080 --> 00:40:19,719
Speaker 1: have dived in UM to opportunities and challenges created and

689
00:40:19,840 --> 00:40:22,320
Speaker 1: healthcare related to the virus. You know, I think about

690
00:40:22,320 --> 00:40:25,120
Speaker 1: our company. We have been you know, we're headquartered here

691
00:40:25,120 --> 00:40:27,560
Speaker 1: in New York City, and we've we've sort of dived

692
00:40:27,560 --> 00:40:29,560
Speaker 1: in through needs that we've seen here in the city.

693
00:40:29,880 --> 00:40:34,120
Speaker 1: We've provided iPads to a hospital system for patients to

694
00:40:34,160 --> 00:40:36,880
Speaker 1: be able to communicate with family members when they couldn't visit.

695
00:40:37,440 --> 00:40:42,200
Speaker 1: We've helped homeless shelters get WiFi for students that might

696
00:40:42,200 --> 00:40:44,840
Speaker 1: be living in shelters that needs to do remote learning.

697
00:40:44,920 --> 00:40:47,640
Speaker 1: So I think one of the things about this year

698
00:40:47,680 --> 00:40:54,359
Speaker 1: has just been seeing UM philanthropists dive in to meet

699
00:40:54,400 --> 00:40:58,799
Speaker 1: the needs that were created so unexpectedly. You mentioned that

700
00:40:58,960 --> 00:41:03,959
Speaker 1: some of the UM non traditional gifting techniques are quote

701
00:41:04,040 --> 00:41:08,520
Speaker 1: unquote on sale, things like charitable lead trusts or grant

702
00:41:08,600 --> 00:41:12,280
Speaker 1: or retain annuity trusts. Tell us about some of these

703
00:41:13,400 --> 00:41:19,680
Speaker 1: mechanisms that allow families to very advantageously make donations to

704
00:41:19,840 --> 00:41:23,520
Speaker 1: their favorite philanthropies. So it really depends very on the

705
00:41:23,600 --> 00:41:25,520
Speaker 1: type of the gift. If you make an outright gift,

706
00:41:25,600 --> 00:41:27,200
Speaker 1: you value it on the day of the gift, you know,

707
00:41:27,640 --> 00:41:30,760
Speaker 1: um what that is, and you've you've made an absolute

708
00:41:30,760 --> 00:41:34,160
Speaker 1: transfer of it. But sometimes gifts are split interest gifts.

709
00:41:34,600 --> 00:41:37,960
Speaker 1: You might keep an interest and give away the remainder.

710
00:41:38,080 --> 00:41:41,840
Speaker 1: You do that um with a charitable lead trust or

711
00:41:41,880 --> 00:41:44,400
Speaker 1: a charitable remainder trust. You do that with a grant

712
00:41:44,520 --> 00:41:48,040
Speaker 1: or retain annuity trust. And the interesting thing about split

713
00:41:48,120 --> 00:41:51,920
Speaker 1: interest gifts is that you have to value what you're keeping,

714
00:41:52,440 --> 00:41:54,000
Speaker 1: because that's not a gift. You don't make a gift

715
00:41:54,040 --> 00:41:58,080
Speaker 1: yourself um, And the gift really is the remainder what

716
00:41:58,160 --> 00:42:00,640
Speaker 1: you're not, what you haven't kept. And the reason that

717
00:42:00,719 --> 00:42:03,759
Speaker 1: there's such a compelling opportunity right now is that the

718
00:42:03,840 --> 00:42:06,960
Speaker 1: value of what you've kept is discounted at very very

719
00:42:07,040 --> 00:42:11,080
Speaker 1: very low interest rates UM, and so that means that

720
00:42:11,160 --> 00:42:13,880
Speaker 1: potentially there could be a large gift just market succeed

721
00:42:14,000 --> 00:42:15,759
Speaker 1: you know, low interest rates, there could be a large

722
00:42:15,800 --> 00:42:19,120
Speaker 1: gift um at the end to the beneficiary, whether that's

723
00:42:19,120 --> 00:42:20,840
Speaker 1: a charity or a family member. So it's a pretty

724
00:42:20,840 --> 00:42:25,800
Speaker 1: technical estate planning environment, but lots of opportunities for clients.

725
00:42:26,880 --> 00:42:31,040
Speaker 1: One of the areas we did not get into was environmental,

726
00:42:31,120 --> 00:42:34,480
Speaker 1: social and governance E s G investing. Tell us a

727
00:42:34,520 --> 00:42:38,000
Speaker 1: little bit about that space. What what are your clients thinking?

728
00:42:38,040 --> 00:42:41,400
Speaker 1: They're so when it comes to environmental, social and governance matters,

729
00:42:41,520 --> 00:42:47,360
Speaker 1: we view those considerations. It's just basic considerations that you

730
00:42:47,360 --> 00:42:50,680
Speaker 1: should employ as an investor and as an active manager.

731
00:42:50,840 --> 00:42:54,880
Speaker 1: So we look at those considerations when we make decisions

732
00:42:55,040 --> 00:42:58,440
Speaker 1: as investors. I think that in a in the big

733
00:42:58,480 --> 00:43:02,320
Speaker 1: scheme of things, you know e s G. Environmental social

734
00:43:02,320 --> 00:43:07,920
Speaker 1: governance considerations. Interestingly enough, there was a time when people

735
00:43:08,000 --> 00:43:11,239
Speaker 1: were concerned that if you took those into account, you

736
00:43:11,320 --> 00:43:14,200
Speaker 1: might be limiting your investment universe. Is therefore, you might

737
00:43:14,239 --> 00:43:18,040
Speaker 1: potentially limit your return because you're investing in a smaller

738
00:43:18,120 --> 00:43:21,960
Speaker 1: universe of companies. In fact, what we've seen happen over

739
00:43:22,000 --> 00:43:25,200
Speaker 1: the last ten years or so, if investors had come

740
00:43:25,280 --> 00:43:28,800
Speaker 1: to realize that these are factors that should be taken

741
00:43:28,800 --> 00:43:31,360
Speaker 1: into account, and if you don't take them into account,

742
00:43:31,440 --> 00:43:36,080
Speaker 1: you might actually increase your risk. So, in our view,

743
00:43:36,280 --> 00:43:40,480
Speaker 1: the whole, the whole rubric of E, S G has

744
00:43:40,520 --> 00:43:43,960
Speaker 1: now become just a fundamental part of investing. Now, when

745
00:43:43,960 --> 00:43:48,160
Speaker 1: it comes to any particular family, they might have particular

746
00:43:48,239 --> 00:43:52,759
Speaker 1: passions or concerns related to E or F or G,

747
00:43:53,120 --> 00:43:55,719
Speaker 1: and we can take those into account and Taylor that

748
00:43:55,840 --> 00:43:58,920
Speaker 1: in general as investors, we just look at those factors

749
00:43:58,920 --> 00:44:04,600
Speaker 1: as things that any um analytical investors should take into account.

750
00:44:05,600 --> 00:44:09,279
Speaker 1: So so let's stay with the governance side of that.

751
00:44:09,920 --> 00:44:14,319
Speaker 1: There was a Deloitte study They found that women in

752
00:44:14,520 --> 00:44:19,919
Speaker 1: leadership roles in the financial services industry was a rather paltry.

753
00:44:21,320 --> 00:44:26,160
Speaker 1: At your firm, the leadership group or women, that is

754
00:44:26,360 --> 00:44:31,279
Speaker 1: quite a success story compared to the industry. How was

755
00:44:31,400 --> 00:44:36,680
Speaker 1: b n y Melon capable of achieving such such success

756
00:44:36,719 --> 00:44:42,320
Speaker 1: in that space? Well, look at the wealth management industry.

757
00:44:42,360 --> 00:44:45,200
Speaker 1: We understand how important diversity is. Our clients are diverse,

758
00:44:45,320 --> 00:44:48,440
Speaker 1: we represent families, so we know how important it is

759
00:44:48,480 --> 00:44:51,080
Speaker 1: to our business. But apart from that, you know, the

760
00:44:51,160 --> 00:44:56,560
Speaker 1: data is really clear. Diverse leadership teams have lower cost

761
00:44:56,640 --> 00:45:01,360
Speaker 1: of capital, Diverse investment teams have better investment returns, Diverse

762
00:45:01,520 --> 00:45:05,680
Speaker 1: sales teams have better sales performance. The data is really clear.

763
00:45:06,200 --> 00:45:09,120
Speaker 1: The diversity. It's good for business and it's good for

764
00:45:09,160 --> 00:45:12,560
Speaker 1: investment businesses. So there's simply no question about that. Who

765
00:45:12,600 --> 00:45:15,960
Speaker 1: asked about why is it that the industry maybe hasn't

766
00:45:16,000 --> 00:45:18,840
Speaker 1: been as diverse as um we are and that we

767
00:45:18,880 --> 00:45:21,360
Speaker 1: wanted to be? And I think there are really two reasons, Verry.

768
00:45:21,640 --> 00:45:24,360
Speaker 1: The first one is visibility. You know, when I was

769
00:45:24,400 --> 00:45:26,799
Speaker 1: growing up, I'm from Washington, DC, and when I was

770
00:45:26,840 --> 00:45:30,719
Speaker 1: growing up, I didn't really see finance or investing or

771
00:45:30,719 --> 00:45:33,600
Speaker 1: financial services of a career. Back then. This was, you know,

772
00:45:33,600 --> 00:45:36,319
Speaker 1: in the nineteen and Washington, and I saw lots of

773
00:45:36,360 --> 00:45:40,120
Speaker 1: great careers public service and medicine and law. My dad

774
00:45:40,120 --> 00:45:43,479
Speaker 1: as a lawyer, Um, you know, real estate, all sorts

775
00:45:43,520 --> 00:45:47,920
Speaker 1: of things, media, But I wouldn't necessarily see financial services.

776
00:45:47,960 --> 00:45:51,440
Speaker 1: It wasn't until I was a professional that I realized, um,

777
00:45:51,440 --> 00:45:54,120
Speaker 1: that that was a career you know, that I could pursue.

778
00:45:54,200 --> 00:45:57,560
Speaker 1: And so one thing that's happened since then is that

779
00:45:57,880 --> 00:46:02,920
Speaker 1: Marcus took democratized that shift from pension plans to furrowing

780
00:46:03,000 --> 00:46:06,600
Speaker 1: case and personal savings markets have democratized, and so I

781
00:46:06,640 --> 00:46:09,719
Speaker 1: think the industry is much more visible, and I try

782
00:46:09,719 --> 00:46:11,719
Speaker 1: to do things to make it as visible as I can.

783
00:46:11,800 --> 00:46:14,480
Speaker 1: For women, part of what we're doing today because I

784
00:46:14,520 --> 00:46:16,960
Speaker 1: just think it's really important. It's a wonderful industry and

785
00:46:16,960 --> 00:46:20,160
Speaker 1: a wonderful career. So visibility is the first, but then

786
00:46:20,160 --> 00:46:22,680
Speaker 1: the second thing, that's the process. Right. We are in

787
00:46:22,680 --> 00:46:27,640
Speaker 1: industry that is challenged by markets, the change all day

788
00:46:27,640 --> 00:46:30,880
Speaker 1: every day. Right, we are in industry that tends to

789
00:46:30,920 --> 00:46:34,480
Speaker 1: have to absorb information and move very quickly. And sometimes

790
00:46:34,480 --> 00:46:37,960
Speaker 1: when it comes to diversity, moving too quickly is not

791
00:46:38,080 --> 00:46:41,320
Speaker 1: the best thing to do. Sometimes you need to slow down.

792
00:46:41,800 --> 00:46:43,839
Speaker 1: You need to have a good process, and you need

793
00:46:43,840 --> 00:46:47,279
Speaker 1: to cast your nest widely when you're thinking about recruiting

794
00:46:47,640 --> 00:46:50,640
Speaker 1: and promoting, and that does take a little longer, but

795
00:46:50,800 --> 00:46:54,200
Speaker 1: the but the result tends to be much better if

796
00:46:54,239 --> 00:46:56,759
Speaker 1: you can just slow down a little and have a

797
00:46:56,760 --> 00:47:01,680
Speaker 1: great process that's very inclusive. M it's quite interesting we're

798
00:47:01,719 --> 00:47:05,880
Speaker 1: recording this on a day when black Rock bought a

799
00:47:06,480 --> 00:47:10,480
Speaker 1: direct indexing fund for about a billion dollars. What are

800
00:47:10,480 --> 00:47:15,240
Speaker 1: your thoughts given what you said about tax advantaged alpha

801
00:47:15,320 --> 00:47:22,680
Speaker 1: of direct indexing and its ability to um generate better

802
00:47:22,800 --> 00:47:28,319
Speaker 1: after tax returns versus traditional indexing. So I think when

803
00:47:28,320 --> 00:47:31,400
Speaker 1: it comes to wealth management, there's a role to play

804
00:47:31,480 --> 00:47:34,320
Speaker 1: for broad market indexes, but there's also a role to

805
00:47:34,400 --> 00:47:37,640
Speaker 1: play for customizing the indexes. Right, So you might be

806
00:47:37,680 --> 00:47:43,120
Speaker 1: customizing them for um particular um tax outcomes. Right, you

807
00:47:43,120 --> 00:47:46,239
Speaker 1: can tax Harve's losses and customize for the kind of

808
00:47:46,280 --> 00:47:49,680
Speaker 1: tax outcome you want. You might be customizing them for

809
00:47:49,719 --> 00:47:53,880
Speaker 1: other reasons, right to form an index that is a

810
00:47:53,880 --> 00:47:56,880
Speaker 1: little bit different than the market but helps to accomplish

811
00:47:56,880 --> 00:47:59,040
Speaker 1: a particular passion and goal with your clients. So I

812
00:47:59,080 --> 00:48:02,719
Speaker 1: think there are there are roles for broad market indexes,

813
00:48:02,760 --> 00:48:06,040
Speaker 1: but increasingly I think there are roles for customizing those

814
00:48:06,080 --> 00:48:10,560
Speaker 1: indexes too, after tax returns or other goals that a

815
00:48:10,640 --> 00:48:13,000
Speaker 1: client has. And we really see that at the future

816
00:48:13,040 --> 00:48:14,560
Speaker 1: and in a way that we spend a lot of

817
00:48:14,600 --> 00:48:18,279
Speaker 1: our time. Let me let me throw a curve ball

818
00:48:18,360 --> 00:48:21,440
Speaker 1: at you. I know B and Y Melon's founder was

819
00:48:21,520 --> 00:48:26,680
Speaker 1: Alexander Hamilton's. How did the play resonate within B and

820
00:48:26,840 --> 00:48:32,640
Speaker 1: Y Melon? What? What? What was the response within the firm?

821
00:48:32,680 --> 00:48:35,440
Speaker 1: So obviously we're very proud of our history of Alexander

822
00:48:35,480 --> 00:48:39,240
Speaker 1: Hamilton's and Eliza, as I said, and Eliza his widow,

823
00:48:39,280 --> 00:48:42,200
Speaker 1: who was actually our first client in wealth management. We

824
00:48:42,239 --> 00:48:44,680
Speaker 1: love the musical. We love the musical We love the

825
00:48:44,719 --> 00:48:47,520
Speaker 1: way it makes our history come to life. We actually

826
00:48:47,560 --> 00:48:50,920
Speaker 1: enjoyed watching the streaming versions over the summer. One of

827
00:48:50,920 --> 00:48:53,120
Speaker 1: the fun things that we did UM as a group

828
00:48:53,239 --> 00:48:57,800
Speaker 1: in wealth management. But you know, when I think about UM,

829
00:48:57,840 --> 00:49:00,000
Speaker 1: you know the musical, you know, one of the things

830
00:49:00,040 --> 00:49:02,920
Speaker 1: was that that has always top of mind. Has happens

831
00:49:02,960 --> 00:49:05,680
Speaker 1: to be my favorite song in the musical, as the

832
00:49:05,760 --> 00:49:09,480
Speaker 1: rumor it happens, and that's the one about the compromise

833
00:49:09,560 --> 00:49:12,239
Speaker 1: between the Northern States and the Southern States to move

834
00:49:12,320 --> 00:49:14,719
Speaker 1: the capital from New York City to Washington, d C.

835
00:49:15,280 --> 00:49:17,520
Speaker 1: I obviously live in New York right now, I'm from Washington,

836
00:49:17,560 --> 00:49:21,120
Speaker 1: d C. But I think that that whole process of

837
00:49:21,280 --> 00:49:24,879
Speaker 1: compromise and give and take, it's something that we do

838
00:49:25,000 --> 00:49:28,160
Speaker 1: every single day as we debate UM, you know, investment

839
00:49:28,200 --> 00:49:31,680
Speaker 1: portfolios and decisions and things like that with clients, and

840
00:49:31,760 --> 00:49:34,160
Speaker 1: I think increasingly it's something that we're all looking to

841
00:49:34,239 --> 00:49:38,319
Speaker 1: our government to do right in Washington. So we love

842
00:49:38,360 --> 00:49:40,960
Speaker 1: the We love the show, We love the history that

843
00:49:41,000 --> 00:49:43,720
Speaker 1: bliss us all the time. And thank you for asking

844
00:49:44,080 --> 00:49:46,480
Speaker 1: tell us what you're streaming these days. You mentioned the

845
00:49:46,560 --> 00:49:51,359
Speaker 1: Disney Plus version of Hamilton's which was spectacular. What else

846
00:49:51,400 --> 00:49:54,239
Speaker 1: are you watching on either Netflix or Amazon Prime or

847
00:49:54,560 --> 00:49:58,319
Speaker 1: or whatever. So I'm streaming a couple of things. One

848
00:49:58,440 --> 00:49:59,840
Speaker 1: is the Crown. I think it's hard to be in

849
00:49:59,880 --> 00:50:02,360
Speaker 1: a American and not have an affinity for the special

850
00:50:02,360 --> 00:50:06,080
Speaker 1: relationship we've always had with the UK. I actually even

851
00:50:06,120 --> 00:50:09,920
Speaker 1: tuned in in the spring when Queen Elizabeth addressed the

852
00:50:10,000 --> 00:50:12,400
Speaker 1: United Kingdom for only the fifth or sixth time in

853
00:50:12,440 --> 00:50:15,680
Speaker 1: her whole life about the pandemic, and I found it

854
00:50:16,120 --> 00:50:19,160
Speaker 1: very inspirational and moving. The only thing that I'm streaming

855
00:50:19,280 --> 00:50:22,600
Speaker 1: right now. You know, it remains very hard for independent

856
00:50:22,640 --> 00:50:24,799
Speaker 1: films to get funded in Hollywood, and that can be

857
00:50:25,920 --> 00:50:30,120
Speaker 1: particularly the case when they are films about women, uh

858
00:50:30,239 --> 00:50:32,880
Speaker 1: you know, written by women, stories about women. And so

859
00:50:32,960 --> 00:50:35,120
Speaker 1: a couple of years ago, I actually invested in a

860
00:50:35,200 --> 00:50:38,279
Speaker 1: wonderful film. It's called The Time to Spy and it

861
00:50:38,360 --> 00:50:40,719
Speaker 1: is a true story. It is out on Hulu and

862
00:50:40,719 --> 00:50:44,440
Speaker 1: Amazon right now. It is about three women spies in

863
00:50:44,600 --> 00:50:49,439
Speaker 1: World War two, true story who trained as spies under

864
00:50:49,480 --> 00:50:52,799
Speaker 1: the Churchill Foreign Office and went into not the occupied

865
00:50:52,960 --> 00:50:55,759
Speaker 1: territory as part of the war. And it's a wonderful,

866
00:50:55,760 --> 00:51:00,160
Speaker 1: wonderful story about real women heroes that's the film A

867
00:51:00,280 --> 00:51:03,800
Speaker 1: Call to Spy and you could find that on Amazon Prime.

868
00:51:04,200 --> 00:51:07,120
Speaker 1: Tell us about your early mentors who helped to shape

869
00:51:07,280 --> 00:51:12,480
Speaker 1: your career. So, one of my early mentors in my career,

870
00:51:12,520 --> 00:51:15,320
Speaker 1: and it's just an example of the serendipity in this industry,

871
00:51:15,840 --> 00:51:17,800
Speaker 1: was actually Jack Bogel, who was the founder of the

872
00:51:17,840 --> 00:51:20,000
Speaker 1: Vangard Group. And I've never worked at the Vanguard Group,

873
00:51:20,080 --> 00:51:23,080
Speaker 1: and yet um in this industry, I had the chance

874
00:51:23,120 --> 00:51:26,759
Speaker 1: to meet Jack and work with him and cover him

875
00:51:26,800 --> 00:51:31,759
Speaker 1: as an industry UM, industry group, industry pere and you know,

876
00:51:32,000 --> 00:51:36,920
Speaker 1: I watched him really changed the investment industry. I watched,

877
00:51:36,920 --> 00:51:38,920
Speaker 1: you know, he had lost his dad at a young age,

878
00:51:39,040 --> 00:51:43,239
Speaker 1: and he was very, very committed to the success of

879
00:51:43,320 --> 00:51:47,520
Speaker 1: individual investors. And I remember Vanguard when it was still

880
00:51:47,520 --> 00:51:51,320
Speaker 1: a small company in celebrating billion versus trilliance, and I watched,

881
00:51:51,800 --> 00:51:55,680
Speaker 1: you know, his passion and his conviction really build a

882
00:51:55,719 --> 00:51:58,840
Speaker 1: company that changed the industry. And it's I have It

883
00:51:58,880 --> 00:52:01,280
Speaker 1: has always stayed with me. I was I was fortunate

884
00:52:01,320 --> 00:52:03,959
Speaker 1: to stay in touch with him for his whole life. UM.

885
00:52:04,000 --> 00:52:07,279
Speaker 1: So Jack Bogel unexpectedly a big mentor of mine, even

886
00:52:07,280 --> 00:52:08,960
Speaker 1: though I never worked for him. I just had the

887
00:52:09,000 --> 00:52:12,720
Speaker 1: great good fortune of working with him. UM. And another

888
00:52:12,719 --> 00:52:16,280
Speaker 1: one I mentioned earlier my mom, My mom, who became,

889
00:52:16,440 --> 00:52:19,359
Speaker 1: you know, unexpectedly a widow at thirty two years old,

890
00:52:19,400 --> 00:52:22,560
Speaker 1: but three little kids that went, um, you know, back

891
00:52:22,560 --> 00:52:24,720
Speaker 1: to work and back to school and back to work,

892
00:52:25,400 --> 00:52:27,840
Speaker 1: and learned how to manage her own little you know,

893
00:52:27,960 --> 00:52:31,840
Speaker 1: pot of life insurance proceeds, and um, you know, stayed

894
00:52:31,880 --> 00:52:33,879
Speaker 1: with her career until she was seven nine years old

895
00:52:33,960 --> 00:52:36,160
Speaker 1: because she loved books, since she loved the library, she

896
00:52:36,200 --> 00:52:39,800
Speaker 1: was a librarian. And you know, she's been an incredible,

897
00:52:40,040 --> 00:52:43,239
Speaker 1: incredible mentor for me. So Jack Bogel and my mom

898
00:52:43,280 --> 00:52:46,760
Speaker 1: two of my mentors, quite quite fascinating. Tell us about

899
00:52:46,760 --> 00:52:50,520
Speaker 1: your favorite books. What are you reading these days? So?

900
00:52:50,680 --> 00:52:52,640
Speaker 1: I love to read. I love to read. I actually

901
00:52:52,640 --> 00:52:55,440
Speaker 1: majored in English in college, and this year I've read recently,

902
00:52:55,560 --> 00:52:57,719
Speaker 1: Eric Larson was blended in The Vial, which again a

903
00:52:57,760 --> 00:53:01,440
Speaker 1: great story of church Ill in World War Two and

904
00:53:01,480 --> 00:53:03,879
Speaker 1: the Battle of Britain, really really good and not a story,

905
00:53:03,920 --> 00:53:07,680
Speaker 1: by the way nonfiction. UM. I enjoyed Michelle Obama's Becoming.

906
00:53:07,719 --> 00:53:10,160
Speaker 1: I haven't read The Rocks book yet, but I will.

907
00:53:10,200 --> 00:53:13,000
Speaker 1: I will get to that too, And I enjoyed a

908
00:53:13,080 --> 00:53:17,520
Speaker 1: fiction book that's called The Vanishing Half, which is about

909
00:53:17,560 --> 00:53:21,160
Speaker 1: two sisters that ended up living very different lives than

910
00:53:21,320 --> 00:53:24,440
Speaker 1: very twin sisters, very different lives and very different communities,

911
00:53:24,480 --> 00:53:27,080
Speaker 1: one in a white community, one in black community. Enjoyed

912
00:53:27,120 --> 00:53:31,520
Speaker 1: it very much but quite interesting. What sort of advice

913
00:53:31,560 --> 00:53:34,480
Speaker 1: would you give to a recent college graduate who was

914
00:53:34,640 --> 00:53:40,440
Speaker 1: interested in a career in investment management? So the first

915
00:53:40,480 --> 00:53:42,160
Speaker 1: thing I would do is, I would congratulate them for

916
00:53:42,239 --> 00:53:45,000
Speaker 1: picking a good industry, and the good segments of wealth

917
00:53:45,000 --> 00:53:47,920
Speaker 1: and investment management industries are dynamic and growing and they

918
00:53:47,960 --> 00:53:50,560
Speaker 1: will be a good career for for the rest of

919
00:53:50,600 --> 00:53:53,640
Speaker 1: your career. So congratulations, you pick the great area. And

920
00:53:53,680 --> 00:53:56,160
Speaker 1: then I would tell them two things. The first one

921
00:53:56,239 --> 00:53:58,799
Speaker 1: is that we're a knowledge industry, and so what do

922
00:53:58,840 --> 00:54:01,680
Speaker 1: you realize they or not? Early years in your career

923
00:54:01,880 --> 00:54:04,520
Speaker 1: you have the luxury of being very selfish, focusing on

924
00:54:04,560 --> 00:54:07,279
Speaker 1: yourself and trying to learn as much as you can

925
00:54:07,320 --> 00:54:09,680
Speaker 1: and get as much knowledge as you can. Because as

926
00:54:09,680 --> 00:54:13,400
Speaker 1: your as your career progresses, you tend to have more responsibilities,

927
00:54:13,480 --> 00:54:16,360
Speaker 1: responsibilities for more projects at work, more people at work,

928
00:54:16,760 --> 00:54:19,680
Speaker 1: maybe people at home. So these early years whether you

929
00:54:19,680 --> 00:54:21,200
Speaker 1: know it or not, are years that you can be

930
00:54:21,239 --> 00:54:24,399
Speaker 1: really selfish and focused on yourself and try to learn

931
00:54:24,400 --> 00:54:26,960
Speaker 1: as much as you can. And then the second thing

932
00:54:26,960 --> 00:54:29,840
Speaker 1: that I would tell them is we're a knowledge industry,

933
00:54:30,200 --> 00:54:33,800
Speaker 1: but knowledge is them enough. We're also an empathy industry

934
00:54:33,880 --> 00:54:37,520
Speaker 1: because we really work with people and we have to.

935
00:54:37,760 --> 00:54:39,480
Speaker 1: The first thing you have to do if you want

936
00:54:39,480 --> 00:54:43,319
Speaker 1: to be empathetic is adject to listen. And sometimes in

937
00:54:43,360 --> 00:54:47,239
Speaker 1: our industry the tendency is to tell people everything we know.

938
00:54:48,160 --> 00:54:50,440
Speaker 1: In fact, what we ought to do first and foremost

939
00:54:50,560 --> 00:54:53,160
Speaker 1: is the really good listeners, because then we're going to

940
00:54:53,280 --> 00:54:56,239
Speaker 1: learn about what's important to our clients. And I've just

941
00:54:56,320 --> 00:55:00,759
Speaker 1: learned over time that you get great success when you

942
00:55:00,840 --> 00:55:04,120
Speaker 1: combine what you know with what people care about and

943
00:55:04,120 --> 00:55:07,040
Speaker 1: what you care about. People don't really care about what

944
00:55:07,160 --> 00:55:09,200
Speaker 1: you know until they know that you care. And so

945
00:55:09,400 --> 00:55:12,600
Speaker 1: that combination of learning learning, learning early in your career,

946
00:55:13,160 --> 00:55:17,400
Speaker 1: but also building empathy and listening skills, that's the perfect

947
00:55:17,400 --> 00:55:20,720
Speaker 1: combination in this industry, and that's what I would encourage

948
00:55:20,760 --> 00:55:24,360
Speaker 1: them to focus on. And our final question, what do

949
00:55:24,440 --> 00:55:27,640
Speaker 1: you know about the world of investment management today that

950
00:55:27,719 --> 00:55:30,320
Speaker 1: you wish you knew back in the es when you

951
00:55:30,360 --> 00:55:34,719
Speaker 1: were first getting started. So what I know about the

952
00:55:34,760 --> 00:55:37,720
Speaker 1: world of investment management today that I wish I knew

953
00:55:37,920 --> 00:55:42,200
Speaker 1: back in the if that success is about a lot

954
00:55:42,280 --> 00:55:45,440
Speaker 1: more than beating the market. Beating the market is one

955
00:55:45,480 --> 00:55:48,280
Speaker 1: of those disciplines. And absolutely want to beat the market

956
00:55:48,760 --> 00:55:52,040
Speaker 1: or at least meet the markets over time. But real

957
00:55:52,200 --> 00:55:56,839
Speaker 1: success comes from knowing what your goal is, charting of

958
00:55:56,840 --> 00:56:00,360
Speaker 1: course to get there, staying with it. And it's a

959
00:56:00,400 --> 00:56:02,439
Speaker 1: lot more than the market. As we talked about, Yes,

960
00:56:02,480 --> 00:56:04,880
Speaker 1: investing as part of long term success, but so is

961
00:56:04,920 --> 00:56:07,759
Speaker 1: managing your balance sheet and deciding how much in leather

962
00:56:07,840 --> 00:56:11,200
Speaker 1: to borrow, So in spending and deciding what's the appropriate

963
00:56:11,280 --> 00:56:13,480
Speaker 1: send rate to help you achieve your goals. So is

964
00:56:13,560 --> 00:56:16,880
Speaker 1: managing taxes and managing for after tax returns, and so

965
00:56:17,040 --> 00:56:19,560
Speaker 1: is protecting what you have. So you know those five

966
00:56:19,600 --> 00:56:24,600
Speaker 1: disciplines invest, borrow, then managed to protect. When I started

967
00:56:24,600 --> 00:56:27,160
Speaker 1: my career, I was laser focused on investing, and I

968
00:56:27,200 --> 00:56:31,279
Speaker 1: would tell everybody to broaden your horizons because success is

969
00:56:31,320 --> 00:56:33,880
Speaker 1: about a lot more than beating the market. Thank you,

970
00:56:33,960 --> 00:56:36,640
Speaker 1: Catherine for being so generous with your time. We have

971
00:56:36,760 --> 00:56:40,200
Speaker 1: been speaking with Katherine Keating. She is the CEO of

972
00:56:40,320 --> 00:56:44,560
Speaker 1: b n y Melon's wealth management division. If you enjoy

973
00:56:44,640 --> 00:56:47,719
Speaker 1: this conversation, well, be sure and check out all of

974
00:56:47,760 --> 00:56:52,080
Speaker 1: our previous interviews. We have about four hundred of them,

975
00:56:52,160 --> 00:56:56,160
Speaker 1: and you can find them at iTunes, Spotify, Stitcher, wherever

976
00:56:56,280 --> 00:57:00,000
Speaker 1: you feed your podcast fix. We love your comments, feed

977
00:57:00,040 --> 00:57:03,760
Speaker 1: back and suggestions. Write to us at m IB podcast

978
00:57:03,840 --> 00:57:07,840
Speaker 1: at Bloomberg dot net. Give us a review on Apple iTunes.

979
00:57:08,560 --> 00:57:11,600
Speaker 1: You can check out my weekly column on Bloomberg dot

980
00:57:11,680 --> 00:57:15,560
Speaker 1: com slash Opinion. Follow me on Twitter at Rid Halts.

981
00:57:15,719 --> 00:57:18,640
Speaker 1: Sign up for our daily reading list at Rid Halts

982
00:57:18,680 --> 00:57:21,680
Speaker 1: dot com. I would be remiss if I did not

983
00:57:21,800 --> 00:57:25,400
Speaker 1: thank the crack staff that helps put these conversations together

984
00:57:25,480 --> 00:57:30,360
Speaker 1: each week. Maroufle is my audio engineer. Michael Boyle is

985
00:57:30,440 --> 00:57:34,760
Speaker 1: my producer. Attika val Broun is our project manager. Michael

986
00:57:34,760 --> 00:57:38,880
Speaker 1: Batnick is my head of research. I'm Barry Riholts. You've

987
00:57:38,920 --> 00:57:42,280
Speaker 1: been listening to Masters in Business on Bloomberg Radio.