WEBVTT - Why Private Assets Are Essential: Masters in Business with Stephanie Drescher 0:00:02.520 --> 0:00:11.840 Bloomberg Audio Studios, Podcasts, radio News. This is Masters in 0:00:11.920 --> 0:00:15.440 Business with Barry Ritholts on Bloomberg Radio. 0:00:16.800 --> 0:00:19.800 This week on the podcast, I have an extra special guest. 0:00:19.840 --> 0:00:24.480 Stephanie Dresher is Chief Client and Product development Officer at 0:00:24.560 --> 0:00:29.120 private investment giant Apollo. She's been there for over twenty years. 0:00:29.160 --> 0:00:33.960 She spent a decade before that doing alternatives at JP Morgan. 0:00:34.640 --> 0:00:38.400 What a fascinating person. Apollo runs eight hundred and forty 0:00:38.840 --> 0:00:43.519 billion dollars in client assets, and she has really not 0:00:43.680 --> 0:00:47.920 over overseen the wealth division, but also worked on a 0:00:48.000 --> 0:00:54.200 variety of geographies, new products. She's on everybody's Best off list, 0:00:54.320 --> 0:00:57.200 She's been on the Baron's Women and Financial List, sits 0:00:57.240 --> 0:01:01.120 inception every year. I thought this conversation was fascinating. If 0:01:01.120 --> 0:01:05.240 you're remotely interested in private equity, private debt, private credit, 0:01:05.640 --> 0:01:10.440 private infrastructure, you'll find this conversation absolutely fascinating. With no 0:01:10.560 --> 0:01:17.920 further ado Apollos, Stephanie Drescher, Stephanie Dresher, Welcome to Bloomberg. 0:01:18.000 --> 0:01:20.640 Thank you, Mary, happy to be here, Happy to have you. 0:01:20.720 --> 0:01:23.760 So we're going to get into Apollo when your investment 0:01:23.840 --> 0:01:26.840 philosophy in a bit, but before we do. I just 0:01:26.880 --> 0:01:31.319 have to start with your background. Bachelors in Barnard at 0:01:31.319 --> 0:01:35.679 Columbia MBA from Columbia Business School. What was the original 0:01:35.720 --> 0:01:36.280 career plan? 0:01:38.000 --> 0:01:41.880 I did always have finance in my sites, so undergrad 0:01:41.959 --> 0:01:45.800 it was econ and psych. I joke that I use 0:01:45.880 --> 0:01:48.160 the psych in my day to day field way more 0:01:48.160 --> 0:01:53.080 than the econ RaSE days. But there was always a 0:01:53.160 --> 0:01:58.000 draw towards doing something in the financial kind of arena, 0:01:58.480 --> 0:02:02.680 interest in markets and the like. So very early internships 0:02:02.760 --> 0:02:03.720 led me down that path. 0:02:04.320 --> 0:02:07.600 And I read somewhere in your background that you were 0:02:07.720 --> 0:02:12.240 particularly inspired to go into finance by your grandmother. Tell 0:02:12.320 --> 0:02:12.920 us about that. 0:02:13.160 --> 0:02:18.359 That is true. So my father's mother live with us 0:02:18.400 --> 0:02:23.280 for a time, and I believe or not, she was 0:02:23.520 --> 0:02:27.720 born in the very very late eighteen hundreds, and while 0:02:27.760 --> 0:02:32.200 her brother went on to become a doctor, she kept 0:02:32.200 --> 0:02:35.280 out it an eighth grade education, and so the power 0:02:35.280 --> 0:02:40.400 of education was always a core value and a focus 0:02:40.880 --> 0:02:43.519 of hers and my family. And she used to read 0:02:43.560 --> 0:02:47.639 the Wall Street Journal cover to cover every day, super smart, 0:02:48.760 --> 0:02:52.400 loved tracking stocks, and so we started to track stocks together. 0:02:53.360 --> 0:02:56.040 And how old were you at this time? Oh, I 0:02:56.040 --> 0:02:59.840 don't know, maybe twelve, Okay, and in a very high 0:02:59.840 --> 0:03:02.480 time way. We would put it up on the refrigerator 0:03:03.160 --> 0:03:07.320 and kind of see the changes and the holdings that 0:03:07.360 --> 0:03:10.480 she had in her portfolio and sometimes overlapped with that 0:03:10.600 --> 0:03:12.960 of my parents. That was the early. 0:03:12.720 --> 0:03:17.320 Start, so you get an MBA from Columbia. JP Morgan 0:03:17.639 --> 0:03:19.280 was the first job right out of school. 0:03:19.720 --> 0:03:25.560 It was although there was a mentor right prior to 0:03:25.639 --> 0:03:29.480 the JP Morgan opportunity that, believe it or not, I 0:03:29.520 --> 0:03:34.760 started babysitting for this family and I didn't know what 0:03:34.880 --> 0:03:38.160 the mother did day to day until after a period 0:03:38.200 --> 0:03:41.040 of time of babysitting. She looked at me and she said, 0:03:41.800 --> 0:03:44.119 I think your babysitting days are over. And I said, 0:03:44.160 --> 0:03:46.520 I don't know what you're trying about. And she said, 0:03:46.600 --> 0:03:52.720 I run a women led healthcare consulting firm. Would you 0:03:52.760 --> 0:03:55.920 like an internship? And I practically fell off my chair 0:03:55.920 --> 0:03:57.839 and I said, I would love an internship. 0:03:58.240 --> 0:03:59.480 How old are you at this time? 0:04:00.120 --> 0:04:04.320 It was like late high school, maybe early college, early 0:04:04.360 --> 0:04:09.000 early and it was the most amazing kind of opportunity 0:04:09.080 --> 0:04:11.920 that someone could give me, right just seeing a professional 0:04:12.520 --> 0:04:17.599 organization do its thing and all the analysis and client 0:04:17.640 --> 0:04:21.480 relationship management that went into that so while I decided 0:04:21.520 --> 0:04:24.640 that healthcare wasn't my thing and consulting wasn't my thing, 0:04:25.080 --> 0:04:29.320 it was very an easy bridge to JP Morgan and 0:04:29.360 --> 0:04:30.200 the finance field. 0:04:30.440 --> 0:04:33.039 So when you started JP Morgan, what was the role, 0:04:33.160 --> 0:04:35.960 how did you what areas were you toiling in? 0:04:36.480 --> 0:04:41.840 So I started with a rotational opportunity, which was terrific. 0:04:41.960 --> 0:04:45.400 I had everything from fixed income research to private banking 0:04:45.440 --> 0:04:46.120 in Geneva. 0:04:47.240 --> 0:04:48.280 Did you go to Switzerland? 0:04:48.360 --> 0:04:52.160 I did? Yeah. For about six months, I realized that 0:04:52.200 --> 0:04:54.120 I needed to buy all of my groceries during the 0:04:54.160 --> 0:04:56.000 day because it was closed by the time I got 0:04:56.040 --> 0:05:01.040 out of work, and then I liked to travel on weekends. Importantly, though, 0:05:01.080 --> 0:05:05.599 and seriously, it was a terrific time in my life 0:05:05.680 --> 0:05:11.520 to be more aware of time zones and cultural nuances 0:05:11.600 --> 0:05:15.680 and really see kind of a client perspective outside of 0:05:16.200 --> 0:05:17.119 New York and the US. 0:05:17.640 --> 0:05:18.840 It's a big world. 0:05:19.320 --> 0:05:23.000 Totally, yet it also can feel so small once you 0:05:23.080 --> 0:05:26.240 start to travel and live elsewhere. So that was a 0:05:26.320 --> 0:05:30.480 terrific opportunity. And then ultimately out of that rotational program, 0:05:31.040 --> 0:05:35.520 ended up in alternatives within the private bank, and then 0:05:35.520 --> 0:05:36.560 we were off to the races. 0:05:36.680 --> 0:05:39.839 So alternatum's way back then, but before we leave Switzerland, 0:05:40.960 --> 0:05:44.000 I recall a vacation not too long ago to Lake 0:05:44.040 --> 0:05:47.960 Geneva and what's amazing, And we were in this hotel 0:05:48.040 --> 0:05:50.640 that used to be a castle, and like, you think 0:05:50.680 --> 0:05:53.799 you have some understanding of the Gilded Age and old 0:05:53.880 --> 0:05:56.279 money and then you see no, no, we mean five 0:05:56.360 --> 0:06:00.479 hundred years. Yeah, it's just such a different io, so 0:06:00.560 --> 0:06:05.000 different than here. Yeah, really really amazing. So you're in 0:06:05.040 --> 0:06:09.720 the Alts group at JP Morgan. You stay at JP 0:06:09.800 --> 0:06:12.200 Morgan for a decade, tell us a little bit about 0:06:12.200 --> 0:06:13.040 the work you did there. 0:06:13.760 --> 0:06:17.600 So it was very early days of speaking to families 0:06:17.640 --> 0:06:21.000 around the world, the ultra high network. Clients of JP 0:06:21.080 --> 0:06:26.360 Morgan thought the role of alternatives in their portfolio, and 0:06:26.839 --> 0:06:31.000 I remember distinctly speaking about the core and satellite within 0:06:31.440 --> 0:06:36.599 alternatives now kind of private markets as our nomenclature. But 0:06:37.160 --> 0:06:39.479 it gave me such a great perspective in terms of 0:06:39.520 --> 0:06:43.960 the educational kind of foundation that we needed to set 0:06:44.000 --> 0:06:47.800 first with those clients. And I see it now continuing 0:06:47.839 --> 0:06:50.719 to play out. But my time at JP Morgan, and 0:06:50.760 --> 0:06:53.040 it was a very fast ten ten years and an 0:06:53.080 --> 0:07:00.440 amazing kind of training ground, was kind of assessment of 0:07:00.480 --> 0:07:04.200 all the different private market strategies from private equity to 0:07:04.279 --> 0:07:10.080 hedge funds to credit, and the seat was a combination 0:07:10.320 --> 0:07:13.680 of the buyside, so kind of due diligence on the 0:07:13.720 --> 0:07:16.080 managers we were going to put on platform and then 0:07:16.720 --> 0:07:19.840 the cell side in terms of the educational component to 0:07:20.040 --> 0:07:24.640 the end banker and client. Super Fun traveled around the 0:07:24.640 --> 0:07:30.480 world speaking about how alts could factor in to return 0:07:30.560 --> 0:07:36.560 profiles and diversifications, smoother volatility, all at a time when 0:07:36.720 --> 0:07:39.640 private equity was not on the front page. Yeah, every day. 0:07:39.640 --> 0:07:40.440 It was very early. 0:07:40.920 --> 0:07:43.440 Let's contextualize a little bit. This is the mid to 0:07:43.520 --> 0:07:47.640 late nineties and early two thousands. The stock market was 0:07:47.720 --> 0:07:50.800 just screaming high or double digits, especially the last four 0:07:50.880 --> 0:07:55.440 years of the nineties. What was it like then? How 0:07:55.480 --> 0:08:01.200 receptive was the audience to you should consider the private markets? 0:08:01.680 --> 0:08:05.360 How how much smaller was the whole space back then? 0:08:05.480 --> 0:08:11.840 Yeah, it was very early days and a very small fraction. 0:08:11.880 --> 0:08:15.280 I remember, you know, if we if we launched kind 0:08:15.320 --> 0:08:18.239 of one manager a quarter, it was a big deal. 0:08:18.720 --> 0:08:21.200 Now I feel like there are probably dozens kind of 0:08:21.640 --> 0:08:26.360 on the shelf available for for clients every every day, 0:08:26.480 --> 0:08:32.320 every quarter. The but the transformation was starting to take 0:08:32.360 --> 0:08:41.240 hold where there were especially the large families, recognizing the 0:08:41.360 --> 0:08:46.679 return potential that a manager in alternatives could provide in 0:08:47.040 --> 0:08:49.959 their portfolio, and they didn't want to rely. It was 0:08:50.120 --> 0:08:52.160 very early, but they saw that they didn't want to 0:08:52.200 --> 0:08:57.719 rely exclusively on public market exposure. So you know, when 0:08:57.720 --> 0:09:01.559 we look at actually the percentage is in kind of 0:09:01.760 --> 0:09:08.000 large family office clients today it matches or frankly exceeds 0:09:08.000 --> 0:09:11.640 that of an institution, but it's still they started at 0:09:11.640 --> 0:09:14.800 the ultra high net worth end so much earlier, kind 0:09:14.840 --> 0:09:18.520 of back in those days than most in wealth. So 0:09:18.559 --> 0:09:22.760 I think there were the likes of a JPMorgan client 0:09:22.880 --> 0:09:25.840 base and a select number of other private banks did 0:09:25.880 --> 0:09:31.000 start early in showcasing these opportunities, and the adoption as 0:09:31.040 --> 0:09:35.400 I traveled around the world was strong, but it was 0:09:35.520 --> 0:09:39.800 still kind of storytelling and a lot of niche opportunities. 0:09:40.120 --> 0:09:43.000 Where I feel like we fast forward to today, people 0:09:43.080 --> 0:09:49.520 recognize that private market solutions can play both the core 0:09:49.679 --> 0:09:54.559 and satellite in their portfolios. It relates to a compliment 0:09:55.240 --> 0:09:56.760 to the public market exposure. 0:09:56.800 --> 0:10:00.199 So you join Apollo in two thousand and four, I'm 0:10:00.280 --> 0:10:03.800 kind of curious a few years earlier we have the 0:10:03.920 --> 0:10:07.199 dot com implosion. A few years later, we have the 0:10:07.240 --> 0:10:11.040 Great Financial Crisis. I hate when people call these, you know, 0:10:11.080 --> 0:10:13.800 once a century events because it seemed to happen a 0:10:13.800 --> 0:10:17.600 lot more frequently than that. But how significant were those 0:10:17.720 --> 0:10:23.000 giant public events to telling the story of, hey, here's 0:10:23.080 --> 0:10:27.439 some private market investments that you don't have the same 0:10:27.480 --> 0:10:32.199 sort of volatility and regular you know explosions. 0:10:32.360 --> 0:10:37.200 Yeah, no, you're you're right. They were such an incredibly 0:10:37.240 --> 0:10:44.160 important backdrop to why alternatives, why private markets? And in fact, 0:10:44.840 --> 0:10:47.280 when I was still in my seat at JP Morgan, 0:10:47.840 --> 0:10:51.959 but Apollo was offering then our private equity flagship fund five, 0:10:53.559 --> 0:11:01.320 the dot com boom was just at its tail and 0:11:02.600 --> 0:11:07.120 was starting to fracture. You saw the signs, and Apollo 0:11:07.280 --> 0:11:10.480 came onto the platform and was talking a value story, 0:11:11.440 --> 0:11:15.680 and for the first several weeks there wasn't as much 0:11:15.679 --> 0:11:20.760 take up, and then as the market started to change dramatically, 0:11:21.000 --> 0:11:23.520 there was this wake up call of whoa, you know what, 0:11:23.679 --> 0:11:28.280 let's look at value again, And that kind of was 0:11:28.320 --> 0:11:32.400 the tell end of the of the story for that fundraise. 0:11:33.320 --> 0:11:37.640 Back around the two thousand period, fast forward to the 0:11:37.760 --> 0:11:41.880 Great Financial Crisis, it was such an incredible time at 0:11:41.920 --> 0:11:44.640 that point, I was already in my apollo seat to 0:11:45.200 --> 0:11:49.840 see the investment committee dynamic, and you know, there were 0:11:50.280 --> 0:11:55.480 moments that, thankfully because we were so steeped on the 0:11:55.520 --> 0:12:00.120 credit side in addition to obviously our view of private equity, 0:12:00.559 --> 0:12:05.439 where we could back up the truck on certain credits 0:12:05.800 --> 0:12:11.040 with conviction. And I look back now with honestly such 0:12:11.120 --> 0:12:15.160 pride for the decisions that were made in that period 0:12:15.200 --> 0:12:19.120 of time, and frankly many subsequently during moments of dislocation 0:12:19.440 --> 0:12:25.439 where they make it look so easy on the investment side, 0:12:25.480 --> 0:12:29.680 but it actually takes so much work and rigor to 0:12:29.760 --> 0:12:36.040 be in position to make those big investment calls in 0:12:36.080 --> 0:12:40.000 those moments in time. But it served us incredibly well 0:12:40.280 --> 0:12:44.920 and continues to even Liberation Day. Right post when the 0:12:44.920 --> 0:12:48.520 market started to move materially, there wasn't that much time 0:12:48.600 --> 0:12:51.800 within forty eight hours were there was kind of a 0:12:51.840 --> 0:12:59.559 correction from the volatility that we saw on household issuers 0:12:59.600 --> 0:13:03.840 and names. But thankfully, based on our scale and knowledge 0:13:03.840 --> 0:13:08.199 of those capital structures, we were able to put about 0:13:08.240 --> 0:13:12.160 twenty five billion of dollars to work in just a 0:13:12.200 --> 0:13:16.040 few days, and we're one of the biggest market participants 0:13:16.559 --> 0:13:18.480 during that moment of dislocation. 0:13:18.840 --> 0:13:24.520 You know, you mentioned high conviction investments. I recall in 0:13:24.559 --> 0:13:27.800 the mid to late two thousands, people tossed around the 0:13:27.800 --> 0:13:33.040 phrase toxic assets, and my attitude was always, there's no 0:13:33.120 --> 0:13:36.240 such thing as toxic assets. There are only toxic prices. 0:13:36.800 --> 0:13:40.800 Everything discounted enough eventually becomes attractive. 0:13:41.960 --> 0:13:46.560 Look, we are one of our kind of taglines that 0:13:46.600 --> 0:13:50.079 you'll hear internally and externally is purchase price matters. 0:13:50.480 --> 0:13:52.880 Yeah, one hundred percent. What you pay for something is 0:13:52.920 --> 0:13:56.160 going to have a giant impact on what the subsequent returns. 0:13:56.160 --> 0:13:59.079 I'm going to be totally and you know that that does. 0:13:59.640 --> 0:14:03.040 It does require discipline, especially when multiples are going to 0:14:03.160 --> 0:14:07.560 kind of stratospheric levels. But you know it has that 0:14:07.760 --> 0:14:11.800 strategy has borne out in a very kind of productive 0:14:11.800 --> 0:14:14.520 and successful way for us maintaining that discipline. But as 0:14:14.559 --> 0:14:19.760 you're saying, like spotting those moments where investments are mispriced 0:14:20.000 --> 0:14:25.400 or not well understood, and being willing to deal with 0:14:25.440 --> 0:14:28.400 that complexity at the right place, at the right price 0:14:28.600 --> 0:14:30.920 in order to generate the outcome we want. 0:14:31.440 --> 0:14:35.200 Really really interesting coming up, we continue our conversation with 0:14:35.280 --> 0:14:41.320 Stephanie Dresher, Apollo's chief client and Product development officer, discussing 0:14:41.840 --> 0:14:45.960 her career at Apollo. I'm very ritults. You're listening to 0:14:46.040 --> 0:15:02.400 Master's in Business on Bloomberg Radio. I'm Barry Ridolts. You're 0:15:02.440 --> 0:15:06.120 listening to Masters in Business on Bloomberg Radio. My extra 0:15:06.200 --> 0:15:09.360 special guest this week is Stephanie Dresher. She is Apollo's 0:15:09.560 --> 0:15:14.400 Chief Client and Product Development Officer. Apollo runs about eight 0:15:14.480 --> 0:15:19.160 hundred and forty billion dollars in client assets, So I 0:15:19.240 --> 0:15:23.120 love this title, but I got to think people are wondering, 0:15:23.880 --> 0:15:27.280 what's a day in the life of Apollo's chief Client 0:15:27.440 --> 0:15:30.760 and Product development officer? Like it sounds like that's a 0:15:30.840 --> 0:15:34.280 really wide bit of land. 0:15:35.200 --> 0:15:38.160 It's it's a fun job. So I've been at Apollo 0:15:38.280 --> 0:15:42.200 now twenty one years, and when I first started, I 0:15:42.280 --> 0:15:46.600 built out the institutional side of the business globally, so 0:15:46.600 --> 0:15:51.880 sovereign well funds think the dB public pension plans, and 0:15:52.360 --> 0:15:55.680 that was very much our core client base with an 0:15:55.760 --> 0:15:59.520 episodic offering through a private bank or a wire from 0:15:59.600 --> 0:16:06.760 time to time. As that market evolved and matured into 0:16:06.760 --> 0:16:11.800 a very robust global business there, it was clear to 0:16:11.880 --> 0:16:15.840 Mark Rowan now CEO and I that at some point 0:16:16.080 --> 0:16:23.360 complementing that institutional business with a wealth strategy was in 0:16:23.400 --> 0:16:26.400 our future. We wanted to make sure, though, that we 0:16:26.640 --> 0:16:31.360 chose the right moment to really lean in to wealth 0:16:31.440 --> 0:16:34.560 because it does take a massive commitment, and I'm sure 0:16:34.600 --> 0:16:38.960 we'll talk more about it. So in my role, I 0:16:39.000 --> 0:16:43.880 am fortunate enough to build out our business as it 0:16:43.960 --> 0:16:49.400 relates to our client set of offerings, our product development, 0:16:50.320 --> 0:16:56.320 as well as our partnerships with our distributors, with our investors, 0:16:56.800 --> 0:16:59.560 and just making sure that as we continue to innovate, 0:16:59.640 --> 0:17:04.199 wet our clients where they are and often kind of 0:17:04.280 --> 0:17:08.120 co author the types of offerings that are most meaningful 0:17:08.200 --> 0:17:11.639 to them. So in any given day, I get to 0:17:11.640 --> 0:17:16.080 think about our set of products and what we're innovating. 0:17:16.520 --> 0:17:20.320 I get to speak with our clients and partners existing 0:17:20.720 --> 0:17:26.080 and prospects. I manage a large group of people and 0:17:26.080 --> 0:17:30.440 our talent, and I lean in with a very keen 0:17:30.520 --> 0:17:33.359 focus on culture, which means a lot to me. 0:17:33.480 --> 0:17:38.120 So that's really interesting. How would you describe Apollo's culture 0:17:38.320 --> 0:17:39.800 and what do you do to help shape that? 0:17:40.920 --> 0:17:44.040 So, look, since the day I join, there have been 0:17:44.440 --> 0:17:48.439 certain common themes to our culture which I think have 0:17:49.119 --> 0:17:53.440 always kind of propelled us forward as a firm now public, 0:17:53.840 --> 0:17:56.640 but very much feels like a partnership. And the first 0:17:56.680 --> 0:18:02.960 one is making sure that we continue to innovate, to 0:18:03.080 --> 0:18:07.480 feel very entrepreneurial, and to empower our people to kind 0:18:07.480 --> 0:18:13.480 of find those opportunities and pursue them in an appropriate way. 0:18:13.760 --> 0:18:16.200 We manage the firm as a meritocracy, so we want 0:18:16.200 --> 0:18:21.040 to give people responsibility and let them kind of really 0:18:21.880 --> 0:18:24.879 kind of have the greatest impact that they can for 0:18:24.920 --> 0:18:28.400 their own professional careers as well as for the firm. 0:18:28.760 --> 0:18:33.080 And we want to have a winning high performance culture, 0:18:33.480 --> 0:18:37.000 meaning you know, even with all the success that we've had, 0:18:37.240 --> 0:18:41.560 we want to maintain that, propel it forward and continue 0:18:41.560 --> 0:18:44.960 that high level of performance. And importantly, we do it together, 0:18:45.440 --> 0:18:48.320 so it's not about any one person. I often say 0:18:48.359 --> 0:18:51.800 to my team, you know, it's we, not me, And 0:18:51.960 --> 0:18:55.320 that's really powerful. So when we bring everything that Apollo 0:18:55.400 --> 0:18:57.040 has to offer, we call it kind of the one 0:18:57.080 --> 0:19:03.960 Apollo to any client situation or any goal. We can 0:19:04.720 --> 0:19:08.320 use that power of the firm to be successful and 0:19:08.400 --> 0:19:09.719 to allow us all to win. 0:19:10.840 --> 0:19:14.159 Really really interesting, you know. So the biggest complaint I 0:19:14.280 --> 0:19:18.960 heard from various corporate executives during the pandemic was how 0:19:18.960 --> 0:19:21.680 do we maintain the corporate culture We've spent so much 0:19:21.680 --> 0:19:25.560 time and energy trying to build over the years. Suddenly 0:19:25.720 --> 0:19:28.680 everybody's at home on a zoom call in their pajamas. 0:19:28.960 --> 0:19:31.120 How do you maintain corporate culture like that? 0:19:32.200 --> 0:19:34.959 It is it's so important, frankly, whether we're all in 0:19:35.000 --> 0:19:38.359 the office to maintain that culture or certainly the challenges 0:19:38.440 --> 0:19:45.600 during during the pandemic making sure certainly during that during 0:19:45.840 --> 0:19:52.040 kind of that COVID period of creating forums, even if 0:19:52.080 --> 0:19:57.640 it was remote, to maintain the connectivity was really important 0:19:58.119 --> 0:20:02.919 to have different I remember many different kind of lunchtime 0:20:02.960 --> 0:20:07.200 meetings that we would have on Zoom, or our family 0:20:08.320 --> 0:20:13.000 community group would have different webinars where it was the 0:20:13.040 --> 0:20:16.119 employee as parent and then their children frankly were involved 0:20:16.119 --> 0:20:19.920 as well. So I think it's kind of forced fostering 0:20:19.960 --> 0:20:23.280 that sense of community, even if it is in fact remote. 0:20:23.760 --> 0:20:27.320 And then thankfully once in office. I know, as I 0:20:27.400 --> 0:20:32.479 was passing through the sixth floor here at Bloomberg, I 0:20:32.560 --> 0:20:37.720 saw the very deliberate kind of floor plan that you 0:20:37.840 --> 0:20:41.280 have and food and beverage kind of accessible to employees. 0:20:41.400 --> 0:20:43.880 Everybody has to go through six It causes all these 0:20:44.000 --> 0:20:46.760 random meetings that you have. Oh, I haven't seen all 0:20:46.760 --> 0:20:49.359 the time. How's everything going? Because everybody shows up for 0:20:49.440 --> 0:20:50.360 coffee or. 0:20:50.600 --> 0:20:53.600 Treats totally and we have the same So ours is 0:20:53.600 --> 0:20:56.680 on the eighth floor. But we call it the casual collision, 0:20:56.880 --> 0:20:59.159 and that's really important to our culture to kind of 0:20:59.240 --> 0:21:02.480 show up certainly as soon as we could do do 0:21:02.560 --> 0:21:07.439 so from a practical perspective and allow for that collaboration, 0:21:07.800 --> 0:21:12.359 it's super important for people to share and get to 0:21:12.400 --> 0:21:14.119 the best answer possible together. 0:21:14.320 --> 0:21:16.119 So I want to talk about the wealth channel, but 0:21:16.160 --> 0:21:18.840 before I get there, I have to ask about something 0:21:18.920 --> 0:21:24.880 that Apollo does that not every large private markets firm does. 0:21:26.000 --> 0:21:31.000 You have talked about realigning the interest of the firm 0:21:31.080 --> 0:21:34.399 with clients, making sure that you're on the same side 0:21:35.480 --> 0:21:39.760 of trades and towards that end. Apollo is a regular 0:21:40.119 --> 0:21:42.800 co investor along with clients in certain projects. 0:21:43.080 --> 0:21:48.040 Tell us about that. Yeah, So from a kind of 0:21:48.080 --> 0:21:53.320 balance sheet perspective, we are often one of, if not 0:21:53.480 --> 0:21:57.720 the largest investor side by side with our third party 0:21:57.760 --> 0:22:02.400 clients and the investments and rategies that we manage. So 0:22:02.560 --> 0:22:08.439 through our retirement services business a theme as well as 0:22:08.480 --> 0:22:12.679 our third party business we invest side by side, and 0:22:12.720 --> 0:22:15.920 so the decisions we make on behalf of the balance 0:22:15.960 --> 0:22:23.439 sheet are aligned with the outcomes of the strategies in 0:22:23.480 --> 0:22:26.520 which we invest their party capital. So we often say, well, 0:22:26.560 --> 0:22:30.600 we can't guarantee the outcome, we guarantee a shared outcome, 0:22:31.320 --> 0:22:35.240 and that means a lot to us in terms of 0:22:35.240 --> 0:22:38.240 our commitment and focus, but also to our clients because 0:22:38.240 --> 0:22:42.240 they know how important it is to us in multiple ways. 0:22:42.720 --> 0:22:48.280 I would imagine if anybody has hesitation on a investment, 0:22:48.520 --> 0:22:54.399 if you see the private equity firm co investing along 0:22:54.440 --> 0:22:56.399 with you, that has to be a big confidence driver. 0:22:57.160 --> 0:22:59.400 It is, and in certain instances, like when you look 0:22:59.480 --> 0:23:05.880 across the industry, a commitment from an asset manager might 0:23:05.920 --> 0:23:09.160 be at the two point five percent or three point 0:23:09.240 --> 0:23:15.040 five percent. It's it's an outlier if it's a five 0:23:15.119 --> 0:23:16.480 percent commitment. 0:23:16.160 --> 0:23:18.119 But not double digits exactly. 0:23:18.280 --> 0:23:23.440 Where in one strategy of ours, which has a diversified 0:23:23.600 --> 0:23:30.320 portfolio of private markets, we are two thirds of that portfolio. 0:23:30.880 --> 0:23:36.120 So when we say that it's it's meaningful to our 0:23:36.240 --> 0:23:37.959 balance sheet, we mean it. 0:23:39.040 --> 0:23:41.520 How does that work in terms of direct stakes and 0:23:41.600 --> 0:23:47.560 performance fees? Like if you're most of the invested assets. 0:23:47.600 --> 0:23:49.800 That has to have an impact on what the balance 0:23:49.800 --> 0:23:51.520 sheet looks like. How do you guys align that? 0:23:52.920 --> 0:23:57.040 So, look, we are performance first at the end of 0:23:57.080 --> 0:24:02.560 the day. Our our relationships and the trust that we 0:24:02.640 --> 0:24:09.600 build are over time through performance and through service. I mean, 0:24:09.640 --> 0:24:14.240 we want to make sure that our partners feel our 0:24:14.359 --> 0:24:20.720 support in just about every way. So for us, it's 0:24:20.760 --> 0:24:27.640 never about a particular fee of one type or another. Ultimately, 0:24:28.320 --> 0:24:33.040 we're not focused on an AUM goal. That is the 0:24:33.119 --> 0:24:37.320 reward for good performance and as long as we are 0:24:38.280 --> 0:24:41.600 making the best investment decisions and showing up frankly as 0:24:41.600 --> 0:24:44.439 a best in class partner for our clients, that is 0:24:44.440 --> 0:24:45.639 what drives our business forward. 0:24:45.880 --> 0:24:48.320 So let's talk a little bit about the wealth channel, 0:24:48.440 --> 0:24:53.640 which is where you focus some of your time early 0:24:53.680 --> 0:24:56.760 in your career at Apollo. Tell us how this has 0:24:56.840 --> 0:24:59.280 changed over the past twenty years, and tell us a 0:24:59.320 --> 0:25:02.080 little bit about what type of clients show up there. 0:25:02.240 --> 0:25:08.320 Yeah, so, you know, the wealth business I saw certainly 0:25:08.359 --> 0:25:11.360 in my very early days of JP Morgan, but then 0:25:11.960 --> 0:25:15.400 for my first kind of sixteen plus years at Apollo, 0:25:16.720 --> 0:25:21.679 the private bank or wire was really more the exception 0:25:21.800 --> 0:25:26.359 than the role. It was more of a episodic type 0:25:26.359 --> 0:25:32.480 of relationship that all completely transformed into a strategic commitment 0:25:34.000 --> 0:25:36.840 from all of us at Apollo starting about four or 0:25:36.840 --> 0:25:39.439 five years ago. So when Mark Rowan took the Reins 0:25:39.440 --> 0:25:46.000 as CEO, all the stars aligned to build a wealth 0:25:46.040 --> 0:25:52.960 business to complement the institutional and that decision truly needed 0:25:52.960 --> 0:25:55.919 to come from the top CEO on down because it 0:25:55.960 --> 0:25:59.879 is strategic, it's not transactional. If you're going to do 0:25:59.920 --> 0:26:03.720 it well, it needs to be a long term commitment 0:26:04.440 --> 0:26:09.680 to the channel. And in my view, there are actually 0:26:10.240 --> 0:26:13.320 only a small number of firms that can really show 0:26:13.400 --> 0:26:18.560 up and do this well in partnership with all the 0:26:18.560 --> 0:26:22.520 financial intermediaries involved with wealth. And the reason I say 0:26:22.560 --> 0:26:27.080 that is when you look at what's required, it's a 0:26:27.080 --> 0:26:30.639 pretty massive lift. You need to make sure that you 0:26:30.720 --> 0:26:34.600 build out the right relationships and you need the team 0:26:34.680 --> 0:26:39.080 globally in place to do that across channels and geographies. 0:26:39.560 --> 0:26:43.399 You need to make sure that the product mix is 0:26:43.680 --> 0:26:48.280 extensive enough so that you're relevant as it pertains to 0:26:48.440 --> 0:26:53.240 our investment capability, but you want to make sure that 0:26:53.320 --> 0:26:56.360 you're showing up with the right structures for the right clients. 0:26:57.000 --> 0:27:01.359 Then there's the educational component there's a service, there's technology. 0:27:02.200 --> 0:27:05.840 For example, we have spent actually a billion dollars one 0:27:05.880 --> 0:27:09.640 billion dollars from our balance sheet in wealth tech investments 0:27:09.880 --> 0:27:13.560 alone to make sure that we're partnering and investing in 0:27:13.800 --> 0:27:17.719 firms that will help the industry. So I think there 0:27:17.760 --> 0:27:21.480 are very few that can do that well and truly 0:27:21.520 --> 0:27:25.640 meet the wall clients where with in order to meet 0:27:25.640 --> 0:27:26.720 their portfolio needs. 0:27:27.560 --> 0:27:32.720 So within that channel, family offices, high net wealth, sovereign 0:27:32.760 --> 0:27:37.720 funds are you're also selling through other intermediaries like broker's 0:27:37.800 --> 0:27:39.440 firms or rias. 0:27:39.480 --> 0:27:42.200 Tell us a little bit about that, yes, So the 0:27:42.560 --> 0:27:46.280 channels represented in wealth include the private banks and wires 0:27:46.560 --> 0:27:53.000 as one channel, the independence which includes rias and independent 0:27:53.040 --> 0:27:58.680 broker dealers. Family office is also kind of under our 0:27:58.720 --> 0:28:03.720 wealth umbrella. That's the ultra high net worth space selectively. 0:28:04.200 --> 0:28:08.720