1
00:00:06,160 --> 00:00:08,360
Speaker 1: Welcome the trillions. I'm Joel Webber and I'm Eric bel

2
00:00:08,440 --> 00:00:15,320
Speaker 1: Tunis Eric, do you remember the before times? Because we

3
00:00:15,360 --> 00:00:18,360
Speaker 1: had an interview back in March with someone that we

4
00:00:18,440 --> 00:00:21,160
Speaker 1: never aired and we, you know, dusted it off for

5
00:00:21,200 --> 00:00:24,880
Speaker 1: this week's episode and I'm excited to revisit it. They

6
00:00:24,880 --> 00:00:27,080
Speaker 1: were such they were it was like days of innocence.

7
00:00:27,560 --> 00:00:29,920
Speaker 1: I was so much younger back then in early March.

8
00:00:30,560 --> 00:00:33,240
Speaker 1: I miss you. I miss you. I really do. It

9
00:00:33,280 --> 00:00:37,640
Speaker 1: would be normal again someday. Uh So. Our guest is

10
00:00:38,040 --> 00:00:42,639
Speaker 1: Tim Clift of Investment, and we found him through actually

11
00:00:42,800 --> 00:00:46,519
Speaker 1: Morgan Barna, who's in Bloomberg Intelligence and is an analyst

12
00:00:46,600 --> 00:00:50,040
Speaker 1: with you, and Morgan flagged him because he's got this

13
00:00:50,120 --> 00:00:54,520
Speaker 1: huge team of research analysts who helped him have this

14
00:00:54,600 --> 00:00:57,560
Speaker 1: platform that interfaces with more than a hundred thousand advisers,

15
00:00:57,880 --> 00:01:00,480
Speaker 1: which I thought was really interesting because we always talking

16
00:01:00,480 --> 00:01:02,600
Speaker 1: about products and e t f s, but we don't

17
00:01:02,640 --> 00:01:06,080
Speaker 1: talk about platforms that much. Yeah. I think for somebody

18
00:01:06,080 --> 00:01:08,520
Speaker 1: who isn't in the business, a good way to put

19
00:01:08,560 --> 00:01:11,280
Speaker 1: it would be like the platform is sort of like

20
00:01:11,319 --> 00:01:14,600
Speaker 1: the costco or Whole Foods for advisors. So if you

21
00:01:14,640 --> 00:01:17,800
Speaker 1: have an advisor that you use. They especially one that

22
00:01:17,840 --> 00:01:20,200
Speaker 1: doesn't that has broken away from the sort of wire

23
00:01:20,200 --> 00:01:22,800
Speaker 1: houses like the merrals or ubs is and is on

24
00:01:22,840 --> 00:01:25,840
Speaker 1: their own independent. They would use an invest net to

25
00:01:26,480 --> 00:01:30,080
Speaker 1: shop for individual et f s, funds or packages of

26
00:01:30,160 --> 00:01:33,679
Speaker 1: them um in a sort of wholesale manner. So what's

27
00:01:33,680 --> 00:01:36,920
Speaker 1: interesting to me about this conversation in regards to what's

28
00:01:36,920 --> 00:01:38,679
Speaker 1: going on now and the market is we've seen more

29
00:01:38,720 --> 00:01:42,160
Speaker 1: and more these the way we watch flows all the time,

30
00:01:42,200 --> 00:01:46,360
Speaker 1: and we're seeing more and more that models are impacting

31
00:01:46,400 --> 00:01:49,960
Speaker 1: the flows. You can tell when a model says, you

32
00:01:49,960 --> 00:01:53,080
Speaker 1: know what, we're shifting out of you know, inflation protective

33
00:01:53,120 --> 00:01:56,920
Speaker 1: securities into corporates or out of equities and into bonds.

34
00:01:57,480 --> 00:01:59,520
Speaker 1: You can see it in the flows. And so more

35
00:01:59,520 --> 00:02:01,040
Speaker 1: and more these e t f s make it into

36
00:02:01,080 --> 00:02:03,040
Speaker 1: these models, which are put on the shelf at these

37
00:02:03,960 --> 00:02:08,120
Speaker 1: proverbial costco or whole foods. The more the flows are

38
00:02:08,160 --> 00:02:10,640
Speaker 1: impacted by what the models do. And the models can

39
00:02:10,680 --> 00:02:13,919
Speaker 1: be tactical trading a lot or strategic which don't move

40
00:02:13,919 --> 00:02:17,959
Speaker 1: all that much. And this guy tim Is basically sits

41
00:02:18,680 --> 00:02:20,600
Speaker 1: rate in the middle. He's like the gatekeeper of the

42
00:02:20,600 --> 00:02:23,160
Speaker 1: funds that get on He also works on making the models,

43
00:02:23,520 --> 00:02:26,200
Speaker 1: and there's outside people who make the models. So it's

44
00:02:26,200 --> 00:02:28,600
Speaker 1: a little inside baseball, but I think it's a really

45
00:02:28,720 --> 00:02:33,800
Speaker 1: interesting um look into how the sort of intermediary channel

46
00:02:33,880 --> 00:02:37,080
Speaker 1: of e t F flows and investing works. So just

47
00:02:37,120 --> 00:02:39,560
Speaker 1: to give you some scale, you know, invest Net, this

48
00:02:39,639 --> 00:02:43,840
Speaker 1: company has about seventy dollars in e t F s's

49
00:02:43,880 --> 00:02:46,079
Speaker 1: that's about two of all e t F sets, so

50
00:02:46,080 --> 00:02:48,480
Speaker 1: it's not huge, but it's sizeable. But there they have

51
00:02:49,200 --> 00:02:52,320
Speaker 1: growth year over year. And what's also interesting is that

52
00:02:52,840 --> 00:02:55,520
Speaker 1: in e t F models though, could be something like

53
00:02:55,560 --> 00:02:58,560
Speaker 1: two hundred to three hundred billions, so getting closer to

54
00:02:59,720 --> 00:03:01,960
Speaker 1: so and I think that's the chunk we're really going

55
00:03:02,000 --> 00:03:04,480
Speaker 1: to focus on today. But the vest Net is, like

56
00:03:04,520 --> 00:03:07,440
Speaker 1: I said, a portion of that chunk in terms of

57
00:03:07,560 --> 00:03:11,639
Speaker 1: how they fit into the bigger picture. So again Tim

58
00:03:11,720 --> 00:03:14,960
Speaker 1: Cleft of the vest Net. This was recorded in mid

59
00:03:15,120 --> 00:03:19,440
Speaker 1: March before our office went on lockdown, so it sounds

60
00:03:19,560 --> 00:03:23,120
Speaker 1: especially great because we're not all in closets. And special

61
00:03:23,120 --> 00:03:25,680
Speaker 1: thanks to Morgan Barnett for helping make this episode happen.

62
00:03:26,200 --> 00:03:28,120
Speaker 1: By the way, that's funny you bring that up, because

63
00:03:28,240 --> 00:03:30,160
Speaker 1: remember we wondered which of those e t F s

64
00:03:30,200 --> 00:03:32,280
Speaker 1: that we pitched in the e t F Tank episode

65
00:03:32,720 --> 00:03:36,400
Speaker 1: about ten of us all pitched products we thought should exist,

66
00:03:36,400 --> 00:03:38,240
Speaker 1: and we wondered who would be the first to market.

67
00:03:38,920 --> 00:03:42,880
Speaker 1: And Morgan's one She pitched a online betting e t

68
00:03:43,080 --> 00:03:45,960
Speaker 1: F and it is now a reality b e t

69
00:03:46,200 --> 00:03:48,240
Speaker 1: Z and it's an instant hit. It's already got six

70
00:03:48,280 --> 00:03:50,800
Speaker 1: and seven million dollars came out of the gate pretty strong.

71
00:03:50,880 --> 00:03:54,160
Speaker 1: So congratulations to her. Even though I won in that

72
00:03:54,280 --> 00:03:58,360
Speaker 1: competition with x mon the x Monday's e t F,

73
00:03:59,160 --> 00:04:10,320
Speaker 1: she won the real investing with Investment Damn. Welcome to Trallians.

74
00:04:11,040 --> 00:04:14,360
Speaker 1: Thanks for having me. So what do you do at investment?

75
00:04:15,280 --> 00:04:18,080
Speaker 1: I wear a lot of different hats, but my primary

76
00:04:18,120 --> 00:04:21,440
Speaker 1: responsibility is for research and portfolio management for the organization.

77
00:04:22,160 --> 00:04:25,320
Speaker 1: So we have a team of analysts that do research

78
00:04:25,520 --> 00:04:28,960
Speaker 1: on mutual funds ETFs, all sorts of different investment products

79
00:04:29,040 --> 00:04:33,599
Speaker 1: and then make recommendations to financial advisors UM and to

80
00:04:33,680 --> 00:04:37,240
Speaker 1: our own portfolio managers that will build model portfolios. Eric

81
00:04:37,279 --> 00:04:40,400
Speaker 1: thinks your whole foods, how do you describe yourself? I

82
00:04:40,400 --> 00:04:42,640
Speaker 1: think that's a great description. You know, you know, we

83
00:04:42,680 --> 00:04:48,320
Speaker 1: could be a thank you. So the Amazon Amazon, but

84
00:04:48,400 --> 00:04:51,839
Speaker 1: we we are a big open architecture platform, so we

85
00:04:51,880 --> 00:04:55,719
Speaker 1: don't We don't necessarily start from a curation standpoint. We

86
00:04:56,320 --> 00:04:58,560
Speaker 1: open our doors to just about everybody. But we do

87
00:04:58,640 --> 00:05:02,599
Speaker 1: have teams in how that help advisors and organizations get

88
00:05:02,640 --> 00:05:05,320
Speaker 1: that list smaller. And I think that the real important

89
00:05:05,320 --> 00:05:07,360
Speaker 1: thing for people here to understand who might be retail

90
00:05:07,360 --> 00:05:13,839
Speaker 1: investors themselves, is advisors wealth managers. They don't necessarily do

91
00:05:13,960 --> 00:05:16,080
Speaker 1: it all themselves. They will outsource a lot of things.

92
00:05:16,520 --> 00:05:19,360
Speaker 1: So just talk to us about the shoppers at your

93
00:05:19,440 --> 00:05:22,440
Speaker 1: quote platform. The people who use them are advisors. What

94
00:05:22,520 --> 00:05:25,479
Speaker 1: are they getting from you? And and how are et

95
00:05:25,720 --> 00:05:29,720
Speaker 1: s involved. Yeah, Historically advisors a lot of their practice

96
00:05:29,760 --> 00:05:32,000
Speaker 1: was built around them building their own models, and I

97
00:05:32,040 --> 00:05:36,279
Speaker 1: think over time they've understood or have figured out that

98
00:05:36,279 --> 00:05:38,279
Speaker 1: that's maybe not the best use of their time, that

99
00:05:38,320 --> 00:05:40,919
Speaker 1: they really need to spend more time with their clients

100
00:05:40,920 --> 00:05:43,840
Speaker 1: putting together financial plans. Who can I pay to make

101
00:05:43,880 --> 00:05:47,760
Speaker 1: these problems go away? Not you, exactly exactly. So you

102
00:05:47,760 --> 00:05:50,400
Speaker 1: know the advisors now are saying, well, maybe it makes

103
00:05:50,440 --> 00:05:53,039
Speaker 1: sense for this segment of my business just to go

104
00:05:53,080 --> 00:05:57,160
Speaker 1: into model portfolios. They all have very different appetite for risk,

105
00:05:57,320 --> 00:06:01,960
Speaker 1: different time horizons. Within the model structure, you can actually

106
00:06:01,960 --> 00:06:04,719
Speaker 1: fit a lot of different people into a limited number

107
00:06:04,720 --> 00:06:07,360
Speaker 1: of model portfolios that will make sense for those. Okay,

108
00:06:07,360 --> 00:06:10,600
Speaker 1: so model portfolio, model structures, what does that? What was

109
00:06:10,640 --> 00:06:13,240
Speaker 1: any of that mean? So think of a model portfolio

110
00:06:13,440 --> 00:06:16,919
Speaker 1: as a selection of mutual funds or e t f s.

111
00:06:17,040 --> 00:06:19,320
Speaker 1: No ETFs are the ones that are growing the fastest

112
00:06:20,080 --> 00:06:23,039
Speaker 1: um with different risk tolerances. So maybe you have three, five,

113
00:06:23,200 --> 00:06:27,560
Speaker 1: ten different mutual funds or ETFs in the portfolio, and

114
00:06:27,760 --> 00:06:30,760
Speaker 1: those will change over time as the economy changes or

115
00:06:30,800 --> 00:06:34,600
Speaker 1: the direction of the goals of the client change. But

116
00:06:35,120 --> 00:06:38,520
Speaker 1: it's a it's a set portfolio of of these underlying

117
00:06:38,520 --> 00:06:40,560
Speaker 1: security and and are these tailored for me as an

118
00:06:40,600 --> 00:06:44,920
Speaker 1: individual or are they more off the shelf products? So

119
00:06:45,080 --> 00:06:47,400
Speaker 1: they start off relatively off the shelf. So there may

120
00:06:47,440 --> 00:06:51,280
Speaker 1: be seven or ten um in a risk spectrum, so

121
00:06:51,400 --> 00:06:53,600
Speaker 1: from very conservative to very aggressive, and there may be

122
00:06:53,880 --> 00:06:56,840
Speaker 1: tax efficient versions of those. But there's also tools you

123
00:06:56,920 --> 00:06:59,080
Speaker 1: can set on top of these model portfolio so you

124
00:06:59,120 --> 00:07:01,240
Speaker 1: could say, well, I want to have an e s

125
00:07:01,320 --> 00:07:03,760
Speaker 1: G or an impact component to it, or I want

126
00:07:03,800 --> 00:07:06,520
Speaker 1: to add an income infusion to it, so you can

127
00:07:06,600 --> 00:07:09,160
Speaker 1: do some customization to these, but by and large they

128
00:07:09,160 --> 00:07:13,880
Speaker 1: start off at least as as um um structured structured

129
00:07:13,960 --> 00:07:20,000
Speaker 1: individual portfolios. Most people out there know the sixty equity bonds,

130
00:07:20,720 --> 00:07:23,040
Speaker 1: and you could do that with two ets. Now I'm

131
00:07:23,080 --> 00:07:25,400
Speaker 1: assuming you know if you were described one of these portfolios,

132
00:07:25,440 --> 00:07:28,200
Speaker 1: I know you can't say tickers. Um, we'll we'll say

133
00:07:28,240 --> 00:07:30,880
Speaker 1: them for you if we need too. But go through

134
00:07:31,040 --> 00:07:33,800
Speaker 1: what one might look like? Is it you know fifty

135
00:07:34,080 --> 00:07:37,000
Speaker 1: thirty times? Like, what's going on here? What's an example

136
00:07:37,080 --> 00:07:39,120
Speaker 1: of one? What's the compositions somebody? What would you put

137
00:07:39,200 --> 00:07:41,920
Speaker 1: jole in? Basically? Yeah, so they're there are very simple

138
00:07:42,000 --> 00:07:45,080
Speaker 1: ones and and sometimes those will just be for low

139
00:07:45,160 --> 00:07:47,120
Speaker 1: cost solutions. So you know, you can come into these

140
00:07:47,160 --> 00:07:49,960
Speaker 1: model portfolios with five thousand dollars and get into a

141
00:07:50,000 --> 00:07:51,880
Speaker 1: model portfolio, but that's only going to have a couple

142
00:07:51,920 --> 00:07:56,200
Speaker 1: of different tickers to it um. The larger the cases

143
00:07:56,320 --> 00:07:58,960
Speaker 1: and the more diversified the portfolio. You might have ten

144
00:07:59,080 --> 00:08:02,679
Speaker 1: or fifteen, but they'll generally have certainly equity and fixed

145
00:08:02,680 --> 00:08:06,680
Speaker 1: income and international exposure. In some cases they will have

146
00:08:07,400 --> 00:08:11,200
Speaker 1: UM alternatives exposure in them too. In some cases, these

147
00:08:11,240 --> 00:08:14,280
Speaker 1: are almost said it forget it like strategic models where

148
00:08:14,320 --> 00:08:17,120
Speaker 1: they don't change much at all over time, and others

149
00:08:17,240 --> 00:08:19,680
Speaker 1: that may be more tactical and move in and out

150
00:08:19,720 --> 00:08:21,480
Speaker 1: of the market's a little bit more and be more

151
00:08:21,520 --> 00:08:23,679
Speaker 1: flexible with what's going on in the in the environment.

152
00:08:24,320 --> 00:08:27,520
Speaker 1: How would model profolios help with rebalancing? How would that

153
00:08:27,600 --> 00:08:30,640
Speaker 1: help the advisor community? So with model portfolios, you are

154
00:08:30,760 --> 00:08:34,640
Speaker 1: outsourcing all the selection part of it, but also the

155
00:08:34,720 --> 00:08:38,160
Speaker 1: rebalancing part of the portfolios. So every time the market

156
00:08:38,200 --> 00:08:42,240
Speaker 1: moves significantly, that rebalancing will happen, either from a manager

157
00:08:42,320 --> 00:08:45,640
Speaker 1: standpoint or investment in our platform will do that. We

158
00:08:45,720 --> 00:08:47,920
Speaker 1: can set it up and say, well, let's just do

159
00:08:48,080 --> 00:08:50,959
Speaker 1: it every quarter or once a year or when it

160
00:08:51,040 --> 00:08:53,319
Speaker 1: hits a certain tolerance and it moves outside of that

161
00:08:53,440 --> 00:08:56,199
Speaker 1: risk spectrum that you signed up for. So it seems

162
00:08:56,240 --> 00:08:58,199
Speaker 1: to me, and you know, the recent sell offs we've

163
00:08:58,200 --> 00:09:00,800
Speaker 1: been seeing, we have seen a lot of the core

164
00:09:01,000 --> 00:09:03,559
Speaker 1: E t F s from Vanguard like I VV and

165
00:09:03,679 --> 00:09:06,520
Speaker 1: VU and I E F A and V E A

166
00:09:07,040 --> 00:09:10,240
Speaker 1: continue to take in money during the sell offs. Correctly,

167
00:09:10,240 --> 00:09:12,600
Speaker 1: if I'm wrong, it seems like model portfolios are part

168
00:09:12,640 --> 00:09:14,719
Speaker 1: of what where the flows are coming from. Despite the

169
00:09:14,800 --> 00:09:18,440
Speaker 1: market conditions, advisors say, hey, look we're gonna put We're

170
00:09:18,480 --> 00:09:21,160
Speaker 1: gonna just use this model. Done now, I'm gonna spend

171
00:09:21,200 --> 00:09:24,800
Speaker 1: all my time right now coaching this investor to not sell.

172
00:09:25,720 --> 00:09:28,160
Speaker 1: And that's their big value add Now now they don't

173
00:09:28,160 --> 00:09:29,760
Speaker 1: have to spend their time as much doing that. Is

174
00:09:29,800 --> 00:09:32,240
Speaker 1: that kind of what's going on now and what explains

175
00:09:32,280 --> 00:09:34,720
Speaker 1: some of the flows into these e t s despite

176
00:09:34,760 --> 00:09:37,719
Speaker 1: the market um on some violent days. Actually it is.

177
00:09:37,800 --> 00:09:39,880
Speaker 1: I mean, these are these are much stickier assets and

178
00:09:40,200 --> 00:09:42,680
Speaker 1: and by and large they're part of a financial plan.

179
00:09:42,880 --> 00:09:45,280
Speaker 1: So the advisors sat down with a client, they've gone

180
00:09:45,320 --> 00:09:48,240
Speaker 1: through this long long term goals for the client, and

181
00:09:48,320 --> 00:09:50,360
Speaker 1: they're saying that this makes the most sense for you.

182
00:09:50,480 --> 00:09:52,079
Speaker 1: We are not going to jump in and jump out

183
00:09:52,080 --> 00:09:55,800
Speaker 1: of the market every time something scary happens temporarily long term,

184
00:09:55,880 --> 00:09:59,120
Speaker 1: these are long term holdings. If you need short term assets,

185
00:09:59,200 --> 00:10:01,160
Speaker 1: put it somewhere else. These models are really here to

186
00:10:01,600 --> 00:10:04,560
Speaker 1: you know, generate income over time and to grow over time.

187
00:10:04,600 --> 00:10:06,920
Speaker 1: And so you don't you don't see those flows nearly

188
00:10:06,920 --> 00:10:09,640
Speaker 1: as much as individual tickers. And what kind of time

189
00:10:09,679 --> 00:10:13,040
Speaker 1: horizon are you typically talking about there? Yeah, time risings

190
00:10:13,120 --> 00:10:15,679
Speaker 1: might be ten years fifty you know, all the way

191
00:10:15,800 --> 00:10:17,840
Speaker 1: through retirements, so it could be a fifty year time

192
00:10:17,880 --> 00:10:19,959
Speaker 1: horizon on on many of these models. Can I throw

193
00:10:20,080 --> 00:10:22,880
Speaker 1: theory out at you that I've been thinking about, there's

194
00:10:22,920 --> 00:10:25,800
Speaker 1: this general filling with like, okay, ETFs are going to

195
00:10:25,920 --> 00:10:28,160
Speaker 1: hurt the market because all these people are gonna run

196
00:10:29,120 --> 00:10:31,719
Speaker 1: when something gets tough, and they'll be like only one door,

197
00:10:31,920 --> 00:10:34,280
Speaker 1: like everybody. They'll say, everybody's gonna try to run out

198
00:10:34,280 --> 00:10:37,280
Speaker 1: the same exit door. Um, it seems like every single

199
00:10:37,320 --> 00:10:38,920
Speaker 1: sell off we see the same thing. We see the

200
00:10:39,000 --> 00:10:40,800
Speaker 1: e t f s tend to take in net flows,

201
00:10:41,240 --> 00:10:44,079
Speaker 1: as do index mutual funds, which are passive. It seems

202
00:10:44,080 --> 00:10:47,840
Speaker 1: to me traditionally those are younger clients and more coached

203
00:10:48,000 --> 00:10:51,520
Speaker 1: clients by these advisors. Now mutual funds people were put

204
00:10:51,600 --> 00:10:54,120
Speaker 1: in there by a broker who got paid from mutual funds,

205
00:10:54,120 --> 00:10:57,079
Speaker 1: so less loyalty and traditionally boomers who may have a

206
00:10:57,160 --> 00:11:00,640
Speaker 1: shorter time horizon. Could we be looking at a situation

207
00:11:00,720 --> 00:11:02,599
Speaker 1: for the next at least fifteen twenty years. We're so

208
00:11:02,760 --> 00:11:06,160
Speaker 1: offs are more about mutual funds having to sell and

209
00:11:06,240 --> 00:11:09,599
Speaker 1: being under severe pressure rather than the passive side. Is

210
00:11:09,640 --> 00:11:13,800
Speaker 1: that something you can speak to from where you said, yes, Um,

211
00:11:13,960 --> 00:11:17,560
Speaker 1: he wrestles with big theories. It's a it's a big theory.

212
00:11:17,920 --> 00:11:20,720
Speaker 1: And I don't want, I wanted to anyone to think

213
00:11:20,800 --> 00:11:22,319
Speaker 1: that we're not going to see outflows out of e

214
00:11:22,360 --> 00:11:25,000
Speaker 1: t s two as markets get you know, struggle. I

215
00:11:25,280 --> 00:11:28,559
Speaker 1: just think that you may not have as much fluid

216
00:11:28,600 --> 00:11:34,280
Speaker 1: e I think the way the trend has been it's

217
00:11:34,320 --> 00:11:37,600
Speaker 1: really more function of costs. So you know, I think

218
00:11:37,679 --> 00:11:40,360
Speaker 1: that's where e t f s are have have an advantage.

219
00:11:40,960 --> 00:11:44,240
Speaker 1: And we've seen by and large advisors more and more

220
00:11:44,320 --> 00:11:47,200
Speaker 1: focused when they're putting put portfolios together for their clients.

221
00:11:47,360 --> 00:11:50,559
Speaker 1: Is much more fee pressure. So anytime they meet with

222
00:11:50,640 --> 00:11:52,520
Speaker 1: a brand new client and they're in a mutual fund model,

223
00:11:52,880 --> 00:11:55,400
Speaker 1: very often they're going to be recommending an ETF model

224
00:11:55,480 --> 00:11:58,400
Speaker 1: or a blended model for their client to reduce the

225
00:11:58,480 --> 00:12:02,280
Speaker 1: cost because we know that particularly down markets, additional costs

226
00:12:02,320 --> 00:12:04,199
Speaker 1: are just going to eat away and corrowed at your

227
00:12:04,360 --> 00:12:06,559
Speaker 1: at your returns. But the person who sought out the

228
00:12:06,640 --> 00:12:09,320
Speaker 1: e t F is they bought it, they weren't put

229
00:12:09,400 --> 00:12:13,160
Speaker 1: in it. And I think that's important because usually that

230
00:12:13,280 --> 00:12:17,440
Speaker 1: person also is a UH student of behavioral finance as

231
00:12:17,480 --> 00:12:21,959
Speaker 1: well and has long term mentality understands. As we say,

232
00:12:21,960 --> 00:12:27,439
Speaker 1: they're chasing patients, not performance, and so I think that

233
00:12:27,800 --> 00:12:30,520
Speaker 1: anyone that's going into these models, I think that's absolutely

234
00:12:30,600 --> 00:12:33,199
Speaker 1: true that there's there We're not going to see a

235
00:12:33,280 --> 00:12:35,920
Speaker 1: lot of that friction and movement in and out. But

236
00:12:36,000 --> 00:12:37,600
Speaker 1: I also think you know, a t F are being

237
00:12:37,679 --> 00:12:40,360
Speaker 1: used from from a hedging vehicle and because you can

238
00:12:40,440 --> 00:12:43,400
Speaker 1: interdate trade them there there's going to be some movement there.

239
00:12:43,520 --> 00:12:45,920
Speaker 1: But I think in the in the models for sure,

240
00:12:45,960 --> 00:12:48,720
Speaker 1: when we don't see nearly the outflows that we'd see

241
00:12:48,720 --> 00:12:51,120
Speaker 1: another asset classes. Yeah, given the interest you're seeing in

242
00:12:51,240 --> 00:12:54,880
Speaker 1: e t F only model portfolios, you know, what is

243
00:12:54,920 --> 00:12:58,320
Speaker 1: your take on the new active non transparent funds coming

244
00:12:58,360 --> 00:13:00,839
Speaker 1: to market? Do you think you know, part of the

245
00:13:00,920 --> 00:13:02,920
Speaker 1: appeal is that they fit into e t F only

246
00:13:03,000 --> 00:13:05,560
Speaker 1: model portfolio. You know what is your sort of take

247
00:13:05,640 --> 00:13:09,400
Speaker 1: on I think that's pretty exciting the non transparent um

248
00:13:10,040 --> 00:13:11,679
Speaker 1: e t F s that are that are moving into

249
00:13:11,920 --> 00:13:15,600
Speaker 1: the marketplace. It will it will allow those traditionally beta

250
00:13:15,720 --> 00:13:18,719
Speaker 1: only or just you know, tracking the market type of

251
00:13:18,760 --> 00:13:21,840
Speaker 1: portfolios to have the ability to outperform, and it gets

252
00:13:21,840 --> 00:13:26,000
Speaker 1: a lot of really smart portfolio managers into that space,

253
00:13:26,440 --> 00:13:30,280
Speaker 1: basically moving their traditional mutual fund models into the ETF

254
00:13:30,320 --> 00:13:34,320
Speaker 1: structure that's more tax sensitive and just a more efficient vehicle,

255
00:13:34,400 --> 00:13:36,839
Speaker 1: lower cost. Right, it obviously forces the collapse of the

256
00:13:37,480 --> 00:13:39,920
Speaker 1: multi share class. Right, they're gonna they're gonna be a

257
00:13:39,960 --> 00:13:42,560
Speaker 1: single share class. They're probably gonna be priced. I mean

258
00:13:42,679 --> 00:13:45,920
Speaker 1: looks like a little bit closer to the institutional costs

259
00:13:45,960 --> 00:13:48,679
Speaker 1: of the mutual fund. Eric and I you know, have

260
00:13:48,920 --> 00:13:53,080
Speaker 1: we've talked about there's a clear interest in why fund

261
00:13:53,120 --> 00:13:56,240
Speaker 1: issuers are moving this direction in part A lot of

262
00:13:56,320 --> 00:13:59,240
Speaker 1: these strategies have seen outflows, but is there really going

263
00:13:59,280 --> 00:14:02,760
Speaker 1: to be and I mean, do you see demand from

264
00:14:02,800 --> 00:14:06,559
Speaker 1: the advisors acting for asking for more active strategies or

265
00:14:06,640 --> 00:14:09,360
Speaker 1: asking for e t F only model portfolios that have

266
00:14:09,520 --> 00:14:13,560
Speaker 1: a better mix of active and passive. Yes, so they're

267
00:14:14,440 --> 00:14:17,439
Speaker 1: they're not asking for the non transparent e t F

268
00:14:17,559 --> 00:14:20,840
Speaker 1: s yet. I think once they're more broadly available in

269
00:14:20,920 --> 00:14:24,720
Speaker 1: the marketplace and they've proven themselves out so that the

270
00:14:25,320 --> 00:14:28,120
Speaker 1: bid asks are are tight and the ap s can

271
00:14:28,160 --> 00:14:31,040
Speaker 1: actually create the shares that they need to to to

272
00:14:31,200 --> 00:14:34,560
Speaker 1: make that market efficient, I think the assets will will flow.

273
00:14:35,240 --> 00:14:40,080
Speaker 1: Um we're already seeing the active passive blends, but they're

274
00:14:40,080 --> 00:14:43,120
Speaker 1: not necessarily the non transparent active passive. So the best

275
00:14:43,160 --> 00:14:45,560
Speaker 1: of both worlds, right, you can have smart beta, you

276
00:14:45,680 --> 00:14:48,440
Speaker 1: can have alpha combined, you get the you know, when

277
00:14:48,480 --> 00:14:52,880
Speaker 1: the markets go down sometimes, you know, the active managers

278
00:14:52,920 --> 00:14:55,600
Speaker 1: can be a little bit more nimble. So maybe those

279
00:14:55,960 --> 00:14:59,400
Speaker 1: combined make a lot more sense. So we have advisors

280
00:14:59,400 --> 00:15:02,520
Speaker 1: building their actice around building active passive portfolios. So I

281
00:15:02,560 --> 00:15:04,280
Speaker 1: think once the non transparents get in there, it gives

282
00:15:04,320 --> 00:15:07,400
Speaker 1: a lot more choice and again you get some benefits

283
00:15:07,440 --> 00:15:09,640
Speaker 1: of that structure. I do think some of the worry

284
00:15:09,720 --> 00:15:12,200
Speaker 1: that we will hear with models sometimes is and we

285
00:15:12,240 --> 00:15:14,040
Speaker 1: see it with the flows. A lot of the flows

286
00:15:14,120 --> 00:15:16,840
Speaker 1: do go into the like the SNP one you know,

287
00:15:16,960 --> 00:15:19,440
Speaker 1: vo or IVV and then the ms C I e

288
00:15:19,560 --> 00:15:22,040
Speaker 1: FO one or the foot seat and they're very similar.

289
00:15:22,320 --> 00:15:24,280
Speaker 1: The e M one which is very similar either it's

290
00:15:24,360 --> 00:15:26,680
Speaker 1: ms CR foot see we call it the core wars

291
00:15:26,920 --> 00:15:29,200
Speaker 1: or the ag the agg or BND which is the

292
00:15:29,280 --> 00:15:32,920
Speaker 1: aggregate bonding decks. Um is there any risk to everybody

293
00:15:33,200 --> 00:15:36,680
Speaker 1: by basically hooking into the same portfolio pound for pound,

294
00:15:37,200 --> 00:15:39,440
Speaker 1: because from the flows, it doesn't seem like there's a

295
00:15:39,520 --> 00:15:41,960
Speaker 1: ton of differentiation. But then when you meet with an

296
00:15:42,000 --> 00:15:45,000
Speaker 1: issue where they will say that they're a niche issue

297
00:15:45,000 --> 00:15:49,240
Speaker 1: where that they can provide an advisor with differentiation UM

298
00:15:49,480 --> 00:15:51,120
Speaker 1: and so. But when we see some of that, but

299
00:15:51,240 --> 00:15:52,720
Speaker 1: largely it just seems like that all the money is

300
00:15:52,720 --> 00:15:56,400
Speaker 1: going into the same sort of four et F categories.

301
00:15:56,920 --> 00:16:01,720
Speaker 1: And we're saying that too. So your traditional strategic model

302
00:16:02,200 --> 00:16:06,000
Speaker 1: has those core elements to it, and that's where the

303
00:16:06,000 --> 00:16:08,560
Speaker 1: flows are going into those just those those asset classes.

304
00:16:08,640 --> 00:16:11,360
Speaker 1: So there, you know, can potentially be some concerned around

305
00:16:11,360 --> 00:16:14,760
Speaker 1: liquidity for those products if there tends to be movement

306
00:16:14,800 --> 00:16:17,800
Speaker 1: all all at the same time. But we also the

307
00:16:18,200 --> 00:16:20,480
Speaker 1: issuers and the models that are providing those are the

308
00:16:20,520 --> 00:16:23,520
Speaker 1: biggest ones out there, so that you know, we have

309
00:16:23,720 --> 00:16:25,760
Speaker 1: certain criteria around how many assets they have to have,

310
00:16:25,960 --> 00:16:29,280
Speaker 1: how long they've been doing this UM. So we're not

311
00:16:29,440 --> 00:16:32,360
Speaker 1: as concerned about the liquidity part of it is is

312
00:16:32,560 --> 00:16:35,400
Speaker 1: UM as we would be for a brand new startup.

313
00:16:35,840 --> 00:16:38,680
Speaker 1: The other thing we're seeing is that advisers saying, all right,

314
00:16:38,680 --> 00:16:41,240
Speaker 1: we're going to take that core, but we're gonna build

315
00:16:41,280 --> 00:16:43,440
Speaker 1: around it. So we're gonna say, you know, we've got

316
00:16:43,520 --> 00:16:46,720
Speaker 1: the core for asset classes, and now we're gonna add

317
00:16:46,720 --> 00:16:49,160
Speaker 1: an income boost from my retirement clients. So there's another

318
00:16:49,600 --> 00:16:55,320
Speaker 1: model condiments, sprinkle a little relish and mustard the Kenship

319
00:16:55,400 --> 00:16:58,960
Speaker 1: on the hot dog. That's what Droll likes exactly. I

320
00:16:59,040 --> 00:17:02,160
Speaker 1: like the relish too, So they'll they'll they'll start building

321
00:17:02,200 --> 00:17:04,080
Speaker 1: around it and saying, you know, we want to want

322
00:17:04,119 --> 00:17:05,880
Speaker 1: a little more income in this portfolio, or we want

323
00:17:06,080 --> 00:17:10,199
Speaker 1: some different variation. I want liquid alternatives in there somehow

324
00:17:10,280 --> 00:17:12,280
Speaker 1: so that we can have some downside protection, whatever it

325
00:17:12,320 --> 00:17:17,840
Speaker 1: might be. So, your your clients are basically advisors, right,

326
00:17:18,080 --> 00:17:21,840
Speaker 1: and we're seeing puns more wealth managers sort of break

327
00:17:21,920 --> 00:17:24,680
Speaker 1: off and do their own advisors shop. What do you

328
00:17:24,800 --> 00:17:27,560
Speaker 1: think the potential of your business looks like here as

329
00:17:27,640 --> 00:17:30,480
Speaker 1: you see more and more of these advisors competing with

330
00:17:30,560 --> 00:17:33,880
Speaker 1: one another um and what kind of opportunity and strategic

331
00:17:33,960 --> 00:17:36,320
Speaker 1: growth do you see in the near term? Yeah, I

332
00:17:36,359 --> 00:17:38,520
Speaker 1: think you know, we only see upside right now. The

333
00:17:39,000 --> 00:17:42,919
Speaker 1: number of advisors that are moving into the model portfolios

334
00:17:43,040 --> 00:17:46,159
Speaker 1: and out of you old old commission products, or or

335
00:17:46,240 --> 00:17:49,480
Speaker 1: actually just doing it all themselves. The organizations they work

336
00:17:49,520 --> 00:17:52,199
Speaker 1: for don't necessarily want them doing that. Anymore. They'd much

337
00:17:52,320 --> 00:17:56,440
Speaker 1: rather have um the compliance structure. They'd rather have it

338
00:17:56,520 --> 00:17:59,080
Speaker 1: outsourced to these enormous firms that have a lot of resources,

339
00:17:59,240 --> 00:18:01,159
Speaker 1: rather than having an visor just going and picking and

340
00:18:01,240 --> 00:18:03,879
Speaker 1: choosing on their own. You know, if if if it

341
00:18:04,000 --> 00:18:06,960
Speaker 1: comes down to some litigation, if they have all this

342
00:18:07,080 --> 00:18:09,800
Speaker 1: backup that's been done, that's a much safer place to

343
00:18:09,880 --> 00:18:19,920
Speaker 1: be than than doing it themselves. You service independent advisors

344
00:18:20,480 --> 00:18:24,000
Speaker 1: and you know when you talk about Meryl ubs and

345
00:18:24,040 --> 00:18:26,760
Speaker 1: these bigger networks of fays where they have to sort

346
00:18:26,760 --> 00:18:29,479
Speaker 1: of subscribe to the Meryl do you find people defect

347
00:18:29,520 --> 00:18:32,440
Speaker 1: from there and become independent and then you're kind of

348
00:18:32,920 --> 00:18:35,800
Speaker 1: where they would go to use something similar. Yeah, we

349
00:18:36,160 --> 00:18:39,520
Speaker 1: see a lot of advisors once their practice gets big

350
00:18:39,640 --> 00:18:43,040
Speaker 1: or they wanted more independence, that they move over to

351
00:18:43,119 --> 00:18:45,680
Speaker 1: the investment platform that that is. That is a common trend.

352
00:18:45,720 --> 00:18:48,680
Speaker 1: We've seen that for many, many years. And you know,

353
00:18:48,760 --> 00:18:50,520
Speaker 1: one we want to make sure we have at least

354
00:18:50,800 --> 00:18:54,600
Speaker 1: the tools and products available that they have where they're

355
00:18:54,600 --> 00:18:57,400
Speaker 1: coming from. So that was one of the um ideas

356
00:18:57,520 --> 00:19:00,840
Speaker 1: behind Investment and why it was started to actually give

357
00:19:01,160 --> 00:19:04,840
Speaker 1: independent advisors the same tools and resources that somebody from

358
00:19:04,840 --> 00:19:07,840
Speaker 1: the wires would have. But that is that is a

359
00:19:07,920 --> 00:19:10,240
Speaker 1: continuing trend was seen. So where are you at with

360
00:19:10,320 --> 00:19:12,080
Speaker 1: assets now? And where do you think you're gonna get?

361
00:19:13,640 --> 00:19:17,440
Speaker 1: So we're at a little over three trillion dollars in

362
00:19:17,720 --> 00:19:20,960
Speaker 1: total assets on the platform UM and as far as

363
00:19:21,040 --> 00:19:25,119
Speaker 1: discretionary assets, uh, we're we're involved in the actual trading

364
00:19:25,200 --> 00:19:29,879
Speaker 1: and is about two hundred plus billion and we're growing

365
00:19:30,560 --> 00:19:32,960
Speaker 1: UM double digits for sure every year. And the models

366
00:19:33,000 --> 00:19:39,959
Speaker 1: business is growing over thirty percent year over year. Models. Well,

367
00:19:40,040 --> 00:19:43,240
Speaker 1: I think we're going to come back to this topic repeatedly.

368
00:19:43,960 --> 00:19:46,600
Speaker 1: And here's a question I have. So, UM your five

369
00:19:46,680 --> 00:19:48,960
Speaker 1: percent owned by Black Rocket. They took they bought a

370
00:19:49,000 --> 00:19:51,280
Speaker 1: small piece of you back in the day, right, Yes,

371
00:19:51,600 --> 00:19:54,679
Speaker 1: And we've tracked this theme that we call getting closer

372
00:19:54,760 --> 00:19:57,080
Speaker 1: to the customer. The et f issuers are looking at

373
00:19:57,080 --> 00:19:59,000
Speaker 1: the writing on the wall. They're like, man, everybody wants

374
00:19:59,000 --> 00:20:02,119
Speaker 1: everything for four basis points. Those advisor fees over there

375
00:20:02,160 --> 00:20:05,120
Speaker 1: look pretty juicy there one percent. And I'm not saying

376
00:20:05,119 --> 00:20:07,440
Speaker 1: Black Rocks doing this per se, but like Vanguard's Launchest

377
00:20:07,440 --> 00:20:10,520
Speaker 1: advisory service, so is Schwab. That's the game. That is

378
00:20:10,560 --> 00:20:13,800
Speaker 1: the game, and it feels like the they're all trying

379
00:20:13,840 --> 00:20:16,000
Speaker 1: to own the get as closely they can to the

380
00:20:16,040 --> 00:20:19,159
Speaker 1: advisor that guarantees flows into their funds, and some of

381
00:20:19,200 --> 00:20:22,760
Speaker 1: them are actually becoming advisors. So from your perch, how

382
00:20:22,840 --> 00:20:26,400
Speaker 1: are you seeing that trend develop? Yeah, I think all

383
00:20:26,480 --> 00:20:30,280
Speaker 1: the providers want to have strategic relationships with all the

384
00:20:30,640 --> 00:20:34,280
Speaker 1: gate gapers or the the big providers and and black

385
00:20:34,400 --> 00:20:37,560
Speaker 1: Rocks no difference. And you know, I don't want to

386
00:20:37,560 --> 00:20:40,480
Speaker 1: say what they are doing is just for distribution. The

387
00:20:40,600 --> 00:20:43,360
Speaker 1: reason they did the investment, it was just slightly under

388
00:20:43,440 --> 00:20:47,080
Speaker 1: five percent, but was more for UM technologists. They have

389
00:20:47,119 --> 00:20:49,840
Speaker 1: a lot of really cool technology tools that they wanted

390
00:20:49,880 --> 00:20:53,159
Speaker 1: to embed into our platform to make you know, UM

391
00:20:53,400 --> 00:20:56,600
Speaker 1: advice much more streamlined and simple. So they've they've got

392
00:20:56,640 --> 00:20:59,040
Speaker 1: some really simple tools that advisors can kind of take

393
00:20:59,040 --> 00:21:02,280
Speaker 1: shortcuts and get get to either models that they want

394
00:21:03,000 --> 00:21:05,639
Speaker 1: UM or they can get advice that they want. So

395
00:21:06,000 --> 00:21:08,840
Speaker 1: that was really the reason for that, you know. But

396
00:21:09,560 --> 00:21:12,280
Speaker 1: the closer thing get to to us and that that's

397
00:21:12,320 --> 00:21:15,239
Speaker 1: not just black Rock, but that's all the providers UM.

398
00:21:15,400 --> 00:21:18,359
Speaker 1: You know, the more UM that's really where distribution is

399
00:21:18,400 --> 00:21:21,000
Speaker 1: coming from these days. And you know, it's not lost

400
00:21:21,080 --> 00:21:24,600
Speaker 1: on us to how much data exists in in the

401
00:21:24,720 --> 00:21:28,320
Speaker 1: likes of those end investors and on mass when you

402
00:21:28,440 --> 00:21:30,880
Speaker 1: serve you know, about a third of the advisory community

403
00:21:31,280 --> 00:21:33,680
Speaker 1: you know, rolled up. That's a lot of insight for

404
00:21:34,440 --> 00:21:38,359
Speaker 1: you know, fund issuers who are trying to sort of

405
00:21:38,640 --> 00:21:42,640
Speaker 1: gore the pockets. Is Yeah, I think from your data

406
00:21:42,680 --> 00:21:44,560
Speaker 1: is a big thing for us. And we have a

407
00:21:44,640 --> 00:21:48,200
Speaker 1: lot of data on all those hundred thousand advisors, but

408
00:21:48,280 --> 00:21:50,399
Speaker 1: all the trends of the flows that we're seeing from

409
00:21:50,440 --> 00:21:53,800
Speaker 1: all the different asset managers. So for those and we

410
00:21:54,760 --> 00:21:57,959
Speaker 1: make that information available to the asset managers, so they

411
00:21:58,040 --> 00:22:01,320
Speaker 1: can be much more targeted when they're going after um

412
00:22:01,680 --> 00:22:03,879
Speaker 1: new assets and they know which advisors are selling more

413
00:22:03,920 --> 00:22:06,680
Speaker 1: of their products and how many proposals are being run

414
00:22:06,800 --> 00:22:10,480
Speaker 1: every day from on their individual securities and so that

415
00:22:10,680 --> 00:22:13,000
Speaker 1: instead of from a retail standpoint just trying to put

416
00:22:13,080 --> 00:22:16,760
Speaker 1: up commercials and trying to you know, blanket everywhere, they

417
00:22:16,840 --> 00:22:19,440
Speaker 1: can be very targeted on you know, different organizations and

418
00:22:19,520 --> 00:22:21,640
Speaker 1: figure out, you know, where where am I best using

419
00:22:21,680 --> 00:22:24,200
Speaker 1: my resources. Let's talk about the models that are you

420
00:22:24,240 --> 00:22:26,840
Speaker 1: said there's over a thousand available right on the platform,

421
00:22:27,119 --> 00:22:30,040
Speaker 1: so there's there's a hundred fifty providers asset managers that

422
00:22:30,119 --> 00:22:34,040
Speaker 1: have about fifteen hundred individual models on the platform, um

423
00:22:34,160 --> 00:22:37,320
Speaker 1: the hundred, So black Rocks one of those, right, okay,

424
00:22:37,440 --> 00:22:40,400
Speaker 1: And then you've got companies that like CLS that only

425
00:22:40,520 --> 00:22:45,800
Speaker 1: does this where also there's models that are for long term,

426
00:22:45,840 --> 00:22:47,879
Speaker 1: but then there's models that are are trying to outperform,

427
00:22:48,040 --> 00:22:50,520
Speaker 1: right like a fund of funds? Is that right? And

428
00:22:50,760 --> 00:22:52,960
Speaker 1: do you have like a separate section in the proverbial

429
00:22:53,040 --> 00:22:55,760
Speaker 1: food store for the alpha generating ones versus the long

430
00:22:55,920 --> 00:22:59,919
Speaker 1: term ones. Yeah. So when we're working with and an

431
00:23:00,000 --> 00:23:01,920
Speaker 1: A Prize and they want to set up models, they're

432
00:23:01,920 --> 00:23:04,080
Speaker 1: not going to turn on all hundred and fifty organizations

433
00:23:04,119 --> 00:23:06,840
Speaker 1: models in that They're going to say, all right, we

434
00:23:07,000 --> 00:23:10,199
Speaker 1: want a low cost solution, we want an income solution,

435
00:23:10,240 --> 00:23:12,560
Speaker 1: we want a strategic solution, we want a tactical solution,

436
00:23:12,600 --> 00:23:14,159
Speaker 1: we want an E s G solution. And they might

437
00:23:14,359 --> 00:23:19,000
Speaker 1: end up with five, six, ten different types of solutions

438
00:23:19,040 --> 00:23:22,119
Speaker 1: that all have several different model portfolios attached to it.

439
00:23:22,240 --> 00:23:25,640
Speaker 1: So it really depends on the distribution chain, the type

440
00:23:25,640 --> 00:23:28,080
Speaker 1: of advisors that they have with the demand is and

441
00:23:28,160 --> 00:23:30,560
Speaker 1: so we help them curate that list down to something

442
00:23:30,640 --> 00:23:33,680
Speaker 1: that's that's more reasonable, so advisors don't have overwhelming choice.

443
00:23:34,080 --> 00:23:36,600
Speaker 1: What other trends in et F s do you think

444
00:23:36,640 --> 00:23:39,920
Speaker 1: warrant discussion? A couple of areas that I think we're

445
00:23:39,920 --> 00:23:43,879
Speaker 1: seeing trends that are are very strong right now. We

446
00:23:44,000 --> 00:23:47,080
Speaker 1: talked about et F models. UM. In some cases they're

447
00:23:47,119 --> 00:23:49,480
Speaker 1: open architecture models, so we'll have a third party picking

448
00:23:49,520 --> 00:23:52,000
Speaker 1: the best et F that are out there. But more

449
00:23:52,119 --> 00:23:55,840
Speaker 1: and more are top two organizations and flows are all

450
00:23:55,880 --> 00:23:58,520
Speaker 1: coming from firms that are only using their proprietary e

451
00:23:58,600 --> 00:24:01,240
Speaker 1: t F s, so they're you know, they may not

452
00:24:01,440 --> 00:24:04,320
Speaker 1: have a selection that's you know, completely broad and can

453
00:24:04,359 --> 00:24:09,280
Speaker 1: cover all the different areas UM, but it's cheap, right

454
00:24:09,480 --> 00:24:11,879
Speaker 1: and and there's no management fee on top of it,

455
00:24:12,160 --> 00:24:15,359
Speaker 1: So our advisors look at those models as the free ones,

456
00:24:16,000 --> 00:24:17,680
Speaker 1: so they don't have to pay management feed, just the

457
00:24:17,760 --> 00:24:20,400
Speaker 1: underlying expenses on those models. So those from a cost

458
00:24:20,400 --> 00:24:23,240
Speaker 1: standpoint are very attractive. They know the brand names of

459
00:24:23,320 --> 00:24:26,240
Speaker 1: these big e t F shops, so they're happy to

460
00:24:26,680 --> 00:24:29,440
Speaker 1: make those available to their clients. So the free I think,

461
00:24:29,520 --> 00:24:31,960
Speaker 1: is one of the big trends we're saying right now. Yeah,

462
00:24:32,080 --> 00:24:34,480
Speaker 1: no Bank of New York is rolling out et s,

463
00:24:34,560 --> 00:24:36,800
Speaker 1: and one of them is zero point zero zero percent

464
00:24:37,080 --> 00:24:40,080
Speaker 1: um JP Morgan's is two basis points. I mean people

465
00:24:40,080 --> 00:24:42,840
Speaker 1: are just look in the future, everybody's canna expect there

466
00:24:43,080 --> 00:24:45,040
Speaker 1: the core at least of their portfolio to be pretty

467
00:24:45,080 --> 00:24:49,120
Speaker 1: much free. Right, Yeah, So so you know what I'm

468
00:24:49,240 --> 00:24:53,560
Speaker 1: talking about is a management fee on top. So traditionally

469
00:24:53,720 --> 00:24:55,480
Speaker 1: a lot of the like in other words, they would

470
00:24:55,480 --> 00:24:58,680
Speaker 1: wave that because you're putting it into their funds exactly,

471
00:24:58,760 --> 00:25:03,760
Speaker 1: which would probably include some of the non free ones, right, right,

472
00:25:04,200 --> 00:25:06,960
Speaker 1: but fair enough, But you're right, there's also the underlying

473
00:25:07,240 --> 00:25:09,760
Speaker 1: is you know, race to zero. So if you're underlying

474
00:25:09,840 --> 00:25:12,800
Speaker 1: costs or twelve basis points or fourteen basis points, you know,

475
00:25:12,960 --> 00:25:16,080
Speaker 1: it's hard to compete with. This is a hard question.

476
00:25:16,240 --> 00:25:21,440
Speaker 1: But you know, do you think it's it's concerning either

477
00:25:21,680 --> 00:25:24,679
Speaker 1: overall or for your business as well? Just to share

478
00:25:24,760 --> 00:25:27,400
Speaker 1: that black Rock and Vanguard have of of passive act

479
00:25:27,800 --> 00:25:31,800
Speaker 1: of passive management, and I don't I don't think it's

480
00:25:31,840 --> 00:25:34,960
Speaker 1: a concern, you know, I think it would be. It's

481
00:25:34,960 --> 00:25:38,159
Speaker 1: a hard entrance point. There's barriers to entry if you

482
00:25:38,359 --> 00:25:42,399
Speaker 1: just want to go after low cost strategic e t

483
00:25:42,600 --> 00:25:45,600
Speaker 1: F models. Right, they have a lot of resources. They're

484
00:25:45,640 --> 00:25:48,359
Speaker 1: doing a very good job in that space. But I

485
00:25:48,440 --> 00:25:51,960
Speaker 1: also think there's a lot of opportunity for other et

486
00:25:52,119 --> 00:25:56,000
Speaker 1: F manufacturers to you know, look at smart beta models

487
00:25:56,160 --> 00:25:58,159
Speaker 1: or e s G models or whatever it might be

488
00:25:58,400 --> 00:26:01,399
Speaker 1: that you know that there aren't great options out there

489
00:26:01,440 --> 00:26:04,000
Speaker 1: in this in the space for so they're they're big,

490
00:26:04,080 --> 00:26:05,720
Speaker 1: they're doing a good job of it, they've got lots

491
00:26:05,720 --> 00:26:08,159
Speaker 1: of liquid, and they've got lots of support. You know,

492
00:26:08,480 --> 00:26:10,679
Speaker 1: I'm not concerned about that at this point. And one

493
00:26:10,720 --> 00:26:14,000
Speaker 1: other one. You know, you have obviously a huge research team.

494
00:26:14,640 --> 00:26:17,080
Speaker 1: How are your capabilities going to have to change with

495
00:26:17,920 --> 00:26:22,480
Speaker 1: sort of maybe more evaluation of active managers. Yeah, that

496
00:26:22,680 --> 00:26:26,040
Speaker 1: that's something we have been working on a lot lately.

497
00:26:26,320 --> 00:26:31,480
Speaker 1: Um So, traditionally we've done more quantitative screening for traditional

498
00:26:31,680 --> 00:26:34,120
Speaker 1: e t F s, but now as you're moving into

499
00:26:34,440 --> 00:26:36,880
Speaker 1: multi factor e t F, so you're moving into these

500
00:26:37,000 --> 00:26:40,639
Speaker 1: non transparent ETFs, you really have to have somebody looking

501
00:26:40,800 --> 00:26:43,600
Speaker 1: deep under the hood to understand how that structure works.

502
00:26:44,240 --> 00:26:47,359
Speaker 1: And so when we're making recommendations, it's it's not just

503
00:26:47,760 --> 00:26:49,959
Speaker 1: you know, looking at these three or five different factors.

504
00:26:50,320 --> 00:26:52,159
Speaker 1: We actually have to understand the team better. Just like

505
00:26:52,280 --> 00:26:55,720
Speaker 1: you would on a traditional mutual fund or the old school,

506
00:26:56,080 --> 00:26:58,679
Speaker 1: you know, asset managers, that's you know, what is their

507
00:26:58,720 --> 00:27:02,400
Speaker 1: investment philosophy? How how's it working? So it's it's certainly

508
00:27:02,440 --> 00:27:05,399
Speaker 1: evolving in our resources are are shifting more onto the

509
00:27:05,600 --> 00:27:08,080
Speaker 1: t F side from a research standpoint. Tim, thanks for

510
00:27:08,160 --> 00:27:15,040
Speaker 1: joining us and brilliance right, Thanks for having me, Thanks

511
00:27:15,080 --> 00:27:17,480
Speaker 1: for listening to Trillions until next time. You can find

512
00:27:17,560 --> 00:27:22,160
Speaker 1: us on the Bloomberg terminal, Bloomberg dot com, Apple Podcast, Spotify,

513
00:27:22,760 --> 00:27:24,760
Speaker 1: and wherever else you like to listen. We'd love to

514
00:27:24,840 --> 00:27:27,880
Speaker 1: hear from you. We're on Twitter, I'm at Joel Weber Show,

515
00:27:28,040 --> 00:27:30,879
Speaker 1: He's at Eric Call Tunas that. You can find Morgan

516
00:27:31,160 --> 00:27:34,680
Speaker 1: at M Barnes six and you can follow Investnet at

517
00:27:34,840 --> 00:27:39,280
Speaker 1: e n V intel. This episode of Trillions was produced

518
00:27:39,320 --> 00:27:43,160
Speaker 1: by Magnus Andricksen. Francesca lead is the head of Bloomberg Podcast.

519
00:27:43,600 --> 00:27:43,840
Speaker 1: Bye