WEBVTT - Inside an ETF Platform Catering to 100,000 Financial Advisers 0:00:06.160 --> 0:00:08.360 Welcome the trillions. I'm Joel Webber and I'm Eric bel 0:00:08.440 --> 0:00:15.320 Tunis Eric, do you remember the before times? Because we 0:00:15.360 --> 0:00:18.360 had an interview back in March with someone that we 0:00:18.440 --> 0:00:21.160 never aired and we, you know, dusted it off for 0:00:21.200 --> 0:00:24.880 this week's episode and I'm excited to revisit it. They 0:00:24.880 --> 0:00:27.080 were such they were it was like days of innocence. 0:00:27.560 --> 0:00:29.920 I was so much younger back then in early March. 0:00:30.560 --> 0:00:33.240 I miss you. I miss you. I really do. It 0:00:33.280 --> 0:00:37.640 would be normal again someday. Uh So. Our guest is 0:00:38.040 --> 0:00:42.639 Tim Clift of Investment, and we found him through actually 0:00:42.800 --> 0:00:46.519 Morgan Barna, who's in Bloomberg Intelligence and is an analyst 0:00:46.600 --> 0:00:50.040 with you, and Morgan flagged him because he's got this 0:00:50.120 --> 0:00:54.520 huge team of research analysts who helped him have this 0:00:54.600 --> 0:00:57.560 platform that interfaces with more than a hundred thousand advisers, 0:00:57.880 --> 0:01:00.480 which I thought was really interesting because we always talking 0:01:00.480 --> 0:01:02.600 about products and e t f s, but we don't 0:01:02.640 --> 0:01:06.080 talk about platforms that much. Yeah. I think for somebody 0:01:06.080 --> 0:01:08.520 who isn't in the business, a good way to put 0:01:08.560 --> 0:01:11.280 it would be like the platform is sort of like 0:01:11.319 --> 0:01:14.600 the costco or Whole Foods for advisors. So if you 0:01:14.640 --> 0:01:17.800 have an advisor that you use. They especially one that 0:01:17.840 --> 0:01:20.200 doesn't that has broken away from the sort of wire 0:01:20.200 --> 0:01:22.800 houses like the merrals or ubs is and is on 0:01:22.840 --> 0:01:25.840 their own independent. They would use an invest net to 0:01:26.480 --> 0:01:30.080 shop for individual et f s, funds or packages of 0:01:30.160 --> 0:01:33.679 them um in a sort of wholesale manner. So what's 0:01:33.680 --> 0:01:36.920 interesting to me about this conversation in regards to what's 0:01:36.920 --> 0:01:38.679 going on now and the market is we've seen more 0:01:38.720 --> 0:01:42.160 and more these the way we watch flows all the time, 0:01:42.200 --> 0:01:46.360 and we're seeing more and more that models are impacting 0:01:46.400 --> 0:01:49.960 the flows. You can tell when a model says, you 0:01:49.960 --> 0:01:53.080 know what, we're shifting out of you know, inflation protective 0:01:53.120 --> 0:01:56.920 securities into corporates or out of equities and into bonds. 0:01:57.480 --> 0:01:59.520 You can see it in the flows. And so more 0:01:59.520 --> 0:02:01.040 and more these e t f s make it into 0:02:01.080 --> 0:02:03.040 these models, which are put on the shelf at these 0:02:03.960 --> 0:02:08.120 proverbial costco or whole foods. The more the flows are 0:02:08.160 --> 0:02:10.640 impacted by what the models do. And the models can 0:02:10.680 --> 0:02:13.919 be tactical trading a lot or strategic which don't move 0:02:13.919 --> 0:02:17.959 all that much. And this guy tim Is basically sits 0:02:18.680 --> 0:02:20.600 rate in the middle. He's like the gatekeeper of the 0:02:20.600 --> 0:02:23.160 funds that get on He also works on making the models, 0:02:23.520 --> 0:02:26.200 and there's outside people who make the models. So it's 0:02:26.200 --> 0:02:28.600 a little inside baseball, but I think it's a really 0:02:28.720 --> 0:02:33.800 interesting um look into how the sort of intermediary channel 0:02:33.880 --> 0:02:37.080 of e t F flows and investing works. So just 0:02:37.120 --> 0:02:39.560 to give you some scale, you know, invest Net, this 0:02:39.639 --> 0:02:43.840 company has about seventy dollars in e t F s's 0:02:43.880 --> 0:02:46.079 that's about two of all e t F sets, so 0:02:46.080 --> 0:02:48.480 it's not huge, but it's sizeable. But there they have 0:02:49.200 --> 0:02:52.320 growth year over year. And what's also interesting is that 0:02:52.840 --> 0:02:55.520 in e t F models though, could be something like 0:02:55.560 --> 0:02:58.560 two hundred to three hundred billions, so getting closer to 0:02:59.720 --> 0:03:01.960 so and I think that's the chunk we're really going 0:03:02.000 --> 0:03:04.480 to focus on today. But the vest Net is, like 0:03:04.520 --> 0:03:07.440 I said, a portion of that chunk in terms of 0:03:07.560 --> 0:03:11.639 how they fit into the bigger picture. So again Tim 0:03:11.720 --> 0:03:14.960 Cleft of the vest Net. This was recorded in mid 0:03:15.120 --> 0:03:19.440 March before our office went on lockdown, so it sounds 0:03:19.560 --> 0:03:23.120 especially great because we're not all in closets. And special 0:03:23.120 --> 0:03:25.680 thanks to Morgan Barnett for helping make this episode happen. 0:03:26.200 --> 0:03:28.120 By the way, that's funny you bring that up, because 0:03:28.240 --> 0:03:30.160 remember we wondered which of those e t F s 0:03:30.200 --> 0:03:32.280 that we pitched in the e t F Tank episode 0:03:32.720 --> 0:03:36.400 about ten of us all pitched products we thought should exist, 0:03:36.400 --> 0:03:38.240 and we wondered who would be the first to market. 0:03:38.920 --> 0:03:42.880 And Morgan's one She pitched a online betting e t 0:03:43.080 --> 0:03:45.960 F and it is now a reality b e t 0:03:46.200 --> 0:03:48.240 Z and it's an instant hit. It's already got six 0:03:48.280 --> 0:03:50.800 and seven million dollars came out of the gate pretty strong. 0:03:50.880 --> 0:03:54.160 So congratulations to her. Even though I won in that 0:03:54.280 --> 0:03:58.360 competition with x mon the x Monday's e t F, 0:03:59.160 --> 0:04:10.320 she won the real investing with Investment Damn. Welcome to Trallians. 0:04:11.040 --> 0:04:14.360 Thanks for having me. So what do you do at investment? 0:04:15.280 --> 0:04:18.080 I wear a lot of different hats, but my primary 0:04:18.120 --> 0:04:21.440 responsibility is for research and portfolio management for the organization. 0:04:22.160 --> 0:04:25.320 So we have a team of analysts that do research 0:04:25.520 --> 0:04:28.960 on mutual funds ETFs, all sorts of different investment products 0:04:29.040 --> 0:04:33.599 and then make recommendations to financial advisors UM and to 0:04:33.680 --> 0:04:37.240 our own portfolio managers that will build model portfolios. Eric 0:04:37.279 --> 0:04:40.400 thinks your whole foods, how do you describe yourself? I 0:04:40.400 --> 0:04:42.640 think that's a great description. You know, you know, we 0:04:42.680 --> 0:04:48.320 could be a thank you. So the Amazon Amazon, but 0:04:48.400 --> 0:04:51.839 we we are a big open architecture platform, so we 0:04:51.880 --> 0:04:55.719 don't We don't necessarily start from a curation standpoint. We 0:04:56.320 --> 0:04:58.560 open our doors to just about everybody. But we do 0:04:58.640 --> 0:05:02.599 have teams in how that help advisors and organizations get 0:05:02.640 --> 0:05:05.320 that list smaller. And I think that the real important 0:05:05.320 --> 0:05:07.360 thing for people here to understand who might be retail 0:05:07.360 --> 0:05:13.839 investors themselves, is advisors wealth managers. They don't necessarily do 0:05:13.960 --> 0:05:16.080 it all themselves. They will outsource a lot of things. 0:05:16.520 --> 0:05:19.360 So just talk to us about the shoppers at your 0:05:19.440 --> 0:05:22.440 quote platform. The people who use them are advisors. What 0:05:22.520 --> 0:05:25.479 are they getting from you? And and how are et 0:05:25.720 --> 0:05:29.720 s involved. Yeah, Historically advisors a lot of their practice 0:05:29.760 --> 0:05:32.000 was built around them building their own models, and I 0:05:32.040 --> 0:05:36.279 think over time they've understood or have figured out that 0:05:36.279 --> 0:05:38.279 that's maybe not the best use of their time, that 0:05:38.320 --> 0:05:40.919 they really need to spend more time with their clients 0:05:40.920 --> 0:05:43.840 putting together financial plans. Who can I pay to make 0:05:43.880 --> 0:05:47.760 these problems go away? Not you, exactly exactly. So you 0:05:47.760 --> 0:05:50.400 know the advisors now are saying, well, maybe it makes 0:05:50.440 --> 0:05:53.039 sense for this segment of my business just to go 0:05:53.080 --> 0:05:57.160 into model portfolios. They all have very different appetite for risk, 0:05:57.320 --> 0:06:01.960 different time horizons. Within the model structure, you can actually 0:06:01.960 --> 0:06:04.719 fit a lot of different people into a limited number 0:06:04.720 --> 0:06:07.360 of model portfolios that will make sense for those. Okay, 0:06:07.360 --> 0:06:10.600 so model portfolio, model structures, what does that? What was 0:06:10.640 --> 0:06:13.240 any of that mean? So think of a model portfolio 0:06:13.440 --> 0:06:16.919 as a selection of mutual funds or e t f s. 0:06:17.040 --> 0:06:19.320 No ETFs are the ones that are growing the fastest 0:06:20.080 --> 0:06:23.039 um with different risk tolerances. So maybe you have three, five, 0:06:23.200 --> 0:06:27.560 ten different mutual funds or ETFs in the portfolio, and 0:06:27.760 --> 0:06:30.760 those will change over time as the economy changes or 0:06:30.800 --> 0:06:34.600 the direction of the goals of the client change. But 0:06:35.120 --> 0:06:38.520 it's a it's a set portfolio of of these underlying 0:06:38.520 --> 0:06:40.560 security and and are these tailored for me as an 0:06:40.600 --> 0:06:44.920 individual or are they more off the shelf products? So 0:06:45.080 --> 0:06:47.400 they start off relatively off the shelf. So there may 0:06:47.440 --> 0:06:51.280 be seven or ten um in a risk spectrum, so 0:06:51.400 --> 0:06:53.600 from very conservative to very aggressive, and there may be 0:06:53.880 --> 0:06:56.840 tax efficient versions of those. But there's also tools you 0:06:56.920 --> 0:06:59.080 can set on top of these model portfolio so you 0:06:59.120 --> 0:07:01.240 could say, well, I want to have an e s 0:07:01.320 --> 0:07:03.760 G or an impact component to it, or I want 0:07:03.800 --> 0:07:06.520 to add an income infusion to it, so you can 0:07:06.600 --> 0:07:09.160 do some customization to these, but by and large they 0:07:09.160 --> 0:07:13.880 start off at least as as um um structured structured 0:07:13.960 --> 0:07:20.000 individual portfolios. Most people out there know the sixty equity bonds, 0:07:20.720 --> 0:07:23.040 and you could do that with two ets. Now I'm 0:07:23.080 --> 0:07:25.400 assuming you know if you were described one of these portfolios, 0:07:25.440 --> 0:07:28.200 I know you can't say tickers. Um, we'll we'll say 0:07:28.240 --> 0:07:30.880 them for you if we need too. But go through 0:07:31.040 --> 0:07:33.800 what one might look like? Is it you know fifty 0:07:34.080 --> 0:07:37.000 thirty times? Like, what's going on here? What's an example 0:07:37.080 --> 0:07:39.120 of one? What's the compositions somebody? What would you put 0:07:39.200 --> 0:07:41.920 jole in? Basically? Yeah, so they're there are very simple 0:07:42.000 --> 0:07:45.080 ones and and sometimes those will just be for low 0:07:45.160 --> 0:07:47.120 cost solutions. So you know, you can come into these 0:07:47.160 --> 0:07:49.960 model portfolios with five thousand dollars and get into a 0:07:50.000 --> 0:07:51.880 model portfolio, but that's only going to have a couple 0:07:51.920 --> 0:07:56.200 of different tickers to it um. The larger the cases 0:07:56.320 --> 0:07:58.960 and the more diversified the portfolio. You might have ten 0:07:59.080 --> 0:08:02.679 or fifteen, but they'll generally have certainly equity and fixed 0:08:02.680 --> 0:08:06.680 income and international exposure. In some cases they will have 0:08:07.400 --> 0:08:11.200 UM alternatives exposure in them too. In some cases, these 0:08:11.240 --> 0:08:14.280 are almost said it forget it like strategic models where 0:08:14.320 --> 0:08:17.120 they don't change much at all over time, and others 0:08:17.240 --> 0:08:19.680 that may be more tactical and move in and out 0:08:19.720 --> 0:08:21.480 of the market's a little bit more and be more 0:08:21.520 --> 0:08:23.679 flexible with what's going on in the in the environment. 0:08:24.320 --> 0:08:27.520 How would model profolios help with rebalancing? How would that 0:08:27.600 --> 0:08:30.640 help the advisor community? So with model portfolios, you are 0:08:30.760 --> 0:08:34.640 outsourcing all the selection part of it, but also the 0:08:34.720 --> 0:08:38.160 rebalancing part of the portfolios. So every time the market 0:08:38.200 --> 0:08:42.240 moves significantly, that rebalancing will happen, either from a manager 0:08:42.320 --> 0:08:45.640 standpoint or investment in our platform will do that. We 0:08:45.720 --> 0:08:47.920 can set it up and say, well, let's just do 0:08:48.080 --> 0:08:50.959 it every quarter or once a year or when it 0:08:51.040 --> 0:08:53.319 hits a certain tolerance and it moves outside of that 0:08:53.440 --> 0:08:56.199 risk spectrum that you signed up for. So it seems 0:08:56.240 --> 0:08:58.199 to me, and you know, the recent sell offs we've 0:08:58.200 --> 0:09:00.800 been seeing, we have seen a lot of the core 0:09:01.000 --> 0:09:03.559 E t F s from Vanguard like I VV and 0:09:03.679 --> 0:09:06.520 VU and I E F A and V E A 0:09:07.040 --> 0:09:10.240 continue to take in money during the sell offs. Correctly, 0:09:10.240 --> 0:09:12.600 if I'm wrong, it seems like model portfolios are part 0:09:12.640 --> 0:09:14.719 of what where the flows are coming from. Despite the 0:09:14.800 --> 0:09:18.440 market conditions, advisors say, hey, look we're gonna put We're 0:09:18.480 --> 0:09:21.160 gonna just use this model. Done now, I'm gonna spend 0:09:21.200 --> 0:09:24.800 all my time right now coaching this investor to not sell. 0:09:25.720 --> 0:09:28.160 And that's their big value add Now now they don't 0:09:28.160 --> 0:09:29.760 have to spend their time as much doing that. Is 0:09:29.800 --> 0:09:32.240 that kind of what's going on now and what explains 0:09:32.280 --> 0:09:34.720 some of the flows into these e t s despite 0:09:34.760 --> 0:09:37.719 the market um on some violent days. Actually it is. 0:09:37.800 --> 0:09:39.880 I mean, these are these are much stickier assets and 0:09:40.200 --> 0:09:42.680 and by and large they're part of a financial plan. 0:09:42.880 --> 0:09:45.280 So the advisors sat down with a client, they've gone 0:09:45.320 --> 0:09:48.240 through this long long term goals for the client, and 0:09:48.320 --> 0:09:50.360 they're saying that this makes the most sense for you. 0:09:50.480 --> 0:09:52.079 We are not going to jump in and jump out 0:09:52.080 --> 0:09:55.800 of the market every time something scary happens temporarily long term, 0:09:55.880 --> 0:09:59.120 these are long term holdings. If you need short term assets, 0:09:59.200 --> 0:10:01.160 put it somewhere else. These models are really here to 0:10:01.600 --> 0:10:04.560 you know, generate income over time and to grow over time. 0:10:04.600 --> 0:10:06.920 And so you don't you don't see those flows nearly 0:10:06.920 --> 0:10:09.640 as much as individual tickers. And what kind of time 0:10:09.679 --> 0:10:13.040 horizon are you typically talking about there? Yeah, time risings 0:10:13.120 --> 0:10:15.679 might be ten years fifty you know, all the way 0:10:15.800 --> 0:10:17.840 through retirements, so it could be a fifty year time 0:10:17.880 --> 0:10:19.959 horizon on on many of these models. Can I throw 0:10:20.080 --> 0:10:22.880 theory out at you that I've been thinking about, there's 0:10:22.920 --> 0:10:25.800 this general filling with like, okay, ETFs are going to 0:10:25.920 --> 0:10:28.160 hurt the market because all these people are gonna run 0:10:29.120 --> 0:10:31.719 when something gets tough, and they'll be like only one door, 0:10:31.920 --> 0:10:34.280 like everybody. They'll say, everybody's gonna try to run out 0:10:34.280 --> 0:10:37.280 the same exit door. Um, it seems like every single 0:10:37.320 --> 0:10:38.920 sell off we see the same thing. We see the 0:10:39.000 --> 0:10:40.800 e t f s tend to take in net flows, 0:10:41.240 --> 0:10:44.079 as do index mutual funds, which are passive. It seems 0:10:44.080 --> 0:10:47.840 to me traditionally those are younger clients and more coached 0:10:48.000 --> 0:10:51.520 clients by these advisors. Now mutual funds people were put 0:10:51.600 --> 0:10:54.120 in there by a broker who got paid from mutual funds, 0:10:54.120 --> 0:10:57.079 so less loyalty and traditionally boomers who may have a 0:10:57.160 --> 0:11:00.640 shorter time horizon. Could we be looking at a situation 0:11:00.720 --> 0:11:02.599 for the next at least fifteen twenty years. We're so 0:11:02.760 --> 0:11:06.160 offs are more about mutual funds having to sell and 0:11:06.240 --> 0:11:09.599 being under severe pressure rather than the passive side. Is 0:11:09.640 --> 0:11:13.800 that something you can speak to from where you said, yes, Um, 0:11:13.960 --> 0:11:17.560 he wrestles with big theories. It's a it's a big theory. 0:11:17.920 --> 0:11:20.720 And I don't want, I wanted to anyone to think 0:11:20.800 --> 0:11:22.319 that we're not going to see outflows out of e 0:11:22.360 --> 0:11:25.000 t s two as markets get you know, struggle. I 0:11:25.280 --> 0:11:28.559 just think that you may not have as much fluid 0:11:28.600 --> 0:11:34.280 e I think the way the trend has been it's 0:11:34.320 --> 0:11:37.600 really more function of costs. So you know, I think 0:11:37.679 --> 0:11:40.360 that's where e t f s are have have an advantage. 0:11:40.960 --> 0:11:44.240 And we've seen by and large advisors more and more 0:11:44.320 --> 0:11:47.200 focused when they're putting put portfolios together for their clients. 0:11:47.360 --> 0:11:50.559 Is much more fee pressure. So anytime they meet with 0:11:50.640 --> 0:11:52.520 a brand new client and they're in a mutual fund model, 0:11:52.880 --> 0:11:55.400 very often they're going to be recommending an ETF model 0:11:55.480 --> 0:11:58.400 or a blended model for their client to reduce the 0:11:58.480 --> 0:12:02.280 cost because we know that particularly down markets, additional costs 0:12:02.320 --> 0:12:04.199 are just going to eat away and corrowed at your 0:12:04.360 --> 0:12:06.559 at your returns. But the person who sought out the 0:12:06.640 --> 0:12:09.320 e t F is they bought it, they weren't put 0:12:09.400 --> 0:12:13.160 in it. And I think that's important because usually that 0:12:13.280 --> 0:12:17.440 person also is a UH student of behavioral finance as 0:12:17.480 --> 0:12:21.959 well and has long term mentality understands. As we say, 0:12:21.960 --> 0:12:27.439 they're chasing patients, not performance, and so I think that 0:12:27.800 --> 0:12:30.520 anyone that's going into these models, I think that's absolutely 0:12:30.600 --> 0:12:33.199 true that there's there We're not going to see a 0:12:33.280 --> 0:12:35.920 lot of that friction and movement in and out. But 0:12:36.000 --> 0:12:37.600 I also think you know, a t F are being 0:12:37.679 --> 0:12:40.360 used from from a hedging vehicle and because you can 0:12:40.440 --> 0:12:43.400 interdate trade them there there's going to be some movement there. 0:12:43.520 --> 0:12:45.920 But I think in the in the models for sure, 0:12:45.960 --> 0:12:48.720 when we don't see nearly the outflows that we'd see 0:12:48.720 --> 0:12:51.120 another asset classes. Yeah, given the interest you're seeing in 0:12:51.240 --> 0:12:54.880 e t F only model portfolios, you know, what is 0:12:54.920 --> 0:12:58.320 your take on the new active non transparent funds coming 0:12:58.360 --> 0:13:00.839 to market? Do you think you know, part of the 0:13:00.920 --> 0:13:02.920 appeal is that they fit into e t F only 0:13:03.000 --> 0:13:05.560 model portfolio. You know what is your sort of take 0:13:05.640 --> 0:13:09.400 on I think that's pretty exciting the non transparent um 0:13:10.040 --> 0:13:11.679 e t F s that are that are moving into 0:13:11.920 --> 0:13:15.600 the marketplace. It will it will allow those traditionally beta 0:13:15.720 --> 0:13:18.719 only or just you know, tracking the market type of 0:13:18.760 --> 0:13:21.840 portfolios to have the ability to outperform, and it gets 0:13:21.840 --> 0:13:26.000 a lot of really smart portfolio managers into that space, 0:13:26.440 --> 0:13:30.280 basically moving their traditional mutual fund models into the ETF 0:13:30.320 --> 0:13:34.320 structure that's more tax sensitive and just a more efficient vehicle, 0:13:34.400 --> 0:13:36.839 lower cost. Right, it obviously forces the collapse of the 0:13:37.480 --> 0:13:39.920 multi share class. Right, they're gonna they're gonna be a 0:13:39.960 --> 0:13:42.560 single share class. They're probably gonna be priced. I mean 0:13:42.679 --> 0:13:45.920 looks like a little bit closer to the institutional costs 0:13:45.960 --> 0:13:48.679 of the mutual fund. Eric and I you know, have 0:13:48.920 --> 0:13:53.080 we've talked about there's a clear interest in why fund 0:13:53.120 --> 0:13:56.240 issuers are moving this direction in part A lot of 0:13:56.320 --> 0:13:59.240 these strategies have seen outflows, but is there really going 0:13:59.280 --> 0:14:02.760 to be and I mean, do you see demand from 0:14:02.800 --> 0:14:06.559 the advisors acting for asking for more active strategies or 0:14:06.640 --> 0:14:09.360 asking for e t F only model portfolios that have 0:14:09.520 --> 0:14:13.560 a better mix of active and passive. Yes, so they're 0:14:14.440 --> 0:14:17.439 they're not asking for the non transparent e t F 0:14:17.559 --> 0:14:20.840 s yet. I think once they're more broadly available in 0:14:20.920 --> 0:14:24.720 the marketplace and they've proven themselves out so that the 0:14:25.320 --> 0:14:28.120 bid asks are are tight and the ap s can 0:14:28.160 --> 0:14:31.040 actually create the shares that they need to to to 0:14:31.200 --> 0:14:34.560 make that market efficient, I think the assets will will flow. 0:14:35.240 --> 0:14:40.080 Um we're already seeing the active passive blends, but they're 0:14:40.080 --> 0:14:43.120 not necessarily the non transparent active passive. So the best 0:14:43.160 --> 0:14:45.560 of both worlds, right, you can have smart beta, you 0:14:45.680 --> 0:14:48.440 can have alpha combined, you get the you know, when 0:14:48.480 --> 0:14:52.880 the markets go down sometimes, you know, the active managers 0:14:52.920 --> 0:14:55.600 can be a little bit more nimble. So maybe those 0:14:55.960 --> 0:14:59.400 combined make a lot more sense. So we have advisors 0:14:59.400 --> 0:15:02.520 building their actice around building active passive portfolios. So I 0:15:02.560 --> 0:15:04.280 think once the non transparents get in there, it gives 0:15:04.320 --> 0:15:07.400 a lot more choice and again you get some benefits 0:15:07.440 --> 0:15:09.640 of that structure. I do think some of the worry 0:15:09.720 --> 0:15:12.200 that we will hear with models sometimes is and we 0:15:12.240 --> 0:15:14.040 see it with the flows. A lot of the flows 0:15:14.120 --> 0:15:16.840 do go into the like the SNP one you know, 0:15:16.960 --> 0:15:19.440 vo or IVV and then the ms C I e 0:15:19.560 --> 0:15:22.040 FO one or the foot seat and they're very similar. 0:15:22.320 --> 0:15:24.280 The e M one which is very similar either it's 0:15:24.360 --> 0:15:26.680 ms CR foot see we call it the core wars 0:15:26.920 --> 0:15:29.200 or the ag the agg or BND which is the 0:15:29.280 --> 0:15:32.920 aggregate bonding decks. Um is there any risk to everybody 0:15:33.200 --> 0:15:36.680 by basically hooking into the same portfolio pound for pound, 0:15:37.200 --> 0:15:39.440 because from the flows, it doesn't seem like there's a 0:15:39.520 --> 0:15:41.960 ton of differentiation. But then when you meet with an 0:15:42.000 --> 0:15:45.000 issue where they will say that they're a niche issue 0:15:45.000 --> 0:15:49.240 where that they can provide an advisor with differentiation UM 0:15:49.480 --> 0:15:51.120 and so. But when we see some of that, but 0:15:51.240 --> 0:15:52.720 largely it just seems like that all the money is 0:15:52.720 --> 0:15:56.400 going into the same sort of four et F categories. 0:15:56.920 --> 0:16:01.720 And we're saying that too. So your traditional strategic model 0:16:02.200 --> 0:16:06.000 has those core elements to it, and that's where the 0:16:06.000 --> 0:16:08.560 flows are going into those just those those asset classes. 0:16:08.640 --> 0:16:11.360 So there, you know, can potentially be some concerned around 0:16:11.360 --> 0:16:14.760 liquidity for those products if there tends to be movement 0:16:14.800 --> 0:16:17.800 all all at the same time. But we also the 0:16:18.200 --> 0:16:20.480 issuers and the models that are providing those are the 0:16:20.520 --> 0:16:23.520 biggest ones out there, so that you know, we have 0:16:23.720 --> 0:16:25.760 certain criteria around how many assets they have to have, 0:16:25.960 --> 0:16:29.280 how long they've been doing this UM. So we're not 0:16:29.440 --> 0:16:32.360 as concerned about the liquidity part of it is is 0:16:32.560 --> 0:16:35.400 UM as we would be for a brand new startup. 0:16:35.840 --> 0:16:38.680 The other thing we're seeing is that advisers saying, all right, 0:16:38.680 --> 0:16:41.240 we're going to take that core, but we're gonna build 0:16:41.280 --> 0:16:43.440 around it. So we're gonna say, you know, we've got 0:16:43.520 --> 0:16:46.720 the core for asset classes, and now we're gonna add 0:16:46.720 --> 0:16:49.160 an income boost from my retirement clients. So there's another 0:16:49.600 --> 0:16:55.320 model condiments, sprinkle a little relish and mustard the Kenship 0:16:55.400 --> 0:16:58.960 on the hot dog. That's what Droll likes exactly. I 0:16:59.040 --> 0:17:02.160 like the relish too, So they'll they'll they'll start building 0:17:02.200 --> 0:17:04.080 around it and saying, you know, we want to want 0:17:04.119 --> 0:17:05.880 a little more income in this portfolio, or we want 0:17:06.080 --> 0:17:10.199 some different variation. I want liquid alternatives in there somehow 0:17:10.280 --> 0:17:12.280 so that we can have some downside protection, whatever it 0:17:12.320 --> 0:17:17.840 might be. So, your your clients are basically advisors, right, 0:17:18.080 --> 0:17:21.840 and we're seeing puns more wealth managers sort of break 0:17:21.920 --> 0:17:24.680 off and do their own advisors shop. What do you 0:17:24.800 --> 0:17:27.560 think the potential of your business looks like here as 0:17:27.640 --> 0:17:30.480 you see more and more of these advisors competing with 0:17:30.560 --> 0:17:33.880 one another um and what kind of opportunity and strategic 0:17:33.960 --> 0:17:36.320 growth do you see in the near term? Yeah, I 0:17:36.359 --> 0:17:38.520 think you know, we only see upside right now. The 0:17:39.000 --> 0:17:42.919 number of advisors that are moving into the model portfolios 0:17:43.040 --> 0:17:46.159 and out of you old old commission products, or or 0:17:46.240 --> 0:17:49.480 actually just doing it all themselves. The organizations they work 0:17:49.520 --> 0:17:52.199 for don't necessarily want them doing that. Anymore. They'd much 0:17:52.320 --> 0:17:56.440 rather have um the compliance structure. They'd rather have it 0:17:56.520 --> 0:17:59.080 outsourced to these enormous firms that have a lot of resources, 0:17:59.240 --> 0:18:01.159 rather than having an visor just going and picking and 0:18:01.240 --> 0:18:03.879 choosing on their own. You know, if if if it 0:18:04.000 --> 0:18:06.960 comes down to some litigation, if they have all this 0:18:07.080 --> 0:18:09.800 backup that's been done, that's a much safer place to 0:18:09.880 --> 0:18:19.920 be than than doing it themselves. You service independent advisors 0:18:20.480 --> 0:18:24.000 and you know when you talk about Meryl ubs and 0:18:24.040 --> 0:18:26.760 these bigger networks of fays where they have to sort 0:18:26.760 --> 0:18:29.479 of subscribe to the Meryl do you find people defect 0:18:29.520 --> 0:18:32.440 from there and become independent and then you're kind of 0:18:32.920 --> 0:18:35.800 where they would go to use something similar. Yeah, we 0:18:36.160 --> 0:18:39.520 see a lot of advisors once their practice gets big 0:18:39.640 --> 0:18:43.040 or they wanted more independence, that they move over to 0:18:43.119 --> 0:18:45.680 the investment platform that that is. That is a common trend. 0:18:45.720 --> 0:18:48.680 We've seen that for many, many years. And you know, 0:18:48.760 --> 0:18:50.520 one we want to make sure we have at least 0:18:50.800 --> 0:18:54.600 the tools and products available that they have where they're 0:18:54.600 --> 0:18:57.400 coming from. So that was one of the um ideas 0:18:57.520 --> 0:19:00.840 behind Investment and why it was started to actually give 0:19:01.160 --> 0:19:04.840 independent advisors the same tools and resources that somebody from 0:19:04.840 --> 0:19:07.840 the wires would have. But that is that is a 0:19:07.920 --> 0:19:10.240 continuing trend was seen. So where are you at with 0:19:10.320 --> 0:19:12.080 assets now? And where do you think you're gonna get? 0:19:13.640 --> 0:19:17.440 So we're at a little over three trillion dollars in 0:19:17.720 --> 0:19:20.960 total assets on the platform UM and as far as 0:19:21.040 --> 0:19:25.119 discretionary assets, uh, we're we're involved in the actual trading 0:19:25.200 --> 0:19:29.879 and is about two hundred plus billion and we're growing 0:19:30.560 --> 0:19:32.960 UM double digits for sure every year. And the models 0:19:33.000 --> 0:19:39.959 business is growing over thirty percent year over year. Models. Well, 0:19:40.040 --> 0:19:43.240 I think we're going to come back to this topic repeatedly. 0:19:43.960 --> 0:19:46.600 And here's a question I have. So, UM your five 0:19:46.680 --> 0:19:48.960 percent owned by Black Rocket. They took they bought a 0:19:49.000 --> 0:19:51.280 small piece of you back in the day, right, Yes, 0:19:51.600 --> 0:19:54.679 And we've tracked this theme that we call getting closer 0:19:54.760 --> 0:19:57.080 to the customer. The et f issuers are looking at 0:19:57.080 --> 0:19:59.000 the writing on the wall. They're like, man, everybody wants 0:19:59.000 --> 0:20:02.119 everything for four basis points. Those advisor fees over there 0:20:02.160 --> 0:20:05.120 look pretty juicy there one percent. And I'm not saying 0:20:05.119 --> 0:20:07.440 Black Rocks doing this per se, but like Vanguard's Launchest 0:20:07.440 --> 0:20:10.520 advisory service, so is Schwab. That's the game. That is 0:20:10.560 --> 0:20:13.800 the game, and it feels like the they're all trying 0:20:13.840 --> 0:20:16.000 to own the get as closely they can to the 0:20:16.040 --> 0:20:19.159 advisor that guarantees flows into their funds, and some of 0:20:19.200 --> 0:20:22.760 them are actually becoming advisors. So from your perch, how 0:20:22.840 --> 0:20:26.400 are you seeing that trend develop? Yeah, I think all 0:20:26.480 --> 0:20:30.280 the providers want to have strategic relationships with all the 0:20:30.640 --> 0:20:34.280 gate gapers or the the big providers and and black 0:20:34.400 --> 0:20:37.560 Rocks no difference. And you know, I don't want to 0:20:37.560 --> 0:20:40.480 say what they are doing is just for distribution. The 0:20:40.600 --> 0:20:43.360 reason they did the investment, it was just slightly under 0:20:43.440 --> 0:20:47.080 five percent, but was more for UM technologists. They have 0:20:47.119 --> 0:20:49.840 a lot of really cool technology tools that they wanted 0:20:49.880 --> 0:20:53.159 to embed into our platform to make you know, UM 0:20:53.400 --> 0:20:56.600 advice much more streamlined and simple. So they've they've got 0:20:56.640 --> 0:20:59.040 some really simple tools that advisors can kind of take 0:20:59.040 --> 0:21:02.280 shortcuts and get get to either models that they want 0:21:03.000 --> 0:21:05.639 UM or they can get advice that they want. So 0:21:06.000 --> 0:21:08.840 that was really the reason for that, you know. But 0:21:09.560 --> 0:21:12.280 the closer thing get to to us and that that's 0:21:12.320 --> 0:21:15.239 not just black Rock, but that's all the providers UM. 0:21:15.400 --> 0:21:18.359 You know, the more UM that's really where distribution is 0:21:18.400 --> 0:21:21.000 coming from these days. And you know, it's not lost 0:21:21.080 --> 0:21:24.600 on us to how much data exists in in the 0:21:24.720 --> 0:21:28.320