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Sharon French Discusses Smart Beta ETFs · Masters in Business

• 0:02
  Speaker 1: This is Masters in Business with Barry Ridholts on Bloomberg Radio.
• 0:07
  Speaker 1: This week on the podcast, I have an extra special guest.
• 0:10
  Speaker 1: Her name is Sharon French and she is the head
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  Speaker 1: of Beta Solutions at Appenheimer Funds. She has a storied career,
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  Speaker 1: stopping at such places as JP Morrigan, Chase, Alliance, Bernstein,
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  Speaker 1: and black Rock, amongst others. She has been an instrumental
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  Speaker 1: person in the development and growth of the E t
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  Speaker 1: F sector as well as a very active participant in
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  Speaker 1: the E s G, Environmental, Social and Governance UH sector
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  Speaker 1: of investing. She is consistently named one of the most
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  Speaker 1: influential people in finance. Most recently Cranes had their list
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  Speaker 1: of forty women, but find a list of a hundred
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  Speaker 1: most influential women in markets, investing, finance, and Sharon is
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  Speaker 1: invariably on that list. You will find this to be
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  Speaker 1: an absolutely fascinating conversation. So, with no further ado, my
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  Speaker 1: conversation with Sharon French of Oppenheimer Funds. This is Masters
• 1:14
  Speaker 1: in Business with Barry Ridholts on Bloomberg Radio. I'm Barry Ridholts.
• 1:19
  Speaker 1: You're listening to Masters in Business on Bloomberg Radio. My
• 1:22
  Speaker 1: special guest this week is Sharon French. She is the
• 1:26
  Speaker 1: head of Beta Solutions at Oppenheimer Funds, where she also
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  Speaker 1: implements the firm's E s G efforts, as well as
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  Speaker 1: overseas a number of UH Smart Beta et F products
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  Speaker 1: and solutions. She has previously worked at such storied firms
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  Speaker 1: as Black Rock Alliance, Bernstein Chase, JP Morrigan Chase. She's
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  Speaker 1: a graduate of Wharton School of Business and serves on
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  Speaker 1: the board of Women in ETFs. Sharon French, Welcome to Bloomberg.
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  Speaker 1: Thank you, Barry. I'm glad to be here. We've been
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  Speaker 1: talking about doing this now for a long time. I'm
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  Speaker 1: glad we finally got you in the studios to have
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  Speaker 1: this conversation. Let's talk a little bit about your career.
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  Speaker 1: You began back at JP Morgan Chase when they were
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  Speaker 1: really a much smaller shop. Weren't they, Yes, Yes, down
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  Speaker 1: on Water Street, one Water Street, right across in the
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  Speaker 1: Staten Island Ferry. What was yeah? What were they like
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  Speaker 1: then and what was your role with them? Sure? So
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  Speaker 1: I graduated with a management degree concentration and finance. I
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  Speaker 1: went into a sort of global training program with them. Certainly,
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  Speaker 1: you know much smaller at the time, you know, still
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  Speaker 1: very regionally based. Um. You know, the the project that
• 2:40
  Speaker 1: I was working on is really how to define profitability
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  Speaker 1: for their different product lines. Um. But I got a
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  Speaker 1: chance very early in my career to travel abroad too.
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  Speaker 1: I lived in Paris, I lived in London, and lived
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  Speaker 1: in Milan, Madrid, Frankfurt, doing cost studies with country managers
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  Speaker 1: and then making a recommendation to you know, either d
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  Speaker 1: market a product or or you know, sort of focus
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  Speaker 1: in a particular area. And so I was definitely over
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  Speaker 1: my skis. Looking back, I don't know that I knew
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  Speaker 1: really what I was doing, but I certainly learned a lot. Well,
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  Speaker 1: this is was just right out of grad school. They
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  Speaker 1: start sending you this was right out of undergrad. Yes,
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  Speaker 1: right out of undergrad So I was young. Yeah, yeah,
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  Speaker 1: but you have to work really hard the first year
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  Speaker 1: and then you know sort of um, you know, compete
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  Speaker 1: to go overseas. So thankfully, you know, I've never been
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  Speaker 1: showed a hard work and so they you know, gave
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  Speaker 1: me the opportunity and I jumped at it. So you
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  Speaker 1: go from Chase to Wharton, where do you go? So
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  Speaker 1: my undergrads from University of Delaware Wharton is my um
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  Speaker 1: my certified Investment Management Analyst designation, that's right. And so
• 3:44
  Speaker 1: where did you go from from upen? Uh so? So
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  Speaker 1: then I just went straight into Chase, right, So I
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  Speaker 1: started my career in global banking, then moved into brokerage,
• 3:53
  Speaker 1: then sset manager. Yeah so alright, so then you go
• 3:56
  Speaker 1: from how how do you end up in black Rock
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  Speaker 1: right in the middle of the entire build out of
• 4:01
  Speaker 1: ice Share. Yeah, yeah, that was fun. That was right
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  Speaker 1: after Larry Fink bought b G. I so right, I
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  Speaker 1: think that deal closed December two thousand nine. And look,
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  Speaker 1: you know, I certainly have an appreciation, a broad appreciation
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  Speaker 1: for financial services in general, because my journey and career
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  Speaker 1: progression was, like I said, global banking, wealth management, brokerage platforms.
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  Speaker 1: Really sure, some Leman brothers up through what is now
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  Speaker 1: called Morgan Stanley UM, and then I went into asset management,
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  Speaker 1: always on the active or fundamental active side, right, which
• 4:30
  Speaker 1: is what people like you and I grew up with
• 4:31
  Speaker 1: the mutual fund. But what really drove me crazy at
• 4:35
  Speaker 1: Alliance Bernstein was that we would go into an institutional presentation. Right,
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  Speaker 1: so you've got the committee there, you've got the chief
• 4:42
  Speaker 1: investment officer and would be trying to sell whatever strategy,
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  Speaker 1: and invariably, probably fifty percent of the time, we would
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  Speaker 1: lose to b G I Northern Trust State Street because
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  Speaker 1: of a passive mandate. And you know what I was
• 4:57
  Speaker 1: trying to articulate to the chief investment officer is that
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  Speaker 1: the real prudent way to run the pension fund, as
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  Speaker 1: an example, is to figure out how to combine intelligent
• 5:07
  Speaker 1: alpha with efficient beta so that there's really room for
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  Speaker 1: both of us. So what again, intellectually stuck in my
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  Speaker 1: brain is I cannot really as a practitioner talk about
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  Speaker 1: the indexed enhanced index or beta side of the business.
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  Speaker 1: And so I got a call from a recruiter, James Beck,
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  Speaker 1: wonderful recruiter here in New York City, and they had
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  Speaker 1: a position at I Shares And I loved Alliance Bernstein
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  Speaker 1: Loos Andrews, especially as a leader. Was was just a legend.
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  Speaker 1: They had such a fabulous research group, especially in the
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  Speaker 1: nineties right into the tie absolutely and Bernstein plus Alliance
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  Speaker 1: was sort of like boom right. It was just a
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  Speaker 1: fabulous combination. So I never thought I would leave, but
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  Speaker 1: this I had this nagging thing in my brain intellectually
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  Speaker 1: as a professional that I needed to satisfy. I needed
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  Speaker 1: to be able to talk about both sides of the
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  Speaker 1: investment management industry again as as a professional. So that's
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  Speaker 1: really why I went, and I gotta tell you, And
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  Speaker 1: of course I got you know, I got grilled, and
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  Speaker 1: everybody said to me, oh, you're going to the dark side,
• 6:13
  Speaker 1: And I guess I suppose I did, But I did it,
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  Speaker 1: you know, deliberately. Well, by dark side you mean more
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  Speaker 1: efficient and lower cost or dark side just the company
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  Speaker 1: dark side anything passive right from fundamental active into the
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  Speaker 1: dark side of indexing. If you were, you were dead
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  Speaker 1: right when you say they're not mutually exclusive, they're complementary.
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  Speaker 1: And I don't understand why people, I guess when you're
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  Speaker 1: losing business and we've seen the flows have just been
• 6:40
  Speaker 1: when you started at I Shares, did you ever imagine
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  Speaker 1: Vanguard would be five trillion, black Rock would be six trillion,
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  Speaker 1: and a decade of flows would shift from active to
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  Speaker 1: passes the way we've seen. No, I really didn't, And
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  Speaker 1: and look, you and I both know that. I think
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  Speaker 1: two thousand and eight really propelled that forward dramatically. But
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  Speaker 1: but when I joined I shares Vanguard and State three.
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  Speaker 1: We're certainly a of I shares in terms of the
• 7:01
  Speaker 1: league tables, but I shows came on strong. And one
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  Speaker 1: of the big strategic moves that I Share has made,
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  Speaker 1: and this is right when Mark Weedman took over in
• 7:08
  Speaker 1: two thousand and eleven, maybe nine months after, is they
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  Speaker 1: you know, they were losing the core positions to Vanguard,
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  Speaker 1: right they were, they were being relegated to the satellites,
• 7:18
  Speaker 1: and so they came out with the core series right
• 7:21
  Speaker 1: sort of replicating Vanguard's core products at a lower phase,
• 7:25
  Speaker 1: and that was a big game change. I mean, certainly
• 7:27
  Speaker 1: us m V, which rivalist SPLV and had a better construction,
• 7:31
  Speaker 1: took a lot of assets in low vall. So they
• 7:33
  Speaker 1: you know, they really made a lot of good strategic moves.
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  Speaker 1: I'm fascinated by Larry Fink in two thousand and nine,
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  Speaker 1: when everybody is still stinging from the g f C
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  Speaker 1: from the financial crisis, says, no, No, now is the
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  Speaker 1: time when we're going to make a giant purchase and
• 7:49
  Speaker 1: totally reformulate the firm. That is one of the great
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  Speaker 1: all time pivots in history. And if you recall the
• 7:57
  Speaker 1: time everyone thought, oh, my gosh, he's totally overpaying b
• 8:00
  Speaker 1: everybody's laughing. He's laughing all his way to the bank.
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  Speaker 1: And now they are literally the biggest shop in the world. So,
• 8:08
  Speaker 1: so you were there at a time when the growth
• 8:11
  Speaker 1: was really rampant. What was that experience like? So here's
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  Speaker 1: how I described in many of us who have been
• 8:17
  Speaker 1: at I Shares and have since left and gone on
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  Speaker 1: to really wonderful things. It's like going to boot camp
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  Speaker 1: for the Special Forces. I knew you were going to
• 8:27
  Speaker 1: use that metaphor because I've attended a number of conferences
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  Speaker 1: where you and I have both spoken, and that crew
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  Speaker 1: of E T F people all seem to have gone
• 8:38
  Speaker 1: through the same baptism of fire. It's absolutely fair. Again,
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  Speaker 1: if you have anybody else in your show who's who
• 8:45
  Speaker 1: was there for a period of time and left, we
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  Speaker 1: all say wonderfully positive things about the experience. And I
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  Speaker 1: mean that so genuinely, because every single day you are
• 8:54
  Speaker 1: walking into battle, the bar is set so high for
• 8:58
  Speaker 1: everything that you have to achieve, and Refin's expectations are real.
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  Speaker 1: They they they are quite lofty for everybody, and so
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  Speaker 1: you know, you really sharpen your skill set that when
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  Speaker 1: you get out. You get out like you are a
• 9:12
  Speaker 1: Green Beret or a Navy seal or recall it what
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  Speaker 1: you will, right, So therefore you are very hirable. People
• 9:18
  Speaker 1: love to take people from black Rock now difficult culture
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  Speaker 1: because of that. Um. But you know, I absolutely look
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  Speaker 1: back at that time in my life as a wonderful experience.
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  Speaker 1: That's shaped a lot of who I am today. And
• 9:32
  Speaker 1: the proof is how successful they've become. Whatever they're doing,
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  Speaker 1: it seems to be working. Yeah, I'm very hults. You're
• 9:38
  Speaker 1: listening to Master's in Business on Bloomberg Radio. My special
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  Speaker 1: guest today is Sharon French. She is the head of
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  Speaker 1: Beta Solutions at Oppenheimer Funds, where she oversees smart beta
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  Speaker 1: products as well as E s G efforts. Um, before
• 9:54
  Speaker 1: we move on to what you're currently doing in Oppenheimer,
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  Speaker 1: I have one last black Rock quest Shin. So you
• 10:01
  Speaker 1: were head of private Clients and Institutions at Black Rock.
• 10:05
  Speaker 1: What did that work entail on a day to day basis?
• 10:09
  Speaker 1: What were you basically in branding and marketing or were
• 10:12
  Speaker 1: you front line dealing with c I O S and
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  Speaker 1: investment committee front line? Good question? Um? Uh yeah, so
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  Speaker 1: it so institutional, which was also a responsibility of mine
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  Speaker 1: out of lines Bernstein so institutional and private banks. So
• 10:28
  Speaker 1: you know, we certainly dealt with JP Morgan private bank
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  Speaker 1: quite a bit, and a lot of the others Wills, Fargo, etcetera,
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  Speaker 1: you know them well, UM and so it was it
• 10:37
  Speaker 1: was really a strong product development client fit role at
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  Speaker 1: that time that the the I shares you know, product
• 10:46
  Speaker 1: lineup if you will, was growing pretty dramatically, but it
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  Speaker 1: was very closely connected and linked to certain channels. So
• 10:53
  Speaker 1: the channel that I fail exactly now they're they're pure
• 10:57
  Speaker 1: beta you know index stuff, you know, the um some
• 11:02
  Speaker 1: institutional kinds for using as trading vehicles, but they certainly
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  Speaker 1: were looking to get away from that specifically within smart
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  Speaker 1: beta first trust was coming up very fast in the
• 11:11
  Speaker 1: in the sort of rear view mirror at the time UM,
• 11:14
  Speaker 1: so we had to sort of pivot and balance between
• 11:18
  Speaker 1: our our pure beta market cap strategies, which is really
• 11:22
  Speaker 1: where they started into how do we tilt a particular
• 11:25
  Speaker 1: product more fundamentally, and a lot of the feedback that
• 11:28
  Speaker 1: we were getting for that product development was driven exactly
• 11:32
  Speaker 1: from some of the private banks that we worked with
• 11:34
  Speaker 1: in some of the larger institutions quite interesting. So let's
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  Speaker 1: talk about beta solutions, which is kind of a mouthful
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  Speaker 1: to instead of just saying beta. So let me just
• 11:45
  Speaker 1: start with the obvious question, what's the difference between Beta
• 11:48
  Speaker 1: solutions and basic index? And yeah, well so, and there's
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  Speaker 1: a reason why it's called that. So, yeah, right when
• 11:56
  Speaker 1: I was hired to Oppenheimer Funds, it was a very
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  Speaker 1: deliberate decision Artstime as the CEO, to really, you know,
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  Speaker 1: commit and go full force into the E T F
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  Speaker 1: business utilizing smart Beta, taking a pass on market cap
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  Speaker 1: because there's certainly big players who you know, corner that market.
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  Speaker 1: Hard hard to add value there if you're smaller or
• 12:16
  Speaker 1: even a mid sized player, that right, That's right, And
• 12:19
  Speaker 1: so he sort of wanted to call the unit. So
• 12:22
  Speaker 1: it's a this is a sort of a a independently run,
• 12:27
  Speaker 1: if you will, operating unit within Oppenheimer Funds, which gives
• 12:30
  Speaker 1: us the space and the focus and the commitment to
• 12:33
  Speaker 1: sort of build our business alongside of our active business.
• 12:36
  Speaker 1: But he wanted to call it smart Beta, and I said,
• 12:38
  Speaker 1: you know, is that really what we're trying to do,
• 12:40
  Speaker 1: aren't we Aren't we trying to take a beta concept
• 12:44
  Speaker 1: and wrap it in whatever it makes sense to wrap
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  Speaker 1: it in, whether it's an et F fund, a separate
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  Speaker 1: account and use it. So shouldn't this be called beta solutions?
• 12:53
  Speaker 1: Because if we are pigeonholing ourselves just into smart beta.
• 12:57
  Speaker 1: And you know, for the longest time people really know
• 13:00
  Speaker 1: what smart data was. It had all kinds of names, strategic, beta, alternative, veta,
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  Speaker 1: de menal, indexing exactly, probably the most descriptive. Are you
• 13:07
  Speaker 1: on the side of the fence that thinks the phrase
• 13:09
  Speaker 1: smart data is a marketing term? I am on that
• 13:12
  Speaker 1: side of the film. You're you're not a fan of that.
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  Speaker 1: I know a lot of people just cringe every time
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  Speaker 1: here because if you think about it, if beta is
• 13:20
  Speaker 1: just what the market's giving you, what is how you
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  Speaker 1: modifying that with smart? I like alternatively weighted right, because
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  Speaker 1: I think of I think of buying the market right,
• 13:29
  Speaker 1: which is market cap and certainly favors certain stocks or sectors,
• 13:33
  Speaker 1: which you know, there's always been concentration risk in that approach.
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  Speaker 1: Some people still want it, which is fine, but there's
• 13:40
  Speaker 1: better ways and different choices on how to drive that
• 13:43
  Speaker 1: risk return profile through alternatively waiting the index. And I
• 13:46
  Speaker 1: really do believe that I remember way back when. I
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  Speaker 1: think it was Guggenheim who had the equal weighted that's
• 13:52
  Speaker 1: and that was suddenly like, wow, so you don't have
• 13:55
  Speaker 1: the market cap weighted. It was never giants, although it
• 13:58
  Speaker 1: certainly has grown, but it was always home. You mean,
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  Speaker 1: there's a different way to do this. It's kind of
• 14:04
  Speaker 1: surprising that the smart beta move hadn't begun earlier because
• 14:09
  Speaker 1: people were clearly thinking about ways to look at indexing
• 14:13
  Speaker 1: that wasn't just cap weight That's right. And what I'm
• 14:16
  Speaker 1: really encouraged by Barry is that if you look at
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  Speaker 1: flows in teen versus eighteen, smart beta, of the total
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  Speaker 1: pie of et F flows was about twelve pen it was.
• 14:30
  Speaker 1: That's giant. It seems to have plateaus somewhat now, right
• 14:34
  Speaker 1: or is it still growing? It's still growing. Yeah, it's
• 14:36
  Speaker 1: still growing some of the well, you know, I mean
• 14:40
  Speaker 1: this year, I mean, I haven't seen April numbers yet,
• 14:44
  Speaker 1: but it's it's haund pretty healthy growth this year, you
• 14:47
  Speaker 1: know that. And I know that it's over whether it
• 14:49
  Speaker 1: will double. I mean, it's it doubled. From whether it
• 14:53
  Speaker 1: will double, that's that's a bit of a stretch. But
• 14:55
  Speaker 1: the point of the matter is we knew we would
• 14:57
  Speaker 1: get smart beta market share from three places. The first
• 15:01
  Speaker 1: is underperforming active and you know sort of morning star
• 15:04
  Speaker 1: one and two star rated funds. We certainly saw it there. Um,
• 15:09
  Speaker 1: the just the sheer growth of smart Beta trying to
• 15:11
  Speaker 1: get our unfair share of that. And that's the growth
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  Speaker 1: I'm talking about from eighteen doubling and then passive. So
• 15:18
  Speaker 1: as people got more educated about the merits of alternatively
• 15:22
  Speaker 1: weighted some of the you know, uh, sort of traditional
• 15:27
  Speaker 1: passive buyers started to move towards and understand what they
• 15:31
  Speaker 1: were getting by paying in some cases twenty basis points
• 15:34
  Speaker 1: more to get a smart beta product. They started to
• 15:36
  Speaker 1: move parts of their portfolio to smart beta from having
• 15:39
  Speaker 1: it be all passive. So there were three pillars by
• 15:42
  Speaker 1: which we gathered market share, and we're about five billion
• 15:45
  Speaker 1: today and from our our start with it's about so
• 15:50
  Speaker 1: we're pretty happy with. So let's since you brought that up,
• 15:53
  Speaker 1: let's talk about what Oppenheimer's portfolio options look like. So
• 15:58
  Speaker 1: you have the alternative way thing you're saying billion, what
• 16:02
  Speaker 1: are the other et F offerings they have in either
• 16:06
  Speaker 1: the beta or the non beta opportunities? Sure? Sure, So
• 16:12
  Speaker 1: we have twenty equity strategies. UM starting out with revenue
• 16:15
  Speaker 1: weighted revenue weighted, so that's a traditional smart beta fundamental.
• 16:20
  Speaker 1: It is absolutely yeah, and that is due to a
• 16:24
  Speaker 1: small acquisition we made back at the end of of
• 16:27
  Speaker 1: revenue shares. UM really kept five of those products and
• 16:31
  Speaker 1: then built that suite out and then we started to
• 16:34
  Speaker 1: move into factors and we've got a really nice partnership
• 16:37
  Speaker 1: with Fitsie Russell. We introduced Dynamic multi factor, which we're
• 16:41
  Speaker 1: super proud of. We were one of the first us
• 16:43
  Speaker 1: in PIMCO. So this is an active no, it's it
• 16:47
  Speaker 1: well interesting we have it's sort of an active overlay.
• 16:50
  Speaker 1: So it's a macro signal coming from our global multi
• 16:53
  Speaker 1: Asset group which takes UM sort of leading economic indicators
• 16:59
  Speaker 1: as well as the sort of the momentum signals from
• 17:03
  Speaker 1: the market and tells us monthly whether we're either in
• 17:07
  Speaker 1: a recovery, an expansion, a contraction or a slowdown. And
• 17:11
  Speaker 1: then we take the five factors and we wait them
• 17:15
  Speaker 1: depending upon which market regime we're in, and so based
• 17:18
  Speaker 1: on that you will alter within the e t F
• 17:21
  Speaker 1: the waiting of the So it is rules based, but
• 17:24
  Speaker 1: it is informed by this active signal and it has
• 17:27
  Speaker 1: done phenomenal. We launched it in November. It's at the
• 17:31
  Speaker 1: top of the category. So this is kind of an
• 17:33
  Speaker 1: interesting space because people have been talking about making its
• 17:38
  Speaker 1: ironic how beta has driven so much of e t
• 17:41
  Speaker 1: f s, but we're talking about making e t fs
• 17:45
  Speaker 1: more dynamic and more active based on a variety of
• 17:48
  Speaker 1: other inputs. So this one is rules based, driven by
• 17:51
  Speaker 1: a series of economic inputs. Any other dynamic or active
• 17:54
  Speaker 1: ETFs current or on the rise well, interestingly, so we
• 17:58
  Speaker 1: did file with the SEC for a senior loan product.
• 18:01
  Speaker 1: We've got a very very well recognized and successful senior
• 18:05
  Speaker 1: loan FRANX fixed income right, so so we were making
• 18:09
  Speaker 1: our foray into the fixed income marketplace. We also filed
• 18:12
  Speaker 1: for short duration uh e t F some liquidity enhanced
• 18:16
  Speaker 1: ETFs and all these are not to a specific index.
• 18:19
  Speaker 1: The role dynamic and can change. Well, these are actually active.
• 18:22
  Speaker 1: So what we're doing is filing active fixed income ETFs
• 18:26
  Speaker 1: with some of our key teams and Oppenhammer funds. And
• 18:29
  Speaker 1: had we not been bought by Investco, because those products
• 18:33
  Speaker 1: are just sitting on the shelf, those approvals by the
• 18:35
  Speaker 1: SECO sitting on the shelf, we would have launched fixed
• 18:38
  Speaker 1: income active UM just sort of you know, build out
• 18:41
  Speaker 1: the asset allocation sure and all the academic research says
• 18:45
  Speaker 1: that while active may not necessarily create a lot of
• 18:48
  Speaker 1: value in the equity side, it really can create value
• 18:52
  Speaker 1: unfixed income. It does absolutely, and I think you know,
• 18:54
  Speaker 1: firms who are thinking about that should really look at
• 18:57
  Speaker 1: sort of what are some of their core competencies on
• 18:59
  Speaker 1: the fixed income side. Certainly we've seen you know, Gunlock
• 19:02
  Speaker 1: and Gross do well with the products when they came out,
• 19:04
  Speaker 1: and they're sort of leading the fixed don't come active
• 19:06
  Speaker 1: ETF space, But we really believe that that there's something
• 19:10
  Speaker 1: in that for investors. I think the jury is still
• 19:12
  Speaker 1: out on the equity side. I mean we saw the
• 19:15
  Speaker 1: big you know, Presidian approval that was a big development
• 19:18
  Speaker 1: a couple of weeks ago. I'm not familiar with that ETF.
• 19:21
  Speaker 1: What was the um. The company is Prosidian, and they
• 19:24
  Speaker 1: have been working with the SEC to try to get
• 19:26
  Speaker 1: an approval for a non transparent solution. Quite quite interesting.
• 19:33
  Speaker 1: I'm very ritults. You're listening to Masters in Business on
• 19:36
  Speaker 1: Bloomberg Radio. My special guest today is Sharon French. She
• 19:40
  Speaker 1: is the head of Beta Solutions, for Oppenheimer Funds. She
• 19:44
  Speaker 1: also covers environmental, social and governance efforts at the firm.
• 19:49
  Speaker 1: She is a graduate of the Wharton School of Business
• 19:52
  Speaker 1: and sits on the board of Women in ETFs. So,
• 19:56
  Speaker 1: so let's talk about what's going on, um with women
• 20:01
  Speaker 1: in the E t F space. Tell us a little
• 20:04
  Speaker 1: bit about Women in E t F the board that
• 20:06
  Speaker 1: you're on, uh, and what is that group about and
• 20:10
  Speaker 1: what are they looking to accomplish. Yeah, I would love
• 20:13
  Speaker 1: to talk about that. Thank you for the question. So
• 20:14
  Speaker 1: I'm co president with Jillian del Signore JP Morgan of
• 20:18
  Speaker 1: Women in E t F. So I have been a
• 20:22
  Speaker 1: global governance committee and board members since the beginning. Um,
• 20:25
  Speaker 1: how long has this been around? For just over five years?
• 20:28
  Speaker 1: We just hit our five year anniversary in January. That's decent,
• 20:31
  Speaker 1: you know these days, five years just for something to
• 20:34
  Speaker 1: survive and grow is not a bit. And I have
• 20:36
  Speaker 1: to tell you we are growing so fast. We're global. Um.
• 20:39
  Speaker 1: So we're in a May as well as Asia, pack
• 20:42
  Speaker 1: and Canada. Um, We've got ten chapters, were just about
• 20:46
  Speaker 1: to hit five thousand members globally. That's fantastic. And this Verry,
• 20:51
  Speaker 1: this hit at the heart of what I really think
• 20:53
  Speaker 1: is needed within the e t F industry. There are
• 20:56
  Speaker 1: women of Wall Street, there are women in hedge funds. UM.
• 21:00
  Speaker 1: But this was really something that we heard a lot,
• 21:03
  Speaker 1: as we believe, but within financial services there are a
• 21:07
  Speaker 1: lot of women gravitate to the e t F ecosystem,
• 21:10
  Speaker 1: whether you're an AUTHORIIC participant. We have really drilled down
• 21:16
  Speaker 1: with some theories on this, but we would love to
• 21:18
  Speaker 1: get a research partner to prove it. Well, let me
• 21:20
  Speaker 1: man explain this to you, okay please, But UM, we
• 21:25
  Speaker 1: think it's innovation. We think women are very drawn to
• 21:28
  Speaker 1: innovation and UM evolution. Um, there's a lot of women
• 21:35
  Speaker 1: in supporting the e t F industry on the legal side.
• 21:38
  Speaker 1: There's a lot on the trading side, especially authorized participants
• 21:41
  Speaker 1: and market makers. You and I know many of them. Um.
• 21:45
  Speaker 1: There are a lot of women leading e t F businesses. Uh.
• 21:48
  Speaker 1: There are a lot of women in e t F distribution.
• 21:51
  Speaker 1: Again like my co president Jillian del Signore over at
• 21:53
  Speaker 1: JP Morgan. UM, there are also you know heads of products.
• 21:57
  Speaker 1: I mean, uh, they're the head of uh the e
• 22:00
  Speaker 1: t F business at JP Morgan. Also used to be
• 22:02
  Speaker 1: the head of product both at I Shares and and
• 22:04
  Speaker 1: JP Morgan. So so there is just a huge concentration
• 22:09
  Speaker 1: of women within the E T F industry that we
• 22:11
  Speaker 1: felt a need to get connected. So our mission is
• 22:14
  Speaker 1: to connect, support and inspire UM. So it's really having
• 22:19
  Speaker 1: some of the more senior executives within ETFs mentor and
• 22:23
  Speaker 1: sponsor and connect the women who are joining us who
• 22:26
  Speaker 1: are just starting out in the industry UM. And we
• 22:29
  Speaker 1: have events all over the world and by the way,
• 22:31
  Speaker 1: we do encourage men. Uh they're a well over ten
• 22:35
  Speaker 1: percent of our membership as men. We're hoping to get
• 22:37
  Speaker 1: it up to because we are trying to continue to
• 22:41
  Speaker 1: push forward the agenda of gender equality and the diversity
• 22:44
  Speaker 1: of thought. And so one of our big things that
• 22:46
  Speaker 1: we do every International Women's Day is ring the bell
• 22:49
  Speaker 1: at every stock exchange around the world with the Sustainable
• 22:53
  Speaker 1: Stock Exchange in the u N And that's a fabulous, fabulous,
• 22:57
  Speaker 1: high profile way to promote gender equality within the ecosystem.
• 23:02
  Speaker 1: And it's our five year anniversaries, so we're gonna be
• 23:04
  Speaker 1: doing events both in UH Hong Kong, San Francisco, Chicago,
• 23:09
  Speaker 1: New York, and Toronto. So it's funny you mentioned five years.
• 23:15
  Speaker 1: July will be five years that this show has been around,
• 23:18
  Speaker 1: And when I was first beginning and was able to
• 23:22
  Speaker 1: wrestle up a female guest, one of the questions was
• 23:26
  Speaker 1: always something corny, like, so what's it like being a
• 23:30
  Speaker 1: gallon of man's industry? And I'm being a little sarcastic,
• 23:34
  Speaker 1: and I'm thrilled that I get to ask a question.
• 23:36
  Speaker 1: So tell us about how you're driving the growth of
• 23:40
  Speaker 1: E t F. You can see just over the past
• 23:42
  Speaker 1: five years how much things have have changed. It's really
• 23:46
  Speaker 1: so different. And I'm curious. Do you think it's the
• 23:49
  Speaker 1: fact that the E t F space was so new
• 23:52
  Speaker 1: you did not have that sclerotic old boys network cemented
• 23:57
  Speaker 1: in place. It was easier to um breakthrough into that
• 24:02
  Speaker 1: space without the usual obstacle. I think that's very valid.
• 24:05
  Speaker 1: I think that's a very big part of it. I mean, look,
• 24:07
  Speaker 1: I you know, I've been around for over thirty years,
• 24:10
  Speaker 1: so I did grow up in the environment exactly um,
• 24:14
  Speaker 1: and you know you sort of because of of that,
• 24:17
  Speaker 1: you know, for me personally, I've sort of become teflon
• 24:20
  Speaker 1: coded because you needed to be. But you you know,
• 24:24
  Speaker 1: now it's much more supportive. I mean, the industry has changed.
• 24:27
  Speaker 1: I do have to say glacially it is better today,
• 24:31
  Speaker 1: but I would have preferred it to be in leaps
• 24:33
  Speaker 1: and strides. But um, but but whether it's you know,
• 24:36
  Speaker 1: women on Wall Street, the Financial Women's Association, hundred women's
• 24:40
  Speaker 1: in Hedge Funds, women in ETFs, I mean there's now
• 24:43
  Speaker 1: organizations that have a genuine interest in continuing to promote women. UM,
• 24:49
  Speaker 1: give them the tools and resources in order to to
• 24:51
  Speaker 1: advocate for themselves, negotiate for a job or a better raise. Um.
• 24:56
  Speaker 1: We have a speakers Bureau, So we have a lot
• 24:59
  Speaker 1: of people in media like you tell us about the
• 25:01
  Speaker 1: speakers because um, I introduced them to one of the
• 25:06
  Speaker 1: women who worked for me who actually speaks all around
• 25:09
  Speaker 1: the world then is highly sought after speaker, Blair Ducasney.
• 25:14
  Speaker 1: She started working with the Speakers Group who put together
• 25:19
  Speaker 1: Yes Yes, so thank you and look, we're we're sort
• 25:21
  Speaker 1: of spoon feeding the media who are are are having
• 25:25
  Speaker 1: a hard time finding female speakers. So Elizabeth Kashner at
• 25:28
  Speaker 1: fact Set and Linda Jang with she has her own firm, Purview,
• 25:32
  Speaker 1: we talked a lot about it and that's what we
• 25:34
  Speaker 1: do women as we just get it done. So they
• 25:36
  Speaker 1: came together and they reached out to everybody, and you
• 25:38
  Speaker 1: have to you have to apply, and you have to
• 25:39
  Speaker 1: be qualified in certain topics and media trained in order
• 25:43
  Speaker 1: to be part of our speakers. Beer, I think we're
• 25:45
  Speaker 1: up to Linda last set on our Lastkoll, I think
• 25:47
  Speaker 1: we're up to forty, you know, professionals who are you know,
• 25:51
  Speaker 1: very well experienced in certain key segments of the market.
• 25:54
  Speaker 1: So we're taking this list and we're giving it to
• 25:56
  Speaker 1: people like you. We're giving it to inside ets, We're
• 25:58
  Speaker 1: giving it to Tom i'd a e t of trends.
• 26:01
  Speaker 1: We're giving it to whoever needs female speakers to try
• 26:04
  Speaker 1: to get a more diversity of thought and equal representation
• 26:08
  Speaker 1: in the media. I won't I won't mention the group,
• 26:10
  Speaker 1: but there was an article not too long ago about
• 26:13
  Speaker 1: a conference and the photo is the panel on diversity
• 26:18
  Speaker 1: and it's six white dudes, and it's pretty Hey, listen,
• 26:22
  Speaker 1: you guys, really you gotta make a little bit more
• 26:24
  Speaker 1: of an effort. Then, look, I found six white guys.
• 26:27
  Speaker 1: Let's let's have a that that one I know exactly
• 26:29
  Speaker 1: which one you're talking about. That won't happen again, But again,
• 26:32
  Speaker 1: we did you guys tag them and say, oh, absolutely idiots,
• 26:35
  Speaker 1: absolutely didn't. It's kind of embarrassing. It is. It's embarrassing
• 26:39
  Speaker 1: on diversity. I might be exaggerating slightly, but the photo
• 26:43
  Speaker 1: I saw it was like, what, Yes, No, that's gotta
• 26:45
  Speaker 1: be the you know, how to raise money for a
• 26:47
  Speaker 1: hedge fund or something else, male dominated type of a panel.
• 26:52
  Speaker 1: That was pretty hilarious. Yeah, and so sometimes you just
• 26:54
  Speaker 1: need to take action. That's what we did. We have
• 26:56
  Speaker 1: the list of forty women and growing, so depending upon
• 26:59
  Speaker 1: the topic, we certainly will have three to five women
• 27:01
  Speaker 1: to choose from. That. That makes a whole lot of sense.
• 27:05
  Speaker 1: I'm Barry Hults. You're listening to Master's in Business on
• 27:08
  Speaker 1: Bloomberg Radio. My extra special guest this week is Sharon French.
• 27:11
  Speaker 1: She runs the Beta Solutions group at Oppenheimer Funds. Let's
• 27:16
  Speaker 1: talk a little bit about environmental, social, and governance investing.
• 27:21
  Speaker 1: What I keep hearing is we're on the leading edge
• 27:24
  Speaker 1: of a thirty plus trillion dollar generational wealth transfer um.
• 27:29
  Speaker 1: Millennials and women are the people most interested in investing
• 27:33
  Speaker 1: in the environment and social based clauses, and yet the
• 27:37
  Speaker 1: pickup has been so slow. What do you make of that? Yeah,
• 27:42
  Speaker 1: and if you look at the numbers in retail in
• 27:44
  Speaker 1: the US, right, so you always have to peel the onion. Uh,
• 27:47
  Speaker 1: the adoption has been slow within what I call the
• 27:52
  Speaker 1: sustainable investing universe to really understand why that is. And
• 27:57
  Speaker 1: by the way, this is the first really trend if
• 28:00
  Speaker 1: you want to call it a trend um where the
• 28:03
  Speaker 1: growth outside the US is really driving it. So it's
• 28:07
  Speaker 1: typically there's big pension funds within the Nordics, within Europe
• 28:13
  Speaker 1: or a MIA um so institutionally in Amia driving a
• 28:18
  Speaker 1: lot of the adoption. There is a very high expectation
• 28:21
  Speaker 1: in some cases of mandate that you have to have
• 28:24
  Speaker 1: a very well thought out E s G process within
• 28:27
  Speaker 1: your portfolio management structure. Is it a specific percentage or
• 28:31
  Speaker 1: is it just it's it's most of the market institutional
• 28:35
  Speaker 1: outside the U S. Yes, of the eight trillion or
• 28:37
  Speaker 1: so that's in that market today, most of his institutional
• 28:40
  Speaker 1: outside the U S. So, as you know, most of
• 28:42
  Speaker 1: the growth is driven by the US, and the adoption
• 28:45
  Speaker 1: happens usually in a Midia first and Asian Europe, Middle
• 28:49
  Speaker 1: East and UM Africa. So Europe pension funds specifically driving
• 28:56
  Speaker 1: deeper in the Nordics is what's driving the overall global
• 28:59
  Speaker 1: growth of stainable investing in the US, there has been
• 29:03
  Speaker 1: a legacy understanding that we're trying to unwind with s
• 29:07
  Speaker 1: RI I. So SRI I socially responsible in exactly, but
• 29:11
  Speaker 1: it's been sort of the days of Calvert where it
• 29:14
  Speaker 1: is exclusionary investing, the broad index, they screen out whatever
• 29:24
  Speaker 1: it happens, that's exactly right, and therefore they when you
• 29:27
  Speaker 1: carve out big segments of the market, in many cases,
• 29:31
  Speaker 1: not all, but many cases, it impacts performance. So it
• 29:35
  Speaker 1: has sort of has this negative um inertia attached to
• 29:39
  Speaker 1: it that has really evolved. So that's one end of
• 29:42
  Speaker 1: the spectrum, that's right. The middle part is E s
• 29:46
  Speaker 1: G investing or e s G integration, and what that
• 29:50
  Speaker 1: is is looking at the environmental, social, and governance factors
• 29:54
  Speaker 1: that impacts a corporation using that within a portfolio manage
• 29:58
  Speaker 1: management process. So they really called the intangibles, typically look
• 30:02
  Speaker 1: at the tangible balance sheet right financial metrics. Adding to that,
• 30:07
  Speaker 1: the intangibles really tells you and gives you a full
• 30:10
  Speaker 1: picture of how the firm is run. Um also exposes
• 30:15
  Speaker 1: you to some potential areas of vulnerability or risk. So
• 30:19
  Speaker 1: E s G integration within a portfolio management process is
• 30:22
  Speaker 1: a great risk management tool. I've heard a number of people,
• 30:26
  Speaker 1: in fact, that some of the events we both attended
• 30:28
  Speaker 1: together talk about E s g as being misunderstood, that
• 30:32
  Speaker 1: it's really a fundamental screening method to look for risk
• 30:36
  Speaker 1: and control for it for And the perfect example was
• 30:40
  Speaker 1: a lot of companies that have no diversity, no women
• 30:43
  Speaker 1: on their boards, very little women management. Oh and they
• 30:46
  Speaker 1: managed to get caught in the me too UM debacle
• 30:50
  Speaker 1: self self inflicted wounds. What a coincidental correlation or apparently
• 30:56
  Speaker 1: not right? That that's a fundamental screen isn't it? That
• 30:59
  Speaker 1: is absolutely right? The other sort of common ones are
• 31:02
  Speaker 1: you know, the Volkswagen example with its emissions issues scandal
• 31:06
  Speaker 1: that absolutely could have been uncovered if you start to
• 31:09
  Speaker 1: really dig deeper into some of their governance practices. Um
• 31:13
  Speaker 1: in some cases with some of the oil companies that
• 31:15
  Speaker 1: have been notable to oil spills. So you know that
• 31:18
  Speaker 1: really all of them though, can you screen for preventing oils?
• 31:23
  Speaker 1: You can screen for practices, right, so some have more
• 31:27
  Speaker 1: robust practices than others. Right, So would would you exclude
• 31:30
  Speaker 1: a company from your portfolio or would you overweight another
• 31:33
  Speaker 1: that you feel is more robust and and more tightly controlled,
• 31:38
  Speaker 1: so you know, the and then the the further on
• 31:42
  Speaker 1: the spectrum is impact investing. So impact investing is taking
• 31:46
  Speaker 1: a particular cause that you believe in rainforest in Sudan,
• 31:50
  Speaker 1: carbon emissions, very sort of narrowly focused, and and waiting
• 31:57
  Speaker 1: the portfolio towards that or buying just that. So you know,
• 32:00
  Speaker 1: a lot of private equity money is directed towards impact investing.
• 32:03
  Speaker 1: So so again if you look at the spectrum, you
• 32:06
  Speaker 1: have s R I and exclusionary on one side, which
• 32:09
  Speaker 1: again has been sort of fallen out of favor. Is
• 32:12
  Speaker 1: that well, I mean, I think there's just a better
• 32:14
  Speaker 1: understanding that people believe that there's a better way to
• 32:17
  Speaker 1: do it right. So and then there's the s G integration,
• 32:19
  Speaker 1: which was where a lot of the people in US
• 32:21
  Speaker 1: retail are focused, including us. And then there's impact investing,
• 32:25
  Speaker 1: which we actually have a company that we bought that
• 32:28
  Speaker 1: does custom municipal portfolios and we allow them to do
• 32:32
  Speaker 1: an impact overlay on that custom income fixed income. Really yes,
• 32:38
  Speaker 1: so you can actually get green bonds. You can quite
• 32:41
  Speaker 1: quite intriguing. So so what do you think is going
• 32:45
  Speaker 1: to be required for e s G to take off
• 32:49
  Speaker 1: or or we contextualizing it's the wrong way and it's
• 32:52
  Speaker 1: just going to be something that's implemented into the risk
• 32:56
  Speaker 1: screening approach. Yeah, I actually think it's both, So let's
• 33:00
  Speaker 1: take the latter first. I believe that the asset management
• 33:03
  Speaker 1: industry will just become E s G. Just just integrate it,
• 33:08
  Speaker 1: like you're no longer an Internet company everybody uses. Then yes,
• 33:11
  Speaker 1: there will. There will no longer be E s G
• 33:14
  Speaker 1: or non e s G because millennials and women demographically
• 33:18
  Speaker 1: are driving the desire and the requirement to incorporate E
• 33:23
  Speaker 1: s G screening within their portfolios is a big, big driver.
• 33:26
  Speaker 1: The other is data democratization. Most companies now well there's
• 33:31
  Speaker 1: a variety of different data providers that now collect that
• 33:35
  Speaker 1: information from companies. So now most of the sp are
• 33:39
  Speaker 1: reporting to data providers on those three measures. Their environmental practices,
• 33:44
  Speaker 1: there's social practices, and their governance practices. So we now
• 33:48
  Speaker 1: have access to all kinds of data to be able
• 33:51
  Speaker 1: to screen on those dimensions. Now, don't you run into
• 33:53
  Speaker 1: the same sort of issue we get with hedge funds
• 33:56
  Speaker 1: reporting performance? Well, if it's good your report and if
• 33:59
  Speaker 1: it's not so good, Oh, we're not going to make
• 34:01
  Speaker 1: that filing this quae. Well, so here's the issue this
• 34:03
  Speaker 1: is this is going to impede the group. So again
• 34:05
  Speaker 1: I think to your latter question, we're gonna asset management.
• 34:08
  Speaker 1: I can't say exactly when. I think it will be
• 34:11
  Speaker 1: somewhere between five to ten years from now. And then
• 34:12
  Speaker 1: you think that's a gradual Just one day we'll turn
• 34:14
  Speaker 1: around and say, oh we're all s G. Yes, I do,
• 34:17
  Speaker 1: I do. And there's a variety of people who agree
• 34:20
  Speaker 1: with that premise. The issues today are there's no uniformity, right,
• 34:25
  Speaker 1: there's a variety of different approaches. Even the data provider,
• 34:27
  Speaker 1: they go at collecting the data and reporting the data
• 34:30
  Speaker 1: in a variety of different ways to lack of uniformity
• 34:33
  Speaker 1: and data. The second is benchmarking, right, we always want
• 34:36
  Speaker 1: to try to especially on the active management side, we
• 34:39
  Speaker 1: always want to find a benchmark. So people are struggling
• 34:42
  Speaker 1: with how to benchmark E s G strategies and you know, uh,
• 34:46
  Speaker 1: consulting organizations like a mercer who does due diligence on
• 34:49
  Speaker 1: these strategies, they're they're struggling to answer that question, which
• 34:53
  Speaker 1: is sort of a traditional method of you know, rating
• 34:56
  Speaker 1: a particular strategy. So I think it's those two things
• 34:59
  Speaker 1: that are slowing down the growth. But once we you know,
• 35:02
  Speaker 1: come closer to solving those two, I think the growth
• 35:07
  Speaker 1: will start to be you know, sort of more profound
• 35:10
  Speaker 1: in US retail. So so that's the second part of
• 35:13
  Speaker 1: the question, which is will there still be E s
• 35:16
  Speaker 1: G focus funds and and who are going to be
• 35:19
  Speaker 1: the purchases of these? Yeah, I think there will be. Well.
• 35:22
  Speaker 1: First of all, institutions within the US certainly are following
• 35:26
  Speaker 1: Europe and so look, I mean I have to say,
• 35:29
  Speaker 1: just looking at the last six months to a year,
• 35:32
  Speaker 1: most of the r fps we get request for information
• 35:36
  Speaker 1: into a new strategy for institutional clients. They all have
• 35:39
  Speaker 1: E s G questions in there, and the portfolio management
• 35:42
  Speaker 1: has to be able to describe specifically their E s
• 35:47
  Speaker 1: G process. And uh so institutions are moving first within
• 35:52
  Speaker 1: the the US, and you know retail will follow closer
• 35:55
  Speaker 1: behind once we figure out these issues that I talked about,
• 35:58
  Speaker 1: which is uniformity and benchmarking. What do you think about
• 36:01
  Speaker 1: the dedicated E s G E T F that have
• 36:04
  Speaker 1: come out? Paul Jones has one full Just what are
• 36:09
  Speaker 1: the ones that you guys so we have s g
• 36:11
  Speaker 1: L and s GF and that's where we're taking our
• 36:13
  Speaker 1: revenue weated strategy L and F. What's the difference. That's
• 36:16
  Speaker 1: some foreign and domestic local local, that's right. I think
• 36:20
  Speaker 1: D was taken when we went to look for a ticker.
• 36:23
  Speaker 1: So my by the way, my theory is you you
• 36:25
  Speaker 1: not only need a good investment idea, but a good
• 36:29
  Speaker 1: ticker is just crucial. Absolutely right. It seems like that
• 36:33
  Speaker 1: makes a giant difference. It does make a giant difference.
• 36:35
  Speaker 1: It cuts through all the clutter. Look and a lot
• 36:37
  Speaker 1: of this is coming through the clutter. There's a lot
• 36:39
  Speaker 1: of players who have gotten so E s c F
• 36:43
  Speaker 1: is foreign s g L and they're they're broad based.
• 36:46
  Speaker 1: There's a lot out there that are more narrowly based,
• 36:49
  Speaker 1: again specifically as we talked about before, based upon you know,
• 36:52
  Speaker 1: climate change, um, climate risk, carbon emissions, things of that nature.
• 36:57
  Speaker 1: We want to be more broad based. So this is
• 36:58
  Speaker 1: revenue weighted s G strategies. But there are many and
• 37:02
  Speaker 1: there are many mutual funds. We have a mutual fund
• 37:04
  Speaker 1: where we partner with pick t A and it's a
• 37:06
  Speaker 1: Geo environmental h an E s G shop in Europe.
• 37:11
  Speaker 1: Is very their subadvisor to us and we like them
• 37:13
  Speaker 1: a lot actually. Um. And so there are strategies that
• 37:17
  Speaker 1: are coming out in separate account, mutual fund any TF
• 37:20
  Speaker 1: fashion that I think are a good start. Um. You know. Again,
• 37:25
  Speaker 1: the institutional clients are looking for more of the separate account,
• 37:28
  Speaker 1: in some cases mutual funds. M. They're not buying the
• 37:31
  Speaker 1: E s G E T f s quite yet. There
• 37:33
  Speaker 1: are people like the UN partnering with firms and developing
• 37:36
  Speaker 1: some of their E s G strategies. And there's big
• 37:39
  Speaker 1: pensions like CalPERS who partnered with State Street on she
• 37:42
  Speaker 1: they seated she to the tune of Calipers or Calisters
• 37:46
  Speaker 1: it was Kelpers. So who did Calists? M sure I
• 37:52
  Speaker 1: kind of remember them being involved our counts now I
• 37:54
  Speaker 1: know Calipers seated two d and fifty billion. Yeah, it was.
• 37:58
  Speaker 1: It was a big chunk of whatever it was. It
• 38:00
  Speaker 1: is a big jump of change um or million, excuse me,
• 38:06
  Speaker 1: it was. It was definitely a which is still not
• 38:10
  Speaker 1: ann So so our mutual friend Dave Nodding is a
• 38:15
  Speaker 1: huge fan of direct index. I'm slowly warming up to
• 38:19
  Speaker 1: the concept and where I see it having so much
• 38:23
  Speaker 1: potential is exactly what you just described the s M
• 38:27
  Speaker 1: as for individuals that want to have an overlay of this.
• 38:31
  Speaker 1: How do you see that space development? Yeah? Yeah, so
• 38:34
  Speaker 1: I I actually agree with Dave. Um, you know, getting
• 38:38
  Speaker 1: instead of buying the index, sort of buying the the
• 38:42
  Speaker 1: you know, underlying holdings of the index. That creates a
• 38:45
  Speaker 1: great opportunity for tax efficiency, tax harvesting, customization. Uh. There
• 38:52
  Speaker 1: are some firms out there, they are very good at it.
• 38:54
  Speaker 1: Parametric has been around for a while, Imperio, Uh, there
• 38:57
  Speaker 1: are others um and so you know, look, people are
• 39:01
  Speaker 1: looking for more of those things UM, and you have
• 39:06
  Speaker 1: more flexibility in getting access to that through direct indexation.
• 39:11
  Speaker 1: It is a little bit more uh efficient from a
• 39:14
  Speaker 1: cost perspective, You're not because you're not paying an index
• 39:17
  Speaker 1: provider three to five basis points. So the the index
• 39:21
  Speaker 1: landscape is changing as well as fees are getting driven
• 39:25
  Speaker 1: down there as well, people are doing self indexing, their
• 39:28
  Speaker 1: self indexing providers out there who are calculation agents, and
• 39:31
  Speaker 1: so the world of indexation as it existed ten years
• 39:34
  Speaker 1: ago is also changing because of self indexing and direct indexation.
• 39:38
  Speaker 1: I agree with Dave. I think it's going to grow
• 39:40
  Speaker 1: quite quite fascinating. So before we began we were talking
• 39:44
  Speaker 1: about music because you happen to see my picture, tweeted
• 39:49
  Speaker 1: of Eagles guitarist Don Felder. I have to tell you
• 39:53
  Speaker 1: that was a ridiculous amount of fun. I'm sure it was.
• 39:57
  Speaker 1: I'm jealous is my thing. Everyone who knows me knows
• 40:00
  Speaker 1: that music is my thing. Me too. I don't know
• 40:03
  Speaker 1: how far apart in age we are. We'll talk about
• 40:06
  Speaker 1: that later. You're deceptively um, You're like, you're hard to
• 40:12
  Speaker 1: pin an age on. Okay, like thirty nine is safe.
• 40:16
  Speaker 1: I'll take it. Um, I said you start, well that
• 40:19
  Speaker 1: would You said you've been in the business thirty years,
• 40:21
  Speaker 1: and I said you started it at age nine. So
• 40:23
  Speaker 1: that's how I came to that. Um. But I'm a
• 40:26
  Speaker 1: class I listened to a lot of stuff from jazz
• 40:29
  Speaker 1: to classical but really uh and a lot of punk
• 40:32
  Speaker 1: and reggae. But I'm really a classic rock guy. What
• 40:35
  Speaker 1: what's your musical over classic rock? Okay, you know classic
• 40:40
  Speaker 1: rewind or classic tracks on? On? Yeah, exactly. So you're
• 40:45
  Speaker 1: not a coffeehouse sort of No, Actually, it depends on
• 40:48
  Speaker 1: the mood. I like coffee house as well. Thank you
• 40:50
  Speaker 1: for bringing that up. Well, if you're a jack Johnson fan.
• 40:53
  Speaker 1: That's a great sort of a great sort of channel. Um,
• 40:57
  Speaker 1: so I've had I don't know how this has worked out.
• 41:00
  Speaker 1: It's been a dumb accident. But I've had a series
• 41:03
  Speaker 1: of guitarists. So it's been Don Felder and Steve Miller.
• 41:08
  Speaker 1: Steve Miller is, Lawrence Juber and John Pizzarelli. So those
• 41:13
  Speaker 1: are the four guitarists I've had. And I should reach
• 41:16
  Speaker 1: out to Jack Johnson because I love his ry. He's
• 41:19
  Speaker 1: a great Uh, so these things come up. Trucks, can
• 41:23
  Speaker 1: we talk about derren so your southern sort of roots?
• 41:27
  Speaker 1: So look, I mean I also love southern rock. But
• 41:29
  Speaker 1: my two so, I think Derek Trucks is one of
• 41:31
  Speaker 1: the most gifted guitarist and you know he's so that's
• 41:34
  Speaker 1: your pick for greatest guitarists? No, he actually he's not.
• 41:37
  Speaker 1: He's he's sort of next generation. My pick, but my
• 41:39
  Speaker 1: two picks, which I can't decide on, is uh, Carlos Santana.
• 41:44
  Speaker 1: I love Santana. He's technically a brilliant guitarist and a
• 41:48
  Speaker 1: very good songwriter. I don't know if many people would
• 41:51
  Speaker 1: put him up as in the top five because it's
• 41:55
  Speaker 1: usually the hyper technical guys like Joe Satriani or go
• 42:00
  Speaker 1: down to Montrose or and of course you know we
• 42:03
  Speaker 1: could talk about Clapton or June. Well, so that's my second.
• 42:06
  Speaker 1: So my second is Clapton. I would probably to your point,
• 42:09
  Speaker 1: I'd probably edge Clapton over cent Town a little bit.
• 42:12
  Speaker 1: But I gotta tell you, Derek Trucks is you know,
• 42:16
  Speaker 1: he's he's gonna think gonna arrival everybody. He's just a
• 42:18
  Speaker 1: little bit younger. I asked, Um, By the way, if
• 42:21
  Speaker 1: you like that sort of swampy southern are you familiar
• 42:25
  Speaker 1: with UM? J. J. Gray and the Mofro No? Oh,
• 42:29
  Speaker 1: so that's it. Then you have to check out. It's swampy,
• 42:34
  Speaker 1: bluesy southern roots rocking. They have a number of great albums,
• 42:37
  Speaker 1: but you can never go wrong with that first album
• 42:40
  Speaker 1: is J. J. Gray in the mo They're just um
• 42:44
  Speaker 1: sort of like a Southern version of Remember the album
• 42:48
  Speaker 1: Thick Freakness by Um. I'm ding a blank on the
• 42:51
  Speaker 1: band's name, but that Um Black Keys guy, that's the
• 42:55
  Speaker 1: first album. And I and I so, I asked Henley,
• 43:00
  Speaker 1: let me we can talk about music for hours, but
• 43:02
  Speaker 1: let me wrap this up. I asked Henley, who do
• 43:05
  Speaker 1: you think, um, what sort of guitarists do you like?
• 43:10
  Speaker 1: Who do you really appreciate? And he said, I love
• 43:13
  Speaker 1: the Triple Threats. I love people who are great songwriters,
• 43:18
  Speaker 1: ken sing and a really good performers. And I knew
• 43:21
  Speaker 1: exactly where he was going to go with that. I
• 43:24
  Speaker 1: thought he was going to say clapped in, but um,
• 43:28
  Speaker 1: he kind of surprised me and said, well, this generation,
• 43:31
  Speaker 1: it's John Mayer is that Triple Threat? And I said
• 43:34
  Speaker 1: that's because that's he's this generation the class. So who
• 43:38
  Speaker 1: else do you again? So I don't forget I put
• 43:41
  Speaker 1: Derek right up there. Yeah, but you know, and again
• 43:44
  Speaker 1: I'm a big Alllin Brothers fan, you know, I mean
• 43:47
  Speaker 1: that story, you know, has been a bit of a
• 43:49
  Speaker 1: sad story. But of course Dwayne Allman taught Don Felder
• 43:53
  Speaker 1: to play slide guitar house and they're all from the
• 43:56
  Speaker 1: music scene from Gainesville. Was crazy, was him, and I
• 44:00
  Speaker 1: think it was Stephen Stills and Tom Petty and it
• 44:03
  Speaker 1: was just like a like, wait, why are all those
• 44:06
  Speaker 1: people coming from Gainesville, Florida? And then Dwayne Alman on
• 44:09
  Speaker 1: top of that. So then of course, you know, Greg
• 44:12
  Speaker 1: just died, which was a very sad day for me.
• 44:14
  Speaker 1: But so you know, Ada Peach was my favorite Almon
• 44:18
  Speaker 1: Brothers album. I remember that was giant when I was
• 44:20
  Speaker 1: in high school. Giant. That was who else you listen
• 44:24
  Speaker 1: to today? Give me a newer you know today? I
• 44:27
  Speaker 1: have to tell you I'm sort of evolving a little
• 44:29
  Speaker 1: bit too, you know, sort of this newer country such
• 44:32
  Speaker 1: as so you know Dirk Spentley, Um, Zack Brown, Zack Brown.
• 44:38
  Speaker 1: I know Dirk Spentley. I don't know that. Yeah, yeah,
• 44:41
  Speaker 1: a lot of those guys got a little more of
• 44:43
  Speaker 1: an edge than tradition shoes radio. I mean, Kenny Chesney
• 44:46
  Speaker 1: obviously is terrific. Um, so you know. I so I'm
• 44:50
  Speaker 1: really pushing myself to appreciate other genres. And I didn't
• 44:55
  Speaker 1: like the old twangy country Chad Atkins sort of well
• 44:59
  Speaker 1: he was a brilliant guitarist. But the I know exactly,
• 45:01
  Speaker 1: I love My dog died, my my wife left me
• 45:06
  Speaker 1: that so there's a really do you ever we were
• 45:09
  Speaker 1: talking about X some satellite before. Do you have a
• 45:10
  Speaker 1: play with Pandora? Pandora that's my actually music of choice.
• 45:14
  Speaker 1: I have so knows in my home, so do I
• 45:16
  Speaker 1: and I go to Pandora. So what I love about
• 45:19
  Speaker 1: Pandora is if you want to discover something new, Yeah,
• 45:23
  Speaker 1: like you take those three newer country, create a channel,
• 45:27
  Speaker 1: call it whatever you want new country, and seed it
• 45:29
  Speaker 1: with five songs that you like. And it's really great
• 45:33
  Speaker 1: for music discovery. I'm always hearing things. Wow, what's that?
• 45:36
  Speaker 1: I haven't heard that? So it's a fun thing to
• 45:38
  Speaker 1: play with. Yeah, all right, back to back to ets. Sorry,
• 45:42
  Speaker 1: sorry to drag you back to you said I could
• 45:44
  Speaker 1: talk music all day long. Same here. It's it's just fascinating.
• 45:49
  Speaker 1: I um anything aside from country rock and classic rock.
• 45:52
  Speaker 1: You listen to jazz, you listen to reggae. I do.
• 45:55
  Speaker 1: I listened to both, but I have to say my
• 45:57
  Speaker 1: my world is really dominated by the too today. Um.
• 46:02
  Speaker 1: But I I used to listen to a lot more
• 46:04
  Speaker 1: classical um than I do today. I've always listened to jazz.
• 46:07
  Speaker 1: Miles Davis is my hero. Really, Miles Davis is my hero,
• 46:11
  Speaker 1: for he's not. I always warn people who are like
• 46:13
  Speaker 1: your your jazz head, what what should I listen to?
• 46:15
  Speaker 1: Should I listen to? Miles Davis? Not the most accessible?
• 46:19
  Speaker 1: Like I always say, start, start, slow, walk before you run,
• 46:22
  Speaker 1: because who is your walk slow person. Jerry Mulligan. Um,
• 46:27
  Speaker 1: like Coltrane, I I build a little further out halfway
• 46:30
  Speaker 1: between even thelonious monk um Um Paul Desmonds. Uh, you can't.
• 46:38
  Speaker 1: That's really totally accessible, very easy for most people. If
• 46:41
  Speaker 1: you if you listen to like Time Out or so there,
• 46:45
  Speaker 1: there's a way to to ease into jazz. But if
• 46:48
  Speaker 1: you start with bitches Brew or you know, that's a
• 46:51
  Speaker 1: tough It's like it's the equivalent of starting out in
• 46:55
  Speaker 1: rock music by listening to Frank's Appa. It's like Jethro Tull. Yeah,
• 46:59
  Speaker 1: that's call is. You know, you could listen you know,
• 47:03
  Speaker 1: aqualong or locomotive breath. Yeah, that's straightforward rock and roll.
• 47:08
  Speaker 1: But it's hard to find outside of Joe's garage. It's
• 47:10
  Speaker 1: hard to find a Zappa song that you could just
• 47:13
  Speaker 1: slide right into and say, I'm interested in rock music.
• 47:15
  Speaker 1: Play something for me because um, although since you mentioned
• 47:20
  Speaker 1: some of your favorite guitarists, if you ever have a chance,
• 47:26
  Speaker 1: get the Zappa album, shut up and play your guitar.
• 47:30
  Speaker 1: Y e er guitar. It's just three discs of him
• 47:34
  Speaker 1: doing leads and he's amazing. People don't realize what a
• 47:38
  Speaker 1: spectacular technical musician. You know, I didn't. And if I
• 47:41
  Speaker 1: could just make one plug for for a female the
• 47:44
  Speaker 1: modern day Bonnie Rate is Derek Truck's wife, Susan Twadski
• 47:51
  Speaker 1: a band two Trucks, you would not know the difference.
• 47:56
  Speaker 1: I think she's got more soul. Bonni Rate is a
• 47:58
  Speaker 1: ton of soul. But if if you can believe Susan
• 48:00
  Speaker 1: Tudeski even has more soul than body, right, so I
• 48:03
  Speaker 1: would I need to make my female plug before we
• 48:05
  Speaker 1: move on? All right? Last female guitarist um reference, Go
• 48:11
  Speaker 1: to YouTube. I can't remember the girl's name, and I
• 48:14
  Speaker 1: say girl because she's like eleven. There is this girl
• 48:17
  Speaker 1: on YouTube who just shreds. It's unbelievable. There's probably multiple
• 48:23
  Speaker 1: people in that age group who are just spectacular guitarists
• 48:28
  Speaker 1: and it's mind blowing you. Just I'll send you some links.
• 48:32
  Speaker 1: Some of them are just like what. Alright? So so
• 48:36
  Speaker 1: now now back to eat got drag herself away from music? Well,
• 48:40
  Speaker 1: because you know this is a conversation over a beer. Um.
• 48:44
  Speaker 1: The one question I forgot to ask you during the
• 48:46
  Speaker 1: broadcast portion that I meant to ask is you began
• 48:50
  Speaker 1: your career in nine seven, Right, what was stock market crash? Yeah?
• 48:57
  Speaker 1: What was that like? And by the way, there are
• 48:59
  Speaker 1: a few people who I know of David Rosenberg is one,
• 49:03
  Speaker 1: and I'm trying to remember who the other person was
• 49:06
  Speaker 1: who literally begin their career that fall and bang right
• 49:10
  Speaker 1: into I started and I think at the end of
• 49:12
  Speaker 1: May or June. But it was that fall. Um, you
• 49:15
  Speaker 1: certainly look, I mean it was. It was a great
• 49:18
  Speaker 1: learning experience for me, right, I mean, I am I right.
• 49:20
  Speaker 1: It was a five points, it was you know, percentage wise,
• 49:23
  Speaker 1: it was big and something like that. I think it
• 49:29
  Speaker 1: was six hundred and something points. It's easy enough. I
• 49:31
  Speaker 1: don't know why five hundred six in my mind, but um,
• 49:33
  Speaker 1: which we call today a Tuesday, Yeah, right, exactly exactly.
• 49:37
  Speaker 1: That's why that's why I brought it up. It's it's
• 49:39
  Speaker 1: sort of interesting to look back, and you know, it's
• 49:42
  Speaker 1: a blip in today's world. But but look, so I
• 49:45
  Speaker 1: wasn't really tied to the market at that time. Remember
• 49:48
  Speaker 1: as a Chase Manhattan Bank, and I was doing all
• 49:49
  Speaker 1: these cost studies. I still was domestic at this time.
• 49:52
  Speaker 1: I wasn't yet in Europe. By the way, you have
• 49:55
  Speaker 1: correct five eight points, Thank you. I I don't know
• 49:57
  Speaker 1: why that's stuck in my head, but you know I
• 49:59
  Speaker 1: was there, so you know these things are important. Um.
• 50:02
  Speaker 1: And so it was a great learning experience for me.
• 50:04
  Speaker 1: I was still learning about the market, right and so
• 50:07
  Speaker 1: uh me and Chase Manhattan Bank, you know too, I
• 50:10
  Speaker 1: had some exposures. So they obviously took a hit but recovered.
• 50:13
  Speaker 1: I think Don Boudreau was the the CEO or president
• 50:16
  Speaker 1: at the time. Um. But so you know, there was
• 50:19
  Speaker 1: a lot to learn in terms of the you know,
• 50:22
  Speaker 1: how the market factors into sort of the you know,
• 50:26
  Speaker 1: the capital markets and what a driver they are and
• 50:29
  Speaker 1: why that happened and how to avoid it and how
• 50:31
  Speaker 1: to put you know, stops in place by the New
• 50:34
  Speaker 1: York Stock Exchange. And so I was young and you
• 50:38
  Speaker 1: know what behind the ears as they say, And so
• 50:40
  Speaker 1: I was just a great learning experience for me. Don Boudreau,
• 50:43
  Speaker 1: why is that name familiar? Is he still around and published?
• 50:47
  Speaker 1: He's been retired, So you you looked at it as
• 50:52
  Speaker 1: a learning experience I did. I didn't have any personal exposure.
• 50:55
  Speaker 1: I had no money, so you know it didn't affect me.
• 50:58
  Speaker 1: Are the best crash exactly? Now? The next one I was,
• 51:01
  Speaker 1: by the way, I was in grad school and I
• 51:03
  Speaker 1: watched it with such clinical, detached detachment. It was like, oh,
• 51:07
  Speaker 1: that seems to be kind of interesting. Now. I was fascinated,
• 51:10
  Speaker 1: you know, I thankfully was at a place where I
• 51:11
  Speaker 1: could learn more about it. And that was really my
• 51:13
  Speaker 1: first like ouch when you when you when you um accidentally,
• 51:17
  Speaker 1: you know, touch a burner on this story, it was
• 51:18
  Speaker 1: sort of like a you know, learning about the capital
• 51:21
  Speaker 1: markets by being stung by it. But thankfully it didn't
• 51:23
  Speaker 1: affect yes, and so did two thousand. Obviously two thousand
• 51:29
  Speaker 1: it was the worst, but that was the best one
• 51:31
  Speaker 1: of all two left of market. Yeah, so two thousand
• 51:34
  Speaker 1: and eight was fabulous learning experience. Can we describe it
• 51:38
  Speaker 1: as that because it was we'll take that off, Mike.
• 51:42
  Speaker 1: I found that to be of all the market crashes
• 51:46
  Speaker 1: I lived through, the one that was most fascinating. Yeah, No,
• 51:50
  Speaker 1: it certainly was. There's millions of stories that have come
• 51:52
  Speaker 1: out of that. When it's really shaped, it's shaped, you know,
• 51:55
  Speaker 1: the whole generation. Absolutely. You alluded to this earlier. Let
• 51:58
  Speaker 1: me circle back to that. My pet theory is all
• 52:03
  Speaker 1: of the scandals, the animal scandal, the IP, all those
• 52:07
  Speaker 1: things kind of led mom and pop to say, you know,
• 52:11
  Speaker 1: this Wall Street thing is, you know, I'm just gonna
• 52:14
  Speaker 1: give the money to Vanguard and be done. I kind
• 52:18
  Speaker 1: of felt like the cherry on that cake was the
• 52:21
  Speaker 1: O eight oh nine crash. But you even took it further.
• 52:24
  Speaker 1: You said, this really drove people into passive explain absolutely absolutely, Um,
• 52:30
  Speaker 1: you know, part of it is they sort of didn't
• 52:33
  Speaker 1: want to deal with it anymore. Just let me, let
• 52:35
  Speaker 1: me just give it to an index. Let me give
• 52:37
  Speaker 1: my money to an index. They didn't trust the institutions
• 52:39
  Speaker 1: that were running their money in a lot of cases,
• 52:41
  Speaker 1: especially the ones that got bailed out, that had to
• 52:44
  Speaker 1: imbat the thought process right exactly right, And so I
• 52:48
  Speaker 1: think it just shocked people. People woke up. I think
• 52:51
  Speaker 1: previous that they dabbled in et f s a post
• 52:55
  Speaker 1: two thousand and eight, two thou nine, when when we
• 52:57
  Speaker 1: finally recovered, I think they made it a prominent part
• 53:01
  Speaker 1: of their portfolio construction, and part of it I think
• 53:03
  Speaker 1: was a risk mitigation, at least from what they understood
• 53:06
  Speaker 1: to be more of a risk mitigation because of you know,
• 53:09
  Speaker 1: let me look, at the time, I was at a
• 53:11
  Speaker 1: lines Bernstein uh Bernstein that part of a line Spernstein's
• 53:14
  Speaker 1: deep value and um, you know the Bernstein managers specifically
• 53:19
  Speaker 1: and Loose Sanders as an investor himself, the CEO at
• 53:21
  Speaker 1: the time, they rode financial services down all the way
• 53:24
  Speaker 1: to the bottom because they were looking for that. You
• 53:27
  Speaker 1: know what they talk about the sustainability of earnings with
• 53:30
  Speaker 1: growth companies, and they talk about the recoverability of earnings
• 53:33
  Speaker 1: with with value companies, and so you know, fundamental active managers.
• 53:38
  Speaker 1: I think at the time, we're just riding the wave
• 53:40
  Speaker 1: to see if they can pick up some assets at
• 53:42
  Speaker 1: the cheap. And that was a very, very tough ride
• 53:45
  Speaker 1: for a lot of investors. So I think part of
• 53:46
  Speaker 1: it was trust. I think a lot of it was
• 53:49
  Speaker 1: risk mitigation. Quite quite interesting. So again looking at the
• 53:55
  Speaker 1: lack of faith in the institutions, is that something that
• 53:59
  Speaker 1: eventually comes back or is that a permanent scar and
• 54:03
  Speaker 1: people change their behavior for a generation. Yeah, yeah, No,
• 54:06
  Speaker 1: I think ten years later, I think it is bouncing back.
• 54:09
  Speaker 1: And I think part of it is, you know, government
• 54:11
  Speaker 1: lead because of everything they've put in place in terms
• 54:13
  Speaker 1: of safeguards, meaning the regulatory environment or the federal reserve environment.
• 54:18
  Speaker 1: I think the regulatory environment in terms of the requirements
• 54:21
  Speaker 1: that they have. So they forced some of it. And
• 54:24
  Speaker 1: I think CEO s I mean, now, on the executive
• 54:27
  Speaker 1: committees of organizations, whether it's a bank or asset managers,
• 54:30
  Speaker 1: the chief risk officer reports to the CEO. And that
• 54:33
  Speaker 1: wasn't a position that necessarily exists. It didn't didn't it
• 54:36
  Speaker 1: didn't so and I agree with that, right, I mean,
• 54:39
  Speaker 1: the general council reports the CEO. Why shouldn't the chief
• 54:42
  Speaker 1: risk officers. It's we are stewards of our clients capitals,
• 54:45
  Speaker 1: we are fiduciaries. We need to take that particular function seriously.
• 54:51
  Speaker 1: And so you know, whether it's it did the different
• 54:53
  Speaker 1: government structures for running an etf business or fundamental active business.
• 54:57
  Speaker 1: I think whether it was regulatory pushed or forced upon,
• 55:02
  Speaker 1: or firms just taking this more seriously and it becoming
• 55:06
  Speaker 1: a key role of the CEO. I think that certainly, Uh,
• 55:11
  Speaker 1: those institutions are starting to earn back trust ten years later.
• 55:14
  Speaker 1: Do we do we run the risk when we elevate
• 55:17
  Speaker 1: the chief risk officer to that c suite with the
• 55:22
  Speaker 1: CEO's ear of stifling innovation or making companies risk averse?
• 55:26
  Speaker 1: Sure no, And I think that's a great question, and
• 55:28
  Speaker 1: I think it has to and we and we talk
• 55:30
  Speaker 1: about this a lot at Oppenheimer Funds, and I think
• 55:32
  Speaker 1: thankfully we've struck the balance because the portfolio management teams
• 55:36
  Speaker 1: UM on the fundamental active side are you know, there's
• 55:39
  Speaker 1: a little bit of a push pole there, right. So
• 55:41
  Speaker 1: our chief investment Officer, Christian MoManI Um, you know, he
• 55:46
  Speaker 1: works very very closely with our chief risk officer on
• 55:48
  Speaker 1: behalf of making sure that we don't do just that,
• 55:52
  Speaker 1: that we give the prudent degree of freedom. Now, how
• 55:55
  Speaker 1: do you define prudent degree of freedom? No leverage? That's
• 55:58
  Speaker 1: how I define it, Um, And you know, I mean, really,
• 56:02
  Speaker 1: it's so much easier to get into trouble when you're running,
• 56:04
  Speaker 1: for one, if you're putting out et fs that are
• 56:08
  Speaker 1: more interesting in in the way they're assembled and built
• 56:12
  Speaker 1: and they're not relying on a ton of leverage. There's
• 56:15
  Speaker 1: really very modest risk there, right. The product works or
• 56:18
  Speaker 1: it doesn't. It finds an audience or it doesn't. It
• 56:21
  Speaker 1: accumulates assets or it doesn't. But none of your e
• 56:24
  Speaker 1: t f s are ever going to blow up Oppenheim
• 56:26
  Speaker 1: or that we would never play. We would never I
• 56:29
  Speaker 1: don't want to play that game, but that that wasn't
• 56:31
  Speaker 1: our that was not our space, And I agree with you,
• 56:33
  Speaker 1: it's tough. I don't think investors understand it. I don't
• 56:35
  Speaker 1: think they understand the impact of the leverage you're taking on.
• 56:39
  Speaker 1: It's easy. If you're fifty two one and you drop
• 56:41
  Speaker 1: two per cent, you're gone, You're done, right, Like, wait,
• 56:45
  Speaker 1: two percent drop wipes me out? Oh, I don't want leverage.
• 56:48
  Speaker 1: That's a bad thing. And I think everybody that was
• 56:51
  Speaker 1: the one big takeaway. I thought everybody learned from from
• 56:55
  Speaker 1: the financial crisis. But you're saying risk is now thought
• 56:58
  Speaker 1: of a little more differently at financial institutions. Absolutely, and
• 57:02
  Speaker 1: again part of it is because they knew they needed
• 57:05
  Speaker 1: to to build back trust with clients. I mean again
• 57:07
  Speaker 1: back to our FPS. You know, in the very beginning
• 57:10
  Speaker 1: of the RP, it asks about their risk management process,
• 57:13
  Speaker 1: whether it's the firm overall from a centralized perspective, whether
• 57:16
  Speaker 1: the portfolio management specifically, you've got to articulate your risk
• 57:20
  Speaker 1: management process. And we have that and we're running our
• 57:22
  Speaker 1: rules based strategies. We have that in there as well, right,
• 57:25
  Speaker 1: and index providers have that as well. So it's an
• 57:28
  Speaker 1: important part of the story. You know, again, we are
• 57:30
  Speaker 1: stewards of capital and we are fiduciaries and we need
• 57:32
  Speaker 1: to take that role seriously, not to say the least. Um.
• 57:36
  Speaker 1: The dominance in the E t F space by I
• 57:40
  Speaker 1: almost want to say trilogy, but really it's Van Garden blocked.
• 57:44
  Speaker 1: The Yeah, State Street is up there, but it the
• 57:47
  Speaker 1: two big ones are really um, well, the muscle in
• 57:51
  Speaker 1: the space. How is it that this sector has evolved
• 57:55
  Speaker 1: where it's such a uneven distribution A winner take coal distribution.
• 58:02
  Speaker 1: I mean, look, you know those three firms got started
• 58:05
  Speaker 1: way before everybody else, as you know, spise over years old, right,
• 58:09
  Speaker 1: So I mean there there, there is, there is a
• 58:12
  Speaker 1: a advantage absolutely, um. So part of it is that
• 58:18
  Speaker 1: you know, they certainly won over the early adopters of
• 58:21
  Speaker 1: E t F specifically UM, and they grew their passive
• 58:24
  Speaker 1: business for the first decade, so they just had a
• 58:27
  Speaker 1: giant head start and everybody else's playing catch up. I
• 58:29
  Speaker 1: mean there's well and then the players that got in
• 58:33
  Speaker 1: the market after them. I have a belief set many
• 58:37
  Speaker 1: of them that you know, we actually can evolve our
• 58:40
  Speaker 1: fundamental active franchise. We can do enhanced index, we can
• 58:44
  Speaker 1: do active ETF. So they have sort of by passed
• 58:49
  Speaker 1: the passive to go to alternatively rated or active, something
• 58:52
  Speaker 1: more active, And so there's not a lot of unless
• 58:56
  Speaker 1: you are putting out you know, these vehicles that are
• 58:58
  Speaker 1: for free that you used to allocate internally within your organization,
• 59:02
  Speaker 1: whether you're using them to build model portfolios and charging
• 59:05
  Speaker 1: an overlafy. People aren't jumping on the passive bandwagon, by
• 59:10
  Speaker 1: which State Street vand guard Nice Year has got a
• 59:12
  Speaker 1: very strong early start too, so and most of the
• 59:15
  Speaker 1: pie of the flows every single year go to that.
• 59:18
  Speaker 1: So there are people who are dabbling around the edges
• 59:21
  Speaker 1: to UM try to offer a more sort of UM,
• 59:25
  Speaker 1: you know, fully built out sweet to their clients, but
• 59:27
  Speaker 1: nobody has the scale or can buy or build the
• 59:31
  Speaker 1: scare in a short period of time where they can
• 59:33
  Speaker 1: even make a dent in the market share that that
• 59:36
  Speaker 1: those three organizations have. And I do believe a lot
• 59:39
  Speaker 1: of it was the head start that they got. It
• 59:41
  Speaker 1: makes sense. Before I get to my favorite questions is
• 59:44
  Speaker 1: one of the questions I wanted to ask you about.
• 59:46
  Speaker 1: So you were at F squared UM when they ran
• 59:49
  Speaker 1: into the little difficulties, What was your role and what
• 59:52
  Speaker 1: was your reaction when you've heard about what was happening elsewhere. Yeah, so, uh,
• 59:57
  Speaker 1: that was a big segment of the market, as you
• 59:59
  Speaker 1: recall at F strategis segment which is defined by you know,
• 1:00:03
  Speaker 1: model portfolios where at least fifty or more has to
• 1:00:05
  Speaker 1: be with an ETFs. It grew to over a hundred
• 1:00:08
  Speaker 1: billion UM. Actually F Square was a big client of
• 1:00:11
  Speaker 1: I Shares, so that's how I knew them. Um they
• 1:00:13
  Speaker 1: probably gave I Shares directed six st eight billion a year.
• 1:00:18
  Speaker 1: That number might be slightly off, but anyway, so I
• 1:00:22
  Speaker 1: they had outsourced everything and they wanted to build their
• 1:00:26
  Speaker 1: own discretionary business internally. So as hired as the president
• 1:00:29
  Speaker 1: of F Squared Capital, and I had to build our
• 1:00:32
  Speaker 1: our trading system higher head trader. UH put in place
• 1:00:36
  Speaker 1: a portfolio management system with the client service UM group
• 1:00:40
  Speaker 1: assemble a client service group sales to talk to Wells
• 1:00:44
  Speaker 1: Fargo's separate account platform business. So I built that lots
• 1:00:48
  Speaker 1: of moving parts. Was really fun. We grewed almost thirty billion.
• 1:00:51
  Speaker 1: But the SEC came in in the summer of I
• 1:00:55
  Speaker 1: hope I get this right summer to do a routine
• 1:00:58
  Speaker 1: audit and had discovered that the track record we were marketing.
• 1:01:02
  Speaker 1: This is really important. The tracker we were marketing was
• 1:01:05
  Speaker 1: went back to two thousand one. The time period in
• 1:01:09
  Speaker 1: question was two thousand and eight, back to two thousand
• 1:01:12
  Speaker 1: and one. In two thousand and eight, the CEO of
• 1:01:14
  Speaker 1: F squared bought a signal from a firm and was
• 1:01:18
  Speaker 1: told that the signal was run against live client money.
• 1:01:22
  Speaker 1: Therefore was a live signal two thousand and eight forward. Uh,
• 1:01:26
  Speaker 1: that was now in the in the domain of F
• 1:01:29
  Speaker 1: squared and they ran that money at that signal against
• 1:01:33
  Speaker 1: live client money and live client portfolios. It was Gibbs compliant.
• 1:01:36
  Speaker 1: It was audited by a big accounting firm. So the
• 1:01:39
  Speaker 1: SEC had no issue with the track record from two
• 1:01:41
  Speaker 1: thousand and eight forward. That was valid. It was all
• 1:01:43
  Speaker 1: based on the purchase and what was represented. That's there
• 1:01:47
  Speaker 1: was the crux of the matter. So you know that
• 1:01:50
  Speaker 1: was a disagreement. Yeah, so there was a disagreement. Certainly,
• 1:01:52
  Speaker 1: the CEO of F squared continued to fight that that
• 1:01:55
  Speaker 1: it was misrepresented, but the SEC just with the SEC
• 1:01:58
  Speaker 1: did I mean, they get trade blotters and they get
• 1:02:00
  Speaker 1: everything they need to do to subpoena people and get
• 1:02:03
  Speaker 1: to the heart of the matter, even if it is
• 1:02:05
  Speaker 1: represent if it's misrepresented to you and you go out
• 1:02:08
  Speaker 1: and represented, that's what they're going to hang their hat on. So, hey,
• 1:02:11
  Speaker 1: you relied on someone who lied to you, your bed right,
• 1:02:14
  Speaker 1: so you should have done deeper due diligence or whatever
• 1:02:16
  Speaker 1: the theory is. So unfortunately, you know, we I still
• 1:02:20
  Speaker 1: believe to this day that what we were doing in
• 1:02:22
  Speaker 1: the way in which we were doing it, which was
• 1:02:24
  Speaker 1: the alpha sector of products, was a prudent way to
• 1:02:26
  Speaker 1: run a portfolio. Client certainly agreed with that as we
• 1:02:29
  Speaker 1: grew very quickly. However, um, once they slapped the fine
• 1:02:33
  Speaker 1: on and they got rid of our CEO and sort
• 1:02:35
  Speaker 1: of abandoned from the industry and one of the board
• 1:02:37
  Speaker 1: members came off of the board to be the introm CEO,
• 1:02:40
  Speaker 1: we really needed to kind of wind the firm down.
• 1:02:42
  Speaker 1: There was too much damage done. I was going to say,
• 1:02:44
  Speaker 1: is that recoverable even if it's an innocent mistake? And
• 1:02:48
  Speaker 1: I don't have any information whether it is or isn't,
• 1:02:50
  Speaker 1: But when the SEC drops that sort of hammer, is
• 1:02:54
  Speaker 1: there anything that can be done to done to save
• 1:02:56
  Speaker 1: a company of that point or is it just all
• 1:02:59
  Speaker 1: bets are off? Yeah? You know. Look, so to your point, Barry,
• 1:03:02
  Speaker 1: all two employees approximate to employees were completely innocent. Thankfully,
• 1:03:06
  Speaker 1: the industry recognized that and gave everybody a free option,
• 1:03:09
  Speaker 1: and everybody has has gone on to be into really
• 1:03:13
  Speaker 1: great jobs at other firms. Um. But I think what
• 1:03:16
  Speaker 1: happened is the trust was just eroded, but from the clients.
• 1:03:19
  Speaker 1: So clients were starting to pull money. Um, and it
• 1:03:22
  Speaker 1: was it was too difficult to save. And so we
• 1:03:25
  Speaker 1: what we did is we hired a banker to do
• 1:03:27
  Speaker 1: an asset pursage agreement and so sell the remaining assets off.
• 1:03:31
  Speaker 1: And um, you know, we just it was it was
• 1:03:33
  Speaker 1: too difficult. So you know, look, I I what I
• 1:03:36
  Speaker 1: learned through that process was I mean it was excruciating certainly,
• 1:03:40
  Speaker 1: UM but um, you know, managing through crisis and trying
• 1:03:44
  Speaker 1: to you know, keep everybody on the boat until such
• 1:03:47
  Speaker 1: time that you've got to get everybody safely off the boat. UM,
• 1:03:50
  Speaker 1: and just being really open and honest with clients. I
• 1:03:52
  Speaker 1: mean clients would take me out to dinner and say
• 1:03:53
  Speaker 1: what really happened? And I had to say that I
• 1:03:55
  Speaker 1: actually have no idea. I mean I wasn't here I
• 1:03:57
  Speaker 1: joined in. Um. But again b B seek solace and
• 1:04:04
  Speaker 1: knowing that two thousand and eight forward, since F square,
• 1:04:07
  Speaker 1: it has been running your money. It's been it's been
• 1:04:09
  Speaker 1: done in in a in a prudent way. So it
• 1:04:12
  Speaker 1: was tough. But that's an amazing story. Yeah, it's it's
• 1:04:15
  Speaker 1: certainly the most excruciating chapter of my career. It's for
• 1:04:20
  Speaker 1: two is that everybody below the CEO managed to continue
• 1:04:24
  Speaker 1: the career. Everybody's great without that being a black mark. No, no,
• 1:04:27
  Speaker 1: everybody understands it now. It was sort of isolated to
• 1:04:29
  Speaker 1: the CEO. Amazing. So let's jump to our favorite questions.
• 1:04:34
  Speaker 1: These are the things I asked all of our guests.
• 1:04:37
  Speaker 1: Let's start out with, what was the first car you
• 1:04:40
  Speaker 1: ever owned? Your making Model seventy four Volkswagen super Beetle. Really,
• 1:04:48
  Speaker 1: I had a super Beetle. They were indestructible, are absolutely.
• 1:04:53
  Speaker 1: I had three hundred thousand miles online. I had not
• 1:04:57
  Speaker 1: a beat seven the four By then they had breakes
• 1:05:02
  Speaker 1: and radios and air conditioning. I didn't have any of that.
• 1:05:05
  Speaker 1: Mine was light blue, which god, I had a light
• 1:05:07
  Speaker 1: blue one. Also I had a white Bug and then
• 1:05:10
  Speaker 1: a light blue super Beetle. The super Beetle for about
• 1:05:13
  Speaker 1: six months I was broken, did not have a battery,
• 1:05:16
  Speaker 1: and I would start parked on a hill and just
• 1:05:19
  Speaker 1: drop the clutch and that's how I would start the car.
• 1:05:23
  Speaker 1: It's um literally so so I had no heat, so
• 1:05:26
  Speaker 1: that was tough. But they were pretty pretty indestructive, absolutely
• 1:05:30
  Speaker 1: until the floorboards rusted out and became like a flint stone. Right.
• 1:05:34
  Speaker 1: I had one of those, absolutely, So tell us the
• 1:05:37
  Speaker 1: most important thing people don't know about? Sharon French. It
• 1:05:42
  Speaker 1: was funny what the word important? I mean, the most
• 1:05:44
  Speaker 1: important thing in my life, for sure is that I'm
• 1:05:46
  Speaker 1: a mom. And but I think most people know. Y, yes,
• 1:05:50
  Speaker 1: I think most people know that. Um, what else is important?
• 1:05:54
  Speaker 1: I mean some things people don't know. I don't know
• 1:05:56
  Speaker 1: how important is I have a titanium hip, so a
• 1:05:59
  Speaker 1: lot of people called me the bionic woman. When you
• 1:06:01
  Speaker 1: go through airport security, does that set stuff? Yes, it does.
• 1:06:04
  Speaker 1: I have to. I have to do the walk through
• 1:06:06
  Speaker 1: thing where you hold your arms machine. That is the
• 1:06:09
  Speaker 1: only non invasive imaging technology that has not been f
• 1:06:14
  Speaker 1: d A approved. And you'll notice when they set the
• 1:06:17
  Speaker 1: button they kind of lean back, lean away from it
• 1:06:19
  Speaker 1: because they know that stuff is going to kill them.
• 1:06:21
  Speaker 1: So I'm I'm the beauty of t s A pre
• 1:06:26
  Speaker 1: or even better clear is that you don't have to
• 1:06:28
  Speaker 1: do the naked machine, which does go. But because of
• 1:06:31
  Speaker 1: my hip and I carry I carry a card to
• 1:06:33
  Speaker 1: my and my wallet that shows the hip, I have
• 1:06:35
  Speaker 1: a striker hip, and my doctor's name and everything I've
• 1:06:37
  Speaker 1: an addressed. Um. But I actually just thinking about it,
• 1:06:40
  Speaker 1: and this could set up a whole, This could set
• 1:06:42
  Speaker 1: off a whole another series of questions. An important fact
• 1:06:45
  Speaker 1: about me that nobody knows that I just found out,
• 1:06:47
  Speaker 1: and it's a little bit of a family controversy. Family
• 1:06:50
  Speaker 1: of origin, my my five brothers and sisters or six
• 1:06:53
  Speaker 1: of us is I did twenty three and me and
• 1:06:56
  Speaker 1: my whole life. I thought I was a pure bread
• 1:06:58
  Speaker 1: Irish woman. Apparently not I am Oshgnazi Jew. Really, yes,
• 1:07:07
  Speaker 1: that's fascinating, that's fascinating. So we had an unbelievable you know,
• 1:07:11
  Speaker 1: family conversation over Thanksgiving and made my mother Unfortunately my
• 1:07:14
  Speaker 1: dad has passed, but we made my mother take the
• 1:07:16
  Speaker 1: test and she surprisingly is fifty percent, which means one
• 1:07:22
  Speaker 1: of her parents has to be so you know, and
• 1:07:26
  Speaker 1: which she doesn't. They're both deceased. But we think it's
• 1:07:29
  Speaker 1: my grandfather. But you know, somebody went astray or this
• 1:07:33
  Speaker 1: is post World War two or maybe not. So they
• 1:07:37
  Speaker 1: were born in uh the after the war. People stopped,
• 1:07:41
  Speaker 1: some people stopped talking. They were born in nineteen oh.
• 1:07:45
  Speaker 1: My grandparents were born in nineteen o five or six
• 1:07:48
  Speaker 1: around there. So anyway, so that's an important fact that
• 1:07:51
  Speaker 1: quite frankly, I didn't even know until recently. If you
• 1:07:53
  Speaker 1: want to have some fun, google Oshkenazi Jewish nobel recipients.
• 1:07:58
  Speaker 1: It's there's fastly disproportionate, and I don't know what that's about,
• 1:08:03
  Speaker 1: but it's kind of it's I just went to the
• 1:08:06
  Speaker 1: Nobile Museum in Stockholm and the fall was it was fabulous. Second, yeah,
• 1:08:10
  Speaker 1: I learned a lot um tell us about some of
• 1:08:12
  Speaker 1: your early mentors who helped shape your career. Yes, yes, so,
• 1:08:17
  Speaker 1: um Bob Shulman, Robert Shulman. So he was an executive
• 1:08:23
  Speaker 1: at E. F. Hutton Shearson Lehman Brothers. I think he
• 1:08:26
  Speaker 1: left before the Smith Barney acquisition to become president and
• 1:08:30
  Speaker 1: CEO of Tremont Advisors. Um. But he was a very
• 1:08:35
  Speaker 1: very shrewd, tough boss. He had I had moved into
• 1:08:41
  Speaker 1: a number of different positions throughout my decade at that
• 1:08:44
  Speaker 1: organization and really really tough and ran a number of
• 1:08:47
  Speaker 1: different business units, new product development. He actually was one
• 1:08:51
  Speaker 1: of the early executives who ran the Smith Barney Consulting
• 1:08:55
  Speaker 1: Group UM, which was ultimately sold off to I think
• 1:08:58
  Speaker 1: Bank of New York m Ellen UM. And he was
• 1:09:02
  Speaker 1: tough as nails and so the reason and we still
• 1:09:06
  Speaker 1: meet for coffee and and uh lunch today he's retired, UM,
• 1:09:11
  Speaker 1: but he was. He was instrumental to me because he
• 1:09:14
  Speaker 1: was so tough. I didn't need coddling. I needed to
• 1:09:18
  Speaker 1: understand how to be better and do better and UM help.
• 1:09:22
  Speaker 1: He gave me all kinds of runway. And so my
• 1:09:25
  Speaker 1: reputation today is sort of somebody who can you know, fixer? Right,
• 1:09:31
  Speaker 1: I was a question I didn't get to. Your reputation
• 1:09:33
  Speaker 1: is something's messed up, Send share and she'll fix it. Yeah. Well,
• 1:09:37
  Speaker 1: and it's and it's fixing and growing or doing the
• 1:09:39
  Speaker 1: diagnostic in order to remove the obstacle for growth. I mean,
• 1:09:42
  Speaker 1: I I hope that at some point people see me
• 1:09:45
  Speaker 1: as somebody who drives profitable growth. But that was Bob,
• 1:09:50
  Speaker 1: and that was that is who gave me those early
• 1:09:53
  Speaker 1: you know sort of runways and taught me how to
• 1:09:56
  Speaker 1: go at the heart of the issue, um and keep harder,
• 1:10:00
  Speaker 1: keep running stronger. I mean, I certainly he wasn't a
• 1:10:02
  Speaker 1: lot of people are afraid of him. UM So I
• 1:10:05
  Speaker 1: wouldn't say that he was the mentor in my life
• 1:10:07
  Speaker 1: who taught me how to socialize issues and how to
• 1:10:10
  Speaker 1: get the right key stake overt holders involved and get
• 1:10:12
  Speaker 1: their buy and that came later. Um. I had a
• 1:10:15
  Speaker 1: female mentor, Alliance Bernstein. I had a male mentor also
• 1:10:18
  Speaker 1: to Alliance Bernstein, and I think helped me along in
• 1:10:20
  Speaker 1: that regard as well. UM So, I'm a big believer
• 1:10:24
  Speaker 1: in mentors. I'm a big believer in sponsorship. Um And
• 1:10:27
  Speaker 1: I have mentored a ton of mostly women in my career,
• 1:10:31
  Speaker 1: which I continue to do and I really believe in
• 1:10:33
  Speaker 1: because at this stage of my career very to me,
• 1:10:35
  Speaker 1: it's all about paying it forward. I mean, I I
• 1:10:38
  Speaker 1: still have a lot more to accomplish, but it's all
• 1:10:40
  Speaker 1: about inspiring the next generation, which I started a a
• 1:10:45
  Speaker 1: unit called University Outreach within Women and e t f S,
• 1:10:48
  Speaker 1: which is actually going to universities at the undergraduate level
• 1:10:52
  Speaker 1: and mentoring in them and raising their awareness around asset
• 1:10:56
  Speaker 1: management and et F specifically because a lot of a
• 1:10:59
  Speaker 1: lot of women who are going into business, I have
• 1:11:02
  Speaker 1: nowhere to go from there, and business is hard for women.
• 1:11:05
  Speaker 1: Financial services is still pretty difficult. It's getting better, um,
• 1:11:08
  Speaker 1: but I I really want to inspire the next generation
• 1:11:11
  Speaker 1: at the undergraduate level and then mentor younger females who
• 1:11:14
  Speaker 1: are incredibly smart and promising within this industry. What about
• 1:11:19
  Speaker 1: investors who influenced the way you look at assets, markets
• 1:11:24
  Speaker 1: and investment. When I was young, it was Bill Sharp
• 1:11:26
  Speaker 1: and Harry mark o Witz right Modern Partio, Yes sixty two.
• 1:11:31
  Speaker 1: So the only startup I did in my career was Empower.
• 1:11:33
  Speaker 1: That's when I left my wealth management brokerage experience in
• 1:11:39
  Speaker 1: New York and moved to San Francisco right after AO
• 1:11:41
  Speaker 1: went public in remember that that really started the whole
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  Speaker 1: Internet place. UM and so UM that startup experience was
• 1:11:51
  Speaker 1: was really really strong, and we partnered with Harry Marko Witz.
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  Speaker 1: Our competition with financial engines who partnered with Bill Sharp. UM,
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  Speaker 1: I mean more recently, um over the that was probably
• 1:12:03
  Speaker 1: my second decade. My third decade was more FAMA and
• 1:12:06
  Speaker 1: French at the University of Chicago and a lot of
• 1:12:08
  Speaker 1: their factor work. I really do believe in the persistence
• 1:12:11
  Speaker 1: of factors is a more uh precise way to get
• 1:12:15
  Speaker 1: at the key drivers of return. Right, Eugene Fama at Chicago,
• 1:12:19
  Speaker 1: I think Ken French at Dartmouth, Yes, exactly, a tough
• 1:12:22
  Speaker 1: school and that's quite interesting. Um. Everybody's favorite question, what
• 1:12:28
  Speaker 1: are some of your favorite books, be they fiction, non fiction,
• 1:12:31
  Speaker 1: investing related, or whatever. Yeah. So, I'm I really love
• 1:12:34
  Speaker 1: to learn about people. So I love reading biographies. Um
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  Speaker 1: and so I the one I just read was I
• 1:12:42
  Speaker 1: Love Capitalism by Ken Lango. It was fast. He's a
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  Speaker 1: really interesting I'll be a krusty guy. I mean he's
• 1:12:49
  Speaker 1: sort of like a classic curmudgeon. Lely had the book read.
• 1:12:52
  Speaker 1: He was scrappy, scrappy. That's the better work to get crusty, scrappy, scrappy.
• 1:12:58
  Speaker 1: I mean, I could not put it down. I read
• 1:12:59
  Speaker 1: it three days home. Depot is just amazing. I mean
• 1:13:02
  Speaker 1: he did so many other things deep absolutely, I mean
• 1:13:06
  Speaker 1: he put capital together on Wall Street, That's what he did.
• 1:13:10
  Speaker 1: He was scrappy, he was fearless. He was amazing. Um.
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  Speaker 1: So anyway, so, um, I just read Michelle Obama's book,
• 1:13:16
  Speaker 1: which I thought was great becoming also read that one
• 1:13:18
  Speaker 1: in three days. Um, Katherine Hepburn, Um, certainly Michael Bloomberg,
• 1:13:23
  Speaker 1: I'm a giant Katherine Hepburn fane biography, biography, biography, who
• 1:13:29
  Speaker 1: wrote that? And UM, oh gosh, you're testing me. I
• 1:13:33
  Speaker 1: just I just don't there's a dozen Katherine Hepburn biography. Yes, Um,
• 1:13:38
  Speaker 1: I don't remember. Barry I'm sorry, I don't remember. Emailed me.
• 1:13:41
  Speaker 1: I'll add it to the list. But even Anne Keller,
• 1:13:44
  Speaker 1: I mean, you know, I mean, I you know, so
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  Speaker 1: I'm fascinated by people. So my my my favorite books
• 1:13:51
  Speaker 1: are actually reading about you know, the bio biography channel
• 1:13:54
  Speaker 1: I love to listen to. I mean, I certainly have
• 1:13:56
  Speaker 1: read a lot about the Grateful Dead, going back to music,
• 1:13:59
  Speaker 1: you know, Jerry Goo see uh, Phil Collins, So I
• 1:14:03
  Speaker 1: I typically read not, that's a weird that's a weird
• 1:14:07
  Speaker 1: juxtaposition the dead into Phil. Not exactly. I've got an neglectic,
• 1:14:12
  Speaker 1: you know, palette. Let's see, I go back to the
• 1:14:15
  Speaker 1: established that of Genesis and Peter Gabriel, not that I
• 1:14:19
  Speaker 1: not that I mind super tramp Genesis, that whole that
• 1:14:23
  Speaker 1: was high school for me. That was my freshman year
• 1:14:25
  Speaker 1: in college. Breakfast alight. So you're older than me. A touch,
• 1:14:29
  Speaker 1: just a touch, Um, So, what do you tell us
• 1:14:31
  Speaker 1: about a time you failed and what you learned from
• 1:14:34
  Speaker 1: the experience? Are there any other books before we jumped
• 1:14:36
  Speaker 1: in down? That's that's good. I mean, certainly I read
• 1:14:38
  Speaker 1: other things other than just biographies. But I think that's
• 1:14:41
  Speaker 1: the thought I'd like to leave you with. Okay, So
• 1:14:44
  Speaker 1: let's discuss the time you failed business or not and
• 1:14:47
  Speaker 1: what you learned from the experience. Gosh, okay. So it's
• 1:14:52
  Speaker 1: sort of business and personal at the same time. So
• 1:14:55
  Speaker 1: during that period of time where I was in San
• 1:14:56
  Speaker 1: Francisco where I was working for Empower and we were
• 1:14:59
  Speaker 1: we were growing fast us again. Harvard Business Case Study
• 1:15:02
  Speaker 1: loved it. We ended up selling the business to morning
• 1:15:03
  Speaker 1: Star ultimately in two thousand one. But um, I was
• 1:15:07
  Speaker 1: running global sales. I was one of uh. I was
• 1:15:10
  Speaker 1: you know, I was on the management team employed, you know,
• 1:15:13
  Speaker 1: fifth member of the management team. UM. And we had
• 1:15:16
  Speaker 1: built our business domestically and I was starting to establish
• 1:15:18
  Speaker 1: our business globally. So we I set up I was
• 1:15:21
  Speaker 1: going back and forth from San Francisco to Tokyo and
• 1:15:23
  Speaker 1: San Francisco to London. Put up joint ventures in London
• 1:15:26
  Speaker 1: to grow that and build a subsidiary bricks and mortar
• 1:15:29
  Speaker 1: in Um sorry, in Asia. We did joint ventures London.
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  Speaker 1: We put up a subsidering we had We were a
• 1:15:36
  Speaker 1: finalist for so Miszooho really came together in two thousand
• 1:15:40
  Speaker 1: one of his iby J Industrial Bank of Japan, day
• 1:15:43
  Speaker 1: Chicanga dk B and Fujibank. Those three individual banks came
• 1:15:47
  Speaker 1: together to form ben zoo Hoo. While they were forming,
• 1:15:50
  Speaker 1: they were looking for online investment advisory services. We were
• 1:15:53
  Speaker 1: as one of many things on this platform they were building.
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  Speaker 1: We were a finalist. There was two of us at
• 1:15:58
  Speaker 1: that time. I was pregnant with my daughter, very pregnant, well,
• 1:16:01
  Speaker 1: started out not so pregnant, but over the course of
• 1:16:03
  Speaker 1: eight months, I and um I needed to and as
• 1:16:10
  Speaker 1: if you understand the Japanese culture, they are very much
• 1:16:14
  Speaker 1: into relationships, right, not that we are in the US,
• 1:16:17
  Speaker 1: but even more so, much deeper. So when you start
• 1:16:20
  Speaker 1: with them, you have to end with them or you
• 1:16:21
  Speaker 1: might as well not compete. And so I was the
• 1:16:24
  Speaker 1: one who had to hot fly to Tokyo to do
• 1:16:27
  Speaker 1: this finalist presentation. And I was eight months right, so
• 1:16:30
  Speaker 1: ps forged the doctor's note. Bad idea. UM. I remember
• 1:16:36
  Speaker 1: at the time my husband and my son was to saying,
• 1:16:39
  Speaker 1: you know, if you go you don't get it, we
• 1:16:41
  Speaker 1: will not be here when you get back. Do you
• 1:16:44
  Speaker 1: understand that when you fly to New York or London
• 1:16:46
  Speaker 1: or New York, you're flying over land, So if you
• 1:16:49
  Speaker 1: go into labor, you have to land the plane and
• 1:16:51
  Speaker 1: you can land them. I can't land the plane when
• 1:16:52
  Speaker 1: you're over the that's right, So stupid me I went. Thankfully,
• 1:16:58
  Speaker 1: The story ends, well, we did win the business and
• 1:17:01
  Speaker 1: I didn't quinto labor. But I went into labor prematurely
• 1:17:05
  Speaker 1: two weeks after I got back, and my daughter was fine,
• 1:17:09
  Speaker 1: she was six pounds. My husband and little boy was
• 1:17:13
  Speaker 1: were still there, although he didn't talk to me for
• 1:17:15
  Speaker 1: the following month. But the lesson learned and very I
• 1:17:18
  Speaker 1: said that I mentor people and women, and many of
• 1:17:21
  Speaker 1: the things I said them is look avoid the mistakes
• 1:17:23
  Speaker 1: I made. What was I thinking our number one priorities, ourselves,
• 1:17:27
  Speaker 1: our healths in our family. That was the stupidest thing
• 1:17:31
  Speaker 1: I ever did. I put my life at risk and
• 1:17:34
  Speaker 1: my unborn child's life at risk. Wow, like stupid, that's
• 1:17:40
  Speaker 1: that's that's pretty bad. That's a horrifying, horrifying story. Again,
• 1:17:44
  Speaker 1: it worked out, but still, what do you do for fun?
• 1:17:48
  Speaker 1: What do I do for fund? Listen to music? Um? Look,
• 1:17:52
  Speaker 1: I'm very sporty, as you say so. I I used
• 1:17:56
  Speaker 1: to run, but now I have a new hip, so
• 1:17:57
  Speaker 1: I can't do that anymore. But I do yoga, I
• 1:18:01
  Speaker 1: do you know, stand up paddle boarding, I ski, um,
• 1:18:04
  Speaker 1: I you know, snorkele, I, paraglide, I do anything. I
• 1:18:11
  Speaker 1: don't say no to anything. I don't scuba dive. I've
• 1:18:14
  Speaker 1: got to get my over my fear of scuba diving.
• 1:18:17
  Speaker 1: But I'm very sporty, so you know, I'll be on
• 1:18:19
  Speaker 1: a softball team or I'll you know, um, I'll always
• 1:18:24
  Speaker 1: say yes if anybody wants my son just jump jumped
• 1:18:26
  Speaker 1: out of a plane. I don't know if I'm going
• 1:18:27
  Speaker 1: to do that, but yeah, that's the risk reward on
• 1:18:30
  Speaker 1: that one is not my my favorite. So our last
• 1:18:33
  Speaker 1: questions because we have to wrap. Um, what sort of
• 1:18:35
  Speaker 1: advice would you give any millennial who was thinking of
• 1:18:38
  Speaker 1: going into a career in finance. Yeah, so, look, it's
• 1:18:41
  Speaker 1: interesting millennials. You and I grew up with the mutual
• 1:18:44
  Speaker 1: fund in the eighties. Millennials are growing up with et
• 1:18:47
  Speaker 1: f s right, and they're growing up with digital advice.
• 1:18:50
  Speaker 1: Um So. One of the things I like about that
• 1:18:53
  Speaker 1: is it's it's a lot of the burden of that
• 1:18:55
  Speaker 1: falls on their shoulders in terms of how they learned
• 1:18:58
  Speaker 1: to um you know, think about portfolio construction. Um So,
• 1:19:02
  Speaker 1: I think data and I mean, look, we're sitting at Bloomberg.
• 1:19:06
  Speaker 1: This is the epicenter of data and intelligence. I am
• 1:19:09
  Speaker 1: big into how the financial world meets the technology world.
• 1:19:13
  Speaker 1: So I certainly my passion and my love deep down
• 1:19:16
  Speaker 1: as asset management, but I love the intersection of finance
• 1:19:19
  Speaker 1: and technology, So I certainly would um you know, advise
• 1:19:23
  Speaker 1: them in that direction. And our final question, what is
• 1:19:26
  Speaker 1: it that you know about the world of investing today
• 1:19:28
  Speaker 1: that you wish you knew thirty years ago when you
• 1:19:30
  Speaker 1: first started. I wish I understood risk a little bit more.
• 1:19:35
  Speaker 1: You know, I sort of thought tree screwed to the
• 1:19:37
  Speaker 1: sky back then, and you know, I think I was
• 1:19:39
  Speaker 1: a little bit idealistic at that time. So I'm I'm
• 1:19:42
  Speaker 1: I've I've been sobered and I've been burned. I mean,
• 1:19:44
  Speaker 1: I've been through three market corrections that are pretty significant
• 1:19:47
  Speaker 1: eight seven, two thousand, two thousand one and two eight,
• 1:19:50
  Speaker 1: as well as market timing scandals and all the things
• 1:19:52
  Speaker 1: you mentioned. So you know, I'm I'm much more practical now,
• 1:19:56
  Speaker 1: much more pragmatic, and uh, I wish I knew that
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  Speaker 1: back then. I think a lot of you, a younger
• 1:20:00
  Speaker 1: generation of special millennials, are super idealistic. But having been
• 1:20:04
  Speaker 1: through what I've been through throughout my career, you know,
• 1:20:06
  Speaker 1: I wish I learned more earlier on about you know,
• 1:20:10
  Speaker 1: managing risk better. Really really interesting answer. We have been
• 1:20:14
  Speaker 1: speaking with Sharon French. She is the head of Beta
• 1:20:17
  Speaker 1: Solutions at Oppenheimer Funds. If you enjoy this conversation, well,
• 1:20:22
  Speaker 1: be sure and check out Apple iTunes, uh and look
• 1:20:25
  Speaker 1: upward down an inch where you can see any of
• 1:20:27
  Speaker 1: the other two hundred and fifty or so such conversations
• 1:20:31
  Speaker 1: we've had previously. Uh. You can find that at iTunes, Stitcher, overcast,
• 1:20:36
  Speaker 1: Bloomberg dot com. We love your comments, feedback and suggestions
• 1:20:40
  Speaker 1: right to us at m IB podcast at Bloomberg dot net.
• 1:20:45
  Speaker 1: I would be remiss if I did not thank the
• 1:20:47
  Speaker 1: crack staff that helps put together these conversations each week.
• 1:20:51
  Speaker 1: Medina Parwana is our audio engineer. Slash producer Atika val
• 1:20:56
  Speaker 1: Brun is our project director. Uh Michael Boyle is our booker.
• 1:21:02
  Speaker 1: Michael Batnick is our head of research. I'm Parry Retolts.
• 1:21:06
  Speaker 1: You're listening to Masters in Business on Bloomberg Radio.