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What the Next Generation Wants From Wealth Managers · Merryn Talks Money

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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
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Speaker 2: Welcome to Merrindalk's Your Money, the personal finance edition of
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Speaker 2: Merindalk's Money. In these bonus podcasts, we talk about the
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Speaker 2: best strategies for making the most of your money. I'm
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Speaker 2: Maren Zumset, Web Editor at Large for Bloomberg UK Money,
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Speaker 2: and across the next two weeks, we aren't going to
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Speaker 2: bring you highlights from a special broadcast we recorded at
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Speaker 2: the Bloomberg offices in London on the fourteenth of July.
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Speaker 2: It was an hour long panel focused on how the
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Speaker 2: world of wealth management is changing, about the rise of
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Speaker 2: next generation wealth clients and the growing role of alternatives in.
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Speaker 3: Modern portfolio construction.
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Speaker 2: The banelers were John Steppeck, senior reporter and author of
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Speaker 2: the Money Disgital newsletter, Charlie Morris, chief investment officer and
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Speaker 2: founder of byte Tree, a leading provider of investment research
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Speaker 2: in traditional finance and digital. We also as Jean dam
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Speaker 2: and Marie Global head of Investments for Barkley's Private Bank
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Speaker 2: and Wealth Management. Here's the first part of our conversation.
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Speaker 2: Thank you all for joining me today. Now we are
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Speaker 2: going to define our terms. We are talking about the
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Speaker 2: next gen of clients. What do we mean when we
1:20
Speaker 2: talk about the next gen?
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Speaker 4: That's a good question, I think for us, next gen
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Speaker 4: are you know, typically children who are really developing a
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Speaker 4: sense of wealth.
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Speaker 5: They're they're interested in investing.
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Speaker 4: They're curious. Often, they're active. They're very active, and they
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Speaker 4: want to be in control often and excited. And next
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Speaker 4: gen for us is there's a period for our clients
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Speaker 4: where it's about engagement and trying to understand them better.
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Speaker 5: I think, OK.
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Speaker 2: So we're talking about the newly well off young correct, yes,
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Speaker 2: and be inherited, the beneficiaries of the great well trend wealth.
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Speaker 4: Tund which is the big happening soon as we know.
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Speaker 4: And yeah, they're learning, and they're they're they're passionate, often
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Speaker 4: with purpose beyond returns. So capital is not the only
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Speaker 4: thing that we discuss. There's a lot going on at
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Speaker 4: family level, family dynamics, capital capital more than returns. So yeah,
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Speaker 4: the discussion often with next gen goes in many directions.
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Speaker 4: And what is the same as as the old gen
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Speaker 4: is a sense of having some kind of gross end
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Speaker 4: preservation at the same time, which is interesting. You see,
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Speaker 4: it's a different dynamic than entrepreneurs are creating the wells.
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Speaker 4: Often next gen for us are taking the wells and
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Speaker 4: try to figure out what's going to be the purpose
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Speaker 4: of that as wells for the next generation.
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Speaker 3: Okay, excellently.
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Speaker 2: We'll definitely talk about that bit more in a minute,
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Speaker 2: but I want to continue defining our terms and ask you, John,
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Speaker 2: perhaps to explain what we mean when we say alternatives.
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Speaker 6: Yeah, all ternators are basically anything that isn't listed equity
3:07
Speaker 6: or listed bonds. So you'd be talking about private assets,
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Speaker 6: private equity, private credit obviously in the news a lot recently.
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Speaker 6: Also in the more kind of financial side of things,
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Speaker 6: commodities pretty much every commodity either direct investment commodities are
3:23
Speaker 6: other ways into commodities, the derivatives like futures and options.
3:29
Speaker 6: And also I suppose in its slightly further away from
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Speaker 6: the financial side, kind of like collectibles, so in trophy assets,
3:38
Speaker 6: so anything like art or wine or coins, even.
3:44
Speaker 2: Gems on gems, vintage jewelry.
3:47
Speaker 6: Vintage jewelry, anything that fits into the sort of almost
3:51
Speaker 6: like a kind of hobby turned into financial vehicle, classic cars,
3:55
Speaker 6: that kind of thing.
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Speaker 3: Real estate. Did you mention in real estate?
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Speaker 6: I mean real estate, Yeah, that is a form of
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Speaker 6: alternative is probably in the cost I think, but yeah,
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Speaker 6: commercial property would be the other one I mean.
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Speaker 3: And also anything.
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Speaker 6: That's somewhat less liquid I think you can almost think
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Speaker 6: of like an alternatives is often something that's less liquid,
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Speaker 6: although that's not always the case. Obviously, plenty of commodities
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Speaker 6: up there for the liquid, and obviously gold is broadly
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Speaker 6: an alternatives.
4:24
Speaker 3: And commodities we divide up between.
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Speaker 2: You list listed miners for commodities, for example, would not
4:30
Speaker 2: be an alternative, but holding about a gold in your
4:32
Speaker 2: basement or buy proper uti would be an alternative. Yeah, yeah, okay,
4:36
Speaker 2: fair enough, right, Sarlie. There's one more alternative right which
4:40
Speaker 2: I'm slightly newer. Alternative is that a big one?
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Speaker 7: That is that where that question is crypt in general?
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Speaker 3: Okay, do pick up on I want to pick.
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Speaker 7: Up on the definition of alternatives, and I would say
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Speaker 7: that you could also talk about cash flow and non
4:59
Speaker 7: cash flow, So if financial and non financial assets. Yeah,
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Speaker 7: and so you know, when you look at hedge fund,
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Speaker 7: you know, I say, if it's long short equity or something,
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Speaker 7: it's a strategy. It's not really an asset class. And
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Speaker 7: I would say the same is true for many things
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Speaker 7: like private equity. It's just a liquidity thing.
5:17
Speaker 6: You know.
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Speaker 7: It's obviously long long term money and that sort of thing.
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Speaker 7: But the true alternatives don't don't revolve around money. There's
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Speaker 7: something else. So you've got the commodity sphere, you've got
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Speaker 7: the digital asset sphere or the crypto sphere, and the
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Speaker 7: collectibles that John pointed out, and also that you know,
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Speaker 7: liquidity is essential to that. So when you look at
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Speaker 7: the liquidity, you know, something like gold is the vast
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Speaker 7: majority of the community market, and there's also oil, but
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Speaker 7: of course there's not an investment, you know, oil, it's
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Speaker 7: a future contract, whereas whereas gold can be held. And
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Speaker 7: then again when you come to crypto, seventy five percent
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Speaker 7: of all crypto is bitcoin, and twenty five percent of
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Speaker 7: the other one million coins or however many there are,
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Speaker 7: it's not bitcoin. And it's very similar to gold versus
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Speaker 7: the above ground supply of gold against the above ground
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Speaker 7: supply of of other commodities. So I just think that's
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Speaker 7: a very good way to think about it. I think
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Speaker 7: the financial service industry has been hoodworking people for years
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Speaker 7: trying to call things alternatives. Put the fees up and
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Speaker 7: that sort of thing.
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Speaker 3: But then not really can I pick you up them.
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Speaker 2: Let's stop on private equity, which is constantly called an alternative.
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Speaker 2: And John and I talk about this a lot on
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Speaker 2: the podcast, and we say, well, private equity is just equity,
6:21
Speaker 2: just equity, that's more expensive.
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Speaker 3: It's the same thing.
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Speaker 7: Yeah, absolutely, I mean private equity, I mean it can
6:27
Speaker 7: be very good. But of course the just parity of
6:29
Speaker 7: returns in private equity funds is vast, whereas if you
6:32
Speaker 7: buy an index fund, everyone gets the same out. So
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Speaker 7: there is a very different sort of fundamental thing going
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Speaker 7: on there.
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Speaker 2: Okay, but go back to crypto as Can I call
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Speaker 2: it an asset class?
6:43
Speaker 3: Well, I think so they coin an asset class.
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Speaker 7: Has it been granted permission from somewhere high up in
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Speaker 7: financial circourse?
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Speaker 3: I don't know. I don't know what the rules are here.
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Speaker 7: Well, there are rules, of course, and that is that
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Speaker 7: if it's created by the Federal Reserve, the Bank of
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Speaker 7: England or Golden Sacks or someone like that, then of
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Speaker 7: course it's a legitimate thing. But because it's because it
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Speaker 7: came from chaos, and it came from the cypherpunks and
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Speaker 7: that sort of thing, it's never been accepted by the
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Speaker 7: financial services industry. So that's it. It's where it came from.
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Speaker 7: It came from the wrong the wrong postcode, and that's
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Speaker 7: why they don't like it. And you know everything else
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Speaker 7: that you know, if it comes out of Gonvi Sex,
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Speaker 7: then it's always very good, you must buy it. And
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Speaker 7: so there's that. But I think that is an asset class. Absolutely.
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Speaker 7: It's something completely different. And you know, you go back
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Speaker 7: to the history of asset classes. You know, we probably
7:31
Speaker 7: started off with I would think commodities must have come first,
7:35
Speaker 7: you know, the first loafe of bread, and then we
7:37
Speaker 7: progressed from there with debt and then equity in the
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Speaker 7: thirteenth century or something, and then it really kicked off
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Speaker 7: in Amsterdam a few hundred years later. And most of
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Speaker 7: the other things aren't really asset classes. But crypto has
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Speaker 7: come along. It is completely different. It is definitely non
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Speaker 7: financial and it is definitely not equity or bond or commodity.
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Speaker 7: It's something different. It's digital, it's very but it's real.
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Speaker 3: Okay, so we know what it doesn't. It will come
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Speaker 3: back to what it is. Yeah, we know what it doesn't.
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Speaker 6: What is it?
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Speaker 3: What is it?
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Speaker 2: What's that We'll come back to use cases and all
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Speaker 2: that in the minute we'll have we'll have a nice
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Speaker 2: row everybody in about twenty minutes when we become of
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Speaker 2: some of.
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Speaker 3: The other stuff. Right, let's go back to actual portfolios.
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Speaker 2: So maybe your older gen have classic, old fashioned or
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Speaker 2: did at least have old fashions sixty forty portfolios, and
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Speaker 2: apart from maybe a little bit in their vintage cars
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Speaker 2: and jurry collections, they were very clear equity bond.
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Speaker 3: But that portfolio construction is no longer the default.
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Speaker 4: No, I think to Charlie's point earlier, I think we've
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Speaker 4: seen really the adoption of more asset classes. We can
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Speaker 4: give it with an assad classes later, but clearly today
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Speaker 4: I would say the need for an extry terms and
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Speaker 4: dovestication has led to portfolios being more than equities and bonds.
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Speaker 4: Not new right, because we've been discussing headshants for a
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Speaker 4: very long time. Pract equally in markets in general are
8:56
Speaker 4: more popular, so they are becoming really part of any
8:58
Speaker 4: asset education you can find on the street today. Being
9:01
Speaker 4: the question is the quantum and the question is how
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Speaker 4: you access for what kind of returns? But this is
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Speaker 4: usually back to either skills alpha or in liquidity premium
9:11
Speaker 4: one way or another. So today, yeah, I would say
9:14
Speaker 4: so for our own clients, if you come and you're
9:17
Speaker 4: not constrained and we can have a very very broad discussion,
9:21
Speaker 4: the starting point is going to come from what we
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Speaker 4: call a holistic asset. That location discussion will come first
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Speaker 4: and foremost with liquid liquid long only long short, and
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Speaker 4: it will be a lot more than sixty foury for
9:34
Speaker 4: sure that we see increasingly going into I would say
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Speaker 4: more mainstream portfolio. I think it's been the norm for
9:42
Speaker 4: a long while, right, a lot of families. I've been
9:45
Speaker 4: studying us En doughnuts for a very long time and tried,
9:48
Speaker 4: you know, to be as good as another topic we
9:51
Speaker 4: can discuss. And you see this kind of endoormant spirit
9:55
Speaker 4: now tricking down up to or down to very small
10:00
Speaker 4: portfolio because it's easier today to actually build a fifty
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Speaker 4: fairly something.
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Speaker 2: Maybe it's friddling down exactly the point where it's maybe
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Speaker 2: not going to work so well anymore. Those in downward
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Speaker 2: portfolios have work brilliantly during the great heyday of private equity.
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Speaker 3: Yeah, I think it depends on how it is an end.
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Speaker 4: I think, yeah, Look for us, really the key part
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Speaker 4: of the job is to define a plan like a
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Speaker 4: goal and a plan for a plant, and plan that
10:27
Speaker 4: plants can survive over time.
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Speaker 5: To your point on the way than the likes.
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Speaker 4: I do think that if you can have the time
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Speaker 4: to compound, which is such a wonder being long, you know,
10:39
Speaker 4: and full on equality risk is a good thing usually,
10:43
Speaker 4: whereas if your time arison is shorter, clearly should be
10:48
Speaker 4: a little bit less like in the US and no
10:49
Speaker 4: and at more yield in a portfolio. So I think, look,
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Speaker 4: the toolkit is wider. What doesn't change is the need
10:57
Speaker 4: to get the right to advice and construct right portfolio
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Speaker 4: so you get the right outcome. I think the problem
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Speaker 4: you have is maybe there's a bit of fashion going
11:04
Speaker 4: on right and it's all about that thing or the
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Speaker 4: other thing that may go to the lower and client,
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Speaker 4: maybe not always for the right reason.
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Speaker 2: And say, what's in fashion that maybe some people are
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Speaker 2: having too much of in their portfolios.
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Speaker 5: So well, a good question, I think the with the
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Speaker 5: next gen.
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Speaker 4: To Charlie's point, we've been having a lot of discussions
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Speaker 4: on digital assets for sure that they own one way
11:28
Speaker 4: or another. I think most things, any interesting topic this
11:32
Speaker 4: is really probably something an asset class can debate, but
11:36
Speaker 4: it's really something that's all across the spectrum, like from
11:40
Speaker 4: very very wealthy families to actually mainstream investors because it's
11:44
Speaker 4: easy actually to get to it.
11:46
Speaker 5: Again, it depends how you want to get to it it. Yeah,
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Speaker 5: for real crypto et cetera.
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Speaker 4: So that that piece, for sure, I think the the
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Speaker 4: more private market the it's all about the democratization right
11:59
Speaker 4: now of inequid stuff, which you know, for me, you
12:03
Speaker 4: need to stay true to having quality investment in those
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Speaker 4: portfolio so you need to know what you're trying to
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Speaker 4: harvest and what you're giving.
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Speaker 5: Up for more equity on all the way.
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Speaker 2: Okay, well let's let's imagine, all right, say, good argument
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Speaker 2: that I'm a thirty year old investor now and I've
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Speaker 2: come to you and I haven't really got any sense
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Speaker 2: of what I want, but I know I'm a long
12:24
Speaker 2: time investor. I don't require much in a way yield
12:26
Speaker 2: at the moment. What am I going to get from you?
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Speaker 2: Am I going to get budiocent equity, twenty percent bonds
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Speaker 2: and forty in alternatives?
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Speaker 3: How's it going to work? Is the very default that
12:37
Speaker 3: you have.
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Speaker 4: So we have we have a framework and clearly a
12:42
Speaker 4: thirty year old. You know you've been an accumulation, so
12:46
Speaker 4: should be a really equity or his premium.
12:48
Speaker 5: One way or another if you are.
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Speaker 4: And then question again is like what kind of inequality
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Speaker 4: can you fall in bad times? You need to forecast
12:57
Speaker 4: for those bad times we've seen right back in the day,
13:00
Speaker 4: I used to be a secondary as well.
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Speaker 5: It's good not to be shotcast. It's a good idea
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Speaker 5: in general. So we built a plan you can survive
13:09
Speaker 5: in good time by times.
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Speaker 4: So equality will be a big part, and the alternative
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Speaker 4: part will probably be around the combination of equity or
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Speaker 4: retain seeking portfolio type strategy, some more equality and a
13:20
Speaker 4: bit of diversification on the way.
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Speaker 5: So but equality will be.
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Speaker 3: Will be them.
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Speaker 2: Even though we can label somethings alternatives, et cetera, et cetera,
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Speaker 2: in the end, it's going to still be a majority equity.
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Speaker 3: It's going to be a ninety ten in the end
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Speaker 3: sort of thing.
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Speaker 4: Yeah, we'll define what the right cushion is for you
13:39
Speaker 4: so you can sleep at night.
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Speaker 5: But the point we just made earlier around.
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Speaker 4: Private equity, it's equity leverage right and equity again.
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Speaker 3: And are concerned.
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Speaker 2: I'm John and I have been talking about this, say,
13:52
Speaker 2: just the democratization of private equity is not not necessarily ideal.
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Speaker 6: All right, Well, they's aiming, isn't it, because I suppose
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Speaker 6: this is the other thing, isn't it? The like private
14:00
Speaker 6: equity benefited from ultra low interest rates for a long time,
14:04
Speaker 6: but also from the fact that it was small and
14:07
Speaker 6: I was big. And I think one of the things
14:09
Speaker 6: you were mentioning kind of made me think, if for
14:13
Speaker 6: toalking about ill liquidity, you should be getting rewarded for
14:16
Speaker 6: taking illiquidity risk. Obviously, it was at one point in
14:19
Speaker 6: this particular cycle that actually tipped and people were saying, actually,
14:24
Speaker 6: you were paying an illiquidity premium as a psychological buffer
14:29
Speaker 6: to stop you from taking your money out at the
14:31
Speaker 6: wrong time. And I just thought it was fascinating how
14:33
Speaker 6: it's so smoothly changed that the sale pitch went from
14:37
Speaker 6: being you're getting paid more for taking this eliquidity risk,
14:40
Speaker 6: so the eliquidity premium vanishing and saying, oh, that's because
14:43
Speaker 6: you're paying more for the psychological protection. And I have
14:47
Speaker 6: to say it left me a little bit skeptical about
14:50
Speaker 6: what the exact purposes of adding private equity to a
14:54
Speaker 6: portfolio of publicly listed, equally easily accessed liquid equities, and as.
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Speaker 2: John always says, you know, if you if you want
15:03
Speaker 2: access to small companies in the UK at least inexpensively, boy,
15:07
Speaker 2: have we've got a deal for you a list of market.
15:09
Speaker 5: Yeah, but I think the no, you make a very
15:12
Speaker 5: good point. I think you know that. As we mentioned before,
15:15
Speaker 5: it's about being selective.
15:18
Speaker 4: You know, is it a good idea to invest in
15:20
Speaker 4: the private equity market overall?
15:22
Speaker 5: Can debate. Now we can see.
15:25
Speaker 4: People who've been able managers, who being able to actually
15:28
Speaker 4: deploy capital and actually make most of the return through
15:33
Speaker 4: operational improvement from story shops, less leverage, less multiple expansion.
15:37
Speaker 5: If you can repeat that over time, probably you're happy to.
15:39
Speaker 4: Pay for alpha over over over over better or equally better.
15:44
Speaker 4: Not your point, Yeah, I can see the point. I
15:46
Speaker 4: will always remember and point out a few clients towards
15:49
Speaker 4: the you know seven vintages, right, seven intagers you make
15:52
Speaker 4: money or so many people just time and get got out.
15:56
Speaker 5: Right, you made money because you were stuck. But I
16:00
Speaker 5: here's a good thing to be start with skills. I
16:03
Speaker 5: agree that's important. But yeah, I can see your point.
16:06
Speaker 4: I do think the again for the right portfolio with
16:09
Speaker 4: the right construction, it makes sense.
16:11
Speaker 5: Is it the holy Grail? And you know the magic one? No?
16:15
Speaker 2: No, yeah, let's go back to crypto. Let's go back
16:19
Speaker 2: to a bitcoin. You know, we talk about gold a lot, right,
16:22
Speaker 2: John and I we talk about gold.
16:23
Speaker 3: We right aback, gold a lot.
16:24
Speaker 2: And when we talk about how much gold did you
16:26
Speaker 2: have in your portfolio, even if.
16:27
Speaker 3: You're a gold bug, how much should you have?
16:28
Speaker 2: And the answers comes down to and this is Amsbatian
16:31
Speaker 2: Lion at Troy always puts us very well. He says,
16:33
Speaker 2: you want enough for it to make a difference in
16:36
Speaker 2: a crisis.
16:36
Speaker 3: Right, So one percent isn't enough, Two percent isn't enough?
16:39
Speaker 3: Question what is enough?
16:41
Speaker 2: So in a crisis, you want your portfolio to have
16:43
Speaker 2: enough that you know it saves you two degree of
16:46
Speaker 2: it works as the head when it is working, which
16:48
Speaker 2: it isn't always. But you don't want so much in
16:51
Speaker 2: the good times, remembering that the majority of times are
16:53
Speaker 2: good times. You don't want so much that it pulls
16:56
Speaker 2: your returns down too much when things are going fine.
16:58
Speaker 2: So what is the answer for I think some of
17:01
Speaker 2: the trop portfolios it ends up being.
17:03
Speaker 3: Nine ten percent.
17:03
Speaker 2: And then sometimes it goes down seven and sometimes we've
17:05
Speaker 2: got fourteen, so we tend to think maybe minimum five ish.
17:11
Speaker 7: Yeah. Well, I think the answer ied point people too
17:14
Speaker 7: is the World Gold Council's study which they did about
17:16
Speaker 7: ten years ago, which came to it concluded eight five
17:19
Speaker 7: to eight percent, which means eight percent and they and
17:23
Speaker 7: they were being a bit cautious there. The central banks,
17:25
Speaker 7: of course, are now at twenty nine percent of their reserves,
17:28
Speaker 7: so they're taking it pretty seriously. And you mentioned the
17:31
Speaker 7: good times, Well, we've had most of the times. The
17:33
Speaker 7: last twenty five years have been the good times. But
17:35
Speaker 7: gold has beaten the S and P including after dividends,
17:38
Speaker 7: and so that's into twenty six years, gold is ahead
17:41
Speaker 7: of the SMB.
17:42
Speaker 2: Still has gold been constantly anticipating the bad times?
17:45
Speaker 7: Perhaps, Well, gold doesn't have to. I think it's a
17:48
Speaker 7: bit of a bitsnoment that gold necessarily goes up all
17:50
Speaker 7: the time because of bad news. I think, you know,
17:53
Speaker 7: a very simple way to think about it, particularly in
17:56
Speaker 7: the moment, particularly post Ukraine twenty twenty two, is that
17:59
Speaker 7: gold's ordn't piece of the central bank reserves, always has been.
18:04
Speaker 7: When those reserves are growing very very quickly, the gold
18:07
Speaker 7: price is very very strong, and when those reserves have
18:10
Speaker 7: been growing more slowly or in decontracting than the goal
18:13
Speaker 7: price has been weak. And so you know, people ask
18:16
Speaker 7: them out this year, Well, you know, when they have
18:18
Speaker 7: got problems in the straight of the Moose, and the
18:21
Speaker 7: central banks who are very wealthy in that region, they've
18:24
Speaker 7: got problems right now. They need some liquidity, so they're
18:26
Speaker 7: selling gold, not all of them, but some of them.
18:28
Speaker 7: And so in the margin, there's less gold buying in
18:30
Speaker 7: twenty twenty six and there was in twenty twenty five. Yeah,
18:33
Speaker 7: and that could be one of the reasons. There's also
18:36
Speaker 7: the unwinding of speculation, but that's all another story. But
18:38
Speaker 7: I think you know, the bottom line is, you know,
18:40
Speaker 7: what's the right weight of gold in the portfolio? My
18:43
Speaker 7: view would probably be five percent of you bearish gold
18:46
Speaker 7: and twenty percent of your bullish gold.
18:48
Speaker 2: Have a view, okay, have of you and take a
18:50
Speaker 2: bit no less than five, all right, So with that
18:52
Speaker 2: in mind, With that in mind, what about boitcoin.
18:56
Speaker 7: Well, there's a question, and I have to have to
19:00
Speaker 7: my bold index because I couldn't possibly know the answer intuitively,
19:04
Speaker 7: I would have to go and deliver the financial mass,
19:06
Speaker 7: and if you do some volatility I mean interested, I
19:09
Speaker 7: mean the bark is, do you'd use volatility to do allocation?
19:13
Speaker 7: It's part of it, yeah, I mean it's an important
19:15
Speaker 7: input for a lot of people who do decide how
19:18
Speaker 7: much allocation to have to various things and cross correlations
19:23
Speaker 7: and so forth. But you're a bigcoin of gold, have
19:25
Speaker 7: low correlation high at the moment, possibly, but generally speaking
19:29
Speaker 7: of the last five ten years, that've been very low,
19:32
Speaker 7: and the volatility matching the risk rating would would come
19:36
Speaker 7: out and say about forty two percent in bitcoin about
19:39
Speaker 7: fifty eight gold. Okay, so on that basis, if you're eight,
19:42
Speaker 7: if you're eight in gold, then you probably should be
19:44
Speaker 7: six or seven in bitcoin. That might seem high to people,
19:48
Speaker 7: but the logic stacks up.
19:49
Speaker 3: I got it.
19:49
Speaker 2: Was you ever put that much into a portfolio? You
19:53
Speaker 2: ever give someone a portfolio with a percent bitcoin?
19:55
Speaker 5: So that's a really good question. So I was willing
19:58
Speaker 5: for it.
20:00
Speaker 3: You were ready. Don't say we didn't give you a
20:01
Speaker 3: prep time?
20:02
Speaker 4: No, well no, so yeah, so it is not part
20:06
Speaker 4: of our set location framework.
20:07
Speaker 5: I do have discussions.
20:09
Speaker 4: Regularly, almost less so am I said those days was
20:13
Speaker 4: clients so they're for now. So I grew with Charlie
20:18
Speaker 4: on all side, but we have not made the point
20:22
Speaker 4: of make it an investible assets as part of our
20:26
Speaker 4: set location.
20:26
Speaker 5: Framework for now.
20:27
Speaker 3: Okay, can we ask.
20:29
Speaker 7: About that because to my mind, there's not a single
20:32
Speaker 7: private bank or wealth management firm in Europe that I
20:35
Speaker 7: can identify that is publicly allocated to bitcoin on the
20:39
Speaker 7: discretionary basis. Not one firm that's it might be the
20:43
Speaker 7: execution only desks might have taken client orders, but not
20:46
Speaker 7: one single firm. And and then there must be in
20:48
Speaker 7: it because we speak to people who are really bulleted
20:50
Speaker 7: and you really like it, who with senior roles of
20:52
Speaker 7: these firms and they get blocked by the system. What
20:55
Speaker 7: is the influence, sorry to take over? What is the
20:59
Speaker 7: influen It's of the system on allocating to Bigoin to.
21:03
Speaker 4: Your point, I think on the one end, clients are
21:06
Speaker 4: less constrained, right, so think family offices allocations have happened, right,
21:11
Speaker 4: They've happened already, and and already the discussion usually where
21:14
Speaker 4: I'm quite often out of my debt is the real
21:17
Speaker 4: crypto allocation versus CUBI antf Right. Uh, this is really
21:21
Speaker 4: to me the kind of a deselling factor of those families.
21:24
Speaker 5: Some people are actually really into it.
21:26
Speaker 4: Uh, which is fine because if you actually go to
21:29
Speaker 4: the actual logic of crypto, you should actually go full
21:32
Speaker 4: speed right on the thing.
21:34
Speaker 6: That's a that's a difference between owning your physical gold
21:37
Speaker 6: and holding ant called the same sort of.
21:41
Speaker 5: The same, same story. I agree, except that the world
21:43
Speaker 5: think that I did spend time on uh.
21:47
Speaker 4: Gets complicated readily quick on the actual thing, whereas uh, yeah,
21:54
Speaker 4: I think you have a point on like you know,
21:56
Speaker 4: you move to more retail investing. I think a lot
22:00
Speaker 4: of us are watching a lot of bit the environment
22:02
Speaker 4: and what's the spirit in terms of having a recommendation
22:06
Speaker 4: on digital assets, which I think I said that we've
22:08
Speaker 4: seen very varied.
22:12
Speaker 5: Behavior on that spirit. So I do think that T
22:16
Speaker 5: is starting a load it.
22:17
Speaker 2: Let's pick up on this idea of the next gen
22:21
Speaker 2: client wanting something different to the older client, and exposure
22:24
Speaker 2: to digital assets is part of that. So I would
22:27
Speaker 2: assume that everything that you worry about, no private banks,
22:30
Speaker 2: et cetera providing it over time. If this is what
22:32
Speaker 2: the next gen client wants, this is what they're going
22:34
Speaker 2: to get. Right at some point, someone's going to override
22:36
Speaker 2: that system and make sure that everyone can put an
22:39
Speaker 2: allocation into digital assets one way or another.
22:42
Speaker 3: So that's one thing that we know that they want,
22:44
Speaker 3: or we hear a lot that they want.
22:45
Speaker 2: And the other thing we hear a lot about it
22:46
Speaker 2: is what you mentioned earlier, which is about them wanting
22:49
Speaker 2: a portfolio that has some social purpose or has some
22:52
Speaker 2: impact to it, or they want to have a ESG
22:55
Speaker 2: overlay that maybe older clients don't necessarily have. And we
22:58
Speaker 2: hear this an awful lot of John and I talk
23:00
Speaker 2: about it a lot on the podcast. But in the end,
23:03
Speaker 2: when people say what does your client want, what the
23:05
Speaker 2: client really want in the end just to make more money,
23:07
Speaker 2: is to protect the money.
23:07
Speaker 3: That they have and make more of it CPS.
23:10
Speaker 2: In the end, while you have all these conversations and
23:12
Speaker 2: I know that wealth management is becoming a much more
23:14
Speaker 2: empathetic business than.
23:15
Speaker 3: Perhaps it used to be.
23:16
Speaker 2: A client empathy with your client being a big deal,
23:19
Speaker 2: is it really the case in the end that the
23:22
Speaker 2: new generation of clients is prepared to give up return
23:26
Speaker 2: in return for social purpose or impact.
23:30
Speaker 5: Wow, great question. I think it depends a little bit.
23:33
Speaker 4: There's clear that we're facing more questioning more dialogue on
23:41
Speaker 4: the impact of capital beyond returns. I think that that's true,
23:45
Speaker 4: and from where I see it, I think, you know,
23:48
Speaker 4: we're active from Asia to year Africa at least, it's
23:53
Speaker 4: a relatively common theme takes different shapes and questions. But
23:57
Speaker 4: I think next gen, as in common across geographic to
24:01
Speaker 4: question a little bit more the impact of capital when
24:03
Speaker 4: it comes to.
24:06
Speaker 5: Looking at returns.
24:07
Speaker 4: So the way you think about it is to have
24:08
Speaker 4: actually benchmark for instance, which are the same. We don't
24:11
Speaker 4: adapt the benchmark and perform whatever the way. So I
24:15
Speaker 4: think that's usually the trade off, and this is where
24:18
Speaker 4: you end up back to purpose having not really new
24:22
Speaker 4: discussions frankly, in terms of do you actually bias your
24:25
Speaker 4: actions towards capital with impact or do you maximize return
24:30
Speaker 4: to actually have more philanthropy going on and that well
24:34
Speaker 4: helping if you're not without the return or with the return,
24:37
Speaker 4: but with the capital and no return expectation for pilanthropy
24:41
Speaker 4: and these kind of actions.
24:43
Speaker 5: I think right now.
24:45
Speaker 4: The topic is really more about understanding our processes and
24:49
Speaker 4: what do we take into account, you know, do we
24:53
Speaker 4: have ESG integration, how do we look at the impact
24:56
Speaker 4: of capital of companies we're investing into. It's difficult quantify
25:00
Speaker 4: the trade off, which is why again we're not using
25:03
Speaker 4: sand benchmarks for everything. I think where you do see
25:06
Speaker 4: difference probably in prict markets where you have pure impact investing,
25:09
Speaker 4: which really comes with spell those first, that's different, like
25:13
Speaker 4: you know, you go articule line type spirit. But further
25:17
Speaker 4: actually in pride market that's probably the closest expression, and
25:21
Speaker 4: we do have more queries on that. Interesting, at the beginning,
25:24
Speaker 4: it's clearly stated its impact first.
25:26
Speaker 3: Yeah. Yeah, and you may get low returns and can
25:29
Speaker 3: accept that.
25:31
Speaker 7: Yes.
25:31
Speaker 2: Interesting, don We've talked about this a lot along the way,
25:33
Speaker 2: and we keep seeing surveys, don't we showing that people
25:36
Speaker 2: are very very keen on the purpose of their investments
25:40
Speaker 2: until they see themselves losing money.
25:42
Speaker 6: Yeah, I mean I think you are an average person
25:45
Speaker 6: feels like that because the wasn't the case, then we
25:48
Speaker 6: wodn't constantly have bubbles, because you know, in bubbles are
25:51
Speaker 6: just people chasing the money regard let's say what the
25:54
Speaker 6: bubble is and and and I think it's absolutely fine
25:58
Speaker 6: to you should have your own lines about what you
26:01
Speaker 6: invest in. I think that people need to think very
26:04
Speaker 6: hard about what those are low like lost of people.
26:07
Speaker 6: For example, you know, the obvious one is tobacco. Lots
26:09
Speaker 6: of people won't invest in tobacco because it's often had
26:12
Speaker 6: to see any kind of upside from providing you know,
26:15
Speaker 6: that kind of product. But at the same time, every
26:18
Speaker 6: other kind of overlay comes with trade offs. You can't
26:24
Speaker 6: just turn around and say that, well, I'm not going
26:26
Speaker 6: to invest in an oil major, because they you know,
26:29
Speaker 6: pull oil out of the ground and it gets burned
26:31
Speaker 6: in cars, and then you know, we'll are you can
26:34
Speaker 6: give up driving yourself partically if you'll Arguably people who
26:38
Speaker 6: are using these services at this level will be fairly
26:43
Speaker 6: wealthy and presumably consumers of fossil fuels and things like
26:46
Speaker 6: that themselves. So I tend to think is as a
26:50
Speaker 6: luxury item and it's a nice to have if that's
26:53
Speaker 6: something you want. But if if there was an obvious
26:57
Speaker 6: way kind of detracting from the most people would probably
27:02
Speaker 6: thank you all.
27:03
Speaker 2: And al Durian jury is probably out on what the
27:06
Speaker 2: next Jay client really wants. That was the first portion
27:11
Speaker 2: of our special broadcast on the Next Generation of Wealth Management.
27:14
Speaker 2: Next week we'll bring you more from that panel.
27:18
Speaker 3: Thanks for listening to this.
27:19
Speaker 2: Week's Maren Talk to Your Money. If you like our show,
27:21
Speaker 2: rate review, and subscribe wherever you listen to podcasts also
27:24
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27:26
Speaker 2: at marins w and John Underscore Stepic. This episode was
27:29
Speaker 2: produced by Semisadi and Moses and sound designed by Blake
27:32
Speaker 2: Maple's and Aaron Casper. Questions and comments on this show
27:35
Speaker 2: and all our shows are always welcome. Our show email
27:37
Speaker 2: is Merren Money at Bloomberg dot net