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Kristen Bitterly Michell on Wealth Management · Masters in Business

0:00
Speaker 1: M This is Mesters in Business with Very Results on
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Speaker 1: Bloomberg Radio. This week on the podcast, I have an
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Speaker 1: extra special guest. Her name is Kristin Biddoly Michelle. She
0:14
Speaker 1: is head of North America Investments for City Global Wealth,
0:19
Speaker 1: which is a giant wealth management arm of the giant
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Speaker 1: City Bank. They run over eight hundred billion dollars in
0:27
Speaker 1: client assets, and Kristen's group, the North American Group, is
0:32
Speaker 1: responsible for about half of the revenue that that massive
0:36
Speaker 1: organization generates. She really has an incredible background in everything
0:42
Speaker 1: from capital markets to derivatives to wealth management. And I
0:46
Speaker 1: found this to be an absolutely fascinating conversation covering everything
0:51
Speaker 1: from risk to inflation to how to manage markets and
0:57
Speaker 1: how to manage investments when market show a lot of
1:00
Speaker 1: volatility and everybody starts to get a little nervous. I
1:04
Speaker 1: thought this was quite fascinating, and I think you will
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Speaker 1: also with no further ado, my conversation with City Global Wealth.
1:12
Speaker 1: Kristen Bitterly Michelle, So, you have really very interesting background.
1:18
Speaker 1: You've been involved with capital markets for your entire career.
1:22
Speaker 1: What led you to this area. It's really interesting because
1:26
Speaker 1: I'm not someone that you would think would be the
1:27
Speaker 1: typical profile to end up in capital markets or or
1:31
Speaker 1: sales and trading. I'm from a very small town in
1:34
Speaker 1: the middle of Pennsylvania. It's a town of about four
1:37
Speaker 1: thousand people. So exposure to markets or investment banking, or
1:41
Speaker 1: any of the careers in finance was not something that
1:44
Speaker 1: you really envisioned. And so coming out of school, I
1:47
Speaker 1: studied economics and Spanish literature, and I applied to a
1:53
Speaker 1: program that actually targeted liberal arts majors. It was at
1:56
Speaker 1: Bank one at the time. It was called the First
1:59
Speaker 1: Scholars Program AM, and they targeted liberal arts majors, and
2:02
Speaker 1: the whole concept of it was, why don't we take
2:04
Speaker 1: liberal arts majors, give them on the job training, give
2:07
Speaker 1: them exposure to a variety of different areas of banking
2:10
Speaker 1: and finance. And so this gave me exposure to everything
2:14
Speaker 1: from investment banking to retail looking at like checking account
2:18
Speaker 1: campaigns like how do you get more assets in the door?
2:21
Speaker 1: To credit risk, and ultimately, to make a very long
2:24
Speaker 1: story short, I fell in love with derivatives. So derivatives
2:28
Speaker 1: were a part where I was very intimidated. I wasn't
2:31
Speaker 1: that typical person that did a number of you know
2:33
Speaker 1: internships during the summer had that with no No, I
2:39
Speaker 1: was econ and kind of geeky. I love statistics, I
2:42
Speaker 1: loved math, but really I was going to go down
2:45
Speaker 1: that literature route more than anything else and and study
2:48
Speaker 1: Spanish literature. And so when I arrived and got this
2:51
Speaker 1: exposure and on the job training, I really challenged myself
2:55
Speaker 1: to do the thing that I thought was going to
2:56
Speaker 1: be the scariest, and so derivatives at the time seemed
2:59
Speaker 1: like the scariest, the scariest area, and so I said,
3:03
Speaker 1: all right, it's six months, let's see, let's see how
3:06
Speaker 1: this goes. And so it was within the corporate equity
3:09
Speaker 1: Derivatives team. I was very lucky to have amazing mentors,
3:15
Speaker 1: amazing people around me who really taught me about the business,
3:18
Speaker 1: taught me about markets. And once I started making that
3:21
Speaker 1: translation in my mind that it's just a different language,
3:24
Speaker 1: it's different vernacular. Like when you think of derivatives, it's
3:27
Speaker 1: like statistics, right, if you have a base foundation in statistics,
3:31
Speaker 1: it's just translating those different concepts to a new language.
3:34
Speaker 1: I very quickly fell in love with it. I I
3:36
Speaker 1: fell in love with equity derivatives. I thought they were
3:38
Speaker 1: amazing building blocks and a really creative part. And it
3:42
Speaker 1: was this combination of being, like I said, kind of
3:44
Speaker 1: geeky kind of quantity, but then being client facing. And
3:48
Speaker 1: so that was really kind of the early formation where
3:50
Speaker 1: I'm like, this is the area where I want to be.
3:52
Speaker 1: I want to be client facing, I want to help
3:54
Speaker 1: client solve problems. But having this very creative, almost modular
3:58
Speaker 1: part in terms of designing solutions and structuring solutions I loved.
4:03
Speaker 1: So let's talk exactly about that at City in two
4:08
Speaker 1: thousand and seven fantastic time, and you take over as
4:12
Speaker 1: head of structured solutions. Tell us a little bit about
4:15
Speaker 1: what that job entailed under normal circumstances, and then we'll
4:19
Speaker 1: talk about the couple of years that followed. Sure, so
4:22
Speaker 1: I'll tell you a little bit about how I came
4:24
Speaker 1: to City. So I spent a long time in markets,
4:28
Speaker 1: Like I said, big focus on derivatives, both on the
4:30
Speaker 1: sales as well as structuring side. I covered corporate clients,
4:34
Speaker 1: institutional clients, as well as ultra high net worth and
4:37
Speaker 1: high net worth clients. At the time when I started
4:39
Speaker 1: really focusing in that part of the industry, a lot
4:42
Speaker 1: of those corporate equity derivative teams. They covered both, they
4:45
Speaker 1: covered individuals as well as as well as the corporations.
4:49
Speaker 1: And so throughout that journey and covering different regions, different
4:52
Speaker 1: types of clients, I found that with the high net
4:55
Speaker 1: worth ultra highnetworth clients you developed a much stronger relationship.
4:59
Speaker 1: So this was a part of the market that it
5:03
Speaker 1: really challenged your own understanding of these strategies because these
5:07
Speaker 1: were clients that some of them were very sophisticated when
5:11
Speaker 1: it came to financial products. Some of them it was
5:13
Speaker 1: their first experience. They had a big liquidity event, they
5:16
Speaker 1: sold their company to another company, their company just went public,
5:19
Speaker 1: and it's the first time that they're talking about options,
5:22
Speaker 1: right and strategies to exactly to be able to hedge,
5:25
Speaker 1: maintain wealth, monetize wealth. And so this ability to either
5:29
Speaker 1: go super technical with someone who was an expert in
5:32
Speaker 1: that field, and also be able to roll it back
5:34
Speaker 1: and just explain at a very high level, you know,
5:37
Speaker 1: what is the purpose of the strategy, what is it
5:39
Speaker 1: helping you do? What could go wrong? And so ultimately,
5:42
Speaker 1: given the different types of client segments that I had covered,
5:45
Speaker 1: I made the decision that I really wanted to be
5:46
Speaker 1: in wealth management, and so two thousand seven, UM, I
5:50
Speaker 1: came over to city. My husband, UM always teases me
5:53
Speaker 1: on this point that he says, you know, aren't you,
5:55
Speaker 1: in some aspects kind of a trader? And when you
5:57
Speaker 1: think about market timing, was two thousands even the best
6:00
Speaker 1: time to make a move, um, But it ended up
6:04
Speaker 1: being a perfect time actually long term for for my career.
6:07
Speaker 1: And so coming into the city a lot of changes
6:10
Speaker 1: right on the brink of the Great Financial Crisis. And
6:13
Speaker 1: you know, the one challenge there, Berry was the fact
6:15
Speaker 1: that we were selling these these products and solutions that
6:19
Speaker 1: actually were extremely relevant given market conditions. But obviously, you know,
6:25
Speaker 1: protecting your wealth, hedging downside risk, providing liquidity, helping people
6:29
Speaker 1: navigate margin calls. But obviously it was a really challenging environment,
6:34
Speaker 1: a lot of market volatility, and anything that had the
6:37
Speaker 1: counter party of a large bank was not something that
6:41
Speaker 1: was going to go over well. So there's always risk
6:43
Speaker 1: involve with which people tend to ignore when things are
6:47
Speaker 1: pretty well, Let's say in two thousand seven, a lot
6:50
Speaker 1: of people weren't thinking about counter party risk. Tell us
6:53
Speaker 1: what it was like when everything hits the fan. In
6:56
Speaker 1: O eight oh nine, derivatives blow up, not that you
6:59
Speaker 1: were playing in the leverage, not at all. Risk management.
7:06
Speaker 1: That's a different sort of derivative than c d O CMOS,
7:09
Speaker 1: CDO squared, etcetera. You were basically doing more rational We're
7:15
Speaker 1: helping people customize their risk return profile across asset classes,
7:19
Speaker 1: is the way that I think about it. And so
7:21
Speaker 1: there's definitely a pre in post. I mean, when you
7:23
Speaker 1: look at that pre it was you know, the thought
7:26
Speaker 1: counterparty risk of a bank was solid, right, Like that
7:28
Speaker 1: was something it wasn't even questioned. I'm sure you remember
7:31
Speaker 1: this as well in terms of the bond market, whether
7:33
Speaker 1: you were looking at structured products bonds, this idea that
7:36
Speaker 1: hey it's issued by this bank, that bank, well known,
7:38
Speaker 1: diversified financial services institution. And then the interesting thing is
7:43
Speaker 1: before we really saw that the unwinding of risk, I mean,
7:47
Speaker 1: you saw credit spreads widen, right. You started to see
7:50
Speaker 1: credit spreads to sniff things out. Kind of I hate
7:53
Speaker 1: to anthropomorphous size markets, but there's a sense that some
7:57
Speaker 1: participants in the market are sniffing us out and it
8:01
Speaker 1: gets reflected in prices. You can see credit spreads widen,
8:03
Speaker 1: and it's something you people are like Wow, that's great, Right,
8:06
Speaker 1: they're willing to pay me more. Now I'm getting a
8:08
Speaker 1: higher yield on this. And so I think for a reason,
8:11
Speaker 1: looking back, you learn from every experience. But I think
8:14
Speaker 1: that's one of those one of those moments in time
8:16
Speaker 1: where you're like, if something is too good to be true,
8:19
Speaker 1: it probably is too good to be true, and questioning
8:21
Speaker 1: why something is yielding the amount that it's yielding, and
8:25
Speaker 1: so living through that experience, I mean, from a personal standpoint,
8:29
Speaker 1: it was tragic, right, Like lives were completely changed across
8:34
Speaker 1: obviously the United States, the global economy, and then you
8:37
Speaker 1: saw a lot of people that you really respected, really
8:39
Speaker 1: cared about. There is a massive amounts of layoffs, and
8:43
Speaker 1: so I think it was a very very seismic shift
8:46
Speaker 1: in terms of just what we thought finance was, what
8:48
Speaker 1: we thought sales and trading was, the stability of that
8:51
Speaker 1: type of career. And so I think from that perspective,
8:55
Speaker 1: you really realize that nothing is guaranteed. You have a
8:57
Speaker 1: lot of gratitude for being able to work in this industry,
9:01
Speaker 1: and then you also have to really make sure that
9:03
Speaker 1: people realize and again we carry this through to wealth
9:06
Speaker 1: management more broadly. If you don't understand what you're doing,
9:09
Speaker 1: you should not invest in it, to say the very least.
9:11
Speaker 1: So from there you rise to the position head of
9:15
Speaker 1: Investments for North America for City Global Wealth. It sounds
9:20
Speaker 1: similar to a c i A role Chief Investment officer role.
9:23
Speaker 1: Tell us a little bit about your current role and
9:26
Speaker 1: what it involves. Sure, I love my current role. I
9:30
Speaker 1: love leading investments for North America for City Global Wealth.
9:33
Speaker 1: This is an area where if you hear Jane Fraser speak,
9:37
Speaker 1: it's it's an area where we're heavily investing UM. As
9:40
Speaker 1: an institution, one of our key objectives is to be
9:43
Speaker 1: a global leader in wealth management, and so my mandate
9:46
Speaker 1: in leading North America is really to lead the investments organization.
9:49
Speaker 1: And so that's a combination bury to your point about
9:52
Speaker 1: the c i O role in terms of what strategy,
9:55
Speaker 1: How are we advising our clients, how are we breaking
9:57
Speaker 1: down markets? So there's a strategy component to that. They're
10:00
Speaker 1: a client coverage component to that. Depending upon UM, your wealth,
10:04
Speaker 1: depending upon your objectives, who are you interacting with, whether
10:07
Speaker 1: it's an investment advisor, investment counselor, or whether it's product
10:11
Speaker 1: specialists who have deep expertise in a particular asset class
10:14
Speaker 1: or product. It's our product organization making sure that we're
10:18
Speaker 1: offering the right products and solutions, how we're analyzing what
10:22
Speaker 1: we offer to our clients, how we're differentiating that versus
10:25
Speaker 1: the competition. And the last piece of it, which I've
10:27
Speaker 1: become really passionate about over the past really kind of
10:31
Speaker 1: five to ten years of my career, is the technology
10:33
Speaker 1: and platform. So if you think about some of the
10:36
Speaker 1: trends within wealth management, it's not just about the personalization
10:40
Speaker 1: bespoke solutions, although that is something that is certainly gained
10:44
Speaker 1: um a lot of popularity and grounded and is almost
10:46
Speaker 1: becoming table stakes. But there's a big piece of it
10:49
Speaker 1: that's digitization, right and the platform and how easy is
10:52
Speaker 1: it to access your advice and put capital to work.
10:56
Speaker 1: And you can see some of the trends just from
10:58
Speaker 1: the digital world, right it and that comparison, if someone's
11:01
Speaker 1: going to do an online transaction and online trade that
11:05
Speaker 1: is almost like I use the example, it's like seamless
11:08
Speaker 1: grubhub right where you call up and like this idea
11:10
Speaker 1: of ordering a pizza right and calling a pizza place
11:15
Speaker 1: if you go on like on an app, and if
11:17
Speaker 1: that pizza place isn't open, You're going to the next one.
11:19
Speaker 1: No one's calling anymore. And so those trends within our
11:22
Speaker 1: industry as to some of those experiences that our clients
11:26
Speaker 1: want where it's contactless, right, this should be frictionless, it
11:29
Speaker 1: should be pretty easy for me to do versus where
11:32
Speaker 1: we're really adding value in terms of advice. So the platform,
11:35
Speaker 1: digital experience and technology is really really critical as well,
11:39
Speaker 1: really quite quite interesting. So you've been at City for
11:43
Speaker 1: over sixteen years. That's a long time at any one place.
11:46
Speaker 1: Tell us about what's kept you there for this long?
11:49
Speaker 1: It will be seventeen come December. Yeah, so it's been
11:53
Speaker 1: a great experience. Look, I've been very fortunate at City.
11:57
Speaker 1: I've had a lot of support, a lot of eight
12:00
Speaker 1: people around me, a lot of great mentors, right, And
12:03
Speaker 1: I think that one of the things that citied as
12:05
Speaker 1: remarkably well is really allows you to transition throughout your
12:09
Speaker 1: career in terms of exploring different areas of the business.
12:12
Speaker 1: And so while you can see that concentration and markets
12:15
Speaker 1: and sales and trading, once I started really working with
12:18
Speaker 1: our private bank in a meaningful way, I was then
12:21
Speaker 1: able to lead teams of investment counselors and investors. I
12:24
Speaker 1: ran investments for the East region. I then came back
12:27
Speaker 1: into capital markets and and got to really kind of see, Okay,
12:31
Speaker 1: how are we running this business and really setting the
12:34
Speaker 1: up this business for this client segment of family offices,
12:38
Speaker 1: ultra highnetworth, highnetworth investors. And so while you could see
12:42
Speaker 1: this common vein, it really has given me the ability
12:45
Speaker 1: to flex different muscles. And that's not just me. I
12:47
Speaker 1: mean that's something that's really really common throughout our organization.
12:51
Speaker 1: And you'll see that with a lot of people. And
12:52
Speaker 1: it doesn't have to be all within wealth management. It
12:55
Speaker 1: can be a cross lines of business. So I think
12:57
Speaker 1: city and our culture is one of let's keep our
13:00
Speaker 1: good people, Let's give them opportunities, whether it's in their
13:02
Speaker 1: immediate world or outside. And then the other thing that
13:06
Speaker 1: I will say is that I think culturally it's a
13:09
Speaker 1: very flat organization. There's access to everyone's accessible. And what
13:14
Speaker 1: I've seen that's really special about our culture is even
13:18
Speaker 1: when we've had those situations where we lose people, they
13:20
Speaker 1: tend to come back. We call them boomerang um. They
13:26
Speaker 1: try something else for one to two years and then
13:28
Speaker 1: they say you know what this this place just in
13:31
Speaker 1: terms of the access, the culture, that drive to kind
13:34
Speaker 1: of grow together do stuff as a team. It feels entrepreneurial,
13:38
Speaker 1: even though we're such an old bank, right, So that's
13:41
Speaker 1: really what's kept me here. And I think now that
13:44
Speaker 1: we're embarking upon with Jane taking over at CEO, this
13:47
Speaker 1: massive focus and wealth, which is my passion as well.
13:50
Speaker 1: I am so excited for the next several years. So
13:53
Speaker 1: let me make sure I understand the path that led
13:55
Speaker 1: you to City. You were at Bank one, yeah, right,
13:58
Speaker 1: and if I recall correct, they were required by JP Morgan,
14:03
Speaker 1: So that's how you ended up at JP Morgan. Then
14:06
Speaker 1: Credit Swiss, that's right, what led you to go from
14:09
Speaker 1: Credit Swiss to City. So each part of my career,
14:13
Speaker 1: I would say, is it's something I learned a lot.
14:16
Speaker 1: I experienced a lot um so it's like different building blocks.
14:19
Speaker 1: But the Bank one JP Morgan days, that was out
14:22
Speaker 1: in Chicago, So I worked out in Chicago. That was when.
14:26
Speaker 1: It's a very fun town. I have a soft spot
14:28
Speaker 1: for Chicago. The food. We could talk about the food first.
14:31
Speaker 1: I'm in Chicago every year for Thanksgiving, so it's Turkey
14:36
Speaker 1: is just where we start. Then it's yeah, we gotta yeah,
14:39
Speaker 1: we definitely need to get into pizza. I'm a Luma
14:42
Speaker 1: Natis girl. I don't know how i could go Mill
14:44
Speaker 1: Natis or Eduardo's. I'm very I'm very New York, open
14:48
Speaker 1: mind people, opportunity, there we go. But so in Chicago,
14:52
Speaker 1: it was a really interesting time because if you remember,
14:54
Speaker 1: that's when Jamie Diamond was running bank, right, so talk
14:57
Speaker 1: about a flat organization, someone who at that moment in
15:00
Speaker 1: time was truly a rising star, and he was very accessible,
15:06
Speaker 1: spent a lot of time. I always remember him being
15:08
Speaker 1: like very client centric, very very client centric. So if
15:12
Speaker 1: it was a client of the firm, um making himself accessible,
15:15
Speaker 1: making himself available to close those transactions. And so obviously
15:19
Speaker 1: the rest is history. In terms of JPMorgan I'm a
15:24
Speaker 1: big fan. Though I'm a big fan, I know it's
15:26
Speaker 1: a compeating it's a competing bank. He's a phenomenal leader.
15:30
Speaker 1: How do you not appreciate a person who steps into
15:33
Speaker 1: that role through the takeover and just basically revitalizes the
15:37
Speaker 1: whole organization, who was a very impressive career And I
15:42
Speaker 1: admire him a lot and and everything that that he's
15:44
Speaker 1: done and so I think then like the transition in
15:47
Speaker 1: my own career. Right, So when we were going through
15:49
Speaker 1: all of those transitions with JP Morgan acquiring Bank One,
15:53
Speaker 1: you know, one of the downsides to that talking about
15:55
Speaker 1: you know, our our fondness of the city of Chicago
15:58
Speaker 1: is a lot of jobs moved to New York, Right,
16:00
Speaker 1: So a lot of UM what was kind of that
16:03
Speaker 1: big bank that was like one of the last banks
16:05
Speaker 1: in Chicago and trading floors and things like that. I'm
16:09
Speaker 1: talking about diversified financial services. Obviously we weren't going to
16:12
Speaker 1: have two of everything, and we we had to to
16:14
Speaker 1: move that to New York. And so with that experience
16:17
Speaker 1: moving to New York, I did move to to credit
16:19
Speaker 1: suite and really that was to flex a slightly different
16:22
Speaker 1: muscle in the job. There was building out the Latin
16:25
Speaker 1: American business UM selling derivatives, structured products UM to Latin
16:32
Speaker 1: American UM banks and broker dealer. So let me stop
16:35
Speaker 1: you right there. You have a background undergraduate your economics
16:40
Speaker 1: degree from Notre Dame, but you were dual major Spanish
16:44
Speaker 1: language and literature degree. How useful was that in Latin America? Like,
16:49
Speaker 1: how did you end up in finance Spanish language and literature.
16:53
Speaker 1: It was incredibly useful and it's still useful to this day.
16:56
Speaker 1: So I am a fluent Spanish speaker. I lived in Spain,
16:59
Speaker 1: I lived in Mexico, my husband's from Mexico. Um so
17:03
Speaker 1: I speak Spanish and my personal life, I've I've used
17:06
Speaker 1: it in my professional life, and so when I was
17:09
Speaker 1: covering Latin America, I will say it was a competitive
17:12
Speaker 1: advantage in which everybody speaks English, but you show up
17:15
Speaker 1: speaking the local language. I have to think that's well received.
17:19
Speaker 1: It is well received, and I think Americans have have
17:23
Speaker 1: a reputation for not being multi lingual, for not speaking
17:26
Speaker 1: another language, and you know, working at a global bank
17:29
Speaker 1: like city where we're constantly interacting with people from around
17:32
Speaker 1: the globe, and you see how many other languages are
17:34
Speaker 1: our colleagues speak. But at that moment in time, really
17:37
Speaker 1: kind of focusing on Latin America and then going in region,
17:41
Speaker 1: going down to Miami, being able to have meetings in Spanish.
17:44
Speaker 1: And one thing that I did have to learn though,
17:46
Speaker 1: is I so while I was fluent in Spanish, I
17:49
Speaker 1: wasn't fluent in let's call it financial language. And so
17:54
Speaker 1: you start to learn things like well, so, how do
17:56
Speaker 1: you say call option? How do you say so? As
17:58
Speaker 1: I was like chating with different people are communicating with
18:01
Speaker 1: different people on on Bloomberg, let's say I would, then
18:05
Speaker 1: you know what word are they saying? What does that
18:06
Speaker 1: mean in terms of financial slang. So it was really
18:09
Speaker 1: fun because it developed that part of my language skills.
18:12
Speaker 1: But most importantly it was great because, like the client
18:16
Speaker 1: base was different, their risk appetite was different. And one
18:18
Speaker 1: of the things that I learned is, you know, the
18:20
Speaker 1: difference when you look at a US average let's say
18:23
Speaker 1: wealth client versus someone who grew up in Latin America.
18:26
Speaker 1: Someone who grew up in Latin America has and I'm
18:29
Speaker 1: just saying on average, right, this isn't a generalization, but
18:32
Speaker 1: they have a higher risk tolerance, they've seen hyper inflationary environments, um,
18:37
Speaker 1: they understand currencies, and so when you think of the
18:40
Speaker 1: area that I was very passionate about in derivatives, there's
18:43
Speaker 1: a natural understanding just by growing up in an economy
18:47
Speaker 1: like that that interest rate risk matters, f X risk matters,
18:51
Speaker 1: commodity risk matters, and so inflation really can impact, right,
18:57
Speaker 1: can severely impact you were net worth, and so it
19:01
Speaker 1: was almost like this client base grew up with a
19:03
Speaker 1: natural understanding of derivatives and markets, even though maybe they
19:07
Speaker 1: didn't recognize that it was derivatives. But there is such
19:10
Speaker 1: an easy and it was very facile because of what
19:13
Speaker 1: they lived through. So it was definitely an advantage. But
19:16
Speaker 1: then when I ran capital markets UM in North America
19:19
Speaker 1: and Latin America. UM, you can ask many of my
19:22
Speaker 1: colleagues if the dominant language is Spanish, we have meetings
19:25
Speaker 1: in Spanish if it's a one on one meeting, and
19:27
Speaker 1: you find you know, people's personalities can be different in
19:30
Speaker 1: different languages. Their sense of humor, for sure, can be different.
19:34
Speaker 1: And so it's been a great experience. So let me
19:37
Speaker 1: flip that on its head. The concept of being more
19:40
Speaker 1: risk embracing, more aware of inflation, currencies, etcetera. Here in
19:45
Speaker 1: the US, how complacent are we because the dollar is
19:49
Speaker 1: the reserve currency of the world. We don't think about currencies.
19:53
Speaker 1: We don't usually think about inflation, except since the pandemic.
19:58
Speaker 1: I haven't thought about it int years. It was a
20:00
Speaker 1: little spike pre financial crisis, but for the most part
20:03
Speaker 1: it's been a deflationary environment. How does working in North
20:08
Speaker 1: America with a client base that doesn't have those same
20:14
Speaker 1: sort of sensitivities. How different is that than Latin America.
20:17
Speaker 1: So I would say there's a couple of things that
20:19
Speaker 1: are really important from a and i'll say US perspective, right,
20:23
Speaker 1: So from a US perspective, um, how you hold your
20:27
Speaker 1: assets is just as important as what you hold, right,
20:30
Speaker 1: So the ship or meaning custodians of course, like in
20:34
Speaker 1: terms of of counterparty, but also thinking of like your
20:36
Speaker 1: wealth planning and the structure of your assets, um, the
20:40
Speaker 1: trusts that are available to you, how you want to
20:42
Speaker 1: think about trust and estate planning, and so within the
20:45
Speaker 1: U s there's a big focus on how do we
20:47
Speaker 1: optimize for tax efficiency too? And so what you'll notice is,
20:51
Speaker 1: you know, I think there's almost this thought process that
20:54
Speaker 1: everyone wants to be an active trader, And what you
20:56
Speaker 1: realize is, yes, there are people who are sincerely interested
20:59
Speaker 1: in gets and they follow them and they're passionate about them,
21:02
Speaker 1: but they're also really concerned about the after tax impact
21:05
Speaker 1: of what they're doing and how they're investing. So I
21:07
Speaker 1: think that's a piece of it. I think your average
21:10
Speaker 1: US investor aware of interest rates, right, So aware of
21:13
Speaker 1: interest rates in terms of what am I earning on
21:15
Speaker 1: my deposits, kind of what are the average yields an
21:18
Speaker 1: investment grade debt and understanding mortgage rates and and the
21:21
Speaker 1: impact in terms of liabilities f X is almost absent
21:25
Speaker 1: to a large degree, right for the the average investor.
21:29
Speaker 1: That being said, like I mentioned earlier, we're a global bank,
21:32
Speaker 1: and so like one of the major advantages we have
21:35
Speaker 1: is bringing those international opportunities to our clients, to investors
21:40
Speaker 1: and making sure that we're not we don't suffer from
21:42
Speaker 1: that home bias in terms of how we're allocating capital.
21:45
Speaker 1: And so that's an area where you can then combine
21:48
Speaker 1: all of these things that I've that I've talked about.
21:50
Speaker 1: You know, what regional exposures do you want? Where do
21:53
Speaker 1: you see opportunity? And do you want to take on
21:55
Speaker 1: that currency risk or do you not? And so it's
21:57
Speaker 1: a little bit of an educational process. But but it's different, right,
22:00
Speaker 1: It's different wealth regimes, it's different tax regimes, and so
22:04
Speaker 1: a lot of that will drive the decision making process
22:06
Speaker 1: as well. So let's stay in the US and stay
22:09
Speaker 1: with structures and how you hold assets. What sort of
22:13
Speaker 1: an appetite do you see amongst your clients for traditional
22:17
Speaker 1: alternatives like hedge funds, venture capital, and private equity. It's
22:22
Speaker 1: interesting because that's something that has changed substantially over the
22:26
Speaker 1: past let's say, even twelve months. It feels like, Yeah,
22:29
Speaker 1: I think there's a little bit of a shift going on,
22:32
Speaker 1: and I think you have to separate out if we
22:34
Speaker 1: think of alternatives, maybe in three different buckets, private equity
22:37
Speaker 1: and I'll put private credit in there as well, private
22:40
Speaker 1: equity credit, real estate, and then hedge funds. We've seen strong,
22:44
Speaker 1: strong demand pretty consistently for building out alternatives portfolios, particularly
22:50
Speaker 1: when it comes to opportunities with great financial sponsors on
22:53
Speaker 1: the private equity side. Looking at these long term secular trends, right,
22:58
Speaker 1: and I think one of the interesting trends that we
23:00
Speaker 1: seen year to date is really while people have been
23:03
Speaker 1: conservatively positioned, really kind of shocked by the start of
23:06
Speaker 1: the year that we've had one of the worst ones
23:08
Speaker 1: on record when we look at both equities and fixed
23:11
Speaker 1: income being in tandem, down over ten percent exactly exactly,
23:18
Speaker 1: so pretty intense start of the year. But we're clients
23:21
Speaker 1: were consistently allocating capital was in private markets, and I think,
23:25
Speaker 1: you know, part of that is this ability to take
23:27
Speaker 1: a long term view. Right, So short term we know
23:30
Speaker 1: some of these changes that we're going through, we're nervous
23:33
Speaker 1: about what the fed's trajectory is going to be. I
23:35
Speaker 1: think Friday may have cleared that up a little bit
23:37
Speaker 1: in Jackson Hole. However, you know what happens next year, right,
23:41
Speaker 1: so what happens next year? But being able to take
23:43
Speaker 1: a view out five, seven, ten years much easier. So
23:47
Speaker 1: I think that those flows into private equity in particular
23:51
Speaker 1: have remained really strong. So let's talk about that. Because
23:54
Speaker 1: a year ago, the FED wizard zero. You couldn't get
23:57
Speaker 1: yield anywhere except for play is like private equity and
24:02
Speaker 1: structured credit and structured notes, etcetera, etcetera. Now was the
24:07
Speaker 1: tenure we're recording this, it's quarter or something like that,
24:11
Speaker 1: and you can get yield. And if we want to
24:13
Speaker 1: look at Muni's on a on a tax adjusted basis
24:17
Speaker 1: digits depending upon your state, it's almost respectable. Right, So
24:22
Speaker 1: what do you think that's gonna do? And I don't
24:25
Speaker 1: like to ask people for predictions and forecasts, but you're
24:28
Speaker 1: looking at the flows and you get client questions all
24:31
Speaker 1: the time. Do you think that we've had this amazing
24:35
Speaker 1: run in structured products and private equity because yields were
24:39
Speaker 1: so low. Now that yields are higher, what might that
24:42
Speaker 1: do to demand for those products. So what we've seen
24:46
Speaker 1: is that absolutely bonds are back. So thinking through what
24:51
Speaker 1: was not in vogue last year or the year before,
24:54
Speaker 1: and this was our advice to in terms of UM
24:58
Speaker 1: advising our clients is you know, have and overweight exposure
25:01
Speaker 1: to fix income just didn't make sense over the past
25:03
Speaker 1: couple of years. You're you're talking what you mean at
25:06
Speaker 1: the end of a forty year bowl marketing bonds? You
25:08
Speaker 1: don't want to be overweight. You don't want to be overweight.
25:11
Speaker 1: And when you know of the world's government dead is
25:13
Speaker 1: negative yielding UM, you know, maybe not exactly the best,
25:17
Speaker 1: which actually created some really difficult, difficult situations for those
25:22
Speaker 1: who were retiring right and those that market was really
25:25
Speaker 1: tough because you're like, wait, I need to be overweight
25:27
Speaker 1: equities to get the returns that I'm looking for, but
25:30
Speaker 1: you know, traditional investment advice is telling me I should
25:33
Speaker 1: pull back on some of that risk. So that created
25:35
Speaker 1: some interesting dynamics. But I think this year what we're
25:38
Speaker 1: seeing is on the private equity alternative side, it's really
25:43
Speaker 1: playing that long game. So that ability to kind of
25:45
Speaker 1: see longer term and what I think is going to
25:47
Speaker 1: really have some legs and separate the noise short term
25:51
Speaker 1: is are we going to have a recession? Are we
25:52
Speaker 1: not going to have a recession. When it comes to
25:54
Speaker 1: fix income, though, we're seeing now all of a sudden,
25:57
Speaker 1: you went from a situation where your cash was yielding
25:59
Speaker 1: nothing right, and and now you're even looking at whether
26:02
Speaker 1: it's short duration, intermediate duration, you're now looking at yields
26:07
Speaker 1: that are mid single digits right on investment grade. And
26:10
Speaker 1: so what we've seen is it doesn't completely combat, right,
26:13
Speaker 1: it doesn't entirely combat that impact of inflation if we're
26:16
Speaker 1: staying around eight and a half percent. But for someone
26:19
Speaker 1: who's been sitting overweight cash and getting to marginally better outcomes.
26:23
Speaker 1: You brought up Munis, which is an excellent example as well.
26:27
Speaker 1: You're getting marginally better outcomes on a you know, pre
26:30
Speaker 1: tax equivalent basis looking at high single digits depending upon
26:34
Speaker 1: what state you reside in. And so all of a sudden,
26:37
Speaker 1: that became an easier path versus looking at some of
26:41
Speaker 1: the more traditional true risk assets. The one thing that
26:44
Speaker 1: I will mention since you brought up structured products as well,
26:47
Speaker 1: that's an interesting part of the market that if we
26:50
Speaker 1: think about the past ten years, right, So the past
26:53
Speaker 1: ten years, and this is someone who's worked in derivatives
26:55
Speaker 1: and structured products for quite some time. Um, yes, they've
26:59
Speaker 1: gained in popularity, but there was also a little bit
27:01
Speaker 1: of a concept. We're in, you know, uh long term
27:04
Speaker 1: secular bull market. Everything's going up, right, So this idea
27:07
Speaker 1: of customizing my risk return profile, Well, when you think
27:10
Speaker 1: of the components of a traditional structured note, you have,
27:14
Speaker 1: you know, a bond and then some underlying options. Now
27:17
Speaker 1: that rates are higher, that bond is giving you more value.
27:21
Speaker 1: And when we see these spikes and volatility, a lot
27:23
Speaker 1: of those strategies tend to be short volatility. And so
27:27
Speaker 1: now you've created this environment where the market environment is
27:31
Speaker 1: giving you the ability to use strategies where you can
27:34
Speaker 1: earn high single digit yields with some downside protection. And
27:39
Speaker 1: you're saying, look, if the market pulls back another ten
27:42
Speaker 1: I'll buy in at that level and in the meantime,
27:45
Speaker 1: I'm getting paid to wait. So I think even people
27:47
Speaker 1: who question those strategies historically looking at I can go
27:50
Speaker 1: into an e t F. Everything's going up. I can
27:53
Speaker 1: kind of play some of the momentum now saying, you know,
27:56
Speaker 1: where where do I really want to allocate capital? And
27:59
Speaker 1: I understand that there's a lot of risks. There's a
28:01
Speaker 1: lot of data points that we're waiting on. There's a
28:04
Speaker 1: lot that we need to wait on for earnings. And
28:06
Speaker 1: the impact that this this tightening, right, this tightening that
28:11
Speaker 1: both in terms of rate hikes and quantitative tightening is
28:13
Speaker 1: going to have on companies and consumers alike. I think
28:16
Speaker 1: it's actually opened up a really nice market and place
28:19
Speaker 1: in the portfolio for those strategies. Let's talk a little
28:23
Speaker 1: bit about inflation. You mentioned eight and a half percent
28:27
Speaker 1: inflation rate. It seems like when we look around the world,
28:31
Speaker 1: a lot of that inflation is peak and past us.
28:37
Speaker 1: We look at the Baltic dry Index and gas prices
28:40
Speaker 1: and oil prices, and go down the list of commodities
28:44
Speaker 1: that seemed to be coming down in price, home sales declining,
28:49
Speaker 1: although rents remain high. Let's start talking about where we
28:54
Speaker 1: are in this rate tightening cycle. What was your takeaway
28:58
Speaker 1: from the Jackson Hole Festival of Speeches and and Jerome Pals.
29:04
Speaker 1: It's kind of surprising that anybody thinks, um, he didn't
29:08
Speaker 1: communicate what was happening. But it seems like the market
29:12
Speaker 1: was taken a little by surprise. Don't you think there's
29:14
Speaker 1: a debate though, So I think there's this question around
29:18
Speaker 1: what we want the FED to do, what we think
29:20
Speaker 1: the Fed should do, versus what they're telling us they're
29:22
Speaker 1: going to do. Right, so I think that Chair Pal
29:26
Speaker 1: has been very clear in terms of what they're going
29:28
Speaker 1: to do over the summer months. We got that rally
29:32
Speaker 1: off the June lows, and you know, some of it
29:35
Speaker 1: was kind of peak Barrish positioning, some of the abatement,
29:39
Speaker 1: like you mentioned in terms of commodity prices in particularly
29:41
Speaker 1: with gasoline, and then Q two earnings were pretty resilient, right.
29:45
Speaker 1: We thought inflation was going to impact a lot more
29:48
Speaker 1: than it did. There are a lot of surprises in
29:50
Speaker 1: terms of top line revenue growth, and so then I
29:53
Speaker 1: think what happened was we started sneaking in these narratives
29:56
Speaker 1: the market did about you know, maybe there's a FED pivot,
29:59
Speaker 1: maybe the Fed will be devish. We didn't see that.
30:02
Speaker 1: At City Global Wealth. We did not see any signs
30:05
Speaker 1: that the FED was going to change course, and so
30:08
Speaker 1: I think in Jackson Hole, that very short, very deliberate
30:12
Speaker 1: speech was one where it was make no mistake about
30:15
Speaker 1: the fact that we are going to continue to tighten
30:18
Speaker 1: that inflation expectations will not out of control yet, but
30:22
Speaker 1: at a level of you know, two and a quarter
30:23
Speaker 1: or two and a half looking far out, we need
30:26
Speaker 1: to bring them down to two. And our job is
30:28
Speaker 1: not yet done. We need to make sure that we're
30:30
Speaker 1: taking that action. I think the other interesting thing too,
30:33
Speaker 1: that may have been one of the catalysts for the
30:36
Speaker 1: volatility that we saw on on Friday and Monday was
30:40
Speaker 1: really this lack of mentioning a soft landing. Chair Pal
30:46
Speaker 1: in his past couple of speeches and public comments always
30:50
Speaker 1: said that a soft landing was possible here that was absent.
30:53
Speaker 1: So it was much more about invoking Vulker and also
30:57
Speaker 1: just looking at this is going to create some pain,
30:59
Speaker 1: and he admitted that. So I think their trajectory is
31:02
Speaker 1: very clear through the rest of this year in terms
31:04
Speaker 1: of the tightening path that they're on. I think fifty
31:08
Speaker 1: plus seventy five plus seventy five plus whatever happens September,
31:13
Speaker 1: that's the end. Of the soft landing. He's telling you
31:17
Speaker 1: we're gonna really throttle back in order to make sure
31:20
Speaker 1: we can get the toothpaste back in the tube. But
31:23
Speaker 1: that leads to an interesting question. We're talking about narratives
31:27
Speaker 1: and what we hope there's a little bit of wishful
31:29
Speaker 1: thinking going on. But you know, my perspective has been
31:33
Speaker 1: the FED was late to start raising rates. At the
31:36
Speaker 1: very least, they should have gotten off their emergency footing sooner.
31:39
Speaker 1: It looks like now they're late to recognize the peak
31:42
Speaker 1: and inflation, and they probably don't have to do a
31:46
Speaker 1: whole lot more. Are they going to be causing unnecessary pain?
31:51
Speaker 1: Have have they already won? Can they declare victory and
31:54
Speaker 1: go home? Or are they gonna just keep pounding away? Uh?
31:57
Speaker 1: And either cause a mild recession perhaps something worse. Yeah,
32:01
Speaker 1: And I think that's one of the challenges in terms
32:03
Speaker 1: of you know, this is where economics degrees really come
32:05
Speaker 1: in handy in terms of breaking down all of these
32:08
Speaker 1: these data points. But they were very specific that their
32:12
Speaker 1: goal was, you know, headline inflation. We all talked about
32:15
Speaker 1: the demand side of the equation, the supply side, what's
32:17
Speaker 1: in their control, what's out of their control, and Chair
32:21
Speaker 1: Pal again was very very direct in terms of note,
32:24
Speaker 1: the whole thing is our mandate, right, so whether it's
32:26
Speaker 1: supply side, demand side, we need to make sure that
32:29
Speaker 1: we get this under control. So obviously we're seeing some
32:31
Speaker 1: relief in the commodity sector, but more broadly, it's you know,
32:35
Speaker 1: whether or not how quickly are we going to see
32:37
Speaker 1: that number come down? And even if it's at let's
32:40
Speaker 1: say six and a half six percent by your end,
32:42
Speaker 1: that's nowhere close right to their ultimate target. And so
32:46
Speaker 1: continuing on this path, I think the challenge that the
32:48
Speaker 1: FEDS in is when you think of tightening financial conditions,
32:52
Speaker 1: we don't see the full impact of that until out
32:55
Speaker 1: probably twelve eighteen months, right, So there is this concept
32:59
Speaker 1: of what they're doing now is not really going to
33:01
Speaker 1: flow through to everyone, both the consumer as well as
33:04
Speaker 1: corporations until several months out. And so what does that
33:07
Speaker 1: mean for consumer spending? What does that mean for all
33:10
Speaker 1: of the decisions that the consumer is making, which drives
33:14
Speaker 1: of the the U S economy? And what does it
33:16
Speaker 1: mean for corporations as they're making decisions? And so in
33:19
Speaker 1: Q two we heard a lot that recession wasn't the
33:22
Speaker 1: base case, but they're they're planning. I think it's going
33:25
Speaker 1: to be really fascinating. I think we're going to pivot
33:27
Speaker 1: from I shouldn't use that term pivot become a dirty word.
33:33
Speaker 1: I think we're going to change the dialogue from what
33:37
Speaker 1: was obsessive about the FED and debate about what they're
33:40
Speaker 1: going to do and what is the terminal FED funds rate?
33:43
Speaker 1: To now obsession about earnings. And I think we're really
33:46
Speaker 1: going to focus on where are we seeing that squeeze,
33:49
Speaker 1: where are we seeing that change in consumer spending patterns,
33:52
Speaker 1: how are companies preparing for this, and what companies are
33:55
Speaker 1: well prepared for what is going to be We say,
33:58
Speaker 1: don't fight the FED, and it's easy monetary conditions, maybe
34:02
Speaker 1: we shouldn't fight the FED when it's very clearly tighter financially.
34:05
Speaker 1: So you raise a whole bunch of really interesting points
34:08
Speaker 1: I want to pin you down on. First. Do investors
34:12
Speaker 1: pay too much attention to the FED? Do they obsess
34:15
Speaker 1: when really they should be looking past it a year out?
34:19
Speaker 1: It's hard to say that definitively right. Because interest rates
34:22
Speaker 1: are important, liquidity is important. The concept of a FED
34:24
Speaker 1: put was really important in terms of the overall directions,
34:28
Speaker 1: so it absolutely impacts the economy and markets. I think
34:32
Speaker 1: paying too much attention to the day over day moves
34:36
Speaker 1: is something and this is interesting Verry. I think this
34:38
Speaker 1: is something that we actually saw starting with COVID, once
34:41
Speaker 1: we've shifted to that work from home, stay at home
34:45
Speaker 1: and just massive spike and volatility, massive movements in the market.
34:50
Speaker 1: I think we've gotten into a little bit paying a
34:52
Speaker 1: lot of attention to day over day movements, what does
34:55
Speaker 1: this day mean? And even if we take you know,
34:57
Speaker 1: the summer months, liquidity is like people are on vacation,
35:01
Speaker 1: you know, credence to one day and really trying to
35:06
Speaker 1: take that view. It doesn't need to be out five years,
35:08
Speaker 1: but trying to take that view out several months. And
35:11
Speaker 1: so I think we're seeing a lot of investors really
35:14
Speaker 1: hanging on the word of every speech, every day, daily report.
35:17
Speaker 1: And I think on average, yep, we're going to have
35:20
Speaker 1: jobs reports that are important, We're gonna have cp I
35:22
Speaker 1: and prints that are important. But really it's the amalgamation
35:24
Speaker 1: of all of these things that's going to determine how
35:27
Speaker 1: severe the recession is and the ultimate trajectory of markets
35:30
Speaker 1: from here, going from zero percentage of strate to four
35:32
Speaker 1: percentage of st rate obviously important, but it feels like
35:36
Speaker 1: every CPI report it hits the tape and then people
35:40
Speaker 1: are already talking about the following month, where you know,
35:42
Speaker 1: in in July, it's like, is this going to be
35:44
Speaker 1: the peak? It was barely crossing the tape, and then
35:48
Speaker 1: suddenly August and September, chef, and we're going to see
35:50
Speaker 1: the same thing happen in September as soon as we
35:53
Speaker 1: get that print, people and to stop talking about October.
35:55
Speaker 1: The next question that you alluded to, which is really
35:57
Speaker 1: interesting about revenue you and profits, how solid and inflation
36:04
Speaker 1: hedge our equities. Revenues seem to be unaffected. Profits have
36:08
Speaker 1: been pretty strong, and companies have shown a pretty solid
36:12
Speaker 1: ability to pass along UH input costs to their to
36:16
Speaker 1: ultimately to the consumer. Do we should we be looking
36:19
Speaker 1: at stocks as an inflation hedge? Yeah, so I think
36:22
Speaker 1: this is to your earlier question about US investors thinking
36:27
Speaker 1: through some of these risks. Inflation really hasn't been a
36:29
Speaker 1: risk that we've had to think about for quite some time, right,
36:32
Speaker 1: so obviously absent the seventies and eighties, thinking of this
36:37
Speaker 1: level of inflation is not someone someone's had to think
36:40
Speaker 1: about and the idea of what is the real real
36:42
Speaker 1: rate of return? What is the real interest rate on this?
36:45
Speaker 1: And so if you were someone who was sitting in cash,
36:47
Speaker 1: let's say from like two thousand to two thousand ten,
36:50
Speaker 1: you were earning on a real basis about three percent
36:52
Speaker 1: per annum, not knocking it out of the park, but
36:55
Speaker 1: not terrible. And the market when essentially didn't get above
36:59
Speaker 1: two thou us until exactly And so I think that
37:04
Speaker 1: now looking at this past decade, where you've seen that
37:06
Speaker 1: impact and now you're just seeing it front and center
37:09
Speaker 1: in terms of eight and a half percent, is extreme
37:12
Speaker 1: and in terms of what that means from a spending
37:14
Speaker 1: standpoint as well as what it means from an investment standpoint.
37:17
Speaker 1: And so this becomes the question around how do I create,
37:20
Speaker 1: depending upon how I'm currently positioned, how do I create
37:23
Speaker 1: better outcomes? So if you're someone who has been hiding
37:26
Speaker 1: a little bit in cash, maybe overweight cash for not
37:29
Speaker 1: just the past two years, but the past ten years,
37:33
Speaker 1: that's that conversation. But how do we get to marginally
37:35
Speaker 1: better outcomes? How do we add things like COMMUNI bonds,
37:38
Speaker 1: how do we add things even like preferreds in terms
37:40
Speaker 1: of some of the yields that we're seeing in preferreds
37:43
Speaker 1: for investors. Because I recognize that, Barry, if we're thinking of,
37:47
Speaker 1: like what are the best hedges against inflation, well, if
37:49
Speaker 1: we go through the highest beta, it's almost like you
37:52
Speaker 1: can break it down as commodities direct commodity exposure. A
37:55
Speaker 1: lot of individual investors are not going to take that on,
37:58
Speaker 1: so then you're looking at commodity stocks. Are there opportunities
38:01
Speaker 1: within energy commodity stocks. We actually had positions within commodity
38:06
Speaker 1: stocks um for a period of time as a hedge
38:09
Speaker 1: as a portion of the portfolio, not as a directional
38:12
Speaker 1: that at all, but we we pulled back on those
38:14
Speaker 1: positions just given some of the turnover that we've seen,
38:17
Speaker 1: particularly with the giant spike from last year plus once
38:21
Speaker 1: the invasion in Ukraine started in February, hedging right like,
38:26
Speaker 1: you needed that hedging because it wasn't just impacting energy,
38:29
Speaker 1: was impacting food, it was impacting natural resources. We saw
38:33
Speaker 1: that concentrated exposure right with the the stats that came
38:37
Speaker 1: out that of the world's wheat production, and you saw
38:40
Speaker 1: these were coming out of Russia and the Ukraine. Things
38:42
Speaker 1: we never never knew before. And so getting to your
38:46
Speaker 1: question about equities, were were positioned right now? Equities absolutely
38:50
Speaker 1: can conserve um um an important part in the portfolio.
38:54
Speaker 1: But given the concerns that I have as to where
38:57
Speaker 1: the US is right now, US equities we're not pricing
39:00
Speaker 1: in a recession right now, We're not pricing in a
39:03
Speaker 1: meaningful earnings contraction or tightening financial conditions impacting companies, and
39:09
Speaker 1: so we're we're invested is in quality in um. If
39:13
Speaker 1: you look at like the Spend Aristocrats Index, you're talking
39:17
Speaker 1: about companies, not high dividend pairs, but companies that have
39:20
Speaker 1: been able to consistently grow to their dividends, consistently grow
39:23
Speaker 1: their earnings. And so looking at the yields on that
39:26
Speaker 1: around three three and a half percent, and diversification across
39:30
Speaker 1: sectors like healthcare, even info tech is in there because
39:33
Speaker 1: you know, you have some infotech companies that are now
39:35
Speaker 1: durable demand. That's the part of the market we're from
39:38
Speaker 1: an equity standpoint, we're very comfortable maintaining that exposure. So
39:43
Speaker 1: you said something there that I'm intrigued by. Do you
39:46
Speaker 1: believe markets are pricing in a recession or a market's
39:50
Speaker 1: just pricing in a slowdown of the growth, a little
39:54
Speaker 1: bit of the FED having some bite, but not necessarily
39:58
Speaker 1: causing a full blown traction. I don't think they're pricing
40:02
Speaker 1: in a recession or earnings contraction right now. I'm not
40:05
Speaker 1: saying that we're going to see substantial downside from here.
40:08
Speaker 1: There's a lot of debates right about what are we
40:10
Speaker 1: going to retest those lows? So so let's put put
40:13
Speaker 1: a little framework on what we're talking about. If people
40:15
Speaker 1: are listening to this in the future. Um, it's late
40:19
Speaker 1: in the summer in markets sold off, recovered about half
40:24
Speaker 1: of those losses, then gave a little bit of that
40:27
Speaker 1: back after Jackson Hole, so down ten or so on
40:31
Speaker 1: the SMP. Not really pricing in a hole. And when
40:35
Speaker 1: you look at those analyzes of recessionary bear markets versus
40:39
Speaker 1: non recessionary bear markets, it's a huge difference both in
40:43
Speaker 1: terms of the duration, right so you tend to see
40:47
Speaker 1: recessionary and it depends on what data points you use,
40:49
Speaker 1: but again on its duration, it's a big difference. Where
40:53
Speaker 1: you see, you know, the duration in non recessionary bear
40:57
Speaker 1: markets on average about a hundred eight days maybe max.
41:01
Speaker 1: Some of those max observations around two right, so well
41:05
Speaker 1: under well under a year where recessionary bear markets are
41:08
Speaker 1: four hundred, So that that's a that's a big difference.
41:12
Speaker 1: And also the draw downs if we're using US equities,
41:15
Speaker 1: non recessionary bear markets down around so yea, we may
41:20
Speaker 1: have done that work, but recessionary bear markets can be
41:23
Speaker 1: an excess of thirty percent and even closer to depending
41:27
Speaker 1: upon what data set you're using. So it is very
41:30
Speaker 1: different when companies are making tough decisions about where they're investing, right,
41:36
Speaker 1: and how they're investing, and how that impacts obviously wages, employment,
41:41
Speaker 1: et cetera. So what we've seen with the you know,
41:44
Speaker 1: the two negative quarters of GDP growth, a lot of
41:47
Speaker 1: people say, well, that's a technical recession, and then again
41:50
Speaker 1: all of our economic students are like, no, there's the
41:52
Speaker 1: National Buro of Economic Research and this is how it's calculated.
41:56
Speaker 1: But we're looking at that in terms of you'd have
41:59
Speaker 1: to some significant increase in the unemployment rate and you're
42:03
Speaker 1: going to have to see that earnings contraction. And so
42:06
Speaker 1: do we anticipate here's here's I'm gonna I'm gonna share
42:10
Speaker 1: some positive news, right, So that was that was very cautionary.
42:14
Speaker 1: But I think one of the positive things is we
42:17
Speaker 1: haven't had a recession that has been this anticipated either,
42:22
Speaker 1: so whether the markets pricing it in or not, consumers
42:25
Speaker 1: are planning for it, corporations are planning for it. This
42:28
Speaker 1: is not something that's coming out of left field. The
42:31
Speaker 1: FED is clear about their trajectory. So in terms of
42:34
Speaker 1: taking some of those decisions and mitigating the depth and
42:38
Speaker 1: duration of that. Recessions are painful, right, but the depth
42:42
Speaker 1: and duration of that economic pain, hopefully that can be mitigated.
42:46
Speaker 1: Let's stick with that, because that's really interesting. I'm gonna
42:49
Speaker 1: preface what I'm gonna ask you with with a caveat,
42:52
Speaker 1: so heading into there's surely we're pockets of froth. Crypto
42:58
Speaker 1: had gone, ballistic technology had exploded. Anytime the smpup. Hey,
43:05
Speaker 1: there's probably a little bit of speculation going on. But
43:10
Speaker 1: given all that, the first half of this year, the
43:14
Speaker 1: data and just the general field wasn't like consumers and
43:18
Speaker 1: companies were leaning too far out over their skis. Everybody's
43:22
Speaker 1: balance sheets were pretty clean. They had refinanced at very
43:26
Speaker 1: low rates. It looked like both the household and the
43:29
Speaker 1: business sector. Hey, if things slow down they're pretty well
43:32
Speaker 1: prepared for this, or am I oversimplified? I think you're right.
43:36
Speaker 1: I think you're absolutely right that on average, the average company,
43:41
Speaker 1: average consumer came into this year in pretty good shape. Right.
43:45
Speaker 1: Their balance sheets were very strong. I'm saying they're both
43:48
Speaker 1: across companies and consumers. They were able to take advantage
43:51
Speaker 1: of the low interest rate environment to really kind of
43:53
Speaker 1: clean up liabilities. And so I think that we came
43:57
Speaker 1: into this year prepared, um from a balance sheet perspective,
44:02
Speaker 1: not prepared for what was then going to transpire. Yeah,
44:05
Speaker 1: in terms of not only that quick movement and interest rates.
44:08
Speaker 1: Remember in January that was the story, the kind of
44:11
Speaker 1: very quick movement and interest rates, and then obviously geopolitics
44:14
Speaker 1: and Russia's war in the Ukraine um really exacerbating some
44:18
Speaker 1: of those supply shocks. And so I just think that
44:21
Speaker 1: those types of risks and the overall prospect of what
44:26
Speaker 1: that means from a recession standpoint, it's better to be
44:30
Speaker 1: in that position, right, is better to be in that position.
44:32
Speaker 1: We're coming into it from a place of strength, and
44:36
Speaker 1: you are starting to see some cracks, right, So let's
44:38
Speaker 1: talk about the cracks inventories building, right, That's that's probably
44:42
Speaker 1: from hey, we can't get anything, let's just get everything.
44:45
Speaker 1: Now we're seeing a massive inventory build. We're seeing housing
44:48
Speaker 1: starts come down. We're seeing just the time right that
44:51
Speaker 1: homes are on the market and extending. You're starting to
44:56
Speaker 1: see that. But that's also good in terms of showing
44:58
Speaker 1: some of that froth being taken out of the the
45:01
Speaker 1: economy and and some of that that slowed down. I
45:04
Speaker 1: think some of the things that we need to keep
45:06
Speaker 1: an eye on just from a the impact of the
45:10
Speaker 1: FEDS tightening is a couple of things. One, we also
45:14
Speaker 1: saw record number of credit card openings and Q one
45:17
Speaker 1: and Q two, and so some of the stats um
45:21
Speaker 1: that we've seen. Q one of this year was a
45:23
Speaker 1: record number two million new credit card issuances. And so
45:29
Speaker 1: on one hand, people like consumers are continuing to spend YEP,
45:33
Speaker 1: they're continuing to spend. We're reaching pre pandemic levels in
45:36
Speaker 1: terms of balances on credit cards. We're not going above that,
45:40
Speaker 1: we're just pre pandemic level relative to income. It's you
45:43
Speaker 1: know that always people always show you the debt, but
45:46
Speaker 1: they sometimes fail to show you what does the debt
45:49
Speaker 1: look like relative to discretionary income? That's a really good
45:52
Speaker 1: levels and a very good levels. But when you see
45:55
Speaker 1: so it's interesting because then you see these trends. Okay,
45:58
Speaker 1: we're opening more and more credit cards. Okay, interesting, how
46:01
Speaker 1: are people than spending Previously it was stimulus, right, there
46:04
Speaker 1: was stimulus fueling the economy, and now it's okay, now
46:07
Speaker 1: I'm buying on credit. That's not the end of the world, right,
46:09
Speaker 1: that is access to capital. But when we see those
46:13
Speaker 1: balances increase, and now they're increasing at higher interest rates,
46:17
Speaker 1: that's something that we want to watch and keep an
46:20
Speaker 1: eye on. And obviously in Q two a lot of
46:22
Speaker 1: financials reported and they talked about lone loss reserves very
46:25
Speaker 1: well in check, very healthy, and so I think that's
46:28
Speaker 1: a trend that we need to keep on eye on.
46:30
Speaker 1: The same thing when it comes to corporations. Right, so
46:32
Speaker 1: when we think about credit spreads in the market, and
46:36
Speaker 1: we look at high yield spreads, we look at we
46:39
Speaker 1: haven't really seen that widen out. And if that does
46:42
Speaker 1: widen out, right, it's widened a little bit buried, to
46:45
Speaker 1: be fair, but it hasn't really to this level of Okay,
46:48
Speaker 1: we're really going to see companies stretched. Those are some
46:52
Speaker 1: areas that could create some continued pain in the market.
46:55
Speaker 1: So you sit in a really unique perch, your reference
46:59
Speaker 1: to all of the new credit card openings. You at
47:03
Speaker 1: City also get, which is a giant credit card entity.
47:09
Speaker 1: You get to see delinquencies, delays, default, all all those
47:15
Speaker 1: sorts of things. How do you manage to tap into
47:19
Speaker 1: that huge amount of data that you have? Can you
47:23
Speaker 1: crunch those numbers and use it for your own benefit?
47:26
Speaker 1: Because who better than someone at one of the nation's
47:30
Speaker 1: biggest credit card issuers to look at those numbers and say, hey,
47:34
Speaker 1: what are we seeing internally before it hits BLS or
47:37
Speaker 1: commerce department. Yeah, so any data that we have obviously
47:40
Speaker 1: as a large financial yeah, large financial institution, there's obviously walls,
47:45
Speaker 1: there's data that can be shared, data that cannot be shared,
47:47
Speaker 1: and there's a lot of protection around that. However, when
47:51
Speaker 1: we look at things like like flows, right, and we
47:54
Speaker 1: can see average cash balances that our clients have, are
47:56
Speaker 1: they building cash balances? Are they taking more risk in
47:59
Speaker 1: the market? So all of those trends and insights that
48:02
Speaker 1: we get from our clients are critically important in terms
48:05
Speaker 1: of the pulse of the economy as well as the markets,
48:07
Speaker 1: and so yes, we we pay a lot of attention
48:10
Speaker 1: not only to what we think right, what we think
48:13
Speaker 1: is going to happen in the economy and markets, but
48:15
Speaker 1: those signs that we're getting from our investors, what's actually
48:18
Speaker 1: occur on our clients at large exactly, And it's a
48:21
Speaker 1: really important thing. We always think about that. On the
48:22
Speaker 1: institutional side in terms of flows, a lot of people
48:25
Speaker 1: are measuring every single day, right, But that's something that
48:28
Speaker 1: you can see within private wealth as well, and it's significant.
48:32
Speaker 1: It can move the market really interesting. So let's talk
48:35
Speaker 1: a little bit about the current environment in the past
48:38
Speaker 1: couple of years, starting with the pandemic. How did that
48:43
Speaker 1: affect clients? Did they react to the volatility? What what
48:47
Speaker 1: sort of questions did you get? So I think we
48:49
Speaker 1: could break it down into two different parts. How did
48:51
Speaker 1: it impact us and how did it impact clients? Because
48:55
Speaker 1: at that moment in time, Barry I was running our
48:57
Speaker 1: capital markets division in the America as North America, in
49:00
Speaker 1: Latin America, and I remember March, there was no thought
49:05
Speaker 1: in our mind that we were going to work from home,
49:07
Speaker 1: working on a trading floor, trading desk. This idea that
49:11
Speaker 1: you were going to somehow mobilize and be able to
49:13
Speaker 1: take an organization of dozens of people and somehow figure
49:17
Speaker 1: out how to work from home. Um. So I was
49:20
Speaker 1: one of those people that definitely left kicking and screaming,
49:23
Speaker 1: eyes like I can stay here, I can still work
49:25
Speaker 1: from here. I remember someone saying, don't worry, it'll be
49:29
Speaker 1: a week or two, you'll be back in the We
49:30
Speaker 1: all thought that, right, We we all thought that it
49:32
Speaker 1: was maybe a month, maybe three months max. And so um,
49:37
Speaker 1: but we did it right. We had to. We were
49:39
Speaker 1: doing at that moment in time at City. We had
49:41
Speaker 1: the contingency plans, we had people working on different days
49:44
Speaker 1: and continuity of business sites. And then we got the
49:47
Speaker 1: phone call that no, we need to find a way
49:49
Speaker 1: to move everyone to work from home and that that
49:53
Speaker 1: continuity that was all set up post nine eleven. I
49:56
Speaker 1: think a lot of people don't realize one of the
49:59
Speaker 1: few good things that had come out of our you know,
50:03
Speaker 1: closing of the stock markets for a week, and everybody realized, oh,
50:08
Speaker 1: we have to have a plan being in case something
50:10
Speaker 1: like this ever happens again. We have different sites exactly.
50:13
Speaker 1: So we have one in New Jersey where we can
50:15
Speaker 1: recreate and it's part of your job, right, you do
50:17
Speaker 1: the continuity of business testing, and so that was helpful.
50:21
Speaker 1: But then it was you know what, we need to
50:22
Speaker 1: have everyone work from home, and so it was um
50:26
Speaker 1: a mad rush to be able to make that happen.
50:28
Speaker 1: And I think we all learned a lot about our technology.
50:30
Speaker 1: We learned a lot about phone lines, phone lines, and
50:35
Speaker 1: and how to to make sure that every call was
50:38
Speaker 1: going to be answered because you couple not only that
50:41
Speaker 1: with one of the most volatile markets in history, and
50:44
Speaker 1: so you're like, the one thing that we can't fail
50:46
Speaker 1: to do is help our clients if they need to
50:48
Speaker 1: get out of risk, if they need to sell, we
50:50
Speaker 1: want to make sure that we're able to answer those
50:53
Speaker 1: calls and help them out. And so we were very fortunate. Um,
50:56
Speaker 1: looking back on it, I think everyone has those surreal experiences,
51:00
Speaker 1: right that you don't even know how many hours you
51:02
Speaker 1: worked or what was happening, or your kids doing virtual
51:05
Speaker 1: school next to you while you're trying to manage this,
51:08
Speaker 1: And so I think we we really helped our clients
51:11
Speaker 1: through that that period of time because this wasn't like
51:14
Speaker 1: any other market correction, right, this was a once in
51:17
Speaker 1: a hundred year pandemic down less than six weeks. You've
51:22
Speaker 1: never seen anything like that before. We never is the
51:26
Speaker 1: closest thing, and that was really more plumbing than anything.
51:29
Speaker 1: And so one of the things that we did um
51:32
Speaker 1: was we started communicating more frequently with our clients. And
51:35
Speaker 1: so our chief investment officer and our chief investment strategist
51:39
Speaker 1: we all got together and decided that this was something
51:42
Speaker 1: we need to communicate to our clients every week as
51:45
Speaker 1: to what's going on, and so we continue to do
51:47
Speaker 1: this to this day. We we published once a week
51:50
Speaker 1: breaking down what's happened in the markets, what's happened in
51:52
Speaker 1: the economy, how people should be thinking about their portfolios.
51:55
Speaker 1: And then we do a weekly webcast every Thursday say things.
52:00
Speaker 1: Some people they like to read it, some people liked
52:02
Speaker 1: the live interaction, but people were craving that information. How
52:06
Speaker 1: should I think about this? How should I think about
52:08
Speaker 1: what's next? And so that frequency of communication and having
52:12
Speaker 1: that access to information and how to think about how
52:15
Speaker 1: you should be positioned and staying the course right, because
52:18
Speaker 1: that's the most difficult challenge. And when you see those
52:21
Speaker 1: severe drawdowns human psychology and all of our heuristic biases
52:27
Speaker 1: right that come into play. As you're seeing the market tank,
52:30
Speaker 1: it is very hard to stay invested. What about the
52:33
Speaker 1: flip side of that? Starting in April, the market begins
52:37
Speaker 1: to recover and takes off. Were you getting phone calls
52:40
Speaker 1: from clients saying, Hey, what's going on? This doesn't make
52:43
Speaker 1: any sense? Everything around me is closed? How can the
52:45
Speaker 1: market be rallying? Absolutely? And then you know some of
52:48
Speaker 1: the calls that we had about adding to home builders,
52:51
Speaker 1: thinking about human behavior and how it was going to change,
52:54
Speaker 1: and I remember when we added some of those exposures
52:57
Speaker 1: to the portfolio. The knee jerk was that reaction was
52:59
Speaker 1: really you crazy, really like who's who's buying a house
53:02
Speaker 1: right now? Like we're in a pandemic, and it's like, well,
53:04
Speaker 1: actually everyone people want to get the hell out. Everyone
53:07
Speaker 1: want to get out of apartments. Everyone wants to which
53:09
Speaker 1: is so intuitive now. But we became a lot more
53:13
Speaker 1: tactical with some of our allocations. Of course we have
53:16
Speaker 1: strategic asset allocations, strategic portfolios, but to really take advantage
53:21
Speaker 1: of some of these movements because it was it was intense,
53:24
Speaker 1: right and it continues to be intense in terms of
53:26
Speaker 1: navigating these markets. And so we became a lot more
53:29
Speaker 1: nimble and a lot more opportunistic in some of our investments,
53:33
Speaker 1: and so it really increased I will say, I think
53:36
Speaker 1: one of the surprises to us was it only made
53:39
Speaker 1: our client relationship stronger. You would think that this very
53:42
Speaker 1: personal business of your constantly visiting clients, You're meeting in
53:47
Speaker 1: their homes, you get to know their families. The pandemic
53:50
Speaker 1: created a need to understand markets better, the economy better,
53:54
Speaker 1: the global economy better, all of these different dynamics, and
53:58
Speaker 1: having like a go to advise and someone who was
54:01
Speaker 1: accessible pretty much because we're all we're all working from
54:06
Speaker 1: home and living, yeah, trying to stay healthy and taking
54:10
Speaker 1: care of our families and and and so I actually
54:13
Speaker 1: think it's strengthened a lot of the relationships. Um. It
54:17
Speaker 1: was a way for us to actually when we see
54:19
Speaker 1: look at our new client acquisition statistics, when we look
54:23
Speaker 1: at our a U M growth, we actually brought in
54:25
Speaker 1: a lot of assets. And so you know, hopefully that's
54:28
Speaker 1: a testament to how we were advising our clients through
54:31
Speaker 1: that time, the frequency, the accessibility, and and their trusting
54:34
Speaker 1: us to continue to do that going forward. So you
54:37
Speaker 1: have this rally off of the lows in the pandemic.
54:41
Speaker 1: Then the calendar flips and its one. Not only does
54:44
Speaker 1: it not slow down, it accelerates. What were you hearing
54:48
Speaker 1: from clients the following year, Yeah, so was dominated by
54:52
Speaker 1: this concept of COVID defensives, COVID cyclicals, Right, who are
54:55
Speaker 1: the winners and losers when it comes to being work
54:58
Speaker 1: from home state? Yeah, you saw that whole thing of
55:02
Speaker 1: like stay at home versus leave your home. Right, So
55:05
Speaker 1: that was what really dominated, and it continued to dominate.
55:10
Speaker 1: And one of the questions that we were asking ourselves
55:12
Speaker 1: is you did see particularly within the hyper growth part
55:16
Speaker 1: of the market, right, hyper growth? And you know, I
55:19
Speaker 1: think it's unfair we tend to talk about technology very
55:21
Speaker 1: broadly as though it's you know, all one thing and
55:23
Speaker 1: all the same. It's very different and the subsectors are
55:26
Speaker 1: very different. But I think one way to slice and
55:29
Speaker 1: dice it is looking at, Okay, you have some technology
55:32
Speaker 1: companies that have durable demand, right, you can put them
55:34
Speaker 1: in that bucket of dividend growers, durable demand um quality companies.
55:40
Speaker 1: And then you have hyper growth companies that, you know,
55:43
Speaker 1: the way that their stocks trade is almost like a
55:46
Speaker 1: call option on an unknown future. Right, So just like
55:48
Speaker 1: a coll option premium is going to have a lot
55:50
Speaker 1: more volatility than you would see in a stock price,
55:53
Speaker 1: you see similar behavior. And I think the momentum that
55:56
Speaker 1: we saw in the pandemic and coming out of the pandemic,
55:59
Speaker 1: a lot of hyper growth benefited from that. And so
56:03
Speaker 1: one of the changes that we made to our portfolios
56:06
Speaker 1: probably in Q three Q four of last year, was
56:09
Speaker 1: this idea, Okay, there's going to be this shift. We're
56:11
Speaker 1: no longer going to have this dominance of COVID cyclicals,
56:14
Speaker 1: COVID defensives, and where we should be invested. But this
56:17
Speaker 1: is going to be a question of what's going to
56:19
Speaker 1: do well in a rising rate environment, how are we
56:22
Speaker 1: how do we want to be positioned in a rising
56:24
Speaker 1: rate environment? What companies can withstand inflationary pressures? Which was
56:29
Speaker 1: really our shift in our portfolios away from some of
56:32
Speaker 1: those hyper growth technology companies and then into more quality.
56:36
Speaker 1: So let's stay with that because that's really an interesting
56:39
Speaker 1: distinction heading into two. Sure, the broad market sold off
56:45
Speaker 1: and we were down twenty or so percent, but when
56:48
Speaker 1: you look at the hyper grows, when you look at
56:50
Speaker 1: the high flyers, some of these got shall lacked forty
56:53
Speaker 1: fifty six or worse. What do you do when clients
56:57
Speaker 1: call up who are sitting in those sorts of things?
57:00
Speaker 1: How do you manage that? I think finding so for
57:04
Speaker 1: for clients who are sitting in individual stocks and looking
57:08
Speaker 1: at okay, I am you know, part of that experience
57:11
Speaker 1: where these positions are down fifty six. To be fair,
57:15
Speaker 1: they had a giant run the past, had a massive
57:18
Speaker 1: run exactly, and so you look at it net net
57:20
Speaker 1: obviously that that's an important part of that equation. But
57:23
Speaker 1: I think breaking it down into are we talking about
57:25
Speaker 1: a profitable company? Are we talking about that call option
57:28
Speaker 1: on an unknown future, or are we talking about there's
57:30
Speaker 1: a clear path to profitability. I think there's a misunderstanding
57:34
Speaker 1: sometimes in the market that you know, just because something
57:36
Speaker 1: is sold off substantially, it has to go up. You know.
57:39
Speaker 1: There there's a number of analyzes out there where it
57:41
Speaker 1: talks about stocks that are trading, you know, eighty percent
57:44
Speaker 1: off their all time highs, and you really look back
57:47
Speaker 1: at it and people think that happened last year or
57:48
Speaker 1: the year before. It could have happened twenty years ago.
57:51
Speaker 1: There are still stocks that are trading significantly off. So
57:55
Speaker 1: not everything that goes down must go up, So I
57:57
Speaker 1: think it it is a function of understand ending that
58:00
Speaker 1: we are in a tightening financial conditions environment. Don't fight
58:05
Speaker 1: the FED, right, don't fight that FED, and and try
58:08
Speaker 1: to determine is this something I'm willing to hold long
58:10
Speaker 1: term because I see that path to profitability or is
58:13
Speaker 1: this something where I don't see it and we could
58:16
Speaker 1: see continued volatility or continued So that's the question about
58:19
Speaker 1: the other side of the recession. Are you buying things
58:22
Speaker 1: in two especially that you're comfortable riding up and down
58:29
Speaker 1: until we come out of whatever takes place in twenty
58:33
Speaker 1: three and twenty four precisely So at the like I,
58:35
Speaker 1: like I mentioned Q three, Q four of last year,
58:37
Speaker 1: we started to make some of these portfolio changes on
58:39
Speaker 1: the equity side. This year we came into the year
58:43
Speaker 1: UM underweight fix income like most people right anticipating UM
58:47
Speaker 1: rising rates. We added fix income exposure again quality fixingcome exposure,
58:52
Speaker 1: looking at Muni's investment grade preferred really once that tenure
58:56
Speaker 1: the tenure crossover three for the first time, that was
58:59
Speaker 1: an area where we said, all right, are we going
59:01
Speaker 1: to see peak inflation? Are we going to see peak
59:03
Speaker 1: rates in this year probably, and so we became very
59:06
Speaker 1: comfortable adding that exposure. And now when you think of
59:09
Speaker 1: what we were talking about earlier, this debate of are
59:12
Speaker 1: we going to see some resiliency here or we're going
59:14
Speaker 1: to tip over into a recession and preparing your portfolio
59:17
Speaker 1: for both of those things, I think patients is a
59:20
Speaker 1: virtue in this market, not chasing some of these rallies
59:23
Speaker 1: that we see, but being very comfortable with those exposures,
59:26
Speaker 1: both across equities, fixing come and as we were talking
59:29
Speaker 1: about earlier private markets as well, so what you're really
59:31
Speaker 1: describing our portfolios that are robust, resilient and can ride
59:36
Speaker 1: out at downtown. And when you even go back to
59:40
Speaker 1: really difficult times like the nineteen seventies and you say, okay,
59:44
Speaker 1: well what happened to large cap quality shares during that
59:47
Speaker 1: period of time? They were able to double their share prices. Right,
59:50
Speaker 1: So even when you start analyzing companies about durable demand,
59:54
Speaker 1: are acknowledging that we're going to be it doesn't mean
59:57
Speaker 1: I I view tightening financial conditions. It's very similar to
1:00:00
Speaker 1: a climbing a mountain. Right, if you have a heavier load,
1:00:02
Speaker 1: it's going to take you longer. Right, it doesn't mean
1:00:04
Speaker 1: you can't climb the mountain. That's what corporations are faced with,
1:00:07
Speaker 1: that's what consumers are faced with, and so putting your
1:00:10
Speaker 1: capital in those areas and then if we do tip
1:00:13
Speaker 1: over into that recessionary environment, that fixed income portion of
1:00:16
Speaker 1: the portfolio is going to do well. Right, So the
1:00:19
Speaker 1: anticipation in terms of raids coming down, flight to quality
1:00:23
Speaker 1: is a balance and a diversifier in the portfolio that,
1:00:27
Speaker 1: as we were talking about, previously didn't make sense when
1:00:30
Speaker 1: we were dealing with negative yielding dead but now now
1:00:33
Speaker 1: makes sense. Right, you get some ballast at three and
1:00:35
Speaker 1: a quarter three and a half that you don't really
1:00:37
Speaker 1: see it forgetting me negative when when yields are, you know,
1:00:40
Speaker 1: below one percent, how much room is there to that
1:00:43
Speaker 1: offset any sort of downs on and we saw that
1:00:46
Speaker 1: in the first half of this year. So you mentioned
1:00:49
Speaker 1: high net worth and ultra high net worth. I want
1:00:52
Speaker 1: to ask a question about family offices, which seemed to
1:00:55
Speaker 1: be sort of their own specific category of investors. Do
1:01:00
Speaker 1: they approach markets like this similarly to high net worth investors?
1:01:06
Speaker 1: How is their approach different? Tell us a little bit
1:01:10
Speaker 1: about what your experiences are with that group. Sure, So
1:01:12
Speaker 1: with family offices, I think the interesting thing is we
1:01:16
Speaker 1: try to view them as one client segment. It's not
1:01:19
Speaker 1: the case at all. So well, there's a big difference
1:01:22
Speaker 1: between a fifty million dollar office and a five million
1:01:25
Speaker 1: dollar absolutely, and and not every family office is a
1:01:28
Speaker 1: little bit different in terms of what they're dealing with,
1:01:31
Speaker 1: how the wealth was created, the existing assets. And so
1:01:35
Speaker 1: we're very fortunate we work with over a quarter of
1:01:37
Speaker 1: the world's billionaires, we have experience working with family offices.
1:01:41
Speaker 1: We actually have a dedicated global family office team, and
1:01:44
Speaker 1: we do a lot of research in this area and
1:01:47
Speaker 1: we provide a lot of information both in terms of
1:01:49
Speaker 1: networking opportunities for family offices as well as family offices
1:01:53
Speaker 1: recognizing kind of their own benchmarking, right, so data around
1:01:56
Speaker 1: what are other family offices doing, how are they set up,
1:01:59
Speaker 1: what is they're staffing, what are the roles of the
1:02:01
Speaker 1: different people on on staff, and so um. We spend
1:02:05
Speaker 1: a lot of time with this client segment. With the
1:02:08
Speaker 1: acknowledgment that family offices are markedly different. I think it
1:02:11
Speaker 1: all goes back to the size, as you mentioned, right,
1:02:14
Speaker 1: So the size and amount of capital can greatly change
1:02:17
Speaker 1: the way that the family office is structured. And then
1:02:20
Speaker 1: it's also how the wealth was generated. Sometimes it's within
1:02:24
Speaker 1: our industry. Sometimes it was within hedge funds, for example,
1:02:28
Speaker 1: whether there's an asset that's a non negotiable, we're not
1:02:31
Speaker 1: selling this asset. So someone who started an amazing company
1:02:36
Speaker 1: right still is on the board, owns a big chunk
1:02:38
Speaker 1: of their wealth and a concentrated stock position, and then
1:02:41
Speaker 1: it's like, what are we doing around that? Right? Because
1:02:43
Speaker 1: we're not touching this, I still remain active in the company.
1:02:47
Speaker 1: And so I would say each family office is different.
1:02:51
Speaker 1: We work with institutional family offices that tend to, you know,
1:02:54
Speaker 1: trade more actively. They're looking for opportunities that are very
1:02:58
Speaker 1: similar to our institution client base. We we partner with
1:03:02
Speaker 1: other family offices exactly what we're talking about, right, So,
1:03:05
Speaker 1: how should we think about liquidity, how should we think
1:03:07
Speaker 1: about the markets? No asset classes off limits? And then
1:03:11
Speaker 1: you know, there's there's certain family offices that we're seeing
1:03:13
Speaker 1: nowadays especially that have very precise mandates right where you
1:03:17
Speaker 1: see where you see mandates that are heavily weighted towards
1:03:20
Speaker 1: private markets, mandates that are heavily weighted towards sustainable investing
1:03:24
Speaker 1: or impact investing. So that's something that's really come out
1:03:27
Speaker 1: over the past several years where the mandate is not
1:03:30
Speaker 1: just about investments and asset classes, but actually thinking through
1:03:34
Speaker 1: the full journey of the principle and what they want
1:03:37
Speaker 1: to do, both from an investment standpoint as well as
1:03:39
Speaker 1: a philanthropic standpoint reflecting their values. So let's I'm glad
1:03:42
Speaker 1: you brought that up, because we haven't talked about that.
1:03:45
Speaker 1: There's been a lot of political pushback to E s
1:03:48
Speaker 1: G and that's sort of investing, but it sounds like
1:03:52
Speaker 1: the investors themselves, at least a portion of them, are
1:03:55
Speaker 1: asking for that. How do you balance the two or
1:03:59
Speaker 1: do you just ignore the political noise. When you look
1:04:01
Speaker 1: at the growth rates overall of sustainable investing versus just
1:04:06
Speaker 1: broad broad based wealth right and wealth growth and and
1:04:10
Speaker 1: assets coming into traditional let's say traditional investing, the anticipated
1:04:14
Speaker 1: growth rate is anywhere from three to five times higher
1:04:18
Speaker 1: and sustainable investing over the next five years. Huge, it's
1:04:21
Speaker 1: really significant. Um, we're talking about, you know, trillions of
1:04:24
Speaker 1: dollars coming into this space. And so I think the
1:04:27
Speaker 1: important thing is really from an education standpoint, right, So
1:04:31
Speaker 1: this is partially about what's happened within the industry, and
1:04:34
Speaker 1: it's partially about what is the desire of the investor.
1:04:37
Speaker 1: What's happened in the industry is a massive proliferation of products, right,
1:04:40
Speaker 1: but there is a scale, right, how we've evolved over time.
1:04:44
Speaker 1: You could say sustainable investing originally came, right, it came
1:04:47
Speaker 1: from exclusionary, I don't want to invest in certain things,
1:04:51
Speaker 1: and then it's become okay, maybe more broad based in
1:04:54
Speaker 1: terms of some of the criteria and then looking at
1:04:57
Speaker 1: really making an impact, right, so both a return financially
1:05:01
Speaker 1: and being able to measure the impact the trends that
1:05:04
Speaker 1: we're seeing in this space that are much more personalized.
1:05:07
Speaker 1: So where you see that higher kind of five times
1:05:09
Speaker 1: growth rate is really more on the line of I
1:05:12
Speaker 1: want thematic, I want things that are personalized to what
1:05:15
Speaker 1: I want to do. And it's no longer. And this
1:05:18
Speaker 1: is where a lot of people get confused. It's not
1:05:20
Speaker 1: about philanthropy, right, So philanthropy is something entirely different. This
1:05:24
Speaker 1: is about where am I investing capital that is then
1:05:27
Speaker 1: aligned to my values and it's not concessionaire. It's not
1:05:31
Speaker 1: about taking inferior returns. It's about creating that mandate and
1:05:35
Speaker 1: being very specific about it. So the ability to be
1:05:38
Speaker 1: able to customize that and personalize that is something that's
1:05:41
Speaker 1: going to be significant for wealth managers going forward. So
1:05:45
Speaker 1: last question on this topic and then we'll get to
1:05:47
Speaker 1: our favorite questions. Some of the studies I've seen have
1:05:52
Speaker 1: mentioned that when it comes to sustainable investing or impact
1:05:56
Speaker 1: investing UM, the younger generation embraces it much more wholeheartedly
1:06:02
Speaker 1: than do the boomers or or younger than them, And
1:06:06
Speaker 1: the boomers are really on the verge of a multi
1:06:09
Speaker 1: trillion dollar generational wealth transfer. Is part of that, underlying
1:06:14
Speaker 1: that big change in growth of for sustainable investing. Absolutely,
1:06:19
Speaker 1: I think there's demographics, there's trends UM. You even see
1:06:23
Speaker 1: that in gen Z Right. It's it's about passion and purpose, right,
1:06:27
Speaker 1: It's it's not just about where you're investing, but what
1:06:29
Speaker 1: is my career? Where am I working day to day? Right?
1:06:31
Speaker 1: And really finding that from a from a value perspective.
1:06:35
Speaker 1: But I think we're also a little bit too flippant
1:06:37
Speaker 1: in terms of of saying the the boomers are not
1:06:43
Speaker 1: interested in this. I think everyone's interested in it. I
1:06:46
Speaker 1: really really do. I think you know, when you think
1:06:48
Speaker 1: about who am I giving my money to write? Who
1:06:51
Speaker 1: am I giving my money to? Investing is giving your
1:06:53
Speaker 1: money to someone right? It is betting on someone else's ingenuity.
1:06:57
Speaker 1: And so having that type of thing, if I are
1:07:00
Speaker 1: going to lend money to someone you know personally or
1:07:02
Speaker 1: invest equity in someone, I would want them to be,
1:07:05
Speaker 1: you know, aligned in terms of values, make sure that
1:07:07
Speaker 1: there are you know, a good person treating their employees well,
1:07:11
Speaker 1: making you know, investments in the right in in the
1:07:14
Speaker 1: right areas, embracing things like diversity, not just from a
1:07:19
Speaker 1: diversity and inclusion standpoint, but also from diversity of thought
1:07:22
Speaker 1: and background and ideas, and so you know, when you
1:07:25
Speaker 1: think of that on a micro level and then you
1:07:27
Speaker 1: expand it to a macro level in terms of how
1:07:29
Speaker 1: you're investing, it becomes intuitive that everyone wants to do that,
1:07:33
Speaker 1: but do they have the time? Right? Like, do they
1:07:35
Speaker 1: have the time? And so that's where I do think
1:07:38
Speaker 1: there is a huge responsibility for wealth managers to filter
1:07:41
Speaker 1: through and make sure we're not labeling certain things. And
1:07:44
Speaker 1: then there's a huge opportunity for wealth managers because then
1:07:46
Speaker 1: if you're presented with that, you understand the risk mitigation factors,
1:07:51
Speaker 1: you can view this as a risk mitigant, right governance.
1:07:55
Speaker 1: Governance is a big piece of that. Right, so better
1:07:58
Speaker 1: governance is less of the sort of outcome. Absolutely, and
1:08:04
Speaker 1: so I think it's applicable to everyone. Um. I think
1:08:07
Speaker 1: there's a lot more education that has to happen within
1:08:10
Speaker 1: the space. There's a lot more personalization, a lot more
1:08:12
Speaker 1: demand for thematic investing. But this is something where it's
1:08:16
Speaker 1: a great opportunity to bridge what the investors really want.
1:08:21
Speaker 1: And also the current offerings really quite interesting. Alright, I
1:08:25
Speaker 1: know I only have you for a limited amount of time,
1:08:27
Speaker 1: so I'm going to jump to my favorite questions. I
1:08:31
Speaker 1: know you have young ones at home that you had
1:08:34
Speaker 1: to deal with during during the pandemic. What did you
1:08:37
Speaker 1: do to entertain them? What sort of things was the
1:08:40
Speaker 1: family watching on Netflix or whatever? What were we doing
1:08:43
Speaker 1: during the pandemic? I mean we did, uh. We we
1:08:47
Speaker 1: set up makeshifts like zip lines in our house. It's
1:08:50
Speaker 1: an engineering feat. Um. I have two boys, So two boys. Um,
1:08:54
Speaker 1: they're now six and eight. Okay, So at the pandemic,
1:08:57
Speaker 1: they were a little yeah, they were, they were all
1:09:00
Speaker 1: they're still young. Um, so we were trying to find
1:09:02
Speaker 1: ways to burn energy, right, Um, it was for them.
1:09:06
Speaker 1: I think it was Hopefully they'll remember this way. I
1:09:09
Speaker 1: think it was delightful for them because I travel a lot,
1:09:12
Speaker 1: so they've got used to, you know, me being at
1:09:13
Speaker 1: home cooking pancakes in the morning. Um, but what have
1:09:17
Speaker 1: we been watching? So two boys obviously are dominating my
1:09:22
Speaker 1: Netflix and any type of streaming. Uh, there's a lot
1:09:25
Speaker 1: of wild crats going on. Not even sure if you
1:09:28
Speaker 1: know this program. I have nieces and nephews. Yes, I'm familiar, Yes, yes, Um,
1:09:33
Speaker 1: and then I would say I had no idea how
1:09:35
Speaker 1: many Avenger movies there were endless, there's millions. They just
1:09:40
Speaker 1: don't stop. They don't stop. Um. Godzillas a whole franchise
1:09:44
Speaker 1: I didn't know existed. I missed this over the past
1:09:46
Speaker 1: two decades. I know it's a franchise. I haven't seen
1:09:48
Speaker 1: any of the recent ones. You can ask me anything
1:09:51
Speaker 1: about that. Um. And then any of the Star Wars Mandalorian.
1:09:56
Speaker 1: Are they too young for Star Wars? I tried, we're
1:09:59
Speaker 1: not there yet. We are into the Jurassic World. We
1:10:02
Speaker 1: got to see that in the theater. Um. So I
1:10:06
Speaker 1: you know what, I I let them lead the way.
1:10:08
Speaker 1: Someday they'll they'll get into two star Wars, I hope,
1:10:11
Speaker 1: but personally so, here's my current recommendation, which I just
1:10:15
Speaker 1: discovered and I don't know how I didn't know about
1:10:18
Speaker 1: this earlier is yellow Stone. We haven't started it yet.
1:10:23
Speaker 1: It is remarkable. So Kevin Costner, I mean, who doesn't
1:10:26
Speaker 1: love Kevin Costner? Right? Like Field of Dreams The Bodyguard.
1:10:30
Speaker 1: Do you remember the famous Whitney It was Robin Hood,
1:10:35
Speaker 1: I mean Dances with Wolves. But this is an incredible show.
1:10:39
Speaker 1: There's four seasons out there. It is like Succession meets
1:10:44
Speaker 1: I don't there's like a Succession meets the West meets
1:10:48
Speaker 1: It's worth it. Check it out. Next question, you mentioned
1:10:52
Speaker 1: some of your mentors. Tell us who helped to shape
1:10:55
Speaker 1: your career. I have been so lucky that I've had
1:10:59
Speaker 1: so many amazing mentors and people around me. I may
1:11:02
Speaker 1: flip this question a little bit, just in the sense of,
1:11:05
Speaker 1: like some early pieces of advice that have stuck with me,
1:11:08
Speaker 1: I'll mention two uh one, Um, I played tennis growing up,
1:11:13
Speaker 1: and and I had a great tennis coach in high school.
1:11:17
Speaker 1: And one of the things that she said, and I
1:11:19
Speaker 1: still remember this, this is like so vivid, and I
1:11:21
Speaker 1: tell it to myself some sometimes, because we we all
1:11:23
Speaker 1: need to to check ourselves. Is She would tell the
1:11:26
Speaker 1: story that basically went something like this, that you know,
1:11:29
Speaker 1: when you're in your twenties and thirties, you're always worrying
1:11:33
Speaker 1: about what everyone is saying about you, and then when
1:11:36
Speaker 1: you get into your forties, you realize you don't really
1:11:39
Speaker 1: care what they're saying about you. And then when you're
1:11:42
Speaker 1: in your fifties and sixties, you realize they weren't talking
1:11:44
Speaker 1: about you in the first place. And it is so true, Barry,
1:11:49
Speaker 1: it is so true. And so sometimes when you're feeling,
1:11:52
Speaker 1: you know, a little anxious, or you're wondering how something
1:11:54
Speaker 1: went or whether it was bad good, I use that also.
1:11:58
Speaker 1: I don't know if you play golf. Do you play golf?
1:11:59
Speaker 1: I play tennis. I don't play golf all right, So golf.
1:12:02
Speaker 1: I'm a terrible golfer, but I love to do it.
1:12:04
Speaker 1: And so golf I used to get really nervous playing
1:12:07
Speaker 1: with clients and playing with with other people. And then
1:12:11
Speaker 1: I realized that advice applies to golf as well, because
1:12:14
Speaker 1: everyone is so obsessed with their own game, they're not
1:12:17
Speaker 1: paying attention to your game. So there's there's numerous ways
1:12:21
Speaker 1: you can apply this. The other story that I'll tell
1:12:24
Speaker 1: really quickly, which has carried with me is um I
1:12:27
Speaker 1: went to Notre Dame undergrad. One of Notre Dames very
1:12:31
Speaker 1: long standing, very well known presidents is is a gentleman
1:12:35
Speaker 1: who passed away various years ago named Father Hesburg. So
1:12:39
Speaker 1: he was president of the university for thirty five years,
1:12:42
Speaker 1: very present, very very present. Um. He had an office
1:12:46
Speaker 1: on the thirteenth floor of the library. So for anyone
1:12:48
Speaker 1: kind of geeky you could, you could hang out with him,
1:12:51
Speaker 1: go into his office. He would give you, give you advice.
1:12:54
Speaker 1: And he had this homily during Lent, which is when
1:13:00
Speaker 1: Catholics generally you give up something for for lunch, you
1:13:02
Speaker 1: make some type of sacrifice. And so normally you people
1:13:07
Speaker 1: like to give up food. They like to they like
1:13:10
Speaker 1: to become a vegetarian for that that period of time.
1:13:12
Speaker 1: And so he would tell this story that, Um, you
1:13:16
Speaker 1: know when he thinks about Lent, you know there are
1:13:18
Speaker 1: periods of time where you know, at first he thought
1:13:20
Speaker 1: he would give up drinking. So let's give up drinking
1:13:23
Speaker 1: for Lent. That's what I'm going to do. And a
1:13:24
Speaker 1: couple of days into it, it becomes too hard. It's
1:13:27
Speaker 1: too hard. So then you know what, I'm going to
1:13:29
Speaker 1: give up smoking. I like to smoke cigars, so I'm
1:13:32
Speaker 1: going to give up smoking. But then I have a
1:13:34
Speaker 1: drink in my hand, and that cigar kind of seems
1:13:36
Speaker 1: to make sense. So that was too hard. And so
1:13:39
Speaker 1: then I'm thinking, instead of giving something up, why don't
1:13:42
Speaker 1: I do something challenging yet healthy. I'm going to start running.
1:13:46
Speaker 1: But then with all the smoking and drinking, there's no
1:13:49
Speaker 1: way I could be a runner. And so what he
1:13:51
Speaker 1: said is, you know, we spend all of this time
1:13:54
Speaker 1: thinking about like how we're making sacrifices, what we're gonna do,
1:13:57
Speaker 1: And he's like, just be kind, like be aware of
1:14:00
Speaker 1: how you're treating other people. That's probably the most important
1:14:03
Speaker 1: thing to do, not just during Lent, but during any
1:14:06
Speaker 1: time of the year. And I think that's really applicable
1:14:09
Speaker 1: to your personal life, your professional life. It's like, just
1:14:13
Speaker 1: you know, take a moment to check yourself and just
1:14:15
Speaker 1: be kind. I like it. Let's talk about books. What
1:14:18
Speaker 1: are some of your favorites and what are you reading
1:14:20
Speaker 1: right now? So I'll give you one from Spanish literature.
1:14:24
Speaker 1: Um so one of my favorite books of all time
1:14:28
Speaker 1: was written by a Spanish philosopher named Una Muno, So,
1:14:33
Speaker 1: a very famous Spanish philosopher. Uh. He wrote this book
1:14:37
Speaker 1: called San Manuelitude, which is San Manuel Saint Manuel the
1:14:42
Speaker 1: Good Murder, and it is effectively it's a really short story,
1:14:47
Speaker 1: but it is about a priest who doesn't believe in
1:14:49
Speaker 1: God and kind of the impact that he has. It's
1:14:52
Speaker 1: it's a beautiful book. It's like really challenges a lot
1:14:55
Speaker 1: of things. So that's one of my all time favorite
1:14:58
Speaker 1: parable or is it? How how it's like a parable? Yeah,
1:15:01
Speaker 1: it's like a parable. Um. And so you know, at
1:15:03
Speaker 1: face value, you think it's an entertaining story, but there's
1:15:06
Speaker 1: a lot of you know, undercurrents in it. Um. So
1:15:09
Speaker 1: anyone who has studied Spanish literature from Spain probably knows
1:15:13
Speaker 1: the author certainly and and and this book pretty well,
1:15:16
Speaker 1: um in terms of some of the things that I'm
1:15:19
Speaker 1: reading right now. So another podcast that I'm a big
1:15:23
Speaker 1: fan of. Have you listened to Dak Shepherd's podcasts Armchair Expert?
1:15:28
Speaker 1: Have you ever know? But it sounds familiar. So Dak
1:15:31
Speaker 1: Shepherd actor, comedic actor. Um, he also happened to study
1:15:36
Speaker 1: I believe anthropology at U c l A. He does
1:15:39
Speaker 1: an amazing podcast right interviews people from all different walks
1:15:43
Speaker 1: of life, um, politicians, authors, scientists, um, you name it.
1:15:49
Speaker 1: And so he had a recent guest on Anna lemke
1:15:52
Speaker 1: Um who was a psychiatrist, and she wrote this book,
1:15:55
Speaker 1: Dopamine Nation, which is I'm in the middle of that.
1:15:58
Speaker 1: It's really fascinating ing. It's kind of like the science
1:16:02
Speaker 1: of addiction, and it's not addiction in your traditional sense.
1:16:05
Speaker 1: It's like addiction to digital devices and some of the
1:16:08
Speaker 1: things that are kind of plaguing modern times right now.
1:16:11
Speaker 1: So I haven't finished it. I'm like square in the
1:16:13
Speaker 1: middle of it, and it's been a really really good read.
1:16:17
Speaker 1: And then the next one that I'm reading, which is
1:16:19
Speaker 1: great because it's short stories, is um. David Sedaris has
1:16:23
Speaker 1: a new collection it's called The Best of Me that
1:16:26
Speaker 1: is kind of vignettes from his life and some of
1:16:29
Speaker 1: his best stories that he's written in the past. So
1:16:31
Speaker 1: I like anything we can kind of get like a
1:16:32
Speaker 1: little snippet and you finish it, start to finish. He
1:16:35
Speaker 1: and I believe his sister are both hilarious, and they
1:16:38
Speaker 1: are hilarious hilarious, right, I think David Sedaris. You know
1:16:42
Speaker 1: those books, the books where you laugh out loud. I
1:16:46
Speaker 1: think you're reading like it's easy to laugh out loud
1:16:48
Speaker 1: you're in person. But when you're reading a book, someone
1:16:51
Speaker 1: who's humor comes through on a page. Insanely talented writer
1:16:56
Speaker 1: in my book, absolutely Our final two questions, what sort
1:17:00
Speaker 1: of advice would you give to a recent college grad
1:17:03
Speaker 1: who was interested in a career in either capital markets,
1:17:08
Speaker 1: derivatives or wealth management. I would say it's an amazing career,
1:17:12
Speaker 1: so I would highly recommend it. I would say, you know,
1:17:16
Speaker 1: one piece of advice if you go into it, don't
1:17:19
Speaker 1: don't exclude wealth management. I think a lot of times,
1:17:22
Speaker 1: you know the the sexier UM analyst programs and entry
1:17:26
Speaker 1: level programs, everyone historically has always focused so much on
1:17:29
Speaker 1: investment banking and sales and trading. Don't ignore wealth management.
1:17:33
Speaker 1: It's a high growth rate, and it's a It's a
1:17:35
Speaker 1: really interesting and rewarding part of the market. The other
1:17:38
Speaker 1: thing that I would say is, I think there's this
1:17:41
Speaker 1: habit that when you graduate from school and you get
1:17:46
Speaker 1: your first job, you basically have this moment you're like,
1:17:49
Speaker 1: I did it right. I've been planning for so long.
1:17:51
Speaker 1: I you know, I was building up my resume and
1:17:54
Speaker 1: high school so I would get into the right college.
1:17:56
Speaker 1: And I did well in college, and I you know,
1:17:59
Speaker 1: applied to various jobs and now I have this job,
1:18:01
Speaker 1: and like I've done it. And so we spend you know,
1:18:04
Speaker 1: the big chunk of our life planning for the next phase.
1:18:07
Speaker 1: So approaching everything as though you're always a student, never
1:18:12
Speaker 1: stop planning. Always think about that, right, Like you have
1:18:15
Speaker 1: to do a good job at what you're doing. That's
1:18:17
Speaker 1: table stakes. But having this constant it can change this
1:18:20
Speaker 1: constant plan, like what do I want to do right
1:18:22
Speaker 1: in five years. So it's a great career, it's a
1:18:25
Speaker 1: great industry. It's a growing area of our industry. But
1:18:28
Speaker 1: I think if you bring that same innovation planning drive
1:18:32
Speaker 1: to it, you'll be just amazed at where it takes you.
1:18:35
Speaker 1: And our final question, what do you know about the
1:18:38
Speaker 1: world of markets and investing today you wish you knew
1:18:43
Speaker 1: years ago when you were first getting started. So I
1:18:47
Speaker 1: mean so many things, probably so many things. I would
1:18:51
Speaker 1: say a couple of things as I've progressed in the industry,
1:18:56
Speaker 1: and some of the things that I've thought about is
1:18:59
Speaker 1: when you get very comfortable, is when you get a
1:19:02
Speaker 1: little lazy and complacent, right, So this idea that one
1:19:05
Speaker 1: something you're you're doing it and it almost becomes at
1:19:08
Speaker 1: first it's really challenging, but you find yourself in that
1:19:11
Speaker 1: environment where it's on autopilot pivot, right. So so find
1:19:15
Speaker 1: a way to either expand your responsibilities, learn something new,
1:19:18
Speaker 1: reach out to colleagues. And so there's just it's such
1:19:21
Speaker 1: a vast industry. And I think it's going back to
1:19:24
Speaker 1: my comment about always a student. We're always learning things, right,
1:19:27
Speaker 1: So I think that's one component to it. And then
1:19:30
Speaker 1: another thing that I'll share is this is something Jamie Ferreese,
1:19:33
Speaker 1: who is the former he let our Institutional Clients group.
1:19:36
Speaker 1: He as a former president of City. You know, one
1:19:39
Speaker 1: of the things that he shared with me is I
1:19:40
Speaker 1: was playing a terrible golf round with him. By the way,
1:19:43
Speaker 1: one of one of my embarrassing golf golf rounds is
1:19:48
Speaker 1: I asked him a question about, you know, just thinking
1:19:50
Speaker 1: about his success and how he really rose through the
1:19:53
Speaker 1: ranks at City, and he said, you know what, one
1:19:55
Speaker 1: of the challenges that I have is that, you know,
1:19:58
Speaker 1: you reach a certain seniority level and people don't challenge
1:20:02
Speaker 1: you anymore. Every idea that you have, everyone says is brilliant,
1:20:06
Speaker 1: and it's it's not the case. It's certainly not the case.
1:20:09
Speaker 1: It can't be the case. And so what he said
1:20:12
Speaker 1: is he's like, you know, you have to really create
1:20:13
Speaker 1: those opportunities and environments where people can challenge you. Right.
1:20:17
Speaker 1: And the second part of that is that pivoting or
1:20:22
Speaker 1: changing your mind is not a sign of weakness. It's
1:20:25
Speaker 1: actually a sign of strength. Right, So to be able
1:20:27
Speaker 1: to admit that you did something wrong or that you
1:20:30
Speaker 1: made the wrong decision, but you're going to change that
1:20:33
Speaker 1: and you have an action plan. I think we tend
1:20:35
Speaker 1: to value things like confidence and conviction, but humility is
1:20:40
Speaker 1: a virtue, and I think knowing and admitting when you're
1:20:43
Speaker 1: wrong is actually a superpower that's way underrated. I couldn't
1:20:47
Speaker 1: agree more. Um, thank you, Kristen for being so generous
1:20:51
Speaker 1: with your time. We have been speaking with Kristin Biddely Michelle,
1:20:55
Speaker 1: head of North American Investments for City Global Wealth. If
1:20:59
Speaker 1: you enjoy this conversation, well, be sure and check out
1:21:02
Speaker 1: any of the previous four hundred plus we've done over
1:21:06
Speaker 1: the past eight years. You can find those at iTunes, Spotify,
1:21:10
Speaker 1: wherever you get your favorite podcast from. We love your comments, feedback,
1:21:14
Speaker 1: end suggestions right to us at m IB podcast at
1:21:18
Speaker 1: Bloomberg dot net. Sign up from my Daily reads at
1:21:22
Speaker 1: rid Halts dot com. Follow me on Twitter at rid Halts.
1:21:26
Speaker 1: I would be remiss if I did not thank the
1:21:28
Speaker 1: crack team who helps us put these conversations together each week.
1:21:32
Speaker 1: My audio engineer is Justin Miller Atka Val Brond is
1:21:36
Speaker 1: my project director. Paris Wold is my producer. Sean Russo
1:21:41
Speaker 1: is my head of research. I'm Barry Hults. You've been
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Speaker 1: listening to Masters in Business on Bloomberg radioa