Latest / Masters in Business / BlackRock's Jaime Magyera on Wealth Management and Retirement

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BlackRock's Jaime Magyera on Wealth Management and Retirement · Masters in Business

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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. This is Masters in
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Speaker 1: Business with Barry Ritholts on Bloomberg Radio.
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Speaker 2: This week on the podcast Wow What Can I Say?
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Speaker 2: Jamie Majera is head of BlackRock's US wealth advisory business
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Speaker 2: as well as running their retirement business. Blackrock is the
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Speaker 2: twelve trillion dollar investment giant, the biggest asset manager in
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Speaker 2: the world. Jamie has been working for the firm effectively
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Speaker 2: since two thousand and one, where she began at Merrill
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Speaker 2: Lynch Investment Managers, which was merged with Blackrock in six
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Speaker 2: She's risen through the ranks and has really seen every
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Speaker 2: aspect of the wealth management and product services, everything from
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Speaker 2: ey shares to their Alpha products to alternate lives. She
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Speaker 2: has quite a fascinating history, and there are a few
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Speaker 2: people better able to describe and discuss how the wealth
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Speaker 2: management business is changing and where it's going than her.
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Speaker 2: I found this conversation to be fascinating, and I think
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Speaker 2: you will also, with no further ado, Black Rocks head
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Speaker 2: of US wealth advisory business, Jamie Majera.
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Speaker 3: It is so good to be here.
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Speaker 2: It's so good to have you. I've been looking forward
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Speaker 2: to this conversation. But I want to before we get
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Speaker 2: up to the US Wealth advisory business and retirement business
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Speaker 2: of Black Rock, let's talk a little bit about your background.
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Speaker 2: You go to University of Pennsylvania undergraduate. Would you study?
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Speaker 2: What was the plan?
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Speaker 4: So?
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Speaker 3: I studied psychology. I went to University of Pennsylvania. My
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Speaker 3: brother went there as well. My sister went there as well,
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Speaker 3: psychology major. I didn't have a plan. I didn't know
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Speaker 3: what I wanted to do. I was that kid that
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Speaker 3: loved working. So I had, you know, any job I
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Speaker 3: had when I was growing up, I just loved. I
2:05
Speaker 3: was a babysitter, I worked at a bakery. I taught
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Speaker 3: tennis lessons. I did it all and I loved it.
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Speaker 2: Bought tennis. You still play?
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Speaker 3: I am incredible. So I don't play well or regularly
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Speaker 3: any longer. There is a story behind that, which maybe
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Speaker 3: I'll share with you. But my husband does play tennis.
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Speaker 3: He's incredible and he coaches at West Point.
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Speaker 2: Oh wow, that's amazing. Yeah, So what was the first
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Speaker 2: gig right out of pe?
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Speaker 3: So, so you know, I was a psychology major, and
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Speaker 3: I knew that I was fascinated with people and also
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Speaker 3: a distribution and I'll come on set in a second.
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Speaker 3: Because I was a music person. I loved music. I
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Speaker 3: wanted to be in the music industry. So my plan was,
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Speaker 3: do I go FBI criminal psychology or do I go
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Speaker 3: into the music industry?
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Speaker 2: Very similar?
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Speaker 3: Very similar.
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Speaker 2: And I'm not being sarcastic because you're profiling people who
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Speaker 2: perhaps have certain deviant perspectives about the world.
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Speaker 3: Yeah, I'll leave it there, okay. And so I had
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Speaker 3: to make a decision. And so I was going towards
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Speaker 3: the music industry. And so people always say, well, were
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Speaker 3: you a performer? Did you sing? Were you classically trained?
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Speaker 3: The answer is no. But I was fascinated with the
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Speaker 3: business of music and the distribution of music. And so
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Speaker 3: at that time, remember it was kind of napster, right,
3:19
Speaker 3: so like things were going.
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Speaker 2: Like late nineties, Is that what you're talking about.
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Speaker 3: Oh yeah, so we're going from CDs to digital distribution.
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Speaker 3: And I just found it to be fascinating and what
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Speaker 3: did that mean for the business and the implications for artists.
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Speaker 3: And so I had this dream I was going to
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Speaker 3: be a big time record label EZAC. I had internships,
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Speaker 3: I got a job at the time it was Sony BMG,
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Speaker 3: and then I realized as I got my offer letter
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Speaker 3: that I wasn't quite sure how I was going to,
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Speaker 3: you know, sustain my life, pay my bills. My parents
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Speaker 3: helped massively with college, but there was some student debt
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Speaker 3: that I had to pay off. And so at the time,
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Speaker 3: my brother was a financial advisor. So I called him
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Speaker 3: up and I said, hey, big bro, what do you recommend?
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Speaker 3: What should I do? And I was thinking he'd give
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Speaker 3: me some financial advice, and his advice was, get a
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Speaker 3: real job that's going to help you pay your bills
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Speaker 3: and then you can go back into music after. And
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Speaker 3: so that's kind of how I made my way into finance.
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Speaker 2: So what was the real job?
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Speaker 3: So the real job was working at Mary Lynch.
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Speaker 2: So your whole career, you've been in the same more
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Speaker 2: or less the same place. That's amazing.
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Speaker 3: Yeah, and there's this theme as you kind of look
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Speaker 3: through different things I've done throughout my career. But I
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Speaker 3: started at Meryl Investment Managers, which was the asset management
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Speaker 3: arm of Mery Lynch, and I wanted to be the
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Speaker 3: farthest thing away from markets because I had no experience.
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Speaker 3: I didn't know what the markets were. I didn't even
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Speaker 3: know what a mutual fund was and so I joined
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Speaker 3: Merrill as an analyst in their analyst program and I
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Speaker 3: was a technology project manager.
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Speaker 2: Wait, so as an analyst, did you become a CFA?
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Speaker 2: Did you go through that process or I did not?
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Speaker 3: So you get all of your Series sevens and everything else.
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Speaker 3: But I was responsible for again let's date ourselves here.
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Speaker 3: The late nineties, early two thousands. E business was the thing, right, so.
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Speaker 2: It's gonna be a big one day.
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Speaker 3: It's gonna be big one day. There's this whole thing
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Speaker 3: called the internet. And so at the time, Meryl did
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Speaker 3: not even have a website for their financial advisors.
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Speaker 2: How is that possible? I know, can you imagine thousand
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Speaker 2: and one, We're gonna We're gonna wait and see if
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Speaker 2: this thing.
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Speaker 3: Becomes takes off, Right, I have a feeling, right, so
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Speaker 3: I have a good feeling. Yes, yeah, yeah, So that's
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Speaker 3: where I started.
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Speaker 2: And so did you help build out the first set
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Speaker 2: of Merrill Lynch websites for their is this for outward
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Speaker 2: facing for clients internally for advisors and brokers or a
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Speaker 2: little bit of.
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Speaker 3: Everything for advisors and brokers? And so that's where I
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Speaker 3: first learned, you know, the role of the financial advisor
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Speaker 3: and what it is to be a financial advisor and
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Speaker 3: how you serve your clients and how hard it is
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Speaker 3: and what it is to actually sell and support and
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Speaker 3: serve those financial advisors. But that was the job. It
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Speaker 3: was translating technology speak into business and client needs really interesting.
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Speaker 2: So I know you've had multiple multiple roles at both
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Speaker 2: Marylyn Blackrock, Let's quickly walk up the ladder. So from that,
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Speaker 2: what was the next role?
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Speaker 3: So I always had this idea that I wanted to
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Speaker 3: get closer to the client, so I'd move and you'll
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Speaker 3: see for my career, I moved into roles that were
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Speaker 3: closer to clients. So from there I went into marketing,
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Speaker 3: which you really learned strategic messaging and how to simplify
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Speaker 3: and help people understand what you're doing. I then went
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Speaker 3: into our retirement business. We're there. I used to help
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Speaker 3: participants understand how to enroll in their four O one
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Speaker 3: K plant. I mean literally going around the country helping
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Speaker 3: people figure out how to save and how to invest.
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Speaker 3: And then I moved back into the wealth business, which
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Speaker 3: is where I am today. Along with leading our retirement business.
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Speaker 3: And the wealth business was the first time when I
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Speaker 3: came back into it that I actually had direct client accountability,
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Speaker 3: and that was important to me because I had done
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Speaker 3: technology and marketing and product and strategy and everything else,
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Speaker 3: but I had never been responsible for helping to solve
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Speaker 3: client problems directly.
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Speaker 2: And to clarify, you didn't just kind of move into
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Speaker 2: the world health business. You are the head of BlackRock's
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Speaker 2: US wealth advisory business. That is not like just You're
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Speaker 2: not just casually drifting into that space. You're running it.
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Speaker 2: So let's talk a little bit about how you got there. So, Maryland,
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Speaker 2: Blackrock merged in two thousand and six when the dust settled.
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Speaker 2: What was your title back then?
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Speaker 3: So back then I had moved into marketing and I
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Speaker 3: was the head of marketing for our wealth business. Then
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Speaker 3: fast forward to Blackrock acquired BGI and I shares.
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Speaker 2: I recall one of the greatest acquisitions in finance history.
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Speaker 3: And a theme for Blackrock on just structural growth and
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Speaker 3: how we view where the world is going and how
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Speaker 3: we meet the needs to be there. But at that point,
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Speaker 3: leadership had asked me to bring together all of the
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Speaker 3: retirement businesses that were legacy Blackrock Legacy, I shares Legacy BGI,
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Speaker 3: and I was part of that team.
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Speaker 2: In other words, turn into one company instead of all
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Speaker 2: these separate pies race. How long did that process take?
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Speaker 3: It was, I mean every day. It was another step
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Speaker 3: in that process. And you know, we learn over the
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Speaker 3: years how important it is to integrate and to acquire.
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Speaker 3: When you acquire, you're acquiring for capabilities, but you're acquiring
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Speaker 3: for talent and culture. And so the match between the
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Speaker 3: firms is really strong, and that helped us to integrate
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Speaker 3: even faster.
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Speaker 2: So you began this process late two thousand and six
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Speaker 2: and right around the corner comes to financial crisis. How
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Speaker 2: did that get in the way or affect this entire
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Speaker 2: post merger situation. It had to be pretty disruptive, certainly
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Speaker 2: on the client level. How did it affect what you
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Speaker 2: were doing?
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Speaker 3: Yeah, I mean, of course it was disruptive. And I
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Speaker 3: think this kind of goes back to part of the
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Speaker 3: vision with Blackrock always was and I mentioned the term
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Speaker 3: structural growth, but what does that really mean. It means
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Speaker 3: durable engines of growth, resilient engine of growth, growth that
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Speaker 3: can persist market cycles. And so even through a financial crisis,
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Speaker 3: the fact that we had our I shares ETFE, we
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Speaker 3: had fixed income, we had equity, we had cash, we
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Speaker 3: had everything you could imagine, and we had a Laddin.
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Speaker 3: Remember Aladdin, our technology platform was massively helpful to so
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Speaker 3: many firms and institutions and governments during that time, So
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Speaker 3: we had multiple ways to lead through that and help
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Speaker 3: our clients through that crisis.
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Speaker 2: Huh. Really quite fascinating. And back then, you know, it
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Speaker 2: was a couple of trillion dollars. Now black Rock is
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Speaker 2: what eleven twelve trillion dollars. That's the largest asset manager
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Speaker 2: in the world. I want to say Vanguard is probably
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Speaker 2: ten twenty percent behind. You never knit your heels, But
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Speaker 2: between Vanguard and Blackrock, these are two of the most
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Speaker 2: storied firms. And in fact, the new CEO of Vanguard
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Speaker 2: used to run a division over a great friend of mine, Sting,
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Speaker 2: which really just goes to tell I recall interviewing him
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Speaker 2: when he was at Blackrock and like, Hey, that guy's
9:56
Speaker 2: going to go somewhere one day. But what's fascinating is
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Speaker 2: just how so unbelievably successful the ieshare business became. But
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Speaker 2: people tend to think of retail investors tend to think
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Speaker 2: about Blackrock in terms of I shares, But Blackrock is
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Speaker 2: really so much more. It's not only passive beta, but
10:18
Speaker 2: there are alpha seeking strategies and as we'll discuss later,
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Speaker 2: there are alternatives. So there are a lot of things
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Speaker 2: going on at Blackrock. As head of US wealth advisory,
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Speaker 2: What is the core focus? What are the bulls that
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Speaker 2: you keep in the air all the time.
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Speaker 3: Yeah. So one of the things I love about the
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Speaker 3: wealth business generally is that it is changing so rapidly.
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Speaker 3: It's dynamic. Every day there is something new. Investor preferences
10:41
Speaker 3: are changing, there's different client segments, and as you said,
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Speaker 3: it's not just about I shares. I mean, we have
10:45
Speaker 3: so many capabilities that we can bring to bear, and
10:48
Speaker 3: so when we wake up every day, what we think
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Speaker 3: about at Blackrock is how do we make investing easier?
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Speaker 3: How do we get more people access to the capital markets?
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Speaker 3: And that used to be public markets now it's public
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Speaker 3: and private markets. But that's what we do. And when
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Speaker 3: you think about our wealth business, we do that through
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Speaker 3: financial advisors and with wealth management firms. So our job
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Speaker 3: in our wealth business is to help advisors and the
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Speaker 3: firms that they work for build better portfolios for their
11:14
Speaker 3: clients so that they can achieve their dreams. And we
11:17
Speaker 3: aim to power their growth, to help them scale their
11:20
Speaker 3: businesses so that they can do what they do best,
11:22
Speaker 3: which is serving their clients. And so that's what we
11:24
Speaker 3: wake up doing every single day in the wealth business.
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Speaker 2: So I've seen a variety of areas Blackrock model portfolios.
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Speaker 2: If you have a bond ladder that you have concerns about,
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Speaker 2: you can run it by the Blackrock folks and hey,
11:40
Speaker 2: here are your options. We really haven't talked about SMAs,
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Speaker 2: which I know is a really fast growing part of
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Speaker 2: the business. Is there a priority or are all these
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Speaker 2: things just day by day you're just checking off different
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Speaker 2: boxes and working on different projects.
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Speaker 3: Yeah, So our priority is serving the client, meeting their need.
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Speaker 3: And when we look at the wealth market it and
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Speaker 3: talk to advisors every single day, there's really three call
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Speaker 3: and client segments investor segments that advisors are trying to
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Speaker 3: serve and win and build relationships with, and we're trying
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Speaker 3: to help the advisor do so. So those three segments,
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Speaker 3: think about the next gen investor, think about women, and
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Speaker 3: think about high net worth, and we'll hit on kind
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Speaker 3: of direct indexing and everything that we do through that.
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Speaker 3: But if you think about those three segments, and it's
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Speaker 3: a broadway to think about this. You know, there's exceptions
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Speaker 3: to every rule here. But next gen what are we
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Speaker 3: talking about. It's the millennials, right, it's Z and gen Z.
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Speaker 3: It's forty four percent of the population. So it is
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Speaker 3: a massive number by quantity, but it's also a massive
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Speaker 3: number by assets.
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Speaker 1: Right.
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Speaker 3: That generation is going to inherit seventy jillion plus in
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Speaker 3: assets over the next few years. And so what's interesting
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Speaker 3: and what's different about these folks is that they want
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Speaker 3: to invest in line with their beliefs. They're incredibly tech savvy.
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Speaker 3: In fact, they trust digital and social more than they
12:56
Speaker 3: might even trust humans these days. But they want advice advisors,
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Speaker 3: and they want to invest in things that are new
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Speaker 3: and interesting. And so you think about bitcoin, right, bitcoin?
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Speaker 3: Eighty plus percent of millennial millionaires hold crypto. They're more
13:11
Speaker 3: inclined to use crypto than stocks and mutual funds. So
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Speaker 3: we were doing and investing and innovating in in service
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Speaker 3: of client demand, is creating a bitcoin ETF.
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Speaker 2: I BIT I bit one of, if not the fastest
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Speaker 2: growing ETF in history, fastest to a billion to five
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Speaker 2: billion to ten. I haven't even looked at what it is.
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Speaker 2: Eighty five unbelievable. This is less than two years old, right, Yes,
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Speaker 2: that's incredible. Eighty five billion dollars and no passwords, no
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Speaker 2: loss this, no that that they've taken. What was a
13:43
Speaker 2: You know, whenever I see the return claims for bitcoin,
13:47
Speaker 2: I always have to point out, hey, twenty thirty percent
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Speaker 2: of coins have been lost, last words have been lost,
13:53
Speaker 2: drives break, so subtract a third off of that. But
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Speaker 2: really it's it's this or zero if you totally lost it.
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Speaker 2: You guys have made this a traditional financial product. So
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Speaker 2: it's pretty amazing, and we've seen like a general acceptance
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Speaker 2: of hey, everybody should have one percent or maybe a
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Speaker 2: little more, a little less, whatever your needs are of
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Speaker 2: some bitcoin, and this seems to be the easiest way
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Speaker 2: to do it.
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Speaker 3: I think we'll see a lot more of that too.
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Speaker 3: I think we're going to see a lot of firms
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Speaker 3: coming out now to say we are actually going to
14:26
Speaker 3: allow advisors to incorporate this into portfolios on the FEEBA side,
14:30
Speaker 3: on the advisory platforms, and so I think this is
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Speaker 3: just the beginning, but it's also just a perfect example
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Speaker 3: of if you understand where clients are going, and you
14:37
Speaker 3: have the capability set to innovate and build products around it.
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Speaker 3: Then you can deliver those products to market and help
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Speaker 3: advisors better serve their clients.
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Speaker 2: And I Bit's a perfect example of that, really really
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Speaker 2: quite fascinating. Coming up, we continue our conversation with Jamie
14:50
Speaker 2: and Manjera, head of black Rocks US wealth advisory business
14:54
Speaker 2: and head of black Rocks Retirement Business, discussing wealth management
14:59
Speaker 2: and retirement. I'm Barry Ritholts. You're listening to Masters and
15:02
Speaker 2: Business on Bloomberg Radio. I'm Barry Ridults. You're listening to
15:15
Speaker 2: Masters and Business on Bloomberg Radio. I'm speaking this week
15:19
Speaker 2: with Jamie Majera. She's head of black Rocks US wealth
15:22
Speaker 2: advisory business as well as retirement business. So let's talk
15:27
Speaker 2: a little bit about both of these. I want to
15:29
Speaker 2: start with the wealth management business. This is more than
15:33
Speaker 2: just I shares. This is very holistic and comprehensive. Tell
15:38
Speaker 2: us a little bit about the US wealth advisory business.
15:42
Speaker 3: So our business is really focused on helping those advisors
15:45
Speaker 3: who are really trying to go after multiple client segments
15:48
Speaker 3: and help those client segments actually meet their goals. And so,
15:52
Speaker 3: you know, we talked a little bit about next gen
15:54
Speaker 3: and kind of the millennials and gen Z. The other
15:57
Speaker 3: segment that is just growing an incredible rate is women.
16:01
Speaker 3: Women today control a third of the world's assets. In
16:04
Speaker 3: a few years, it'll be fifty percent. It'll be seventy
16:06
Speaker 3: percent by twenty fifty seventy percent. And you know, part
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Speaker 3: of this is, let's talk about what's driving this. Women
16:13
Speaker 3: are creating wealth right. More women are having careers or
16:16
Speaker 3: reaching executive levels or starting their own businesses. Women are
16:19
Speaker 3: also inheriting wealth right from family or from parents. Women
16:23
Speaker 3: are also inheriting wealth. We call it the horizontal wealth
16:26
Speaker 3: treadsours right divorce or widowed.
16:28
Speaker 2: Tent taut live the husband. Yes, so it's a way
16:31
Speaker 2: station before it goes to the kids.
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Speaker 3: Absolutely, absolutely, and women are quite frankly underserved in this market.
16:39
Speaker 3: Women were not seen as as a significant growth segment
16:42
Speaker 3: in the past, and now people are starting to come
16:45
Speaker 3: around to wait a minute, this is a very important
16:47
Speaker 3: segment that we need to get right. And women do
16:48
Speaker 3: things differently, and so advisors need to help women do
16:52
Speaker 3: things differently, and they need to serve them a little
16:54
Speaker 3: bit differently. And women, you know, like to have impact.
16:58
Speaker 3: We talk about the fact that some people invest as
17:01
Speaker 3: a means to an end. You know, women tend to
17:03
Speaker 3: invest as a means to what's next, right, they want
17:05
Speaker 3: to impact their community, they want to impact their family.
17:08
Speaker 3: They're always thinking about what can I do with this money,
17:11
Speaker 3: as opposed to I want to make more money, and
17:13
Speaker 3: so that's it's a nuance, but it's a difference that
17:16
Speaker 3: really requires a very personal relationship with a financial advisor
17:20
Speaker 3: and trust.
17:21
Speaker 2: You know, it's been fascinating seeing what was previously a
17:25
Speaker 2: male dominated industry slowly awakened to the idea that hey,
17:30
Speaker 2: women have money and they're going to continue to accrue
17:33
Speaker 2: more money. Maybe we should be more open to coming
17:38
Speaker 2: up with a way to serve that demographic. It's like amazing.
17:43
Speaker 2: It's taken so many decades for the industry to adjust,
17:46
Speaker 2: but it's shockingly slow and sometimes stuck a little bit
17:51
Speaker 2: in the past.
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Speaker 3: Yeah, it is.
17:52
Speaker 1: You know.
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Speaker 3: The wake up call I think for many is when
17:54
Speaker 3: a financial advisor has a client, maybe it's the man
17:58
Speaker 3: in the household, and perhaps there's a divorce, or there's
18:02
Speaker 3: a or the or the client passes away. Listen, seventy
18:06
Speaker 3: percent of women leave their financial advisor leave their husband's
18:11
Speaker 3: financial advisor after a divorce or death.
18:14
Speaker 2: So obvious with divorce, but with death, it tells you
18:19
Speaker 2: what a terrible job that advisor did speaking to both
18:22
Speaker 2: of those. And you know, I've heard stories from advisors
18:25
Speaker 2: about people kind of agast at somebody ignoring the spouse
18:30
Speaker 2: in the room. It's just a totally wrong, wrong approach.
18:34
Speaker 2: How does Blackrock help their advisor clients address this issue?
18:39
Speaker 3: So we believe there's such an opportunity for advice here
18:43
Speaker 3: right there. I mean, there's just this whole world of
18:46
Speaker 3: women who want advice, they want to coach, they want
18:49
Speaker 3: a partner, and so what we do is we work
18:51
Speaker 3: with financial advisors to help them better serve these clients.
18:56
Speaker 3: We do that through products. So for example, women want
18:59
Speaker 3: to be able to customize and personalize their investments to
19:02
Speaker 3: things that are important to them, so we'll talk about
19:05
Speaker 3: direct indexing. But direct indexing and what we're doing through
19:07
Speaker 3: a perio is a great way for an advisor to
19:11
Speaker 3: serve his client and help her have impact with what
19:15
Speaker 3: she's doing. We also care deeply about educating advisors on
19:19
Speaker 3: this And to your point, it's not that the industry
19:21
Speaker 3: just woke up, so nobody was really talking about it,
19:24
Speaker 3: and so now we're really invested in talking about this
19:26
Speaker 3: and helping and doing events and getting advisors to bring
19:30
Speaker 3: their prospects in and we'll join them. We are a
19:33
Speaker 3: minority investor in a company called Willow which focuses exactly
19:36
Speaker 3: on this. It builds practice management and education and actually
19:40
Speaker 3: helps connect female investors to advisors, and so we're really
19:44
Speaker 3: focused on this, and it's just such an opportunity for
19:47
Speaker 3: advice but also an opportunity for advisors to grow their business.
19:50
Speaker 2: So you mentioned aperio. Let's talk a little bit about
19:54
Speaker 2: direct indexing. I'm a big fan of it. We happen
19:57
Speaker 2: to have started on a different product six years ago,
20:00
Speaker 2: so we've been pretty locked in on that. Why do
20:03
Speaker 2: you believe it's gaining so much popularity amongst both advisors
20:07
Speaker 2: and clients.
20:08
Speaker 3: Yeah, so direct indexing it still sounds like a new
20:11
Speaker 3: phrase to many. It's been around for quite some time,
20:15
Speaker 3: and previously it was really used for ultra ultra high
20:18
Speaker 3: net worth families and direct indexing and ability to create
20:22
Speaker 3: a portfolio, a custom index, if you will, of securities
20:26
Speaker 3: that you can choose and select what securities you want
20:28
Speaker 3: in that portfolio to align with how you want to
20:31
Speaker 3: invest and you can also then manage taxes more effectively
20:34
Speaker 3: in there because you can tax loss harvest. And so
20:37
Speaker 3: it's a brilliant approach for not only aligning with your
20:41
Speaker 3: beliefs on how you invest, but also really living in
20:44
Speaker 3: an after tax world. We need to better look at
20:47
Speaker 3: tax alfa in our investment portfolio.
20:49
Speaker 2: So I'm so glad you said that. When we first
20:51
Speaker 2: started working with O'Shaughnessy on their product, I was on
20:56
Speaker 2: the impression that would first be like, the most common
20:59
Speaker 2: use case would be, Hey, I don't want tobacco or guns,
21:03
Speaker 2: or I don't want this whatever. I know. The New
21:06
Speaker 2: York Bishop's Archdiocese Investment Pool uses it to say, hey,
21:10
Speaker 2: we don't want a board efficients in our portfolio or
21:14
Speaker 2: anything related to stuff that is in contradiction with our
21:18
Speaker 2: belief system. I thought that would be the biggest use
21:22
Speaker 2: And then hey, I work for Apple, so I don't
21:25
Speaker 2: need all this tech. You could tune down tech in
21:28
Speaker 2: my portfolio, and then taxes would bring up the rear.
21:31
Speaker 2: I had it exactly backwards. In the past five six years,
21:36
Speaker 2: after tax returns, tax alpha seems to be the dominant
21:41
Speaker 2: usage for this concentrated portfolios low basis cost inherited stock.
21:46
Speaker 2: Things like that really are a challenge to dealing with
21:50
Speaker 2: capital gains. Tell us about black Rocks experience.
21:52
Speaker 3: With this, Yeah, so we agree completely. In fact, back
21:56
Speaker 3: in twenty twenty one, we acquired the firm Aparo and
22:00
Speaker 3: Aperio is a pioneer in direct indexing. A Perio led
22:05
Speaker 3: the market working with ultra high networth. They called it
22:08
Speaker 3: the new institutional for the purpose of tax management after
22:12
Speaker 3: tax returns. And you think about it, we live in
22:14
Speaker 3: an after tax world. I bought my coffee with after
22:16
Speaker 3: tax dollars. Yet we manage our investments before taxes. And
22:20
Speaker 3: so we saw this trend coming and we could have
22:22
Speaker 3: built it. It would have taken us probably a lot
22:25
Speaker 3: more time. But we saw what Aperia was doing in
22:27
Speaker 3: their capabilities and just their approach, and we thought, man,
22:30
Speaker 3: if we could match that with our distribution reach and
22:33
Speaker 3: our scale, we could really make some wonderful, wonderful solutions
22:38
Speaker 3: for our clients. And that's what we did. We acquired
22:40
Speaker 3: a Perio and we have a very significant direct indexing business.
22:45
Speaker 3: And to your point, Barry, it is predominantly tax customization,
22:50
Speaker 3: tax management.
22:51
Speaker 2: Right any especially when we see markets or at all
22:54
Speaker 2: time highs. People are sitting on enormous gains. Sometimes that
22:58
Speaker 2: becomes very concentrated, to say nothing of people who work
23:01
Speaker 2: for tech stocks and they've accumulated or other companies that
23:04
Speaker 2: have just accumulated so much value that hey, maybe I
23:09
Speaker 2: have too much single stock risk and I want to
23:12
Speaker 2: diversify into things. Tell us, what else does Blackrock do
23:16
Speaker 2: with direct indexing? How do you differentiate yourself? For everybody
23:20
Speaker 2: these days seems to have a direct indexing product? What
23:23
Speaker 2: makes black Rocks special or unique? Yeah?
23:27
Speaker 3: So, you know, one of the things that we did
23:28
Speaker 3: is when we acquired a Perio, we already had a
23:32
Speaker 3: very significant separately managed account business. I mean for decades
23:36
Speaker 3: we had fixed income and active equity, and what we
23:38
Speaker 3: did not have was that direct indexing capability. When we
23:42
Speaker 3: brought a Perio into Blackrock, we then pulled it all
23:44
Speaker 3: together and said, how can we actually make all of
23:47
Speaker 3: these capabilities together better serve our clients. So that means,
23:50
Speaker 3: for example, tax loss harvesting on UNI portfolios, right, so
23:54
Speaker 3: being able to take a capability and not just do
23:56
Speaker 3: it on equities, but do it on fixed income. Last
24:00
Speaker 3: year we acquired a company called spider Rock. I'm not sure,
24:03
Speaker 3: if you're familiar with spider.
24:04
Speaker 2: Structured notes, we've used them in the past.
24:06
Speaker 3: Yeah, and option over similar kind of.
24:09
Speaker 2: Not quite the same, but occasionally similar, a different solution
24:13
Speaker 2: to a similar problem.
24:14
Speaker 3: Yeah. And to your point on concentrated stock, what a
24:16
Speaker 3: great way to hedge that concentrated stock position. If I
24:20
Speaker 3: want to continue holding that stock, but I want to
24:22
Speaker 3: hedge against it and manage the risk, or I want
24:24
Speaker 3: to manage for tax implications, why not run an option
24:27
Speaker 3: overlay on top of that. And So the beauty of
24:29
Speaker 3: what we're doing now is we're bringing all of these
24:31
Speaker 3: discrete capabilities together into one portfolio, one holistic offering. And
24:37
Speaker 3: so you'll be able to will be able to work
24:39
Speaker 3: with advisors and say, let's look across your client's entire
24:42
Speaker 3: book and let us help you build a whole portfolio
24:45
Speaker 3: of public markets, private markets, direct indexing, option overlay, all
24:50
Speaker 3: in one. Really solving for unique needs, customized, really.
24:54
Speaker 2: Really quite fascinating. So you mentioned you work with a
24:57
Speaker 2: lot of different wealth management firms. What is that relationship
25:01
Speaker 2: look like? What are these firms looking for from Blackrock?
25:05
Speaker 3: So I remember when I first started in the wealth business,
25:07
Speaker 3: years and years and years and years ago, you know,
25:10
Speaker 3: the relationship between asset managers and wealth management firms was
25:15
Speaker 3: often a kind of a vendor relationship. Yes, right, it
25:18
Speaker 3: was you have a product, let's put it over here.
25:21
Speaker 3: Our position and our partnership with wealth management firms today
25:26
Speaker 3: is the only word I would say. It's like true partnership, right,
25:29
Speaker 3: it's aligned interests. We are there to not only provide
25:34
Speaker 3: them with investment capabilities, by the way, we have incredible
25:37
Speaker 3: breath to do so, but we're also there to help
25:40
Speaker 3: them with their technology needs, their operational and scale needs,
25:44
Speaker 3: their advisory needs. How can we help them think through
25:46
Speaker 3: how they can grow organic growth? That's everyone's challenge. How
25:49
Speaker 3: do I grow organically? Well, you have to scale your
25:51
Speaker 3: business and increase your margins to do so. We help
25:54
Speaker 3: them think through all of that. And the other thing
25:56
Speaker 3: that we do is we have incredible people that are
26:00
Speaker 3: so expert and working with these firms and advisors every
26:03
Speaker 3: single day to help them achieve their goals. And our
26:06
Speaker 3: view is if we can help our clients, the wealth
26:09
Speaker 3: management firms and their advisors grow, will naturally grow with them, right,
26:13
Speaker 3: So our job is to help them grow.
26:14
Speaker 2: So let's talk retirement. We're recording this post Labor Day.
26:20
Speaker 2: But by the time this comes out, Blackrocks Big Report,
26:24
Speaker 2: the Read on Retirement will be out tell us some
26:27
Speaker 2: of the big takeaways for this.
26:30
Speaker 3: So it's really special for me personally because I've just
26:34
Speaker 3: now returned into the retirement business and have the responsibility
26:37
Speaker 3: for this retirement business. And I say it's a responsibility
26:40
Speaker 3: and an honor because we think about the thirty five
26:44
Speaker 3: million people across America that we are helping to save
26:48
Speaker 3: for retirement, like that is what we do. Over half
26:51
Speaker 3: of the assets at Blackrock. Not many people know this,
26:53
Speaker 3: Over half of the assets at Blackrock are helping people
26:56
Speaker 3: save for retirement in some way.
26:57
Speaker 2: Really, Also, when you say that it's for a wis
27:00
Speaker 2: for three bees.
27:01
Speaker 3: IRA's annitionis dB.
27:04
Speaker 2: Wow.
27:04
Speaker 3: Yes, that's amazing over fifty percent and that's not a
27:07
Speaker 3: guess tho. Yeah, not many people know that, and so
27:10
Speaker 3: you know, it's something that we are so proud of
27:13
Speaker 3: and really for me, it was always my north star.
27:16
Speaker 3: I remember when I was first in the retirement business
27:18
Speaker 3: at black Rock, I was able to go home and
27:21
Speaker 3: tell my parents what I did and explain it to
27:23
Speaker 3: them in a way that I felt so good about
27:25
Speaker 3: and they understood, and that's what we get to do
27:27
Speaker 3: every day. You mentioned the survey, So it's our ten
27:30
Speaker 3: year anniversary of doing the survey. We've been doing it
27:33
Speaker 3: for a decade now, and every time we go out,
27:35
Speaker 3: we go to plan sponsors, who are the employers building
27:38
Speaker 3: the plans and offering them to their employees. We go
27:41
Speaker 3: to the savers, who are the employees at massive corporations.
27:44
Speaker 3: And then we also talked to retirees, people that have
27:47
Speaker 3: saved and had access to a four to one K plan,
27:50
Speaker 3: but they're now no longer working and they're in retirement.
27:52
Speaker 3: And so this year I'll break it down in this way.
27:55
Speaker 3: Savers those that are still working, the employers of these
27:59
Speaker 3: are the employees of this company. Savers have the highest
28:02
Speaker 3: confidence we've ever seen, like off the charts confidence. Now
28:06
Speaker 3: it's come down a little bit because of market volatility.
28:08
Speaker 3: And I think what that calls out is, of course
28:10
Speaker 3: we're all more confident when markets are rising, but very
28:14
Speaker 3: strong confidence in their ability to retire. However, we've seen
28:18
Speaker 3: savings come down, and so the question is is that
28:21
Speaker 3: because of confidence.
28:22
Speaker 2: When you say savings, we mean savings.
28:23
Speaker 3: Rates rates, right, Savings rates have come down thank you.
28:27
Speaker 3: And so the question is is that because of confidence
28:29
Speaker 3: or is that because actually people are spending more money
28:32
Speaker 3: they need to maybe inflation maybe right, So like we
28:34
Speaker 3: have to dig into that a little bit more. But importantly,
28:37
Speaker 3: savers are seeing more confidence or feeling more confident. You
28:41
Speaker 3: then ask the people in charge, the experts who are
28:43
Speaker 3: building those plans. Confidence is very low, in fact lower
28:47
Speaker 3: than we've seen. And I'll come back to that in
28:50
Speaker 3: a moment, but I think there's a really interesting tension
28:52
Speaker 3: there of perhaps over confidence in savers and reality in
28:58
Speaker 3: those building the plans. And then when we move on
29:00
Speaker 3: to retirees, very low confidence once they've retired and their
29:03
Speaker 3: ability to actually figure out how to sustain their life
29:06
Speaker 3: in retirement. And so some of the actions are some
29:09
Speaker 3: of the insights that really came out of this. One
29:12
Speaker 3: Savers are looking for access to professionally managed solutions, think
29:15
Speaker 3: target date funds, right life path portfolios. Black Rock invented
29:19
Speaker 3: the target date fund thirty years ago, but target date
29:21
Speaker 3: funds are very very important. Two is, savers are looking
29:25
Speaker 3: for some type of clarity or solution around guaranteed income.
29:29
Speaker 3: Give me something that will just tell me what I'm
29:31
Speaker 3: going to be able to spend every month, and better yet,
29:35
Speaker 3: make that guaranteed so I know I have it every month.
29:37
Speaker 2: So what does that look like? Are we talking an
29:39
Speaker 2: annuity product or something else?
29:41
Speaker 3: So imagine a target date fund with a guaranteed income
29:44
Speaker 3: sleeve in that. So we have a product called life
29:47
Speaker 3: Path Paycheck. Life Path Paycheck is among a few other
29:51
Speaker 3: solutions in the marketplace, but Life Path Paycheck is the
29:54
Speaker 3: fastest growing guaranteed income solution. What's amazing about this solution, though,
29:58
Speaker 3: is that it gives employers and employees the choice to
30:02
Speaker 3: turn on that guaranteed income. So you're investing, investing, investing,
30:05
Speaker 3: and then you come to a point and you decide
30:07
Speaker 3: do I want that guaranteed inclip the switch, flip the switch.
30:10
Speaker 3: Really really interesting. And then the third point is people,
30:13
Speaker 3: both employers and employees are saying we need to close
30:18
Speaker 3: the gap on this saving shortfall, and we need to
30:20
Speaker 3: find more returns and more protections. And so that's really
30:23
Speaker 3: where you start to point to private markets.
30:25
Speaker 2: So the I think of the traditional retirement savings as
30:30
Speaker 2: classic sixty forty, and what I've been reading about and
30:34
Speaker 2: hearing about for the past ten plus years is hey
30:38
Speaker 2: sixty forty isn't going to get it done in the future,
30:40
Speaker 2: especially with yields as low as they've been up until
30:43
Speaker 2: twenty twenty two. Anyway, how do you see this side
30:46
Speaker 2: of the business changing. Is it no longer sixty forty,
30:49
Speaker 2: is it sixty thirty ten, or what does this look like?
30:52
Speaker 3: Yeah, so it's you know, the one thing that's different
30:55
Speaker 3: about the retirement space is it's versus the wealth space
30:58
Speaker 3: is retirement is quite slow moving. The market itself is
31:01
Speaker 3: quite slow moving. And so if you actually look back
31:03
Speaker 3: twenty years, I would say there's probably less change over
31:06
Speaker 3: twenty years then we'll expect to see over the next ten.
31:08
Speaker 3: Meaning people are getting very focused policymakers, employers, asset managers,
31:14
Speaker 3: record keepers on how do we close the gap between
31:16
Speaker 3: this retirement saving shortfall? And so to your question, the
31:20
Speaker 3: sixty forty worked. It works, but actually if you were
31:24
Speaker 3: to have a fifty to thirty twenty, but strategically and
31:28
Speaker 3: thoughtfully make sure that that glide path, that target date
31:31
Speaker 3: fund that also incorporates private markets is doing so in
31:34
Speaker 3: a way that helps people get more diversification, gain alpha,
31:40
Speaker 3: possibly gain more income. We've done studies that show you
31:43
Speaker 3: can get fifteen percent more return on a portfolio with
31:46
Speaker 3: private markets a target date fund with private markets over
31:49
Speaker 3: a forty year retirement. And so that's something to talk.
31:52
Speaker 2: About, not nothing. That's pretty substantial. Coming up, we continue
31:57
Speaker 2: our conversation with Jamie Majera, head of Blackrocks US wealth
32:01
Speaker 2: advisory business as well as head of BlackRock's retirement business,
32:05
Speaker 2: discussing the rise of alternatives in the investment space at Blackrock.
32:11
Speaker 2: I'm Bury Ridults. You're listening to Masters in Business on
32:15
Speaker 2: Bloomberg Radio. I'm Bury Ridults. You're listening to Masters in
32:26
Speaker 2: Business on Bloomberg Radio. My guest this week is Jamie macgira.
32:30
Speaker 2: She is the head of black Rocks US wealth advisory
32:33
Speaker 2: business as well as the head of their retirement business.
32:37
Speaker 2: The firm manages over twelve trillion dollars. So let's talk
32:42
Speaker 2: about alternatives. This has been one of the fastest growing
32:47
Speaker 2: space in investing. Tell us what Blackrock is doing. I
32:53
Speaker 2: think a black Rock of ey shares and biggest manager
32:58
Speaker 2: of public equities and in the world, what is Blackrock
33:02
Speaker 2: doing with alternatives?
33:03
Speaker 3: So if you think about the capital markets, public is
33:07
Speaker 3: only one piece of those capital markets, and for so
33:10
Speaker 3: long private markets the other part of capital markets have
33:14
Speaker 3: been utilized for institutions or even the ultra ultra ultra
33:18
Speaker 3: high at Worth, and so there is a world to
33:22
Speaker 3: believe strongly an investment thesis that if you're going to
33:26
Speaker 3: do the best thing for a portfolio, for an investment,
33:29
Speaker 3: you need full exposure to public and to private markets.
33:33
Speaker 3: And so Blackrock is doing a lot to help advisors
33:36
Speaker 3: and their clients have easier access to private markets. So
33:40
Speaker 3: you may recall last year we had a whirlwind news
33:44
Speaker 3: announcements around HPS, GIP, pre Quinn, three acquisitions all related
33:51
Speaker 3: to private markets. Pre Quinn related to data, GIP, infrastructure, HPS, credit,
33:57
Speaker 3: and private financing. And so we acquired these firms so
34:02
Speaker 3: that we could offer to our clients not just the
34:05
Speaker 3: full power of the capital markets through public but now
34:08
Speaker 3: also through private. And so we're very focused on really
34:11
Speaker 3: democratizing access, helping everyday people, when appropriate, gain access to
34:17
Speaker 3: this very important part of the capital markets.
34:19
Speaker 2: And I mentioned earlier sixty forty. You peel ten percent
34:23
Speaker 2: off the sixty and ten percent off the forty, and
34:26
Speaker 2: you end up with something that looks like fifty thirty twenty.
34:29
Speaker 2: Is that the future of this because typically we see
34:32
Speaker 2: a lot of privates. They tend to be locked up
34:35
Speaker 2: for a long period of time. They tend to be
34:37
Speaker 2: complex to administer, custodians and reporting and fees. It's like
34:42
Speaker 2: you buy an eye share, it's easy. You want to
34:45
Speaker 2: get involved on the private side, it just seems so
34:48
Speaker 2: much more complex for anyone less than I don't know,
34:52
Speaker 2: pick a number, twenty million, ten million, and five million.
34:55
Speaker 2: So what does the future of alternative investment look like
34:59
Speaker 2: at Blackrock?
35:00
Speaker 3: Yeah, so you hit on it, right. I mean, it
35:02
Speaker 3: was so hard for people to gain access to it.
35:05
Speaker 3: It was complicated if they were able to get access
35:08
Speaker 3: to it. And to your point, liquidity was not necessarily
35:11
Speaker 3: a top priority for various reasons. When you think about
35:14
Speaker 3: where the market is going now, there's just been so
35:17
Speaker 3: much change over the wealth industry on how the wealth
35:20
Speaker 3: industry as a whole is starting to modernize access to
35:24
Speaker 3: private markets. And so one thing we are doing at
35:26
Speaker 3: Blackrock is we've focused very much on technology partnerships that
35:32
Speaker 3: allow and relieve the advisor of all of that operational complexity.
35:37
Speaker 3: So you think about a firm like I Capital, I Capital.
35:40
Speaker 2: Right of which you are on the board of.
35:42
Speaker 3: I am on the board. And you know, I Capital
35:44
Speaker 3: has done so much to actually pave the way for
35:47
Speaker 3: advisor's ability, wealth management firm's ability to access private markets.
35:52
Speaker 3: But they are a technology platform. You still need the products.
35:55
Speaker 3: And to your point on draw down and liquidity, we've
35:58
Speaker 3: done so much work to build solution that actually are
36:01
Speaker 3: semi liquid and that provide that liquidity on a regular
36:05
Speaker 3: basis for advisors and their clients. And so that's something
36:08
Speaker 3: that has really held advisors back in the past. I
36:11
Speaker 3: think the last point vary is it's still new to
36:14
Speaker 3: so many and there's a lot of education that's needed,
36:18
Speaker 3: and you know, it's education on the asset class and
36:21
Speaker 3: what does this really mean? And how do I actually
36:22
Speaker 3: strip the ten percent here and the ten percent there?
36:25
Speaker 3: And so we've gone a step further to say, how
36:28
Speaker 3: do we make it even easier for advisors to build portfolios,
36:32
Speaker 3: Not that I have my private markets over here and
36:34
Speaker 3: my public markets over there and another account, but instead,
36:37
Speaker 3: how do I build a portfolio that's one account and
36:39
Speaker 3: it holds public and private together in one portfolio, that's
36:43
Speaker 3: professionally managed asset allocation. All of the due diligence has
36:46
Speaker 3: been done, and so recently, we've engaged in partnerships with
36:50
Speaker 3: firms like GEOL and I Capital to be able to
36:53
Speaker 3: bring models to market strategic asset allocated models that are
36:57
Speaker 3: professionally managed, that incorporate private markets alongside of public markets.
37:02
Speaker 2: So the pushback I hear from various people about alternatives.
37:07
Speaker 2: They're expensive, they're liquid, you have these long lockups. Doing
37:11
Speaker 2: due diligence is complex and expensive. All of the back
37:15
Speaker 2: office aspect seem to be like a series of one offs.
37:19
Speaker 2: There's no real scalability. How are you addressing these issues?
37:25
Speaker 3: We have found a way to scale and make it
37:28
Speaker 3: more convenient. So all of that work that you just
37:30
Speaker 3: talked about, the due diligence, the operations, the complexity, we
37:34
Speaker 3: have taken that on. We have built model portfolios that
37:37
Speaker 3: do all of that for the advisor. The advisor just
37:40
Speaker 3: has to offer that to their client.
37:42
Speaker 2: Is this in an SMA or is this how does
37:44
Speaker 2: this so? My firm we wear black Rock Vanguard, a
37:48
Speaker 2: handful of other The bulk of our portfolios, either direct
37:52
Speaker 2: indexing or mutual funds or ETFs, looks like that. Some
37:58
Speaker 2: clients say, what do you offer in terms of alternatives?
38:01
Speaker 2: And we have to click off and run of stuff.
38:04
Speaker 2: And what I've noticed is once you start working into
38:08
Speaker 2: the here's the costs, and here's the lockup, and here's
38:11
Speaker 2: what the reporting looks like, and it's held at a
38:13
Speaker 2: custodian here, the complexity tends to be like, is this
38:17
Speaker 2: really worth it? Well, theoretically, it provides diversification, and historically
38:22
Speaker 2: there have been some cases of outperformance. All that comes
38:27
Speaker 2: off the advisor's plate and you guys handle all of it.
38:29
Speaker 3: So, if an advisor wanted to build a portfolio for
38:32
Speaker 3: you, you're the client. The advisor could call Blackrock, could say,
38:36
Speaker 3: I want to build a custom portfolio. I wanted to
38:38
Speaker 3: have this component of public markets, maybe it's I shares ETFs,
38:41
Speaker 3: maybe it's direct indexing APERIO. I would like it to
38:44
Speaker 3: have this component of private markets, perhaps it's Blackrock Credit,
38:48
Speaker 3: Blackrock Equity on the private side. We will customize that
38:51
Speaker 3: for them, and then it's waiting for them on a
38:54
Speaker 3: platform like geowealth, which is a you know, geo wealth well,
38:58
Speaker 3: a technology platform that will automatically rebalance it for them,
39:01
Speaker 3: and that advisor can now then invest their clients in
39:03
Speaker 3: that portfolio.
39:04
Speaker 2: How about if a firm comes up to you and says, Hey,
39:06
Speaker 2: we're pretty good on the stocks and bond side, we
39:09
Speaker 2: really need help on the alt side. And we have
39:12
Speaker 2: such embedded long term gains that it's painful to peel
39:18
Speaker 2: too much off. But going forward, we want to build
39:21
Speaker 2: this into what we offer and add this to existing clients.
39:25
Speaker 2: What does that solution look like?
39:27
Speaker 3: Call Blackrock. We have a team of you asked about
39:30
Speaker 3: CFAs earlier. We have a team of CFAs portfolio consultants,
39:34
Speaker 3: tax economists who do nothing but work with advisors every
39:38
Speaker 3: day on solving those problems. They will work, they will consult,
39:42
Speaker 3: they will help them take the portfolio they have. We
39:44
Speaker 3: want to meet the advisors where they are right, so
39:47
Speaker 3: we want to help them build on what they have,
39:49
Speaker 3: and we will work with them to take that portfolio
39:51
Speaker 3: and transition it into whatever the destination is they're going for.
39:55
Speaker 3: We'll work with them in a way to do it
39:56
Speaker 3: tax efficiently and at the appropriate cadence for their client.
40:00
Speaker 2: And you guys very successfully took crypto and bitcoin and
40:04
Speaker 2: put it into an ETF. Are we ever going to
40:06
Speaker 2: get to a point where alts become an ETF product?
40:10
Speaker 3: Look, I think there is a world where so much
40:13
Speaker 3: can happen right in the next five years. I think
40:15
Speaker 3: we're going to see a lot of things around private markets.
40:18
Speaker 3: Part of that is solving for data and having the
40:21
Speaker 3: transparency around the private markets. What is an ETF, right,
40:24
Speaker 3: it's transparency into that index. Part of our thought process
40:28
Speaker 3: in acquiring pre Kanals would be able to offer data
40:31
Speaker 3: transparency around private markets. But I also think that sometimes
40:35
Speaker 3: people naturally go to ETF as kind of shorthand for liquidity,
40:40
Speaker 3: convenient and low cost. And I think there's a lot
40:43
Speaker 3: of ways that we have to figure out as an
40:45
Speaker 3: industry and black Rocks working on this right now. How
40:47
Speaker 3: do you structure and build vehicles that allow for liquidity,
40:52
Speaker 3: allow for lower cost, and allow for easier access, less
40:56
Speaker 3: complexity around private markets. Maybe it's an ETF, maybe it's
40:59
Speaker 3: something else.
41:00
Speaker 2: Yeah, liquidity is always the challenge when you have an
41:03
Speaker 2: investment product that buy design is supposed to play out
41:07
Speaker 2: over five, seven, eight years. They're not public for a reason.
41:11
Speaker 2: They need the breadth for whatever that market cycle is
41:14
Speaker 2: to realize those gains. So I get the challenge, what
41:18
Speaker 2: are you doing to educate advisors and clients about what
41:21
Speaker 2: this process looks like.
41:23
Speaker 3: I'm glad you asked that because I keep coming back
41:25
Speaker 3: to liquidity is a challenge when it does not match
41:28
Speaker 3: an expectation of a client, and so advisors need to
41:32
Speaker 3: fully understand what they're working with when they delve into
41:36
Speaker 3: private markets, and in some cases it is a five
41:38
Speaker 3: to seven year lockup if they're doing drawdowns. In some
41:41
Speaker 3: cases you do have a liquidity interval every quarter. And
41:44
Speaker 3: so we are working with advisors all across the industry
41:48
Speaker 3: to help educate them on the new type of private markets,
41:53
Speaker 3: the new vehicles, the semi liquid structures, but then more
41:56
Speaker 3: so we're working with them to help them understand how
41:58
Speaker 3: do you actually put that in a whole portfolio. Talk
42:02
Speaker 3: to me about how private markets sits alongside of public
42:06
Speaker 3: markets and what that does for the risk profile, for
42:09
Speaker 3: the return profile, and for the liquidity profile.
42:13
Speaker 2: And Blackrock launched a model, i want to say, earlier
42:16
Speaker 2: this year that uses both private and public assets under
42:21
Speaker 2: one ticker. That sounds like really challenging to put together.
42:25
Speaker 2: Tell us a little bit about that.
42:26
Speaker 3: Yeah, it was challenging, very challenging, and it was something
42:30
Speaker 3: that we could not do alone for all of the
42:33
Speaker 3: reasons you mentioned. It took operations and technology platforms like
42:38
Speaker 3: I Capital. It took operations and rebalancing and trade platforms
42:43
Speaker 3: like geowealth to be able to allow us to deliver
42:46
Speaker 3: this portfolio. So this was something that we announced earlier
42:49
Speaker 3: this year alongside of Geowealth and I Capital, and it
42:53
Speaker 3: was the first of its kind in the industry. A
42:56
Speaker 3: model portfolio that in one model, in one account, you
42:59
Speaker 3: can have of public and private automatic rebalancing customized for
43:03
Speaker 3: your client, done so easily, so conveniently.
43:07
Speaker 2: Some of what you're describing sounds a little bit like
43:11
Speaker 2: OCIOs that kind of were the rage a few years ago,
43:14
Speaker 2: outsource CIOs where a professional manager can bring a higher
43:19
Speaker 2: level of professional wealth management to a smaller shop. Tell us,
43:24
Speaker 2: is this similar to that or what are the parallels?
43:27
Speaker 3: Yeah, it is one of the most accelerated trend we
43:32
Speaker 3: are seeing in the wealth market right now, which is
43:34
Speaker 3: this whole notion of outsourcing and whether an advisor is
43:38
Speaker 3: doing it because they want to professionalize what they're offering
43:41
Speaker 3: to their client, or whether an advisor is choosing to
43:43
Speaker 3: outsource because they want to save time and their value
43:47
Speaker 3: is being with the client and talking about the holistic
43:49
Speaker 3: wealth plan, not the investment management component of it, and
43:52
Speaker 3: so they turn to Blackrock to be the outsourced provider,
43:57
Speaker 3: and so we have a model's business, which is effectively
44:00
Speaker 3: ocio business. A model's business for the wealth channel is
44:04
Speaker 3: three hundred and fifty billion today. It's grown rapidly over
44:07
Speaker 3: the past few years. We think that'll double in the
44:10
Speaker 3: next few years. And it's because advisors are turning to
44:13
Speaker 3: us to say, please, let us outsource to you. And
44:15
Speaker 3: it's not just advisors, wealth managers are doing the same
44:18
Speaker 3: because again, wealth managers are going to focus on their
44:21
Speaker 3: core value, which is serving their clients, helping their clients
44:25
Speaker 3: build financial plans, and helping them navigate their wealth picture holistically.
44:29
Speaker 3: They turned to black Rock to help them scale their
44:31
Speaker 3: investment management and that's where our outsourcing capabilities come in.
44:35
Speaker 2: So we've talked about wealth management, we've talked about I
44:38
Speaker 2: shares and as well as alpha pursuit and retirement planning.
44:44
Speaker 2: My last question for you is what do you think advisors, clients,
44:48
Speaker 2: investors are not thinking about but perhaps should be. What
44:53
Speaker 2: important topics It could be an asset, it could be
44:55
Speaker 2: a geography, it could be a policy or data point.
44:58
Speaker 2: What do you think is getting over looked but just shouldn't.
45:01
Speaker 3: I think taxes is still not being discussed enough. Taxes
45:06
Speaker 3: as a concept. I mean, there is so much value
45:08
Speaker 3: you can bring as an advisor to your client by
45:10
Speaker 3: just having that conversation asking the question. So I would
45:13
Speaker 3: encourage everyone to do that. That is such a way
45:16
Speaker 3: to build loyalty, trust and deep in relationship. And by
45:19
Speaker 3: the way, your client starts to tell you where they
45:21
Speaker 3: have assets elsewhere. The other area, I would say, is
45:24
Speaker 3: just really thinking about the future growth drivers of our economy.
45:28
Speaker 3: So infrastructure AI. We didn't talk about AI, but.
45:32
Speaker 4: That the another thing might be big ones exactly, but
45:37
Speaker 4: you know, you.
45:37
Speaker 3: Think about some of these future growth drivers infrastructure as
45:40
Speaker 3: part of you know why we acquire GIP, but we
45:43
Speaker 3: have I share solutions that really align with infrastructure as well.
45:47
Speaker 3: And I just think that's such an under discussed opportunity.
45:51
Speaker 2: Really interesting. All Right, I only have you for a
45:53
Speaker 2: few more minutes, so let's jump to our favorite questions
45:56
Speaker 2: that we ask all our guests, starting with tell us
45:59
Speaker 2: about your mint who helped shape your career.
46:02
Speaker 3: So this is such a good question and hard question.
46:06
Speaker 3: I will answer it this way. There are so many
46:09
Speaker 3: I love to have a board of director's approach, Like,
46:11
Speaker 3: I have this whole crew of people that I go
46:13
Speaker 3: to for different things, and I truly like, you know,
46:16
Speaker 3: you mentioned Salim Ramsey, He's one of them. Martin Small,
46:19
Speaker 3: Rob Goldstein, Rob Carpedo, Mark Weedman, Like there's so many
46:23
Speaker 3: Ann Ackerley who used to run the retirement business at
46:26
Speaker 3: Black Rock, and they've all played a different role in
46:28
Speaker 3: my career and in my life.
46:30
Speaker 2: Huh really really interesting. Let's talk books. What are some
46:33
Speaker 2: of your favorites? What are you reading right now?
46:36
Speaker 3: Lama Lama red pajama.
46:39
Speaker 2: To your kids at night?
46:40
Speaker 3: Is that what that three year old he loves Lama Lama.
46:44
Speaker 3: So any Lama Lama you can imagine. But actually I
46:46
Speaker 3: just finished a great book for the second time. A
46:49
Speaker 3: more beautiful question, huh, warren Berger. It talks about the
46:55
Speaker 3: art of inquiry and using inquiry too. I mean, gosh,
46:59
Speaker 3: the heart of any in event. Why does the world
47:01
Speaker 3: not have this? What if the world did have this?
47:03
Speaker 3: How do we get the world to have this? And
47:05
Speaker 3: so it really talks about the art of inquiry as
47:08
Speaker 3: a way to better understand, to fuel curiosity, and to
47:12
Speaker 3: innovate and create better solutions.
47:15
Speaker 2: I love that name. I'm gonna check that out. Let's
47:18
Speaker 2: talk streaming. What are you watching or listening to these days? Netflix? Amazon? Podcasts?
47:23
Speaker 2: Tell us what's keeping you entertained?
47:25
Speaker 3: So I have this this Barbell approach. I go, I
47:29
Speaker 3: love reality TV below Deck? Do you watch Below Deck?
47:32
Speaker 2: No, but I know plenty of people.
47:34
Speaker 3: Who do so good. But that's kind of one side
47:36
Speaker 3: of it. The other side of it is I like intensity. So,
47:41
Speaker 3: like Mayor of Kingstown, I'm watching Terminal List Dark Wolf
47:45
Speaker 3: right now. I think that's on Amazon. It is very good, basically, Yes,
47:51
Speaker 3: Navy Seal turna operative.
47:54
Speaker 4: Very interesting, right, yeah, yeah, we just finished Killing Eve.
47:58
Speaker 4: Oh my wife watched it, loved it and said you
48:03
Speaker 4: have to watch this, and she rewatched it with me.
48:05
Speaker 4: If you like that sort of high intensity espionage, really
48:10
Speaker 4: great cast, really strong recommend So our final two questions,
48:16
Speaker 4: what sort of advice would you give to a recent
48:18
Speaker 4: college grad interest in the career in retirement services, wealth
48:23
Speaker 4: management investing?
48:25
Speaker 2: How would you advise them?
48:26
Speaker 3: So I go back to my way my entry into
48:29
Speaker 3: this industry. I didn't know the first thing about anything.
48:31
Speaker 3: I didn't think I wanted to be in this industry,
48:33
Speaker 3: but I went in with open eyes and I asked
48:35
Speaker 3: a lot of questions, and in some ways it was
48:38
Speaker 3: like because I didn't have the experience, it made it
48:40
Speaker 3: easier for me to be just like an everyday person
48:44
Speaker 3: that we were trying to serve. And so I say,
48:46
Speaker 3: come into this industry. You don't need a traditional background.
48:48
Speaker 3: In fact, I prefer people not to have a traditional
48:51
Speaker 3: background of finance or econ. Come into this industry and
48:54
Speaker 3: help us make it better.
48:55
Speaker 2: Love that and our final question, what do you know
48:58
Speaker 2: about the world of wealth management retirement services? Investing today
49:04
Speaker 2: would have been useful twenty five years or so ago
49:06
Speaker 2: when you were first getting started.
49:08
Speaker 3: I was really fortunate to have my father tell me
49:12
Speaker 3: that the first thing I needed to do when I
49:14
Speaker 3: got a job was start saving in an ira and
49:16
Speaker 3: in my four one K and even when it hurt
49:18
Speaker 3: to do, I did it. I wish I had known
49:21
Speaker 3: back then that I could have been saving in many
49:23
Speaker 3: different ways. I could have been investing in many different ways.
49:26
Speaker 3: And so you know, to anyone who is out there
49:28
Speaker 3: thinking about are they saving enough or investing enough, the
49:30
Speaker 3: answer is probably know and you should do more. And
49:33
Speaker 3: there's so many ways to do it. You can use
49:35
Speaker 3: a financial advisor, you can go direct. You can do
49:38
Speaker 3: it in many different ways, but just do it. Just start.
49:41
Speaker 3: That's something I would have done.
49:42
Speaker 2: Huh, really really good advice. Thank you Jamie for being
49:46
Speaker 2: so generous with your time. We have been speaking with
49:49
Speaker 2: Jamie Majera. She's head of black Rocks US Wealth Advisory
49:53
Speaker 2: Service as well as head of black Rocks Retirement Business.
49:57
Speaker 2: If you enjoy this conversation, well, be sure and check
50:01
Speaker 2: out any of the previous five hundred and fifty we've
50:04
Speaker 2: done over the past eleven years. You can find those
50:07
Speaker 2: at iTunes, Spotify, YouTube, Bloomberg, wherever you find your favorite podcast,
50:13
Speaker 2: And be sure and check out my new book How
50:17
Speaker 2: Not to Invest The ideas, numbers and behavior that destroys
50:22
Speaker 2: wealth and how to avoid them How Not to Invest
50:25
Speaker 2: at your favorite bookstore. I would be remiss if I
50:28
Speaker 2: did not thank the Crack team that helps put these
50:31
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50:36
Speaker 2: are Anna Luke and a Lesis Noriega. Sage Bauman is
50:40
Speaker 2: the head of podcasts at Bloomberg. Shoran Russo is my researcher.
50:44
Speaker 2: I'm Barry ert Hants. You've been listening to Masters in
50:48
Speaker 2: Business on Bloomberg Radio,