HighTower's Weissbluth Commits to Fiduciary Standards (Audio)

the global economy. Dead on unexpected numbers this morning from JP Morgan Chase up two percent, other bank stocks rallying as well. Tomorrow we hear from Citigroup and Wells Fargo. SMP five hundred index up twelve to sixty four again there of six tents of one percent. Naz DAK up twenty nine points, a gain of six tents of one percent. The NaSTA Composite index. By the way, now at five thousand thirty five, Dow Industrial is up one forty four points,

a gain of eight tenths of one percent. Gold up ten dollars an ounce the thirteen thirty three, a gain of seven tenths of one percent. The tenure Town fifteen thirty seconds, the yield on the tenure one point five. I'm Charlie Pellett. That's a Bloombard business flash. Thank you very much, Charlie Pellett. It's time now for the e t F Report. It's brought to you by Sector Spider e t F S. Why buy a single stock when

you can invest in the entire sector? Visit sector s PDRs dot com or call one eight six six Sector e t F. Let's go to Katherine Calgary for the e t F Report. Vanguard took in one forty billion dollars in new money in the first half of the year. Bloomberg Intelligence analyst Eric Baltuna says Vanguard's game continues to cause Wall streets some pain. His reasoning, if you take Vanguards three trillion dollars, they only take home about three

point nine billion dollars in fees from that money. To put that into perspective, if for every three trillion active mutual funds have they taken about thirty billion? And for every three trillion hedge funds have they taken about fifty five billion. Valtuna says a popularity of low cost e t s and index funds represents a transfer of wealth

away from nancial middleman toward investor accounts. He has an addition to Vanguard's low fees, the financial industry is also being hurt by the lack of trading done by Vanguard's index funds and e t s. Low turnover within those funds means less revenue for Wall Street firms. That's your Bloomberg ETF Report. I'm Catherine Cowdery. This is taking stock with Gableen Hayes and Prim Fox on Bloomberg Radio. Your money, your financial wellness. Someone that's looking out for your financial wellness.

Elliott Weiss Blooth. He is the founder and the chief executive officer of High Tower, helping to manage about thirty five billion dollars of customer assets. Elliott, thank you very much for being in the studio. Always a pleasure him. All Right, So you gotta just step back and tell me what's been going on since last time we spoke, Because you know, if you take a look at the SMP five dred, you know you're up about six percent so far this year. But you've kind of done a

round trip. If you already packed in January and held onto your your stomach as the stock market crater, what's been going on. Well, hopefully if you have a good financial advisor, you, um didn't look at all the blood that was showing in December and January and February. You you sort of turned off the screen. You didn't look at all the all the bad news. Markets recovered. Things

today look a little bit more stable. But if you have somebody who's looking out for your investments for you, um, you don't have to worry exactly about what's happening in the marketplace because you've entrusted a professional, hopefully your fiduciary, to keep an eye on that for you. I'm glad

you mentioned fiducier. Maybe we can just do a little sidebar here, because fiduciary is a hot word this year because it has to do with the new Department of Yeah, okay, explain what's going on, and also about your registered reps and responding. So, first of all, the fiduciary standard is

not new. The fiduciary standard is embedded in what it means to be a doctor, to be a lawyer, to be an accountant, And in the most simplest terms, it means that the service provide or has a legal obligation to put their clients or their patient or their person they're serving first. They can't put their own economic interest in front of what they're saying to their to the

patient of the client. So just when you go see a doctor, you don't ever worry that a doctor is prescribing a drug to you because they're getting paid to prescribe that drugs. So the high degree of confidence in the areas of medicine in our industry. Unfortunately, that term has become a really hot topic. There are are parts of the industry where there's a fiduciary duty, like High Tower, and there are parts of the industry where people pretend

to be fiduciaries and they're not really fiduciaries. The Department of Labor unfortunately has made that even more complicated because what they've done is they've tried to redefine the fiduciary duty,

and they've done it with good intentions. I applaud their intention, but it's kind of like if the U. S d A. Came out and said, you know, we're gonna have vegetarian steak, or we have a new way to kosher a pig, all right, and you gotta look at that and you go, well, how does that work Exactly, I'm going to be a vegetarian, but I get have a stake once in a once in a while. Well, that doesn't work. You can't be a vegetarian and occasionally have state because that means you're

not a vegetarian. So similarly, with the Department of Labor, they said, well, we're going to have fiduciaries, but here's a bunch of exceptions and situations where the conflict of interest can actually exist in their relationships. So that high tower, we don't we don't buy that. We don't think that's a true fiduciary duty. We think that those loopholes and caveats sort of swiss cheesing of the Department of the of the of the rule is really a problem because

it creates confusion. So we hope that the Department of Labor and the the sec and and the government sort of gets a little more organized, has a little more frank conversations, and we have a single, clear, unambiguous fiduciary duty standard where there's no ambiguity. Everybody understands what it means and you can trust that when you have a fiduciary, it's really a true fiduciary. All right, so now let's

talk about the actual money. Right and now we are post brexit, we're living in a low interest rate and by arment UH for a one case i R race, they are tax advantaged accounts. What should people be thinking about for those kinds of investments, Well, the most important thing they should be doing is really getting the advice of a third party. And everybody's situation is a little

bit different. A lot of it has to do with where you are in your life cycle, a lot of it has to do with the planning that hopefully you have a financial plan that takes into consideration where you are in terms of building a family and building a career, and all of these are important tools that a financial advisor will integrate into a holistic plan. And this is

where we talk about financial wellness. If you have a thoughtful financial plan and a fiduciary advisor, you hopefully can back away from what happens day to day in the stock market or what happens week to week and a situation like breaks that happens. If you trust your financial advisor is doing what he's doing, you might have a curiosity about sort of the global economic plitical landscape, but you don't have anxiety that it's going to have a have a an impact on your portfolio where you have

to actually engage to worry about it. That's what a good financial advisor should be doing, should be doing for you. I wonder whether your background as a lawyer, because I know that you you have a law recovering right. But the reason I bring that up is because lawyers are either advocates or interrogators. There's always the other side and people who are not professional in let's say, managing money, who try to do it themselves. They're up against some

very smart, energetic, and powerful adversaries. Well so, statistically, um, there's a doining how you count the data, Between five and six trillion dollars of assets are managed by do it yourselfers, and some of them are doing it themselves in a very sort of disorganized fashion. Some of them are plugged into a firm like Vanguard, and they're using very thoughtful tools and dis and and products that have

very low cost to them. There's another six trillion dollars that are being in the hands of brokers, folks that are not fiduciaries. They may even call themselves financial advisors, but from a legal perspective, they don't owe you a fiduciary duty. And then there's a few trillion dollars that are in the hands of true fiduciaries. So if you take a look at those three segments of the industry, um, we obviously are biased because we're in the business of

providing advice. We think that having a true professional manage your financial plan and manage the assets for you is obviously the right way to go compared to somebody who has an agenda to sell you, to sell you a product.

But doing it yourself, and many people do it successfully themselves, requires a lot of time and care and attention, and it's probably better for you than at the hands of somebody who has an ulterior motive and a conflict of interest where you're unaware that they're actually making money off of you, not making money for you. In the legal profession, in the medical fashion, as a lawyer, you don't represent yourself.

As a doctor, you typically don't treat yourself or or right or your family members for example, not allowed to unethical. In the financial industry, people in the financial business, they manage their own money many times should that change, I don't think so that's a great point them. I think in some cases the sort of I eat my own

cooking is a really good metric of credibility. Now, many financial advisors will say, you know, I invest alongside my clients, I use many of the products that my clients use, and we think that's a perfectly suitable way to establish credibility. Now, depending on where that financial advisor, maybe inside of their own financial plan visa their clients, you may have some

differences in people's needs and risk tolerances. So it's not a requirement from a client's perspective that their financial advisor be invested in all the things that they are. But there's nothing wrong with the nancial advisor, uh saying to a client that I eat my own cooking and I put my money at risk the same way that I put your money at risk. Last point to you, low interest rates? Is this the topic of the year for customers? Well, I think it's been a bit of a topic for

a while. I think we've been living in this environment, um for for some time now. Uh. And again, because I'm not in the markets business, I'm a recovering lawyer, and and UH do not do not comment on on

rates in which way they're going. But I certainly am surrounded at High Tower by some very fine, thoughtful financial advisors that are true professionals in this and the consensus opinion from a couple of them that are sort of close to close to me is that we're going to be sort of in this environment for at least a near term, and given where we've been, it's it's not likely to change soon. Thank you very much for spending

time and coming into the studio. Elliott Wis Blooth is the founder and the chief executive officer of High Tower, helping to manage thirty five billion dollars. You're listening to taking stock. We're going to take you through to the clothes next, and this is Bloomberg. Yeah,