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Here we are Nashville, Tennessee for bny mel and twenty six Annual Insight Conference, two thousand financial intermediaries from top asset management firms. We also want to keep you updated on the data. John was just talking about the ISM services beating estimates. You're looking at business activity and at eighteen month high.
This was This was the ISM and then the services part did really well as well.
Let's get to Anthony Javis, chair of the ISM Services Business Committee.
What drove the increase? We're over expansion again.
We don't have to freak out about slipping below fifty as we did last month.
What drove it?
Well, when you look at the report on business release this morning and you hit it on the head business activity up ten point three percentage points to sixty one point two. We had thirteen industries, Thirteen of the eighteen
industries reflected growth month over month. We're measuring that directional change, and we had just under the fifty baseline last month, which showed reflected contraction in the report still above in the positive areas as it relates to GDP growth, it was a little bit like over zero point one percent point there. But when you look at this, what's really driving this is again two of the industries in the top four real estate rental and leasing, health care and
social assistance had increases month over month. And the picture would even be stronger if the employment was better. At forty seven point one, that's one of the four indexes that make up the composite, and that's kind of dragging a bit still as employers are still remaining cautious about hiring.
So, Anthony, I noticed, you know, not being an expert in this some month to month volatility here, what's the best way to look at this ism data is on like a rolling six month kind of basis. And if so, what's that telling you?
You know, it's a great question. We look at the data and we always want to see how it trends out. We don't, you know, look at it as just one month. And to your point, I like to look at trends is three to four months, and this is pretty much in line with what we had on our semi annual forecast going back to December and most recently, our respondents indicated the second half would be better than the first half.
And what we're seeing is this directional change again, and so we're seeing the increases month over a month, and so far the services sector has been fairly resilient and would be even better. Our respondents are very much still concerned about inflation and interest rates.
Before I let you go, Anthony, one big thing, what are the worry spots?
Can you just talk us through that a little bit.
Well, definitely, we're seeing the geopolitical concerns that have been ongoing, and as I just mentioned, inflation and interest rates, interest rates, there's numerous comments from our respondents in the report indicating that capital reinvestment is affected the cost of money. So those are the two areas that are highlighted as the most concern for our respondents.
All right, Anthony, thank you so much. We appreciate it. Anthony Yavi's chair of the Ism Services Business Committee, talking about that data compucity better than expected.
You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at ten am Eastern on applecar Play and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa Play Bloomberg eleven thirty.
We also want to keep you updated on breaking news out of India. Indian Prime Minister are in the Modi ones crucial backing from two key allies in his coalition and that allowed him to form a government and extend his.
Decade in power.
His party was forced to join with the National Democratic Alliance as well as the Teugu Dessam Party. So we want to get you an information on what all of that means and how it sets India's growth up going forward. And the current is a global economy reporter at Bloomberg. He's covered all of this stuff for a very long time. And what did you make of this coalition? What does it mean? How our investor is going to take it?
Well, what we know is that a deal has now been agreed to set up a government and it gets Prime Minister Remodi back into office sort of done a quick negotiation. It puts an energy uncertainty on that side of things, but that's probably about all we know so far. We don't quite know what's behind the deal yet. Obviously this is coalition, which means there has to be concessions and trade offs. It's not clear how that will play out in terms of cabinet postings, policy priorities, and what
it means of course for economic growth going forward for India. Remember, in the past, India's had coalition governments. One of the great pitches of the Modi government was and it was a strong, stable government able to push through change and reform. Well, I've seen some economist notes this morning questioning where that will go from here. It's obviously a Modi government, but the weekend Modi government so uncertainly on the domestic front. And then of course we don't know what it would
mean for India on the world stage yet either. India has been the darling of the global economy, one of the fastest growing, emerging as kind of an alternative to China in the middle of the geopolitical arguing with the US playing a security role in the US led Quad for example, et cetera very confident place in the world
stage for a prominent's remote in India. Will that direction now change, Will they carry on us as they wore I think, so, I think a lot of question marks on certainly over where this government goes over the months and years ahead.
So and then with with you know, twenty four to forty eight hours here of hindsight, is there a decent narrative emerging about why mister Mody lost so much support that we find ourselves at this point where we have to form a coalition government like what happened.
I think it'll probably take a little while for that to become fully clear. Just you know, from what our own colleagues New Delhi are saying, it sounds as though economic matters were certainly at least part of it, inflation and living costs, and this feeling that on the one hand, as I mentioned earlier, India had become this kind of global growth star, stand out on the world stage, a new confident kind of outlook, maybe capitalizing on the challenges
China was facing. But underground, listening to our colleagues there, they're making the point that maybe that growth story wasn't trickling down, or perhaps people on the ground weren't necessarily feeling was trickling down. So clearly some degree of this affection, but it will take time for that to become clear. What is clear is that India had been benefiting from some of the shifts happening right now. FDI had been increasing,
their markets were certainly on a chair. Companies and investors were looking at India or maybe wishing to look at India in a different light than they had been. But of course there are limitations so that it's still no China. It's it doesn't have anything like the scale infrastructure that China offers. So the economy has a long way to go in terms of development, and clearly people underground maybe reflecting that point.
And now this was me yesterday.
I was sitting by the pool here in Nashville, Tennessee with Damien Sassar on the phone being like, I don't get it.
Break down India, South Africa and Mexico for me.
The stuff you said about India was quite interesting in that now that we have a coalition, Mody is going to have to do something to get those.
People that are very disaffected by the.
Government and sort of left behind, because all you're talking about is on capital investment in the stock market, but the people left behind, and that means larger budget deficits, bigger fiscal deficits, more borrowing.
Do you see that in the market. Do you think that that's on the table.
Well, that's the corollary. Our colleagues in New Delhi made point that the coalition partners he's signed up with are especially unreliable. So that would suggest that obviously any incumbent would want to try and do what they can to keep them onside. And if you're trying to keep them onside, that lends us healthy idea of everyone has their pet projects, everyone will want to investment in spending in their home state.
And of course that suggests it would be more pressure on the on the public finances, being on welfare, being investment in infrastructure or whatever. But we have to wait and see what particular policy does come out of it. But at the very least, not just India, but any country where you have a coalition government, that means there has to be trade offs, That means there has to
be compromised. That means everyone has a wish list, and when you have a wish list government to try and keep things together in that typically does mean more pressure and spending. We'll just have to see how that plays out. In the months ahead.
All right, and so good to chat with you.
Thank you so much for joining us and the current He is Bloomberg Global Economy reporter joining us from DC So I think that's quite interesting.
We'll see, we'll see how much money is.
But again we've all heard this pitch. I think over the last several years, as China has had its challenges, whether it's government cracking down on business or their economy slowing their you know, folks will come up to me and say, what you guys thought about China for the last ten twenty years, Take them and put it onto India. That's where the opportunity is and you have better rule of law, better you know, expectations of business, and that can be a real opportunity for the next ten to
twenty years. We'll have to see how this change in government maybe impacts that.
You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at ten am Eastern on Applecarplay and then Broud Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
Cara Malex Steel alongside Paul Sweeney. This is Bloomberg Intelligence Radio. We bring you all the top news with our analyst Lens from Bloomberg Intelligence. They cover two thousand companies and one hundred and thirty industries worldwide, and occasionally they let us go on the road and do stuff. So today we are broadcasting live from that magnificent Gaylord Opu Land Resort in Nashville for BNY Melon's twenty six annual Inside Conference.
They have over two thousand financial intermediaries from top asset management firms. And I'm grateful that someone is here now from Pershing who's going to give us some insight into technology.
Joining us now is Avesley Simmons.
She's president of Pushing X, head of strategy for B and Y Melons Pershing, and head of product management for BNY Melons.
You do a lot of stuff.
Yeah, that's a lot of titles there you go.
So first off, what is Pushing X.
Yeah, Pushing X is a fintech inside of the Bank of New York Mellon that was started about two and a half years ago. So I was the first employee. My background's in FinTechs and I came to be and why to really drive innovation inside this story two hundred and forty year old institution, so we're never resting on our laurels.
We're always moving.
Forward, and doing it with a fintech inside of the bank has been a super efficient way to go.
So what are some of the initial products that you guys have been bringing to market for your clients.
Yeah, so last year we launched our first product, which is called Wove Advisory, and that really.
Is WOV Wove Wove.
Yeah.
The reason we call it Wove is it brings together a lot of disconnected technolog and really that's kind of an advisor workstation if you think about it. Let's advisors sort of build portfolios, trade them, report on them everything they need to service a client. This year we launched
three more products, so we've been busy. We launched Wove Data, which is a cloud based data aggregation service so that advisors can have access to all the data they need to service their clients across any custodian and any firm. We launched Wove Connect, which is a suite of APIs. Lots of people need to build through APIs and so
we've offered that. And then the third product is probably the one I think people are most excited about, which is wove Investor, which is an investor portal that can be configured to any firms branding so that they can have their investors log into a really simple.
And easy to use experience. Wow, that's fintech man, right there, you do?
I think? Well, I think what happened during the pandemic? You're you weren't going into yourinancial advisor, you weren't going into your commercial right local brand. So people were forced to get yeah, tech savvy, and I think probably from the provider perspective, you guys were probably forced by the marketplace to make up more investments. So what are you hearing from your advisors? What do they what do they
really need? Do they want to empower their clients? So they just want to be smarter when they're talking to the clients.
Well all of the above, right, Like, so they really want their clients to have a very easy to use experience. And today, just given the way the industry has grown up, they are usually having to ask their and investor to log into multiple accounts, one for financial planning, one for performance reporting, one for trading.
Nobody wants that.
Anymore, So you remember that now, I can't remember that many passwords. So Wove Investor brings all that together, and that's why I think people are super excited about that product.
But you can't pull.
Together a really great investor experience unless you have all the data pulled together. So Wolf Data is also a really important product. So Wolf Connect, Wove Advisory, Wove Data, Wolve Investor, they all create a suite. And the way to think about it is kind of like the Microsoft suite. You know, you got your outlook, you got your teams, and they all work together.
That's what we're doing here in wealth.
So when I log onto my wealth management MIENT site, yeah, and I can see my investments and my bank accounts and my savings and my furrow one K and then I see like what the planning is.
That's all that.
Stuff stuff, and we're putting it all together for any firm, right. So a lot of large firms have made those investments if you're working with you know, like a large wirehouse
or something like that. But these are independent, mostly independent wealth advisors, and they don't have that kind of capital right to build something that end to end, So we're doing it for them and they can own it fractionally and not have to make that massive investment that the Bank of New York Mellon is making on their behalf.
What's the business case for the investments that you get? So when you go to your CFO and Astra Capital to make some of these investments, what's the business case you make to your CFO.
Yeah, so it's pretty easy to make the case for this platform because this helps our Persian custody business, it helps our investment management business, it helps our wealth management business, and it helps our asset manage our clients. So because Bank of New York Mellon runs across all of those different business lines.
This pulls it all together.
So it's i'm the best dollar to spend because it's really lifting all these different business lines across B and Y. And that really was the reason that we've made the investment in this platform.
So what else then do you work on? And this sounds great?
Yeah, yeah, done and done? No, never done.
So we'll be driving forward with a lot more and I'll be back here on the stage next year with more releases on WOVE.
But we've also been working on strategy.
So I took over the head of Persian strategy back in November, and what was really exciting is here we were able to release our new mission and our new vision and let me just quickly run through it. Our new mission is to help advisors help more people. So we believe that there's not enough advisors in the in the United States to serve all the clients that need service. So there's not many more people, you know, coming into
the industry. So our job is to make the ones that are here more productive so that it can just help more people.
So it's pretty simple.
And then our new vision is to create the most connected and productive platform for the future of wealth. We really see a world now where everything has to be connected, and that's the mission we're on.
So why aren't more young people coming into the business Because all I read about is the big macro story of all this wealth from the boomers has to be transferred and has to be managing. It seems like a twenty thirty year runway.
It is.
So my number three offspring is going into that part of their business scheme.
Yeah.
Why, I've heard from a lot of your colleagues that that's a challenge, right, Yeah, it.
Is a challenge. I think there's some structural challenges.
A lot of part of this business is still very you know, kind of commission based, and young people want potentially a different kind of onboarding model. But I also just think we have a bit of a pr problem. You know, people don't realize how mission driven a financial
advisor is. You know, you really are helping families create a different future, and I think if we can sort of change the narrative a little bit, I mean, I hate to use that term, but it is a really noble ambition, and I think a lot of kids don't see it that way. They sort of see it as like yuckie Wall Street, but it's not that at all. Financial advice is really a community based, heartfelt type of occupation, especially if.
You're able to touch families and lives that aren't multi billion.
Yeah, that's the whole thing, right, Like everybody's like, okay, cool. But the reason our help advisors help more people. Ambition is so strong is, you know, the more we can help advisors be more productive, the more sort of lower down the economic chain they can go, and we can really truly change lives.
So I'm super passionate.
About it, and I think that you know, we're just going to keep working until we can get millions more internally.
You know, change for such a large institution that's been around for hundreds of years, especially in the technology sense, can be really hard.
Yeah, what kind of mandate do you feel like you were able.
To have an execute?
Like?
Yeah, I'm how on bored? Is everybody with all the change?
I feel so so privileged because this has been a you know, kind of top of the house embraced initiative, right so, our our CEO, Robin Vince, this is one of his key initiatives, our CFO, our whole executive's office, and people are so supportive. And what they love about this kind of fintech model that we've put together is we're actually now going to start to adopt this whole model firm wide. And I think it's going to make the future of Bank of pre Yorick Mellon as as bright as its past has been.
And Bank of New York the best address global financial services? Okay, number one Wall Street?
Yeah?
How cool is that?
I mean that's a good is that good? Pr rom in right now?
I always think it's pretty cool when I think about Alexander Hamilton as our founder, I mean, what a visionary, what a revolutionary?
So I I don't mind sharing.
And what would you think of b and why Melonson?
I think it'd be pretty proud. Yeah, I certainly hope he would be.
Well, I think that that's a good recruiting tool. You go go on campuses. You know that Hamilton musical that you have eyes.
Such a good point.
Ainsley, thanks, love, really appreciate thanks for stopping by with us. Ainsley Simmons, President of Pershing X, head of Strategy for Being y Melon's Perching and head of product management for Being My.
Men Canadian and Canadian.
There's so much that she does.
Apparently you're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on applecar Play and Android Auto with a Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station just Say Alexa playing Bloomberg eleven thirty.
Alex Feel Pulse when you live here in our down the Ashville, Tennessee. At the b NY Mellon Insight conference, we are at the Gaylord Entertainment Grand opry Land Resort, and this is a serious resort. So if you're ever done in the Nashville area, come take a look. They got everything here, all right, Alex and I've been spending the past a day or so talking to a lot of the good folks at bny Mellon about how they try to serve their investor clients. Let's see if they
actually get it done here. No, I'm Tash, he joins its head of Revenue and Partnerships at BNY Mellon's Pershing X and Mohan grew up Pockum. He's a chief information officer at Stewart Partners and investment advisory firm. So we got client, we got like the person who kind of works for the client. We got all together here at one stage. So no, and let's talk about let's talk to you first, what type of investor? What type of
clients do you guys look for on your platform? What's an ideal type of money management client for you guys at B and Y.
Persian'side from obviously O.
Mohans the ideal and you be sure a bit more about that, but we look at the whole range. We can serve everybody, everything from a traditional broker dealer to independent ria or hybrids, aggregators and you know, fast growing companies is really where we are. We believe that heavy tech adopters are the ones that are growing fastest. We actually see research that tells us that advisory firms that adopt tech heavily you can see client growth and AUM growth of three.
X what do others do?
And so those are the types of provider of advisors we want to work with because what we're doing is delivering delivering to them the most connected tech because there's still even for those adopters, there's still a lot of challenges and pains that come along with that tech.
So Mohan, Stewart Partners is actually quite large, right, Can you tell us a little bit about the firm and sort of what works for.
You that Pershing X is doing.
So absolutely thanks for having us. First of all, So Stewart Partners, we are a hybrida, we are a blocker dealer and we're headquartered in New York. Roughly thirty five billion dollars in assets, two hundreds on the advisors. A lot of our advisors come from a breakaway firms from the bultch firms like big firms. Some of the officers softly twenty six states a large footprint and in terms of our relationship with posing. You know, we have two
strategic relationships. One is for the custody business obviously right the biggest player, and of course beyond the custody we are also very excited to be part of the Pushing X. We are one of the earlier actors. We just started the rollout, so more feedback to come, but we are truly excited by what we're going to see.
Mohun, I've heard. I guess what we've learned over the last couple of days is that the number of advisors out there isn't growing. There's a greater demand. There's more demand for advisors than maybe there are advisors. How do you grow your advisor base? Do you wait for some of your breakaway from a bultch bracket firm. Do you you try to go out there and attract them proactively? How does that happen?
So we look at two different options. The first one is obviously approved my right, there are breakaway advisors. So if you look at the breakaway advisors, they are mostly seeking independence. That is something that is not well understood. They seek independence in how they run the business.
So this is somebody from say like a Merrill Inch or something, or Morgan Stanley says, I want to kind of go out on my own a little bit, get a little bit more autonomy.
Well at autonomy and how they run the business, and that inevitably translates into the technology stack. We need to win for them, right, That is one option. But also we are looking at a lot of M and as this pace is quite i would say, like active.
In the M and day space.
If you look at the number of areas with more than ten billion dollars in azards like ten fifteen years versus where it is right now, that segment is growing really fast. So we look at multiple options. You know, recruitment, we have a very robus pipeline, but also we are very active in the M and day space and we will not hesitate to go after the right target.
That was one of the topics.
You Actually Mohan joined me on a panel yesterday and one of the topics was how do we differentiate leveraging tech in a heavily active M and A environment and how do we recruit and keep those assets at the
advisory form firm. A lot a lot of that is where we're trying to add in value as as woe offering, flexibility, offering, connectivity and really allowing these advisors that are breaking away to still have that comfort of a full stack that oftentimes can be really challenging if you're try and go out there on your own and start over.
How does the relationship between client and provider work? Like, does mohon go to you and is like, look, no, I got some problems.
I need to help me fix them, Like how can you help my efficiency or productivity? Or do you go to them and say, look, these things are going to make your lives a lot better and this is why.
How does this evolve?
It always starts with the client.
Okay, so you were like, I need help.
It's always a dialect, right, I think that's the most important part. It's a dialect.
It's it's not.
You know, uh, it's it's both. It's both ways. Be give the feedback in terms of what we hear and what we see. We have much closer to the advisors, like because we work with them on a day to day basis, and we also, you know, like to hear from the broader trends from you know, closing closing X. They obviously see a much broader size of the market than we do, so we send feedback, we get feedback. We both jointly put together technology strategies to help us move off.
The We have a philosophy of meeting our clients where they are, so we're never coming and trying to pitch a widget.
We're always coming and listening.
Where do you have your biggest pain points and let's figure out how we can help solve those pain points or even advise you as to where we're seeing clients go elsewhere to solve those pain points.
Who's your biggest competitor?
That's a great question, I think right now, end to end, it's a there's a different types of competitors. There's the fully outsourced model that we see some clients go to where they're getting everything all in one shop, but they're also you know, have to sacrifice a bit of their brand and independence. And then there's dissemblers, those clients that are going out there and quite a little really putting
together twelve different pieces of technology. And then you have this new category that we've brought to the market, and so the new category of actually having it curated for you in one spot.
I think it's really a new category.
What do you want him to fix next? What are you telling him, now, well.
Stay through to the core philosophy of being flexible but integrated.
Right.
That is my one feedback, which is, you know, we should not lose sight of the broader philosophy, which is to build a technology ecosystem that works for the advisor. They sign our paychecks, so we got to make sure that they're happy at the end of the day.
Fair point.
All right, guys, thanks for coming by.
This was really helpful.
We got the Lolan wove before and it's nice to see how it interacts Nome Tash He's head of Revenue and Partnerships at ME and Y Melons Pershing X and also a Mohan Guru Pakiam, a Chief information officer at Steward Partners or the interconnection between client and technology.
Thank you so much much.
Guys, you're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on applecar Play and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station, Just Say Alexa playing Bloomberg eleven thirty Alex Deal Paul Sweeney.
We were live here in Nashville, Tennessee. At the BNY Mellon Insight Conference. We are at the Gaylord opry Land Resort, which is this spectacular, world class water park. Alex did you go yesterday? John Right?
I did.
Some kids tried to cut line in front of me. He's gonna think twice about doing that again. Let him believe it that exactly.
This is a good life lesson that one must learn exactly.
Hanaka Smith joins us here. She's a global head of Investment Management at BNY Mellon. Hanneack, I know in the investment management business for BNY melon. You guys had a pretty big announcement this morning. Talk to us about that.
Yeah, so we're actually announced something in collaboration with our colleagues. It's Pershing, which is why I'm so excited to be here. And that's a bundled service offering between Pershing and investment Management. So Pershing, of course already offers custody retail managed accounts capabilities, and now what we're also going to be offering clients is access to investment management products, but in a much more cost effective way than they've been able to access before.
And the way this is going to work is that once they're on what we call the WOVE platform in this tech enabled environment and manage their accounts through pershing. The more assets they allocate to IM products, the greater the discount up to forty percent. So it's one going to simplify advisor's life because they it will free up time through this tech enables environment. It's also going to give them choice and it's also going to reduce the cost, which is really important.
What I mean, aside from the cost, what problem was this trying to solve?
So it is one of the things that.
Is trying to solve is actually giving advisors more time to spend with their end client because the environment for them is becoming increasingly complex through regulatory pressures, technology pressures. And the first thing that this is resolving this first through onboarding clients onto the WOVE platform or the advisors, which is where they can bring their technology and their apps.
And then secondly we're going to be helping them by putting institutional quality portfolio advice on that platform and also giving them the full breadth of investment management product as a choice.
It seems like this was something that should have been done day one. Why is it happening now?
It is happening now, partly because we have been working quite hard in insight being wide to be more for our clients, as we call it, we have better technoology solutions that we didn't have before. And Thirdly, and also really importantly, we've been investing time in educating our colleagues that work with the advisors about the expertise that exists in investment management two degree that we hadn't done before. What's been the response so far, Well, we're it's a
day old. We have of course tested this with some clients before we sort of rolled it out into the broader market, and it's been very very well received, and working with some of our key clients considering these offerings previously really made us consider that we should roll this out further.
As globalhead of Investment Management at BNY Mellon, how are you guys viewing the market here these days when you kind of just start from the thirty thousand foot level, where do you start?
So where do you start?
Well, it's very difficult not to start without talking about rates, what's going to happen. And we're still of the view that rates will be higher for longer and that we're coming out of what was an abnormal environment in a very low rate environment. Notwithstanding that, we are expecting perhaps a rate cut later in the year, both here as well as it will be interesting to see what the
ECB is going to do tomorrow as well. There's been tiny optic in inflation in Europe, but it was really really tiny that it seemed to be set for a rate cut.
Will be if they have telegrammed that raid cut that if they didn't know.
So that's of course on industor's mind, but we're keenley of course, what really watching what the Fed is going to do, and it does seem that there's some that the economy is slowing down a little bit. I was actually looking through some of the figures around hiring and what's really interesting to see is that the hiring rate is slowing down.
I know we're always.
Looking at employment figures, but hiring rates slowing down, I think is also a sign. Plus, the data that we saw coming out of manufacturing may indicates a little bit of a slowdown and may lead to a cut.
What I find so interesting about this moment in time is that we're really reversing like fifteen years of zero interest rates and twenty years of no inflation, and now you have a world where fixed income makes money, Yes, just from the dividend, like I mean actually yeah, like cash makes money. I mean, forget about appreciation anything. You can just make money by sitting there. And I wonder how that changes what a wealth manager does. I mean, this has been a world that hasn't been seen in
like two generations of investors at this point. How does someone with your experience think about that?
Well, that in itself is actually quite a big issue, right. We have a lot of people who are just not experienced in this type of environment, who on their own actually have considerable experience, maybe fifteen or twenty years of investing, but they haven't seen this before for and they don't
really know how to react. So it is important that people like us keep training not only our own colleagues, but then also the end advisor as they work with clients, because you need to plan for your future and we do know, of course we're hitting we're hitting the issue of how clients are going to fund their retirement, and we haven't really solved for that, so you could perhaps you know, income will be important and in a higher
rate environment and inflation coming down that rate environment will actually be quite helpful with income, but that will not be sustainable so that when you think about retirement sort of over a fifteen twenty year term, so you will also have to continue to have some risk other risk assets in the portfolio with a longer term view to both grow your capital base that also have assets in the portfolio that can generate income, and that whole diver
versification journey, how to plan for that is a journey in itself, you.
Know, coming to events like this, I was always surprised about alternative investments and how they are top of mind on some of these wealth managers. I thought that was just a big institutional allocation, but retail I mean, you know rias are thinking about that. How do you What are the conversations that you have with some of these people.
Well, we are, We were just in a conversation earlier this morning with Jenny Johnson from Franklin Templeton as well, and we are seeing the demands coming through from the end investor. So first of all, you need to think about how we make those investments accessible to a retail investor, because you still need to be a qualified investor to
actually access those products. Then secondly, you need to make sure that the advisors are appropriately trained to really explain to the end investor the risks that come with a type of investment. They can provide a lot of upside. They're obviously have to create the opportunity to generate higher returns someone who can achieve in the public markets, both fixed and equities. But the investments are illiquid.
And so you have to plan for that.
And it does mean that those investments cannot be a very large allocation of end client's portfolios, and that has to be well understood and appropriately managed from.
A risk respective like hunder ten percent.
Yeah, but I think what's also happening. I think the markets have been running quite hot. There's also fewer listed companies, right, that's just there are fewer companies going IPO. We've also seen a trend of the D listings, so there's actually fewer companies available. So if you want to invest in the US economy, you kind of have to go private.
Such great insight.
Really appreciate your time, Thank you so much for stopping by, Congratulations and unveiling your new Speedo products. Hanaga Smid's a global head of investment management for b ny Melon, and that's so interesting. It's like, yes, you're gonna have alternative assets.
Be a part of the portfolio, but I don't know if we know just how much that's going to be.
And you mentioned that ten percent number. I remember being in a conversation with one of these events a couple of years ago, and some retail advisors were saying, no, twenty thirty, forty percent. I mean, that's kind of almost like an endowment allocation with good Yeah, when you go to an endowment. And so that really surprised me that they're willing to take that level of risk on, or the private our clients are probably willing to take that
level of risk on. So it's private equity, private credit, hedge funds, all those types of things are out there.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on applecar Play and Android Auto with the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station just say Alexa playing Bloomberg eleven thirty.
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We bring you all the top news and finance and business through our lens of our Bloomberg Intelligence analysts. They cover two thousand companies at one hundred and thirty in is worldwide. For the last two days, we've had the honor being right here in Nashville, Tennessee, broadcasting live from the magnificent Gaylord Opuland Resort in Nashville for BNY Melons twenty sixth Annual Insight Conference with over two thousand financial
intermediaries from top asset management firms. We've seen a lot of guests that we usually have on TV to stroll and buy see of them. Person is always really fun and we were just ended the last conversation on alternatives and we could not find a better person than to talk to about alternatives. Lisa Lewin is director of Prime Services at BNY Melons Pershing and she joins us here. Lisa, it's great to see you, Thanks for being here.
Good morning, Thank you for having me.
It's great to be here.
So we're just talking to Hanaka about alternatives and what part they should play in their portfolio and sort of with the risk allocation should be.
You are on a panel earlier.
That talked about just that.
What were some of your takeaways?
Yep, absolutely, so we moderated a panel yesterday that was on the topic actually around the democratization of alternatives, and what we really focused on was the trend that we've seen over the last several years here at BNYMEL and Pershing and where there's been an increased interest from advisors and other clients in the wealth management channel to allocate
or increase their allocations to alternative investments. So that's obviously been very exciting for us since we work with both alternative investment managers but also advisors to help them navigate kind of what that means for their business, what they should be thinking about, how they should look at alternative strategies where those can fit into their asset allocation. And that's really what we focused on during our discussion yesterday.
Like I came to one of these events a couple of years ago and I was talking to an advisor, and I thought that their allocation would have been ten percent, it's a lot higher. What's your experience about what some of these wealth advisors think about in terms of allocation to alternatives. Great question.
So it's actually really varied from what we've seen advisory community, and that really depends a lot on the advisor, kind of their comfort for an educational level with alternatives, their profile of their clients that they service. We see more that right now advisors have more of a I would call it maybe two to five percent allocation to alternatives.
But the data that we've seen and the statistics from when we've talked to our clients in this space is that they're actually looking to increase their allocation to alternatives the closer to ten to fifteen percent of their clients overall portfolio waiting.
So where's the risk here?
So usually what we talking about private investments like, they just are alternative investments. I think of private credit, I think of crypto all that kind of stuff. Yeah, they haven't been around very long. So what's the conversation around risk management?
Excellent question.
There's definitely a lot of conversation around risk management, and that really folds into the larger conversation which is around education and the need for education and alex I think to your point, one of the biggest challenges that both advisors and alternative investment managers have is trying to provide the edge to these clients who have not been as traditionally invested in these types of strategies about why they're
beneficial in their portfolios. So it's talking about everything from risk to liquidity to you know, where they provide diversification from your traditional stalk and bought investments to how you should bucket them and your overall allocation. All of that is kind of part of the conversation that is still being had in education that you know, a lot of people are looking to provide in this space.
All Right. I grew up with private equity and with hedge funds hedge funds as my main alternatives. Now this new thing, private credit has come in and become such a huge market. What's the view of bny Melon Pershing on the private credit market.
The private credit market has definitely been huge. One of the things that my panel has actually talked about yesterday is that private credit strategies have actually seen the most inflows from their advisor clients, so they've seen certainly a lot of interests in private credit strategies.
You know.
One of the things that we also heard is that a lot of the managers of these private credit strategies have really been kind of on the forefront of creating structures that make it more like a little easier for these clients.
To access their strategies.
So that's certainly helped as well, but they can We continue to see in my panel has talked about this yesterday, a lot of interest in private credit and inflows into those strategies.
How do you think that investors and wealth managers are using private credit? Is it long term, riskier bets that will return more than say the stock market.
Is it just hey, let's just throw.
Some money here, see what happens, because money's going there and it could be really good return.
Like, what's the best use of it?
Excellent question.
I think the best use of it from what we're seeing is again like another way to diversify away from that traditional kind of sixty to forty portfolio allocation that so many people have traditionally stuck to. It is another way to maybe provide kind of higher returns for their clients, you know, diversification again away from the public markets. So that's really how we're seeing clients use these private credit strategies.
In the pastime. How I've interacted with prime services is you know, I've got some trader on Morgan Stanley's equity or bond desk, and she has a great three or four years and she takes that track record and says, calls you up and say, go raise me a billion dollars. There's so how much money you can raise. I want to go out on my own. Does that happen anymore?
Well, maybe not as easy as you describe, but certainly one of the services that we do provide our clients is what's called capital introductions, So we help our hedge fund and other alternative asset management clients meet potential investors to raise capital. So that is certainly something that we do. We also work with our clients to structure different financing arrangements and to facilitate any type of securities lending activity if they have a shortening component to their strategy.
What else are you.
Guys talking about that we don't know about yet that like the clients are saying, like, this is a really cool alternative that we have to start talking about in a different way.
Question a few things.
I think one of the things that I found interesting in my panel yesterday is that they're seeing a lot of inflows into an addition to private credit, also to PE secondaries.
I thought that was.
Interesting, and that they're also starting to see more interest and inflows into real estate credit. So I thought that those were kind of two interesting things that they highlighted that are trends that we certainly plan to continue to watch.
The secondaries.
Yeah, I don't so is crypto in your world? So we crypto is in our world.
I do not really deal with crypto, and I will be the first to amit. I am not the expert on the space.
Like, I don't know if it's an alternative, it's is it a currency, is a commodity? I don't know.
I think that's kind of the issue, right, Like if you're a wealth management like management manager, how do you pitch that and what percentage of your portfolio?
Should that be? Excellent question?
I No, it knows.
No one knows, and I think part of that is just around No one really fully understands crypto.
Yeah, I think that's fair to say, except for the just the real maybe the grey scale people over there. They have the nice big booth this year, so maybe they do.
It's the young kids, Yeah, that's what I was gonna say.
You got to ask someone that's young. Yeah, they'll understand it, all right.
Lisa, thank you so much for joining us. Really appreciate Lisa lew And she's a director of Prime Services at b n Y Melon Pershing with life here in Nashville, Tennessee at the Gaylord Opperland Resort for the BNY Melon Insight get together here, which they do every year, and here we're in Nashville, so good stuff. Here we can talking to a lot of smart people about the wealth management business, learning a lot as well.
I have to say I did learn a lot.
Yeah, I know.
I don't think I really understood what like pershing did it be?
And why Melon and how instrumental it is to the functioning of like my wealth manager.
Yeah. So the next time you're on Wall Street, go to number one Wall Street on the corner. That's the original site of the Bank of New York. Alexander Hamilton. Good stuff.
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