Business
BNY's Jose Minaya on How AI Is Transforming Asset Management
In this episode, Jose Minaya, CEO of BNY Mellon, shares insights on how artificial intelligence is revolutionizing asset management. He discusses his career journey, the impact of digital technology a...
BNY's Jose Minaya on How AI Is Transforming Asset Management
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Hi, I'm Stephen Carroll.
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Why Bank of New York?
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Incredible Bank, incredible history.
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They're literally the first bank, BNY is the first bank in America, the first publicly
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listed stock on the New York Stock Exchange.
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Not only do they have 2.2 trillion in assets, but they touch about one out of every $5
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in assets globally.
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They touch 60, 70 trillion dollars worth of assets, whether it's through their clearing,
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their infrastructure, their custodianship, they're just a massive bank, the oldest bank
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in America, the first bank in America formed by Alexander Hamilton.
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Jose has a fascinating background and a fascinating career as both a chief investment officer
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and CEO.
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Few people are better positioned to talk about not only what's happening in the state of
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wealth management in the US and globally, but what's coming.
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Next, what digital technology and tokenization means for asset managers, as well as the
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impact of AI on how we're all going to deal with our dollars.
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I thought this conversation was absolutely fascinating and I think you will also with
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no further ado, my master's in business interview of BNY's Jose Manaya.
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So let's start out talking about your background, bachelor's in finance from Manhattan
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College, an MBA from Tuck Business School at Dartmouth.
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What was the career plan?
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You know, my career plan was always a work in progress.
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I always say I almost had a little bit of a forest gump approach to starting my career.
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I, first I'm a first generation American, so you're going to go up in Washington Heights
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to a Dominican, a Dominican family Dominican parents.
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So baseball was big in my life.
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And for a while there, I thought I was going to be a pro baseball player.
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What'd you play?
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I was a pitcher.
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Uh-huh.
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Did pretty well.
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Did pretty well up into the point that I didn't.
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And then high school of college, high school and college.
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I pitched in high school.
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No curveball.
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That's the end of your pitching career.
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Yeah.
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My whole thing is if I threw strikes, I did pretty well.
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If I didn't, I was going to get in trouble.
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So you a little control issue?
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Is that the problem?
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Yeah, a little control issues.
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Yeah.
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It's hard to throw both hard and accurately.
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Yes, it is.
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Yes, it is.
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It's like like everything else.
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It's about trying to find the balance, right?
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So that's right.
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So you mentioned your first generation American.
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How did that affect you?
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What, what does that do to your world view, your work ethic?
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How does it affect your outlook and career progress?
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All right.
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I think being a first gen and just kind of my, you know, the neighborhood I grew up,
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which I often described to people, you know, if you've been to Chinatown,
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Washington Heights when I grew up there was the Dominican version of Chinatown.
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But look, I mean, I grew up around strong family values.
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I had a great home-wise, very privileged that way.
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Strong work ethic coming in, but I did, but I did grow up in a bubble, right?
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So one end, what I took with me when I exited or left that bubble was work ethic,
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was kind of really understanding relationships and that.
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But then when I left that bubble, it was more defined by, okay, I was in different audiences.
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I was in situations where then more acclimating was kind of more my focus and my goal for early
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part of my career.
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Really, really interesting.
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You come out of talk.
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You end up being an analyst.
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Tell us about the early days post grad school.
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Yeah, I think post grad school.
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I was still trying to figure out what I really wanted to do because, you know, if I even
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go pre, you know, coming out of undergrad, you know, I had a finance degree.
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I was good at math and, you know, I asked people, what are you supposed to do with this?
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And people mentioned Wall Street and firms like JP Morgan and Goldman Sachs.
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And I was fortunate enough to get a job at JP Morgan.
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I went, everyone was taking a GMAT.
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I had no idea what a GMAT was, but I figured I'm supposed to take it as well.
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And I went to grad school.
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And then coming out of grad school, I went back to Wall Street.
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I'm not necessarily thinking that's what I wanted my career to be.
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But I didn't really have a plan for anything else.
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I think as I started really searching around what I wanted to do and instead of advising
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people kind of doing things that were going to be there for the long term build something,
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you know, I found my way into the buy side, right?
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And then my first job kind of in investing, working at AIG Global Investment Group, I think
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today is called Pine Bridge.
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But that was my first real like investing job.
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And even there finding my way, I started out in equities.
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And I was like, okay, I like this.
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But I felt like, you know, the other side as I ran into people on the bond side and
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private credit, I felt that that was more kind of cash low based versus I used to get
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a knowing where my model, I felt like my models were right, but the markets never cooperated
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with, so it didn't matter that I was right.
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I felt more at home in that environment where it was more around, okay, how do I judge
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the downside?
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How do I kind of really analyze cash flows?
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And then I found myself on the buy side and I found myself as a private credit manager.
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I think from there, interestingly enough, I said, hey, I found my thing.
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I love doing this.
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And I always found myself in situations where I did what I did really well and somebody
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always asked me to do a little more.
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And in that little more, it was always kind of like extending myself and say, okay, am I
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still the SME?
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Am I not gathering and doing different things?
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And then ultimately, especially when I was at TIA, it was this idea of like, oh, you
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know, should we go into agriculture?
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Should we go into commodities?
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And I was like, well, here, I'm a kid from New York City.
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I don't really know anything about agriculture and commodities.
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But you know what?
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I kind of dive in and said, this is interesting.
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This was the other thing that took me to another place in my career that I'd say I took
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another people view it as a big risk.
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Because at that point, I was managing about a $15 billion private credit portfolio.
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Back then, that was a pretty major thing.
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I felt like a lot of money.
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I felt like a lot of money and it was and is.
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And I kind of made a decision from doing these kind of nights and weekends on this project
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of going into farmland.
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I made a decision to say, you know what?
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I'm going to leave all this behind.
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I want to go try to build this.
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And even my, the CIO at the time said, are you sure you want to do this?
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Because you know, maybe I'll tell you what, what, why don't you give this a run?
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But you know what, we'll keep your job warm for you here.
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I think he figured he'll come running back in six months.
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Give this a run, meaning the CIO position.
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Meaning running a farmland fund.
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Oh, okay.
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Yeah.
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And, you know, I, so I went out and said, oh, I want to do this.
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We ended up becoming the largest farmland fund institutional manager for farmland assets
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globally at the time.
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And you know, one of the things that my philosophy in doing these things is, you know, taking
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the confidence so I was kind of tripe things that get me excited and that I feel passionate
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about.
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But I think throughout my investing life, you know, one mantra I've always had is, you
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don't know.
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And that comes with me more humble that comes with kind of asking a lot of questions, not
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being intimidated by bringing people around you that are smarter than you.
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Because I was like, hey, I could understand people.
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I can understand math.
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Now how do I fill in these blanks?
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How do I get people around me?
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They're going to give me kind of the knowledge that I know I don't have.
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And that career progression was from farmland.
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They said, hey, you did an amazing job.
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Can you take real estate?
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Can you take natural resources?
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Can you take all of private markets?
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And then ultimately, can you be the chief investment officer?
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And then growing that into a asset management firm.
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And what I realized was that what I thought my passion was was in investing.
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But the real passion that I really found was in building things, you know, managing teams
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and bringing teams together.
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So I want to circle back to building what you did at Newveen.
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How do you go from JP Morgan to AIG to Merrill?
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What ultimately leads you to Newveen?
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You know what leads me to Newveen is just, I would say like picking up the breadcrumbs,
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right?
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I was on a journey of really kind of searching, again, what's my passion?
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What I want to do?
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I was very fortunate, you know, here I am.
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I'm sitting at a job on Wall Street at JP Morgan.
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Very fortunate to have it.
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But I couldn't see myself doing that job for 20 years.
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Then I'm like, oh, I'm fortunate to get a job on the buy side.
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And I'm like, okay, this is great.
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I'm at AIG, you know, it's a terrific opportunity, terrific firm.
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Yet there's still that thing that I'm kind of still trying to find that feels like,
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hey, what's really getting my juices going?
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And you know, it was always that search for that thing that kind of made me get up early
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in the morning.
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And when I ultimately landed at Newveen, which is part of TIA, that was that role.
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And I ended up being there 20 years.
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And I would tell you, the longest role I've ever had in my life in my entire career
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was my five years or so as my role as CEO there.
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Even 20 years is a long time in the modern world to be at anyone firm.
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It seems people don't do that anymore.
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What was it that kept you there?
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It sounds like they kept piling on new challenges and really keeping you engaged.
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Yeah, that's exactly right.
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Meaning, like the longest role I've had in my career is the five years I was the CEO.
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Part of that, every three, four years, someone was giving me something else to build.
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I would say I get itchy.
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Maybe I'm not the best steward in the world.
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But what does get me excited is building things, kind of building new teams,
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you know, the challenge of kind of like growing a capability.
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And I got to do that over the course of 20 years.
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I've been extremely blessed.
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And same thing in moving to my role now.
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It's a tremendous opportunity.
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And, you know, I could still say that 20 plus years, I still get excited every morning
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to kind of go to work.
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When you say building new teams, give us an example of some of the sort of teams you
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helped build that kept you occupied for 20 years.
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Sure.
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I mean, when I mentioned the farmland example, that was a complete start up from scratch,
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from zero dollars, from zero dollars to kind of go in and building a team.
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You know, very proud of what we did in private credit.
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You know, we started the Churchill group with, you know, again,
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that was finding the right people, finding Ken Cancel, who was a tremendous leader
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and had a team with them.
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And we started with zero.
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Today, that broader platform at New Vien is almost, you know,
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just short of 100 billion in private credit.
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So there's multiple examples like that where basically the blueprint was either
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we were doing an acquisition or we were finding a team and we're saying,
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okay, we've got the right making.
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See, over team, how do we give this team the right tools and go out and try to grow,
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grow a platform?
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So you're no stranger to alternatives.
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We've talked about farmland, real estate, private credit, private debt, natural resources.
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What is your view today on all?
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What do you think about?
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What kind of feels a little bit like a land rush?
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What's going on in the world of all today?
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Yeah.
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You know, it feels like a land rush, but I will tell you that this has been building for
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some time.
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And the interesting thing is, you know, if I go back 10, 15 years ago, my pitch talking
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to clients around alternatives was one that was largely academic, right?
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It was this idea of diversification.
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Diversification.
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Hey, by the way, I know you haven't seen inflation in 20 years, but it may show up.
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And if it does, are you protected for it?
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By the way, you may be going to a market where there's a lot more volatility.
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Have you thought about that?
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And then also, hey, have you thought about yield?
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You know, there's ways to kind of think about principal protection in your portfolio and
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then yield.
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And alternatives, let's say it's just the way of bringing in the right correlations into
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your portfolio.
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And some of the biggest alpha in alternatives is the lack of access.
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Meaning the liquidity, you can't sell in a panic because the market's off 8%.
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Yeah.
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And in many ways, you know, you're going to kind of structuring it over turn you're looking
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for because the you need to have a specific skill or access point to get those assets.
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So then maybe the markets are a little bit less efficient.
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You know, the interesting thing is today that academic conversation has turned into urgency.
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Right?
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So now while markets have obviously continued to be at all time highs, I think individual
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investors have felt with volatility feels like whether that was coming out of the global
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financial crisis, whether that was at a COVID in the pandemic, we have felt and seen a lot
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of significant volatility.
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2022, first time in 40 years, stocks and bonds, both down double digits.
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Like people seem to think volatility gets conquered every few years.
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And whenever there's any sort of complacency, the market says now's the time to teach people
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volatility never goes away.
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Yeah.
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And throughout that throughout that time period, you've also seen the growth of index funds,
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right?
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So also on top of that is this idea of like, you know, I always say the world's become more
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commoditized.
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When I entered the industry, you differentiate it yourself by picking better securities
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in the next person and driving returns.
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Then all of a sudden there was a focus on cost.
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Believe it or not, once upon a time, you know, nobody paid attention to fees.
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I think then it was, well, no, you're going to compete on fees as well.
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And then became the race to zero.
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Today, you know, investment performance is obviously extremely important, but it's
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table stakes.
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Costs were all, we're all kind of basically at the bottom end of that curve for cost.
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So now it's more around what are the outcomes you're going to deliver to someone?
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Technology is a big component.
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It is the flexibility that you offer clients, but it is ultimately about what is the outcomes
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you're going to get to clients.
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And that 70, 30 portfolio, that passive fund that, hey, you're in a target date fund.
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You don't have to do anything.
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Just sit back and it all adjusts and drives kind of the returns you need.
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One, those moments where correlations go to one, it didn't feel so good.
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That's right.
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It didn't feel so good.
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And I think now it's, there's more sophistication in terms of how you package, you know, solutions,
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more sophistication now on the need to get alternatives to clients.
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I think these things all now, I think again, what was an academic conversation today is an urgency.
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So the phrase I've heard from a number of people over the past year or so has been 70, 30, 60, 40.
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That's the old way.
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The new way is 50, 30, 20.
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Are you in that camp?
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Yeah, look, I think 50, 30, 20, 130, 30, look at the end of the day.
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I would say it's not really about whether you should be in the 50, the 30, ultimately,
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it starts with a conversation around what are the outcomes you're looking for?
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What are your needs?
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These markets, and when you think about alternatives, these are not get rich, quick schemes.
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These are not like, oh my God, we need alternatives because there's like this outsized return.
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In many cases, I'd mentioned to you, farmland, that was a four to six percent return market,
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but extremely consistent.
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And long time locked up.
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And long term locked up.
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Yeah.
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But it gave you a certain correlation.
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So yes, like all these different mechanisms at the end of the day, though, what it's really
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all about is what are the outcomes you're trying to drive for your clients?
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And what is the sophistication we have and the ability to construct those portfolios?
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And the most important thing in constructing those portfolios is, do you have access to
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a broad array of capabilities?
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Because the more access you have to different types of assets, the better the outcome is
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portfolio theory 101.
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Coming up, we continue our conversation with Jose Menaya, global head of BNY's investment
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and wealth, discussing his experiences at NewVine TIA.
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I'm Barry Rittholtz, you're listening to Masters in Business on Bloomberg Radio.
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I'm Barry Rittholtz, you're listening to Masters in Business on Bloomberg Radio.
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My special guest this week is Jose Menaya.
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He is the global head of BNY investments and wealth, helping to manage over $2.2 trillion
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in client assets.
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When you were at NewVine, you ran about $1 trillion in assets.
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You led the company through a big expansion, through the COVID pandemic, and then you helped
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expand the entire digital engagement.
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Tell us a little bit about what you put together at NewVine.
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I think I get at NewVine if I was quite a 20 year journey because I joined when it was
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basically just the investment team for TIA.
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That was right after the .com implosion around 04, something like that.
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That was around 04.
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Actually, yeah, I really started in 2005.
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Really, it was just an investment team.
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Like I said, I joined as a fixed income portfolio manager.
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At the time, we're managing money for about a $200 billion general account where everything
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was based in New York City.
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When you say general account, you're managing it on behalf of NewVine, not specific clients?
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I was managing on behalf of the balance sheet of TIA, which is an insurance company.
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It largely just, that was really the structure.
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NewVine, we had not acquired NewVine yet at that time.
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From that $200 billion, you fast forward to today and what I was there to help build.
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It became a trillion dollar asset manager.
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One where it still managed approximately $200 billion balance sheet, but then it raised another
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800 plus billion in just outside capital.
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These are sovereign wealth funds, wealth platforms, retail.
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It grew to about almost a 250 billion in alternatives as well.
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Pretty diversified shop, which now you're seeing a lot of firms trying to capture that same
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not just scale, but diversity in their business.
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Let's talk a little bit about real assets that you've had a lot of background in.
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Tell us about real estate agriculture, timber, infrastructure. Tell us how you built those areas
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previously at NewVine now at BNY.
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Sure. I think first of you think about those different asset classes.
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I go back to these are not typically strategies that you're trying to get outsized returns.
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I think sometimes they come and they're very much welcomed.
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They're typically pretty structured transactions, whether it's buildings with rents,
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farmland with leases, infrastructure with 20, 30 year contracts.
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Often there is a hedge against inflation, whether that is contractual or just by the nature
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of the commodity.
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Prices go up, land goes up, they're false.
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The simple math on these things are clipping a coupon.
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There's a yield component and it's a pretty steady one.
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I have a gold-like protection because if you think about what do I own,
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I own farmland in a particular case. That produces a need for society in perpetuity.
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There's a certain kind of protection in your principle in owning that or
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wind farms. There's intrinsic value.
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I have a yield but it's usually tied to a commodity.
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And because of that, there's also an inflation hedge component to it.
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And it brings down my volatility because it's more of that consistent return profile.
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It plays that part in portfolios.
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That it gives a yield. It gives it in a way that should be pretty high sharp ratio
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lower volatility.
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Now, today, that market is trying to get into more mainstream.
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If I fast forward to my opportunity going to B&Y,
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now, look, I had that journey in my previous life.
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What I saw in B&Y is where the industry is going.
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B&Y obviously is two times the size of where I came from.
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But it's also part of B&Y, the bank.
spk_0
And B&Y, the bank touches about a fifth of the world's investable assets.
spk_0
So there's almost 60.
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That's amazing.
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Yeah, there's almost 60 trillion dollars,
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called it 5556 trillion to be exact,
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that the bank is touching.
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And it's either managing these assets,
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it's either custody these assets,
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or it's helping move kind of the global financial markets around.
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That is tremendous kind of access points to someone like me sitting as an asset manager.
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Because I'm working at a firm that is one of the largest asset servicers in the world.
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It also is one of the largest servicers to wealth platforms.
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I registered investment advisors.
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Well, I have a wealth platform.
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I manage an investment platform.
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How do I get advantage of the fact that there's tremendous technology being invested
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to help serve asset managers?
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And if you go back to a comment that we talked about previously,
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if the world's becoming more commoditized with performance and cost,
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then what is the difference?
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The difference in what is the tip of the spear is technology.
spk_0
You hear about tokenized assets,
spk_0
which B&Y is on the forefront.
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That's just about helping clients move money quicker.
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To define what tokenized assets mean when we're talking about stocks or bonds.
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I think the simplest way that I think about tokenized assets is
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it's an ability to again be more liquid.
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Meaning if you were in a T plus one scenario,
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do you have the ability to be in a T plus five minutes?
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So for the layperson T plus one means you sell something today.
spk_0
It clears tomorrow the cash is in your account one day later.
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T plus zero, as some people call it, means you sell it and you instantly get the cash.
spk_0
Is that what tokenization does for people?
spk_0
That's a big component.
spk_0
So that's creating that liquidity where if you had to wait 24 hours,
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now you can wait a lot less than 24 hours.
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The other thing that it helps do is also kind of you're able to earn a yield on.
spk_0
But you're getting the cash.
spk_0
Now for most people one day doesn't matter,
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but scale that up to an institution, scale that up to a bank or an insurer,
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that day times thousands and thousands of accounts and transactions.
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Really, that's up, doesn't it?
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I mean, scale that to again,
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B and Y is kind of touching and helping move $55 trillion.
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So T plus zero or T plus five minutes,
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that's much better than T plus one.
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And it's a big difference.
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And your ability again to potentially earn a yield in that process.
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Also, right?
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In that whole T plus one and that 24 hours,
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in many cases, you're not able to earn a yield while that money is clearing.
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So back in the battle days when it was T plus three,
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we were always told, hey, it takes three days to just make sure there's no fraud.
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The right stock is going to the right buyer.
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The money goes to the right account.
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And when they got shrunk down to one day,
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well, technology has allowed us to do this.
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But we still need a day just to verify everything.
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What is it that allows us to go to T plus zero?
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Is it just technology? Tell us how that works.
spk_0
Yeah, I think obviously the blockchain technology is one component.
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The other component is the fact that one of the reasons being why I can lead in this area
spk_0
is that it custodies around 80 plus percent of the digital assets.
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Digital assets mean Ethereum, Bitcoin, any other sort of things like that.
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And it's one of the largest custodian in the world in general.
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So clearing something becomes a lot easier when it's all sitting inside.
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I mean, think about a warehouse.
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If I don't have to move it from one warehouse to the other,
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that makes life a lot easier.
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So that's from one way.
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You're not even moving it from one road one other.
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You're just changing the label.
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Here's who owns it.
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Yeah.
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Now and again, I will tell you for me,
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I was having a conversation with our CEO about this the other day where I'm like,
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one of the other things I love about my career right now.
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Look, it's been a long time since I've walked into rooms and I'm learning something.
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Because typically, you know, you, I was a subject matter expert
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and typically most rooms that I walked into,
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I felt like I was the expert in that category.
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I'm not an expert on tokenization.
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I'm not an expert on custody.
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I work at a firm that has experts.
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And you know, you're quickly, quickly learning
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and what's important there.
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I go back to, hey, but what I do understand,
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even though I know what I don't know, is this matters to my clients.
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So all of a sudden, if I am trying to think about, hey, how am I pitching my services
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to clients in Asia and around the globe?
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And I have a differentiating factor meaning I can help you go to T plus zero.
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That is a differentiator from a relationship perspective.
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And this is what I mean by where today,
spk_0
it's, there's so much more consolidation in the asset management industry
spk_0
because scale is important and why scale important.
spk_0
Because you then need to be able to service and invest in these technologies
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to service your client.
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AI is a big topic today.
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And I would argue and say, well,
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it's no longer debatable that AI is here
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and it's going to be disruptive, it's going to make a difference.
spk_0
So if you believe that,
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you also have to believe that the firms who can invest in it
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are going to be the winners for tomorrow.
spk_0
Now, you know, being able to invest hundreds of millions of dollars in AI,
spk_0
that takes significant scale.
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That takes kind of diversified businesses,
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being able to hire engineers.
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Right? So when I was sitting usually in the role of running an asset management shop,
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it's very hard for me to even say,
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how am I even going to attract engineers from Silicon Valley?
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How am I going to be able to pay them?
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Well, being wise, a massive tech stack,
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right, like they can attract a lot of engineers,
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they can attract a lot of investment in AI.
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I just happen to be in that realm part of that universe
spk_0
and I'm going to be able to benefit from that technology.
spk_0
So let me step back a second
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because we're all guilty of using acronyms
spk_0
and even something like BNY,
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you and I understand it,
spk_0
but perhaps the listener needs to learn a little more.
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BNY is Bank of New York, it's been around for how long?
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240 plus years, I think we're at 241.
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So more than almost two and a half centuries,
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more than two centuries.
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I got to add to that because I'm always fat,
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I will tell you even as I joined BNY,
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there were things I did not know.
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You know, obviously it's the first bank in the United States.
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It was the first bank to issue the first loan or warrant.
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Begun by Alexander Hamilton.
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It's the first company traded on the New York Stock Exchange.
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It was the first public company.
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Right.
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You know, our first clients of the bank were George Washington
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and Eliza Hamilton.
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So it's just got incredible, incredible history.
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Unbelievable history.
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In addition to all that history,
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BNY is also affiliated through ownership
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with a lot of really well-known names
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within finance.
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Tell us about some of the other divisions
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that maybe people will be more familiar with those names.
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Yeah, and I tell you, I think this has a lot to do
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with kind of the recent performance you're seeing
spk_0
about the firm because it's unlocking
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what we would describe as, you know,
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being wise, a platform operating model.
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Meaning it has multiple platforms.
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You know, of course it has an asset manager
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and it has a wealth business.
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As we said, it's got a $2 trillion asset manager.
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It's got about a $350 billion private bank,
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wealth platform.
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By the way, it also owns Pershing.
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And client clearing shop and that captures around
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almost 3 trillion and advisors,
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advisors capital that it's servicing
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through a technology and a service and a service platform.
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It has an asset servicing arm.
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And that asset servicing is serving both asset managers
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and asset owners doing things like custody,
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fund accounting.
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It has a treasury component as well.
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You know, the other interesting thing about BNY is
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it clears all the treasuries of the United States.
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So, you know, it's a G-CIP.
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It's a significant bank and plays an important part
spk_0
in our financial and our financial system.
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Really, really interesting.
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So tell me the story of how you move from New Vene
spk_0
to your role as global head of BNY investments.
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You're doubling the size of the assets you're responsible.
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Have you approached this change?
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What sort of challenges did you face?
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I think every challenge that's really attracted me,
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including what kept me in my previous role
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and the different roles I was in,
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it was the opportunity for growth.
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I think looking at BNY and seeing where I believe
spk_0
the industry is going, just such a tremendous opportunity
spk_0
of what is a $2 trillion shop,
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should easily be a $4 trillion shop.
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You think about the ecosystem that we play in within BNY.
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As I mentioned, we manage money for other people as an asset manager.
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We manage money also as a wealth platform for families and individuals.
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Yet, we also service other wealth advisors through purging.
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But they're also the clients of the firm.
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I'm an asset manager.
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A lot of my competitors are clients of BNY as well.
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You think about the technology that it takes to do all that
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and grow that technology stack.
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I feel like a kid on a candy store for two reasons.
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One, that's a tremendous amount of infrastructure and capabilities that are there
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that I should have a home field advantage to.
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The other thing is that has become a lot easier in my job is,
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when you touch a fifth of the world assets,
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most people are your clients.
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So having a conversation with potential clients is very easy to do.
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A lot of what you've seen, the recent success of BNY,
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and I think you said this earlier,
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is a collection of a lot of different things that were either acquired or built,
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is that, but it was also a very siloed organization for a while.
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The ability of having that cross connection,
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if I look at a world that AI is going to be important,
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you know, being able to touch your clients in multiple ways and have broader technology,
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I am sitting in a spot where in those, all those platform operating models,
spk_0
I'm two of those, but I'm fitting in pretty well in trying to take the advantage of the other five or six that are around me.
spk_0
A great example of that is Archer.
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Archer is...
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That's a digital platform?
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It's a technology platform for SMAs.
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So IE, your ability to clients want to be able to...
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We talked about solutions.
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Your ability to go to an Archer, and by the way, my previous job,
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Archer, I was a client of Archer.
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And SMAs stand for separately managed accounts?
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Separately managed accounts.
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Again, now you go back to technology, meaning you may be able to manage bonds and equities
spk_0
and alternatives, or even tax managed solutions.
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Believe it or not, bringing that together in a package for individuals takes technology.
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Of course.
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Asset managers, traditionally, they're stockpickers or investors,
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they're not technology people.
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So you go to that platform and do that.
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Now, when I join B&Y, I'm like, okay, this is great.
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They've acquired Archer.
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I know that they have a great capability for doing this, and this is a growing market.
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And already, our wealth platform is a client of Archer before it was even acquired.
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The Asset Management on B&Y was already a client, was acquired.
spk_0
Now, Archer is also free to grow because it services a broader capability.
spk_0
So if you do have a services B&Y and B&Y clients.
spk_0
Yeah, and that's important because again,
spk_0
if you think about this, the model of tomorrow and what scale matters is one,
spk_0
you can, it's its own business and just kind of providing what Archer does to the broader,
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to the broader community.
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We get an inside view and a home-fueled advantage in getting it ourselves.
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Typically, if I build my own SMA platform, I have to not worry about how do I feed it to grow it.
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Other people are feeding it to grow it, and I get the benefit of kind of being attached to it.
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And I think that connectivity around, hey, everything I do on the Asset Management side,
spk_0
you know, all those clients are perjuring, they buy that as well.
spk_0
Should we not be engaging with our clients to do more for them?
spk_0
It's like, sure, we're doing clearing for you and custody and offering you technology.
spk_0
We also have Asset Management, all of them, obviously, by Asset Management as well.
spk_0
So having those connective dots, I think is a tremendous competitive advantage.
spk_0
So I want to talk a little bit about your role.
spk_0
I want to define it better.
spk_0
At Nuveen, you were CIO, and then you were CEO to distinct positions.
spk_0
Your title as head, global head of B&Y investments in wealth, sounds like a little bit of each.
spk_0
You're building, but you're also helping to direct the investing.
spk_0
Tell us a little bit about your roles and responsibilities in this new position at B&Y.
spk_0
Yeah, I think I look at one end of the spectrum is very similar to my previous role,
spk_0
which is B&Y investments is an Asset Manager.
spk_0
You know, obviously it's a much bigger one than the firm I came from,
spk_0
but it's an Asset Manager.
spk_0
And there, you know, I'm the chief executive for that particular platform.
spk_0
We also have a wealth platform and very different from Asset Management.
spk_0
It's more dealing with individuals and advice, but there's also synergies in the business,
spk_0
right?
spk_0
Meaning if you're a wealth advisor, you're talking about how do you create investment products?
spk_0
How do you source them?
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Well, we have investment products.
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And how do we make sure those two groups are talking to each other?
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What's the products that we're creating?
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If you're an Asset Manager, a big part of who our clients are, are wealth advisors.
spk_0
So having a good understanding of kind of what wealth advisors need,
spk_0
it really helps to have a wealth advisor in house.
spk_0
Sure.
spk_0
So I'm managing a larger platform, but at the end of the day, my job is still very similar.
spk_0
It's about picking the right teams and people.
spk_0
We talk about $2 trillion and I would tell you,
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$2 trillion should go to $4 trillion.
spk_0
We don't own any of that money.
spk_0
The end of the day, our biggest value set of what we do and have is our people.
spk_0
And obviously the technology that we can offer those folks,
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but people is kind of really our business.
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And I've kind of seen my job today really as the chief people officer
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for how we kind of build teams around this.
spk_0
Coming up, we continue our conversation with Jose Manaya,
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global head of BNY's investment and wealth,
spk_0
discussing his experiences at Nuveen TIA.
spk_0
I'm Barry Rittholz, your listening to Masters in Business on Bloomberg Radio.
spk_0
Introducing IVF Disrupted, the Kind Body Story.
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A podcast about a company that promised to revolutionize fertility care.
spk_0
It grew like a tech startup.
spk_0
While Kind Body did help women start families,
spk_0
it also left behind a stream of disillusioned and angry patients.
spk_0
You think you're finally like in the right hands?
spk_0
You're just not.
spk_0
Listen to IVF Disrupted, the Kind Body Story,
spk_0
on the iHeartRadio app, Apple podcasts, or wherever you get your podcasts.
spk_0
I'm Barry Rittholz, your listening to Masters in Business on Bloomberg Radio.
spk_0
My special guest this week is Jose Manaya.
spk_0
He is the global head of BNY investments and wealth,
spk_0
helping to manage over $2.2 trillion in client assets.
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Let's talk about who the clients are at BNY.
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You mentioned RIAs and advisors my day job,
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but you also work with institutions,
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you work with high net worth and family offices,
spk_0
as well as other players in the investing world who are also clients.
spk_0
Sounds like you guys are a little bit of everything to a lot of different people.
spk_0
How do you keep all that running smoothly?
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How do you keep all those balls in the air?
spk_0
Yeah, well look, I think BNY is often described as the Bank of Banks,
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because again, it's kind of that broader provider.
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And in goes the opportunity set,
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right, again, you look at the firm, I don't know,
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the last high look to stock was about 106.
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That's in less than a three year span of there about, from $40.
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It makes it one of the best performing financial stocks.
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And financials have been kind of lagging the tech sector for a couple of years.
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They're stunning, play a little bit of catch up.
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They're playing a little catch up.
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They're doing better, but I think few are doing better,
spk_0
if any are doing better than BNY.
spk_0
Some of it goes back to that question you just asked me.
spk_0
Yeah, there's a lot of these, the way typically these conglomerates
spk_0
or these platforms were typically managed were very siloed.
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The ability to bring in the technology and the leadership to say,
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how do we have better connectivity across all our platforms
spk_0
is where the value proposition is.
spk_0
And the market is seeing that and the market is rewarding that.
spk_0
So it's funny earlier, we talked about how commoditized so much of the world
spk_0
has become your basically saying we need to be an integrated solutions provider
spk_0
and not just have these commoditized silos, which is what
spk_0
exists outside of a mega bank of banks like the NY.
spk_0
Yeah, so much that I used to talk about the concept of selling watches.
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I think that the world doesn't really, it's hard to sell watches now.
spk_0
People are looking for, they need, our clients are getting more efficient.
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They need to scale their operations as well.
spk_0
And it's the idea of like, do I want to work with 150 managers
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or am I better off working with 20, 30 or 40?
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And if I'm going to go from 150 different types of managers,
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you know, to 20 or 30, how do I pick those 20 or 30?
spk_0
What's going to differentiate that?
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So I think a lot of that is what's driving the need for scale.
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It's what's driving the need for consolidation.
spk_0
And it's also driving a lot of innovation.
spk_0
So you've mentioned technology a couple of times.
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We've talked about tokenization and a little bit about AI.
spk_0
What are the big technological trends that we can look for
spk_0
over the next couple of years?
spk_0
Where are you thinking about how technology is going to have the biggest impact
spk_0
on asset managers and on investors?
spk_0
Yeah, it's interesting.
spk_0
And honestly, my narrative has changed.
spk_0
I used to say, look, AI is going to be very disruptive.
spk_0
But I have no idea if it's five years from now or 20 years from now.
spk_0
And by the way, that makes it very difficult to invest in it.
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Because when are you going to get the returns for it?
spk_0
Clearly now, that's come into a lot more clarity.
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Because where AI has begun to already yield returns for firms and
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BNY is no different, it's on the productivity side.
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I think BNY is one of the first firms to have digital employees.
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So digital employees that can work on real problems.
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And that's driving productivity increases.
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And that's kind of been a large part of the narrative with AI.
spk_0
Now the new narrative is it can also provide value add.
spk_0
So again, as an investor, do you have the capability of instead of the old way of
spk_0
we're going to look at satellite pictures and see how many cars are in the driver?
spk_0
Well, now AI can actually track devices and see where things are coming.
spk_0
AI is able to go through a lot more information and disseminate that information.
spk_0
I still say that human beings with AI will be better than human beings without
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AI.
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You're still going to need the component for human beings in the mix.
spk_0
But so much of the future is unknown.
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By the way, I think that's also the uneasy part that we are today in our markets.
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Because if you speak to individuals on one end, I can kind of picture and say,
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the economy is doing great.
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Earnings are strong. Consumer household balance sheets are strong.
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Wages are still relatively strong as well.
spk_0
And there's a strong kind of like very constructive view to putting your money in the
spk_0
market today, even at these valuations. The other side of that story is okay.
spk_0
But then are we losing the independence of the Fed? Are there geopolitical issues and wars
spk_0
out there that can also cause massive disruptions in the global economy?
spk_0
Policy issues and fiscal issues coming to the forefront that could just be mistakes that happen.
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So at the same time, there's so many things that can go wrong.
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If I would say we're probably at an all-time high of things that can go wrong, yet where you should
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today should feel pretty good in terms of the economics and the economy. And I think technology
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is the same thing. It's like, wow, AI is going to be disruptive.
spk_0
What we think AI can do is literally changing every week, every month.
spk_0
And again, that in many ways is exciting. In many ways, it's also extremely unsettling.
spk_0
To say the very least, since you brought up the current state of the world, profits are all
spk_0
time highs, but it seems like risk sort of all-time highs, I want to throw two of your own quotes back
spk_0
at you and get your thoughts on it. In the beginning of this year, you said risk assets are going higher.
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What led you to that conclusion and has the year played out as you expected?
spk_0
Clearly, look, I think there was a little bit, I think I was challenged a little bit on that
spk_0
comment. And remember, I said it right after Liberation Day. So the markets were obviously falling
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off. There was a tremendous amount of concern with the tariffs and what would come.
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I had two thoughts there. One, understanding that I thought the current administration that we
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have was going to about the carrot in the stick. And we started out the year with the stick,
spk_0
but what the carrot was going to show up at some point. And then, too, this other view of,
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most of us don't have a choice to be risk off. The idea that being risk off through these
spk_0
different cycles hasn't really paid off. So the one thing we should do is go back and look at
spk_0
the fundamentals. But yes, if you're saying I'm going to just take a correlation of one or just
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take broad market exposure, it's more than, again, the academic conversation being more of an
spk_0
urgency. If you think about the actual conversation around, I'm structured for solutions for outcomes
spk_0
in my portfolio, then why should you be risk off? You already planned for this.
spk_0
Right? I maybe plan to have part of my principle protected. I maybe plan to have certain
spk_0
amounts of yield or uncorrelated assets in my portfolio. So it might be put, and again, one,
spk_0
the fundamentals are there to not say exit the market, but two, the should not always be around,
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should I buy this stock or that stock or should I go bonds or equities?
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It has to be broader. It has to be, it has to be broader because, you know, we're not a hedge fund.
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And then a lot of what we do is not about that. It is about driving long-term outcomes.
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So another quarter of yours that caught my attention was noise is at all time highs.
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I totally agree, but explain your point of view. Yeah, and I'll explain it, I'll explain it both
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in terms of where we are in our markets and then also like it's also like a personal philosophy.
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One, this is what I mean by things look very calm, things look very constructive,
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yet we can, I think my team at the time, and this was back in January, I think they were like
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26 or 30s different press releases or things that happened that kind of really jolted the markets
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in some way or cause concern. So the list of the things going on, whether it's inflation,
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whether it's political, you know, the fed policy changes, wars, the list.
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It's endless. It's endless. So that I think is at an all-time high of the things that,
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okay, what's the list of what can go wrong? But then, you know, the other thing with noise,
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and I say this to my kids, I try to, I'm still trying to master this. Is it in most cases 80% of what
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you hear is just noise. Right. And already in stock prices. Yeah, it's there. It's like 20% actually
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matters. You know, I said to be a good investor, you have to be good at knowing what you don't know,
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but I also think you also have to be good at taking a motion off the table. You could see a lot,
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obviously, we're pretty divided country politically. I would say like, don't bring that to your
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investing, right? So it's more like take the emotion out. Don't let the noise suck you in.
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Go back and it's about the fundamentals. It's about what's in front of you. It's about your outcomes.
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I love the concept of knowing what you don't know. Let's address that. What are investors not
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talking about, not thinking about, but should? What topics assets, geography, policy, data points,
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whatever? What is not at the forefront of many investors' minds, but maybe is getting overlooked?
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You know, and again, this is going to sound very simple and it's been talked about since the
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beginning of our markets. You know, it's true diversification. And again, it sounds simple,
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but it's not because the old diversification is that 70, 30, 60, 40 stock spawns.
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The markets are a lot more complex and sophisticated. That idea of having that conversation
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now around, let's talk about what I'm trying to accomplish. Not, hey, I think large caps are hot
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now. So I'm going to put you in them. Hey, you know, you see technology stocks. I think technology
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is going to do really good. That to me is what's really being overlooked is again, where I know a lot
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of people sit down with their advisors and they're getting that academic, you know, this rotation on
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you should be diversified. This is why this is how, but often the conversation falls right back to,
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is it large caps, small caps, is it tech stocks, is it banks, is it financials, but that's not the
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right conversation. Even as it's all sort of public, it's everything. It's all of that. And it's
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using technology and solutions and packages to create the right construct for individuals.
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Makes a lot of sense to me. I only have you for a couple of more minutes. So let's jump to our
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speed round, our favorite questions. We ask all our guests starting with who are your mentors,
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who helped shape your career? You know, I've had so many and I'll tell you, you know, they started
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with family members. I've had professors. I've had, you know, the dean of the business school,
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I met out in college. I felt like was a mentor to me. I have my previous bosses that I still
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stay in touch with and try to have lunch and dinner with. So I have many people that I can,
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that I can kind of think. Huh, that's very nice. Let's talk about books. What are some of your
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favorites? What are you reading right now? You know, there's a, I'm not, I'm not a fixing
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I so most of what I read is non-fix. I love, I'm the same way. I love all the, I love all the
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Michael Lewis's books. Recently read The Boys in the Boat. So I just love the story about people
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and I love, I love reading about books that, you know, you see perseverance in human beings.
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Right now it's, I'll tell you, I'm not reading anything right now. I'm getting ready to read
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something and I'm wondering if it's going to stick. But I've been hearing a lot about the
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meditations by Marcus Aurelius. Oh, sure. And I made the comment around 80% of the things you
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hear is noise. My understanding is that book has a lot about that in there of like what you should
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really spend your time thinking about. So I was, I was, that's synopsis and I've heard two people
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now mention it. So I said, I'm, I'm getting ready to read that. Let me bastardize that for you and
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say to what I took from that was recognize that what's in your control and that's what you focus on.
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What the Fed's going to do, we can't control. You don't lose sleep over it. Yeah. Accept it, it's
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going to be what it's going to be. But focus on the things you can control, you can change. Really,
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it has absolutely stood the test of time. And if you're a Michael Lewis fan, I'm going to,
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I'm going to self promote his most recent book that just came out who was government. We did a
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live masters in business in April. And I want to say the ratio of me speaking to him was probably
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3% to 97%. For 90 minutes, he just regaled the audience with stories and had people in stitches.
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Absolutely hilarious stories about Billy Bean and and Brad Pitt tears down people's face.
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I'm going to go listen to that. I'm listening to that. I'm going to listen. Yeah, absolutely.
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It if you're Michael Lewis fan, I think I've interviewed him 10, 12 times. That's my favorite
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interview. I heard stories I never heard before. He was his books ruined all the movies that have
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come out off of his books. Because they none of them come close, in my opinion, to the actual book.
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So I agree with you. The one that's closest is Moneyball is at least listen, the big short,
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I love the book. The movie wasn't bad. The blind side, the movie wasn't bad. But Moneyball really
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captured the moment of I agree that money ball is probably the closest you got to the book. Yeah,
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no, no doubt about that. What about streaming? What are you watching on Netflix or Amazon Prime
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or what podcast are you listening to? Yeah, it's very similar to the whole nonfiction thing.
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I'm a big fan of documentaries on Netflix. There's two things that I'll do on streaming.
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It's watching the men who built America, which is a great documentary. Again, it has the JP
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Morgan's of the world, the Carnegie's of the world, Rockefellers and Vanderbilt's. But what it
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was, I love the documentary. I love the documentary. I don't watch a lot of TV. I will watch sports.
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But I'll hear things like Breaking Bad. Everyone talked about it. I'm watching it 10, 15 years after
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the fact. Then that led me to say, hey, there's this show Better Call Saul. So I just went through the
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whole, not just went, but I've been going through the, I went through Breaking Bad and then Better Call
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Saul. The only way I watch shows now is, well, they came out five, seven years ago and now I'll
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go in and be like, okay, I'll dig in. So I have two things for you. We saw Mad Men during the pandemic.
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I never saw a single episode once on TV. I'm like, wow, this is amazing TV. If you're a documentary
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fan, the Billy Joel documentary video, we're like three quarters of the way through. It's just amazing.
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And I'm a big Billy Joel fan. And yeah, I thought it was, and again, to me, it's just history and
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people, right? You just kind of just love learning about people. And then especially for me,
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it's, I'm in awe of folk of people who could do things I can't, right? Like, I'm in awe of a
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Billy Joel. When you hear about his process and what he does and you're like, it's hard not to get
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inspired by. No, absolutely. 100%. Our final two questions, what sort of advice would you give to a
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recent college grad interested in the career in investing? You know, the advice I give everybody
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coming out of school. And you know, I think they're waiting to hear for some kind of special nugget
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on how they're going to get ahead doing models or what deals. And I'm like, do do the easy things
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really well. Like I did this intuitively not knowing how important it was, which was I came into
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Wall Street. You know, they're not going to give I was fresh out of school. They weren't going to
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give me a big client. They weren't going to give me a big mouth. But you know what? If someone said,
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I need copies, I ran a did copy. You know, I could do that. That I can do. Hey, book, book a
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restaurant for a client dinner. Hey, don't worry about it. I got it. So to me, it's like, oh,
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life is never going to be that easy in your career than when you're first out of school.
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Don't come in day one thinking about how do I get on? How do I start traveling or meet clients
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and work the big deals? It's like, do the little things really, really well. That is how they're
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going to be able to judge you early on. Good advice. And our final question, what do you know about
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the world of investing today? You wish you knew 35 or so years ago when you were first starting out.
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Yeah, I think it goes back to the when I start, I first started learning those lessons of
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don't pay attention to the noise. Pay attention to what really matters. So, you know,
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earlier on, it's hard not to get emotional about investing. Sometimes it's a heart even not to get
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completely kind of, you know, you, you and I watch for this in our PM's like, PMs can fall in love
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sometimes even with companies, stocks and even management teams. That ability to now say, hey,
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in all these cases, be objective. Tell, remind yourself, be good at knowing what you don't know.
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Take emotion off. Focus on what really should matter. Not all the noise that's surrounding it.
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So, so interesting. Jose, thank you for being so generous with your time. We have been speaking
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with Jose Manaya. He's global head of BNY investments and wealth managing $2.2 trillion.
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If you enjoy this conversation, well, be sure and check out any of the 550. We've done over the past
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11 years. You can find those at Bloomberg iTunes Spotify YouTube or wherever you get your podcasts
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from. Be sure to check out my new book, How Not to Invest. The ideas, numbers and behaviors that
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destroy wealth and how to avoid them, how not to invest at your favorite bookseller. I would be
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remiss if I did not thank the crack team that helps put these conversations together each week. And
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Noriega and Anna Luke are my producers. Sean Russo is my researcher. Sage Bauman is the head of
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podcast at Bloomberg. I'm Barry Rittholtz. You've been listening to Masters in Business on Bloomberg Radio.
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I'm Carol Maser. And I'm Tim Stenevek inviting you to join us for the Bloomberg Business Week
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Daily Podcast. Now, every day we are bringing you reporting from the magazine that helps global
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And I'm Tim Stannevek, subscribe today wherever you get your podcasts.
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