00:00The economy is always, to a certain extent, a little bit of a fog. I mean, we're always just trying
00:03to guess kind of where things are going.
00:05But it feels a little bit different right now, given the overhang of the war, the spike that we're seeing
00:09in energy prices.
00:10I am curious as to sort of how you approach these types of moments, which aren't, I won't say they're
00:16not common, but they're not necessarily rare either.
00:17We've been here before where we've had this type of fog here.
00:20How do you either look through that fog or grope your way around it to sort of figure out maybe
00:25what people should actually be doing and where they should be putting their money?
00:28Yeah. Well, it's great to be with you and your audience.
00:30And the reason that we come and share Romain with you is what we're hearing from nine million clients that
00:36we talk with every day.
00:38And, you know, you said being light with the reporters there, Chair Powell, none of it's any laughing matter.
00:46And at the same time, your insight is correct. We have been here before.
00:51We've been we've had times of anxiety, of economic uncertainty, of of war, of times that make people very, very
01:00anxious.
01:01However, Chair Powell said it, we've got to be humble right now, right, about what we know and what we
01:05don't know.
01:06But the Fed also raised their expectations for productivity in the U.S. economy.
01:12They're not calling for recession, nor are we. We don't think that that's the case.
01:16The fundamentals of the economy are strong right now, notwithstanding.
01:20And we should have tremendous respect for what's going on in our world right now and be very thoughtful about
01:28the people who are in that conflict.
01:30But that notwithstanding, prices have begun to moderate.
01:35Inflation has been coming down, albeit slowly.
01:40Interest rates are coming down a bit.
01:43So the productivity in the economy and the productivity that we may gain, and we believe this is the case
01:49from A.I. and generative A.I., we think that's a real thing.
01:52It hasn't all come through yet.
01:53Well, that's what I'm curious about, because prior to this war starting, there were a lot of positive signs in
02:00the economy, as you mentioned.
02:02I mean, we had mortgage rates coming down.
02:03You actually saw a pretty healthy uptick in selling and buying activity in the housing markets for the first time
02:09in a couple of years.
02:11And it raises the question as to what we're seeing right now with this impact of energy prices.
02:16Does that become just kind of a temporary speed bump in all that and the structural issues that were in
02:21place in January, February, that at some point those will dominate the conversation once again?
02:27The way that sounds when we talk to our clients is, Penny, if I were the financial advisor, and I
02:33once was, Penny, I know what's going on in the world.
02:37How does that affect my world?
02:40And so the conversation that we have with our clients is, tell us about your goals.
02:45Let's revisit your goals for the long term.
02:48Let's revisit how you feel during a time that can feel a little anxious.
02:53Has it shifted your risk tolerance?
02:55Let's take a look at your portfolio.
02:57Does it continue to be well balanced against the goals, your long term goals?
03:02And then as we look at how the effects of price changes, whether they be temporary or long term on
03:09the decisions that a client and a client family might make about not just their investments, but how they choose
03:15to balance their saving and investing between different kinds of goals, be it long term goals for long term care
03:23or retirement or education goals.
03:25Or in this case, what we're what many are facing today is legacy planning.
03:30We're in the middle of an intergenerational wealth transfer right now across four generations where families are moving their wealth
03:37and their values to the next two generations.
03:40And so the conversations associated with that and how how the current the current impacts affect those near and longer
03:49term decisions is what a great financial advisor is talking to clients about.
03:54Right. And you know, as we sort of, you know, start to go through that, that this major wealth transfer,
03:59we're also going through a major sort of transformation of financial markets.
04:02Obviously, private assets have become much more talked about.
04:05They're not just for institutions anymore.
04:07And to a certain extent, they're becoming much more available to individual investors.
04:11And even aside from just private assets overall, you've seen a lot of individual investors start to look for assets
04:16other than just, you know, stocks and bonds, whether it's digital assets, et cetera.
04:20How do you factor that in?
04:21Well, what they're focusing on is diversification and diversification has been a sturdy, durable rule of the road for investing
04:29for the last hundred years.
04:31We think good diversification and high quality assets are the fundamentals for a strong portfolio.
04:38Private assets may be under certain circumstances a correct investment for clients to be making.
04:46It depends on the level of diversification they need.
04:50It also depends on their risk tolerance and their need for liquidity.
04:53And a lot has been written about this just in the past few weeks.
04:57Private investments are structured differently than those in the public markets.
05:02And it is also true that I think I saw the statistic.
05:05Eighty five percent of companies with two hundred and fifty million dollars revenues are more are private companies.
05:13And so more clients want access to those early stage companies, want access to those opportunities for growth and innovation.
05:22When we talk about early stage companies, I mean, we have to kind of separate kind of what we're talking
05:26about here, because I think a lot of the headlines have been more some of the more mature companies, some
05:30of the ones that were have been kind of under the wing of private equity and private credit.
05:34Is that what you're talking about?
05:35Are you talking more companies, more at the kind of VC stage or really the entire range of private assets?
05:42But what you're getting at is so important.
05:45It is helping clients understand what sort of asset they should have in their portfolio and what kind of ride
05:52it's going to be for them when it's there.
05:55We believe that private assets should be a smaller position in a portfolio and are meant for people with generally
06:02more complex needs, longer time horizons, a greater need for diversification.
06:08But building the right expectation for liquidity, for risk, for all of those aspects of that investment are very important
06:16in the in the advisor client relationship.
06:18And are you making sure that your advisors are educated?
06:21Absolutely.
06:21To be able to educate their clients?
06:24Absolutely.
06:24As we have been about emerging investments for decades, we've been around for 104 years through thick and thin with
06:31our clients.
06:32And so helping them make sense of those investments and making sense of the right place they should have in
06:39their portfolio is is our job.
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