00:00Really beating across the board when it comes to your net revenue, whether we're looking at
00:04investment banking, asset management, or wealth management. But let's focus in on wealth management
00:10since that is by far your biggest revenue generator at this point. What led to the beat
00:16and what do you see sort of continuing that momentum? Well, first of all, wealth is the
00:25durable part of our model, and it has been for years. Our institutional businesses, we've had
00:30more operating leverage in that. But turning back to your question, wealth, we've continued to gain
00:37market share. We won J.D. Power, employee advisor satisfaction that's voted by the advisors,
00:43made us number one for four years in a row. And so we'll grow through recruiting. But importantly,
00:51we're going to see a lot of productivity gains from AI. I mean, it's a topic not only of the
00:55day,
00:55but of the year. And we see the ability to just do a lot more business in the same sort
01:03of container.
01:03We have a great business model, and I see it continuing. And when it comes to AI, I want to
01:11talk about that a little bit in the context of advisor recruiting, because you said on the earnings
01:15call today that advisor recruiting remains as competitive as I've ever seen. I wonder how much
01:22you're competing against AI. I feel like you and I have had this conversation before, but it's just
01:28getting ingrained in the muscle memory, especially of the younger generations, that, I mean, you fire up
01:33an LLM for advice, and I would imagine increasingly that extends to financial advice as well.
01:40Well, we'll see. I think that there's sort of a disconnect, Katie, because every time something
01:48comes out about an LLM doing something, all the wealth stocks, including ours, get hit. Yet every
01:54wealth firm in the country is recruiting at the highest level ever experienced advisors. So which
02:04is it? Is it that the LLMs are going to replace advisors, or are advisors important? I'm on the
02:11side that the advisors are the last mile of advice, and that as AI gives you more abundant information,
02:18but as you get more abundant information, the value of advice goes higher. So that's where I land on
02:23that. We'll see. But, you know, there was a recent survey that said from 2009 to 2023 or 24, I
02:32think it's
02:32by Bloomberg, frankly, that, you know, the affluent people that would use advice was 30%. Now it's up
02:39to 60. So, you know, I'm in the advice game. Yeah. And it was by Bloomberg. Thanks for shouting us
02:45out, Ron. I always appreciate that. Yeah. Hey. I am curious about just a couple of interesting things
02:52that jumped out at me, particularly with this earnings. Obviously, we knew the IB business was
02:56going to do great. Wealth is doing great. I was taking a look at fund banking. I know this came
03:00up on
03:00the conference call. There was very strong growth there. And I was kind of doing the calculation,
03:05something like about a quarter of your funded loan portfolio right now is fund banking. And I am
03:09curious, is this sort of a longer term growth opportunity for you? Or are you just kind of
03:14taking advantage of what's been happening in the moment with regards to what's going on behind the
03:19scenes in private capital? Well, look, I would like to think we never try to do anything in the
03:26moment. I mean, we just, you know, we always have a strategy. I would like to tell you that. And
03:31it
03:31is true. We have we we got into when when SVB and all that happened, we recruited a lot of
03:38people. We
03:39went from maybe three people to probably nearly 200 now in venture lending and fund banking. And we view
03:46it as an integral part of, you know, that ecosystem. Not only can we lend to companies, we are helping
03:53the
03:53sponsors and the venture funds and we're providing wealth management to the founders and we're doing
03:58investment banking. So it's a great growth opportunity for us. And I'm excited about it. And
04:03I think you you noted the trends and I would expect those to continue. Are there any concerns here
04:11about private market valuations and then maybe potentially being out of sync with what we're seeing
04:17with regards to public valuations? Well, we've seen that we've seen that for for a while. I mean,
04:25you look at just when I I'm asked about acquisitions and I've done probably as many acquisitions as
04:31anyone in my career, at least in building Stiefel. And today, you know, I'm being shown deals that,
04:38you know, let's say 15 times adjusted EBITDA and I'm trading at eight. So there's a disconnect right
04:43there, which tells you, by the way, why buying my stock instead of doing acquisitions. I also want
04:49to talk a little bit about investment banking beating when it comes to revenue there versus
04:54estimates. We know that Stiefel was one of really a plethora of banks that were involved in the
04:59SpaceX IPO in some capacity. Really curious what that process was like. And, you know, moving forward
05:06now that that's in the rear view, you know, how you can sort of build on that.
05:12Well, look, they it was that was a well managed process. You know, I hate complimenting my larger
05:19firm competitors, but but that was a well run process for us, though. It didn't really drive
05:25our results. It did drive the results, I think, of the larger firms. But, you know, we were certainly
05:31involved. We expect to be involved in the other ones. But for us, what you saw was the breadth of
05:36our platform. And it was not both people think, oh, you know, Stiefel's depository M&A. Now we we that
05:43was actually somewhat muted for us relative to health care technology and industrials. And so we have a
05:51pretty broad based diversified platform. And you saw that come through. Investment banking was up over 40 percent.
05:57Ron, are you planning to do any more acquisitions anytime soon? Anything you want to tell us?
06:03Hey, you know, I'm always evaluating things. But as I said, I think the private valuations,
06:13especially with leveraged returns, has has made those things. I'm a little little cautious.
06:18So we're not just going to do remain a deal for deal sake. I'm not looking just to do a
06:24print. I'm not looking
06:25just for revenue. We had 24 percent return on tangible equity for the quarter and for the year. And frankly,
06:31last year. That's my measure return on invested capital. And some of these deals require some Excel, you know,
06:40growth assumptions to make them work that probably I'm just not comfortable with at this point. But hey, we'll see.
06:46We'll see you in the next one.
