Animal Spirits Podcast - Talk Your Book: Custom Portfolio Protection

Starting point is 00:00:00 Today's Animal Spirits Talk Your Book is presented by Halo Investing. Go to haloinvesting.com to learn more about their structured note platform and also their brand new SMA marketplace. If you're a financial advisor, go check out haloinvesting.com to learn more. Welcome to Animal Spirits, a show about markets, life, and investing. Join Michael Batnik and Ben as they talk about what they're reading, writing, and watching. All opinions expressed by Michael and Ben are solely their own opinion and do not reflect the opinion of, of Ridholt's wealth management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Ridholt's wealth management may maintain positions in the securities discussed in this podcast. Welcome to Animal Spurits with Michael and Ben. On today's show, we're joined by Matthew Radgowski. Matthew is the CEO of Halo.

Starting point is 00:00:52 Ben, one of the things, one of the things that's exploding in popularity, or access, I should say, in the wealth management industry is is customization at scale. And those things might sound like they're like contradictory, because how do you achieve such a feat? Well, luckily, there are now platforms like Halo that are as much technology platforms as there are financial platforms. Back in the day, creating a portfolio of structure notes would have been laborious as all get out.

Starting point is 00:01:23 I like that phrase, all get out. Don't say that too often, but... You should see how big the private placement memorandums are for an individual structure note if you went straight to a bank. It's like 200 pages of legalese and it's a lot. Yeah, it's a lot. No, yeah, but I do think there was this shift for simplicity in financial advisor space going from active management to index funds that took place.

Starting point is 00:01:48 Check the box. Done. Yes. But then people realize, like, we have to be more customized to the circumstances, needs, and desires of our clients. And that is where things are going. I think that's the 2020s decade to me, is advisors learning how to customize for their clients, whether it's taxes, investments, income, downside protection, whatever it is, customization.

Starting point is 00:02:10 So we've had Halo on a couple times in the past to talk about how structure notes work, the downside, the upside, the soft protection, the hard protection. On today's episode, we expand a little bit more into some of the new things that they're getting into. So hope you enjoy this conversation with Matthew Erdogan. Matt, welcome back to the show. Thank you. Yeah. Appreciate the chance to get back here. Hope all has been well. All has been well. Thank you for asking. So we've had your predecessor, Jason, on a few times. You've been on once before. But for people that might be new to your platform, remind the listener, who is Halo. What are you doing? Who do you serve? So Halo is a investment technology and marketplace for protective investments. So we offer the ability for financial advisors to find and buy structure notes, fee-based annuities and other.

Starting point is 00:02:58 protective investment products. We'll talk about our SMAs today, but we connect the manufacturer of those products to the consumer, which is the advisor who uses them in their client portfolios, offering wide range of access to investment banks on the structured note side, insurers on the annuity side. These types of products seem to be exploding in popularity, and not only from your side of things, but also on the ETF space. There's a lot of other option-type strategies. Michael and I have talked to a number of different managers that have these type of strategies, and we get questions all the time from our listeners asking, what do you think about them? Because I think people really like the sort of defined outcome nature of these things,

Starting point is 00:03:36 right? They don't know exactly what their outcome's going to be, but they have a couple of different paths to go depending on what happens, right? And so it's a little easier to understand for people, I think especially for older investors who don't want as much risk and want to have things be a little more certain. So how do you all separate yourselves from the ETF space that's coming in and having these more options-based strategies, what would you say the biggest differences are? Yeah, so it really comes down to, you know, it's balancing out, I'll say, the ease of purchase versus the ability to tailor and customize.

Starting point is 00:04:08 And so the buffards that you're talking about, buffered ETFs, you know, do offer the ability to, you know, provide protection to the investor, you know, through the purchase of that ETF. It's tickered, so it's easy. I would say the structured notes do offer the ability, you know, we think about personalization is a key dynamic in the industry today. The structured note, given the individual nature of that note, the bond that it is, it does allow the ability to increase the personalization of that strategy.

Starting point is 00:04:39 So you think the ETFs are complete garbage, hot garbage. No, not at all. I think about it in the spectrum of needs, right? So as far as like ease of implementation and liquidity, right? So certainly the ETF has the highest level, right, of ease of implementation of liquidity, giving up some of that ease of implementation, you gain, right? And so it's all about tradeoffs. I think I'm actually personally excited about the fact that more people are interested in defined outcome investments that offer the appreciation

Starting point is 00:05:11 with the protection as well as income. And so I think for the industry, it's good that we're paying more attention to these products. We believe that the structured note is a great mousetrap, quite frankly. And we're trying to build better technology to make it easier to access and manage these types of strategies. The concept of protection in a portfolio, and Jason speaks about this, like he said, you insure your house,

Starting point is 00:05:34 why wouldn't you, you insure your portfolio? And I think the purist would say, anything that's going to put a floor on your downside, right, is going to eliminate some of the upside, to which I would say, yeah, okay, fine.

Starting point is 00:05:47 If you are a young person, not like Ben, but like myself, if you are a young, vibrant person and you've got a long time horizon, and you've got the ability to stomach, 50% drawdowns, why would you cut off, why would you cut off any of your upside? However, this is a behavioral science, a behavioral exercise, and not everybody can handle all the

Starting point is 00:06:07 smoke. So what I am, what I find intriguing about these products that might sound antithetical to like the buy and whole type of ethos that I have is that not everybody can handle all of the downside. And so what these give you is a way to define, Matt, you said, So you can say, okay, this downside, that upside. Nah, I don't like that. No. Okay, oh, that one I like. Like, you could define your terms.

Starting point is 00:06:34 Absolutely. You know, I've spent a lot of time in career building glide paths, right? So we kind of think about it, you know, into the future, you know, we'll talk about some of the technology we're building later. But if you think about the traditional glide path, you know, you mentioned earlier investors, right, have more long term, you know, horizons and they can afford some of that volatility. the way we're thinking about structured notes is along that protection path, right? So as you move through time, your ability to withstand those downside events grows less and less, right? And so traditionally we've taken equity risk off the table, put it into fixed income. Now, that just creates a different risk, right? Just in terms of shortfall into the future, right? There's inflation risk

Starting point is 00:07:16 and things of that nature. So you're trading risks. And so for us, as you move through time, your ability to dial up the protection while maintaining that equity exposure is absolutely critical to success, right, in terms of building the wealth you need. And then, quite frankly, you know, making sure it can sustain your needs through retirement as well. One of the things that we've talked about over the years is just the fact that the pricing on these things can and will change depending on market dynamics, right? It's interest rates and volatility. And sometimes the timing on these things and the type of environment you're in can dictate the types of yields that you're able to earn on these structured notes. So maybe you could take us through where we are today with

Starting point is 00:07:52 being in a bull market, but also having rates much higher than they were in the past, maybe than the first few times we talked to Jason when rates were much lower. Yeah. So, you know, I think what tends to happen is the use of the product, the type of the product, you know, tends to change, you know, given the rate environment as you think about use and implementation. I think volatility is obviously a key driver in, you know, in the pricing of the notes as well. And so, you know, a couple things I'd say there, you know, obviously, well, maybe not obviously, but recent spikes in volatility, you'll see activity grow. We'll talk about why using a professional manager inside our structured node SMAs can be helpful as far as some of that timing. But if we look at on a year-over-year

Starting point is 00:08:33 basis, as rates increased and maybe some of the income-oriented users of the product, you know, start to wane growth notes, right, where you're participating in the market on the appreciation side with downside risk protection, those products certainly come into play. Yes, it impacts pricing, but overall, right, if you think about the impact in terms of maintain participation on the upside, but downside protection, they're still a valuable tool even in the rate market, even in the interest rate market we have today. You'll also see from an income perspective, what tends to happen is, you know, more creativity, right, in terms of the underliers. You'll see, you know, different indexes used, different underlying individual equities that try and again help

Starting point is 00:09:17 maintain the income exposure that that client is seeking. So yes, there is dynamics around pricing, but all in still feel there's valuable use regardless, quite frankly, of the current situation around volatility and interest rates. So Matt, you guys built the platform based around the idea of protection, structure notes, customization, technology, all that good stuff. What else have you been up to? What's new on the platform? Yeah. So the structure note SMAs, so separately managed accounts, you know, this is a program we're super excited about. It offers the ability for advisors to use structure notes in their practices and portfolios. But, you know, similar to models and other separate account

Starting point is 00:10:07 strategies, it allows them to utilize a professional money manager to do so. And so excited about the launch of the program. We've had some recent news in terms of expansion of access through places like Invested and SmartX. But we're super excited about the program of what it offers. So what exactly does that mean? Is it, are you, is this like a best ideas collection? Like, what does the SMA look like? Yeah. And so, you know, the Halo platform, you think of the Halo platform as, quite frankly, think of Halo as a traditional separate account program sponsor. And so what does that mean? And we act a lot like a TAMP in terms of the implementation and ongoing management of the strategies. And so we provide all of the operational infrastructure

Starting point is 00:10:50 for the investment manager, right? So they need to source, build, and manage their portfolios of structured notes. We offer them our platform to do that. We have investment expertise in house to curate. So it's a curated list of manager. today. We can talk about who they are and the strategy types, but it's not a full-blown marketplace, at least today. It is a curated list of managers. And then on the investor side, it's really all of the infrastructure that they need to, you know, evaluate, select, and then monitor those separately managed account allocations within their portfolios as well. So is this, I'm curious, did you build this because although some people really love the customization

Starting point is 00:11:31 piece, other people would rather just have the sort of access or the exposure to structured notes and want to pick a certain style. Is it one style? Are there multiple? Is it, you know, a conservative, a moderate and aggressive, whatever it is? Are there different styles that you can choose, or is it one whole strategy? Yeah, so let's jump in a little bit on the strategies. Then we can talk about who's using them, why, and how. And so, you know, today we actually, we have five structure note strategies that are available from three different managers. So New Edge, Peton, and Wisdom Tree. In terms of the strategy types, they do differ. They really fall along, I'll say, two main lines, income. So those that are looking to utilize the structured note

Starting point is 00:12:15 to generate periodic income within their portfolios. And they can do that to replace fixed income, or they can do that to basically try and drive equity like returns, but using those periodic those coupons, and then growth, growth-oriented investment strategies from both New Edge and Wisdom Tree that are really focused on participating in a market upside, but also providing that downside risk mitigation. If we dig even a little further into that, you have Wisdom Tree, unique investment strategy that really follows along their ETF models. So if you're an user of an ETF strategy, you can use this to replace your equity side, equity growth-oriented investments, but provide that downside protection. And so we also, it's interesting,

Starting point is 00:13:03 as we traveled with our advisors, we receive some asks around fixed income. So we have an intermediate fixed income strategy, as well as an ultra-short. So when coupons are paid or when capital is ready to deploy, we talked a little bit about pricing and the movement of, you know, we have an ultra-short strategy that allows you to keep your cash where you're looking for those opportunities. And so, yeah, really trying to make sure the objective, right? So are you seeking? seeking appreciation, preservation, or consumption, and how are you thinking about balancing those things? And then the investment strategies align. We curate them to align with those objectives. And so, interestingly, from a user perspective, it's a combination of those that we go out that

Starting point is 00:13:44 are new to notes and basically say, love the concept, just not ready to build and manage strategies on my own. And so they can use this to get themselves into the product using a professional manager. And then those, quite frankly, that are experts that say, you know, my practice, my structure, I want to build scale and efficiency. Again, love the product. I want to use that manager. I know how to integrate it into my portfolio and want to use that professional manager for, you know, scale and implementation. I'm trying to wrap my head around this. Like, what is the, so walk me through this. So wisdom tree has a model portfolio. They and others have been in that business forever, working with advisors that are more planning oriented

Starting point is 00:14:24 and say, we'll get the investment side. So they're doing that, but they're using Halo to build a model portfolio based on structure notes. That's exactly correct. So if we think about the growth strategy offered by New Edge and the growth strategy offered by Wisdom Tree, the whole idea there, right, is to align with your equity allocation, right? So take a portion of that equity allocation, put it in that growth portfolio that has downside

Starting point is 00:14:53 risk protections for the notes. you know, why would you do that, right? Yeah, like, that's what I'm trying to figure out. Yeah, yeah. So it really, you know, back to the core principles of the note, it is meant to maintain that equity exposure, but reduce that downside volatility. And so I'll say a super practical use case. There's two, you know, two super practical use cases that effectively illustrate why you

Starting point is 00:15:16 should have these in the portfolio all the time. But you have individuals that are looking to put money to work are not sure if it's the right time to do so. Right. So they have, you know, money to put to work. The advisors trying to convince that investor to get into the market. The structure note allocation can really help get money off the sidelines, right? It's providing that. I buy that. Yeah, providing the, you know, and so when it's there then, right, so it's getting that money to work, get it in the market because obviously, as we know, you need that, you need equity investments to get to where you want

Starting point is 00:15:46 to go, obviously, unless you're, you know, ultra, ultra high net worth. Once they're in that strategy, Right. Our feeling is that it also helps maintain consistency. So because you have, right, those, that downside buffer in the portfolio itself, when things do get volatile and the investor begins to question, right, the flight out of strategies when stuff hits the fan, it does offer the ability to keep them in that strategy. So the whole idea is to get them invested in the market and keep them in that model based on an allocation to the structure note. SMA. So that part of it resonates with me. As I said earlier, like, if we're all cyborgs, nobody would need any insurance. We just ride all the downside, ride all the upside. But of course, that's not real life. So I've actually had a couple of conversations in the last weeks, even with, like, younger people that have way too much cash that are waiting for a pullback. Who knows when it's going to come? Who knows how it's going to, how they're going to behave when it actually does come, right? Maybe like, I'm not going to by now. I'll wait for a deeper

Starting point is 00:16:46 pullback. So for people that are like trying to dip a toe in the water, Matt, you look at your salivating. So for people that like need a, uh, uh, an entrance into the market, but are, but are uncomfortable just buying today, this is a potentially really good option. So talk about how this works. Is this, all right, we get into the portfolio and there's, there, these are, these are six month maturities or two years or like, how do, so how does this work? And then how do we get them?

Starting point is 00:17:14 I know this is not to your benefit, but as an advisor, how do we, how would we get somebody out of this and into the, I'm looking of a better metaphor, but like a raw dog exposure where they're fully in. Forgive me. I love it. So yes, and you saw me salivating there. It really is, you know, in terms of focusing on the investor, the outcome that they desire that cash, right? There's a lot of it today, right? Sitting on the sideline, tons of it, right? And so you're exactly correct, right? So the structure note does offer the ability for them to say, okay, get into the market, right? We don't know when that, you know, when that next pullback's going to happen.

Starting point is 00:17:54 You don't know if you're going to miss the runup. And so, you know, now is always the best time. But what we're also saying is we understand your concerns, right? Whether they're, you know, whether they're behavioral or whether they're from a horizon perspective, if you don't have, you know, the luxury of losing money now or if you're just super concerned about it, the note definitely, again, allows you to invest in a broad-based, you know, index exposure. You can create notes that are, you know, get associated with individual activities. But again, it entices them to do what they need to do, which is get that money

Starting point is 00:18:28 to work and do it now. And so you mentioned, right, when do you move from the, the structured note SMA to the individual? It really, quite frankly... Don't say never. Yeah, yeah, right? So, of course. But, you know, I look at them as value, again, back to the question first around, you know, using buffered ETS versus using structured notes. I think there's the ability to use both of them effectively in practice as well as individual notes, right? Individual notes and the structured note SMA. And so I think of that structured note SMA as more of a core integrated allocation that

Starting point is 00:19:04 should remain, right? So depending on the risk, you know, the risk type of the investor, you know, the size of that investment, right? And hence the protections that it offer, you want to allocate in size, but keep it in there. right now there's you know how about this matt sorry to cut you up but how about how about somebody's like all right i've got uh whatever this pile of cash and i'm nervous so what if okay i okay i understand right i get nervous too yeah what if we're going to take uh i'm making this up 40 percent of the money we're going to put it in these in this structure note model wrapper we're going to take the remaining

Starting point is 00:19:39 60 percent and put it on with no protection and this way you know if your worst fears come to fruition at least we've got we've got you some insurance that's it that's that's that's absolutely correct, right? And then I would say the pivot to when you start using the individual notes, right? So as your experience grows, well, taking a big step back, like we are super focused on integration of these products into the portfolio allocation process. They can't hang off the side of the desk. They need to be part of that core allocation model. So now you've gained exposure to the structured note through our professional managers. Now you see in your own practice, whether it's from a valuation's perspective, from a macroeconomic or geopolitical, you see some

Starting point is 00:20:21 dislocation in a sector, in an asset class, in an exposure. You then, once you have that expertise, right, so for instance, if you want international exposure these days, right? Let's go China. Talk about China, because China was probably blown out less. You probably had great opportunities there. For sure, right? And so those are situations where if you as an advisor either think there is, you know, from a valuation perspective, you know, dislocation to the, to the low side, right? So undervalued, right? Or overvalued, if you still want to, again, express or maintain an exposure that you have in your model, but you want to do it in a highly, I'll say, tactical way, though align with your core allocation strategy. The note's perfect, right? So, you know, we have a ton

Starting point is 00:21:07 of interest today, like you mentioned China, but also like Eurostocks, right? So international exposure, Europe in particular, the participation in some of those notes are absolutely phenomenal with decent downside protection as well, strong downside protection, I should say. So again, as you become that note expert, whether it's China, whether it's Tesla, whether it's Eurostocks, whether it's small caps, you can use that structured note in collaboration with your other allocations, whether the structured note SMA or your core portfolio. And that's the whole idea of Halo, though, is to teach advisors, right? Educate them not only on what they are, right?

Starting point is 00:21:47 Education sometimes is around, like, deep, dark infrastructure around how the node is built, but it's as important to us to show how do you actually put this in a portfolio, what's its role, and then how do you, again, adjust it over time based on these market dynamics. For the SMAs, is there any difference between in the liquidity structure or the fees or anything? Tell us how that works compared to the other platform. where you're creating them yourself. Yeah, so there he is. So as, you know, with any, you know, externally managed strategy, so, you know,

Starting point is 00:22:18 SMA, right, there are advisory fees associated with them, right? And so they vary by the strategy and strategy type. What you're looking for, you know, anywhere from 40 to 80 basis points, you know, to, in terms of the advisory fee that's associated. So that's the fees you're paying, you know, for the professional management by those, you know, new edge peaton or wisdom tree. And so you get very similar to using other SMAs, you know, across other asset classes. But that gives you some sense from an advisory fee's perspective. So if you're managing them on your own, right, you come to our platform.

Starting point is 00:22:54 You source a note. You're only paying, you know, I'll say a transaction fee, right, on the note itself. We've talked about, you know, pricing structure for notes. You know, typically these are sold in an advisory accounts, right? of the advisory still charges what they charge from an advisory perspective, and then, you know, the cost of issuance and the cost of delivery of that note is, you know, is embedded in the reoffer the bond. What about implementation?

Starting point is 00:23:21 Is this something where they click a button and all the notes are bought, or is it like, I have to go, I have to do this part of it and this part of it and that part? Yeah, that's the beauty of the platform. And so you can go out to haloinvesting.com if you're onboarded with the platform. And you, similar as you would see in a typical SMA, you know, infrastructure, you have access to information about the strategy. What is it, it's objective, who is the manager, right? You know, historical information about the strategy itself. You then basically, yes, as you point out, you click to buy the note.

Starting point is 00:23:56 Now, it's, I will say it's just as simple or just as it's similar to buying a separate account strategy as I. as a custodian, as you would at a custodian today. And so from an operational lift, you know, you have to make sure, obviously, you have an account open at the custodian. And then there's the investment management agreement. And then with the advisor, we have our, you know, our platform services agreement. So again, nothing out of line with what they would expect to see and engage, you know, on a traditional, you know, tamp like infrastructure and this, you know, separate account

Starting point is 00:24:29 strategy. So the customization is, is fantastic. advisors, all that, clients love that. But how does that contrast with, like, scaling, right? Like, the ability to do this at scale is, does the customization, like, make that tricky? Well, so customization at scale, right? This has been, you know, industry focus across all products for a long time. You've seen the, you know, the advent of model portfolios to really try and help address that, right?

Starting point is 00:24:59 So create models that have objectives such that they can be used. in different sizes at different times, you know, to personalize and customize, right? And so the whole idea of the technology infrastructure is to basically make this easy for the advisor to do at scale. And so they have note types, right? So the platform itself allows them to curate notes, you know, create watch list for notes so that they can monitor pricing or, you know, pricing or terms. And so the whole idea of the platform is to easily buy them and deliver them back into the client portfolio. Now, when you talk about that integration at scale, we are launching a tool called ORA, and the whole idea of ORA is to demonstrate the impact of that structured note

Starting point is 00:25:48 inside the client's portfolio. And in the case of an advisor that uses models, we demonstrate the impact of that model, or that impact of the occlusion of the structured note, SMA, or individual note, in that diversified asset allocation. And so back to scaling, right? So, So in order to drive the adoption of that across their investor base or in the case where there's models used at the home office level, you can demonstrate to that investor what is the impact that the note is having. Why is it there? And so in terms of easing the adoption of the product, it becomes, for us, we're convinced

Starting point is 00:26:26 it's much more seamless when you can show, right, here's the impact on risk, here's the impact on negative returns, here's the impact on income, if that's your focus. of the notes in a, you kind of think about it in the traditional TAMP investment proposal framework. I worked at Morningstar for a long time. You think about, you know, that the advisor workstation or other investment proposal tools, the advisor or the TAMP investment proposal, it's so core to that client engagement and showing them, right, why this is happening. And we are convinced that if we can help the advisor do that,

Starting point is 00:27:01 the ease of getting clients into the portfolios, but also then, again, the management of it over time, given ORA and then the core platform, can really drive that scale. So your ORA platform is essentially a portfolio modeling and analytics that allows you to do some scenario analysis of, here's our current allocation. If we put a 10% allocation into these structured notes, here's what it does to the drawdown potential for the portfolio or whatever it is or the upside or any of that stuff. It just kind of allows you to integrate better with the rest of your portfolio. That's it. Yep. Yeah. Show the impact it has, right? What is its place, right? Because it's very important to make sure it is appropriate, right? We don't want, you again, you want the product to be used, used effectively used, right? But you've nailed it, right? That's exactly what it does. It shows them why. Why is this note? Why is this structured note SMA in that client's allocation and what is its role? Do you, is for most advisors and clients, obviously the downside protection, Michael keeps talking on the behavioral thing. I tend to think that the income is, a really important piece for people too. Do you think just for clients, just the safety and comfort of feeling and knowing that income is coming in, whatever the percentage is, I'm getting

Starting point is 00:28:09 6% a quarter or 10 or 8 or whatever the number is, is that income piece just as good for the psyche as the downside protection? Absolutely, right? It's another form of security, as you point out, right? And so, you know, that steady stream of income is extremely attracted to a lot of advisors and investors, right, where they can just show the periodic nature of that cash flow, right? So many are using it as a way to try and replicate the equity returns, you based on those underlies, but also some are heavily focused. So if you think about the Piton strategy that we offer, it's a high-income strategy that uses individual security, individual equity notes to drive higher yields, right? And so you absolutely agree, behaviorally, right? Having that

Starting point is 00:28:56 defined protection in the portfolio is critical. And some want, again, to kind of manifest that in the secured and periodic income as well. When did Pelotan get into the structured note game? Well, I don't know. Peton, Peton, Peton. So Peton is an investment manager on our platform. So in terms of the expertise, I think two things to know, Annali Capital, if you recall, a very large fixed income manager,

Starting point is 00:29:30 that's the predecessor of the firm. And so in terms of sophisticated utilization of fixed income instruments, they've been at this for quite a long time. So it's P-I-T-O-N for those. It's not Peloton for those that are listening. And so, you know, in terms of their portfolio management capabilities, they also have, you know, a lot of exposure building custom portfolios for high net worth and ultra-high-net-worth individuals. And so structured notes have always been a part of the investment strategies that they build and manage for both their own portfolios and that of their clients. And so we're basically leveraging that, you know, Chris Conrad as the portfolio manager

Starting point is 00:30:05 on it, leveraging that expertise in the single name, right, single stock, income note, strategy to, again, drive high income yields to the allocation portfolio. So, Matt, Ben mentioned that income is one of the easiest things for advisors to sell because clients love it. And that's, in my opinion, one of the reasons that private. credit has exploded because clients are able to get that 10% coupon, whatever it is. What sort of yields can we generate using these strategies, ish? Yeah.

Starting point is 00:30:42 So, you know, it's that 10% yield that you mentioned can certainly be replicated inside of the structure note. It really, I mean, how, how, that sounds. Yeah. It sounds too good to be true. So tell me why it's not. Yeah. So, you know, typically, you know, in that case, you're looking at either, you know,

Starting point is 00:30:59 I mentioned some of the single stock notes, and those yields can actually push even higher than that. Obviously, it's subject to all the market conditions we talked about. Jason showed us some Tesla yields back in the day. They were very high. Obviously, with a more volatile stock like that, you would expect to have higher yields. Yeah, but the tradeoff there is that, like, you can get knocked in. That's exactly right. So you want to make sure it's balanced, right? And so, you know, I'll say today, you know, typically you're going to see a, you know, three index worst of, right? So think about, you know, Russell's.

Starting point is 00:31:29 2 NASDAQ S&P 5 note. So based on the worst performance of those three, you know, generating, I'd have to look to see what the price is actually this morning. I should have done that. But, you know, if you take that worst of basket, it convert that into an income note, you know, again, you can create accessibility to yields, I'll say inline similar to what you're, what you're seeing there. Now, if you want to take on more risk, as we mentioned, you can push those yields higher.

Starting point is 00:31:56 single stocks, obviously, can drive higher income, given their volatility than the broad-based indexes, the fewer indexes you have associated with that income note, the higher yield's going to be as well. All right, give me, I want to know it on micro strategy this afternoon. What are we looking at? Yeah. I'll go ahead and have the crew priced that up for you, Michael. But I guess I'm joking, obviously, but the thing is that you really, there is flexibility

Starting point is 00:32:19 in the platform to do more or less whatever you want. More or less whatever you want. Absolutely, right? So as long as it can be hedged, right? the issuing bank or you're issuing banks will, of course, you know, price up the note real time. And that's the whole, again, the beauty of the platform itself is access to multiple issuers, right, multiple banks to price up that note. So, yeah, the platform, and there's, quite frankly, it's the, you know, the, in some cases, curse of choice, right? There's infinite, basically infinite combinations of underliers, protection, right, duration.

Starting point is 00:32:52 in. And so that's kind of back to the point of the SMA. It does, it does allow for a streamlining of that. But the other thing, too, is just the ability to kind of set filters and screen, define your objective, it will help you curate. And we have humans, right? It's always helpful. We have a team that's at the ready to help advisors hone in on the note that they need as well. And so, you know, I don't want to, I'm going to sneak back right to the SMA because one of the things I do think is important is, you know, credit risk is always something people talk about. within the structure note world. Obviously, the bank is issuing the note. It's based on their credit. One of the additional dimensions that could be important to investors is that the managers can,

Starting point is 00:33:35 through the platform, they can see their issuer level exposure. And so they can balance their exposures across the banks to make sure there's not too much concentration in a single bank as well. And again, it's something that's taken off of their plate. The manager themselves is, again, and making sure they're diversified across the issuers as well. If financial advisors want to learn more, where do we send them at? Yeah, so send them to haloinvesting.com. There's a lot of resources that are there. The Halo Journal is not password protected,

Starting point is 00:34:05 a ton of great thought leadership, education, and certainly you can find information about the platform and how you sign up for it there. Perfect. Thanks for coming on, Matt. Yeah, thank you very much. Appreciate it. Okay, thanks to Matt. Remember, check out Halo Investors. To learn more, email us, animal spirits at the compound news.com.

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Animal Spirits Podcast - Talk Your Book: Custom Portfolio Protection

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