How I Invest with David Weisburd - E80: How ~$16 Billion Multi-Family Office WE Invests

Episode Date: July 26, 2024

Matt Farrell, Senior Investment Manager at WE Family Offices, sits down with David Weisburd to discuss how families with $50M-$1B+ invest their capital. They also cover balancing risk tolerance and liquidity needs, where alpha is in the market today, and characteristics of an ideal private fund manager.

We advise on about 16 billion of assets with roughly 100 families. So that's an average of 160 million, but we really have clients that run the range. You mentioned you like this kind of Goldilocks of somebody that's experienced enough, but hungry enough. What is the ideal amount of time that you'd like somebody to be at a top manager before spinning out? I love managers who are early in their career in which they have a track record. Maybe they're a spin out, but you're capturing them at the best part of their career curve. So meaning they're hungry, they're motivated, they're willing to grind for you,

but it's before they're really trying to scale their business and have multiple business lines and such. Because there is that point where there's a diminishing return. A lot of our listeners would love to know what people with $50 million to $1 billion, how they like to invest their money and how you advise them. Matt, I've been looking forward to chatting ever since our friend Mikhail Dankovich from Unicorn Strategic Capital introduced us a few years back. Welcome to the 10X Capital Podcast. Thanks for having me. So let's start with a simple question. What is WeFamilyOffice?

Yes, good question. So We Family Office is a multifamily office. We're headquartered in Miami. We position ourselves as a family office company. So we do everything from taxes, structuring, governance, and also investment advisory. So the way we think about it is We stands for wealth enterprise. So we consider ourselves the quarterback of the client's wealth enterprise. They can have different asset managers or operating companies and relationships. And we're just kind of that connected entity that

helps oversee the client's wealth enterprise and really just sit on the same side of the table as the client. And what's the typical family that you guys work with? Just to add to, you know, we family offices specific to our business model, we are, we do not take discretion. We're fee based. So just a flat retainer. So we're agnostic to custodians, to any investment manager, we're beholden to no one, we like to say. So we'd like to consider that we're just objective advice and sourcing as to what we see the best in class managers. The role that we can serve with a family is that when you think of the ultra high net worth segment, if you're less than a billion in assets, it's really hard to have your own family office. You don't have the time and resources to start up the business and hire and run it. So it's easier to outsource. And so we try to fill that void of the ultra high net worth.

While there is no exact size, it really ranges anywhere from 50 million to upwards of a billion. But really our model is to have a different experience, have our clients have a different experience than they typically work with, whether that's a banker or brokerage firm. Their typical experience from what they tell us is they feel like they're always being sold something. And that's just the opposite of our model. We're not trying to sell anything. We're just trying to deliver a family office experience while keeping the clients in control and really ultimately just trying to give them the confidence to make their own decision. Yeah. So the main distinction being that you get paid the same amount, whether they invest into this product or that product, that you're taking your fee-based assets under

management versus based on what product you sell them. Not just purely assets under management. It's actually based on complexity. And so the fee is just based on scope of work as opposed to assets under management. Tell me more. You asked, what's a typical family office client profile? And the short answer is there is no typical family office profile. But if you wanna do some quick math, we advise on about 16 billion of assets with roughly 100 families.

So that's an average of 160 million, but we really have clients that run the range. But the common denominator is quite often that they're complex. So this could be, they have some kind of family dynamic. There could be a generational transition of wealth from, you know, patriarch to the, to the children, and they have different risk rewards or have different goals with their liquidity, but there's often a liquidity event. So again, whether that's a passing of someone or a selling of an operation company,

operation company, and they just came into a lot of liquidity, right? And so that's part of our job is to help structure. Half our client base is domestic and the other half is non-US, which happens to be in Latin America. So a lot of it is diversifying their wealth from countries of risk to structuring it in a tax efficient way. But also a common denominator

is our clients being ultra high net worth, they tend to have a lot of liquidity. And therefore we can build pretty interesting portfolios, particularly in the private markets. And we can really lean into the illiquidity premium. You mentioned your 16 billion that puts you up there in terms of AUM, multifamily office. What are the economies of scale and what are the diseconomies of scale to having $16 billion? I'd say with every client being very different, there are of course some commonalities that

I mentioned with the investment advisory, there's a benefit to being able to pull together and collective buying power across the 16 billion of assets. Whenever we're sourcing the private investment, we're able to leverage that collecting buying power and negotiate minimums and sometimes fees. So you get that benefit of the economy as a scale. But the opposite of that is, again, every client is different. And so we don't have model portfolios. We can't just roll something off the shelf. It's a truly bespoke and customized experience based on their needs. You know, of course, the risk tolerance, liquidity needs, maybe they have an ESG or impact mandate as we refer to it.

So everything's very customized with our model. And, you know, with my focus in particular, I focus on alternatives. And even within that, asset allocation within private markets, which I think is under-emphasized actually within our peer group, will inherit a lot of clients. And maybe they are very risk-averse or not have a high liquidity tolerance. And you look at their portfolio and their overweight early-stage venture capital, for example. And while venture has a place in portfolios for a certain client type, if you're very risk-averse and need liquidity, it may not be appropriate for that client. So we're very focused on ensuring the cashflow profile really,

and risk tolerance really fits the client's needs. Is that 80% of the game, risk tolerance and liquidity needs in terms of portfolio construction? I'd say that's a lot of it, right? And I think education is a big part of it. And it's a big part of our philosophy as a firm is to empower clients to make informed decisions. So a lot of that is education. So we thought our clients are very sophisticated, but maybe some of them have never heard of venture capital. And so while we think there's a role for in their portfolio, maybe for this particular client, if they don't really understand that 80% of venture funds are active after 12 years and they're expecting liquidity much sooner, then there can

be a mismatch of expectations. So really educating the client and ensuring as you're going through that risk and illiquidity mandate to make sure they're truly aligned. You mentioned when we last chatted that half of managing a multifamily office is behavioral finance. What did you mean by that? As humans, we're not really wired to be good investors, right? When volatility happens or there are drawdowns in the market, fight or flight kicks in, and we want to sell at the exact wrong time, right? That's pretty well known. So that's part of our job as advisors

is to actually keep them off the ledge, so to speak. You know, I think a good example is what happened in starting in 2020 and 2021, whenever we saw a lot of liquidity in the market and, you know, all ships rose with the tide. And then 22 happened when the rates started to go up and there's a lot of volatility in the market and all ships rose with the tide. And then 22 happened when rates started to go up and there's a lot of volatility in public markets. And then on a lag basis within private markets, we had to go back and revisit and just say, look, these are 10-year funds. That's why it's important to have vintage diversification and continue to invest

across cycles. We talked about entry valuations and just when you zoom out and given our firm, we really elevated our private starting in 2013. We're able to see clients with mature portfolios and zoom out and say, this works. If you continuously invest across cycle, you're blending your investment entry valuations and it works over time. So just follow the process, have a plan in place, and we're able to reference that plan. Good examples of this week, just having calls with clients. And they're only two years in and some examples into their private funds. And with valuations either static or no markups or markdowns,

just typical J curve with fees kind of eating into the values. They're expressing concerns like, you know, everything's okay. Just be patient and just take the long view. These are long duration assets. So, you know, big picture, it's don't let FOMO happen. So as, as everyone's jumping in on something, just, you know, exercise caution and let's have a balanced and measured approach. And then also don't let fear drive investment decisions, but you know, it's tough to do because we are human. And I even see it internal at our internal investment committee. Sometimes we get tempted

to fall into the trap and be backwards looking, and we have to stop and kind of zoom out and look forward. Do you think illiquidity could be a feature of sorts, given that humans are so adverse to volatility? I think that's fair, right? And that's where privates come into play. We know there's a smoothing component just the way they're marked, but we think there's a value to that, right? Where you're almost protecting them from themselves and not being able to sell. Certainly in crypto, I found that personally. Illiquidity is a huge, huge benefit to me as an investor. How are clients feeling about their venture portfolio today? I've had a lot of client calls recently and there's like, look, maybe they just started investing in, I don't know, 2018, 2019. And then they were to see that run up, you know,

post COVID during zero interest rate environment. And everyone was happy. There was liquidity, there were distributions, everyone's portfolio looked good. It was easy going. And then the opposite happened in 22, and then the lagged effect that we're still feeling today. And so, they're feeling the lack of distributions. I think they're a little frustrated by that. Certainly, the commitment pacing has slowed down. But again, going back to education, it's like, look, let's break down the basics. And actually, it was just doing that with private equity just early today on a call and just looking at the data historically that there actually is a premium, even though things may be expensive now, there actually is a premium at exit and contrasting with valuations in the public markets and just getting back to basics. Public markets, they are operating on a quarterly basis

and managing earnings for quarter to quarter, whereas privates are taking the long view, right? And so it's just really getting back to basics. And then I think that calms them down a little bit and just reminds them and, you know, look, it'll be okay. Just follow the plan, follow the process. A lot of our listeners would love to know what people with $50 million to a billion dollars, how they like to invest their money and how you advise them. What should their mix be for the average ultra high net worth family office, you know, how they like to invest their money and how you advise them. What should their mix be for the average ultra high net worth family office, whether they're being conservative or aggressive? Right. So again, there is no common portfolio. We don't have a model portfolio, but we have frameworks as starting points, right? And so we mentioned liquidity as being concerned

are a big consideration, risk tolerance and how they handle volatility. And part of that is showing them backtesting a portfolio and showing them a drawdown. It's like, look, would you be comfortable with this going through a global financial crisis? This portfolio mix would draw down X amount. Would you be okay with that? And kind of getting back to basics in that regard. But generally speaking,

it's a combination of active and passive. We like to be passive in the most efficient parts of the market. So that's large cap public equities. Let's do that as cheap as possible and have cheap beta through an index and then use our fee budget in the most inefficient parts of the market. So that's large cap public equities. Let's do that as cheap as possible and have cheap beta through an index and then use our fee budget in the most inefficient parts of the market. So whether that's in public markets, that could be small cap equity. We actually think there's

manager alpha in the fixed income space. So we kind of have to be responsible with our fee budget and selective. But as I mentioned, generally speaking, there's excess liquidity. And so we have large alternative portfolios, but that could be a combination of drawdown vehicles, hedge funds, and other semi-liquid alternatives. So we really embrace the illiquidity premium for the drawdown structures. And then the other alternatives, I love these uncorrelated yield-oriented strategies that have a positive correlation with inflation. They can often benefit from higher rates. And there's a yield component. And that is a couple of things. Number one,

it's psychological, right? You're getting capital back in your pocket. And so you just have a view that you're de-risking over time. And in reality, you are de-risking over time. Your capital at risk is coming back, even though it may not be principal, whenever you're getting some kind of coupon or yield component that just de-risk your overall portfolio. And then aside from that, yield-oriented strategies are popular because our clients overall aren't overly aggressive. Again, it runs a spectrum, but they generally speaking just want to inflation plus a spread.

So whether that's inflation plus three, 4%, and then just fund the lifestyle. So these yield-oriented strategies can play a role and those are obviously embedded in a lot of alternative strategies. You mentioned there's alpha and fixed income, also presumably private credit. Where is alpha? Explain that. So maybe back up. Whenever we're exploring direct lending, for example, that's all the

height now. But we started looking at direct lending during low interest rate environment. And the thesis was different. We were looking for, instead of negative real yields that you're finding in traditional fixed income, we needed positive real yield and income. So that's when we first looked at private credit and our approach was like, let's cast a broad net and really dissect the space. So the first component was sponsored versus non-sponsored backed. When looking at sponsored versus non, I think there's pros and cons to each, but ultimately, the considerations were the sponsor side we felt was very crowded. I think there's something like 600 sponsored backed managers even a couple

of years ago. So it's, it's almost a race to the bottom in terms of covenants and spreads. So we thought that was too competitive. We looked at the non-sponsored less competitive and, you know, we're able to deduce that there was about a 200 basis point premium in the non-sponsored space and then go in a little deeper. Should we get a large cap to where, you know,

companies are in theory, less risky because they have a diversified customer base or multiple revenue channels, whatever the case may be, or the lower end of the market to where it's more fragmented, to where there's a larger opportunity set, but there's potential for higher risk because these are smaller companies.

So we have this philosophical debate back and forth and looking at data and we found that there was another, call it 150 to 200 basis point premium in the lower end of the market. And so that's ultimately where we landed. And so when we think of manager alpha, we love these fragmented, less crowded parts of the market. Similar in asset-backed lending is something we're looking at now to where sourcing is obviously a huge component of that and structuring and underwriting. So just having a manager specialize, whether it be structuring or sourcing, that's where we try to identify manager alpha. And sourcing being relationships, essentially, who has the relationships with the right parties.

Correct. Right. So taking a step back, what's the ideal private fund or private manager look like to you? Right. So it can be strategy specific, but typically speaking, we are biased towards smaller funds. Again, just highlighting that fragmented part of the market. But I think it's asset class specific. There are some to where economies of scale can make sense. But manager wise, I love managers who are early in their career in which they have a track record.

Maybe they're a spin out, but you're capturing them at the best part of their career curve. So meaning they're hungry, they're motivated, they're willing to grind for you, but it's before they're really trying to scale their business and have multiple business lines and such. Because there is that point to where there's a diminishing return, I feel like. So we're trying to capture that manager to where they have just enough experience

for a track record and our clients can get comfortable with it. But before they're turned into really an asset gatherer. So track record of executing, experience success, they haven't passed that inflection point. They're balanced between managing their business to where it's not a business risk in terms of just a newly started business versus growing the business to the point where there's an erosion of returns. Often those managers will pitch us synergistic across equity or credit. There's probably an

element of truth to that, but I think often they get spread too thin and their ability to attract talent can be challenged sometimes. But overall, we like the fragmented parts of the market. So again, we have to challenge this with balancing business risk because quite often these niche fragmented markets, the team hasn't been fully built out yet or the infrastructure and the reporting, but you have to access this fragmented market before it becomes commoditized and other entries come into the market and returns ultimately come down. Something else I'll highlight, we tend to be thematic, the generic or top-down, bottoms-up. So by top-down, I mean, we're still going to capture these main asset classes, but we want some kind of thematic tailwind. So whether that's energy AIs, like obviously the

big bubble right now or talk. So going back maybe a few years, industrial assets before it came crowded, but we like to capture these early in their cycle when they're still fragmented and they have some kind of tailwind. And then finally, you know, transparency is hugely important for us. It seems very obvious, but give you an example. We were looking at a venture manager, a well-known, everyone would know the name and we progressed through diligence. We got to a point where asking for data and they just flat out told us, no, that we don't give this data out. And it was pretty basic data in our, in our eyes.

And, you know, I was just like, look, you know, I've actually never been told no before with this very basic data. You know, are you sure? There's like, yeah, we just don't send that out. I was like, we're going to have to pass, you know, it's just a non-starter. And I think that's just from experience of, you know, if you're going through this, when, you know, just the general underwriting process, think about if something's going wrong and you have to really lean on your partner to provide transparency and help explain what's going on.

It's just hard to get that confidence if they're not willing to provide transparency up front. You mentioned you like this kind of Goldilocks of somebody that's experienced enough, but hungry enough. What is the ideal amount of time that you'd like somebody to be at a top manager before spinning out? It's hard to quantify with time, actually. So what we do is ask, hopefully, that's a bit of a challenge manager before spinning out? It's hard to quantify with time, actually. So what we do is ask, hopefully, that's a bit of a challenge as well, right? If they're spent out, it's difficult to really get their track record.

So it requires a lot of reference calls because I think experience can be a- How many reference calls are you talking? A lot, I don't know. So former colleagues, it depends who we can get in touch with. There's a lot of perusing LinkedIn and trying to connect with people,

former portfolio companies, if they'll speak with us, off-sheet record references as much as we can, and try to understand, did they really lead these deals? Because if they're at a big organization, they have a lot of resources, right? And so it could be teams of, I don't know, five plus people working on a deal. So did they actually really lead this deal? Did they source the deal? Did they really have those relationships? So it's a balancing act, right? Because tracks can be very difficult to come by if it's not portable from their prior shop or if they didn't leave on good terms. So you have to have something, but there's a lot of reference calls.

In terms of diligence and what are you trying to ascertain when there's a spin out from a top manager? How does it go wrong? So one of the big risks is obviously business risk. And that's kind of what I was referring to earlier. So you have to actually be able to keep the lights on, right? So do you actually have enough capital to do that? Can you attract talent? Because there's going to be some key person risk if you have a spin out and it's one person and they didn't bring someone with them. Often you'll see decks and they have an org chart, but there's a lot of TBDs and the underlying name. So it's very hard to make a decision based on TBDs in terms of who the team's going to be. So maybe we'll start engaging at that

point and wait until they make some more hires in order to get comfortable to move forward. So I mentioned track record and also just a clear strategy, right? Have you really thought this through? Again, it's asset class specific, but I think venture capital, you see obviously a lot of spin outs, but I think one of the under-emphasized points is portfolio construction. How much are you reserving for follow-ons? Have you thought that through? What are the KPIs in which you will do a follow-on? Have you thought that through? What are the KPIs in which you will do a follow-on? Have you thought through, are you going to lead rounds versus not? Are you going to sit on boards?

Are you going to, or not? Right. And there are all these little considerations that actually impact portfolio construction, right? Because if you're a spin out, generally speaking, you're going to be a smaller team and you're capacity constrained. So you want to make sure you have the staffing to do all these things that you say you're going to do.

And you've fully thought it through. What's your approach to venture as an asset class? We invest in funds primarily. We rely heavily on our GPs. So we invest in funds. And then if they offer co-invest through the fund, we'll lean on the GP for help with diligence and we will participate in co-investments. So we'll do some directs to compliment our fund investments. But the way I think about it in terms of sourcing, even though this isn't reality, given we're technically non-discretionary, I think as if every client invests in every single one of the funds that we approve by our investment committee. And the reason I do that is just for portfolio construction reasons for our own venture

portfolio. So that could be sector, geography, philosophy, approach. So whether they're an active investor versus they just want to be a passive and own a minority and not add value to the company at all versus someone who's on every single board, that's just a different approach. And so I take all those things into consideration when looking at a venture manager. And then it's very topical now, but DPI, so distributions, is that your key focus? We know it's a long-term asset class, but we want to know that you have a plan in theory for an exit upon even entering a position. So focus on liquidity and is this company able to be commercialized? Is there an exit? Is there a strategic market for it? So just making sure they've thought through an exit. I've had some LPs tell me that it's not even just DPI that's

important. It's the veracity of the TVPI. How can we trust these numbers in these markets? Some of these books have not been up to date over the last lot of client calls and a lot of explanation that this is very conservative. And they'll admit that it's conservative in which I appreciate that, you know, that they're not trying to game the system at all. But at the same time, like if no one else is marking down their books, you know, you can, you can ask the question, it's like, what is the value? I think this is across asset classes right now that we're in such a period of price discovery that who knows what value is, whether it's real estate, whether it's private equity, the bid-ask spreads are so wide. No one wants to be the first person to come to market and sell in this environment, right? And with the cost of capital. And so there's all these dynamics going on. And to me, it's like, it doesn't really matter

that much right now. I want to know that the company is healthy, that's going to survive, that there's a runway, that there's a strategic plan, that they're navigating this environment. And I'm less concerned about the quarter to quarter marks. And that's kind of my message, right? We try to tease that out at underwriting, the valuation approach, how they think about it. You know, of course, there's a great period of stress test

that we'll be able to reflect upon and use as a reference point when diligencing going forward, how they mark their books. But we try to make sure they're just good partners and they're ethical and doing the best they can. And then ultimately, if they're picking the good companies, it'll work itself out in the end.

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Maybe big picture first. Our general guidance is to reserve about 20% of your private portfolio for co-invest, which is material. But the way I think about co-invest… On the family side, right? Not on the venture side. Yeah, on the family side. On the family side. So all around in the private portfolio, reserve 20% for co-invest. But the way I think about it, it's a risk management tool.

So, you know, obviously venture is tech heavy. Even in buyout, it venture is tech heavy, even in, in buyout, it can be tech heavy, right? And so it's, it's really taking a holistic view across your portfolio, even public and privates to see where your sector exposure lies. And if you're a way overweight, a certain sector underway, a certain sector, this is a good way to kind of toggle your exposure. It's a good way to capture thematic tailwinds. You know, again, we referenced AI is the buzz biotech, whatever it may be. And it's a good way to have clients bes. Again, we reference AI as the buzz, biotech, whatever it may be. And it's a good way to have clients be involved. Again, our whole model is to encourage clients to

make informed decisions and being involved in their investments. That's the whole model. And so if there's a particular passion or interest that they have in a co-invest that aligns, it's a good way for them to be actively involved. How do you manage information and information rights on co-invest in the startup ecosystem? That's what we're dealing with right now, actually. It's a live consideration. And I think that's why our model is focused on only doing directs that are available via co-invest from funds in which we've made a primary commitment. And that's so we can, our process involves initially having a call with our GP in which we have a fund commitment, ask about general questions about the transaction, their diligence,

their thoughts, why they are or are not participating in this round. That's our first set of questions. And then if possible, we try to have calls with the founders. And we'll start with our initial set of questions and data room. And then we'll have a whole other host of questions. And again, this is a live exercise to where we'll go back to the GP and with follow-up questions. And then ultimately we'll make a recommendation to the client and that'll be as sized appropriately. And that's really the job of the advisors to

work directly with the clients and help them with sizing to make sure it fits within their broader plan. We spoke about value-add being a critical component to how you diligence venture capital manager. Why is value-add so important? Well, I think it's strategy specific, but generally speaking, I think it's just a great way to mitigate risk. If a GP is actively involved and they're hands-on, I just think they're going to be aware of issues earlier in the process. I think that with a seat at the table, whether it's being on a board or just, again, very hands-on approach, they can drive outcomes and be aware of issues earlier. So again, I think there's a lot of nuance between strategy. I think it's embellished quite a

bit to where a lot of GPs would say, oh, what are these hands-on value add investors? And then you do your referencing. It's like, okay, sure. They opened up the Rolodex or they helped them with data or something like that, which is always helpful. But again, maybe it's a little bit more embellished, but overall, I just think it's a good way to be proactive instead of reactive, mitigate risk. So I think with venture specifically, I think there is value when GPs are on boards, making resources and contacts available, helping them to scale. But at the end of the day, getting access to the top companies is what's going to drive returns. So again, I think it's a little nuanced conversation, but our emphasis within venture, again, it's who's the network referencing. And at the end

of the day, just understanding why the founders picked that particular GP to work with. Cause then at the end of the day, that's what's going to drive, right? Is who do I want to work with as a founder? So I think it's a little bit more nuanced with a venture, but generally speaking, we prefer managers who are just actively involved and the portfolio company, or again, it could be real estate across asset classes. You mentioned references. Is there a hierarchy of your reference process, meaning you try to kill a deal early on and then you go deeper and you're referencing different things? Tell me about the evolution of how you do your references on a manager. Right. So I think first, when you ask for references, there's on-sheet references. And we'll go through that process. But I think one of the benefits of being in this seat is I've collected a network of other

like-minded LPs that are really beneficial to just use as a sounding board and say, hey, have you heard this person? Have you worked with them before? And if not, do you know some of these people on the reference list? And hopefully, ultimately, the goal is to get an off-sheet reference. So that's the reference list. And hopefully, ultimately, the goal is to get an off-sheet reference. So that's the general process. We'll speak with portfolio companies, again, the on-sheet first, and then try to get access to those who they didn't initially put on a list. The ultimate goal for me is just, key questions for me is, why did you work with them?

Would you work with them again? And have you referred them to any of your other network? Things like that, right? Did they actually do what they said they were going to do? You know, again, going back to the value add component, did they make this grand pitch that they're actively involved in driving value and scaling the companies? And you're able to ask, did they actually do that? Because again, it's about transparency and trusting the GP. So generally speaking, that's the reference process. Which references carry the most weight?

Is it co-investors, LPs, or founders? I don't know if it's one versus the other. Ideally, I think it's very difficult to tease that out sometimes in video calls. So if you know a contact who actually knows the person that's on a reference and you can kind of cross channel and say like, look, we're trying to reference this person. Like, you know, can you talk to them and basically let them know that you know each other, right? And that you're going to give me an honest answer, right? And so if I'm able to do that, then I put a lot of weight on that to where they know that there's a personal connection and hopefully they can give the most honest answer

possible. And then I think other LPs, right? Because there's a lot of colleagues out there that respect their opinions and have a lot of experience and good networks. And so if they have a direct contact there, I put a lot of weight on that. What would you like our listeners to know about you, about WE, or anything else you'd like to shine a light on? Starting with WE, when you think about, and this is fairly new to me, my background, I came from a large global bank and before that was in investment banking and started at a smaller family office. So when you think of the word advisor, it's just kind of a broad concept. And I think WE has a very specific model. You have a few different types. You have kind of distributors who are paid to sell product, manufacturers of that product,

and then advisors in which that's the way we position ourselves. So they're paid to be aligned with no agenda. And again, just sitting on the same side as the client. I think often the industry confuses these with the word advisor and it's all thrown together. So again, just being aligned, objective, independent, that's something that's really resonated with me. And I think it's the model of the future just to be fee-based with no product and just being purely objective. Maybe personally, and I think it really aligns with the firm, but my philosophy, it kind of goes back to my first job out of undergrad. I had a boss who run around saying, challenge conventional wisdom, challenge conventional wisdom. And we'd kind of roll our eyes at the time,

but it's really resonated with me. And that's something that I try to push amongst our team. So that's really trust, but verify. There's several case studies we've done to where a manager will put something on the deck, maybe advertising these outsized returns. And you read the footnote and it's like, oh, your unlevered return is actually only this,

which is a fraction of what you've advertised, right? Or again, just if a manager is saying how much value they add to a company, that's like, look, we're going to trust, but we're going to verify that and challenge it. So, you know, I always say the worst answer the team can give me is if I ask, why'd you do something this way? And they say, it's because we've always done that way. That's the worst answer, right? We should always try to challenge and rethink whether it's our framework, our investment tools, our approach to manager diligence, always challenge that. And I think it's healthy and leads to better discussions internally at our investment committee

and better investment outcome for our clients. The trust by verify is critical. I've had LPs tell me that they spend 5% of the time with the manager figuring out if they like the story and 95% verifying the story. They think the devil is in the details. Well, Matt, I really enjoyed jumping on podcast and learned a lot. Thanks for jumping on. Thanks for having me.

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