The Compound and Friends - The Truth Behind Private Equity’s Megaboom

Episode Date: September 5, 2025

On episode 207 of The Compound and Friends, ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Michael Batnick⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Downtown Josh Brown⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ are joined by Michael Sidgmore, Partner and Co-Founder of Broadhaven Ventures to discuss: the evolution of private markets, evergreen funds, the T. Rowe Price/Goldman deal, and much more! This episode is sponsored by WisdomTree and Apex Fintech Solutions For Portfolio Consultations by WisdomTree visit https://www.wisdomtree.com/portfolioconsultations⁠ Find out more about Wavvest’s planning engine powered by advanced AI and built on Apex’s AscendOS at https://www.wavvest.com/ Sign up for The Compound Newsletter and never miss out: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠thecompoundnews.com/subscribe⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Instagram: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠instagram.com/thecompoundnews⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Twitter: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠twitter.com/thecompoundnews⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ LinkedIn: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠linkedin.com/company/the-compound-media/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ TikTok: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠tiktok.com/@thecompoundnews⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Josh Brown are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. The Compound Media, Incorporated, an affiliate of ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Ritholtz Wealth Management⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://ritholtzwealth.com/advertising-disclaimers⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information. Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://ritholtzwealth.com/podcast-youtube-disclosures/ Learn more about your ad choices. Visit megaphone.fm/adchoices

Where do you live? Between D.C. and here. Okay. So I split my time. Where are you more often? Here. I'm here pretty much. Our office is three blocks up from you.

So why are you also in D.Safe? That's where I built the home podcast studio when I started AGM during COVID. You know, you could move the microphones. I could. I know I could move the microphones. It is, it's a cool background, though, so it's hard to. So I listened to your show, and I really liked it. And I know it's very long running.

You've done a ton of episodes. He caught one, but he caught one. No, dude, you're, you can do it. You're good. You're good. Appreciate it. That's good to hear from another podcast. I thought that this episode was just going to be, I thought I was going to be in this seat.

Josh was not supposed to be here. So I invited you. Well, surprise, surprise. So I invited you and somebody who canceled 24 hours ago. Dead to us, right, Nicole? And I'm not going to name companies. I'm not going to do it. Now, I'm not going to do it.

But let's just say it rhymes with. Stop, stop, stop, stop, stop. Stop. Do it. And listen, you are not encumbered by corporate speak. You could say whatever you want. I saw the person's title and I don't know how they even got into our show. What do you mean?

This person was like the vice president of human resources or something. It's like a, it's not CEO. It's not a portfolio manager. It was not. I would never, I would have edited this person out if they came here. It was none of those things. I only want to hear from Michael. But I guess like there's a, I thought the doc looked kosher to me.

Like if there's too much smoke? Come on. Some people can't handle the truth. All right. All right. Well, you can handle the truth. I will say it does bring up an interesting point in this space is that I think firms take their brand very seriously. As they should.

As they agree. But at the same time, they may have to recalibrate some of that as they think about working with the wealth. Well, they're going to lose because John Gray is not taking himself seriously. And Harvey Schwartz is not taking himself seriously. I think the best, the leading avatars for the private equity market or people like David Rubinstein who mix it up with the crowd and have unexpected conversations and are not scripted when they do media, they're going to win because that's what the advisor audience responds to. So if you want to come on and read your PR talking points, you're not going to do that here, right?

I don't even know where is the venue for that, Yahoo Finance? Like where could you go where they're like, tell us what questions we can ask you. I don't even know if that even exists anymore. So anyway, you ready for this? Yeah, I'm ready. I thought we were going. I was ready.

We're going. We start recording you the minute you get off the elevator. I don't know if you know this. So you've been potting for a while. When did you start a couple years ago? April 21 was the first podcast. Okay, this show started in June 21. Oh, really?

I think a lot of pods were born in that era because none of us knew what to do with ourselves. we can talk yeah how many episodes have you done 170 it's amazing congratulations thank you congratulations how many have we done 206 not to brag i got i got i got to pick up the face here yeah yeah are you as far as you know the predominant podcaster in the alternative asset space i think you probably are focused on the intersection of private markets and private wealth yes ted ted has obviously done this for but ted goes way more hedge fund than you do.

Ted's more institutional, I feel like. Ted's more, yeah. Do you not consider hedge fund? So, so I haven't done as much on the hedge fund side. And then I would think of hedge funds as alternatives. I think what they haven't done as much of is work with the wealth channel in the same way that the larger alternative asset managers. They tried.

It didn't go well. The returns were bad. We'll see if they try again. They had their moment 15 years ago after the financial crisis. And unfortunately, it was like the worst time to get into global macro. Yeah. But that's what all the advisors were looking for. They wanted the people that called the crisis correctly.

Unfortunately, those people then went on to predict 10 other crises. And the end result for wealth management clients was, when can I get out of this thing? So, and you know this history. Well, this is, I think, an important thing to talk about in the context of evergreen funds, which I'm sure we'll discuss, which is how should advisors think about investing in private markets. What's evergreen funds? You're buying like Christmas trees? I'm kidding. No, I agree.

I actually, I'm going to do a lot of questions with you. Yeah. Mostly because I have not paid close enough attention to this space over the last five years, as I should have. But also our audience, we have a lot of people working in wealth management and a lot of people who are the clients of people working in wealth management. And I think it hasn't really dawned on everyone that the era of three basis points, Vanguard, you don't need anything else. Like, I don't think everyone has accepted that that investing era is over and we're in a new era. So I think because of that, there's a lot of just, I don't want to call it ignorance, but there's just like a lot of, I'm too afraid to ask these questions. What is an interval fund?

What is this? So I'm going to pepper you with like, give me definitions. as we discussed. Wait, where's your computer? You don't have an infestpity open. How are you going to do this? No, no, no. But like when you talk to Ted Sides,

you guys are speaking at a level that makes sense, given his audience, which is institutions. Yep. My audience, they want to learn. Yep. But like, they're not ready to hear some of those terms without us pausing and saying, what does that mean? Which is good.

I mean, I think, look, like, that's one that's... It's missionary work. It's missionary work. Of course. But, I mean, that all the firms are doing that? Like, what's Blackstone doing? Blackstone University, Apollo as Apollo Academy, you know, et cetera, et cetera. And they all know they need to educate the advisor. We did that at I Capital. That was a huge part of what we did. The I Capital is still doing it today. And that, that,

I think, is a hugely important. Education is marketing. These firms pay for their education, their universities out of the marketing budget. Nothing wrong with it. You know who I had here the other day. I had a Shanali Basak here. And I think she maybe has like the most consequential role in this ecosystem out of anyone because she's like basically going to be the face of ICAP and the voice of ICAP when she starts doing media. Did you know Michael is one of the first? What employees there? Yeah, I know that. First. Yeah. Help build the sales team. Yeah. Number nine. Okay. Number nine. Yeah. And so she, so she, so she, she's like, I'm so excited because, you know, working at one private equity firm, basically

that's the whole story that I have to tell, and that's the whole job is marketing that. But sitting at I capital, I work with every firm, and I can really put my contacts to good use by connecting people from all over the ecosystem. So I think she's, like, perfectly positioned for it. Oh, I mean, and that is critically important, right? Like, somebody has to connect public and private. somebody has to make sense of what's going on in the industry, what the different firms are doing, how they're doing it, how advisors think about private markets, how to fit into a portfolio.

All those things, I think, are top of my, right? And they're going to have to think about it, and the productization around it, there's model portfolios, there's, I mean, different advisors have different types of clients, all of those things. I hold your thought. Let's start the show. He's brimming with information. We're going. We're going. Whoa, whoa, whoa, stop the clock.

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slash investments. Read it carefully. There are risks involved with investing, including the possible loss of principle. This episode is sponsored by GPZ by Vanek. When private markets expand, who leads to charge? The asset managers behind the scenes, those investing in private equity, credit, infrastructure, and real estate, introducing GPZ, the Vanek alternative asset manager ETF. For the first time, retail investors can invest alongside Blackstone, Brookfield, KKR, Apollo, and peers sharing in the growth of private markets with minimal effort. GPZ tracks a specialized index of ultra-pure alternative asset managers, cap at a low-cost 40 basis point expense ratio.

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Welcome to The Compound and Friends. All opinions expressed by Josh Brown, Michael Batnick, and their castmates are solely their own opinions and do not reflect the opinion of Riddholt's wealth management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Rithold's wealth management may maintain positions in the securities discussed in this podcast. Oh my God. Episode 207. Ladies and gentlemen, we're now listening to one of the best investment podcasts in the world. We have a very special guest here today.

He is a podcaster, thought leader, operator, expert in an area of the market that is in one of the biggest bowl markets any of us have ever seen. Super excited to learn from him today. Maybe push back a little bit. We'll see what happens. Either way, we're going to have some fun. Michael Sidgemore is a partner and co-founder of Broadhaven Ventures, a global early-stage investor that makes principal capital investments

in financial technology companies and venture capital funds. Michael is also the founder of Altz. Alt's, alt goes mainstream. No S, alt. No S. All right. Don't trust me up till.

You should change it. It's not too late. You know, I've thought about that. I've built out the brand. No, just do it. Uh, if you added an S, nobody would care. The brand is you, as you know. It's not like somebody else could sit in the seat and do all that goes mainstream.

You're the brand. Boy, Michael, you guys are also in an investment bank. Uh, yes, we have an investment bank called Broadhaven about 65 people. I said that. You didn't listen to my... Wasn't listen to us. It was destructive. No, you didn't say that.

You didn't say that. I literally said it. Co-founder of Broadhaven. Do I have to play the table? Do I have to play the table? You didn't say they're in investment bank. I said it. You didn't say it. What, what do you mean?

What is Broadhaven Ventures? We're the principal investment arm that sits on top of the investment bank that my So I said, I said it wrong, what you guys do? Not what I do. It was a, no, no, no, no, no, no. It was a complete. All right, all right, just kidding. Michael, it's so great to have you here, and I've been overdosing on listening to you

over the last couple of days, and I'm so excited to have this conversation. Let's start, let's start with this. How big? is the alternative investing market right now. Give us some sense of the scale, as we sit here today. Yeah, so I'll go from a chart from Brookfield, which is probably based on some other data, like the banning companies, the prequins, et cetera, the world. About 25 trillion of assets in alternatives or private markets today.

Now, private markets is not just private equity, which is what we may think of. It's also private credit and hedge funds and infrastructure. Um, secondaries, private real estate, GP stakes. So it's about 25 or so trillion today. Private equity is the biggest asset class within private markets. Now, over time, let's see what happens with things like secondaries. I think if there's going to be a 50 billion dollar fund that's raised, secondaries is probably the first place that that would happen. Secondaries is private equity funds that have holdings they'd like to get liquidity on. A secondary fund would come along. It's just another private equity fund, but they specialize in buying those assets away from the primary.

Correct. Why is that so vital and necessary right now? The second is it because there's a lack of liquidity? To some extent, yes. So there's in today's world of private markets, yes, absolutely. There's been a lack of liquidity, lack of distributions, mainly because of the institutions, and we'll talk about this as it relates to the wealth channel, I think that's all part of the story here, is that part of why the alternative asset managers, the Blackstone's a policy,

as KKRs, etcs of the world are choosing to work with the wealth channel is because institutional investors have reached a point where they're relatively fully allocated. 15, 20% invested in old partners. Sometimes I mean, the Yale, Harvard endowments are sometimes 30% percent. When I hear that stat, I hear it cynically. Like, I hear it like the institutions can't physically buy anymore this stuff. We need a new buyer. Hey, we're super interested in democratizing this for wealth management.

I don't mean to be cynical. How could you not be it? But how could you not be when that's the rhetoric? A very fair question of private markets. I think there's certainly some truth to that when you think about alternative asset managers as businesses. Their customers are their LPs. So institutional LPs are their customers. Now the wealth channel is another customer of theirs.

And particularly as some of these firms are in public markets or have taken investments from GP-stakes firms like so they've taken in capital to grow their business. We don't say that name here. Dead to us. Dead to us. They need to think about other pools of capital. It's not just private wealth. It's insurance to insurance has been structurally under-allocated to private markets,

and I include things like private credit in that relative to institutions. But I think let's put that aside, the cynical aspect aside for a second, because I think there's another side of this. Can we start with the cynical side? Sure. Just lean into it a little bit more. Let's get it out of the way. For sure.

So, look, I think, um, these, these asset managers are, are the best in the world. They're very good at generating revenue and profit for their shareholders and themselves. They charge higher fees. And now they're all buying insurance companies because like, it's just, it's a never-ending supply of money and investments and fee-related earnings and profits and carry and all that good stuff. Sure. So I think you hit on an important aspect from the business of asset management, which is they charge a management fee and they charge carry. As you guys well know from the evolution of the mutual fund industry, the rise of ETFs, the traditional asset managers who also are getting into private markets in a big way, whether it's Franklin or T-Roe, BlackRock, et cetera.

They've seen a fee compression in traditional asset management. That's the way the mutual fund industry went. and alternative asset managers generate higher fees. So I think if the institutional... Wait, I'm hearing that cynically too, though. Sure. Okay. So the next piece of the puzzle here is the institutional side,

as they've become bigger consumers of private markets, there was a wave in alternative asset management where big institutions think like the Maple 8, so the big Canadian pension plans, Ontario teachers, the CDPQs of the world, et cetera, they started going to private equity firms and saying, hey, we want to co-invest alongside of you, or we want to build out a direct investment capability.

Why do they want to do that? In part because they wanted access to this part of the market, but in part because they wanted to blend down their fees. Yeah. Strip out the fund. We don't need a fund. We're coming with money. You have the products.

Let's do it that way. Smart. There's definitely a piece of that where I think we've moved away from two and 20 is the common parlance right 2% management fee 20% carry that's more likely the case to be in private equity than is in private credit and there's a reason for that there's you know some element of like you have to hire the team they have to find the companies they have to do the diligence we could debate whether it should be 2 and 20 i don't think it is 2 and 20 anymore i'll use another example of you know certain fees have gone down so like EQT is one example they're a big 270 billion euro

private equity or alternative asset manager their fees have stayed relatively constant about if you look at one of their last management presentations about 142 basis points or so that stayed relatively constant it's not 2% anymore and that gets to your point of the fees have come down in private markets will they come down to true vanguardization of private markets probably not i actually think they should they should be high it's a very complex thing to manage a portfolio of privately held investments they should not look like an ETF. So we agree there. I guess what I'm trying to figure out is,

and maybe there is no good answer. Maybe this is just the way it is. I heard you talk about, you estimate there's $250 billion in private equity that's just wealth management channel money. And I think you're including the Merrill Lynch and the Morgans who have always done private equity investing. And now the mega RIAs,

Ozaic, creative planning, et cetera. Is that the number? Is it a quarter of a trillion dollars in wealth money? I think that was specifically related to the Evergreen Fund. Oh, just Evergreen. So it's more than that. Yeah, and just Blackstone. It's just Blackstone.

So Blackstone, is that that 250, roughly speaking, it's probably a little higher today than when I said it then. So where do you think it's headed? Like, let's say end of decade. Like, what do you think that number is going to look like in dollars? We're certainly talking trillions of dollars from the wealth channel. So here, I'll break down the reason to that. I think you're going to be right.

So about 140 trillion of assets on the institutional side. There's a roughly similar number on the global private wealth side, individual investor side, about 145 trillion or so. This is data from Bain. Bain and companies, they put private equity report out every year. private wealth is around roughly speaking around like one to three percent allocated to private markets so rounds to zero basically institutions are 15 to 20 yeah so maybe it shouldn't be 15 to 20 in the next five years and that depends on the client family offices have invested in private markets in many cases for years yeah if they're qualified purchasers or qualified institutional buyers they're probably

having some allocation to either private equity funds or companies directly or other parts of private markets, but when we think about how early it is, to your point, like the Ozaics, the LPLs, the Schwabes, the Fidelity, they're just starting to get into this. Now, some platforms, the high towers, the focuses, the dynasties, these RAA aggregator roll-up platforms, and then private equity back firms, they're getting into it. And some have advisor teams that are doing it, but even still, there's still relative under penetration. I would say it's, this is, again, rough numbers, but I think it's the 80-20 rule, maybe even the 90-10 rule of at many of these firms, even the big wirehouses. There's, you know, 10% of the advisors are doing 90% of the flows today.

So I think it is going to be the trillion. Let's put a pin in that because that's an important stat for us. Michael, do you agree with the statement, the more former wirehouse advisors work at an RIA, the higher the likelihood that that RIA is actively allocating to alts. 100%. Because wirehouse guys, they learned that when they were at the... They're selling performance and Arias were typically selling planning.

So it's just a very different mentality. So when you say like High Tower Dynasty, everyone that works there used to work at Morgan Stanley and Merrill Lynch. And they spent 25 years, let's say, a guy in his late 40s, early 50s, spent 25 years telling their clients the reason to have an account with them was performance. So, and they used alternatives as part of their pitch.

They don't really believe in financial planning. Now they have some young CFPs. They throw the kid at a client. They're like, hey, do a financial plan for this guy. You do it. And then they get to check a box and get higher compensation. There's not like a hardcore wave of CFP believers at the wires. Nothing wrong with that.

Just pointing out what it is. The clients actually care more about performance than meeting with the CFP kid. So it's a nice fit. Those are the people who, when they break away, they go to Dynasty or Hightower, those are the people most likely to take meetings with Blue Owl and Carlisle and all these firms and want to know, like, which of your products can I include in my portfolios because I'm going to be pitching the performance of these products. I think it's a really important point in two contexts. One is you have. But I think that's what's changing. Yeah.

Yeah, so these things are all... What in the world? Look at this fucking Velociraptor. What is that? That is ominous. That is ominous. Nicole! Wow.

All right, no matter. I'm sorry. A raven just perched on your shoulder. It's not an omen or anything. I wouldn't worry about it. I wouldn't think too much about it. For private markets or for public markets? Yeah, no, this will be fine.

Jesus. It's a black raven. I don't know what we were saying, but one other aspect of this that's important. Let him, let him cook. What were we talking about? The bird? So one, uh,

definitely not fly eagles fly we can all agree on that yeah um commander's fan yeah well we'll see what happens here uh sports is a piece of that we can we can talk about sports i think that's another interesting element of all of this too and and and it relates to the branding and the collision of culture and finance which you guys have done a great job of covering in a number of ways and bringing to life but that i think is actually part of the story here but before that on the point about the advisors thinking about this from a business building perspective yeah i don't think we can ignore the trend of private equity investing into wealth management as part of this. Say more. Say more. You just have to be a Carl about this. Heckenberg.

Yep. Carl is one example of that. He has a fund called Constellation Wealth Capital. He raised a billion dollars or so in his first fund to take minority stakes in RIAs, so the likes of Crescent and Lido, AlphaCorps, which is Alts-focused RIA. And I think that that's a good example of this one of many i mean many private equity firms have invested into either platforms like the high towers dynasties focuses of the world or in creative planning general atlantic investor and creative uh tpg more recently as well bain and mariner i'm not mariner um uh carson yep yep right so the private equity funds come in they buy a stake in the ria all of a sudden the cio at the ria the chief investment officer is way more receptive to private equity

Well, they need to grow the business. And I will say this. So there's two sides of the coin. One aspect of it. And again, I think the most important aspect is their fiduciaries. At the end of the day, they have to remember that. The other side of it is from the business building perspective is when you think about what private markets can do to a portfolio, we can get into certain aspects of this. But private equity or private credit, it's not daily mark to mark in many.

cases. Now, certain structures are creating more frequent marks, so get Evergreen funds. But the traditional closed-end draw-down structure private equity fund, they mark once a quarter. And that valuation is not daily mark-to-mark like public equity portfolio. In periods of volatility, in public markets, that can be a challenge for a wealth manager's business. Private equity, private credit, because of their marking cycle, they may not have that same volatility in a certain period. I think there's data that shows

that private equity can outperform over certain longer periods of time and market cycles relative to public equities in certain cases. Again, that depends on the vintage. Private credit has demolished public fixed income. Demolished. I mean, it's not even a horse race anymore.

Yeah. So that's a good point. What do you say to the people who would listen to that talking point about the lack of day-to-day volatility because there are no marks for 90 days. I'm sure you've heard the criticisms of that. I'm sure you've heard great defenses

of that criticism from the industry. So Cliff Asniss calls this volatility laundering and he flies into a rage over this. He's rightly bitter. I get it because he has a portfolio of public stocks and bonds. He has to answer to clients. Why am I in a 15% drawdown

over the last month? Whereas the private equity manager, kind of gets to skate through a lot of that unless it's a sustained drawdown and then the marks will come down usually on a delay. So like how does the industry respond to that, I don't want to call it

a charge, but like that criticism like don't tell me lower volatility. It's not a charge. That's the point. I think there's... That's right. It's one of the benefits of the Ossibus. That's like the selling point. So I think there's definitely on on both sides. There's some where you sit is

where you stand element to it. So philosophically, people will have their biases, people who are in private markets will have their biases and people who are in public markets or in hedge funds will have their biases when it comes to how they're thinking about that. I think there's valid points on both sides. I think it really comes down to what is a client need and what do they want and what's appropriate for their portfolio. I think whether you're a traditional asset manager, whether you're an alternative asset manager, the most important thing is you have the right. product structure at the right time that's delivered to the right investor. And that could be

for a certain client, maybe that's a closed-end drawdown fund for a QP client who has 100 million in net worth and they want to invest in private equity. They can take that a liquidity risk. And as long as, and maybe they have, they're working with an advisor or a team that can build out that private equity program and that understands that they're going to have a J-Curber in the first few years. So they're going to be paying out money, effective. for capital calls. They're not going to be seeing money come back. So the IRAs might not look great relative to if you put it into public equities, you know, today or maybe that may not four or five months ago, but eight months ago or something like that, right? And then you have to think about it

over a longer term. But then by year eight or nine, you'll have the harvest period and you'll be getting capital back. And in an ideal world in the private equity fund, you're getting more capital back and you put in. So over a 10-year period, if you smooth out the IRAs, then that would have bested what you could have done over that same period in public. You have to wait a really long time to be able to determine this 10% allocation we put into private markets was a good alternative or a bad alternative. Like you really have to wait for that harvest period when you start pulling your money back out. And look, this is why it's predominantly an institutional market because most normal people, it's hard for them to wrap their heads around investing with a 10 years. you're, I mean, we do it all the time with 401Ks, but it's just, it's still hard.

Yeah, I mean, great point in two contexts. One is maybe 401Ks, again, with the right managers, with the right structures for investment, and there's the regulatory and legal side that needs to be figured out. That, I think, is still in question despite the executive order. Maybe that's the right vehicle for that because it's capital. The money's locked up anyway. You're not going to take the money out and you don't need. it and you don't need it in a year from now. You don't need it in three years from now.

So I think that's an important piece of this is you need to match the right vehicle or the right duration with what you're trying to achieve as an investor. I think the other piece of this too is like there is an element of private markets and building a private markets or private equity program. That is very institutional in quality and in nature. And you need to have the ability to do that in order to invest in more traditional private equity so that 10 year drawdown. closed-end vehicle. We're starting to see that change in this industry with the creation of evergreen funds where I do not call them liquid. They are very much not liquid. They are- Tell our listeners what an evergreen fund is. So evergreen funds are, they're not closed-end

draw-down vehicles. Closed-end draw-down vehicles means you commit capital and it's generally over a three-to-five-year period that it's called. The fund closes. Fun closes. You can't get your money out. You can't call up and say, hey, I want to redo. You also don't put new money in. You don't, you commit a million dollars. That capital gets called 30% in year one, 30% in year two, 40% in year three, just making up numbers. But based on the cadence of the investment managers, processing of deals, sourcing companies, and deciding to invest. An evergreen fund is different in that there's continuous ability to invest. There's also the ability to withdraw capital. There's nuances based on the type of

evergreen funds. Yes, they limit the amount that an investor or investors can redeem in any given time because they need to manage the liquidity. But they're constantly looking at different investment opportunities. And I think this is the important piece of evergreen structures is that the firm needs to have enough deal flow to be able to handle both the amount of amount of capital they raise because they can raise in continuous offering format. It's not like most private equity funds in the in the historical context would say, I'm going out, I'm raising a $25 billion fund. That was more, less common. A few firms do that. Yeah. Exactly. But like a CVC, they raise 26 billion euros in their last fund. So like we're going to go raise $26 billion or $26 billion.

They do that fundraise for six to 18 months. Once that fund is closed, it's closed to your point you can't get in if you miss that close i think that's an important point though for the advisor community and why evergreens can make sense for certain using evergreen and interval uh synonymously evergreen funds i i look at i think of as the broad umbrella term for interval funds tender offer funds those are different types of structure what's a tender offer fund tender offer fund and interval funds are both they can be closed end or open ended but tender offers mean that there's a, there's a period where investors can actually tender some of their capital for redemption versus interval fund their specific intervals.

Yes, generally quarterly, although in a tender, there's a board. How time are we talking? Medium rare? Some people like their state. Okay, so just on the surface, the interval fund, the Evergreen Fund, makes way more sense for wealth management than the traditional. closed fund because we're not institutions. We're human beings. Things happen in our lives. And maybe we don't, we can't demand the right to get 100% of our capital out. But if you tell me,

God forbid, you go into a stretch in life where you need to reinvest in your own business or something horrible happens to a family member. It's not zero percent liquidity. And vice versa, regular people don't typically make their money via windfall. They make money over time, over years. So having a vehicle that they can add a dollar amount into every year makes it more utilitarian for that person. So I totally get why that structure has become so popular. What percentage of the assets that the wealth channel is putting into alts, would you say,

is going into interval funds, right? though. Most of it. I don't know the exact number. It's like almost all? Depends on how you define the wealth channel again. Like if you think about family offices, then I think that's different. RIA. That's mostly interval funds.

RIAs and wirehouse is mostly interval. So, and this is public data, but I Capital had talked about this that, because they have over 240 or so billion, maybe I'm off by a few billion at this point, of assets on their platform. They do both closed end fund, but they do a lot of. evergreen funds on the private market side, a good portion of their flows have been evergreen funds. They're working with the wealth channel. And it's all advisor-led. It's wirehouses and it's RIA channel or independent channel. The majority of the flows are through the, through evergreen

structure. You refer to the Icapitals as placement agents? Is that or is that not the right term? I think it's more of the pipes and plumbing of. So they call, I know they call themselves a platform. Everybody you want to be a platform now. They are. But they're also directing advisors toward one fund, not another. There's, so there's different models. I Capital has multiple models.

And for context, I was, I was an early employee at I Capital. I helped build the investor network or distribution team. Question it with that. Thank you. Just saying, look at it. I mean, look at it now.

You've got to be very proud of that. Yeah, I mean, look, I think the market structure needed to be built just like the pipes. and plumbing of equities fixed income derivatives needed to be built and has evolved over time and has become more electronified over time. Private markets is obviously much younger. I mean, Blackstone is a 40-year-old company. They're the biggest, a trillion plus of assets. It's still a young industry when you think about the size and scale. And if it's, if it is 25 trillion of total assets

in private markets, I mean, equities is what, 110 trillion fixed income is similar number. The reason I love what you did is that I existed in this industry prior, and there were a lot of advisors who wanted to sell private investments to their clients. It was a wild west. There was no platform where you can look and say, compare this fund to three of its nearest peers. And let me rank in on different, did not exist. There was no way to automate the paperwork process or explain what the paperwork means that your clients about the sign did not exist. You had guys running around with PPMs, private placement memorandums, doing reg D offers, like just ridiculous conversations, extra legal in many cases. And what you have done, and I know there are others, but like those platforms that now exist, I think they have brought order to a very chaotic process.

Even if you don't like the investments, you got to agree that they are good for investors, the fact. that this exists. I think that's a big piece of the puzzle to making sure that the wealth channel is served properly. Because if you think about it, yes, the investment is important. So I don't want to minimize that. And selecting the right fund is absolutely critical. It's probably even more critical in private markets than it is in public markets. But putting that aside for a second, just the operational challenges of investing in a private fund, whether it's a drawdown, closed-end fund, or even an evergreen fund, unless you create the straight-through processing system leveraging technology, it's much harder to do. And that's why it's been so important. And I don't think

the private wealth investing in private market story can actually take place without the technology market structure evolution. Those two things can't be decoupled. You need that evolution from pre-to-post trade in private markets, just like you had in equities, fixed income, and derivatives. And that's the other piece of this is you have to create the right packaging and the right post-trade processes because the example you gave earlier about the client needing to make sure that it's easy for them. I think part of the reason why an evergreen structure is important for the wealth channel is it also helps the advisor run their business. They don't want to have to wait to the next drawdown fund to be able to put a new client who comes in. You deal with this all the time. You have new clients

who come in. Yeah, sorry. I will allocate you in five years. Right. You can't do that. want to have an evergreen offering that you can say, hey, I just had a new client came in. I can allocate to this manager because this is part of our private equity program. We've vetted this fund or our private credit program. We like this manager. We have an account with them already. We've worked with them across our client base. And that could be accredited and qualified purchaser. And you can put a $10,000 minimum or $100,000 minimum in for one client. And then you could put a $5 million investment in for another client. And it makes it easy for the advisor. And I think that's a big piece of this, too, is you have to meet the

advisor where they are. One of the other big parts of the story, the less cynical part of it, because we address that part. Institutions are full. The Wall Channel's next. Okay. Is that the actual investment story here is that 83% of the companies in the United States that are doing $100 million in revenue are privately held. I'm sure a lot of them are private equity backed. The other side of it is the private credit side. And private credit, it's bonds for these private companies. It's loans. Non-traded junk bonds they prefer.

No, no, no. No, okay. Sorry. JK. This part of the market, banks were regulated out of. And so in-step, these black stones of the world and said, we could do it quicker. We don't have to syndicate it. We have an endless supply of money.

We can do the underwriting better. We can negotiate if things go wrong. And it's all playing out. And that is a huge part of how we got. to where we are today. Oh, 100%. I mean, so you mentioned the, let's talk about the private company side, 87% of companies in the U.S. with 100 million of revenue or greater are private, similar numbers in Europe and Asia. So I think it's a really important, that's an important point to me, right? Which is the whole universe of investable assets and almost none of them are traded.

And if you don't have access to that, you're missing out on all of that in a world where what Nvidia's 7, 8% of the S&P 500, and you have indexation, you have correlation, you have concentration, and the rise of passive. All of those things, I think, if you're shut out of investing in the private markets, and again, I want to put the disclaimer on, because it's important that you need to make sure you're investing in the right companies or the right funds. Oh, is that all? So that's the important piece that you can't just buy the index. I can just fire up the spaghetti cannon and just start throwing. Okay. But part of the Part of that story.

Are you writing this stuff down for me, Duncan? Michael, part of that is this. So I totally understand private credit. It is wherever it's going, $25 trillion, it's going to $40, whatever. I believe it. I 100% believe it. The problem is, as I see it, I get legitimately a dozen emails like this a week. And I pick the most recent one.

I partner with RAA's family offices and institutional investors seeking differentiated private market opportunities. As a blank billion dollar private credit manager, we originate loans in niche markets. our portfolio is 100% senior secured, producing 12% annual cash distributions, and a 17% IRA with a $2 billion track record and blah, zero credit loss. Okay. Is there too much money chasing too few deals where the terms are getting shittier because there is just a torrent of capital because the advisors, the easiest thing in

the world to sell us 12% income returns and they're steady and there's no volatility. It's the easiest thing in the world. Is that the danger? You said there's 11,000 private equity and private credit managers. That's not a sound like too many. There's too many. It's a lot. And I think that that number is going to shrink because there's going to be consolidation in the market

because the biggest players are going to buy smaller firms. But to his point. So it is crowded today and everyone's getting increasingly desperate to raise money, not the big firms, but everyone else. And the terms are getting worse. And like, what do you make of that level of? activity, just generating bad outcomes. I'll talk about both sides because I think there's credence to both sides.

And I think... Michael, look at that chart. Sorry cut off. But we look at the percentage of covenant light term loans. It's basically 100%. Yeah. Is this... Covenant light, meaning the protections for the end investors are lesser because the

desperation to raise money is higher. Is this misleading? What's going on here? No, that's... Look, I think... You will answer for it now. That's the case. There's an increase in pick.

Coverage right? Payment in kind where the company can't come up with the cash so they'll just issue more bonds or more shares in lieu of the that's never a good sign. All of those things are true and that is a cause for concern for the private credit industry. I think it's worth zooming out for a second on this, which is private credit is a $2 trillion or so industry today. It was a few hundred billion a few years ago. So it's grown massively. time an industry grows fast, I think you have to take stock and step back and say, okay, is this growing too fast? Is there too much capital being raised and then deployed? All of that is true. I think what I would also say is if you believe what some in the industry are saying, so like Mark Rowan from Apollo, one of the biggest credit managers, close to 700 billion of AUM, a large portion of that is in credit. And he would say that it's a $40 trillion marketplace over time. And that's because banks have been retrenching.

There's been regulatory reasons for that. $40 trillion to $40? No wonder there's $11,000 firms chasing it. Yeah, I bet it gets there. So $11,000, just to be clear, that's Dave Layton said that from Partners Group. They're a big manager. That's private equity managers. That could be private equity managers who also have a private credit arm as well. I think the lines are blown very rapidly.

I think they're all doing it. 100%. There are a lot of managers chasing private credit and the opportunities there. And private credit and private equity are related too, right? Because a lot of the private credit activity to date has been into sponsor-backed deal. So private equity, you need the leverage to do the private equity deals, et cetera. That's changing a little bit. They're doing private credit across different categories within the space. So things like asset-based finance, so like aircraft leasing as an example, that's a different part of private credit. There's real estate credit. There's

infrastructure credit, which is starting to grow as the infrastructure asset class grows. So I think private credit actually might be a lot bigger when you think about it's anything that, not anything, but a lot of things that could otherwise have been on a bank balance sheet. Again, we could take both sides of this argument, and I think it's probably, there's probably worthy arguments on both sides, but those in private credit would argue that it actually is, it may be a concern for those who are investing in private credit if the space grows too fast and people start to compete for deals by loosening up terms. That might be bad for the investors. But there's also a set of people in the private credit industry who would say that it's actually good if you're taking that

off a bank balance sheet because there's less leverage in private credit than there is in the bank system. What does leverage look like in private credit? A few turns at most. So what does that mean exactly two to three times maybe it's usually i mean some managers are doing less than a turn of leverage or one-time's leverage but banks are generally leveraged what eight to ten times or so so again i'm not i'm not here to defend private credit i am not the foremost expert on private credit to be clear but i think when you listen to what the likes of a mark rowan from apollo is saying that this being a very big market that could be things that banks you better hope so because the banks are not going stay out of this any longer. I listened to

what J.P. Morgan had to say on the subject. Jamie Diamond spent like eight to ten years sub-tweeting this industry. Yeah, you think Cliffassus is mad. Right. So the bankers... They looked at buying Monroe. Right. Capital, it's a $20 billion.

So Jamie is like, yeah, we know about these fly-by-night lenders. They're not going to be here in the next crisis. Well, two things. We haven't had a crisis. Is one. And then two, we are now going through this massive deregulation wave and I guarantee you

by the time Trump's term ends all of the banks, the big ones, are going to have their own products competing with Aries, Apollo, etc. They're not just going to watch this shit anymore. If you tell me private credit's $2 trillion going to $40, do we honestly think

like Goldman, Morgan, J.P. Morgan they're going to sit here and watch it? Or they're going to take a slice of fees for introducing a fund to their clients? No way. What I'm with Goldman in T-Rot today. What was in his there? So I have this. Can I read this? Yeah. I would love to get your reaction to it and whether or not you think we're going to see more.

T-Row Price had a really big upside day today. Bear with me. T-Row price shares rallied Thursday after the asset manager struck a billion-dollar deal with Goldman Sachs to sell private market products to retail investors. Goldman will buy up to a billion dollars in T-Row-Price common stock through open market purchases, bullish. The two financial firms will team up to offer wealth and retirement funds that give access to private markets for individuals,

financial advisors, plan sponsors, and plan participants. And then David Solomon did like a PR quote. But basically, like, TRO has the infrastructure to sell funds in 401Ks to advisors through banks. Goldman has the private equity assets to put into those funds by virtue of all of their whole ecosystem. T. Roe doesn't have what Goldman has. Goldman doesn't have a T.Row has. It's brilliant. I totally get it. We're probably going to see a lot more

of these tie-ups. Okay. 100%. We've seen it in the reverse with BlackRock trying to build out its private markets capabilities by acquiring HPS and GIP. How about Vanguard partnering Blackstone?

Blackstone. And Wellington. And Wellington. That was a three-party partnership. So I think that what we're seeing Going down, though, if this continues, because, like, these are mass market players that they can afford to undercut, charge less. I don't know. It seems like a double-edged sword for the industry. Depends on the product construction. But, yes, absolutely.

I think we're going to see more of this. I think this is the type of thing where firms will try to match their capabilities. Goldman, to your point, they have the private market's capabilities. They have $550 billion or so of A. in private markets that they're not a pure play alternatives manager, but if they were, they'd be a top five in terms of AUM. So, like, that's, that's meaningful. They get to distribute their products through the T-Roe wealth channel.

T-Row, and it could be Franklin, it could be Black Rock. It will be other-Rock. Black-Rock is going to have model portfolios for advisors very soon. And Larry Frank's annual letter, on, like, page five, he just went all in. He said Black Rock has always had a foot in private markets, but, we've been first and foremost, a traditional asset manager. That's who we were at the start of 2024, but it's not who we are anymore. In the past 14 months, we've announced the acquisition of two of the top firms in the fastest growing areas of private markets. That's a global

infrastructure partners and HPS. And HPS. We bought another firm to get better data and analytics. That's prequine so we can better measure risks, spot opportunities and unlock access to private markets. We've transformed our company. That is the biggest asset manager in the world going all the way in on private markets. If it feels late, we're just getting started. We are just getting started, right? Because think of how much capital can go in to private markets from the wealth channel. A lot of the advisors who BlackRock or Franklin and then all these alternatives managers are working with and certainly on the traditional side are selling traditional products, mutual funds, ETFs, et cetera, they're very underpenetrated in Alts. Whether they're wirehouse

or RIAs. So I think we're going to see more of this just because you have to be able to spend a lot to do distribution well. Blackstone has 600 people or so and a huge team and budget, and they've spent a lot of resources to build out their footprint in private markets because it is a ground game to sell. Now what are traditional asset managers have? They have distribution. How do advisors figure out which of these firms to talk to? and who's best at what product type? Is it just like you learn from just like weeding or... But Michael, part two of that question is when hedge funds came along,

not when they came along, but it was often said that assets are an enemy of performance. I feel like with private markets, private equity, especially private credits, scale is really important. Yeah, I think it might work the other way around. So how do advisors know who to work with? Just call Blackstone and BlackRock and call that day. Is that all you need?

I think there will be a portion of the market that probably does that because what you're getting at is brand wins. And so I think the nuance to your question, which is a really good one, because it, I think, gets to the core of what all of these asset managers are thinking about in their sea level strategy discussions, boardrooms, et cetera, is how do we show who we are? What's our DNA? What are our values, what's our culture, and how does that transmit itself in terms of our investment culture and our brand? And how do we market that brand to the wealth channel? I got to be honest to you. Advisors don't care about that stuff. I think it's what is a big enough name that when I say it to my clients, they're not afraid anymore. And what's the price? I have to be honestly, I don't think that branding culture shit, like nobody cares about that. So that, but that's a really instructive, I'm glad you said that because that's really instructive and an important piece to

all this. Hold on, hold on, but think about it this way. Think about it this way. I think you're right to a certain extent, but to the extent that culture is the people, it matters a lot because how many relationship managers have we worked with that have had a very impactful part of our decision-making process

and who we will and won't work with? Several. Right? So from that respect, it does matter. No, no, no. But how do they even get to the table to begin with? Because the company was sufficiently large. 100% and we believed in the... But they have to have great people that are trustworthy

that can educate... No, I totally agree with that. What I'm saying doesn't matter, these highfalutin mission statements that have been crafted by a publicist. Well, advisors don't give a shit. They don't, they're not reading the marketing materials. That's why they, that's why I think asset managers really need to think about how they want to evolve their brand to work with the wealth channel. To your point earlier, Blackstone has figured that out. They have John Gray being very authentic doing running videos, being on LinkedIn.

Is he working? Like, he's, so they were all going to start rapping? Is that what's going on? Maybe. I mean, I think every firm needs to be... Could we have a little bit of fun? Can we do a little free association? Sure. You were saying on another lesser podcast that every one of these companies has sort of its own brand and its own like idiosyncrasies.

So I'm not terribly aware of the difference from one to the other. I know there are a lot of memes being made about this now, which is fun. and I follow all those guys and gals. So I'm going to tell you the name of one of these firms. You don't have to do it in one word. And name an animal that you associate it with. You don't have to do it in one word, but like, help us understand the cultures of which you use.

Sure. Okay. Apollo. Purchase price matters. No, God of life. No, say that again, what is it? Purchase price matters. So they're disciplined on what they're... Price sensitive.

They're discipline. They're their DNA. Okay. All right. Aries. God of war. My Greek mythology wasn't good. I probably need to study up on that if I want to know all these matters.

Why do they all have to be Greek gods? Is this like a superiority complex or? Inferiority. Aries, I think of, they obviously do a number of things. But when I think of Aries, I think of a fantastic credit franchise and an innovator and structure around credit and BDC world. Okay, KKR. Everybody, everybody's going to say barbarians at the gate. I actually think they've, they've, I think of them as a,

you could say pass. No, when it comes to private equity and that they do other things. I think of them as a private equity firm to start. They've done a lot of other things, but. So just, just do a minute on GP stakes. We haven't spoken about that. Wait, wait, I got two more. I got to get to these.

People care. Carlisle Group. Private equity heritage. So, okay. So like the heritage. David Rubinstein. I mean, they were. They were one of the, I mean, there were obviously a few firms that were first, KKR, Apollo, Blackstone, Carlisles, in that group.

I think of them as private. Now they've obviously expanded beyond that, but they're also a high-quality brand. I mean, these are all high-quality brands just in slightly different ways. Blackstone, the biggest, behemoth. They, and they use Steve Shoresman, said a quote, I had this former CFO Blackstone on my podcast a while ago. he made a really important point and a really instructive quote which was quoted Steve Schwartzman who apparently always used to say

scale begets skill so his view is scale is their advantage as a firm because scale begets skill if you can put enough scale against an investment opportunity that required A that requires skill but B you then have an advantage

And that's why I think they've leaned so hard into scale. They've raised very large funds. But scale is what enables them to have an advantage in winning deals. I think this actually relates to private credit a little bit, too. It's like there are... It's like an IBM thing where there was like the old saying, like nobody ever gets fired for choosing IBM. Does Blackstone sort of have that aura about them

where it's like, when in doubt, we'll just use Blackstone? I feel like they must. The B-WRE thing sort of blew over. By the scale, they did a deal with... Cowpers. They figured it out because they have the scale to figure it out and they have the brand. And I think they've used their brand to be early and educate the market very early on. Blackstone University was an innovation in the space to educate advisors. But they've also put a ton of capital. And I do think that in order to work with the wealth channel effectively, and this is partially why we're seeing partnerships.

This is why we're seeing consolidation. You need to invest enough capital. You need people. You need wholesalers. You need people. But you actually have to invest enough capital to do that. The firms that have the scale to put their balance sheet and invest capital to do all of that and are willing to spend on marketing. You need local area, like shock troops who could show up and be friends. You need John McEntee.

How do you go to Edward Jones? John's at all right? If you want to work with them, right? You've got to be right there. I have a guy who covers me. I have a guy who covers me for BlackRock. No, no, no, no. He's at Allspring.

Oh, he's at Allspring now? All right. Of course he is. Forget the story I was going to tell you. Everywhere I go, I just run into this guy. He covers me so well. I'll, like, show up randomly in a restaurant somewhere, and he's like, hey, good to see you. Did you share your location with him or something?

No, it's crazy. He's so good at what he does. Unbelievable. Michael, what area of the private markets? There's so many different areas. We haven't even spoken about really a data centers and infrastructure or GP stakes. What area are you most excited by? Or, and or what do you think resonates most with advisors?

I think what I'm most excited about is not necessarily the same as what resonates most with advisors. I think private credit resonates most with advisors now for the reasons you discuss. And I think it's also a very, it's an entry point into private markets because it's not as illiquid as private equity. It's, it's loans to company. Yeah, we got it. There's a current yield. I think that's an important piece of this too, which is advisors want to, yeah, they want income generating assets. I guess what?

In 2020, when rates run up, these things are floating. rates, they didn't get killed. The option, they did great. Exactly. So I think private credit has been the first foray for many advisors. Secondaries, I think, is also very popular right now because similar thing. There's a structural imbalance in the market. So there's a lot of capital that needs to be unlocked and there has, there's been a lot of capital raised in secondary space, but there's still reason to believe that the secondaries firms can have their pick of what assets they want to go after. Now there's structural challenges in private markets and there's innovation around different kinds of funds.

Well, prior to the secondaries becoming as big as they have, you really had to rely on going public. That's increasingly difficult to do these days. A number of private companies has a lot of companies don't want it. Investors, the risk appetite after the first day or two, they just, they abandon these companies. You don't have the research coverage on Wall Street to support a small cap or a mid-cap company. Like, analysts aren't, you know, there aren't enough analysts cover all these. So for that reason, that's the structural imbalance. You don't have the liquidity from public markets.

I guess philosophically, when you have secondaries, these are almost like public securities at that point. Well, Open AI just did one. It was a secondary, but their employees were able to set a $500 billion valuation. And yet, and yet a lot of these private companies, even the giants, like Open AI and the others. Is Open AI not a public company at this point? It's $500 billion. I mean, it's going to be past Walmart soon.

That's a great example, though, of, what private markets has become, right? There's this evolution in broader markets where the number of public companies has have from 2000 to today. We have like 3,500 public companies. That's it. And so how do you get access to the universe of company? Like a $500 billion company that's private.

And if they're doing secondary offerings, there's some level of the, it's not liquidity in the same sense is there's daily, daily liquidity, but SpaceX does tender offers on a regular basis. So these big companies need to figure out how to create liquidity mechanisms for their employees and or investors. That, I think, is a great example of what private markets has become. It's, I mean, it's an entire universe that probably should be, at the very least, if people are investing in meme stocks and crypto, they should also have the ability if they want to invest in the assets. But that part of the market is still not built out for. the everyday investor, not even close.

Sure. Even for RAs, it's difficult to get your hands on those shares. Sure. And it's a pain in the ass. And that's why I think this is going to be advisor-led for a while, as it should be. The brokerage firms are starting to do this Schwab announced earlier this year that they're rolling out private markets offerings to their, to their QP client, through brokerage, it still has to be advisor-led either the brokerage client has to call up their advisor

or they have to ask for a Schwab advisor who sells private market. markets to be able to invest in it through their brokerage account. But soon you're going to see private markets, products, probably evergreen structures in brokerage accounts. We're coming to the end of this, but I can't let the moment pass without asking you. Is the duchiness quotient of the industry being like overplayed on social media? Is it not as bad? Because you probably know 1,000 people working in the industry.

I probably know 100 or 200. I don't really find that these people are any worse than any. any other people I've ever met in finance. But like, let me play this for you. John, can you hit that link for me? Topics sex industry. Do you know Johnny Hilbrant is? No.

Oh, you're in for a treat. All right. Do you have to log in in order to play? So, Michael, what else is going on? Yeah. What did you have lunch today? I'm ready for football season. Who do you guys open with?

You're a commanders fan. Is that because private equity owned? Makes sense. Of course. I mean, private equity came to save the day. Honestly, like,

it's so much better now than it was. So is that, does that say that private equity is, uh, it can be a good thing? We're going to see,

we're going to see a lot of, I think, minority stakes in sports teams, and those are going to be very popular. The cold brothers just took a 10% stake in the Giants at a $10 billion valuation. Yeah. I mean,

if you think about, so sports teams are an interesting one though, right? Because it's, the media deals have just consistently grown in lockstep. as more people continue to watch sports, as the streamers get involved.

So, and I think there's been data from Arctose and others that sports are relatively uncorrelated assets to other parts of the market. No, they are uncorrelated. They will be less uncorrelated if and when thousands of people are invested in them. And then all of a sudden... Yeah, but, dude, people are going to next game. It doesn't matter what the environment is.

I think everything becomes correlated as more people invest in it. You don't think so? No. I'm not a thousand percent sure if I agree with that. Who's the buyer once the Giants get to $20 million? Saudi Arabia. I'm pretty sure Saudi Arabia is going to end up owning several major sports. It looks like they own golf.

They forced a merger with the PGA. Like that happened in a year. It didn't really take that much money either. So if you think that they're not going to end up owning franchises in sports or owning entire leagues, you're crazy. Of course they will. You think the leagues will ultimately let that happen? They'll have no choice. You'll never have enough money to come. How are you

going to compete with Saudi or Ramco? No, it's, it's, it's trillions versus billions. 4.1Ks. We already know, 4.1Ks. We're not going to be able to do this? I'm having the issue. All right, can I play the audio? Yeah, you can just play the audio.

All right, we'll go audio. Leveraged by out. Yeah, Sycamore. Yeah, Singapore. just dropped the insane $23.7 billion on Walgreens. Ah, it's so sick. It's the largest retail I'll be on history. And it's, so they took the company off the NASDAQ.

Yeah, you know that play. Oh, it's going to be so sick, by then. Well, yeah, Walgreens have, appears to have more annual revenue than any other company that's ever been acquired by PE. So that's substantial. And look, I know a couple of the guys over at Sycamore. They're really salted the earth, fellas. I've golfed with a few of them.

One of them has a son on Tarantino's Squash Team. And actually, the other, Tarantino Spars with one of the other guy's sons in Jiu-Jitsu. Yeah, they're four years old. Yeah. Yeah, very cool. Sorry, what was that? Oh, no. Sycamore has no health care experience.

No, no, no. But those guys are awesome. Yeah, they're going to absolutely print. They already were. I know one guy that I know, he was rolling up pediatric dental offices. Yeah, Arizona, California. Ah, he's absolutely printing. Yeah, yeah.

Yeah, the guy only flies private. I was wearing a vest, okay. I'm so sick by, man. It's going to be very cool. I'm so thrilled for everybody involved. That's, uh, if you're on, all right, enough. That's Johnny Hillbrand, one of my favorite creators on Instagram. He's absolutely hysterical.

He, I don't know if nobody's ever sent that to you before. No. He's done like 500 of these videos as the same character. And like, it's the most pretentious asshole you've ever seen in your life. And all his videos are like, I'm in Nantucket. Now I'm in the Hamptons. now, Matt, F1 race, like, just on and on and on. And they're never not funny.

But he has this, he doesn't work in the industry. I think he's a stand-up comedian. He just has this persona down to a science. And don't, like, it's not my fault. This, that video I played for you has 6,000 likes. All of his videos blow up because everybody knows one of these people. He's obviously an extreme version. But, like, is it unfair?

Or is it sort of on the mark? or do you know these people and they don't represent the whole industry? Oh, man. I'm sure. Look at the pause before he could. I'm sure there are people like that. I think there's a lot of people in the industry who, one, really enjoy building companies. Yeah.

And that could be investing in and building companies that they're investing in. And also, I think at this point, like, the firms themselves are business builders. And I think they find that fast. And interesting. Obviously, it's good for them, no doubt. But I think there's a lot of people in the industry who are not like that. I will say those focused on the wealth channel. And I've spoken with many of the wealth. I've spoken many of the heads of private wealth on my podcast. They're building a business within a business. I think they take their job very seriously and believe in the merits of private markets. They are. understand the importance of educating the wealth channel. They know that's critical, both educating advisor and end client, if they want to actually be able to do this well. And I think they also know that if advisors don't have a good experience

and clients don't have a good experience from the start, they won't work with them again. Advisors are very fickle and rightly so. You have one chance. So I think a lot of those in the wealth channel who I speak with, I think they really do care about how they do this and making sure they do it right so that, private markets does become something that is another tool that the advisors can choose.

I think the other thing that that is important to say is we don't live in a world without memes. We never have. And we certainly won't anymore. We've gone through the memeification of everything, but certainly the memeification of financial services. I think that's an important point and something for those in financial services, asset managers, to really think about and understand because I think they need to realize and think through how they want to work with the wealth channel. That might be different. They may have to evolve how they do things and think about things a little differently and lean into that a little

bit in a way that's true to who they are and who their brand is. But also recognize that at the end of the day, finance is a serious business. It's people's money. That's probably, if not the most important thing. It's one of the most important things that people have and hold sacred because it enables them to do all sorts of things in life from take care of themselves and their family to do whatever they want. So making sure that advisors and clients have a good experience, their money is safe kept and they generate returns. Private equity and private markets don't work unless the returns are higher than public markets. Why do it? It has to be done well. Subject to the same pressure that every other asset class is subject to. I don't know, man. I take minus 50

basis points for no liquidity, I mean for no marks. I'd pay it. Honestly. So the guy that's being caricatured here is not the guy that they would send to interface with a wealth management firm. That's more of like a portfolio manager. And he keeps saying, due to my role, I have substantial wealth due to my role. Like, that is, that is not the face that any private equity or credit firm would show to financial planners or fiduciaries. No, and it can't be. I mean, they really need to make sure they understand who the advisor is. There's different types of advisors.

There's different types of clients. They need to make sure they're understanding what product they're selling. And they need to build their brand in a way that reflects who they are. I think we're going through a huge brand evolution in asset management. I think we're seeing this collision of culture and finance. And I think firms are going to need to lean into that. I think they are going to need to think about culture and how to appeal to culture. Not just culture, but like how to broadcast, like show people what your culture is about.

And they need to do it, but they need to do it in an authentic way. I think they need to be out there talking to people. They need to come on podcasts like this and just be able to chop it up. Can I tell you something, Michael? That's important. Can I tell you something? I think they could all learn a lot from paying attention to the way that you carry yourself and what you're doing.

So I hope they are. I'm sure they are. And you do a really great job communicating the virtues of the industry. I could tell you're passionate about it. And we had a lot of tough questions for you. I thought you came through with flying colors Can I just say one more thing?

Nope You know So I'm just kidding Go ahead Go ahead No no I was rapping

The moment passed No I know you were rapping You want to say something Nice about Michael No no no No no no The moment passed That's okay

Let's bring it back I want to hear you No no really Really and truly It was a bad joke It would have It would have played But the moment is over

Wrap it up I'm so sorry I stepped on that That's okay All right Guys I want to say Thank you to Michael

Sijmore for coming by I want to tell people where they can follow you because I think, like, we did an hour probably doesn't do justice to all the things that are happening in your space. People are going to want to learn more as a result of this conversation.

I know I do. Where should they follow you? Where can they get more information about the things you talk about? So, Alco's mainstream. Put the hat on. Yeah. Oh, wait, you got a headphone on.

I got it. Sorry, forget it. This is coming your way. You look crazy. I got some hats for you guys. Walt goes mainstream. So that's the pod. So, yeah, Alco's mainstream is on substack.

So I write every weekend and I have a podcast at least once a week, sometimes more. Your substack is amazing. I've told you that before. I appreciate that. Do people want to hire you like every day? Like how many people are trying to just be like, we'll buy your, we'll buy your thing just come work here. It's got to be everybody. It has happened.

I think, look, I think it's important to stay independent. I work with a lot of different firms. I think that's part of the importance of this is being able to talk about what's going on in the industry and put in the piece of the puzzle together for everyone from a 40,000-foot view. I think every firm needs to have their own way of educating and their own amplification methods that's through socials, through their own content that they produce. But I think also having independent platforms for that's important. So I want to stay independent. Well, you have probably the leading independent platform for it. So I think it's amazing.

Hey, we always end the show asking people what they're most looking forward to. I'd love to hear anything in your life or in your business or any events you're going to, what are you looking forward to right now? Futureproof. I am looking forward to future proof. I've written about this. I actually really am.

I think Futureproof is this great intersection of finance and fun. You guys have figured it out. You guys have figured out how to celebrate advisors and make sure that they understand who they are and how to build their business, but do it in a way that's fun. I think...

Are you bringing the pot out? I'm moderating a panel. Okay. Is it on all? On... It is on... Okay. All right, cool.

There's a traditional asset manager on there, too, because we're going to talk about the conversion. Okay. But, no, I think there's something that... It's hard to explain other than seeing it in person, but people in casual outfits on a beach, but talking about really interesting, intellectual topics within their industry,

I think it creates this unique element that you can't get from sitting in an office or just doing a conference in Midtown. Totally great. And I think that's, I always look forward to it every year. I think it creates this way of just thinking about what you're trying to do as a business.

I mean, the advisors are really, they're trying to learn from each other. You know who this guy is? No. My friend, Robert Bihari. He's an independent financial advisor in Australia. How many Australians do we have coming? Do you think?

25 or 30 Australian. How cool is that, right? So shout to Robert for coming by the studio. We really appreciate you sitting in for this. We have an audience today. We're going to have, yeah. So we're going to have 30 financial advisors from Australia at Future Proof of California. I think the Canadians are sending over 100.

So it's like, it's really cool thing. I'm so glad you're going to be there. And I'll try to catch your session. Michael, what are you looking forward to? The Giants, losing the commanders. Life. Giants, yeah, Giants. Football season's a good answer.

I'm looking forward to Boston Wilson getting out of New York. It's enough already. I don't want to. You're on the Jackson Dart bandwagon? Is that what it is? I don't know what's going to happen? It's going to go 0 and 3, and the crowd is going to demand Jackson Dart. That's my prediction for...

New York is a fickle market. Wow. Yeah, so we're very, we're very discerning. You're a Giants fan too, right? No? Yeah, so that's the thing I'm not looking forward to it. I'm not going to focus too much on it, honestly. I'll watch all the games, but I'm not going to get upset.

It's just, it's not our era right now. It's just not right? You think that's fair? I won't, no, we bought them last summer or last season. I think we could be okay. It's just not, this is not like watching. It's so depressing. I can't.

Let's just me. All right, guys, we're going to get out of here. Thank you so much to John, Duncan, Nicole, Rob, Graham, Chart Kid, Matt, Sean, Keith. Everyone who works on our show is Daniel, Travis. What a week we've had. Huge thanks to our guest, Michael. Please follow off goes mainstream.

Great podcast, great education. The substack is lit as well. Guys, next week, know what are your thoughts on Tuesday on the YouTube channel? Because we will be in Huntington Beach for Future Proof. We will have a compounded friends episode. though at the end of the week, and it'll be live. We are hosting the CEO of Franklin Templeton, Jenny Johnson. Jenny is an absolute killer.

Michael Batnik and I are so excited for that conversation. So look for that next week. Thank you so much for watching. Thank you for listening. We'll see soon. All right. We're out. Do you want to do one more time?

Do you have it? We got it? What? The whole shot? Yeah. Is that good? Oh. Is that fun?

Okay.