The Daily Signal - Is Your Money 'Voting' for Things You Don't Believe In?

Episode Date: March 4, 2024

Americans with investments in the “Big Three” financial companies—BlackRock, State Street, and Vanguard—may see their money “voting” for things they don't believe in, warns the top lawyer at Strive Asset Management, the firm founded by former Republican presidential candidate Vivek Ramaswamy. “I think, for a long time, we've been really focused on, where is money in politics, right?” Alexandra Gaiser, the general counsel at Strive, tells “The Daily Signal Podcast” in an interview at the National Religious Broadcasters convention in February. “So, you have all sorts of campaign finance restrictions.” Gaiser joins the show to explain how Stive works. Enjoy the show! Hosted on Acast. See acast.com/privacy for more information. Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Daily Signal podcast for Monday, March 4th. I'm Tyler O'Neill. I sat down with Alexandra Geiser. She is the General Counsel at Strive Asset Management, and she and I actually go back for a while. Her husband, Elliot, who is now the Solicitor General of Ohio, was a former classmate of mine and fraternity brother at Hillsdale College. So it's, it was great to reconnect with, Alexandra. And it was also great to go over the topic that we were focused on. Strive Asset Management is the financial firm founded by former Republican presidential candidate Vivek Ramoswamy. He founded the firm in 2022 shortly before his presidential run, but he founded it to actually put Americans money where it will have the best return on

investment, which you think is the most obvious thing in the world. But apparently now, with the success of the ESG movement, the environmental social governance movement that is hijacking American capitalism and pushing it in a leftward direction, it no longer is natural for every company to just invest Americans' money where it will have the highest return on investment. They're instead focused on the... their environmental, social, and governance goals, which don't usually align with the way conservatives see the world, but also which don't always align with the way that you would

see the world if you really did care about the environment succeeding. That's one of the things that Alexander and I discussed is that if you care about the global environment and you have a broader picture of view, you might actually want the United States for a instance, which burns its energy in a cleaner way, creates energy in a cleaner way, than some of these other countries in the world, most notably China, Russia, you might want the United States to be making more energy than these other countries are, because the ramifications for the globe would be better. But no, the ESG movement is all about cracking down on energy creation in countries that do it in the safest and cheapest manner and the most environmentally

friendly manner and not forcing it on the countries that don't do it in an environmentally friendly manner. And so Alexander and I talked about this. We talked about and the key point, I think, in our discussion is the question that she raised. She's wondering, is your money voting for things that you don't believe in? And I think that's a really important question because Alexander herself speaks about getting the chance to choose how her funds are spent in terms of how they're voted on. Because when you invest in a company, you get say, a small say usually, in how that company runs its business. But the way that the system is structured, there are these companies called institutional shareholder services or ISS.

and Glass Lewis and co. And they vote on behalf of shareholders at company shareholder meetings. And so what they will do is you have investments in a company like Black Rock or State Street or Vanguard. They manage investments. These companies pay ISS and Glass Lewis to represent shareholders at these shareholder meetings that make decisions for the companies in which you're investing. So your say that you get because you're investing in a company is circumvented by two different steps, first by the company in which through which you are investing, and then secondly, buy these proxy investors with ISS and Glass Lewis.

And so Alexandra got the opportunity recently to choose how she would vote her shares, which you would think is a great idea, right? she had four options, and they were all essentially the same option. One of them was aggressively ESG, one of them was an I agree with management option, which will also support ESG, and then the other one is a Vanguard special sauce. Anyway, the only other option she had was to abstain. And so you essentially have no choice in how your funds are going to be spent. And they have this illusion of choice that Vanguard gave her. And she goes through all of it. But I think it's very important to see that when it comes to investing our money, we get something like a vote like we have in our electoral system.

And that vote is being subverted by a system that is focused on left-wing priorities. So listen to My Interview with Alexander Geiser right after this. Hi, I'm John Carlo Canaparo. And I'm Zach Smith. And we host SCOTUS 101. It's a podcast where you'll get a breakdown of top cases in the highest court in the land. Hear from some of the greatest legal minds. And of course, get a healthy dose of Supreme Court trivia.

Want to listen? Find us wherever you get your podcasts or just head toheritage.org slash podcasts. Case is submitted. This is Tyler O'Neill, a managing editor at The Daily Signal. I'm really glad to be joined by Alexandra Geiser, who is the general counsel of strive asset management. Alexandra and I actually go back little ways her husband was a classmate of mine and frivolous fraternity brother at Hillsdale College. It's really great to have you with me, Alexandra. Yeah, thanks so much, Tyler. It's great to be here. So we were talking about strive,

and we've covered strive at the Daily Signal multiple times, but just for those who might not be as familiar, you know, you're a new asset management company that is really focused on fiduciary duty and not getting driven into this DEI cul-de-sac. Can you talk a little bit about why and why that sets you apart? Yeah, Strive was founded in May of 2022. We launched our first DTF in August of 22, and we're founded by Vakramuswamy with the sort of surprisingly sexy and controversial idea that your investment dollars should just make you more dollars.

They shouldn't be fighting for somebody else's social and political agenda. And it turns out that's what Black Rock, State Street, and Vanguard, the big three, have been doing for years. So we now have 11 ETFs. We've just rolled out a 401k offering for small and medium-sized businesses. We've got direct indexing coming down and some other really exciting projects coming out later this year. And it's all with the idea that it's a big country and you should absolutely fight for the change

you want to see in the world. But it's not fair if your dollars are fighting for somebody else's change. Yeah, I think those 401Ks for small and medium-sized businesses is a really interesting, you know, new move for strive and helpful, I think, for the market in general, because it seems like you're filling a gap. Can you talk more about that? Yeah, so I think first it's on the offering side and then it's on the what we're offering piece. So generally speaking, a huge portion of American companies are classified as small to medium-sized businesses, right? So you probably have under 50 employees. And a lot of your back office services, either you're going to outsource or it's going to be fairly expensive because you're doing it as a one-off. And so 401K offerings are no exception to this. That said, a lot of states have started requiring that companies offer a 401k option to their employees. So you can imagine this is a huge cost issue.

The Strive 401K product is a pooled employer plan or a PEP, a PEP. And so this lets you kind of team up with other small and medium-sized businesses and get around some of those cost issues. So we're excited. We think it should be a really great offering for owners of small and medium-sized businesses that make up so much of the American economy. And then we also are hoping, you know, I won't worry with all the partners involved, but you should be able to purchase drive ETS as an option through those programs. And so that should give the employees of these companies a chance to invest in their 401Ks and their retirement and in their futures and have that investment voted in a pro-shareholder, pro-fiduciary duty manner. Yeah, that's great. How are there any of these companies that you can say that Strive is working with, or is this all, you know, something you're not public about?

So it's pretty early. but our CEO and CIO chief investment officer Matt Cole just had an op-ed earlier this week talking about this program, how not only is it important to focus on returns, especially in retirement accounts where you're looking at things like compounding interest and time in the market in a really meaningful sense. And so that little bit on the edge that ESG investing tends to take away, we really really want to get away from that so that we're making sure Americans are prepared for retirement. But it's also something where sometimes these ESG goals are getting in the way of the actual

business that the employees are in. So you consider ESG for those who may not know, stands for environmental, social, and governance policies and issues. So on the environmental side, you can see a lot of pretty obvious costs that get baked in here and may be working again. the very company who's offering the retirement plan. So if, for example, you are moving towards environmentally friendly jet fuel and you work for an airline, your ticket prices are probably going up, this might cause people to do less travel, it might actually hurt your stock price and hurt the company you work for that's offering you this plan.

And we just think that's insane. So you should be operating for your shareholders. They're the main constituency of any company, and we think it's particularly perverse when an offering works against the company that's trying to do right by its employees. So we're hoping to see that we'd love it if there were other options for people to have a pro-fiduciary vote in their retirement accounts. But so far it's just us. Are there also free speech concerns when you have a company that's adopting certain? I mean, I think of the S and the G aspects of it, because you mentioned the environmental, you know, how those might actually harm the stock price, but also I think with the social aspect and sometimes with the environmental aspect, these people don't want their money to be directed in that. Is that a free speech concern that this is happening?

Absolutely. I think for a long time we've been really focused on where is money in politics, right? So you have all sorts of campaign finance restrictions. You've got McCain-Feingold. There's a whole infrastructure designed to make sure that money and politics are only mixing in ways that we're okay with them mixing. And unfortunately, that hasn't covered Americans' investments. And so when we think about using our voice and going to the ballot box to participate in the government of our country, that's huge and important. But many Americans don't realize that they're voting every quarter for things they don't believe in because the proxy voting system is a duopoly.

It's controlled by ISS and Glass-Lewis. And then most Americans have their investments through one of the big three. So State Street, BlackRock, Vanguard. And Vanguard actually, maybe it's bad, but yes, I'm the G.C. of Strive. And I do have some Vanguard investments from a from a past. past life. But they emailed me a week or two ago saying, hey, Alexandra, we'd love to give you a choice in how we vote your shares. I, of course, think this is directly related to the work drive's been doing. And so I sort of excitedly click on the link and I say, yes, Vanguard, what are my

options? And I think I had four. One was pro ESG, so really aggressively there. Two was a, I agree with management option. Well, management often is listening to ESG's special interests. Also, management tends to vote for a lot of increases in their comp, which may or may not work in a pro-shareholder way. If you're creating excellent returns, yeah, you should have an increase in comp. If your company is really struggling, you probably shouldn't get a bonus. So, again, what kind of a choice is that? Then they had a sort of vanguard special sauce option of Like, just trust us. I assume that that's what they're usually voting.

I assume there's a lot of ESG there. Or my fourth option was to abstain. And to just say, I'm so concerned about the other three options. Just don't use my vote, right? Nowhere was there an option to say, please vote in a way that we think is going to make me more money in the long run. Please vote in a way that takes into account these different factors. And so it strived we take those things really seriously.

people call us, you know, anti-WOK or anti-ESJ, we wouldn't describe ourselves that way. We'd say we're pro-shareholder and we're really thoughtful about that. So we have some metrics and rules of thumb for things we think sort of always cause you an issue. Our head of corporate governance, Justin Danhoff puts out excellent reports, so you can read all about those. But this is really something where, you know, my investments that have been sitting in my Schwab account for years at this point have been voting. regularly during proxy season without my voice or say. And even when Vanguard gives me a choice, it's not a real choice. Yeah. I mean, I think in terms of ESG, like, there are also different ways that you could want environmental, social, and governance goals. Like, maybe I happen to think

that the United States burns its coal and oil and gas much in a much more environmentally friendly way than other countries do. And maybe I want the United States to be producing more energy because it's better for the global environment overall. But that's not considered part of the environmental policies that they have, right? Or maybe I want, you know, more babies. And I think that we should maybe the traditional family is what, I think as a social goal.

And, huh, they're not so focused on that social goal, right? Exactly. So it's one of the cruel ironies, I think, of this movement is that so many goals, particularly on the environmental side, but also you see it on the social and the government side as well and in the kind of DEI initiatives. A lot of these goals are really short-sighted. And so I tend to think of it as trading your. future 50 years for a quick result tomorrow, right? It's almost like cheating on a test. If you could get,

if you could get the answers ahead of time, you might get an A, you might get everything right, but you haven't learned it. And so especially if you're going to build on these pieces, it's going to set you up for failure. So what we see on carbon emissions goals is often you're punishing countries that have much cleaner burn methods, much cleaner. Much cleaner. energy and getting them to reduce, reduce, reduce. It drives prices up, up, up. And countries like Russia and Venezuela, China, are not committed to these same goals. They're polluting out in the wazoo and they become your main suppliers of energy. Well, that can't be good for the overall environment, right? Similarly, board diversity is important. You want a diversity of views in terms of

risk. Corporate backgrounds, the experience people bring really does matter. And, you know, a lot of times I think you see corporate boards sort of just rubber stamp, whatever it is, management has presented to them. There's not necessarily a rigorous back and forth that you'd hope to see. But also, boardrooms aren't live streaming their proceedings. So it's a weird place to be super focused on visual diversity, right? And that's not to say that women or ethnic minorities or whomever shouldn't be on boards. They very well might be a valuable voice on those boards, but it shouldn't be what you look like in the mirror that determines your value to a corporate board, right? And so I think when we look at these sorts of things, the overall goal, the overall effect,

is it useful to be raising energy prices and driving people to low-cost suppliers who are actually creating dirtier energy? I would say no. I don't think that's a good ESG goal, but all of the ESG metrics measure it in that way. And so I think, again, regardless of what your desired policy outcomes are, I would sort of say most of these tools are not beneficial. They're not getting you closer to those market. environmentally friendly goals especially,

and may not be getting you to some of the other preferred goals. And so wouldn't it be better if your money could just do what money is supposed to do, right? Sit in your account and have more money, right? So that at Strive is really what we're concerned about. We think, you know, social and political issues are really important, and it's our job as Americans to advocate for those the way we'd like to see them go. And as far as your votes go, whether it's in a self-directed brokerage account or your 401K, those votes should be going towards enhancing your investment and nothing else.

Yeah. I've long been covering the Southern Poverty Law Center and this movement on the left. I think they're the worst example, but there are other organizations that are moving. They've kind of tried to force the charitable sector into blacklisting conservative organizations. by branding them hate groups and putting them on a map with the Ku Klux Klan. And they've gone absurdly broad with this, like Alliance Defending Freedom is on their moms for liberty, and all sorts of organizations that have nothing to do with racism or anything like that.

But how to strive, engage with, you know, see movements like that that are trying to, you know, debank or kick conservatives out of the financial sphere? So this is an area where, you know, Strive isn't directly involved with the SPLC. It's structured as a nonprofit. You can't really invest in them or vote shares. But what we do is we don't divest from companies that we disagree with. So we'll invest in a Google, an Apple, a Starbucks, a Disney, because we want to be a shareholder.

We want to engage their board. And so whether that's on the voting side or through corporate engagement letters, again, we meet with their C-suits, we meet with their general councils, and we say, hey, this isn't working for shareholders. And again, we come at it from a, you know, I think some people would call it neutral,

we call it pro-shareholder policy position that says, taking these really, hard social stances is driving customers away. If you drive customers away, it's going to hurt your stock price, it's going to hurt shareholders. Could you please stop? Right? And I think a downstream effect of that is that Americans have always held a variety of ideas and held them fiercely. And we've always been able to live together and be friends and neighbors with people we don't agree with and we don't vote with. And there's no reason that that shouldn't be the case in 2024. And yet, we have a hard time because everything's become politicized. And so Strive is really laser focused on saying,

hey, at least your investments, those shouldn't be politicized. It should be a really boring sort of mathematical exercise and get, no American should have to think actively about, oh man, I've got really remember to go vote my proxy shares, right? It's not a Tuesday in November that that happens, right? And so, again, if you can keep politics to the politics lane, keep finance and the finance lane, we tend to think that actually everyone is better regardless of the goals you're hoping for. Make investment boring again? Exactly. Yes, very much. Well, so I think the opposite of boring is your co-founder, Vivek Ramaswamy. You know, he ran a very spirited presidential campaign, dropped out, endorsed former president

Donald Trump. How involved is he at Strive? You know, I think a lot of us see and think of Strive is ultimately connected with him. But, you know, it is its own entity. He's not fully engaged, you know, full time back there now, right? Yeah. So Vivek will always be our co-founder. He's a great guy.

He's got big ideas, and he's really focused right now on making America a better place. Kind of no matter where he can serve, that's what he's really focused on. So we certainly appreciate him founding us. Otherwise, I wouldn't have a job. And it's exciting to see all the work he's doing and all the work that strives doing. So as general counsel, what are you focused on? Are you focused on protecting strive legally or enabling strive to make an impact legally? What's the role for you?

So it's really exciting and really hard to be a financial services startup because financial services is a highly regulated industry. And it's regulated mostly at the federal level but also at the state level. And so any given day, my job is all of that, right? So protecting the company, enabling the company, we love moving fast. We've got a lot of big ideas, people, and we've got a lot of great ideas. And so it's really, it's a fun, fast-paced environment trying to say, hey, where can we be strategic and, you know, pick some battles that might really matter for folks kind of all across the country? And then where should we be quick and nimble and say, whatever, this is. SEC provision, this rule, this regulation, it's not going away and it's been here for a long time.

So we just need to understand it and abide by it and make sure that however we're setting up this new product, this new product, it's structured correctly because the last thing we'd want is to get shut down over a sloppy mistake or honestly over a battle that wasn't worth fighting. So love it or hate it, the regulatory state is vast and it has a lot to say on financial services. So we want to make sure that everything is compliant. And so far it has been. It's been a great place to work. People take legal and compliance really seriously at Strive.

And I think that that's an exciting new phase of our growth. That you go from pure disruptor, total startup. There are five people doing a thousand jobs each to really building out some of those back office competencies and focusing on, well, how can we? how can we expand our offerings and where are the regulations taking us? So my job is maybe more boring than you were hoping to hear about, but following the rules is a big part of it. Well, and that is a big job.

Where is Strive located? And I mean, I know you're in Ohio and not likely to move anytime soon. Strive is headquartered in Columbus, Ohio. So I like to call Columbus the new birthplace of American capitalism, because if we succeed, that's what it'll be. but we're right here in the heartland. We care about this country, love this country, and we are right in the middle of it.

Awesome. Was there anything else you'd like to add? Where can people follow, strive? Absolutely. Strive.com is probably the best place to go. We're active on social media. And otherwise, please do stay connected. We'd love to hear from you

and ultimately would love to have you come be a part of what we're building over here. Thank you so much, Alexandra. Thanks, Tyler. Appreciate it. And that was Alexander Geiser. Again, I'm Tyler O'Neill with the Daily Signal podcast. If you liked what you heard here, please feel free to leave us a five-star rating and review. We read all of your feedback. And don't forget to tune in to this very podcast feed at 5 p.m. today, Easter, to hear the top news of the day,

where we bring you the headlines that you need to know for your evening. evening commute. We want to keep you up to date with a good interview in the morning and then a great recap of the day's events in the afternoon. Again, this is Tyler O'Neill. Thank you so much for listening. And don't forget to tune in to our top news edition this afternoon. The Daily Signal podcast is brought to you by more than half a million members of the Heritage Foundation. Executive producers are Rob Louie and Kate Trinko. Producers are Virginia Allen and Samantha Asheras. Sound designed by Lauren Evans, Mark Geinney, and John Pop. To learn more, please visit DailySignal.com.