SKEPTIC’S GUIDE TO INVESTING

Analog is the New Digital: Chris Guarino's Surprising Take on Finance

• Steve Davenport, Clement Miller

Share episode

Please text and tell us what you like

The wealth management industry is transforming through fragment consolidation, increased democratization of investment opportunities, and technology-enabled customization of client services. Today's episode of Skeptics Guide discusses wealth management with Chris Guarino of Alpine Strategic Partners.

• Private equity access is becoming more democratized, with quality boutique managers offering differentiated opportunities for smaller investors
• ETFs now outnumber individual stocks, shifting focus from stock picking to thematic investment approaches
• Technology enables "made-to-measure" investment solutions previously unavailable to all but the wealthiest clients
• "Analog is the new digital" - as technology handles routine tasks, human advisor interactions become more valuable
• Advisors typically lose clients during wealth transfers because of relationship/coverage issues, not investment performance
• Holistic coverage is increasingly important across client segments, with high-net-worth individuals expecting private banking treatment
• Inflation and housing costs present significant long-term concerns for investors, particularly those on fixed incomes
• Technology that enables proactive client engagement (like alerting advisors when clients frequently check portfolios) can enhance relationships

Alpine Strategic Partners LLC is an institutional consulting firm and is neither a broker-dealer nor a registered investment advisor. The views and opinions expressed by the firm are solely our own and are provided for informational purposes only. Nothing contained herein should be construed as an offer, solicitation, or recommendation to purchase or sell any specific securities or to engage in any investment strategy. All information is subject to change without notice and should not be relied upon for investment decision-making.


Straight Talk for All - Nonsense for None

Please check out our other podcasts:

https://skepticsguidetoinvesting.buzzsprout.com

Disclaimer - These podcasts are not intended as investment advice. Individuals please consult your own investment, tax and legal advisors. They provide these insights for educational purposes only.

Clem Miller:

until you're ready, if you want.

Steve Davenport:

Hello everybody, this is Steve Davenport, and I'm here with Clem Miller as our usual skeptic's guide to investing, and we have a special guest today the managing partner of Alpine Strategic Partners, Chris Guarino. Christofer has been in this industry for the last 20 years, with time spent at Citi and prior to that with Strategas, as an advisor to RIAs and others in the industry who need to find the right data, the right analysis, but also the right system, staff and the right partners so that they can offer the best opportunities to their clients. And I really think that Chris today will help us understand what's on the edge of new firms and what a firm's doing, and how are they trying to consolidate and grow such that they can do a better job servicing the industry overall. So I'd like to say welcome, Chris, and why don't you start by just telling us a little bit about what's in the you know day-to-day, what do you do to try to help make advisors and RIAs more successful?

Chris Guarino:

Thanks, Steve. It's great to be on and you've been a great friend and industry colleague for the last over a decade now, so just wanted to say again thanks for having me on and I appreciate getting to share with you a little bit about what I'm seeing in the industry across the wealth ecosystem. I would say the biggest trends are what I call fragment consolidation Analog is the new digital More holistic demand from clients and clients looking for more democratized access not only to investment products but also to a certain level of servicing. As you see, the family offices looking more like institutions, the high net worth looking more like the ultra high net worth client and the retail client expecting and looking for a more customized experience.

Steve Davenport:

Do you really think that it's democratization when we have the best foundations and endowments, getting the first access to some of the alternatives in the private space, and then it eventually moves down? Does what moves down to the lower levels really equal the quality of some of the higher end private equity and private alternatives?

Chris Guarino:

I think there's some great smaller managers that have emerged and what we're seeing is the large institutions really have to go with the large wealth managers and the sorry the large wealth managers have to go with the large wealth managers and the sorry the large wealth managers have to go with the large private equity firms because they have to be able to apply it across such a large number of clients. It's hard for a big firm to be able to allocate to some of these niche managers and there's some great niche managers out there. So I do think that you can get access to some differentiated opportunities within private equity if you're a boutique and you find other great boutique managers that come on as well.

Steve Davenport:

Yes, I've seen some great boutique managers and I think it's true. It's just, if I'm an investor sitting at home right now, I'm thinking, well, where are the? How do I get them? Where's you know where? How do I determine what's a great boutique manager and how do I know that this isn't just I'm the first person in line for these dollars, and just because I put my money in doesn't mean they're a boutique manager, does it?

Chris Guarino:

No, not necessarily. And I think it looks a lot like what you saw, you know, 10, 20, 30 years ago with the hot IPO that people wanted to be with the big firms because they got access to the hot IPOs because they had an investment bank. Now what we're seeing is firms are staying private for longer, and so the private managers are essentially getting their clients access to companies that would have been at the IPO stage and they're not IPOing either ever or not until they're a much larger cap company than they would have 10, 20, 30 years ago. So it's a lot like when people used to have to trust whether or not to buy a stock on an IPO when their broker came and called them on it, versus today, where you're trusting more investment managers to go out and pick these managers for you in a lot of cases, rather than the traditional brokerage model of the past.

Steve Davenport:

And how do you think we are? When you look at the industry today versus 10 years ago, how would you characterize how we've improved and maybe how we've not improved, um what we're offering people? It feels to me like, the media and the imagery of CNBC flashing what stock is up or down today has never been the best way to motivate investors and it doesn't seem like it's changed much overall. I mean, how do you feel about media and the way that investments are offered to people? Do you think we're getting better?

Chris Guarino:

Well, I haven't had any tacky drivers or Uber drivers pitch me stocks lately and I feel like that used to be the case, where there was a lot more stuff. You know, people wanted to know the hot new thing and they wanted to go out and buy a stock in their own personal account, and I think now we have gotten better at people being a little more patient and not just chasing individual stocks better people being a little more patient and not just chasing individual stocks?

Steve Davenport:

And how do you feel about the selling solutions or products versus actually creating what's right for a client? Do you think that people are still I mean, is passive too massive? Is there a reason to be a little more careful about not owning everything and trying to own the things that are better? Or do you think that active management is dead?

Chris Guarino:

I don't think active management is dead. I think that technology is making it easier for firms to provide a more made-to-measure service for clients where they have their best ideas and they want to be able to apply that across multiple client accounts clients where they have their best ideas and they want to be able to apply that across multiple client accounts and it's something that in the past, had been harder to do, where perms had to mainly allocate to mutual fund managers. Now you're seeing more of these advisors being able to pick ETFs and pick individual stock baskets or allocate to SMA managers and provide not necessarily a custom experience for each individual client, but certainly something that was a little more made to measure than they had access to in the past.

Steve Davenport:

So you'd say we're getting better as an industry.

Chris Guarino:

I would say we're getting better in general. If you look today, there's more ETFs than there are stocks. So there also is presented this argument of should you be picking individual stocks? You should be picking more of the thematic trends and picking individual ETFs, and do you actually have more opportunity and more choices if you go with the 5,000 plus ETFs that are out there from which to choose or the 4,000 and change stocks that there are to choose?

Steve Davenport:

Doesn't that get back to? Every time you add another layer or another provider, you're going to add another fee.

Chris Guarino:

But you have seen a lot of fee compression. So it's about whether you're going to have the trading turnover of buying each individual security or you're going to be allocating to another layer of manager in the middle. Also, the ETF fees are a lot lower than the fees had been on a lot of the mutual funds in the past and the SMA managers are also providing that secondary level of analysis and security selection and in a lot of cases those SMA managers aren't charging the same rates that you would have seen from things like some of the structured products and mutual funds in the past.

Clem Miller:

So I've got a few questions. Steve, may I jump in here? Sure, sure. So how do you get clients to be a little bit tempered on the themes? I know sometimes clients can get very excited about a particular theme, for example AI, and how do you get them to be a little bit more tempered about that, more realistic about that?

Chris Guarino:

So I find that a lot of wealth institutions may chase some of the trends on the periphery but a lot of them don't move client accounts from one strategy and one theme whole hog into another. I think part of that's obviously the taxes. People don't want to sell out of one thing unless it's really not working, because the tax that can be so impactful that it really is making people want to take more of a buy and hold perspective.

Clem Miller:

Is that true also of the ESG theme?

Chris Guarino:

The ESG theme is funny because I feel like you had a layer of what people called greenwashing occur, where strategies didn't necessarily change but the marketing did. And even if ESG has fallen away as a big headline topic, it's still something that's really important to a lot of foundations and endowments and some of the ultra high net worth families that are thinking more about how their money is being invested from an impactful way rather than just a returns perspective.

Clem Miller:

Do you think that the political environment that's sort of shifting away from green and ESG, has affected what people are interested?

Chris Guarino:

It certainly has from a returns perspective. If people were saying, okay, there's a lot of momentum around this trend, we want to invest in the momentum versus we want to invest in the underlying trend itself. If the momentum has moved away, then people who are looking for where they're seeing more upside may look to other themes today than they did in the prior administration or in the prior part of the economic cycle.

Clem Miller:

What trends do you see in SMAs, especially some of the smaller SMAs? You know minimums, the ability to customize. You know what do you see in that space?

Chris Guarino:

There's some technology out there that's making the ability to customize you know, what do you see in that space? There's some technology out there that's making it easier to customize and easier for firms to manage SMAs and UMAs at scale than there had been in the past. So I think we're going to continue to see more of these pop up and people looking to have the unwrapped version of some of these solutions or a tokenized version of some of these strategies coming down the pike. The other piece of this is obviously that you've got clients that really can't allocate to SMAs because the account is not large enough. So if you can have an ETF portfolio, it allows for another layer of customization without as many individual Q-SIPs in the client account.

Clem Miller:

Okay, what about this? I don't know. It sounds kind of new, this whole indexing trend, sort of indexing without having to do it in an ETF.

Chris Guarino:

Yeah, there's some nice overlay tools that are out there. So, especially firms that do have an investment policy statement that restricts access to certain verticals or certain companies or certain activities restricts access to certain verticals or certain companies or certain activities there are groups that are out there that allow you to screen out for some of those names or to be able to double down on things. There's also new technology out there on the AI side that's making it easier to do portfolio construction using natural language processing, to come up with your factors and themes, to screen through indices and then turn those into tradable baskets. But again, it also comes down to what's suitable for the client, and does the client have enough assets in their account to actually be able to allocate across 50 or 60 or 100 different Q-SIPS?

Clem Miller:

Okay, and since you speak about factors, you know that used to be a very hot thing. Do you think it's still hot or do you think it's sort of fallen by the wayside?

Chris Guarino:

I think it's still hot. I think that we're looking at factors not just from a quant perspective now, and I think we've always looked at factors in one way or another. If you took a look at the old mutual fund grids in the past, you had the value versus growth, you had the more aggressive versus more conservative, you had the yield components. We've always looked at some of these factors and it had been, in the past, part of our mutual fund screening process. That then was applied down to the individual securities, and now I think we're still seeing it in a more thematic way and technology is making it easier to do it with more natural language than having to do as quantitatively driven, a process that restricts you to just certain factors that are available in a grid or through a pivot table.

Clem Miller:

Right, because I recall you know you can get pretty granular when it comes to factors. I think the last time I looked at a Bloomberg they had something like 60 or 70 different factors that you could play with, which is kind of crazy if you think about it.

Chris Guarino:

And then you're also seeing the shades in between. So instead of using quintiles, maybe it's using deciles and then people looking for a momentum bend without being a full momentum trade or things that have a yield bend without being a full high yield stock portfolio construction theme.

Clem Miller:

Do you find that investors are becoming more defensive lately, or more aggressive, or just the same as they've always been? Some are aggressive, some are defensive.

Chris Guarino:

I think a lot of people kind of held their breath the last three months. I think there was maybe a little bit of chasing going into the end of last year and the beginning of this year with the skepticism about what way things were going to go, and the only thing that seemed certain was that there was uncertainty, and so I think getting closer to some level of certainty one way or another is helpful for people. But we've ended up in this sort of stop and go traffic for the last few months and I think a lot of firms have tried to just stay the course or trim from things that they felt had overreached and buy things that they thought were looking cheap from a longer term perspective.

Clem Miller:

Okay, and then my last question for now, okay is you know if you mentioned you were talking about private equity with Steve, and you know what's your thought about? About investors, especially smaller investors, buying the private equity stocks as opposed to taking a private equity position, in other words, buying Blackstone, buying Apollo, buying Aries. Why wouldn't you buy those, since obviously, the managers of those companies are going to own their stock?

Chris Guarino:

It's a great question. Alpine works with some private equity companies that are involved in the wealth ecosystem, either investing in FinTech and or wealth companies, and I don't want to call out any individual names in terms of purchases, but I would say that you're seeing the potential of investing in the fixed income managers that are doing private credit but are a public listed company. Or you're seeing just like when people wanted to invest in gold but there wasn't a GLD option out there in the past and they didn't want to go buy physical gold, so they bought the gold miners. So it's a way that you can do it with your equity allocation and it's a way you can do it in a scalable way across client accounts, as opposed to those more mass affluent clients who really don't have access to the private equity directly, so you can only get access through the proxy.

Clem Miller:

So you just mentioned gold, which leads me to ask you I happen to right now hold a lot of gold in my portfolio, which has done quite well over the last few months, and so do you have a lot of investors who are doing likewise.

Chris Guarino:

Gold has proved to be the longest running hedge against inflation volatility. It does better against inflation volatility than just inflation historically, so I think you will see more people continue to see that as a more defensive part of their portfolio. The pushback to gold right now is that you're also seeing yield on higher rated securities and government debt so high that you want to buy an asset that isn't yielding anything but is a good protection and store of value, versus buying US treasuries where you're going to get paid 4% or 5% on a US treasury.

Clem Miller:

And of course I was just going to say, and of course treasuries are. There's a lot going on in the bond market right now.

Steve Davenport:

Yeah, I mean, I'm still becoming more and more skeptical about treasuries and what could happen if.

Steve Davenport:

China were to do something in Taiwan with a blockade. I mean, this has been a thought I've had and I don't know how you feel about the idea that, since we've kind of weaponized the SWIFT system with what Biden did with Ukraine and Russia and capturing assets that were in the system, do you think that we would ever do something with our treasuries? That you know, if a nation was doing something and we didn't like, aka China, that we would not pay the coupons on the bonds because we don't like what the country is doing? Because we don't like what the country is doing, do you see the treasury system staying as intact as it is as the default value of what most people consider?

Chris Guarino:

to be safety. Being the reserve currency comes with certain blessings and a certain amount of curses to it as well. I think it depends on if you look at your fixed income as a tradable asset class or as a buy and hold, because if you mark to market, may the portfolio go up or down. That's one thing versus if you plan on buying it as just a store of wealth, and it's something that provides yield and your intention is never to sell it. Would the US government default on a foreign actor during a time of war? Potentially, but are they going to default on the American bondholders? That seems like it's very, very, very, very, very, very very unlikely.

Steve Davenport:

Right, but wouldn't the volatility that would create if certain actors were denied payment? Wouldn't that volatility completely break what's been the image of something that is complete safety?

Chris Guarino:

And I think that's why it's very different if you're a macro hedge fund and your trading rates versus if you're a retiree that's looking for a buy and hold investment that may again go down on paper, but they're just there to clip that coupon.

Steve Davenport:

I see, chris, that you're also a trustee for Mount St Mary College, and I think about different locations of where asset class ideas and investment ideas get discussed. How do they invest versus the average investor in terms of you know doing things with more less, you know less liquid alternatives, or do they do more things with stuff that's related to their mission or values? How do you see the differences across those two investors?

Chris Guarino:

I can't comment on anything that the portfolio is doing directly on a granular level, but I can say from a thematic perspective. It goes back to what I mentioned earlier, which is some of these foundations and endowments and religious groups have an investment policy statement that restricts investments that go into things that are contrary to the mission or the values of an organization, and those may be different from one institution to another. You could have one that has to be Sharia compliant versus one that has to follow the Catholic bishops guidelines versus one that has a customized investment policy statement to meet a certain family's objectives for their own endowment or foundation or charitable trust. So again, I think this goes back to some of the larger long-term investors who really have an infinite time horizon.

Chris Guarino:

Endowments by their nature are supposed to last for forever. Family trusts and endowments are also supposed to last from one generation to the next, to the next to the next. So I think that perspective in those investments, both from a duration perspective and from an investment selection perspective and from an asset allocation construction methodology, is different from what you may see from somebody who's 22 years old and looking for growth because they're not planning on retiring and they need enough money that's going to be there in 40 or 50 years when they are. Money that's going to be there in 40 or 50 years when they are, versus an endowment that's looking to perpetually have resources available for activities or a family trust that's looking to make sure that assets are preserved for one generation to the next and that maybe an underlying asset, like a home or a preserve, is also maintained and never has to be sold or a preserve, is also maintained and never has to be sold.

Steve Davenport:

You think what's happening with Harvard and these colleges and the current administration is setting a dangerous precedent for how the long-term mission can be maintained will also satisfy short-term reactions to government to what's happening on campuses. It feels like this is we're going down a path that we've never gone down before. Do you think it's concerning for those foundations and endowments? Do you think we could see more? You know people challenging whether they deserve the right to have their non-.

Chris Guarino:

So the nonprofit status comes up, obviously in part because we're overhauling the tax code. So anytime you really start to take apart the tax code, you start to look at all of the exempt organizations and deductions. So it's part of that process. It's natural that something like this would come up when you're doing something that is such a deep overhaul of the tax code.

Chris Guarino:

I'm not sure if it in the long run, changes some of the things of these universities that have been around for three or 400 years. Does it impact certain things like grant funding? Maybe does it mean that they have to tap the endowment for certain programs that had been getting a government grant in the past? That's down to each individual organization to have to sort out and at the end of the day it comes down to are people going to want to go to the universities themselves on one side or the other? Are they going to be a negative reaction? Is it going to make people feel even more so that they want to go to a certain university because of a contrary view as to what's happening, or is it going to make somebody not want to go to a university because they agree with some of the things that are coming out of the White House?

Steve Davenport:

When we sit down with the guests, we usually try to summarize and say where do we feel we are and where do we feel we're going in the next year or so. It's not always easy to predict six months, two months, three months, and certainly today is one of those examples where it seemed like everything had gone great. Trump's getting the bill through the House was a big win, and now we turn around and start to criticize NVIDIA and Apple and others and you realize there are no sacred cows anymore. Can you give us you know what your perspective is for the next six months to a year and any ideas you think that are not being completely listened to or promoted by the mainstream media, Because we like to think of things outside of whatever. If everyone in the boat is on one side, we think there's opportunity on that other side of the boat.

Chris Guarino:

Yeah, I feel like we're probably going to continue to be in this sort of range bound market from a macro perspective. Whether that range is between $5,500 and $6,000 on the S&P or $5,000 and $6,000 on the S&P, depending on some of the factors that are driving volatility, remains to be seen. But I think, as we've tried to approach $6,000 again, we've been turned away a little bit. I think part of it is investors looking for an excuse to pull back versus actually seeing some dramatic change from crossing one psychological line to another. The longer term outlook in some ways is harder to break right now than I think, the short term. I think short term we still stay in this back and forth until we have resolution one way or another.

Chris Guarino:

The thing that I think is concerning from a longer term perspective is just the cost of living globally. We're seeing issues in Europe, we're seeing issues in the US and Canada where the cost of living, and especially the cost of housing, is having some pretty strong impacts, I think, on people's productivity and their will to work and the idea of how much money people have to have saved with demographically so many of those entering the retirement part of their life when they're living on a fixed income. If that fixed income can't keep up with the inflation volatility, what does that mean for society and governments and capital markets?

Steve Davenport:

So does that lead you to like inflation index notes and some of that space a little more? Or do you feel like REITs and equities are the best solution when you really think about inflation, because they tend to keep up? Or how do you feel personally or I guess, and professionally, about the alternatives that people are seeking to get through this uncertainty?

Chris Guarino:

Personally, I feel like your biggest hedge against inflation is to borrow in today's dollars to pay back in tomorrow's and not to get overextended on your leverage.

Chris Guarino:

So if the income doesn't keep up with the rest of the cost of living, you've got to be able to cover whatever your leverage is. But being of the mindset that everything has to be purchased for cash today, when maybe that cash is going to be worth less in five or 10 years. If you can appropriately take a certain measure of risk on borrowing today, I think that there's fewer opportunities for us to get out of the debt levels we have than to inflate our way out. And I think that we've seen from a demographic perspective. You still do have growing demographics in the United States. So if you're a US investor and you're looking, the millennials and the Gen Z generation are still larger than the generations that came before, versus if you're in Europe or in your other parts of the world, where the demographic view is different and you may have a different perspective and your opportunities and your risks are also been different.

Steve Davenport:

That sounds great. Clint, do you have any other questions for Chris or any ideas you want to close on?

Clem Miller:

inflation. Yeah, I got a few questions here, not on inflation per se, but do you find that people, that investors, are more skeptical of sort of traditional asset allocation I mean I don't mean necessarily bond stocks, alternatives, I mean like within stocks, you know, like domestic, international, emerging markets, you know do you find there's some more greater skepticism than there was in the past about, about asset allocation?

Chris Guarino:

I find that investors haven't necessarily changed their viewpoints dramatically.

Chris Guarino:

I think some have changed how they invest, from bringing some more of the investments in-house or changing from a 40-act traditional closed-end or open-end mutual fund to utilizing ETFs as more of their portfolios for their clients clients.

Chris Guarino:

So I think some of the tools maybe have changed, but I think people's investment process hasn't necessarily changed that much. People are looking to add more alternatives, or those who have alternatives are looking for ways to get access to them without paying as many layers of fees and with more customization and liquidity for clients. And then there's the balance of trying to invest in an inherently illiquid asset with a more liquid structure. So there's changes again, I think, to how we're investing from the building blocks perspective, but I think the themes and the underlying focus that investment firms tend to have necessarily hasn't changed. If you're looking for more of a growth at a reasonable price type of investment opportunity and you had picked your favorite active fund managers and now you've gone to using those same managers in SMA format or buying their ETFs for clients instead of buying their mutual funds, your process may not have necessarily changed as much in practice as it did on paper.

Clem Miller:

Are you okay? So another question this is a tough question. I think it's more of a not a Mac. It's a macro question and a behavioral question, which is do you think that there, that investors are becoming more or less charitable over time?

Chris Guarino:

charitable over time? Do you mean individual investors?

Clem Miller:

Yeah. Individual investors, yeah, I mean, obviously there are charitable organizations and they're always charitable. But I mean, are you seeing, when it comes to individual investors, are you seeing them more interested in preserving wealth for future generations? Are you seeing them more interested in preserving wealth for future generations or do you see them becoming more or less willing to sort of give away a large portion of their wealth to charity? Are people becoming more charitable or less charitable is what I'm getting at.

Chris Guarino:

So it's a good question. I don't work with any individual investors, but what I'm seeing in the data and what I'm getting by proxy through working with wealth institutions is that people still see that as part of their trust in the state's planning. I think that people are trying to do some of the giving while they're still alive and they can see the benefits, whether that's intra-generational, where people are giving money to their children to help purchase a home. If you look at the data right now, the generation that's buying secondary homes today is essentially the same generation that was buying secondary homes 30 years ago. As part of that co-purchasing with their children. As part of that, they're looking to buy a home in another market and rent out their existing home because they don't want to give up the mortgage rate they have on their existing home. So they buy the second one for cash and they can use the primary home either as a snowbird address or as a way for them to get incremental yield by renting it out. So I think what you're seeing is people want to be charitable, but this idea of charity beginning at home, I think is resonating more with some people than gifting to some of the big institutions or gifting to more small, local charities. People want to see their money have impact. So I think also people are looking more deeply into how the dollars are actually spent rather than feeling like they have a lot of discretionary dollars to give away. So they don't necessarily look at each individual penny and where it goes as closely.

Chris Guarino:

I think technology has made it easier to look at that today and I think that it's allowing for more charity at a micro level where people will do a GoFundMe to help somebody's dog and I think people still want to go and help and do those little activities. So people may do more small activities but maybe not do as many medium-sized activities versus the large activities are always going to happen. You know, being on the front page of the Boston Philharmonic's list of donors, that group's going to have the elasticity to still give during different times. But you know, the second and third page may start to move to the fourth and fifth page for the smaller donations and the smaller donations that may go to more close at home activities. So the cash to help out a neighbor or being able to again help a friend whose dog needs surgery and do a GoFundMe or just a Venmo to somebody. I think you're seeing a lot of those little activities that don't get picked up in the big donor data.

Clem Miller:

So I have two additional questions. I know we have to close in a few minutes, but you touched a little bit on AI earlier and I'm wondering what you know. Where do you expect the use of AI to be? And I'm wondering where do you expect the use of AI to be in the future and sort of related to that question is what's the area that when you look at advisor offerings, where are the gaps? What?

Chris Guarino:

are advisors not offering that you think would be valuable? Yeah, I think more clients are looking for holistic coverage. I think the high net worth individuals are looking to be treated more like private bank clients of the past and I think the more mass affluent clients are used to a lot of things being customized for them and the rest of their lives and getting content and information for free. So now they're looking for that same level of customization and impact from their advisor, even if they're a smaller client. I think that's where technology enables firms to be able to cover clients more holistically, cover clients more granularly and more customized than they would have necessarily been able to do in the past and at better scale. But I also feel like the other side of that is what I call analog, is the new digital. Other side of that is what I call analog is the new digital. It makes the human interaction even more important because if technology takes away so many of the more redundant tasks and commoditized tasks and if it's able to better empower advisors and client coverage people to be able to serve their clients better by prompting them or providing more granular data or providing access to ways of tracking client engagement across their investments who's been looking at their portfolio today. And maybe you reach out to the clients that have opened up their account five times that day because they're a little worried. Or it alerts advisors to when their client has a large cash deposit, without the client having to call and say, hey, by the way, I just sold my house. Maybe now they get a prompt that says, hey, this cash went in. Let's think about how to invest that for the client before the client reaches out to them.

Chris Guarino:

And I think that proactive level of service is really more important, necessarily, than returns, because what I've found is advisors seem to lose clients more than they do on the investment side, from their coverage side. So whether that's when money changes hands from one generation to the other, or when the head of the household passes away and then the new head of the household maybe doesn't have the same level of engagement or relationship with the advisor that their spouse or other significant other may have had, or it's a parent onto the children and the children haven't had that relationship with the advisor for the last 20, 30 years that their parents did. So it's that relationship level and the coverage level that, in a lot of ways, is where people are having impacts. So I think technology is going to help not only on the investment side from portfolio construction and analysis and security selection but I think the technology is really going to help enable advisors and clients to have access to better information about their wealth and better cover those clients.

Clem Miller:

That sounded great, chris. Yeah, I got one last question, steve. No, I think we probably covered that question. So, yeah, okay, I'm good, steve. All right, I was getting a little skeptical.

Clem Miller:

No, actually, actually no, no, I do have one more question. I do have one more question, and that is I always have questions, but this will be my last question, I promise Chris. You know you look around and there's a lot of information that's out there. Steve talked about you know what. You know what might be on CNBC and, and obviously, different client, different advisors, uh, put out you know different kinds of information. Um, you know it used to be a long time ago as newsletters. Today it's like you know they send out. You know missives every week or every month or every quarter, with lots of information, lots of discussion about the Fed, about what's going on with you know, last week's market. I mean, do you think that? Do you think that individuals find this or advisors find this kind of information valuable, or are there? Is there, is there this kind of information valuable? Or is there some kind of information that would actually help advisors and individuals more that they're really not getting right now?

Chris Guarino:

So the macro talking points are still, I think, important because people are always going to want to talk about what's going on in today's world and how that impacts their investments. Even if they have a 30-year time horizon, they want to know how tomorrow's portfolio performance may be different from yesterday's. So I think on the macro side, you're still seeing people who go to the front page of the Wall Street Journal and they watch Bloomberg and CNBC or they at least have it on in the background in the office and they go through and probably have alerts set up, either through some of the more AI-enabled companies that are putting together morning notes for people for internal use or private use, or even helping them to create notes to send out to their clients on a more frequent basis than if they had to build everything, every word, from scratch. And the traditional forms of media still do hold sway. People go back to opening up the Wall Street Journal and it may be on an iPad as opposed to being in physical form, but I still feel like some of the more traditional ways of getting access to media and information are important. I think clients in general not just in the newer generations are looking to technology, but people now, just at any age, can open up their app and take a look and see what their assets are doing on a daily basis and they don't have to wait for that quarterly statement to come from their advisor. But it also means the advisor may have to stay on top of things intra-quarter.

Chris Guarino:

I had three meetings this week where firms were talking about wanting better technology to be able to support their client statement reporting and other client communications around their individual client performance, rather than being an asset manager who is putting together their monthly reports and putting that up, or you're seeing the performance on a live basis for the publicly traded ETFs and mutual funds.

Chris Guarino:

What I'm seeing is you've got technology that's out there that's able to help support some of those firms. Different technology supports different firms depending on their client base and their investment approach, so one firm's needs may be different from another. I always use the analogy of it's like a restaurant what you need to have a steakhouse is different than what you need to have a sushi restaurant. So what one wealth firm needs for their clients is different than what another firm may need, and the firms that I spoke to this week ranged from a billion in asset center management to over 500 billion in asset center management with clients around the world. So it's not just something that's impacting the big firms that have thousands of clients and hundreds of advisors, or thousands of advisors, versus the boutiques that may have a hundred clients and only four or five people. It's really impacting firms across the industry.

Clem Miller:

Okay, thank you very much, chris.

Steve Davenport:

Thanks, Chris.

Chris Guarino:

Thanks, Steve.

Steve Davenport:

I guess I just want to give you one last chance. Is there anything about Alpine Strategic Partners that you think we need to understand, or the general community needs to understand, in terms of where you're positioned and where your greatest opportunity is?

Chris Guarino:

Sure thanks. You know, I founded Alpine two and a half years ago because I wanted to have an open architecture firm that took the independence of a traditional business consultant and brought the sort of solutions mindset you get from the sell side of the industry to come in and provide advice, services and solutions through third-party partners to be able to help firms to manage and grow their business. We do things like succession planning and M&A advisory for more episodic opportunities that firms go through once in a generation. We also do things like help firms with their technology resources. Where are they staying in touch with the latest that's out there to help a firm like them? So it's great to work with firms across the wealth ecosystem fintech companies, rias, banks, broker-dealers and firms of all sizes because we get a great cross-section of what's going on across the ecosystem rather than being so narrowly defined into one sleeve, and because we're open architecture, we can look for the right solutions, partners to take our advice and turn strategy into reality, versus only being able to offer an in-house suite of products.

Steve Davenport:

Thanks, chris. I think your insights are great and I think that we need always to be looking around at what our industry is doing well and not doing well, and then how do we help incorporate in our own business, you know, the things that are going to satisfy clients and ultimately deliver what we can in return, but also in a risk adjusted way that's going to satisfy everyone. So thanks for listening everyone on Skeptic's Guide and we really appreciate your support and we want you to send us a like or any questions you have. We are going to be working on more and more interviews as we go forward, because we find that there's so much going on in this industry that we need to get more and more experts in to help us understand it. So thank you everyone and I hope everyone has a great Memorial Day weekend and we look forward to working with you again soon. Bye-bye.

People on this episode

Head Shot

Clem Miller, CFA

Co-host
Head Shot

Steve Davenport, CFA

Co-host

Podcasts we love

Check out these other fine podcasts recommended by us, not an algorithm.

Wealth Actually Artwork

Wealth Actually

Frazer Rice
The Memo by Howard Marks Artwork

The Memo by Howard Marks

Oaktree Capital Management