We wanted to build a business to take care of wealthy American families across the country, not just the Rockefellers. It's a distinctly American notion that philanthropy should be part of wealth creation. I tell people today, younger bankers, you want to really get a long-term client, make sure you tell them when they shouldn't do the deal.
The Rockefeller name has been synonymous with wealth for more than a century. Rockefeller Capital Management traces its roots to a family office established by John D. Rockefeller in 1882.
It became a multi-family office in the '70s. And in 2018 we bought it from the Rockefellers. And Jacob Rothschild owned a piece at that time, and we created something called Rockefeller Capital Management.
Its president and CEO Greg Fleming saw an opportunity to turn a storied family office into a modern wealth management firm serving rich families across America.
We bought it with 18 billion in client assets, and our client assets today are over 200 billion. So we've grown the value of the company quite significantly today.
Rockefeller Capital Management provides clients with investment management, estate and tax planning and family office services. Fleming took an unconventional path to Wall Street, raising a family of educators. Fleming headed to Yale Law School after graduating from Colgate. But during his final year at Yale, he discovered management consulting and took an unexpected turn in the business.
I said, I really want this job, and he said, well, you came in late. We filled the class with business school students. We don't typically hire from law schools, but we'll keep you in mind. And he came back two minutes later and he said, you're in. And it changed my life.
Before building Rockefeller Capital, Fleming also spent more than two decades at Merrill Lynch, eventually becoming president of the firm. His tenure coincided with the 2008 financial crisis, and he helped negotiate Merrill's sale to Bank of America.
You know, I regret having to sell Merrill Lynch. It was a great firm. And I do sometimes think back to, could I have done things differently? I wasn't yet president when that position was put on because it was a 94-year-old company when I sold it. And that was a hard thing to do.
Today, Fleming is focused on helping clients navigate a rapidly changing world shaped by artificial intelligence and economic uncertainty. He says wealth management is about more than markets and technology.
We're counselors in that. And that's a real privilege to do that, because this is really the most important part of their lives.
So why do families need specialized advice? If they made a lot of money, presumably they know how to make money. So why do they need you to help them make even more money?
Well, you know, families and the state of, if they've built the wealth for building a business and something else. And our families have businesses that they've built in so many different industries across the United States. It's really a remarkable country, an economy with the pockets of wealth in so many different places. The expertise was in the business that they built. They're not as affluent most of the time on what they do with the wealth and how they preserve the wealth and how they plan for the wealth and how they invest the wealth. That's what we're there for. We really are there to take care of all of the needs. And it can be quite complex. You know, our families are multi-generational. And maybe the business is still ongoing, or maybe they've sold the business and they're just trying to figure out how to have the wealth stretch for generations. And that's not where their expertise is. That's where our expertise is.
How do you find that? Families that are wealthy, they spend a lot of time planning to give away the money upon the death of the founder or the co-founders, or they actually give it away before the co-founder or founders die?
I think it's more of the latter, that families give a lot of money away along the way, before the founder or co-founder dies. You know, I think it's the most philanthropic country in the world. We worked with somebody recently who won a lottery. One of the first things they were focused on wasn't just how to spend the money, but how to give some of it back. It's a distinctly American notion that philanthropy should be part of wealth creation. We help many families set up a foundation, you know, to make sure that it gets done in the way that the family wants with the causes they care most about. So it's a huge part of almost every single family we work with.
Now the Rockefeller and Co, which you bought, and what year did you buy it?
2018. We closed on March 1st, 2018. At that time, the family decided to sell.
Why did they sell Rockefeller and Co, or what part of it?
They sold part of it. Remember, they stayed in, and that was something that we were very focused on. We wanted to build it with the family, and they're quite pleased with what we've done with it. You know, they have an incredible name. And, you know, we've really been privileged to build this company in their name, but they wanted to modernize it, expand it, you know, build world-class technology, you know, create something that could endure going forward. And that's why they sold a significant part of it.
You know, when you bought a significant part, you were backed by Viking. Is that correct?
Yes. Viking Global Investors. The founder, Andreas Halvorsen, is still in charge and still runs Viking. And Brian Kaplan runs the private investment side. They've been a terrific partner of ours. And I really picked Viking because I was quite pleased with the way they thought about building a business the right way over the long term.
So after you bought it at a certain price, you and Viking controlled the company, the Rockefellers were still in. And then a number of years later, a number of other investors came in. Did you ever publicly say what you paid for the company when you bought it?
We didn't publicly say what the price was when we bought it, but we bought it with 18 billion in client assets. And our client assets today are over 200 billion. So we've grown the value of the company quite significantly.
So the inevitable question is, are you going to take the company public?
You know, in the final analysis, I'm a fiduciary, as always, to the shareholders. Building this company is one of the great things in my career that I'm proud of. But we don't need the capital that would come with an IPO, which is, you know, a lot of the reason why people do IPOs. We just finished the recapitalization in December. We have a very happy set of shareholders, old and new. They invested knowing that the best way to continue to build this business is for the long run. And I think they're comfortable with the company being private in the long run.
That's the preferred route for most of your clients in America. Is that what you focus on?
American, overwhelming percentage. Yes.
Okay. And have you thought about moving to Asia or Europe?
We've had many, you know, many conversations, people coming to us, opportunities. The name carries well. The Rockefellers' footprint is not just in this country. It's in Europe. The wealth creation in this country, David, continues to be, you know, frankly, staggering. And the number of families that we can serve in this country and the number of places, you know, there are these growth cities in this country where there's a tremendous amount of wealth being created. And we like to be on the ground in these cities with our private advisor teams, close to the families, close to the clients. So there's been such a significant opportunity here. We've stayed focused on the US.
I suppose I watch this show and I've heard about your firm. But I don't know if I'm wealthy enough to be eligible. How much net worth does somebody need to qualify to have their money managed by you?
We don't dictate to the private advisor teams a minimum. You know, the sweet spot is probably 20 to 25 on up to 250, 500 million. And we take care of many families that have more than $1 billion.
Let's suppose I say I've got $50 million. I inherited $50 million. I don't know anything about money, I'm something in the non-financial world, but I want to not lose my $50 million. If I give it to you and you manage it, what kind of rate of return can somebody realistically expect from a money manager like Rockefeller?
Well, you know, remember, we're a family office on the wealth management side. So it's open architecture. We're providing the advice on which investments to go into. Most of our clients we help put into third-party firms that are on our investment platform, and we do a lot of diligence on making sure that we bring in the best outside firms for every single micro strategy you can think about. We're trying to put them in the best possible position. So if it's 50 million and it's preservation of wealth, you know, the private advisor team will be working with them on a portfolio that might be more skewed on the fixed income side versus equities and alternatives. But we work backwards from the needs of the client and the family. And we emphasize open architecture and independent advice here.
Let's talk for a moment about the United States economy today, which obviously is important if you're in the money management world. Are you worried about the rate of inflation in this country?
I'm most focused on the fiscal situation in this country. I think that, you know, we're still at relatively full employment. We have been in a good time. We run these five, six, 7% of GDP deficits annually, and there seems to be no impetus to change that. You know, it's approaching 40 trillion in debt. You know, you're very familiar with all the different benchmarks. We spend more in interest than we do in defense. And, you know, that obviously could have implications over time. It's a fantastic amount of money to have borrowed, even for an economy this robust and this big. That does worry me. And it could feed into the inflation side. The specific inflation question, David, there's a couple of things that make it a very complicated picture for Kevin Warsh as he steps into it at the Fed. You know, the first is AI, which is being implemented everywhere. I mean, every private and public company is trying to figure out how to use the tools for greater productivity. And these large language model companies like Anthropic are working with a lot of these companies. And it's moving faster than even I thought. That could have a depressing effect on prices. You know, you could have a productivity pop coming out of that and it could, you know, make things cheaper as the agents start to be embedded in more companies. So he's got to look at that. Then he's now got an energy shock. So it's a pretty... he's got an ongoing, you know, significant fiscal deficit which, you know, clearly could put pressure on rates, particularly on the long end. So I think it's a complicated picture. It remains to be seen exactly how he starts to play this.
How do you think money management, or particularly your type of money management, will be affected by it?
I think that the front end of our business, the client interface, because the work we do with families, there's a lot of complexity. You're dealing with human beings. The front end will continue to be our private advisors and their teams. I think we can make them more efficient. And I have said before that if we have a private advisor today that has 20 clients with $100 million, 20 families he or she is taking care of and five people on his team or her team, they could have 40 clients with $100 million, $4 billion of client assets and five people on the team in three or five years. So I do think it's going to make our advisor teams more efficient, our whole team, our whole firm more efficient. The great thing about being in a growth firm is that means that we can, you know, hire fewer people. But, you know, we don't have to rationalize the way a lot of these big firms will have to do it.
So if you look at the future, what is your biggest worry for the US economy?
What I worry about is the fact that we've got the most transformational technology that we've ever seen, you and I or anybody, in the form of AI. And it's going to affect every aspect of our lives and every single business, private or public. You know, and my colleague Richard Sherman reminds me that there's never been a breakthrough technology in history where more jobs were created rather than the ones that were lost. So net positive on jobs. And I think that ultimately that could be the case here. But, you know, we may have a transition where agents are able to do things before we have new jobs created. So I think the transition coming from artificial intelligence is likely more comprehensive and impactful than the country is yet ready for. We have these incredible American families coming with incredible success and maybe building a business and creating the wealth. And we're counselors in that. And that's a real privilege to do that.
What is it about money management that appeals to you? What is it you like about managing other people's money?
What I like the most is the counseling aspect of it. And I do refer to our private advisors as counselors. When I worked in investment banking, I like to think that I was providing great advice to my clients. And I tell people today, younger bankers, you want to really get a long-term client, make sure you tell them when they shouldn't do the deal, even though you might get a lower bonus a year later because there's no fee. So we're counselors here. We have these incredible American families that come in with incredible success and maybe building a business and creating the wealth, but they're looking for help. And how do they preserve that over generations? How do they talk to children about it so that the ambition is still there in the second and third generation? That's a, you know, we're counselors in that. And that's a real privilege to do that because this is really the most important part of their lives.
Let's talk about how somebody like you got into this business. So where were you born?
I was born in Massachusetts, a little town called Fitchburg, which I think is in the western part of the state. My father was a teacher. We had a couple of moves, but I ended up from grade school on in a town called Hopewell Junction, New York, in Dutchess County. And my mother eventually went back to college and became a teacher. She'll watch this show. And I'm proud of the fact that she went back to college after my youngest brother went into the first grade, got her degree, and then she taught for 25 years as a special education teacher.
How many siblings do you have?
And are they all in the financial money management world?
No. One of my brothers is a teacher. There's a lot of teaching in my family. My great uncle was also the black sheep of the family.
