goRIA On-Location with Dana D’Auria & Jamie Magyera

Okay. All right. So, we are back with our live coverage and this is a slightly different format that you've seen. We're actually doing two interviewees with me of course here on GO. So, this will be our final segment in our live coverage of the InvestNet conference here in Las Vegas. And why not end with something new? Now, these are two people who I'm sure you recognize, but for those of us in the audience that may not know completely, we have I'm Dana D'auria, the co-chief investment officer. And not so easy, is it? You never joking. Start over. No, we don't start over. We just go, we roll. We roll. We go with it. And I'm Jamie Majera. I'm the co-head of wealth at BlackRock. Okay, that's a little off camera inside joke. Okay. So, look, the reason why we're kind of breaking our format here, and I'm super glad we are, is that you guys have a cool announcement that is better with you guys together. So, what is that announcement?

That is so fascinating. And we were talking again a bit off camera on the integration of the private markets. So you know first let's take a minute and talk about why this is so important. And I've been talking about this a lot on GO. Most advisers now especially the younger ones understand we are not really in the portfolio management business as advisers. We're behavioral finance. We're planners but the asset management is critical but probably better left done in a model setting to get more process into your business. Is that something you're seeing a lot in investment?

Oh, 100%. I mean, look, we have a huge focus on models, on ways to make more scalable practices for advisers. And from our perspective, it's not this binary decision of do I want to outsource to a particular model to particular manager to broadly distributed types of models. It's really the managers like BlackRock are finding innovative solutions like custom model strategies to say how do we meet you the adviser where you are, right? And that's exactly what this program is. It's one among several that are designed to really say to the adviser, okay, you can decide where you want to be on the spectrum for how much of the investment management you want to do, and we will work with you. And Investnet will bring managers like BlackRock to that table and say, okay, you want a model strategy, but you want to have a little bit of say in the model strategy still. Great. We have managers who are going to build that. And that's exactly what BlackRock's CMS program does. And so it's not about this one-way decision anymore. Am I going to outsource? Am I not going to outsource? It's how do I bring these managers to bear in a way that's going to help me be more efficient.

Yeah. So, you know, from our perspective, we use models a lot at Sovereign, but not for every single client and almost never for every part of that client household. For a good chunk of it, for sure, but not for every single piece. And one of our challenges has been incorporating private markets. Looks like you guys have solved for that.

Yeah, we're working together to do so. So, you know, one of the things at BlackRock that we believe very, very strongly is that our mission should be to help advisers and through advisers their clients access the full power of the capital markets. And for so long, capital markets were just the public markets. But you know well in your business that capital markets are increasingly becoming driven by private opportunities. And so as a platform and as an investment manager, we are working together to be able to say that for the advisor, for the RIA who wants to bring the full power of the capital markets to their clients, we will now be able to do so with Investnet and through Investnet. And today in fact advisers can access models with our liquid alt solutions. So we have target allocation with liquid alts. We will soon be coming to market with models that incorporate interval funds and then after that we'll continue on to semi-liquid and more. And so that's our shared ambition is to be able to help advisers, to your point, meet them where they are and how they want to build these portfolios but be able to bring the whole power of the capital markets in ways that meet the unique needs of their clients.

Love that. So, you know, I think I mentioned to you before we're big BlackRock fans at Sovereign. We have a lot of your ETFs in our models and one of the things I really am very fascinated about is your recent acquisition of Spider Rock. Such a cool option overlay. Will that be involved in this model solution as well?

Why yes, in fact this was not a pre-planned question. I was like really curious but yeah. Okay. Thank you for your question. So look, I think if we just think about some of the trends in the market, personalization is certainly a big trend. One of the reasons personalization is so important is because it helps you, like you were saying, for your clients, solve for unique needs that your clients have. Some of those needs can be solved through option overlays. Whether that be hedging portfolios against risk. We think about the past few days in the markets and how much we were doing to help advisers do exactly that. You also think about tax management and the role options can play. And so last year, we acquired a firm called Spider Rock. We had been working with Spider Rock for years as partners. And we got to know each other really well and together we solved many problems for advisers and their clients. And so now as part of the BlackRock family, Spider Rock is also available through Investnet and it's one of our fastest growing strategies through Investnet actually and for good reason. We really like what they're doing there and perhaps we'll have you back on just to do a little deep dive into Spider Rock because I honestly talked to a lot of advisers and honestly they just don't know about as much as they should because it's really a very cool solution. For example, your what do you guys call it? The exchange fund replicator I think that's just a brilliant idea. Thank you for that. Look, the team is incredible. Eric Matz is the CEO. You know him. Incredible team. They have such instinct but importantly what they've built is exactly what clients want. And so what they built is based on the feedback of RIAs like you who are actually looking for ways to solve client needs but do it in a scaled methodical process.

Right. I keep hearing the word scale come up a lot in this conversation and for good reasons. What do you think about that?

Yeah. I was just going to add in one of the things and we were talking about this earlier is when you think about the volatility in the markets and an advisor's role in helping keep their clients looking at the longer term, so many advisers are actually turning this into an opportunity for tax loss harvesting. Yes. And so, and you probably are seeing this in your own business, the opportunity, and I hate to say it, but the volatility is truly an opportunity for advisers to lean in and help their clients generate some tax alpha that will help them out later in the year.

Yeah, it really is. And I think that's really where the future of advice is on delivering tax alpha and behavioral finance and definitely the IP which I love the idea of being able to put my own thoughts into the model but then having you guys press the buttons to make it work because that's the part that I think advisers don't need to be doing, shouldn't be doing. It's not the best use of their time.

I love that. All right, Dana, we're almost out of time, but let me give you the last word to sum all this up.

Absolutely. Well, that's a good place to put a pit in it for today. So, Dana, Jamie, thank you so much for joining me today and closing out today's first session of our coverage of the Investnet Conference. I will be back again tomorrow for another full day of live coverage. Please stay tuned for that. So, on behalf of GO Fueled by Investment News, I'm Chuck Phillip and we will see you tomorrow. Thanks again. This is fantastic. Thank you.