Pod Insights Masters in Business BlackRock's Jaime Magyera on Wealth Management and Retirement About this episode On this episode, Barry speaks with Jaime Magyera. She was recently tapped as head of retirement and US wealth for BlackRock. They discuss her career and unique experience working at one of the world's largest asset managers, trends in retirement and wealth management, the rise of alternative investments and more.
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Transcript 10,454 words · 8 speakers
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0:00 Speaker 00 At KKR, we've spent 50 years understanding what matters to our clients and companies. From pioneering private equity to investing across credit, real assets, insurance and sports, KKR has built the experience to navigate complexity, the judgment to recognize opportunity, and the conviction to create lasting value. Because when people and institutions are counting on us, understanding what matters isn't just important, it's everything. KKR, understanding what matters. Visit kkr.com/whatmatters.
0:31 Speaker 01 This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Business Week's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs, and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw, innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting
1:13 Speaker 01 and hiring practices, but according to recruiters, advisors and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company, and Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates, quote, "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at ChatGPT.com.
1:54 Speaker 02 If you listen to financial news, you know a lot of time is spent thinking about what's next, the next opportunity, the next investment, the next move. But sometimes what matters most is being ready for what you never saw coming. For more than 75 years, Cincinnati Insurance has worked with independent agents to help protect businesses, homes, valuables, and more. Because planning for the future isn't only about knowing what's next, it's about making sure you're ready for what you can't predict. Let Cincinnati Insurance make your bad day better. Find an independent agent at C I N F I N dot com.
2:31 Speaker 03 Bloomberg Audio Studios, podcasts, radio, news. This is Masters in Business with Barry Ritholtz on Bloomberg Radio.
2:48 Barry Ritholtz? This week on the podcast, wow, what can I say? Jamie Majara is head of BlackRock's U.S. Wealth Advisory Business, as well as running their retirement business. BlackRock is the $12 trillion investment giant, the biggest asset manager in the world. Jamie has been working for the firm effectively since 2001, where she began at Merrill Lynch Investment Managers, which was merged with BlackRock in '06. She's risen through the ranks and has really seen every aspect of the wealth management and product services, everything from iShares to their alpha products to alternatives.
3:32 Barry Ritholtz? She has quite a fascinating history, and there are few people better able to describe and discuss how the wealth management business is changing and where it's going than her. I found this conversation to be fascinating, and I think you will also. With no further ado, BlackRock's head of U.S. Wealth Advisory Business, Jamie Majara.
3:59 Speaker 05 It is so good to be here.
4:00 Barry Ritholtz? It's so good to have you. I've been looking forward to this conversation. But I want to, before we get up to the US Wealth Advisory business and Retirement Business of BlackRock, let's talk a little bit about your background. You go to University of Pennsylvania undergraduate. What'd you study? What was the plan?
4:18 Speaker 05 So I studied psychology. I went to University of Pennsylvania. My brother went there as well. My sister went there as well. Psychology major. I didn't have a plan. I didn't know what I wanted to do. I was that kid that loved working. So I had, you know, any job I had when I was growing up, I just loved. I was a babysitter. I worked at a bakery. I taught tennis lessons. I did it all and I loved it.
4:41 Barry Ritholtz? Taught tennis? Are you any good? You still play?
4:43 Speaker 05 I'm incredible.
4:45 Barry Ritholtz? You play regularly?
4:46 Speaker 05 Don't ask my husband.
4:47 Barry Ritholtz? Singles or doubles?
4:47 Speaker 05 So I don't play well or regularly any longer. There is a story behind that, which maybe I'll share with you. But my husband does play tennis. He's incredible and he coaches at West Point.
4:58 Barry Ritholtz? Oh, wow. That's amazing. So what was the first gig right out of UP?
5:03 Speaker 05 So, you know, I was a psychology major and I knew that I was fascinated with people and also with distribution. And I'll come on to that in a second because I was a music person. I loved music. I wanted to be in the music industry. So my plan was do I go FBI, Criminal Psychology, or do I go into the music industry?
5:22 Barry Ritholtz? Very similar.
5:23 Speaker 05 Very similar.
5:23 Barry Ritholtz? And I'm not being sarcastic because you're profiling people who perhaps have certain deviant perspectives about the world.
5:31 Speaker 05 Yeah. I'll leave it there. And so I had to make a decision. And so I was going towards the music industry. And so people always say, well, were you a performer? Did you sing? Were you classically trained? The answer is no. But I was fascinated with the business of music and the distribution of music. And so at that time, remember, it was kind of Napster, right? So like, things were going from...
5:52 Barry Ritholtz? Wait, like late 90s? Is that what we're talking about?
5:54 Speaker 05 Oh, yeah. So we're going from CDs to digital distribution. And I just found it to be fascinating. And what did that mean for the business and the implications for artists? And so I had this dream. I was going to be a big time record label exec. I had internships. I got a job. At the time, it was Sony BMG. And then I realized, as I got my offer letter, that I wasn't quite sure how I was going to, you know, sustain my life, pay my bills. My parents helped massively with college, but there was some student debt that I had to pay off. And so at the time, my brother was a financial advisor. And so I called him up and I said, hey, big bro. What do you recommend? What should I do? And I was thinking he'd give me some financial advice. And his advice was get a real job that's going to help you pay your bills. And then you can go back into music after.
6:39 Speaker 05 And so that's kind of how I made my way into finance.
6:42 Barry Ritholtz? So what was the real job?
6:44 Speaker 05 So the real job was working at Merrill Lynch.
6:47 Barry Ritholtz? So your whole career, you've been in the same, more or less the same place? That's amazing.
6:50 Speaker 05 Yeah. And there's this theme as you kind of look through different things I've done throughout my career. But I started at Merrill, Investment Managers, which was the asset management arm of Merrill Lynch. And I wanted to be the farthest thing away from markets. Because I had no experience. I didn't know what the markets were. I didn't even know what a mutual fund was. And so I joined Merrill as an analyst in their analyst program. And I was a technology project manager.
7:16 Barry Ritholtz? Wait, so as an analyst, did you become a CFA? Did you go through that process?
7:21 Speaker 05 No, I did not. So you get all of your Series Sevens and everything else. But I was responsible for, again, let's date ourselves here, the late 90s, early 2000s. E-business was the thing, right?
7:33 Barry Ritholtz? It's gonna be big one day.
7:34 Speaker 05 It's gonna be big one day. There's this whole thing called the Internet. And so at the time, Merrill did not even have a website for their financial advisors.
7:41 Barry Ritholtz? How is that possible?
7:42 Speaker 05 I know. Can you imagine?
7:43 Barry Ritholtz? 2001. We're gonna, we're gonna wait and see if this thing becomes.
7:47 Speaker 05 Takes off.
7:48 Barry Ritholtz? Right.
7:48 Speaker 05 I have a feeling.
7:49 Barry Ritholtz? Right.
7:50 Speaker 05 So that's.
7:51 Barry Ritholtz? I have a good feeling about this one.
7:52 Speaker 05 Yeah, yeah, yeah. So that's kind of where I started.
7:54 Barry Ritholtz? So did you help build out the first set of Merrill Lynch websites? For their, is this for outward facing, for clients, internally for advisors and brokers? Or a little bit of everything?
8:05 Speaker 05 For advisors and brokers. And so that's where I first learned, you know, the role of the financial advisor and what it is to be a financial advisor and how you serve your clients and how hard it is. And what it is to actually sell and support and serve those financial advisors. But that was the job. It was translating technology speak into business and client needs.
8:26 Barry Ritholtz? Really interesting. So I know you've had multiple, multiple roles at both Merrill and BlackRock. Let's quickly walk up the ladder. So from that, what was the next role?
8:37 Speaker 05 So I always had this, this idea that I wanted to get closer to the client. So I would move, and you'll see my, over my career, I moved into roles that were closer to clients. So from there, I went into marketing. Which you really learned strategic messaging and how to simplify and help people understand what you're doing. I then went into our retirement business. Where there, I used to help participants understand how to enroll in their 401k plan. I mean, literally going around the country, helping people figure out how to save and how to invest. And then I moved back into the wealth business, which is where I am today, along with leading our retirement business. And the wealth business was the first time, when I came back into it, that I actually had direct client accountability. And that was important to me, because I had done technology and marketing and product
9:20 Speaker 05 and strategy and everything else, but I had never been responsible for helping to solve client problems directly.
9:26 Barry Ritholtz? And to clarify, you didn't just kind of move into the wealth business. You are the head of BlackRock's US Wealth Advisory business. That is not like just, you're not just casually drifting into that space. You're running it. So, so let's talk a little bit about how you got there. So, Maryland BlackRock merged in 2006. When the dust settled, what was your title back then?
9:52 Speaker 05 So, back then, I had moved into marketing, and I was the head of marketing for our wealth business. Then, fast forward to BlackRock acquired BGI and iShares.
10:03 Barry Ritholtz? I recall, one of the greatest acquisitions in finance history.
10:07 Speaker 05 And a theme for BlackRock on just structural growth and how we view where the world is going and how we meet the needs to be there. But at that point, leadership had asked me to bring together all of the retirement businesses that were legacy BlackRock, legacy iShares, legacy BGI, and I was part of that team.
10:24 Barry Ritholtz? In other words, turn it into one company instead of all these separate pieces. How long did that process take?
10:31 Speaker 05 It was, I mean, every day was another step in that process. And, you know, we learn over the years how important it is to integrate and to acquire. When you acquire, you're acquiring for capabilities, but you're acquiring for talent and culture. And so, the match between the firms was really strong, and that helped us to integrate even faster.
10:48 Barry Ritholtz? So, so you began this process late 2006, and right around the corner comes the financial crisis. How did that get in the way or affect this entire? Post-merger situation, it had to be pretty disruptive, certainly on the client level, how did it affect what you were doing?
11:08 Speaker 05 Yeah, I mean, of course, it was disruptive, and I think this kind of goes back to, part of the vision with BlackRock Always was, and I mentioned the term structural growth, but what does that really mean? It means durable engines of growth, resilient engine of growth, growth that can persist market cycles. And so even through a financial crisis, the fact that we had our iShares ETF range, we had fixed income, we had equity, we had cash, we had everything you could imagine, and we had Aladdin. Remember, Aladdin, our technology platform, was massively helpful to so many firms and institutions and governments during that time. So, we had multiple ways to leap through that and help our clients through that crisis.
11:50 Barry Ritholtz? Huh, really, really quite fascinating. And back then, you know, it was a couple of trillion dollars. Now, BlackRock is what, 11, 12 trillion dollars? That's the largest asset manager in the world. I want to say Vanguard is probably 10, 20% behind you, nipping at your heels. But between Vanguard and BlackRock, these are two of the most storied firms. And in fact, the new CEO of Vanguard used to run a division over at BlackRock.
12:20 Speaker 05 A great friend of mine, Saleem.
12:21 Barry Ritholtz? Which, which really just goes to tell, I recall interviewing him when he was at, at BlackRock and like, huh, that guy's gonna go somewhere one day. But what's fascinating is just how unbelievably successful the iShare business became. But it, people tend to think of, retail investors tend to think about BlackRock in terms of iShares, but BlackRock is really so much more. It's not only passive beta, but there are alpha-seeking strategies, and as we'll discuss later, there are alternatives. So, there are a lot of things going on at BlackRock. As head of the US Wealth Advisory, what is the core focus? What are, what are the bulls that you keep in the air all the time?
13:02 Speaker 05 Yeah, so one of the things I love about the wealth business generally is that it is changing so rapidly, it's dynamic. Every day, there is something new. Investor preferences are changing. There's different client segments. And as you said, it's not just about iShares. I mean, we have so many capabilities that we can bring to bear. And so when we wake up every day, what we think about at BlackRock is how do we make investing easier? How do we get more people access to the capital markets? And that used to be public markets. Now it's public and private markets. But that's what we do. And when you think about our wealth business, we do that through financial advisors and with wealth management firms. So our job in our wealth business is to help advisors and the firms that they work for
13:44 Speaker 05 build better portfolios for their clients so that they can achieve their dreams. And we aim to power their growth, to help them scale their businesses so that they can do what they do best, which is serving their clients. And so that's what we wake up doing every single day in the wealth business.
13:58 Barry Ritholtz? So I've seen a variety of various BlackRock model portfolios. If you have a bond ladder that you have concerns about, you can run it by the BlackRock folks and, hey, here are your options. We really haven't talked about SMAs, which I know is a really fast-growing part of the business. Is there a priority? Or are all these things just day by day, you're just checking off different boxes and working on different projects?
14:26 Speaker 05 Yeah, so our priority is serving the client, meeting their need. And when we look at the wealth market and talk to advisors every single day, there's really three, call them client segments, investor segments, that advisors are trying to serve and win and build relationships with, and we're trying to help the advisor do so. So those three segments, think about the next-gen investor, think about women, and think about high net worth. And we'll hit on kind of direct indexing and everything that we do through that. But if you think about those three segments, and it's a broad way to think about this, you know, there's exceptions to every rule here, but next-gen, what are we talking about? It's the millennials, right?
15:02 Barry Ritholtz? And Gen Z, right?
15:03 Speaker 05 And Gen Z. It's 44% of the population. So it is a massive number by quantity, but it's also a massive number by assets, right? That generation is going to inherit 70 trillion plus in assets over the next few years. And so what's interesting and what's different about these folks is that they want to invest in line with their beliefs. They're incredibly tech savvy. In fact, they trust digital and social more than they might even trust humans these days. But they want advice from advisors, and they want to invest in things that are new and interesting. And so you think about Bitcoin. Right Bitcoin 80% plus percent of millennial millionaires hold crypto. They're more inclined to use crypto than stocks and mutual funds.
15:45 Speaker 05 So what we were doing and investing and innovating in, in service of client demand is creating a Bitcoin ETF.
15:52 Barry Ritholtz? IBIT.
15:53 Speaker 05 IBIT.
15:54 Barry Ritholtz? One of, if not the fastest growing ETF in history, fastest to a billion, to five billion, to 10 billion. I haven't even looked at what it is.
16:02 Speaker 05 Eighty-five.
16:03 Barry Ritholtz? Unbelievable. This is less than two years old, right?
16:06 Speaker 05 Yes.
16:07 Barry Ritholtz? That's incredible. Eighty-five billion dollars.
16:09 Speaker 05 Yep.
16:10 Barry Ritholtz? And no passwords, no lost this, no that. They've taken what was a, you know, whenever I see the return claims for Bitcoin, I always have to point out, hey, 20, 30% of coins have been lost. Passwords have been lost, drives break. So subtract a third off of that. But really, it's this or zero. If you totally lost it, you guys have made this a traditional financial product. So it's pretty amazing. And we've seen like a general acceptance of, hey, everybody should have 1% or maybe a little more, a little less, whatever your needs are of some Bitcoin. And this seems to be the easiest way to do it.
16:51 Speaker 05 I think we'll see a lot more of that, too. I think we're going to see a lot of firms coming out now to say, we are actually going to allow advisors to incorporate this into portfolios on the fee-based side, on the advisory platforms. And so I think this is just the beginning. But it's also just a perfect example of if you understand where clients are going and you have the capability set to innovate and build products around it, then you can deliver those products to market and help advisors better serve their clients.
17:15 Barry Ritholtz? And IBIT's a perfect example of that. Really, really quite fascinating. Coming up, we continue our conversation with Jamie Majara, head of BlackRock's US Wealth Advisory Business and head of BlackRock's Retirement Business, discussing wealth management and retirement. I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio.
17:41 Speaker 00 At KKR, we've spent 50 years understanding what matters to our clients and companies. From pioneering private equity to investing across credit, real assets, insurance and sports, KKR has built the experience to navigate complexity, the judgment to recognize opportunity, and the conviction to create lasting value. Because when people and institutions are counting on us, understanding what matters isn't just important, it's everything. KKR, understanding what matters. Visit kkr.com/whatmatters.
18:13 Speaker 01 This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Business Week's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs, and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw, innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting
18:55 Speaker 01 and hiring practices, but according to recruiters, advisors, and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company, and Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute, brought to you by ChatGPT. Get started at chatgpt.com.
19:39 Barry Ritholtz? I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio. I'm speaking this week with Jamie Majara. She is head of BlackRock's U.S. Wealth Advisory Business as well as Retirement Business. So let's talk a little bit about both of these. I want to start with the Wealth Management Business. This is more than just eye shares. This is very holistic and comprehensive. Tell us a little bit about the U.S. Wealth Advisory Business.
20:08 Speaker 05 So, our business is really focused on helping those advisors who are really trying to go after multiple client segments and help those client segments actually meet their goals. And so, you know, we talked a little bit about Next Gen and kind of the millennials and Gen Z. The other segment that is just growing at incredible rates is women. Women today control a third of the world's assets. In a few years, it'll be 50%. It'll be 70% by 2050.
20:33 Barry Ritholtz? 70%?
20:34 Speaker 05 70%. And, you know, part of this is, let's talk about what's driving this. Women are creating wealth, right? More women are having careers or reaching executive levels or starting their own businesses. Women are also inheriting wealth, right, from family or from parents. Women are also inheriting wealth. We call it the horizontal wealth transfer.
20:52 Barry Ritholtz? Sure.
20:52 Speaker 05 Divorce or widowed.
20:54 Barry Ritholtz? Tend to outlive the husband?
20:55 Speaker 05 Yes.
20:56 Barry Ritholtz? So it's a waystation before it goes to the kids?
20:58 Speaker 05 Absolutely, absolutely. And women are, quite frankly, underserved in this market. Women were not seen as a significant growth segment in the past, and now people are starting to come around to, wait a minute, this is a very important segment that we need to get right. And women do things differently. And so advisors need to help women do things differently, and they need to serve them a little bit differently. And women, you know, like to have impact. We talk about the fact that some people invest as a means to an end. You know, women tend to invest as a means to what's next, right? They want to impact their community. They want to impact their family. They're always thinking about, what can I do with this money as opposed to, I want to make more money. And so that's,
21:40 Speaker 05 it's a nuance, but it's a difference that really requires a very personal relationship with a financial advisor and trust.
21:47 Barry Ritholtz? You know, it's been fascinating seeing what was previously a male-dominated industry slowly awaken to the idea that, hey, women have money and they're going to continue to accrue more money. Maybe we should be more open to coming up with a way to to serve that demographic. It's like amazing it's taken so many decades for the industry to adjust, but it's shockingly slow and sometimes stuck a little bit in the past.
22:17 Speaker 05 Yeah, it is. You know, the wake-up call, I think, for many is when a financial advisor has a client, maybe it's the the man in the household, and perhaps there's a divorce, or there's a or the or the client passes away. Listen, 70% of women leave their financial advisor, leave their husband's financial advisor after a divorce or a death.
22:40 Barry Ritholtz? So, obvious with divorce, but with death, it tells you what a terrible job that advisor did, speaking to both of those. And, you know, I've heard stories from advisors about people kind of aghast at somebody ignoring the spouse in the room. It's just a totally wrong wrong approach. How does BlackRock help their advisor clients address this issue?
23:05 Speaker 05 So, we believe there is such an opportunity for advice here, right? There, I mean, there's there's just this whole world of women who want advice. They want a coach. They want a partner. And so what we do is we work with financial advisors to help them better serve these clients. We do that through products. So, for example, women want to be able to customize and personalize their investments to things that are that are important to them. So, we'll talk about direct indexing, but direct indexing and what we're doing through Aperio is a great way for an advisor to serve his client and help her Have impact with what she's doing. We also care deeply about educating advisors on this. And to your point, it's not that the industry just woke up, it's that nobody
23:48 Speaker 05 was really talking about it. And so now we're really invested in talking about this and helping and doing events and getting advisors to bring their prospects in and we'll join them. We are a minority investor in a company called Willow, which focuses exactly on this and builds practice management and education and actually helps connect female investors to advisors. And so we're really focused on this and it's just such an opportunity for advice, but also an opportunity for advisors to grow their business.
24:16 Barry Ritholtz? So you mentioned Aperio. Let's talk a little bit about direct indexing. I'm a big fan of it. We happen to have started on a different product five, six years ago. So we've been pretty locked in on that. Why do you believe it's gaining so much popularity amongst both advisors and clients?
24:34 Speaker 05 Yeah, so direct indexing, it's, it still sounds like a new phrase to many. It's been around for quite some time. And previously, it was really used for ultra, ultra high net worth families. And direct indexing and ability to create a portfolio, a custom index, if you will, of securities that you can choose and select what securities you want in that portfolio to align with how you want to invest. And you can also then manage taxes more effectively in there because you can tax loss harvest. And so it's a brilliant approach for not only aligning with your beliefs on how you invest, but also really living in an after-tax world. We need to better look at tax alpha in our investment portfolios.
25:14 Barry Ritholtz? So I'm so glad you said that. When we first started working with O'Shaughnessy on their product, I was under the impression that it would first be like the most common use case would be, hey, I don't want tobacco or guns, or I don't want this, whatever. I know the New York bishops, archdiocese, investment pool uses it to say, hey, we don't want to board efficiency in our portfolio, or anything related to stuff that is in contradiction with our belief system. I thought that would be the biggest use. And then, hey, I work Work for Apple, so I don't need all this tech. You could tune down tech in my portfolio and then taxes would bring up the rear. I had it exactly backwards.
25:59 Barry Ritholtz? In the past five, six years, after tax returns, tax alpha seems to be the dominant usage for this concentrated portfolios, low basis cost, inherited stock, things like that really are a challenge to dealing with capital gains. Tell us about BlackRock's experience with this.
26:18 Speaker 05 Yeah, so we agree completely. In fact, back in 2021, we acquired the firm, Aperio. And Aperio was a pioneer in direct indexing. Aperio led the market, working with ultra high net worth. They called it the new institutional for the purpose of tax management, after tax returns. And you think about it, we live in an after tax world. I bought my coffee with after tax dollars, yet we manage our investments before taxes. And so we saw this trend coming and we could have built it. It would have taken us probably a lot more time, but we saw what Aperio was doing and their capabilities and just their approach. And we thought, man, if we could match that with our distribution reach and our scale,
27:00 Speaker 05 we could really make some wonderful, wonderful solutions for our clients. And that's what we did. We acquired Aperio and we have a very significant direct indexing business. And to your point, Barry, it is predominantly tax customization, tax management.
27:17 Barry Ritholtz? Right, especially when we see markets are at all time highs, people are sitting on enormous gains. Sometimes that becomes very concentrated to say nothing of people who work for tech stocks and they've accumulated or other companies that have just accumulated so much value that, hey, maybe I have too much single stock risk and I want to diversify into things. Tell us, what else does BlackRock do with direct indexing? How do you differentiate yourself? Everybody these days seems to have a direct indexing product. What makes BlackRock's special or unique?
27:52 Speaker 05 Yeah, so you know, one of the things that we did is when we acquired Aperio, we already had a very significant separately managed account business. I mean, for decades, we had fixed income and active equity. And what we did not have was that direct indexing capability. When we brought Aperio into BlackRock, we then pulled it all together and said, how can we actually make all of these capabilities together better serve our clients? So that means, for example, tax loss harvesting on muni portfolios, right? So being able to take a capability and not just do it on equities, but do it on fixed income. Last year, we acquired a company called Spider Rock. I'm not sure if you're familiar with Spider Rock.
28:29 Barry Ritholtz? We've structured notes. We've used them in the past.
28:31 Speaker 05 Yeah, and option overlays.
28:32 Barry Ritholtz? For the similar kind of, not quite the same, but occasionally similar, a different solution to a similar problem.
28:39 Speaker 05 Yeah. And to your point on concentrated stock, what a great way to hedge that concentrated stock position. If I want to continue holding that stock, but I want to hedge against it and manage the risk, or I want to manage for tax implications, why not run an option overlay on top of that? And so the beauty of what we're doing now is we're bringing all of these discrete capabilities together into one portfolio, one holistic offering. And so you'll be able to, will be able to work with advisors and say, let's look across your client's entire book and let us help you build a whole portfolio of public markets, private markets, direct indexing, option overlay, all in one, really solving for unique needs, customized preferences.
29:20 Barry Ritholtz? Really, really quite fascinating. So you mentioned you work with a lot of different wealth management firms. What does that relationship look like? What are these firms looking for from BlackRock?
29:30 Speaker 05 So I remember when I first started in the wealth business, years and years and years and years ago, you know, the relationship between asset managers and wealth management firms was often a kind of a vendor relationship.
29:43 Barry Ritholtz? Yes.
29:43 Speaker 05 Right? It was, you have a product, let's put it over here. Our position and our partnership with wealth management firms today is, the only word I would say, it's like true partnership, right? It's aligned interests. We are there to not only provide them with investment capabilities, by the way, we have incredible breadth to do so, but we're also there to help them with their technology needs, their operational and scale needs, their advisory needs. How can we help them think through how they can grow? Organic growth, that's everyone's challenge. How do I grow organically? Well, you have to scale your business and increase your margins to do so. We help them think through all of that. And the other thing that we do is we have incredible people that are so expert in working with these firms and advisors
30:28 Speaker 05 every single day to help them achieve their goals. And our view is if we can help Our clients, the wealth management firms and their advisors grow, will naturally grow with them, right? So our job is to help them grow.
30:40 Barry Ritholtz? So let's talk retirement. We're recording this post Labor Day, but by the time this comes out, BlackRock's big report, the read on retirement will be out. Tell us some of the big takeaways for this.
30:55 Speaker 05 So it's really special for me personally, because I've just now returned into the retirement business and have the responsibility for this retirement business. And I say it's a responsibility and an honor, because we think about the 35 million people across America that we are helping to save for retirement. Like, that is, that is what we do. Over half of the assets at BlackRock, not many people know this, over half of the assets at BlackRock are helping people save for retirement in some way.
31:23 Barry Ritholtz? Really?
31:24 Speaker 05 Over half.
31:24 Barry Ritholtz? So when you say that, it's 401Ks, 403Bs, IRAs, any...
31:28 Speaker 05 Pensions, DB.
31:29 Barry Ritholtz? Wow.
31:30 Speaker 05 Yes.
31:30 Barry Ritholtz? That's amazing.
31:31 Speaker 05 Over 50%.
31:32 Barry Ritholtz? I would not have guessed that.
31:33 Speaker 05 Yeah, not many people know that. And so, you know, it's something that we, we are so proud of. And, and really, for me, it was always my North Star. I remember when I was first in the retirement business at BlackRock, I was able to go home and tell my parents what I did and explain it to them in a way that I felt so good about, and they understood. And, and that's what we get to do every day. You mentioned the survey. So it's our 10-year anniversary of doing this survey.
31:57 Barry Ritholtz? Wow.
31:57 Speaker 05 We've been doing it for a decade now. And every time we go out, we go to plan sponsors, who are the employers, building the plans and offering them to their employees. We go to the savers, who are the employees at massive corporations. And then we also talk to retirees, people that have saved and had access to a 401K plan, but they're now no longer working, and they're in retirement. And so this year, I'll break it down in this way. Savers, those that are still working, the employers of these, or the employees of this company, savers have the highest confidence we've ever seen. Like, off-the-charts confidence. Now, it's come down a little bit because of market volatility, and I think what that calls out is, of course, we're all more confident when markets are, are rising.
32:38 Barry Ritholtz? Right.
32:39 Speaker 05 But very strong confidence in their ability to retire. However... We've seen savings come down. And so the question is, is that because of confidence?
32:47 Barry Ritholtz? When you say savings, we mean savings rates.
32:50 Speaker 05 Right. Savings rates have come down. Thank you. And so the question is, is that because of confidence? Or is that because actually people are spending more money? They need to maybe inflation, maybe, right? So like, we have to dig into that a little bit more. But importantly, savers are seeing more confidence or feeling more confident. You then ask the people in charge, the experts who are building those plans, confidence is very low. In fact, lower than we've seen. And I'll come back to that in a moment. But I think there's a really interesting tension there of perhaps overconfidence in savers and reality in those building the plans. And then when we move on to retirees, very low confidence once they've retired and their ability to actually figure out how to sustain their life in retirement.
33:33 Speaker 05 And so some of the actions or some of the insights that really came out of this. One, savers are looking for access to professionally managed solutions. Think target date funds, right? Life path portfolios, BlackRock invented the target date fund 30 years ago. But target date funds are very, very important. Two is savers are looking for some type of clarity or solution around guaranteed income. Give me something that will just tell me what I'm going to be able to spend every month. And better yet, make that guaranteed. So I know I have it every month.
34:03 Barry Ritholtz? So what does that look like? Are we talking an annuity product or something else?
34:07 Speaker 05 So imagine a target date fund with a guaranteed income sleeve in that. So we have a product called Life Path Paycheck. Life Path Paycheck is among a few other solutions in the marketplace. But Life Path Paycheck is the fastest growing guaranteed income solution. What's amazing about this solution, though, is that it gives employers and employees the choice to turn on that guaranteed income. So you're investing, investing, investing, and then you come to a point and you decide, do I want that guaranteed income?
34:34 Barry Ritholtz? Flip the switch.
34:34 Speaker 05 Flip the switch.
34:36 Barry Ritholtz? Really interesting.
34:36 Speaker 05 Really interesting. And then the third point is people, both employers and employees are saying, we need to close the gap on this savings shortfall, and we need to find more returns and more protections. And so that's really where you start to point to private markets.
34:51 Barry Ritholtz? So the, I think of the traditional retirement savings as classic 6040. And what I've been reading about and hearing about for the past 10 plus years is, hey, 6040 isn't going to get it done in the future, especially with yields as low as they've been up until 2022, anyway.
35:11 Barry Ritholtz? How do you see this side of the business changing? Is it no longer sixty forty? Is it sixty thirty ten? Or what does this look like?
35:18 Speaker 05 Yeah, so it's, you know, the one thing that's different about the retirement space is it's versus the wealth space is retirement is quite slow moving. The market itself is quite slow moving. And so if you actually look back twenty years, I would say there's probably less change over twenty years than we'll expect to see over the next ten. Meaning, people are getting very focused. Policymakers, employers, asset managers, record keepers on how do we close the gap between this retirement savings shortfall? And so to your question, the sixty forty worked. It works. But actually, if you were to have a fifty thirty twenty, but strategically and thoughtfully, make sure that that glide path, that target date fund that also incorporates private markets,
35:59 Speaker 05 is doing so in a way that helps people get more diversification, gain alpha, possibly gain more income. We've done studies that show you can get fifteen percent more return on a portfolio with private markets, a target date fund with private markets, over a forty year retirement. And so that's something to talk about.
36:19 Barry Ritholtz? Not, not, nothing. That's pretty substantial. Coming up, we continue our conversation with Jamie Majara, head of BlackRock's U.S. Wealth Advisory Business, as well as head of BlackRock's Retirement Business, discussing the rise of alternatives in the investment space at BlackRock. I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio.
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39:11 Speaker 06 I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio. My guest this week is Jamie Magyera. She is the head of BlackRock's U.S. Wealth Advisory Business, as well as the head of their retirement business. The firm manages over $12 trillion. So let's talk about alternatives. This has been one of the fastest-growing space in investing. Tell us what BlackRock is doing. I think of BlackRock of iShares and biggest manager of public equities and bonds in the world. What is BlackRock doing with alternatives?
39:51 Speaker 05 So if you think about the capital markets. Public is only one piece of those capital markets. And for so long, private markets, the other part of capital markets, have been utilized for institutions or even the ultra, ultra, ultra-high net worth. And so there is a world to believe strongly, an investment thesis, that if you're going to do the best thing for a portfolio or an investment, you need full exposure to public and to private markets. And so BlackRock is doing a lot to help advisors and their clients have easier access to private markets. So you may recall last year, we had a whirlwind news announcements
40:33 Speaker 05 around HPS, GIP, PreQuin, three acquisitions, all related to private markets. PreQuin related to data, GIP, infrastructure, HPS, credit, and private financing. And so we acquired these firms so that we could offer to our clients not just the full power of the capital markets through public, but now also through private. And so we are very focused on really democratizing access, helping everyday people, when appropriate, gain access to this very important part of the capital markets.
41:07 Barry Ritholtz? And I mentioned earlier 60-40. You peel 10% off the 60 and 10% off the 40, and you end up with something that looks like 50-30-20. Is that the future of this? Because typically, we see a lot of privates. They tend to be locked up for a long period of time. They tend to be complex to administer, custodians and reporting and fees. It's like you buy an I share, it's easy. You want to get involved on the private side. It just seems so much more complex for anyone less than, I don't know, pick a number, 20 million, 10 million, 5 million. So what does the future of alternative investment look like at BlackRock?
41:48 Speaker 05 Yeah, so you hit on it, right? I mean, it was so hard for people to gain access to it. It was complicated if they were able to get access to it. And to your point, liquidity was not necessarily a top priority for various reasons. When you think about where the market is going now, there's just There's been so much change over the wealth industry on how the wealth industry as a whole is starting to modernize access to private markets. And so one thing we are doing at BlackRock is we focus very much on technology partnerships that allow and relieve the advisor of all of that operational complexity. So you think about a firm like iCapital. iCapital
42:28 Barry Ritholtz? Of which you are on the board of, correct?
42:30 Speaker 05 I am on the board. And iCapital has done so much to actually pave the way for advisors' ability, wealth management firms' ability to access private markets. But they are a technology platform. You still need the products. And to your point on drawdown and liquidity, we've done so much work to build solutions that actually are semi-liquid and that provide that liquidity on a regular basis for advisors and their clients. And so that's something that has really held advisors back in the past. I think the last point, Barry, is it's still new to so many. And there's a lot of education that's needed.
43:05 Barry Ritholtz? Sure.
43:06 Speaker 05 And it's education on the asset class and what does this really mean? And how do I actually strip the 10% here and the 10% there? And so we've gone a step further to say, how do we make it even easier for advisors to build portfolios? Not that I have my private markets over here and my public markets over there in another account, but instead, how do I build a portfolio that's one account and it holds public and private together in one portfolio that's professionally managed, asset allocation, all of the due diligence has been done. And so recently, we've engaged in partnerships with firms like GeoWealth and iCapital to be able to bring models to market, strategic asset allocated models that are professionally managed, that incorporate private markets alongside of public markets.
43:50 Barry Ritholtz? So the pushback I hear from various people about alternatives, they're expensive, they're liquid, you have these long lockups, doing due diligence is complex and expensive, all of the back office aspects seem to be like a series of one offs, there's no real scalability. How are you addressing these, these issues?
44:13 Speaker 05 We have found a way to scale and make it more convenient. So all of that work that you just talked about, the due diligence, the operations, the complexity, we have taken that on. We have built model portfolios that do all of that for the advisor. The advisor just has to offer that to their client.
44:30 Barry Ritholtz? Is this in an SMA or is this, how does this? So my firm, we, we were BlackRock, Vanguard, a handful of other, the bulk of our portfolios, either direct indexing or, or mutual funds or ETFs, looks like that. Some, some clients say, what do you guys offer in terms of alternatives? And we have to click off and run a stuff. And what I've noticed is, once you start working into the, here's the cost and here's the lockup and here's what the reporting looks like and it's held at a custodian here, the complexity tends to be like, is this really worth it? Well, theoretically, it provides diversification and historically, there have been some cases of, of outperformance.
45:14 Barry Ritholtz? All that comes off the advisor's plate and you guys handle all of it.
45:17 Speaker 05 So if an advisor wanted to build a portfolio for you, you're the client. The advisor could call BlackRock, could say, I want to build a custom portfolio. I wanted to have this component of public markets. Maybe it's iShares ETFs, maybe it's direct indexing, a period. I would like it to have this component of private markets. Perhaps it's BlackRock Credit, BlackRock Equity on the private side. We will customize that for them. And then it's waiting for them on a platform like GeoWealth, which is a, you know GeoWealth well, a technology platform that will automatically rebalance it for them. And that advisor can now then invest their clients in that portfolio.
45:52 Barry Ritholtz? How about if a firm comes up to you and says, hey, we're pretty good on the stocks and bonds side. We really need help on the alt side and we have such embedded long-term gains that it's painful to, to peel too much off, but going forward, we want to build this into what we offer and add this to existing clients. What does that solution look like?
46:15 Speaker 05 Call BlackRock. We have a team of, you asked about CFAs earlier. We have a team of CFAs, portfolio consultants, tax economists, who do nothing but work with advisors every day on solving those problems. They will work, they will consult, they will help them take the portfolio they have. We want to meet the advisors where they are. Right? So we want to help them build on what they have. And we will work with them to take that portfolio and transition it into whatever the destination is they're going for. We'll work with them in a way to do it tax efficiently and at the appropriate cadence for their client.
46:48 Barry Ritholtz? And you guys very successfully took crypto and Bitcoin and put it into an ETF. Are we ever going to get to a point where alts become an ETF product?
46:58 Speaker 05 Look, I think there is a world where so much can happen, right? In the next five years, I think we're going to see a lot of things around private markets. Part of that is solving for data and having the transparency around the private markets. What is an ETF, right? It's transparency into that index. Part of our thought process in acquiring Precen was being able to offer data transparency around private markets. But I also think that sometimes people naturally go to ETF as kind of shorthand for liquidity, convenient, and low cost. And I think there's a lot of ways that we have to figure out as an industry, and BlackRock's working on this right now. How do you structure and build vehicles that allow for liquidity, allow for lower costs,
47:42 Speaker 05 and allow for easier access, less complexity around private markets? Maybe it's an ETF, maybe it's something else.
47:48 Barry Ritholtz? Yeah, liquidity is always the challenge when you have an investment product that by design is supposed to play out over five, seven, eight years. They're not public for a reason. They need the breadth for whatever that market cycle is to realize those gains. So I get the challenge. What are you doing to educate advisors and clients about what this process looks like?
48:11 Speaker 05 I'm glad you asked that because I keep coming back to liquidity is a challenge when it does not match an expectation of a client. And so advisors need to fully understand what they're working with when they delve into private markets. And in some cases, it is a five to seven-year lockup if they're doing drawdowns. In some cases, you do have a liquidity interval every quarter. And so we are working with advisors all across the industry to help educate them on the new type of private markets, the new vehicles, the semi-liquid structures. But then more so, we're working with them to help them understand, how do you actually put that in a whole portfolio? Talk to me about how private markets sits alongside of public markets and what
48:55 Speaker 05 that does for the risk profile, for the return profile, and for the liquidity profile.
49:01 Barry Ritholtz? And BlackRock launched a model, I want to say, earlier this year that uses both private and public assets under one ticker. That sounds like really challenging to put together. Tell us a little bit about that.
49:15 Speaker 05 Yeah, it was challenging, very challenging. And it was something that we could not do alone, for all of the reasons you mentioned. It took operations and technology platforms like iCapital. It took operations and rebalancing and trade platforms like GeoWealth to be able to allow us to deliver this portfolio. So this was something that we announced earlier this year alongside of GeoWealth and iCapital. And it was the first of its kind in the industry, a model portfolio that in one model, in one account, you can have public and private automatic rebalancing customized for your client, done so easily, so conveniently.
49:55 Barry Ritholtz? Some of what you're describing sounds a little bit like OCIOs that kind of were the rage a few years ago, outsourced CIOs where a professional manager can bring a higher level of professional wealth management to a smaller shop. Tell us, is this similar to that? Or what are the parallels?
50:15 Speaker 05 Yeah, it's a, it is one of the most accelerated trend we are seeing in the wealth market right now, which is this whole notion of outsourcing. And whether an advisor is doing it because they want to professionalize what they're offering to their client, or whether an advisor is choosing to outsource because they want to save time. And their value is being with the client and talking about the holistic wealth plan, not the investment management component of it. And so they turn to BlackRock to be the outsourced provider. And so we have a models business, which is effectively an OCIO business. A models business for the wealth channel is 350 billion today. It's grown rapidly over the past few years.
50:56 Speaker 05 We think that'll double in the next few years. And it's because advisors are turning to us to say, please let us outsource to you. And it's not just advisors, wealth managers are doing the same. Because again, wealth managers are going to focus on their core value, which is serving their clients, helping their clients build financial plans, and helping them navigate their wealth picture holistically. They turned to BlackRock to help them scale their investment management, and that's where our outsourcing capabilities come in.
51:23 Barry Ritholtz? So we've talked about wealth management. We've talked about iShares and as well as Alpha Pursuit and retirement planning. My last question for you is, what do you think advisors, clients, investors are not thinking about, but perhaps should be? What important topics? It could be an asset, it could be a geography, it could be a policy or data point. What do you think's getting overlooked, but just shouldn't?
51:49 Speaker 05 I think taxes is still not being discussed enough. Taxes as a concept. I mean, there is so much value you can bring as an advisor to your client by just having that conversation, asking the question. So I would encourage everyone to do that. That is such a way to build loyalty, trust, and deepen relationship. And by the way, your client starts to tell you where they have assets elsewhere. The other area I would say is just really thinking about the future growth drivers of our economy. So infrastructure, AI. We didn't talk about AI, but the
52:20 Barry Ritholtz? It's gonna be another
52:21 Speaker 05 Another thing, it might turn into something, right?
52:23 Barry Ritholtz? Right, gonna be big one day, exactly.
52:25 Speaker 05 But you know, you think about some of these future growth drivers, infrastructure is part of, you know, why we acquired GIP, but we have iShare solutions that really align with infrastructure as well. And I just think that's such an under-discussed opportunity.
52:39 Barry Ritholtz? Really interesting. All right, I only have you for a few more minutes, so let's jump to our favorite questions that we ask all our guests. Starting with, tell us about your mentors who helped shape your career.
52:50 Speaker 05 Oh, so this is such a good question and hard question. I will answer it this way. There are so many. I love to have a board of directors approach. Like, I have this whole crew of people that I go to for different things. And I truly like, you know, you mentioned Saleem Ramji, he's one of them. Martin Small, Rob Goldstein, Rob Capito, Mark Weedman. Like, there's so many. Anne Ackerly, who used to run the retirement business at BlackRock. And they've all played a different role in my career and in my life.
53:19 Barry Ritholtz? Really, really interesting. Let's talk books. What are some of your favorites? What are you reading right now?
53:24 Speaker 05 Llama, llama, red pajama.
53:27 Barry Ritholtz? To your kids at night?
53:28 Speaker 05 I have a four-year-old. He loves llama llama, so any llama llama you can imagine. But actually, I just finished a great book for the second time, A More Beautiful Question. Warren Burger. It talks about the art of inquiry and using inquiry to, I mean, gosh, the heart of any innovation. Why does the world not have this? What if the world did have this? How do we get the world to have this? And so it really talks about the art of inquiry as a way to better understand, to fuel curiosity, and to innovate and create better solutions.
54:03 Barry Ritholtz? I love that name. I'm gonna have to check that out. Let's talk streaming. What are you watching or listening to these days? Netflix, Amazon, podcasts? Tell us what's keeping you entertained.
54:13 Speaker 05 So I have this Barbell approach. I go, I love reality TV.
54:18 Barry Ritholtz? Oh, really?
54:19 Speaker 05 Below Deck. Do you watch Below Deck?
54:21 Barry Ritholtz? No, but I know plenty of people who do.
54:22 Speaker 05 So good. But that's kind of one side of it. The other side of it is I like intensity. So like Mayor of Kingstown, I'm watching Terminal List, Dark Wolf right now. I think that's on Amazon. It is very good. Basically...
54:38 Barry Ritholtz? Chris Pratt?
54:39 Speaker 05 Yes, Navy SEAL term CIA operative.
54:42 Barry Ritholtz? Very interesting, right? We just finished Killing Eve.
54:46 Speaker 05 Oh, I haven't started yet.
54:48 Barry Ritholtz? My wife watched it, loved it, and said, "You have to watch this." And she rewatched it with me. If you like that sort of high-intensity espionage, really great cast, really a strong recommend. So, our final two questions. What sort of advice would you give to a recent college grad interested in a career in retirement services, wealth management, investing? How would you advise them?
55:14 Speaker 05 So I go back to my way, my entry into this industry. I didn't know the first thing about anything. I didn't think I wanted to be in this industry. But I went in with open eyes and I asked a lot of questions. And in some ways, it was like, because I didn't have the experience, it made it easier for me to be just like an everyday person that we were trying to serve. And so I say, "Come into this industry. You don't need a traditional background. In fact, I prefer people not to have a traditional background of finance or econ. Come into this industry and help us make it better."
55:43 Barry Ritholtz? Love that. And our final question. What do you know about the world of wealth management, retirement services, investing today? Would have been useful 25 years or so ago when you were first getting started.
55:56 Speaker 05 I was really fortunate to have my father tell me that the first thing I needed to do when I got a job was start saving in an IRA and in my 401k. And even when it hurt to do, I did it. I wish I had known back then that I could have been saving in many different ways. I could have been investing in many different ways. And so, you know, to anyone who's out there thinking about, are they saving enough or investing enough? The answer is probably no, and you should do more. And there's so many ways to do it. You can use a financial advisor. You can go direct. You can do it in many different ways. But just do it. Just start. That's something I would have done.
56:30 Barry Ritholtz? Huh. Really, really good advice. Thank you, Jamie, for being so generous with your time. We have been speaking with Jamie Majara. She's head of BlackRock's U.S. Wealth Advisory Service, as well as head of BlackRock's Retirement Business. If you enjoy this conversation, well, be sure and check out any of the previous 550 we've done over the past 11 years. You can find those at iTunes, Spotify, YouTube, Bloomberg, wherever you find your favorite podcasts. And be sure and check out my new book, How Not to Invest: The Ideas, Numbers, and Behavior That Destroys Wealth and How to Avoid Them. How not to invest at your
57:14 Barry Ritholtz? favorite bookstore. I would be remiss if I did not thank the crack team that helps put these conversations together. Meredith Frank is my audio engineer. My producers are Anna Luke and Alexis Noriega. Sage Baumann is the head of podcasts at Bloomberg. Sean Russo is my researcher. I'm Barry Ritholtz. You've been listening to Masters in Business on Bloomberg Radio.
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