Oct 21, 2024 · 1h 3m · capital-allocators
Brad Briner - Family Office to Public Service (EP.413)
Brad Briner · 38m spoken Ted Seides · 13m spoken AI Co-host 1 (NotebookLM) · 1m spoken AI Co-host 2 (NotebookLM) · 38s spoken
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of Capital Allocators, host Ted Seides interviews Brad Briner, former Co-CIO of Willett Advisors and candidate for North Carolina State Treasurer, exploring institutional asset allocation, family office operations, and Briner's strategic plan to overhaul North Carolina's underperforming $120 billion pension fund.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Ted holds 24.7% of the talking time here. How this is scored →
Ted as informed peer 4.9 Guest teaching 2.4 Guest disagreement 0.4 Ted pushing back 0.2
speaking balance: gold is Ted, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 44:45 Critique of overly conservative pension management
Brad forcefully rejects the conventional local premise that holding fixed income was safe, arguing that buying one percent treasuries against six and a half percent hurdles guarantees slow bankruptcy.
Hardest push from Ted ▶ 49:30 Host pushes on dismantling the sole fiduciary modelTed challenges Brad on why he would actively seek to surrender absolute decision-making power that allocators usually desire.
Biggest teaching moment ▶ 44:50 Educating on pension math and driving analogiesBrad educates Ted and the audience on actuarial rate deficits and uses the analogy of a driver driving too slowly on a highway to reframe risk.
Ted holds their own ▶ 49:30 Host framing structural bottlenecks in public pensionsTed demonstrates his deep understanding of public pension governance friction by directly challenging the wisdom of moving to committee-based governance.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Ted as informed peer | Guest teaching | Guest disagreement | Ted pushing back | Why |
|---|---|---|---|---|---|---|
| Google NotebookLM Demonstration on Private Equity Deals Book | 0 | 0 | 0 | 0 | This segment is an AI audio generation demonstration from Google NotebookLM summarizing Ted's book. Because it is a generated recording and promotional clip, neither host dynamic nor guest combativeness applies. | |
| Reflections on AI Content and Transition to Brad Briner | 4 | 1 | 0 | 0 | Ted introduces Brad Briner and prompts him on his origins in investing. Brad shares personal anecdotes about his family and starting out at the UNC endowment. | |
| Endowment Management Evolution and Move to Morgan Creek | 5 | 2 | 0 | 0 | Ted and Brad discuss the evolution of endowment management in the late nineties. Brad explains how orphan asset classes like real estate fell into his lap because of Texas roots. | |
| Scaling Morgan Creek and Managing OCIO Client Dynamics | 5 | 2 | 1 | 0 | Brad explains the shift from running an endowment to an OCIO model at Morgan Creek. He highlights the friction of moving from pure investing to spending eighty percent of time managing client demands. | |
| Transition to Willett Advisors and Managing Real Assets | 5 | 2 | 0 | 0 | Brad details the post-GFC consolidation pressures that led him to join Willett Advisors to oversee real assets under Mike Bloomberg's family office structure. | |
| Executing Willett's Real Asset Strategy and Secondary Deals | 5 | 3 | 0 | 0 | Brad explains how Willett gained an edge in secondary markets by exploiting forced sellers and leveraging scale and speed. | |
| Decision-Making Dynamics and Executive Candor at Willett | 4 | 2 | 0 | 0 | Ted asks about the governance structure at Willett, and Brad details how Steve Rattner and Alice Ruth fostered candor and rapid decision-making. | |
| Economic Alignment and Structuring Co-Investments | 6 | 3 | 1 | 1 | Ted probes into co-investment mechanics and team alignment. Brad details the balance of personal coinvestment rules and structuring deals with emerging managers. | |
| Promoting Collaboration and Managing the Credit Factor | 6 | 3 | 0 | 0 | Brad outlines how Willett dismantled silo mentalities to share information cross-asset and quickly mobilized across categories when interest rates created credit opportunities in 2022. | |
| Sponsor Message: Ridgeline Cloud Platform for Asset Managers | 6 | 3 | 1 | 0 | Following the mid-roll break, Ted and Brad discuss the merits of active versus passive public market management and how excess business holding rules influence private direct scaling. | |
| Chief Investment Officer Leadership, Technology, and Market Lags | 5 | 3 | 0 | 0 | Brad discusses the CIO role as primarily managerial and strategic, noting the importance of recognizing market lag inefficiencies ahead of other institutions. | |
| Decision to Pursue Public Service in North Carolina | 5 | 2 | 0 | 0 | Brad explains his motivation for leaving Willett to run for North Carolina State Treasurer, citing a desire to apply his skills to public service in a mismanaged system. | |
| Diagnosing Underperformance in North Carolina Pension Fund | 6 | 4 | 2 | 0 | Brad breaks down the strategic failure of the NC pension fund, explaining how buying 1% treasuries against a 6.5% actuarial hurdle caused dead-last performance across fifty states. | |
| Asset Allocation Strategy and Alternative Investment Plans | 7 | 4 | 2 | 2 | Ted questions why Brad would dismantle the sole fiduciary model when he would hold that exact power. Brad illustrates the risk of concentrated power using historical pension context. | |
| Post-Election Roadmap: Team Building and Legislative Reform | 5 | 2 | 0 | 0 | Brad outlines his post-election roadmap, detailing steps to evaluate existing staff, pursue legislative governance reform, and rebuild the alternative investment program. | |
| Recruiting Investment Talent to a Public Pension Fund | 5 | 2 | 0 | 0 | Brad explains how the turnaround challenge attracts mission-driven investment talent and discusses his campaign strategy to inform voters. |
Statements from this episode (28)
Briner: Aspiring investors should skip banking and start directly in investing
“He said, well, it turns out the number one reason that people should study Latin was to be better at English. But you know what's even better to learn English? Studying English. So if you want to be an investor in the long run, why don't you go be an investor?”
Briner: Late 1990s endowments were passive retirement posts for alumni
“Many endowments at that time were essentially where alumni went to retire after a successful career, and they put in some stocks and some bonds, and they didn't really do a whole lot, and so that profession was evolving massively at the time, in part the tech …”
Briner: Early endowments heavily backed hedge funds shorting 2001 tech crash
“Many of the endowments were invested heavily in hedge funds that shorted the tech rec in 2001.”
Briner: Scaling an OCIO flips daily time to 80% client relations
“What changes is when you add many more clients and then all of a sudden your day goes from 80% investing, 20% clients to 20% investing, 80% clients. And now you're in the asset management business.”
Briner: A la carte funds left Morgan Creek exposed in 2008
“It's very tempting. And some firms have pulled that off. Well, I would say it is a material change in your mission to become a purveyor of asset class fund to funds versus an OCIO. And it's hard to do without a lot of people. Doing a lot of different things. W…”
Briner: Scale was the only way to survive post-GFC fee pressure
“The fee pressure, justifiably, given that no one really distinguished themselves during the GFC, was intense. So the only way to deal with intense fee structure is to get to scale.”
Briner: Secondaries work best when sellers liquidate under non-fundamental pressure
“It's always good setup when you know more than the seller about the assets and when the seller has to do so for the wrong reasons.”
Briner: Interpersonal networking beats brand names for winning deal allocations
“Some firms are able to Sell their capital with their brand name, but most it's interpersonal relationships and going out there and meeting people at conferences and networking and showing up to board meetings and things like that is the best way to sell that c…”
Briner: Availability and candor are the essential traits for investment approvers
“And those are the two most essential characteristics, in my view, for people who approve investments, is availability and candor.”
Briner: Team co-investment is an essential alignment tool, not a conflict
“I always find it interesting that people view it as a conflict of interest for the investment team to invest alongside whoever's capital you're investing. Structured correctly, I think that should be essential. You want people to have more than just their psyc…”
Briner: Willett vetted emerging managers via single-deal co-investments before committing
“We would often do a deal alongside a manager before we'd invest in their fund, set up an economic structure, That allowed us the optionality to not go in the fund if we didn't like what we saw. So the economics would stand on their own and then they would fade…”
Briner: Scaled investment committees devolve into performative reporting sessions
“These investment committees do become performative at a certain scale, where it's really just, this is already a done deal, and we're just telling you about it.”
Briner: Willett Advisors entirely avoided credit until 2022 interest rate hikes
“Credit was the biggest of all of those from a factor perspective that really changed. We had never bought credit before. It wasn't really in our mandate. Will is a high risk, high return investor, equity oriented, perpetual life, all those things.”
Briner admits staying largely active in developed public equities was a mistake
“And so we kept going down that road with largely active. And I think that's proven to be a mistake over time.”
Briner: Passive investing relies on a feckless FTC ignoring mega-cap tech
“If you're going to be passive, I think you must argue that the FTC is feckless, which they have been. If you're going to be active, then you probably argue that they are going to get it right this time, or get it different this time, at least. It kind of boils…”
Briner: A CIO’s daily role is largely operational, not just investing
“It's largely not an investment job. I think people kind of know that, but I'd take it maybe a degree further. There are many functions that make an investment organization work well, and they are all important. Some of them are important because if you step on…”
Briner: First lien private credit yields compressed from 12% to 9%
“Private credit by early twenty-twenty-three, a lot of people were talking about it, but not a lot of people were doing things about it. By early twenty-twenty-four, they had. But you had a full year where you could deploy at 11, 12% First lien in new buyouts, …”
Briner: Forced ESG divestments pushed energy secondaries to 20 cents
“Energy secondaries were on sale. Some of them are trading at 20, 25 cents on the dollar because the owners don't care. They must get rid of them, and there are not many natural buyers of them.”
Briner: North Carolina's state finances are consistently and irrationally managed
“In part because it's so irrationally managed, and I'm fascinated by consistent irrational behavior. I always want to understand it and have it explained to me, and the truth is, it's never been explained to me for North Carolina.”
Briner: Overly conservative pension strategies destroy wealth through inflation
“When you are wealthy, which our state is, you can manage your investments very, very conservatively if you want. But what you see in history when people do that, they essentially lose their wealth because they are not keeping up. So in fact, a successful inves…”
Briner: North Carolina pension holds a massive 52% fixed income allocation
“It's roughly 48% in aggregate equity exposure, including some private equity, but mostly public equity, and 52% investment grade fixed income. There's some other pieces in that, but largely investment grade fixed income. There's about seven and a half percent …”
Briner aims to deploy $10B of North Carolina pension cash into credit
“I think we'll start with it's about ten billion dollars of cash right now. Finding places to deploy that in the single B, double B, or mortgage credit spaces where we can make six and a half, seven, and begin to build that portfolio aggressively as we think th…”
Briner: Pensions shouldn't expand PE because top managers don't prioritize them
“This plan's got plenty of capacity to do more private equity. To be honest, I can't figure out why we would. In part, you got to recognize who you are. Pension plans are not at the top of the wishlist for really successful investors generally.”
Briner: Only Connecticut, New York, and North Carolina retain sole fiduciaries
“47 other states have gone away from this model. The three that are left are Connecticut, New York, and North Carolina.”
Briner: Sole fiduciary pension models only work if run by Warren Buffett
“Yes, there's more bureaucracy, but without Warren Buffett in the sole fiduciary chair for a hundred years, it probably makes sense to go away from it.”
Briner plans to restart North Carolina's frozen alternative investment program in 2025
“We'll also begin resuscitating the alternative investment program. So they have been out of the market essentially for a long time. There are things we can do there. It'll be slow because we're not just going to turn on the tap full speed, but we're going to a…”
Briner: North Carolina's state pension ranks 50th out of 50 in performance
“We are 50th best performing out of 50, and so there's a lot of desire to help fix that and move it up the curve that is really appealing to certain people.”
Briner: Moving your own goalposts traps you on unintended career paths
“Don't move your own goalposts. And it goes a little bit back to the power plant story earlier. So many people find themselves on a path, and they don't really mean to be on that path. It's just because it's easy, and if they had talked to their younger self an…”