The Exchanges

Q So there's less, less sort of your personal investing philosophy, more what have you seen that you think are factors of success from the CIOs that you've interviewed?

A There's a number of things. I would say, I would almost coach them a lot of times as critiques. We all know that the, one of the major advantages is being long-term. That is, in some cases, the only advantage an institutional investor has. So, the best ones focus on that. You know, Britt Harris has always said that's, like, his key advantage. Like, I'm a long-term investor, I can wait you out. The sad fact is a lot of allocators say that, but don't mean it. They say that, but their staff compensation is all short-term. You can't actually be a long-term investor if every single person making a decision is compensated on a twelve-month cycle. And so, some of the best investors, I think, of New Zealand Super, Is really trying to change that equation, figure out a way. They're never going to be able to compensate their staff on a 30 year horizon, but can they compensate them on a three or four or five year horizon?

AI assessment note: “one of the major advantages is being long-term... You know, Britt Harris has always said”

Q Right. And what does a well-structured piece look like?

A There's different formats. We try to start every major long-form piece scene setting. You don't want to start a story at the beginning. If anyone listening reads, they'll get what I'm saying. If I'm writing this story of Ray Dalio's life, I know it fairly well, because I've read the book, and I've written many things on him. I don't start the book saying, Ray Dalio was born on Lying Island to the son of a jazz singer, and then he went to college. That's sort of chronological. It doesn't work. So you'd say, what is the Ray Dalio, the biggest win he ever had? Let's say he just called the markets right. Let's start last year. December Markets are crumbling. Bridgewater has, has bets on that will benefit from that. How you'd start that piece, and I'm just making this up, is on December 22nd in Westport, Connecticut, a group of five individuals sat at a table. Like, Ray Dalio sat at the head of the table, talking about principle number 48. That's it. You set the scene, and then you move back. Then you take a step back. Ray Dalio was born on Long Island to the son of a jazz musician. And so it's about those hooks that the point is always to make it more painful for the reader to leave than to stay. They just have to read that next section to figure out what's going on. That is the key, whether you're writing a feature for institutional investor, feature for the New Yorker, and I thin…

AI assessment note: “You set the scene, and then you move back. Then you take a step back.”

Q asset and wealth management firms moving to Ridgeline gain a decided advantage. That's why customers call it miraculous, game-changing, and an awakening. If that's not how you would describe your investment management tech, request a demo at ridgeline.ai. And now, back to the show. What are you seeing on the promotional PR side, not the crisis management, in the use of the gem pro-techs of the world by asset managers?

A As that one group is getting meaner, I think the gen Prozacs and generally the Brunswick's of the world and others are actually getting better. They're getting people who understand the industry more. They're getting better at working with us collaboratively, understanding what our needs are. They're giving us access to people that perhaps didn't have access before. A classic example is Bridgewater, and Prozac has reped Bridgewater for a while. They've been wonderful. When we want to speak to people at Bridgewater, whether it's a big name, or whether it's a subject matter expert, they're getting us access, and I think that Bridgewater has really bought into the idea that this is a good thing. We will sometimes be at odds. There will be calls between myself and Prozac that, They don't love, but there's a real respect there and a proactiveness about it. That's a big change in my time here. Another thing for us, well, these firms do research. A lot of them are as much academics as traders, and we like having research to write about. If it's a valid study about allocator behavior, we want to write about it. If it's coming from academia, that's great. But AQR puts out a bunch of great research, and so the PR people are often the middleman saying, hey, AQR is this wonderful piece of research. Do you want the first crack at it? And we'll always say yes. And so I think that it's a sele…

AI assessment note: “I think the gen Prozacs and generally the Brunswick's of the world and others are actually getting better.”

Q So for the people that are throwing events, maybe for their own annual meeting or whatever it might be, what makes an engaging piece of content at events? Because we've all gone to them, and most of them, you're excited to go, and you walk away going, eh,

A I agree with you. Most events are garbage. And it's my job to make the event as high caliber as possible. And so we use those same principles that I've been talking about on stage. So next week I'm doing a Q and A with George Walker, Neuberger Berman. As I design out that Q and A, I will think about those exact same things. I already have the access. He's on stage with me. He can't go anywhere. The thing is to get disclosure. In this case, it ties into conflict. I want him to be brutally honest about what he sees as a trajectory of asset management. The role of consultants. The demands being made on his firm by asset allocators. I want for him to paint a holistic picture and not just say things that are in Neuberger Berman's interest. And so that's a clear example, but that is the case for every panel or anything we put on stage. We don't want people to be able to Google it because we want it to be set on stage first. When we write the Titles and summaries of those panels. We're using the same principles that we use online, because we're online, you're competing with the 18 other tabs open. At a conference, I'm competing with their phones. Everyone's addicted to their phone. They want to go in the lobby and check their email. The best panel we did all year, and it's not a coincidence, it was a young man named Dan Rasmussen, Dan Rasmussen wrote the most popular article on I.I. a…

AI assessment note: “The thing is to get disclosure. In this case, it ties into conflict.”

Q I'm on the edge of my chair here. What are those tools?

A They're not specific to finance. But the same principles apply, and I sort of steal them from the people who are better at my job than I am. I'm Graydon Carter, who was the editor of Vanity Fair for around 25 years. Vanity Fair sometimes gets thrown around as like a flippant magazine because there's always a star on the cover. But some of the best journalism produced in the last 25 years was coming out of Vanity Fair. Hidden behind the star or starlet is a great piece by Bill Cullen about Hedge funds. So Gregan Carter said there's four things that make a great story. The first is access. You need to get access to people that your competitors aren't. At Institutional Investor, I benefit from those editors that came before me so much, because they built such a good brand that I, I, we can credibly call up anyone in this industry, or more likely nowadays, and this is a whole other vein of topic, they're PR people, and they will respond because of what my predecessors did. They did a great job building a brand, so when we want to do videos with Henry Kravis or Ray Dalio, It's really just a scheduling thing, which is phenomenal. You know, that is unusual. The second is what Graydon Carter would call disclosure. I would call revelation. They have to tell you something they're not telling someone else. I'll use this example. It's sometimes hard interviewing folks like Ray Dalio or Ste…

AI assessment note: “Gregan Carter said there's four things that make a great story. The first is access.”

Q I want to touch on maybe a lesser conflict, but you mentioned the increased use of PR firms. And from an allocator's perspective, there's this constant conflict of you want a manager who you like managing your capital, but maybe not too much capital. How have the asset managers used PR firms historically, and how is that changing?

A This is oversimplifying. There's two types of PR firms. There are firms that are there to actively get a positive story out, so using Gen Prozac. Gen has built a business largely on firms that want to engage with the broader world in a positive, helpful way. Gen does a lot of the work for them, and they have a lot of tools, and that's been a long-standing thing. There's crisis PR. Asset management, like every other industry, has bad actors, has bad events, sometimes intentional, sometimes just, you know, we screwed up, and oftentimes there is another layer of people who come in and are crisis PR. Those are the people that are screaming on the phone. I fear that that is becoming more common, and I can use an example here, because this actually made me very angry, all usernames, And we wrote about this, so it's not like I'm, I'm not giving you a revelation here. We were writing a story about MIO, the internal fund tied to McKinsey. It's a lot of retirement money and partners capital. A consulting firm that also does like advising of distressed companies. There are some inherent conflicts there. And we're not the only ones who covered this, the Wall Street Journal and the New York Times covered it very well as well. But we have, obviously, this is right in our wheelhouse. This is, that money is being allocated to asset managers. And so we had a freelancer dig into it. And you star…

AI assessment note: “There's two types of PR firms... There's crisis PR... I fear that that is becoming more common”

Q You know, we mentioned Bridgewater a couple times, AQR a couple times. Does it tend to be the largest firms or the ones that put the resources into that and then get your attention?

A Generally, yes. I think there's a, almost a linear relationship there. Having watched these firms for a while, I've always been surprised that more asset managers don't invest more in the client service and distribution side of their business. Asset managers are 99 times out of a hundred started by investors, right? That's just the way it is, and it's the way it should be. But as they get bigger, and they realize that inevitably, they will not always be good. They will never have bad years. And you talk to allocators, and the worst thing these firms can do is clamp up and not talk. The firms that over-communicate during crises are the ones that have the sticky assets. And so because they are Able to invest in the client service function and have people dedicated to this role. I think those are the firms that have the sticky money because in the inevitable periods of down performance, they can be hugely communicative to their clients. They can be value add in other areas beyond pure alpha. One of my now good friends, Ted Noon in Acadian, he calls it relationship alpha. That's how he thinks about it. He's that he runs some distribution there, and I thought that was a beautiful way of putting it. There is investment alpha, but people and asset managers should not discount the relationship alpha involved in this business. These are people, right? Chris Ailman wants someone to talk …

AI assessment note: “Generally, yes. I think there's a, almost a linear relationship there.”

Q Before we switch over to some closing questions, we have to talk about this conferences. This is conferences are the engine of your business. I was kind of blown away when I asked you, how many of these conferences do you do a year? So why don't you give the kind of high level of that part of the business as well?

A I mentioned we have two million US readers. So, 99.9% of the people who are aware of Institutional Investor think of us as a media brand, and we are a media brand, but if you are a bean counter, we are an events business. They're not public, so I can't give actual numbers, but events started early on. Diana Alfano, our current CEO, was really the driving force starting in the eighties to build these events into what they are now. I think It's fair to say that Diane revolutionized the way events are done in this space. I had the pleasure of running a series of events for us, but I am a steward of those events. I'm not the creator. And they are behemoths. It's a good extension of the media brand. The media brand at its best captures the attention of the 10 or 15,000 odd allocators who matter in America. It's probably 15,000 individuals who are really decision makers at the asset allocators. We take that attention and we monetize that attention by serving ads against it. That's a low margin business. If you can get those same people in a room and then be the one to also bring asset managers, investment consultants, bring the ecosystem together, that is a very powerful business that Diane and her team built over the years. And so we do around a hundred events all over the world. We have events here in the U S of course, but we have in Canada, Australia, Asia, Europe. And the model …

AI assessment note: “And so we do around a hundred events all over the world.”

Q So what, can you talk a little bit about how you ranked these CIOs and, and there's a hundred different people. And if it makes a difference to someone, whether they're 46 or 41, you have to be a little bit bigger. So what were the criteria you used?

A So we, every year we formalized it more. And I think it really Hit its stride, and it's still the way I think about things in this industry, that we came up with five criteria that equaled power, and this was, ah, a lot of help from the recruiters. I think, you know, there's some very big, powerful recruiters here. I think Deb Brown, David Barrett, Jane Marcus, people like that really have been helpful in formulating the thinking. But we said, what's power? You know, power is innovation. Power is collaboration. Power is team development. Power is tenure and fund size. So tenure and fund size, you can't, they're objective, right? David Swenson runs thirty billion dollars and has been there for 30 years. Then we sort of weighted them. Innovation and collaboration were the, were the most weighted. Innovation being, David Swenson is a 30 out of 30. He changed the game. Collaboration, he did alright, in a sense because his people spread out throughout the universe. Seth Alexander, Andy Golden. Randy Kim. Paula Valen. People all over the world. You could go on. I'm Rob Wallace. All these people are Swenson protégés, and they're collaborating with each other still. At least, theoretically, they are following the same system. But Swenson doesn't actually do a ton of outreach to other ENFs. So we got, we got a little dinged there. And then team building, he's a, again, a 20 out of 20 be…

AI assessment note: “Power is innovation. Power is collaboration. Power is team development. Power is tenure and fund size.”

Q What, what book that you've read in the last stretch of time has been sort of most Influential or most interesting?

A This is the easiest. I'm obsessed with Robert Caro's Biography of Lyndon Johnson. As I said, I'm Canadian. I don't think, I don't think I knew who Lyndon Johnson was when I showed up to go to college in the States. And then eight years ago, someone handed me a book called The Power Broker. It's about Robert Moses, the man who built New York. And I liked it a lot. It was nerding out, but I knew that Robert Carroll, the author, had, um, written another series on Lyndon Johnson, and I want you to know why. Why would he, to me, he seemed like a minor president. He wasn't JFK. He wasn't Ronald Reagan. So I started reading it, and so the total book is like 4000 pages at this point. It's not done yet. It's over almost 35 years old since he started, and I've read it multiple times. I've been to Johnson's Ranch a couple weeks ago. I was like a teenage girl meeting Taylor Swift. Outside our office, Robert Carroll was walking, and all I could do was stand there. I followed, I followed him for a little bit, because I was going to say something, and then I froze again, because I didn't know what I would say to him, and then he left. And I was so disappointed in myself, because he's my literary hero, and I couldn't, you know, couldn't talk to him. But no, LBJ is a fascinating character. And these books are amazing understanding of how power works, and that's, you know, it's influenced a lot …

AI assessment note: “I'm obsessed with Robert Caro's Biography of Lyndon Johnson.”

Q So what are your favorite ones to hate?

A Well, the, the all-time king is solutions. That, absolutely meaningless term now. And it's been meaningless for five years. And I've had good enough friends that there was an asset manager in Boston who I went and I think I had a drink with him. He goes, I go, he goes, I have some bad news. I said, what? He goes, my title has turned to, like, director of solutions. And I said, you gotta get that change, because it means nothing. It sounds like marketing, and, because it is marketing so often. There are, I would say, there are people who truly provide solutions. I think of a NISA investment advisors who are just, you know, along now with legal in general, really own the liability-driven investing space in America. Jess Yawitz is a, an, almost a mythical figure to the corporate funds, and he deserves to be because he really changed that game. He's truly giving them a solution.

AI assessment note: “Well, the, the all-time king is solutions. That, absolutely meaningless term now.”

Q So given that we don't have those tools today, what have you learned from these conversations with the CMOs about sort of best practices of what works?

A There's no consensus. They produce a lot of different types of content, everything from academic-based thought leadership. You think of what AQR does, right? To the daily observations from Bridgewater, to what PGM is doing, which is very impressive on a larger scale of getting marketing pieces on, let's say, fixed income out there. But there doesn't seem to be any consensus on what works, and so what has been the most interesting conversations for me, perhaps not as interesting for them, I don't know, is that trying to tell them what we're learning, what has resonated with our audience, what are the tools we use to turn a story from something that's going to get A thousand views into something that's going to get 10,000 views, and more importantly, something that's going to get read for 30 seconds versus something that's going to get read for 30 minutes. And so I've spoken to a number of groups about CMOs about that, and I think that's been an interesting discussion about how we can both take from each other, because in the larger scale, my job as editor of I.I., and their job is not all that different. They are trying to engage the world's most prominent institutional investors via various mechanisms, whether it's written word or video. I'm trying to do the same thing, engage those same people. Now, marketers have to take it a step further. They have to then turn that into som…

AI assessment note: “There's no consensus. They produce a lot of different types of content”

Q And so what did you figure out? Because I'm, I'm sitting here doing these interviews trying to figure out that same question, right? How do you make Material that might otherwise be dry, interesting, entertaining to people. So what'd you find out about the people involved as you went through and met more and more of them?

A So in terms of just like purely making content or journalism interesting, I'm a voracious reader of other people's journalism, and there's great journalists out there not in the financial space, and you can take a lot of their formats and apply it here. So many people write Business journalism boring. And our view at Institutional Investor now is that it doesn't have to be. You just have to put an interesting twist on what you're doing. So the first major cover story that we really got our hands on here at Institutional Investor, Leanna Orr, who has joined II as well, and been my longtime deputy, who basically said, like, I think one of us was flying through LaGuardia, and we said, man, this sucks. And so I said, while we write an article called Why America's Airports Suck, And talk about, and talk about, you know, how institutional capital, which is actually in place now, is really solving this problem, because the American government system doesn't want to foot the whole bill for LaGuardia rebuild. So my understanding is that 80% of the capital into that refurbishment is private capital, is our core audience. And so we took an idea that, like, could be read by your mother. She's had a horrible flight experience as well, but applied it to our audience. So I like to say I've never really had a A novel idea in my life. I'm just taking stuff that I see in New Yorker, in the Atlan…

AI assessment note: “You just have to put an interesting twist on what you're doing.”

Q As you've looked more and more at the data of Who's reading what they're reading? You mentioned it earlier that the good news is the more thoughtful long form gets read more. What other trends have you seen in the data?

A Original research. We call them sort of the sleeper hits. Amy White is our research editor. Amy, like Leanna, worked with me at CIO magazine and joined us here. There's a lot of academic work. Done on asset management. There's a lot of academics embedded in asset management, which is a story we're writing right now. There's all kind of things to explore there. But there is a wealth of research around investing behavior, all this stuff. And so we are always looking for something that doesn't take a huge investment of time or money that really pays off with our audience. And that kind of stuff is gold. I think that asset managers are realizing this and producing more of it, because we're a medium for distribution for that research. They should just be sending that right to their clients. It should be a benefit of being a client of asset manager X to get access to proprietary research about it. So those things we love. They're real sleeper hits. Stuff that doesn't do well for us is, I would say, the stuff that P&I does pretty well. We can get some scoops on people moves when people in the industry pass away. We can get those. We don't really search them out because P&I has a larger team of journalists and does that very well. So the Newswire stuff is not our gig. It's just not worth it for us.

AI assessment note: “Original research. We call them sort of the sleeper hits.”

Q When we started talking about this shift, we also started talking about this question that asset managers have of how do they either use Medium, or how do they communicate with their clients differently? And I know you've spent a fair amount of time thinking about this and would love to hear your thoughts.

A Yeah, so part of my remit outside of running the media brand and being the editor is I run a, we call it an institute, it's a chief marketer institute, and so we have the CMOs or heads of institutional marketing come, and we put on a conference for them to talk to each other about their challenges, so I can help them because I sit on the opposite side of that often, but also I get to hear their conversations, and there's still a lot of Learning to happen in that world. There are some people in the marketing department's asset management that are very smart, but still, they're still struggling with some of the tools they've been given. There's always that cultural element that marketing within asset management organizations can be viewed as a secondary function, sort of a base level support function. And so one of the things I get from them and talking to a lot of people is there's actually still a lot of frustration, not as much as there was when everything was done via print. But still, they rarely can get person-level data on who's reading what. The holy grail for an asset manager, let's take Bridgewater as an example, and I don't have actually much insight into their marketing side of it. The holy grail for Bridgewater is they send out the daily observations every day, their morning bible of this industry, and they know exactly how long Chris Aylman has read it, Where he sto…

AI assessment note: “they rarely can get person-level data on who's reading what”

Q Alright, let's touch on this last one, conflict. So as you are writing a piece for your investors, for prospects, how does that concept of conflict come into what makes a piece that that audience will be attracted to?

A You can't manufacture it. And when I say those first three are in every story we try to do. The fourth is not always there. Conflict starts with the pitch, right? We get pitches from our own staff and from our external freelancers. And I'll use an example. It's a controversial one. And one that has caused us a fair amount of pain. And that to this day we stand behind entirely because there's never been one error found with the story. And it's a story of UC Regents and Jagdeep Basher. I've had numerous meals at Jagdeep. I very much respect Jagdeep. I think he's one of the most charismatic people I've met in this industry. We know a lot of people who worked for him. Leanna Orr, who is the deputy editor alongside Amanda Cantrell, this was around a year and a half ago, came to me and said, I'm hearing some stuff about disgruntled employees. And my view is, check it out. You gotta go and you have to do the legwork. And so there's that kernel during the pitch of conflict. There might be something there, but you need to go and make sure it's real, partially because, as I said, we want it to be real, partially because people have lawyers, and we need to be able to back this up in a court of law. And so that took, I believe, three trips out west by Leanna as the story develops about getting people on the record. You know, this is not a problem for asset managers, right? They, By definit…

AI assessment note: “You can't manufacture it. And when I say those first three are in every story”

Q Why don't we start with what most people knew IEI for the print publication, which has gone away. Why don't you talk about that strategic decision, how you got there?

A It was not an easy process. I.I. was founded in April of 67 by Gil Kaplan. It was started as a print magazine, quickly went into the events business, and the research business. Today is the day that the All-American Research Team was released for the 48th time. And so there's these things that I was known for, and the print magazine was one of them, partially because it was really first to market. In the sixties. And you saw at that point, not just in finance, but New York Magazine was made a month later. Rolling Stone was made within days of II. There was an explosion of like cheaper printing and ambitious young people who came out in all these industries and made these publications. And II was a publication. There weren't that many editors. One of the first editors was Adam Smith. Guy named Jerry Goodman, who wrote under the pen name Adam Smith, was really the first one to get to know and profile Warren Buffett. You had some great editors over the years, right up to my predecessor, Michael Peltz. These are people who care deeply about this publication, and were really good at telling the stories that needed to be told. But over that time, the internet was invented, and I think no one at I.I. would say we managed that transition wonderfully. I don't think anyone else managed that transition wonderfully. Media was notoriously slow to change that. Some people really did well wit…

AI assessment note: “We look at the financials and printing a magazine for a 100,000 readers”

Q different models of asset allocation? So you have this sort of, Yale model is one example, asset classes, people think of it as less liquid, that's a whole separate debate. You have now the factor premium models, Jim Dunn's model at Verger is more about factors than specifically assets. Are there other frameworks that you've seen that you think make a lot of sense that might be less well known?

A No, the factor thing, Is obviously big right now. I'm a big cynic, so I'm always wondering, is that being overplayed? Is this just the next silver bullet that's going to get people, and I put silver bullet in air quotes, that's going to get people through the next three or four years until the next idea comes around? Um, I'm not a great judge of whether it makes sense or not. It intellectually makes sense to me, but we need to wait a while to see if it actually works, and you know, you can't eat factors. And eventually you need to get the returns to pay the bills. And so I'm eagerly awaiting a time when we can be certain that this works for allocators and not just on a leading edge, right? The first people doing something are often going to have a good, a good experience or maybe a bad experience too, but whether it can work for a few institutions versus all institutions is a different question. And David Swenson would say the same thing. He's often said, you guys think you're doing what we're doing, and you're not, and you know more about this than me, but his argument is, don't try and do what I do, because you don't have the size, you don't have the track record where managers want to work with you, and it's not him being eutistical, it's him being factual. You know, asset managers would love seed capital from Yale, and we're willing to give up a lot to get it, because of wh…

AI assessment note: “No, the factor thing, Is obviously big right now. I'm a big cynic”