This week, I speak with Mike Pyle, Deputy Head of BlackRock’s Portfolio Management Group (PMG) and a member of BlackRock’s Global Executive Committee.

We discuss the durable economic shocks that could result from the war with Iran, including energy security. We also discuss his time in the Biden administration as Deputy National Security Advisor for International Economics.

A list of his current reading is here; A transcript of our conversation is available here Tuesday.

You can stream and download our full conversation, including any podcast extras, on Apple Podcasts, Spotify, YouTube (video), YouTube (audio), and Bloomberg.

Be sure to check out our Masters in Business next week with Philippe Bouchaud, co‑founder, chair & head of research/chief scientist at Capital Fund Management (CFM) The $20 billion dollar fiorm specializes in managed futures). He beghan his career in theoretical physics, was awarded the IBM young scientist prize (1990) + C.N.R.S. Silver Medal (1996), and has published over 300 scientific papers and several books in physics & finance.

Current Reading

The post MiB: Mike Pyle, BlackRock’s Portfolio Management Group appeared first on The Big Picture.

Also in industry news this week:

• New research suggests that while the percentage of newly widowed women who leave their financial advisors is significantly lower than previously assumed, attrition amongst this group is still three times as much as other clients
• A new income tax on high earners in Washington state has some residents considering a move and demonstrates the impermanence of state tax policy for the broader group of clients considering where to live today or in retirement

From there, we have several articles on retirement planning:

• How incorporating available rates on Treasury Inflation-Protected Securities (TIPS) into advisors' analyses of Social Security claiming strategies can lead to more accurate "breakeven ages"
• At a time when staffing at the Social Security Administration is strained, advisors can encourage their clients to take several steps to ensure they receive their benefits on time
• How the availability of six-month 'reversible' delays in claiming Social Security could make certain clients more comfortable with pushing out the age they claim benefits

We also have a number of articles on investment planning:

• How the design of certain value and growth index funds leave investors holding stocks with poor prospects for future returns
• While investors are used to comparing expense ratios for (active) ETFs, bid-ask spreads can also vary widely and affect the total cost of an investment
• Why growing one's pool of capital and using it to support favored causes directly could be more effective than seeking out investment funds that (attempt to) exclude disfavored companies or industries

We wrap up with three final articles, all about smartphone use:

• Two strategies that can help individuals who have previously struggled to reduce time spent on their smartphones
• Why smartphones might be better characterized as "displacement machines" for more meaningful activities rather than as a "poison" that should be avoided altogether
• Lessons learned by a group of college students who underwent a week-long smartphone 'fast' and how they can apply to working professionals as well

Enjoy the 'light' reading!

Read More...

Books

• Five insights from "How to Disagree Better" by Julia Minson. (nextbigideaclub.com)
• Five insights from "Hard Feelings: Finding the Wisdom in Our Darkest Emotions" by Daniel Smith. (nextbigideaclub.com)

Companies

• Is Disney ($DIS) now just milking the theme parks? (readtrung.com)
• How Airbnb ($ABNB) came to create a category. (fiscal.ai)
• The story of Chipotle ($CMG). (quartr.com)

Bitcoin

• The search for the inventor of Bitcoin lands on a new candidate. (nytimes.com)
• Then again, does it really matter any more? (ft.com)

Longreads

• Willy Staley, "With so much of our world being so rapidly reshaped for such stupid reasons, it’s hard not to feel as if we’re living in one of the canonical A.I. doom scenarios without even noticing it." (nytimes.com)
• Hungary's economy under Orban is a story of corruption and decline. (cato.org)
• Another example of how budget cuts are affecting science education. (statnews.com)
• The environmental history of offshore oil drilling isn't great. (newyorker.com)
• Is America really seeing a religious revival? What the numbers actually say. (derekthompson.org)
• How the British experienced the Revolutionary War. (smithsonianmag.com)
• Life lessons learned from abandoned storage units. (nytimes.com)

Fund management

• Diversification is a shock absorber for Blackrock ($BLK). (wsj.com)
• Asset management is going to look very different in ten years. (philbak.substack.com)

Prediction markets

• Joe Weisenthal and Tracy Alloway talk with Thomas Peterffy, founder and Chairman of Interactive Brokers ($IBKR), about prediction markets. (podcasts.apple.com)
• Eric Balchunas and Joel Weber talk with Matt Hougan, CIO of Bitwise, about how prediction market ETFs would work. (podcasts.apple.com)

TBPN

• Why OpenAI bought TBPN. (npr.org)
• The TBPN deal has unleashed more podcast acquisition talk. (theankler.com)

GLP-1s

• Where the GLP-1 market stands. (sherwood.news)
• Novo Nordisk ($NVO) is launching a high dose Wegovy. (wsj.com)
• Eli Lilly's ($LLY) GLP-1 pill, Foundayo, is easier to take. (biopharmadive.com)
• GLP-1 drugs have been found to improve symptoms of arthritis, even without weight loss. (refractor.io)
• An experiment with microdosing GLP-1s to treat disease. (jodiettenberg.com)

Global

• Where does the U.S. stand vs. before the Iran war? (danieldrezner.substack.com)
• America's allies have no idea how to deal with an erratic leader. (wsj.com)
• The Swiss love their public referendum. (ft.com)

Economy

• Still no meaningful pickup in weekly initial unemployment claims. (bonddad.blogspot.com)
• The Fed is facing a tough environment. (carsongroup.com)
• Is falling labor share driving corporate profitability? (klementoninvesting.substack.com)

Earlier on Abnormal Returns

• Longform links: inverting our lives. (abnormalreturns.com)
• What you missed in our Wednesday linkfest. (abnormalreturns.com)
• Personal finance links: increased tax complexity. (abnormalreturns.com)
• Don't miss a thing! Sign up for our daily e-mail newsletter. (abnormalreturns.com)

Mixed media

• Americans overwhelmingly agree that the wealthy are not paying their fair share of taxes. (pewresearch.org)
• It's hard to argue the American aviation system is getting safer. (giftarticle.ft.com)
• The fertility rate in the U.S. continues to decline. (wsj.com)

Markets

• TIPS are trading at historically high levels. (wsj.com)
• Momentum has outperformed since the start of the Iran war. (capitalspectator.com)
• Roundhill Memory ETF ($DRAM) is off to a fast start. (etf.com)

Companies

• What Greg Abel, the new CEO of Berkshire Hathaway ($BRK.A) can learn from Tim Cook. (kingswell.io)
• What 1000-year old companies can teach us about resilience. (bigthink.com)
• Why Dr. Bronner sales are booming. (wsj.com)

SpaceX

• Of course Elon Musk wants to merge SpaceX with Tesla ($TSLA). (barrons.com)
• This aspect of a SpaceX IPO is notable, and worrying. (ft.com)

Finance

• How private credit's problems redound on private equity. (axios.com)
• Stocks backed by this company all tend to go down, a lot. (ft.com)

Prediction markets

• Google ($GOOGL) is now featuring Polymarket odds. (futurism.com)
• A lot more athletes have invested in Kalshi. (frontofficesports.com)

Social media

• Twitter downgrades external links. (niemanlab.org)
• Max Tani and Ben Smith talk with Bluesky COO Rose Wang. (semafor.com)
• Why can't billionaires just stay off Twitter? (wsj.com)

Iran

• What's getting through the Strait of Hormuz? (axios.com)
• What the Gulf states have learned about American power. (paulkrugman.substack.com)
• Who is going to pay Hormuz tolls? (wsj.com)
• Helium is hard to replace. (construction-physics.com)

Economy

• March CPI showed a 3.3% annual increase. (bonddad.blogspot.com)
• Derek Thompson talks with Roge Karma about the labor market for new college graduates. (podcasts.apple.com)
• These measures of consumer sentiment are in the crapper. (axios.com)

Earlier on Abnormal Returns

• What you may have missed in our Thursday linkfest. (abnormalreturns.com)
• Longform links: inverting our lives. (abnormalreturns.com)
• Don't miss a thing! Sign up for our daily e-mail newsletter. (abnormalreturns.com)

Mixed media

• Why does the media feel compelled to unmask anonymous artists? (om.co)
• In a world of AI slop you can't fake up close up magic. (nytimes.com)
• Why you should always carry a book with you. (ryanholiday.net)
• How 'zombie flow' took over our lives. (derekthompson.org)

“Apple: The First 50 Years”

1. To tell you the truth, I finished this book almost a week ago, and I forgot most of what I wanted to say about it. Primarily the business insights.

Not that I don’t remember the facts. Not that I haven’t internalized the messages.

In any event, this book is not for casual fans, casual readers. If you came to the Mac after Steve Jobs returned or later, you probably won’t get far in this tome. But if you were there at the beginning…

I was not. At the very beginning. Because it was all about the Apple II.

And that lore is repeated here, the creation of the Apple I, the Apple II team’s frustration that it was considered a second class citizen whilst generating all the profits, keeping the company alive well into the Macintosh era.

But I came in in 1986. With the Mac Plus…

The original Mac was close to unusable, it only had 128kb of RAM…

Now let me see… This machine I’m running has 48 GIGS of RAM. 128kb was infinitesimal. Months later came the Fat Mac, with 512kb, but the Mac Plus had a gig of RAM. However you still had to swap floppies. The screen was still small and black and white. But if you bought in, it was a religion. Like being a fan of your favorite band, but deeper. Maybe because you were there early, you were intrigued, and you knew these machines would change the world.

Computers were not rare in 1986, but most of them were PCs…which really didn’t have an effective Windows interface until 1995. In other words, they were not very usable. They were business tools.

But what really blew up computing was AOL. Didn’t matter what platform you were on, they all worked with AOL…and people ran out and bought computers just to play.

But that was almost thirty years ago. Do today’s generations, many birthed in this century, know this?

No, just like we couldn’t fathom the introduction of television in our parents’ era.

Anyway, I had no allegiance to Apple. All I knew was I wanted to start a newsletter and needed a computer to do so. And it didn’t take much research to find out I needed a Mac, with PageMaker, and a LaserWriter.

This was a different era, not quite the hobbyist era, but the machines were not foolproof, unlike your iPad and iPhone. Not only did they crash, they might not reboot. The Mac wasn’t truly user-friendly for everybody until the introduction of Mac OS X, based on Unix with the Mach kernel.

Not that you need to know that, not that today you need to know how your car runs. But for almost all of my life, you had to have a rudimentary knowledge of how your automobile functioned, because it would break! Computers were even worse, although they rarely physically broke, they just stopped working.

And you had to figure out why.

That’s right, there was no Genius Bar, really very little tech help at all. You had to sit in front of the computer and figure out what was wrong, and it could take you hours…I found it nearly impossible to fall asleep until I’d solved the problem, gotten my computer back on the right track.

Needless to say, those are not these days.

2 So forty years ago…

Not only was there no internet, techies were considered nerds, geeks, they were not respected by the hoi polloi, who were infatuated by MTV. But once you got bitten…

I used to say it was like having a math problem on my desk. Only there was no test, I wasn’t graded, but when I figured it out the level of satisfaction…

And what the Macintosh could do, and what the PC could not!

So if you were around in those days, you’ll be intrigued, you will be riveted, because Pogue brings it all back. The system updates, which you had to go to the store at first to get. The step by step innovation. The dark years and then the renaissance.

Now this is not the first time this territory has been covered, but it has never been covered so well, because David Pogue is one of our own, he’s not only writing about the Mac, he LIVED the Mac!

The best books ever about the Mac and Mac products were authored by Pogue, and I used to buy the “Missing Manual”s and read them cover to cover. You’d be stunned how powerful these machines are, most only use a tiny faction of their ability.

And the software too.

I read all the manuals, also from cover to cover.

Do you know if you double-click the top of your window, it will shrink it down to the dock? I could list tons of tips, but most are not used and not cared about. It’s almost an insider’s game. But…

Those early days, do you remember Conflict Catcher?

All the breakthroughs and bumps in the road are catalogued by Pogue. In an upfront, breezy style. He makes Walter Isaacson’s Steve Jobs look like the doorstep it is. Content is secondary to readability, and Pogue is very readable. And as much as he knows to leave in, he’s not afraid of leaving a bit out. It’s a book. Made to be read from start to finish. If you do so, you’ll know Apple’s history.

But how many people need to know this?

3

Apple was the little engine that could. The true breakthrough was the iPod.

But before that, during Jobs’s hejira with NeXT…

The problem with Sculley was he was a marketer, of a completely different product. Pepsi could sit on the shelves for a while. Computers lost value every day they were held in inventory.

Also, Sculley was a publicity hog, who wrote a book and liked being perceived as a visionary, even though he was not. We see this story again and again, do not believe the hype. Which is easy to garner. Can you say “Theranos”? No, the true people to admire are those who are doing the work, whose names are out there, but oftentimes say no to press, it slows them down, never mind that the press always gets it wrong, ALWAYS! Because unlike Pogue, most writers are not familiar with the territory.

Was Jobs a terror?

Yes.

And he was milder when he came back.

But he had a vision, and he didn’t believe in consumer research. He was about the bleeding edge. A lot of this has been documented, which is why the second half of the book is less interesting.

As for Tim Cook and the players in power today…

Yes, the petty wars are delineated, but the real point is they are not superstars, they are not visionaries, those only come along once in a while.

Like a classic musician, Jobs is focused on getting it right, in a world where everybody is taught to compromise to get along, where no one wants to stand out, upset the apple cart. Jobs focuses on product, believing the rest will take care of itself.

And prior to his return and their replacement, those who sat on the board saw Apple as a traditional business. They wanted to sell it, before it cratered, before Jobs came back and reinvigorated it.

Now I remember one of the lessons I wanted to impart… Don’t underestimate expertise. We see this all the time in the music business, since you don’t need a degree to be in it, no one has any respect for those who work in it. Average citizens believe they can find talent, they can do ticketing. But again and again outsiders fail, because the expertise cannot be quantified, it is built over time, it’s something you feel, it’s something innate. Even as simple as picking the hits. I’d say at least ninety percent of what people e-mail me, saying it’s great and deserves further attention, does not. I’m not saying they can’t like it, but they don’t have the seasoning and the vision to know what will spread to the public.

But it’s not only in music, in politics people have contempt for expertise. There’s this belief everybody can do everything. Then why did it take Steve Jobs to come up with the iPod and iPhone?

Breaking rules all the while. Getting rid of legacy ports on computers, getting rid of the physical keyboard on the iPhone. People are attached to the past, and if you’re busy serving them you’re going to be left behind. Jobs knew the iPhone was going to destroy the iPod, but rather than keep the music player alive, Jobs insisted on pushing the envelope, he was not willing to rest on his laurels, giving competitors a window to leapfrog Apple.

Hell, me-too is everywhere. When was the last time you heard a successful record that was truly surprising, completely different? Labels don’t sign those acts anymore, it’s too heavy a lift. They want it easy. Just like the movie studios, whose lunch was eaten by Netflix. Let me see… You raise the prices, you make fewer movies in obvious genres and then you complain that the theatre experience is dying? Believe me, people will show up for something unique and different. Then again, something might have to percolate in the marketplace for a while to catch on, but these flicks play in theatres for a minute and are then available on TV, which is a better experience.

User experience. That was Jobs’s main focus. But in most avenues of life, this is denied. Purveyors are trying to whittle down and control human behavior, keep it in the past, which is a fool’s errand.

4

The press is all over Apple’s 50th.

But it’s kind of like a lifetime achievement award… Once you get that, you’re usually done.

I get a new iPhone every year. But recently, the changes have been miniscule, almost irrelevant.

Apple is making a ton of money on services, and maybe the days of hardware breakthroughs are done, then again, the days of tech wowing us died over a decade ago, now tech is the enemy.

But the story of going from Motorola to Intel to in-house chips… Once again, the company is always thinking about the future, whereas in entertainment, everybody seems to be constantly blind-sided. Kind of like George Bush and 9-11. Who could envision they’d fly planes into buildings?

Then again, entertainment executives are all about lifestyle, accumulating and displaying. The company is something to milk.

Oh, I just remembered another thing that struck me… This happened again and again, but foremost with the original Macintosh team.

Yes, Jobs asked for the theoretically unachievable, which they always delivered, but once the Mac was released…most of the members of the team were so burned out, they couldn’t work for months, if ever at this level again. Most left Apple. None set the world on fire once again. They’d been to the mountaintop, they’d experienced the ride and the rewards, they just weren’t up for doing it again, like a hit act that cannot create hits anymore.

There are a lot of lessons in Pogue’s book. Not that he bats you over the head with them. But almost no one is going to read this book. They might buy it, but the average punter just doesn’t care about the minutiae of tech, the history of creation. Kind of like cars. You may love Mercedes-Benz, Ferrari, but how many people want to go back seventy or a hundred years and hear about the arguments and decisions regarding what kind of engines and suspensions to use, the failures…

However, the thing about Apple is unlike any single car brand, unlike any musician, period, the company’s products and services touch a broad swath of the public. Sure, Android might be bigger internationally, but all the innovation is on the iPhone first, which has over fifty percent market share in the U.S.

And now with the MacBook Neo, Macs are no longer expensive. The last hurdle has been eliminated, you can enter the cult on the cheap.

And once you do…

You get locked in.

And the love for Apple sustains. This is not a musical act or TV show that ultimately peters out. We expect Apple to continue to deliver, to lead us into the future.

Did it miss AI?

I’m not even gonna get into it. Could be their philosophy of licensing turns out to be the best.

But one thing is for sure, Apple is not a one trick pony. So many use their products and they think they know what goes on inside the gold mine. In truth they don’t. And, in truth, they don’t really care that much, they have no need to know.

But if you do…

P.S. Don’t buy the e-book unless you’re going to read it on an iPad… There are numerous color photos.

~~~

Visit the archive:   http://lefsetz.com/wordpress/

@Lefsetz  http://www.twitter.com/lefsetz
–
If you would like to subscribe to the LefsetzLetter

~~~

Originally published by Bob Lefsetz at the Leftsetz Letter

The post David Pogue’s Apple Book appeared first on The Big Picture.

The post How Wealthfront Helps Lower Your Taxes appeared first on Wealthfront Blog.

Podcasts

• Morgan Housel on how spend your money without spoiling your kids. (podcasts.apple.com)
• Christine Benz and Amy Arnott talk with Wade Pfau about the benefit of higher rates for retirees. (morningstar.com)
• Peter Lazaroff about what you need to know about Trump Accounts. (podcasts.apple.com)

Housing

• America's housing stock is rapidly aging. (wsj.com)
• Why VA mortgage foreclosure rates are soaring. (npr.org)
• How the Augusta Rule works. (moneychangeseverything.substack.com)

Accounts

• On the pros and cons of 529 plans. (wsj.com)
• BNY and Robinhood are set to launch Trump Accounts this summer. (semafor.com)

Passwords

• Couples need a plan for their passwords. (readthejointaccount.com)
• How to use a password manager. (obliviousinvestor.com)

Wealth

• The ranks of the super rich are growing and gaining more political power. (awealthofcommonsense.com)
• Why it is so difficult to jump out of the upper middle class: expectations. (ofdollarsanddata.com)

Personal finance

• How to get better at spending money. (moneytalksmatter.com)
• How donor-advised funds work. (wsj.com)
• The nature of financial advice has changed over the years from portfolio management to holistic advice. (ritholtz.com)
• Tax complexity only goes in one direction in the U.S. (yourbrainonmoney.substack.com)
• The Social Security Administration's customer service is in decline. (morningstar.com)
• How to reframe things. (dariusforoux.com)

Markets

• Some highlights from Q1 returns including a big move in energy stocks. (novelinvestor.com)
• Most investors come up with a theory and then look for evidence. (chartkidmatt.com)
• Pictures of the moon are quite a contrast to the mess here on Earth. (howardlindzon.com)

Finance

• Can AI be used to do audits? (wsj.com)
• Why the definition of a swap matters. (dopaminemarkets.com)
• The Morgan Stanley Bitcoin Trust ($MSBT) is now live. (wealthmanagement.com)

IPOs

• How different index providers are planning to deal with mega IPOs like SpaceX. (morningstar.com)
• Looser inclusion rules will stick index investors with the bag. (acadian-asset.com)
• How private markets will get reshuffled after the big three go public. (morningstar.com)
• When will SpaceX and Tesla ($TSLA) merge? (wsj.com)

Claude Mythos

• Why Anthropic is holding back the release of Claude Mythos. (nytimes.com)
• AI can now break, and fix stuff, at scale. (spyglass.org)
• Why spending will now shift to hardening systems. (tomtunguz.com)
• Are future AI model releases going to get gated? (axios.com)

Apple

• All the companies Apple ($AAPL) has outlasted. (asymco.com)
• How a PC user became a Mac user for life. (spyglass.org)

Economy

• The resilience of the American economy is impressive. (awealthofcommonsense.com)
• The labor participation rate is falling. (wsj.com)

Earlier on Abnormal Returns

• Personal finance links: increased tax complexity. (abnormalreturns.com)
• What you missed in our Tuesday linkfest. (abnormalreturns.com)
• Research links: the economics of financial economics. (abnormalreturns.com)
• Don't miss a thing! Sign up for our daily e-mail newsletter. (abnormalreturns.com)

Mixed media

• What Ukraine can teach us about the future of naval warfare. (wsj.com)
• How Ukraine is disrupting Russian oil infrastructure. (nytimes.com)
• What the U.S. needs to learn from Ukraine. (cbsnews.com)

At The Money: Seeking Uncorrelated Returns (April 8, 2026)

Managed Futures generate returns that are not correlated with stocks or bonds. Investors who are looking for greater diversification can do so through ETFS that own futures on commodities, currencies, and interest rates.

Full transcript below.

~~~

About this week’s guest:

Andrew Beer is a hedge fund veteran and founder of Dynamic Beta Investments, a firm focused on hedge-fund replication strategies delivered through low-cost, liquid vehicles like ETFs and mutual funds. His ETF, DBi Managed Futures Strategy (DBMF) attempts to replicate pricier managed futures portfolios

For more info, see:

Firm website

Masters in Business

LinkedIn

~~~

Find all of the previous At the Money episodes here, and in the MiB feed on Apple Podcasts, YouTube, Spotify, and Bloomberg. And find the entire musical playlist of all the songs I have used on At the Money on Spotify

At the Money with Barry Ritholtz
Guest: Andrew Beer, Founder of Dynamic Beta Investments April 8, 2026

TRANSCRIPT:

Barry Ritholtz: Lots of asset classes, promise uncorrelated returns, but very few deliver. One that does is managed futures. Sure they’re expensive and the trading is somewhat spiky. But when all correlations go to one, meaning everything is trading in lockstep, like we saw during the financial crisis or the first couple of months of COVID, managed futures seem to be the rare diversifier that works.

Barry Ritholtz: To help us unpack how to get additional diversification in your portfolio, let’s bring in Andrew Beer. He’s a hedge fund veteran and founder of Dynamic Beta Investments, a firm focused on hedge fund replication strategies delivered through low cost liquid vehicles like ETFs and mutual funds. His ETF DBI managed Future Strategy tries to replicate the premier managed futures portfolio. So Andrew, start us out with just the elevator pitch.

Barry Ritholtz: What problem does DBI manage future strategy — and that’s ETF, ticker DBMF — what does that solve for the traditional 60/40 investor?

Andrew Beer: Sure. So first of all, thank you very much for having me on. So diversification has changed a lot this decade. In the 2000s and 2010s, you really didn’t need anything other than stocks and bonds, but things have changed. You know, since inflation started to come back, stocks have tended to move up and down with bonds and did not protect in 2022.

Andrew Beer: And so what you see across the wealth management space is basically saying 60/40 worked for a long time, but now we need something else. And what is that something else? It’s generally something that has a low correlation to, ideally to both stocks and bonds and can also deliver positive performance when you need it the most. And so we looked — we were looking around for something like that about 10 years ago and we zeroed in on this space.

Andrew Beer: It’s a niche area of the overall hedge fund business, but it’s been around for 50 years. It’s battle tested through all sorts of market environments and you find something that actually meets those criteria — did well during the dot-com crisis, did well during the GFC, and then after we’d invested it, you know, it was up 20% during 2022. And from our perspective, it’s like, that’s great if you’re an institutional allocator, but how do we get the great benefits of this strategy and package it in a way that, you know, my sister or my cousin or something can put into their portfolios as well.

Barry Ritholtz: Really, really interesting. So since 2022, the asset class we’ve all been probably hearing the most about has been private credit, private debt, private equity. Hey, it’s a great diversifier — to be blunt.

Barry Ritholtz: I get the sense that debt and credit are gonna move if we have a recession, if markets sell off 20, 30%. Is there any reason to think that sort of diversifier is not gonna do the same thing?

Andrew Beer: So what’s interesting about it — there’s been a lot of debate about how these guys happen to make money during these big moments in the markets where it feels like nothing is working. And it’s funny because people talk about — sometimes people use a term called trend following or momentum associated with a strategy. To me, it’s totally wrong. When the strategy generates those kinds of returns, it’s because they’re early, contrarian, and right in a big way.

Andrew Beer: And so if you think about it, if somebody came to you and said, here’s a strategy — here was a person who had been buying gold below 3000, who was betting on rising interest rates as far back as September 2020, who saw in advance the rise in the dollar relative to the Japanese yen — these kind of big trades out there because the world is changing in some way. That’s what the strategy has historically been able to pick up on. And so I believe that structurally we are likely to see more of those things over the next several years. And this is one of those strategies that has proven its ability to reposition, to take advantage of those big changes in the world.

Barry Ritholtz: Really, really interesting. So you mentioned trend or momentum — define managed futures without Wall Street jargon. What does DBMF actually mean by exposure to trend?

Andrew Beer: Okay, so I’ll start with the definition of the strategy overall, which is basically what I mentioned — they’re trying to detect big changes in the world. The way I think about that as a hedge fund person is that somebody knows something — that the world is changing — and they’re acting on it with buying or selling different asset classes. Like if the world is changing in a big way, people tend to act on it with their portfolios. And so managed futures as a strategy will often look at lots and lots and lots of the price moves across lots and lots of different markets to pick up these kernels of information that something big is changing.

Andrew Beer: So if you take last year where our core strategy was up 14%, it was in part by being early in the fact that — the run at hot rate — it was continuing to have a long position in gold when gold went through its melt up. And so outside of — I think a lot of people in this space like to talk about how the sausage is made. Our view is actually what’s much more interesting for the end investor and for allocators is how does this actually help you and why should somebody looking at this in their portfolio be glad that it’s there?

Barry Ritholtz: Makes a lot of sense. I guess one of the things that make this space so interesting is, yeah, it’s a good diversifier, but most traditional investors don’t really pay attention to it. You’ve called managed futures the best diversifier no one buys.

Barry Ritholtz: Explain why that is.

Andrew Beer: Well, I’m convincing people — I’m changing hearts and minds one at a time. So a lot of the people in this space love to talk about the technical aspects. The underlying strategies are very, very technical. They’re quantitative models looking at derivative contracts on sometimes hundreds of underlying instruments.

Andrew Beer: And so it’s a little bit like they love to talk shop with each other about what they’re doing. Part of our success as a business is I don’t come at it from that direction. I come at it from the perspective of why will this make my portfolio better? By which I mean help to grow assets and help me sleep at night.

Andrew Beer: And so if you look at it, I’m making progress. When I got into the ETF space — this is in 2019 — there was only about 300 million. There’s maybe close to 5 billion today. Wow.

Andrew Beer: And in part, we’ve been really driving that — that this is something that — and I think if you look five years out from now, you sit down with an advisor and they’ll say, hey, what’s that three or 5% position there? And they’ll say it’s managed futures. It’s one of these strategies. And you’ll say, well, what’s it there for?

Andrew Beer: And they’ll say, well, look, every now and then, the world changes a lot and we want a nimble, flexible strategy that can take advantage of it in the way that the other 97% of your portfolio is not likely to.

Barry Ritholtz: So let me revisit that information in a slightly different question. Whenever I’m speaking to clients or potential clients, the question is always: we have this problem, how do we solve for this? So really the question I want to ask you is, what problem in the traditional managed future space convinced you that a replication-based ETF like DBMF really needed to exist? What’s the problem you’re solving for the average ETF investor?

Andrew Beer: So I would start with the — actually I would first ask the broader question. What problem are we solving for people in their portfolios, right? The modern wealth management business, just like the institutional investment business, just like 60/40 portfolios, is based upon two fundamental ideas. One is diversification is a net positive, and two is have long-term views for your asset allocation models and don’t change them often.

Andrew Beer: It’s the latter part. And that has a generation of investors has not gotten head faked by liberation day and all these moves in the market because they’ve been trained: don’t panic and don’t overreact. And that works 80% of the time.

Barry Ritholtz: 80% isn’t bad, by the way.

Andrew Beer: 80% isn’t bad. Right. And which is why that should be 95% of your portfolio. 20% of the time the world changes. And by design they will be slow to adapt.

Andrew Beer: So where are we right now? Right? The US dollar is getting debased in some fashion, right? There is this potential loss of confidence in US assets at a time where everyone is massively overexposed to US assets that could play out over five or seven years.

Andrew Beer: But most allocators will not change until the horses have left the barn, so to speak. And that’s what it’s trying to solve from a portfolio perspective. What we were trying to solve is, it’s a great strategy, it’s just too damn expensive the way people run it. And it’s not just what are their management fees and incentive fees, it’s also, they run these Rube Goldberg-like portfolios that trade every day, hundreds of times a day.

Andrew Beer: And when we looked at it, we said, look, we love the signal that they’re picking up on. But if we can do that in a simple portfolio that is much more liquid, we can save hundreds of basis points of implementation cost and take more of the value and pass it back to clients.

Barry Ritholtz: So let’s talk about that a little bit and use some real life examples. How does either DBMF or funds like it — in the period before DBMF was trading — how does it behave in periods like the dot-com implosion or the GFC or COVID?

Andrew Beer: Well, I would say, so COVID was — when the strategy does the best is when I say the world is changing, and COVID was a very strange thing. The world changed in three weeks basically, and so it’s not really designed for that kind of a flash move, but still it preserved capital as a strategy during March when things were getting hammered. Where it thrives is periods like 2022 — inflation’s coming back. And I’ll tell you a great story. I wrote a paper on inflation coming back in early 2021, and I was talking about it to people all year long. And I said, if inflation comes back — and Powell came out and said it’s probably not coming back, it’s transitory or something. But I get to December and I’m sitting down with a guy who says, I totally agree with you, I think inflation is coming back.

Andrew Beer: And I said, how are you rebalancing your portfolio? And he said, I’m selling my stocks and buying bonds — because he was benchmarked to 60/40 and stocks had gone up more than bonds. So I think it’s important as allocators to recognize that there are gonna be times like this when the standard playbook that we have from an asset allocation perspective is not designed to pick up on that. And here’s a strategy.

Andrew Beer: So the overall strategy in 2022, when stocks and bonds were both down 15 to 20%, the strategy went up 20% overall. And by being a bit more efficient, we went up a bit more than that.

Barry Ritholtz: Really kind of interesting. So let’s talk about the managed futures ETF. What markets does it trade?

Barry Ritholtz: What positions does it hold? Like I typically think when I hear trend following, I think Michael Covel’s trend following book, and I think primarily of commodities — if you’re watching gold or silver these days — but it’s a little more broad than that. Tell us the assets DBMF actually trades.

Andrew Beer: Yeah, so what is extraordinarily irritating to people in the industry is that we do much better than them with only 10 instruments. And the 10 instruments that we trade are the biggest, most obvious instruments. So S&P 500 — this is all futures contracts, by the way.

Barry Ritholtz: Right. So the index, not individual stocks.

Andrew Beer: Exactly. So S&P 500, non-US developed markets, emerging markets for equities — that’s it. In fixed income, the second asset class is fixed income: two year, 10 year, 30 year Treasuries. In commodities, we only trade gold and oil.

Barry Ritholtz: Gold and oil. The assumption is other precious metals will track gold. Right. And oil is its own thing.

Barry Ritholtz: No agricultural products.

Andrew Beer: We don’t, because the markets — we don’t think — in other words, just the last category is in currencies. It’s the euro and the yen.

Barry Ritholtz: Yen, but not the dollar. Well —

Andrew Beer: Against the dollar.

Barry Ritholtz: I gotcha. All right.

Andrew Beer: So —

Barry Ritholtz: Always relative with currency.

Andrew Beer: Yeah. And so look, what our research showed early on is that — it’s like what’s the political expression? It’s the economy, stupid. It’s the big trade, stupid. In 2022, to be up 20%, you want to be long crude oil in February, you want to be short the yen when it goes from 110 to 160, and you want to be short Treasuries when interest rates go up.

Andrew Beer: And a lot of the narrative in the space, as you say, is exactly that. You know, like look at copper moves, look at the spike in copper, the palladium or other things. It sounds good if you’re an institutional investor who cares about this stuff, but it doesn’t — it’s not big enough to make an impact on the P&L. And so our research is very powerful and it basically showed that if these guys make 10, in theory as a hedge fund investor, you’re likely to get five. I can give you 10 with a simpler and much more efficient portfolio and give you eight or nine and put it into an ETF where you can see every single position every single day.

Andrew Beer: So the basic idea is I wanted to show that we could beat hedge funds at their own game, but do it in an ETF, which no one had ever done before.

Barry Ritholtz: So you don’t have the drag of two and twenty, the cost structure is a little less — or a whole lot less. Maybe it’s about what the typical ETF is. So this has turned out to be a very successful product. DBMF is now the largest managed futures ETF.

Barry Ritholtz: Couple of questions. At what point do you begin to run into capacity constraints for the strategy? Do you have any issues with liquidity or slippage or even market impact? Like how big can this get?

Andrew Beer: It was designed to get as big as we needed to get, really. Because of the instruments that we’re trading, these are the deepest and most liquid instruments that are traded globally. And we trade everything in the US, and so our market impact is essentially zero.

Andrew Beer: I came from — I had started a commodity business — and one of the things that I think people have overlooked is complexity often has a real cost. It sounds great to say I’m trading some esoteric market someplace. When things go bad, like in the week after liberation day, the people who are trading those markets are waiting to see your order come in.

Andrew Beer: That’s right. You are making their year on the days. And so look, I come from a school that simple, efficient is gonna win most of the time. And what we’ve shown is we can beat some of the most sophisticated hedge funds in the world with this by three or 400 basis points a year through efficiency.

Andrew Beer: But then I can also deliver it in something that my sister can own.

Barry Ritholtz: So to wrap up, people who are concerned about correlations just becoming one in any sort of crisis and want diversification should consider managed futures exposure. And the most efficient, least costly way to do that is through an ETF like DBMF, by Andrew Beer and DBI. I’m Barry Ritholtz, you’re listening to Bloomberg’s At the Money.

~~~

Find our entire music playlist for At the Money on Spotify.

The post At The Money: Seeking Uncorrelated Returns appeared first on The Big Picture.

In this guest post, Georgios Argyris, Research Director at bellavia.app, explains how even a small shift in retirement timing can change the market environment the retiree enters and, with it, the sustainability of the plan. The effect becomes clear when comparing otherwise identical retirees who begin withdrawals in different environments. Across the historical lifecycle cohorts examined, allowing for a two-year flexibility window produced a median gap of roughly two-thirds in final portfolio value between the best and worst timing choice within the window. Retiring at the originally planned date was optimal only about 15% of the time; in most cases where a different choice helped, delaying retirement produced a better outcome.

This result can be understood by separating retirement timing risk into two components: cohort risk, which reflects the overall return environment a retiree experiences, and pure sequence risk, which reflects the order of returns within that environment. Historical analysis suggests that roughly three-quarters of retirement outcome variability is driven by cohort risk, while only about one-quarter is attributable to return ordering within a cohort. This distinction matters because most traditional planning tools – including dynamic withdrawal strategies, guardrails, and allocation adjustments – operate only within a given cohort, therefore addressing only the smaller portion of risk. By contrast, adjusting the retirement date is one of the few levers that can shift a client into a different cohort altogether.

This framework also leads to a counterintuitive insight: clients who appear most prepared for retirement – often those with the largest portfolios after strong accumulation periods – may still face elevated timing risk. Strong bull markets can inflate retirement balances while leaving clients exposed to weaker forward returns. As a result, a large portfolio value at retirement might not, on its own, indicate that the timing is favorable. Advisors can partially assess this risk using valuation metrics such as the Shiller CAPE ratio, which has shown a relationship with subsequent decade-long returns and can help identify whether current conditions resemble historically unfavorable retirement environments.

Ultimately, the key point is that retirement timing may deserve a larger role in retirement planning than it is often given. Advisors may improve outcomes by first considering whether the retirement date itself should be adjusted, particularly when market conditions appear unfavorable. When timing flexibility is limited, reducing the initial withdrawal rate can provide a margin of safety, while dynamic spending strategies can help manage the remaining ordering risk. By recognizing retirement timing as a planning variable rather than simply a fixed assumption, advisors can better position clients to navigate uncertainty and support the sustainability of retirement income over time.

Read More...

Podcasts

• Michael Batnick talks with Stephen Caruso, Associate Director of Wealth Management at Cerulli Associates. (youtube.com)
• Brendan Frazier talks with Parul Somani, author of "The Path of Least Regret." (youtube.com)

Practice management

• More wealth managers are launching their own tax practices. (citywire.com)
• How to create evergeen content for your social media strategy. (kitces.com)
• Why midsize RIAs struggle to keep up with larger firms. (wealthmanagement.com)

Advisers

• The nature of financial advice has changed over the years from portfolio management to holistic advice. (ritholtz.com)
• Career changers bring a unique perspective to financial advice. (investmentnews.com)
• On the myth that 70% of widows fire their adviser. (thinkadvisor.com)
• How helping adult children financially can backfire. (advisorperspectives.com)
• A Q&A with Ben Carlson, author of "Risk & Reward: How to Handle Market Volatility and Build Long-term Wealth." (barrons.com)
• Are you a financial advisor? Every Friday we send a (free) advisor-focused newsletter. (newsletter.abnormalreturns.com)
• SSGA is getting into the custody business, again. (riabiz.com)
• When it makes sense to disclaim an inherited IRA. (wsj.com)

Fund management

• Blackrock ($BLK) is launching a competitor to the iShares Nasdaq 100 ETF ($QQQ). (wealthmanagement.com)
• Alternatives in 401(k) plans are a solution in search of a problem. (morningstar.com)

OpenAI

• A big profile of Sam Altman and his leadership of OpenAI. (newyorker.com)
• There seems to be some doubt internally whether OpenAI is ready to IPO. (wheresyoured.at)
• OpenAI published a policy paper on how to deal with the effects of AI on the economy. (axios.com)

Iran

• The Strait of Hormuz 'is not closed. It has been converted.' (theomission26.substack.com)
• The war in Iran has highlighted limits of U.S. power. (theatlantic.com)
• How the war is entrenching Iran's position. (nytimes.com)
• The war in Iran is a boon for China's renewable energy industries. (wapo.st)

Economy

• Gasoline prices are higher, but not historically high. (bonddad.blogspot.com)
• Companies are not acting as if they exepectan extended Iran war. (thetranscript.substack.com)
• Where manufacturing employment is growing (and shrinking) around the U.S. (agglomerations.eig.org)
• How energy disruptions are rippling out across the globe. (axios.com)

Earlier on Abnormal Returns

• Adviser links: convinced clients. (abnormalreturns.com)
• What you missed in our Sunday linkfest. (abnormalreturns.com)
• Top clicks last week on Abnormal Returns. (abnormalreturns.com)
• Don't miss a thing! Sign up for our daily e-mail newsletter. (abnormalreturns.com)

Mixed media

• NBA Europe is coming closer to fruition. (axios.com)
• Fixing the NBA's tanking problem isn't simple. (newyorker.com)
• Tanking isn't the NBA's only problem. (scottsumner.substack.com)

Round-ups

• A round-up of recent white papers including 'The Price of Having Fun.' (bpsandpieces.com)
• A round-up of recent academic research including 'Rethinking Trend Following: Optimal Regime-Dependent Allocation.' (alphainacademia.substack.com)

Society

• Some insights into the persistence of family wealth. (mailchi.mp)
• The U.S. is falling in different ranks of democracy and economic freedom. (abnormalreturns.com)

Research

• How does the carry factor work? (alphaarchitect.com)
• The VIX and economic policy uncertainty measure two different things. (rpc.cfainstitute.org)
• How risk comes to the junk bond market historically. (mailchi.mp)
• How face-to-face interactions matter when it comes to analyzing a company. (alphaarchitect.com)
• Kai Wu talks with Michael Mauboussin about why today’s AI expectations may be historically unmatched. (podcasts.apple.com)
• Is financial economics still economics? (marginalrevolution.com)

Strategy

• Recognize that you are not built to be a great investor. (humbledollar.com)
• The sell is as important as the buy. (klementoninvesting.substack.com)

Deals

• Bill Ackman wants to buy Universal Music Group ($UMG). (cnbc.com)
• Paramount's ($PSKY) bid for Warner Bros. is dependent on Gulf sovereign wealth funds. (wsj.com)
• Why aren't private equity firms doing more company IPOs? (pitchbook.com)
• The big banks are pushovers for Musk. (ft.com)

Private assets

• Josh Brown talks with Nick Nemeth⁠, writer of the Mispriced Assets blog, about the risks of private credit on insurance company balance sheets. (youtube.com)
• Opportunistic credit is gearing up to dig through distressed private credit. (fa-mag.com)

ETFs

• Leveraged ETFs are a double-edge sword. (optimisticallie.com)
• The new Roundhill Memory ETF ($DRAM) has a great ticker symbol. (etf.com)
• Now State Street ($STT) is jumping into the Nasdaq 100-tracking ETF game. (fa-mag.com)

AI

• AI is going to increase frictions, not reduce them. (educatedguesser.substack.com)
• PE is now pushing AI onto their portfolio companies. (wsj.com)
• Companies are asking what to do with all that AI-generated code? (nytimes.com)
• Some older workers see the AI writing on the wall. (wsj.com)

OpenAI

• It's evident OpenAI is nervous about public opinion. (arstechnica.com)
• OpenAI's purchase of TBPN really makes no sense. (garbageday.email)
• Alex Kantrowitz talks with OpenAI President Greg Brockman. (bigtechnology.com)

Prediction markets

• Why the definition of a 'swap' matters. (dopaminemarkets.com)
• Prediction market tax treatment is not locked down. (wired.com)
• How prediction markets are like the old bucket shops. (barrons.com)

Kalshi

• Fox Corp. ($FOX) is going to start integrating Kalshi data. (theblock.co)
• Kalshi picked up a legal win in New Jersey. (nypost.com)
• Kalshi's CEO thinks 'bad actors' on the platform will eventually be prosecuted. (axios.com)

Real estate

• Jamie Dimon and JP Morgan Chase ($JPM) love tall buildings - London edition. (ft.com)
• Downtown office buildings around the country are changing hands for cents on the dollar. (wsj.com)

Hungary

• MAGA is all-in on Orban's re-election. (axios.com)
• So is Russia. (nytimes.com)
• A look at how right wing influencers have taken over Elon-owned Twitter. (natesilver.net)

Earlier on Abnormal Returns

• Research links: the economics of financial economics. (abnormalreturns.com)
• What you missed in our Monday linkfest. (abnormalreturns.com)
• Adviser links: convinced clients. (abnormalreturns.com)
• Don't miss a thing! Sign up for our daily e-mail newsletter. (abnormalreturns.com)

Mixed media

• Howard Lindzon, "Building trust, capturing and growing attention are now the hardest it has ever been in this era of centralized search, LLMs and chatbots." (howardlindzon.com)
• Marketers are now advertising their no-slop tactics. (wsj.com)
• Sincerity is a contrarian strategy. (dariusforoux.com)

The transcript from this week’s MiB: Songyee Yoon, Principal Venture Partners, is below.

You can stream and download our full conversation, including azny podcast extras, on Apple Podcasts, Spotify, Bloomberg, YouTube (video), and YouTube (audio). All of our earlier podcasts on your favorite pod hosts can be found here.

~~~

Bloomberg Audio Studios, podcasts, radio News. This is Masters in Business with Barry Ritholtz on Bloomberg Radio.

[00:00:15]  Barry Ritholtz:  On the latest Masters in Business podcast, my conversation with Songyee Yoon. She is founder and managing partner at Principal Ventures, an AI-focused venture capital investment firm. She has a fascinating background — MIT Corporation Advisory Board, 50 Women to Watch in Business from the Wall Street Journal, named to the advisory board for the Center for Asia Pacific Policy, as well as the National Academy of Engineering of Korea. She has a fascinating background in gaming, telecom, and AI.

[00:00:56]  Barry Ritholtz:  I found this conversation to be fascinating and I think you will also. With no further ado, my discussion with Songyee Yoon. That is quite a CV I went through. Let’s roll back though to where it all began. You get a Bachelor’s in Science from Korea’s Advanced Institute of Science and Technology, and then a PhD in computational neuroscience from MIT. That’s such a fascinating area.

[00:01:27]  Barry Ritholtz:  What was the original career plan?

[00:01:31]  Songyee Yoon:  That’s a very good question. I mean, I think growing up in South Korea, I didn’t know what the career options were that I had. I just really enjoyed learning science and engineering subjects. So when I was young, I realized for some people, like singing is very natural. Some people dancing is natural. I cannot sing, I cannot dance, but speaking to computers and programming was very natural to me. So I started programming when I was nine, and that led me to major in electrical engineering as an undergrad at KAIST.

[00:02:18]  Songyee Yoon:  To be a better engineer, you need to understand how the human brain works. So for example, I was studying signal processing algorithms, and those algorithms look best to your eyes when it’s not necessarily mathematically the best, but takes into consideration what frequencies are most sensitive to human eyes. So understanding human brain and human perception will enable you to become a better engineer. That was kind of the exploration — what subject or major could I pursue to have a better understanding of both engineering and the human brain and perception.

[00:03:00]  Songyee Yoon:  That led me to study computational neuroscience at MIT.

[00:03:03]  Barry Ritholtz:  So computational neuroscience isn’t so much about using computers to understand people, as opposed to understanding neuroscience to create better software, better interfaces, better human interaction with technology. Is that fair?

[00:03:19]  Songyee Yoon:  That’s right. Exactly. Yeah, that’s right.

[00:03:21]  Barry Ritholtz:  Huh. So pretty fascinating — early in your career you’re at McKinsey for a few years, and then you eventually move into SK Telecom. Tell us your focus at both places.

[00:03:32]  Songyee Yoon:  Yeah, so I mean, I think after my PhD I wanted to go into the business world instead of staying in academia, and going to McKinsey was the best way to transition from being a PhD student to going into the real world. So it was a really fascinating experience — very fast-paced, able to work with big conglomerates and the leaders of businesses in the areas of strategy and corporate finance, et cetera. And SK was one of the firm’s clients, and I don’t want to date myself. It was a time that everyone was rushing into 3G rollout. If you remember —

[00:04:23]  Barry Ritholtz:  Oh, sure.

[00:04:24]  Songyee Yoon:  It was an interesting transition, just like we see today, because in 2G, telecommunication is all about voice communication, and 3G — what was promised — was data transmission, including videos and images and high-fidelity audio.

[00:04:41]  Barry Ritholtz:  If I’m remembering correctly, it was voice and text, and then it was image and some video. And then eventually, what was it — 4G or 5G — was full internet, right?

[00:04:52]  Songyee Yoon:  Right. Yeah, that’s right. So as telcos are one of the big CapEx investors in making that transition, we were thinking about how we could do content delivery in the most personalized way — because personalized content delivery was one of the challenges that requires artificial intelligence and a data-driven delivery system. So I thought that was an interesting challenge to take on. So I moved to SK Telecom to lead that effort.

[00:05:26]  Barry Ritholtz:  And then you end up at NCSoft where you’re president and chief strategy officer. I’m curious what those experiences taught you, not just about corporate governance and culture, but about these big institutions that tend to have legacy technology. There tends to be some group that really wants to move forward rapidly and adopt all the latest greatest tech, and then another group that says, hey, this is expensive — what’s the ROI? How did you find yourself navigating a big telecom like SK or a smaller, more nimble gaming company like NCSoft?

[00:06:09]  Songyee Yoon:  Yeah, I mean, that’s a really great question. I think it’s about learning to be persistent and resilient and patient in both places. I was criticized for suggesting something that was not the norm at the time. So for example, when I was at NCSoft, one of the things that was very obvious to me was that it was full of data. The gaming business was offered entirely in a digitized form — you have transaction data, you have behavior data of the gamers and everything. So it was possible to do a lot of things in a data-driven way, which — it’s a lot of companies doing it today, but back then it was not very common to have understanding in both gaming business and AI and data-driven business process modeling.

[00:06:41]  Songyee Yoon:  So when I suggested things like churn prediction — because you can see the customer player behavior within the game, see how much they’re engaged, and predict if that player is about to churn out or continue — and that some interventions could help them stay engaged. That was one application area I identified, which could be very straightforward, but I was told there was strong pushback from the developers and even the business people. They said, ‘Oh, you’re saying it because you don’t understand the gaming business.’ You’re not a heavy gamer enough, or whatever. But —

[00:07:48]  Barry Ritholtz:  But you understand: hey, it costs us this much to acquire a client or a gamer. And if we see this behavior, a high percentage of those folks are tapping out. What can we do to keep them in and paying monthly fees?

[00:08:01]  Songyee Yoon:  Right. Yeah, exactly. Yeah. So even with very clear data and the case presented, it was not an easy task to get everyone’s buy-in. But I think it gradually — the reason I mentioned that tangible example: it was a small, very tangible area where we could apply technology. And once you show success, gradually, one by one, we were able to adopt and integrate that into our business process, ending up with a large AI lab that does all of those things in a more centralized way.

[00:08:36]  Barry Ritholtz:  So what I’m hearing from you is a very systems-oriented framework, both for gaming and telecom, right? I know the big mobile companies in the US are constantly fighting their own churn rate. So having a top-down systems approach sounds like you could be really proactive in terms of maintaining clients. You would think there’s buy-in from everybody, but it sounds like there’s a little salesmanship involved to get everybody behind that approach, right?

[00:09:09]  Songyee Yoon:  Yeah. Right. Yeah.

[00:09:11]  Barry Ritholtz:  So let’s talk a little bit about what’s going on in the world of AI. I’ve heard you discuss various things that are just short-term hype. How do you figure out, when you’re evaluating an AI system — either for an investment or just to use the technology in a company — how do you figure out what’s valuable and what’s just hype?

[00:09:39]  Songyee Yoon:  I mean, I think we talk a lot about the hype cycle and bubble being built up in this AI era, but I think it’s not unheard of in every platform shift. There was overcapacity built, not just in AI infrastructure, but it happened with the internet, with fiber optics — you remember the railroad?

[00:10:02]  Barry Ritholtz:  Yeah. Railroad, electrics, telegram — wherever you go.

[00:10:04]  Songyee Yoon:  So there is always excess capacity that gets built. But on the other hand, if you talk about application of the technology, if you find the application and real business problems that you can apply this technology to solve — to be more efficient or bring out insights that humans were not able to — I think there is a great area to apply the technology, and there are so many of them out there. So that’s why we are so excited about the development of this technology and the prospect of it going forward.

[00:10:47]  Barry Ritholtz:  So I’ve heard you discuss various priorities — durability, defensibility, real-world impact. Explain what those three things mean.

[00:11:10]  Songyee Yoon:  In making that adoption of the technology, there are two ways to think about it. One is adopting the technology without really changing the current work process — for example, there’s a lot of talk about copilot, or augmenting what we do, making it faster. That’s one way of applying it, and there will be some ROI realized from such approaches. The other is a complete redesign of the workflow. And I think that’s — we’re at a very early stage of witnessing that, but I think that will be the more interesting area to look out for, and could produce more tremendous transformation and value.

[00:12:15]  Barry Ritholtz:  So tell us what you did at NCSoft, because a lot of the work you put in there was about transforming them to use AI. Was it, hey, we’re just going to make all our developers and gamers a little more efficient? Or did this require a clean-sheet rethink of everything the company was doing?

[00:12:37]  Songyee Yoon:  Yeah, I mean, it was like 15 years ago, and back then the technology was not ready to fully redesign the game development workflow. It was more about augmenting the existing process — things like churn prediction, NLP specialized for gamer language, an animation tool that helped animators animate four-legged monsters as efficiently as bipedal creatures. So it was more focused on augmenting existing processes back then. But the technology has advanced today to the point where there are more opportunities to completely redesign and come up with new AI-native companies — AI-native entertainment firms rethinking what new types of entertainment and engagement look like.

[00:13:56]  Barry Ritholtz:  So I keep reading that Claude is writing its own code and updating its own code. If you were at a gaming shop today — do you replace coders? Do you have copilot work with coders? There was a Wall Street Journal article last week about coders in Silicon Valley just sitting around watching Claude rewrite their code. What is going on in the world of software development now that Claude is capable of updating itself?

[00:14:34]  Songyee Yoon:  Yeah, I think it’s really fascinating. A lot of the coding is done using tools like Claude, and it certainly makes things more efficient and productive, which means we need a lot less people in the loop in certain areas — such as reviewing code and detecting errors. But there are other areas that need more heavy involvement, like redesigning the schema and structure and how things are going to work and how it’s going to provide an engaging experience for gamers.

[00:15:26]  Barry Ritholtz:  So my bias is that humans are very creative and very innovative. I’m thinking in terms of the storylines we see on streaming shows and interesting novel gaming narratives. Is that what people are going to focus on, and just the blocking and tackling of putting code in place — we’re going to let AI do? Is that a today thing or is that going to change over the next couple of decades?

[00:16:05]  Songyee Yoon:  I think that’s a really good question. If you look at today, a lot of jobs — like YouTubers, podcasters — these are types of jobs that didn’t exist 10 years ago. I don’t know what other jobs are going to be created in a world where things that needed a hundred people’s attention can be done with a fraction of those people. There could be other types of jobs, other types of roles. But that’s an evolution we’ll have to see how it rolls out — I can’t predict exactly what types of jobs will exist 10 years from now.

[00:16:42]  Barry Ritholtz:  Huh. Really, really interesting. Coming up, we continue our conversation with Songyee Yoon, managing partner at Principal Ventures, discussing AI and the modern economy. I’m Barry Ritholtz, you’re listening to Masters in Business on Bloomberg Radio.

[00:17:10]  Barry Ritholtz:  I am Barry Ritholtz, you’re listening to Masters in Business on Bloomberg Radio. My extra special guest today is Songyee Yoon, founder and managing partner at Principal Venture Partners, an AI-focused venture capital firm. Previously she was president and chief strategy officer at gaming company NCSoft.

[00:17:30]  Barry Ritholtz:  So before we start talking about AI in more depth, I just have to mention your book, Push Play: Gaming for a Better World. I love the concept that — let’s not forget about play. It’s really significant in terms of innovation and being an engine of change. Tell us a little bit about what motivated Push Play.

[00:17:56]  Songyee Yoon:  Right. I mean, as you just mentioned, I think we have a tendency of not appreciating the role of play in our everyday life. My motto is: we don’t live to work, we live to play — we live to explore. When you have extra time, are you going to do one more line of work or are you going to play? I think play is our natural tendency — homo ludens as opposed to homo sapiens. Play is very important, not only for computer games, but in general play has played a very significant role in human evolution. Whenever there is a new artifact introduced in our culture, we start by playing with it.

[00:19:04]  Songyee Yoon:  And when we have a good understanding of the material and its utility, then we turn that into utility. I think gaming has been playing that role very diligently over the last couple of decades. Gaming has always been the platform brave enough to incorporate new technology and have players try it out. We had a VP of AI since the early 2000s. AI technology was not mature enough for driverless cars 20 years ago, but it was okay in gaming because gaming is a low-risk environment and gamers are inherently early adopters. Not just AI, but Kubernetes, cloud, even freemium business models — all tried out in gaming first before being adopted in other businesses.

[00:20:33]  Barry Ritholtz:  Let me throw you a little bit of a curveball about gaming. When I was growing up, play was totally unstructured — you’d go down to the schoolyard. Computer games like Pong and Space Invaders were very rudimentary. Now it seems kids’ lives are much more scheduled, their play is more structured. How does that affect the sort of experience you want to provide from a gaming company?

[00:21:02]  Songyee Yoon:  That’s a very good question, and there are many aspects to it. One is about what gaming is for today. The reason there’s so much opportunity to play games as a novelty is because computers happen to be the most sophisticated and advanced devices we have today. I think we’re still trying to figure out their limitations and what they can do, and we’re in awe of the experience they can provide. So there are a lot of online digital games out there, and the size of the catalog means kids end up choosing a game or two from that. And a game is not just one thing — there are sandbox games, building games, quiz games, story-based games. Depending on your preference, you can choose different games.

[00:22:18]  Barry Ritholtz:  So let’s stay with kids, with children, and in particular students. There’s been a lot of concern about the impact of AI on education, on learning, on training people to get jobs in the real world. There’s a quote of yours I was intrigued with: ‘Rather than competing with AI, students should be prepared to leverage uniquely human capabilities.’ Explain what that means in terms of the real world.

[00:22:46]  Songyee Yoon:  If you think about education — our education has been optimized over the last couple of hundred years for delivering knowledge. And I think we are witnessing that knowledge delivery and memorization is rapidly being commoditized. What our next generation needs is more creativity and problem-solving skills. We have to think about how we can redesign the classroom to really enhance those skills instead of helping them acquire one more piece of knowledge.

[00:23:31]  Barry Ritholtz:  So there’s a very different set of targets — acquiring skills versus just learning or memorizing things. I’m a big fan of teaching children how to problem solve. How should schools be using AI to teach children new skills — developing expertise, developing problem-solving? What’s the proper role of AI for educational institutions?

[00:24:05]  Songyee Yoon:  I think what I would like to say is that we have to educate and prepare our students to thrive in a world where AI is more prevalent. But the solution to that is not just AI — it could be redesigning the curriculum, redesigning the school system, thinking about how we evaluate their achievement and how we retrain our teachers. AI could be a tool for doing that, but it’s not the solution for everything. I think there is a huge difference there.

[00:24:48]  Barry Ritholtz:  Alright, so let’s bring this out to the world of the economy and business. Successful companies have wide moats and we’re starting to see AI compress those moats over time. Think about industries like lawyers, tax preparers, accountants. There’s a lot of stuff AI can do in a fraction of the time and with greater accuracy. Everybody knows about reading X-rays and MRIs. So if we know our moats are going to get compressed, how should companies be using AI either to protect and expand those moats, or use AI to expand their competitive advantages while they last?

[00:25:51]  Songyee Yoon:  I mean, I think there are some industries and professions that will become much more productive and need a lot fewer professionals to solve certain well-defined problems. But that doesn’t mean that as humanity we’re left with no problems to solve. We have so many other problems that AI cannot address — for example, politics, how we’re going to redistribute resources. What is our societal priority in enhancing the agency of everyone and helping them achieve their full potential? Those are things we don’t have good solutions for. While AI can take care of things in a well-defined workforce, we’ll have time to work on other problems to progress humanity forward.

[00:27:12]  Barry Ritholtz:  So I think we’re all in agreement it’s going to be a very disruptive technology. Am I hearing you say essentially: hey, it’s up to everybody to learn how to use these tools and adapt, but the change is coming — you have to be prepared?

[00:27:28]  Songyee Yoon:  Yes. Right. Exactly. Yeah.

[00:27:30]  Barry Ritholtz:  So you’ve operated at the intersection of artificial intelligence, gaming, telecommunication, and social platforms. That’s a great convergence of a lot of different technologies. How is that evolving, and how are both consumers and institutions really adapting to an AI-driven economy?

[00:27:56]  Songyee Yoon:  I mean, a lot of people recognize that this is one of the greatest platform shifts in our lifetime, and there’s a lot of excitement. But we are at the very early inning of how it’s going to fully pan out. We don’t even know what’s coming in the next three to five years. And I’m really excited to see all these use cases and applications of technology fully leveraging the creativity of the AI-native generation. The people who think with AI as part of their toolkit will come up with different ideas and apply their creativity.

[00:28:54]  Barry Ritholtz:  So you’ve founded Chameleon as a corporate venture arm, and now you run a fully independent early-stage venture fund. What are the differences between being part of a corporate venture fund versus being independent? What are the strengths and blind spots in each?

[00:29:18]  Songyee Yoon:  I think the objective is different depending on who is providing the capital and what the objective of the firm is. At PVP, I think we focus more on the type of investors who’d like to be at the forefront of innovation and capture the value being created — regardless of the area. It doesn’t have to be confined to entertainment and consumer space. I think we were able to look more broadly.

[00:29:59]  Barry Ritholtz:  So corporate is pure strategic and independent is strictly ROI. So let’s talk about some of the companies you’ve backed — Together AI, Cartia, Sesame. These all seem to be pretty core infrastructure plays. Tell us a little about those. What was it about each of those that made them so appealing?

[00:30:21]  Songyee Yoon:  I mean, it’s a really tricky time to make an investment because there is a lot of excitement about this technology and a kind of rushing mentality. So I try to invest in companies that are going to be durable in the coming decades. I really like companies that are building infrastructure technology that has multipurpose utility as this platform evolves. Together AI and Cartia both have great founders with a vision of building infrastructure and foundational technology. And Sesame was an interesting case because it’s building voice applications — and from my gaming experience I know the importance of focusing on certain features that provide certain experiences to users. The founders understood what was important, and their capabilities were singularly focused on making that technology push.

[00:31:36]  Songyee Yoon:  So I really liked what they were doing, and that’s one of the reasons I ended up investing in Sesame. But there are other types of companies as well that we’re excited about. Those are the companies that are in a position to build a data flywheel — because one of the undeniable characteristics of companies that will be durable in this environment are the ones who have appropriate access to data, understanding of customers and consumers and the business, and build unique technology on top of that. So we’re also investing in companies building this data flywheel that will over time build very defensible moats.

[00:32:27]  Barry Ritholtz:  Hmm, really, really interesting. Coming up, we continue our conversation with Songyee Yoon, co-founder and managing partner at Principal Ventures, discussing the state of venture investing into artificial intelligence today. I’m Barry Ritholtz, you’re listening to Masters in Business on Bloomberg Radio.

[00:33:03]  Barry Ritholtz:  I am Barry Ritholtz. You are listening to Masters in Business on Bloomberg Radio. My extra special guest today is Songyee Yoon, founder and managing partner at Principal Venture Partners, an AI-focused VC.

[00:33:21]  Barry Ritholtz:  What is the key problem Principal Venture Partners is trying to solve in the world of AI today?

[00:33:29]  Songyee Yoon:  So we started to back AI-native companies. When we first talked about AI-native companies, that was not a very common phrase — people asked me, ‘What do you mean by AI-native companies?’ I had to explain what it meant. And these days it’s a more widely used term. We’d like to back companies who are fully embracing the technology of today and tomorrow, led by founders who understand the technology and its limitations and are able to come up with an organizational design that reflects the importance of this. In terms of the size of departments, it will be very different from companies built upon last-generation technology stacks.

[00:34:21]  Songyee Yoon:  And I think the type of leaders and talents who are going to lead all these departments are going to be different in terms of the use of technology and their vision for solving problems that are relevant in the AI-native era. Those are the companies that really excite us, and those are the companies we’re focused on investing in.

[00:34:40]  Barry Ritholtz:  So every time there’s a new technology, everybody just kind of sprinkles a little bit on it to catch a little bit of the buzz. We had it with the dot-coms, we had it with the metaverse, we had it with crypto, and now everybody’s claiming they’re an AI company. How do you distinguish between what is truly AI-native and what is just ‘let’s put a little dash of AI salt on this’?

[00:35:06]  Songyee Yoon:  That’s a very good question. I think I have an unfair advantage from working in a gaming company. The gaming industry is like having a lens into the future, right? Because a lot of the technology and innovation happens in gaming first, and it gives us a sense of whether this type of technology is adoptable and whether consumers will accept it. So in terms of application and platform, that’s a really interesting guiding North Star for me. And companies that are fully AI-native are built around that tech stack, whereas if you’re trying to sprinkle AI, you ask: can you do the same thing without AI? Why do you need it? Why is it indispensable?

[00:36:05]  Songyee Yoon:  I think there are businesses using things like agent technology, but for a lot of applications you don’t need an agent — you just need good data analytics. So there are many ways we try to understand how businesses are operating and see their full potential and their strategy.

[00:36:30]  Barry Ritholtz:  So on the one hand, I know AI has been around a long time. When Deep Blue beat Kasparov, that was a big deal. And then the AI app that won Jeopardy — these are 10 and 20 years ago. So it’s not a brand-new technology. However, it feels like we took another level jump with ChatGPT, and — go down the list — Claude, Perplexity, whatever. How do you think about this moment in time? Is this similar to early broadband, early smartphones, early cloud use? For someone who’s a tech investor, they want to know: is it early, is it late? How do you think about where we are today?

[00:37:30]  Songyee Yoon:  That’s great. Actually, it’s older than that. Do you remember — in the sixties there was an application called Eliza? Eliza was a very early incarnation of a chatbot, and there was even a newspaper headline declaring the end of psychotherapists because it was doing so well rephrasing what people were asking. Since then there were a lot of AI winters and summers, ups and downs. And I think what’s surprising to many people about this time is that the AI shift is closer to the introduction of the railroad than the introduction of the PC or the internet. Because the biggest breakthrough that allowed us to get here was actually scale — not a new algorithm, not new software, but scale: let’s pour a lot of resources to make it really big. And that’s where we saw the tremendous jump in AI capability.

[00:39:34]  Songyee Yoon:  I think there will be interesting new businesses that emerge out of it. So yes, I think we are very early in terms of fully appreciating what’s possible on top of this.

[00:39:46]  Barry Ritholtz:  So I love the idea of interesting new businesses. I’m always fascinated with what the public markets know — they’re more or less eventually efficient, and very often when a new technology comes along, they very much underestimate where it can go. So what’s a use case that the public markets might be underestimating? Where might this go? You look at dozens and dozens of new companies — what direction is just mind-blowing that nobody is really anticipating?

[00:40:24]  Songyee Yoon:  I think there are a lot of things happening. One interesting thing is that while this technology has beaten many people’s expectations, there is a lot more innovation coming along in terms of architecture design and fundamental design of the framework. We are not done with what is the most efficient railroad design. I think there could be other types of railroads that come online that will allow faster and more comfortable ride experiences. And once there is a railroad, interesting businesses emerge — like mail order. It’s really hard to make that connection, but that type of new business was made possible because the railroad was in place.

[00:41:40]  Barry Ritholtz:  Well, broadband and fiber optic led to so many things — everything from YouTube to the build-out of Amazon Web Services and online games, online retail, all that stuff.

[00:41:53]  Songyee Yoon:  Exactly. Games, right? That’s why I am really excited about AI-native generations and creativity — what they’re going to build on top of this. I think there will be new types of businesses that we don’t comprehend today that will be enabled by this infrastructure.

[00:42:06]  Barry Ritholtz:  So when you’re sitting with a founder of a company that’s looking for financing, what sort of questions do you ask? What are you trying to figure out about their model, their direction, their team?

[00:42:24]  Songyee Yoon:  I mean, it depends on what they’re building. The set of questions I ask when they’re building infrastructure technology versus business applications are different. But especially when they’re building business applications or vertical applications, I always try to ask: what is the real value that’s going to be brought to end users? We’re not investing in companies building amazing tech demonstrations — we’re trying to find companies who are solving real-world business problems and doing it in a way that’s sustainable and more efficient than any other type of technology.

[00:43:11]  Barry Ritholtz:  So you’re looking at infrastructure-type companies. What other types of AI applications are you looking at?

[00:43:18]  Songyee Yoon:  We are looking at companies that are building vertical applications by developing data liabilities and data moats.

[00:43:27]  Barry Ritholtz:  So there’s been a little bit of a lightning rod from a regulatory standpoint — all the LLMs have copyright complaints and issues. When you look at a term sheet today, how do you think about the regulatory risks, the litigation risks? How do you think about the regulatory framework and geopolitics? It seems like there are a lot of novel moving parts.

[00:44:11]  Songyee Yoon:  Yeah, I think that’s a really great question. More than ever, understanding how regulatory bodies think and how policy is going to evolve over time is important in making these decisions — especially in the venture space. We’re making investments that should last over a decade. It comes from the belief and understanding that innovation and research are very precious for all of us as humanity. And the tradition of peer review and open forum has really propelled us to where we are today. It’s going to continue, and I think collaboration and openness will better serve our end customers. We don’t have a crystal ball to say what the policy framework or geopolitical tension will look like in the next one or two years, but we have the belief that humanity’s collective work will converge in a direction that serves humanity positively.

[00:46:15]  Barry Ritholtz:  Alright, so before we get to our speed round, let me ask you one last question: what do you think investors in the AI space are either not thinking about or not talking about, that is important and perhaps they really should be paying attention to?

[00:46:33]  Songyee Yoon:  I think the saying that ‘we are at the very early inning’ means a lot. I hear someone even saying we are still in the car getting to the stadium — we’re not even in the first inning yet. That means all the models and structures can change significantly and can evolve over time, and nothing can be seen as engraved in stone. So I think a lot of the investment decisions have to remain nimble and flexible because we should be able to adjust when those changes and new breakthroughs come around.

[00:47:26]  Barry Ritholtz:  Alright, so I only have you for a few minutes, so we’ll click through these really quickly — our speed round. Starting with: who are your early mentors who helped to shape your career?

[00:47:38]  Songyee Yoon:  I would say I was fortunate enough to have a lot of mentors, but one person that stands out is Dominic Barton, who was the global managing partner at McKinsey. When I first started out as an associate at McKinsey, his office was right next to mine, so he was literally my neighbor and I learned a lot from him as a leader and as a mentor. Still today I reach out to him if I have to make tough decisions, and he has always been very generous with his time. So I’m really appreciative.

[00:48:22]  Barry Ritholtz:  Let’s talk about books. What are some of your favorites? What are you reading right now?

[00:48:26]  Songyee Yoon:  Oh, so I read a lot of books, but I’m the type that reads many books simultaneously — one chapter here and then I jump to another book. But the books I recommend to everyone these days are two: one is The Empire of AI and the other is Power and Progress. And I think those books help us understand the dynamics of what’s happening and what we need to think about as a society.

[00:48:56]  Barry Ritholtz:  So let’s talk about streaming. What are you either listening to or watching these days?

[00:49:02]  Songyee Yoon:  So I listen to music through Spotify a lot. My son is a big fan of Taylor Swift, so I have to listen to Taylor Swift whenever I’m in the car. I also watch K-dramas on Netflix.

[00:49:23]  Barry Ritholtz:  Really, really interesting. Our final two questions. What sort of advice would you give to a recent college graduate interested in a career in either artificial intelligence, investing, or gaming?

[00:49:38]  Songyee Yoon:  I mean, I think for kids just graduating today — one thing that’s not going to change is that it’s going to be very bumpy and disruptive, and the world they’re going to be working in is not going to look like the world today — that’s the constant. And what I would like to remind them is: don’t try to follow the trend. You really have to stick to what you’re passionate about. You remember in the seventies the most popular major was material science, then chemical engineering, then electrical engineering, then computer science — just to see the popularity of those majors kind of plummeting. We’ve witnessed so many of those cases. So I don’t think it serves you well to follow that fashion or trend.

[00:50:46]  Barry Ritholtz:  So be a generalist and be flexible.

[00:50:50]  Songyee Yoon:  Could be. Yeah. Right. Yeah.

[00:50:52]  Barry Ritholtz:  Alright. And our final question: what do you know about the world of venture investing and artificial intelligence today that might have been useful to know 20 years ago?

[00:51:03]  Songyee Yoon:  I mean, I think patience. The power of compounding is not just in finance, but also in human capital, our understanding of technology, and also in relationships. It seems very slow today, but if you are persistent for 20 years, what you can achieve is really tremendous.

[00:51:29]  Barry Ritholtz:  Well, thank you Songyee for being so generous with your time. We have been speaking with Songyee Yoon, founder and managing partner at Principal Venture Partners. If you enjoyed this conversation, check out any of the 600-plus interviews we’ve done over the past 12 years. You can find those at iTunes, Spotify, YouTube, Bloomberg, wherever you find your favorite podcasts.

[00:51:58]  Barry Ritholtz:  I would be remiss if I didn’t thank the crack team that helps us put these conversations together each week. Alexis Noriega is my video producer, Anna Luke is my podcast producer, Sean Russo is my head of research. I’m Barry Ritholtz.

[00:52:14]  You’ve been listening to Masters in Business on Bloomberg Radio.

~~~

The post Transcript: Songyee Yoon, Principal Venture Partners appeared first on The Big Picture.

I am heading out to the West Coast with 9 of my colleagues to meet with clients of the firm in San Francisco on April 14-16! I’ll also be hosting a Masters in Business live at the Bloomberg HQ at Pier 3.

Reach out if you’re interested in learning how RWM solves problems involving:

-Capital gains tax management

-Working out of (or around) concentrated stock positions

-Planning the sale of a business

-Bespoke fixed income strategies

-Tax advantaged borrowing

–Employee Stock Option Plan Management

-Maximizing the benefit of philanthropic giving

-Efficient transfer of wealth to the next generation

As we prepare for our upcoming meetings with our Bay Area clients, I can’t help but reflect on how our firm’s value proposition has evolved to meet an ever-expanding set of complex client needs.

I detailed many of these last week in a post titled “The Evolution of Alpha.”

A generation ago, these solutions were viable only for the highest-net-worth households; they required a huge amount of time and effort, making them too expensive for all but the wealthiest families.

This is no longer the case.

Thanks to the innovative application of technology in wealth management, these same strategies are now available to far more households than ever before, and at an affordable price. Managing capital gains taxes, tax-advantaged lending, and orchestrating tax planning and investment management was made cost-effective through the intelligent use of software, data, and personalization.

In my experience, it has been leading to client outcomes that simply weren’t possible at scale just a few years ago. To learn more, send an email to info AT RitholtzWealth.com, subject line “RWM in San Francisco.”

~~~

Looking forward to seeing you in the Bay Area!

Previously:
The Evolution of Alpha (April 3, 2026)

RWM Coming to San Francisco April 14-16 (February 26, 2026)

The post Next Week! RWM Takes San Francisco! appeared first on The Big Picture.

My guest on today's podcast is Jake Falcon. Jake is the founder of Falcon Wealth Advisors, IAR of the RIA Hightower Advisors and based in Kansas City, Missouri, that oversees approximately $1 billion in assets under management for 900 client households.

What's unique about Jake, though, is how he recognized that his strengths are in 'rainmaking' and attracting new clients, leading him to largely take himself out of the planning and client meeting process, giving himself additional capacity as his firm surpasses one billion in assets under management.

In this episode, we talk in-depth about how Jake technically remains the advisor for 500 of his clients but has delegated technical plan preparation and regular clients meetings to a centralized planning team (though he makes himself available to speak directly to clients if they wish), how Jake's firm segments clients by revenue to align the time it takes to serve them with the revenue they generate for the firm, and how Jake leverages the short-form video production tool BombBomb to create asynchronous touchpoints with clients while managing his time.

We also talk about how Jake is building the business development skills of a new firm hire by having them work through the 5,000 leads the firm has amassed over the years to set up introductory meetings with Jake and his partner, how Jake has attracted most of his clients through client referrals, both through his own efforts and by setting referral goals for members of the planning team, and how Jake is using Instagram to meet good-fit prospects "where they are" (and how he's found that being his authentic self on the platform has led to his greatest successes).

And be certain to listen to the end, where Jake shares how a major turning point in his career occurred when he stopped using business development 'scripts' and prioritized first building a relationship with leads, why Jake invests his clients' assets directly into individual stocks and bonds (eschewing mutual funds and ETFs in the process) to reduce fees and promote accountability for his firm, and a rundown of the many books that have helped Jake build a successful career in the financial advice business.

So, whether you're interested in learning about making the transition from client-facing advisor to firm 'rainmaker' while still maintaining touchpoints with clients, building a centralized planning team to serve a rapidly growing client base, or using Instagram to meet prospective clients 'where they are', then we hope you enjoy this episode of the Financial Advisor Success podcast, with Jake Falcon.

Read More...

This month's edition kicks off with the news that Wealthbox is introducing new AI agents to make it easier for advisors to query and take actions based on the client data within their CRM – which could help make it more competitive with encroaching tools like AI notetakers or AI-native CRMs that threaten to shrink its role in the advisor tech stack or reduce it entirely. But the amount of time it took Wealthbox to actually launch its new AI tools means that it may have a long way to go to catch up with the newer AI-native startups that appear to be iterating more rapidly.

From there, the latest highlights also feature a number of other interesting advisor technology announcements, including:

• Jump has announced a significant expansion beyond its roots as 'just' an AI notetaker, introducing a suite of "AI Operating System" tools – but it's not clear yet how much value advisors will really see in those additional features (and might actually just prefer a better alternative to their current CRM solutions, which ironically is the one thing that Jump still insists that it isn't building)
• RightCapital has launched a new AI tool for extracting information from client documents to automatically populate and update data in the clients' financial plan – which is perhaps a bad omen for technology providers that do document extraction on a standalone basis (and many other standalone AI tools that risk being undercut if their main functionality ends up being released as a "feature" that's bundled into a bigger incumbent technology)
• The Google-backed startup RIA Range, after several years of building a technology-forward AI-driven firm with human advisors, has reiterated its plan to gradually eliminate its human advisor workforce – but it remains to be seen whether Range can continue charging human-level planning fees for AI-only planning, given the vastly different economics of serving clients who value working with a human advisor (and are willing to pay premium fees for doing so) versus running direct-to-consumer technology platform that primarily appeals to price-conscious DIYers

Read the analysis about these announcements in this month's column, and a discussion of more trends in advisor technology, including:

• A new technology provider called WealthStream has launched with the aim of training newer advisors to think and act like more experienced planners by ingesting data on the advisor's clients and highlighting particular strategies the advisor can recommend – which could be useful for bringing newer advisors up to speed on an advisory firm's planning process and philosophy (especially at bigger RIAs where it's difficult to train and supervising hundreds or thousands of advisors), though in reality it's most often the skills of client communication, and not technical planning, that advisors need the most training on early in their careers
• As more and more advisors have become specialists in equity compensation owing to the complexity of the planning issues involved and the high potential for business growth (since company stock liquidated by an employee can subsequently be reinvested and managed by the advisor), several new equity compensation-focused planning technology solutions have arisen in the last few years – showing that advisors are often willing to pay more for specialized software that can help them do deeper planning for specialized clients

And be certain to read to the end, where we have provided an update to our popular "Financial AdvisorTech Solutions Map" (and also added the changes to our AdvisorTech Directory) as well!

*To submit a request for inclusion or updates on the Financial Advisor FinTech Solutions Map and AdvisorTech Directory, please share information on the solution at the AdvisorTech Map submission form.

Read More...

The post Wealthfront Modernized Investing. Your Mortgage is Next. appeared first on Wealthfront Blog.