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What's the Alternative? | Episode 7 | Achieving Alts for All By Leveraging Technology Featuring Steve Zuschin
5 Plays9 months ago
Welcome to Banrion Capital Management’s What’s the Alternative Podcast! Join host Shana Orczyk Sissel, the “Queen of Alternatives” Founder & CEO of Banrion Capital Management, as she interviews leaders in the alternative investment space. Learn more about their firms, their passions and about the many different ways investors can use alternative investments to add value in their investment portfolios.
In this episode Shana sits down with Steve Zuschin, Chief Revenue Officer, at Mammoth Technology, to discuss how Banrion and Mammoth Technology have partnered together to develop a technology solution that is changing the way advisors allocate to alternative investments. With this new integrated platform, Banrion and Mammoth have reduced the operational friction that has historically been an obstacle for many advisors. A true game changer that offers "A Better Alternative" for advisors and clients alike.
Steve has a diverse work experience in the financial and technology sectors. Steve is currently serving as the Chief Revenue Officer (CRO) at Mammoth Technology, a technology and services company that focuses on revolutionizing the way funds are established and serviced. Prior to their current role, Steve held various executive positions at LifeYield, a transformative software company that helps financial firms, advisors, and investors optimize their assets. At LifeYield, they served as the Executive Vice President of Business Development, Executive Vice President of Advisor Success, and EVP of Sales. Before LifeYield, Steve worked as the Director of Business Development at HiddenLevers, a financial technology company. Steve also has experience as a Sales Person at Hentze-Dor and as a Financial Representative at Northwestern Mutual.
Steve Zuschin attended California State University, Chico from 2003 to 2006 and earned a Bachelor of Science degree in Financial Management.
Learn More About Mammoth Technology: Mammoth Technology
Connect with Mammoth Technology on 𝕏: @mammothfintech
Connect with Steve on LinkedIn: Steve Zuschin
Learn More About Banrion: Banrion Capital Management
Connect with Banrion on 𝕏: @Banrion_Capital
Connect with Shana on LinkedIn: Shana Orczyk Sissel
Connect with Shana on 𝕏: @shanas621
If you are an advisor wanting to check out our platform, we want to hear your feedback!
Important Disclosures:
The opinions expressed on the “What’s the Alternative Podcast” are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security.
It is only intended to provide education about the financial industry. To determine which investments may be appropriate for you, consult your financial advisor prior to investing. Any past performance discussed during this program is no guarantee of future results.
The guests featured on this program are participants on Banrion Capital Management’s platform. As such Banrion may receive payment for their participation as a platform partner.
Any indices referenced for comparison are unmanaged and cannot be invested into directly. As always please remember investing involves risk and
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Transcript
Introduction to 'What's the Alternative'
00:00:02
Speaker
Welcome to Bonnie and Capital Management's What's the Alternative podcast. Joining host Sheena Orsik-Sicil, the queen of alternatives and founder, CEO of Bonnie and Capital Management as she interviews leaders in the alternative investment space. Learn more about their firms, their passions, and about the many different ways investors can use alternative investments to add value in their investment portfolio.
Meet Shana and Steve
00:00:32
Speaker
Hello everyone. I am Shana Sissel, founder and CEO of boundary and capital management. And this is what's the alternative. And today we have with us. Steve Zushkin. Yes. Right. Is that right? Wrong. I, you know, I've gone to you for a while now and I still can't pronounce his last name correctly and it shouldn't be this hard.
00:00:55
Speaker
No, I love it, Shana, and you're not alone. And this is like a highlight because I use it as an opportunity to get a laugh and have fun with people when I meet them. So it's Zushan. Okay. Well, I relate. My maiden name is also very hard to say. And for some reason, nobody likes to say my first name correctly. I can't tell you how many times I just stop.
00:01:21
Speaker
and don't even bother to correct when they call me Shana. So I feel your pain and I apologize.
Steve's Career Journey
00:01:30
Speaker
All right, so Steve, tell them a little bit about yourself. Tell us a little bit about your background, how you kind of ended up where you are, and tell us a little bit about Mammoth.
00:01:39
Speaker
Sure, sure. Well, thanks again for having me on the show. It's always really, I look at it as an honor and a privilege to represent our industry and be somebody who can really be thought of as a thought leader here. You know, when I first came into the industry of
00:01:56
Speaker
just looking at wealth management or financial services at large. When I was in college, I didn't know what I wanted to study. Like most college students, maybe I was a little bit more realistic that I probably knew that I wouldn't work in the industry that I studied. And so I chose finance as my major because I knew I wanted to make money and I wanted to know what to do with it, but I hadn't thought of financial services as an industry that I would work in.
00:02:24
Speaker
Um, but I started my career actually in college with Northwestern mutual and I went through their internship program, which was incredible sales
Tech and Risk Management
00:02:32
Speaker
training. And it introduced me to this industry that I, I pretty quickly fell in love with, you know, the idea of, uh, planning led financial services and, um, really finding the need to help people improve their outcomes financially in life, uh, became a pretty quick passion for me. And, um,
00:02:53
Speaker
just to fast forward a little bit after college and after Northwestern Mutual, I ended up in New York City. I grew up in California, Northern California, Santa Cruz area. And after college, I ended up moving to New York City and I had the ambitions of going to graduate school there.
00:03:10
Speaker
And while I was waitlisted, I was actually introduced to some guys who were working in a tech incubator that was part of NYU Poly. And this is really at the beginning of or during the financial crisis and the great financial crisis 2008. And they were working on a risk platform.
00:03:32
Speaker
And I got familiar with them and we started hanging out and talking about this. And I ended up being the first employee of Hidden Levers while we were still in this tech incubator. And we're building out this risk platform, which has evolved into...
00:03:49
Speaker
now in our market of taking what was kind of a KYC compliance requirement and turning it into a big part of the building a relationship with your client and setting expectations about the services that are going to be provided. And so that was pretty fun.
00:04:05
Speaker
And so that's kind of how I came into the technology side or service provider to financial services side of the world. Um, really just by accident moved to New York city with the intent to go to grad school and ended up working in a tech incubator with a couple of guys on the new startup.
00:04:21
Speaker
Well, it's interesting because I think one of the things that I find most interesting at Bonrion and what Mammoth is doing is that the teams that started these firms are building solutions for advisors and we've all been advisors. And I think that makes it really unique because we understand the business, what's involved with the day-to-day is and kind of what the pain points are. I think that's such a huge differentiator when you think about
00:04:50
Speaker
tech platforms that have been developed. And I'm sure that helped at Hidden Levers having your insight from when you were at Northwestern Mutual.
Challenges in Alternative Investments
00:04:58
Speaker
I worked at Morgan Stanley as an advisor first. And that's how I got into my career. So almost a similar path in that respect.
00:05:06
Speaker
and left to go to grad school, but I actually ended up going to Bentley and then ended up going back to the financial services industry after that. So I think that's a great segue to talk about how you ended up at Mammoth and what Mammoth is doing that I think is so compelling.
00:05:26
Speaker
Yeah, just to draw a line there, I spent quite a bit of time at Hidden Levers and our focus was on measuring risk. And that conversation evolved a lot and it led me to the next company I worked with, which was LifeYield, which is based here in Boston, where I live now. And LifeYield, we focused on tax efficiency.
00:05:51
Speaker
And I spent a lot of time there with our team building products and building algorithms and software to help automate and support creating more tax efficiency. And that just led me naturally into being exposed to all the problems and complexity that exists with alternative investments and not just alternatives at large, but specifically the private
00:06:12
Speaker
private investments. And so with Mammoth and my partners at Mammoth, really what we started to uncover is that advisors steer away from this because they don't understand it or they don't know how to scale it. And the thing that attracted me most to it is when we look at the infrastructure that's here to support financial advisors and growing their business,
00:06:35
Speaker
For the most part, it's AUM based. So I'm oversimplifying this, but it's assets under management based. And I have a good understanding in the public markets of what the unit economics are.
00:06:46
Speaker
When I approach a client that has a certain amount of assets to invest with me, I know what it's going to take for me to support that client, how quickly I need to scale my team, and I can use my AUM as a measuring stick. Hey, we're hitting another benchmark. It's time to start hiring somebody else, and we're going to need these resources in place. And I know how much margin's built into that. Alternatives in the private markets, that doesn't exist, right? And so it forces advisors who
00:07:15
Speaker
don't have those resources to steer away from it because it's too hard for them to scale. And then God forbid you run into a client who's an awesome prospect, but they have a bunch of private investments and they, they expect you to help service those investments and you don't know what you're getting
Partnership Solutions
00:07:31
Speaker
into. You can bring on a great client that would normally be an awesome opportunity for you to grow your business and you end up upside down in the relationship and no one wants to be there. So that was the problem that we set out to solve.
00:07:44
Speaker
Yeah, I think that's so interesting. So for our audience, Bonnerian and Mammoth have started to work together in partnership because we agree on the core issue here. Anybody who's listened to me talk, and you and I have talked about this a ton, knows that I always talk about the reason advisors don't allocate to alternatives at scale are for all the reasons you just talked about. Lack of education, lack of analytical ways in which they can incorporate private products
00:08:14
Speaker
into analytical reports that include public product, reporting issues, very complex subscription documents and investment, actually making the investment, very complex in terms of following and monitoring the investment. And then above and beyond that, sometimes it can be difficult to bill on. And if you are one of those advisors who is an AUM-based advisor, that is a hurdle you have to deal with. So all of those things,
00:08:44
Speaker
I have found is why advisors don't allocate at scale and everybody seemed to think that the problem was access and I don't think it was ever access. It was all those other things.
00:08:54
Speaker
Yeah, no, I mean, access is a hot topic and look, without access, there's none of this other stuff is worth talking about at all. But we have found there's a lot of on-ramps to access, a lot of on-ramps to access and doesn't necessarily satisfy everything. And so to your point, if I'm an advisor who has access, but I don't have the education and I don't have the tools to automate it or scale it, I'm probably still not gonna head in that direction
00:09:24
Speaker
And then, you know, not, not to mention when it comes to the data and the billing that you mentioned. And this is where that lack of scale comes in, where I don't understand those unit economics. Now, all of a sudden I have staff that's going around and gathering and reconciling these paper statements. Like, what are we? Is this like, are we back in 1982, right? Yeah.
00:09:44
Speaker
being able to give them a plug and play solution, a platform where they can really start to scale and automate that part of their business. And then I'll touch on a thing that you and I know we connect on, which is when we talk about access to private investments, a lot of that access is paid for. And paid for by who? And so it's become pretty common knowledge now, I think,
00:10:12
Speaker
how social media has become such a, you know, in the headlines, that if you're not paying for it, then you're probably the product. And so I've really seen this idea of access where, well, we have access and it's free, right? But you have now become the product. And so we really wanna partner with financial advisors to help them curate and build an intentional alternatives business.
00:10:41
Speaker
not one that's just default that they're being marketed to and those managers and everybody else is getting paid based on the deal flow that they provide.
Advisors' Reluctance to Alternatives
00:10:51
Speaker
And it's interesting because philosophically, we are completely aligned. That's why mammoth and boundary and make so much sense and that our two solutions compliment each other. There's not a lot of overlap. We solve for several different problems. The problems I couldn't solve for with our tech, your tech does and vice versa. But to your point, the biggest problem I see is that advisors are largely unhappy with the access platforms that are out there.
00:11:16
Speaker
They don't feel like they have a ton of options and they don't feel like those those platforms were built off with offerings that are well suited to them. And we've seen this with these large institutions who
00:11:31
Speaker
want to sell it to advisors, but don't want to support that service. And they don't have dedicated advisory teams. And they don't necessarily understand the advisors' business. And they're not accessible. Those are the ones who are willing and most likely paying for access. We're starting to see that change a little bit. But the question becomes, as you pointed out, if you're not paying for it, that means you're the product. And philosophically, I believe that
00:12:01
Speaker
The goal with Bonrion and the goal with Mammoth is, yes, it's not free, but you are getting service and support. And what is being provided for you in terms of the curated list of managers that we put together is
00:12:17
Speaker
well-diligenced and focused on making sure that those firms are accessible and are going to service advisors the right way. And I think that's worth it because the access platforms that exist, advisors aren't using proactively, they're using them more reactively.
00:12:36
Speaker
Um, so the focus has to be on, you know, how do you solve for that?
Advisor-Centric Services
00:12:41
Speaker
Um, but understanding that by doing that, that means there's going to be some cost involved. Um, but it's worth it if your goal is to be a good fiduciary to your client and to have a good experience because this is important to you. And then you also touched on that part of like scalability, being able to provide products, you know, that,
00:13:03
Speaker
is diversified enough in terms of actual structure that you can allocate to alts for all your clients.
00:13:11
Speaker
because I've always felt that that's one of the reasons why advisors don't allocate to alts at scale because the average mass affluent advisor doesn't have their entire book that's qualified or accredited and they don't want to have too much complexity for a small amount of accounts where to your point they have to hire staff and they're doing all this complex work if they're not going to allocate to it for everybody so that they can have consistent conversations and they're not
00:13:37
Speaker
trying to get up to date with seven different private equity funds for five clients. That I think is also a hurdle. So let's talk a little bit about what Mammoth has built because it's pretty cool. And then we can kind of talk about and let the audience know how our companies are partnering together to help advisors.
00:13:59
Speaker
Yeah, absolutely. And just to talk about it kind of from the beginning, our origin story is Mammoth's original company, Mammoth Investors, started as an investment company building private funds. And Mammoth technology came out of that, really out of necessity. What we found being a wealth management centric team,
00:14:26
Speaker
was that at the core of bringing an LP into a fund, we wanted to include their financial advisor. And the tools required for us to do that as a small fund
00:14:40
Speaker
It was too much. It was too much for us to, A, afford, bringing together all these point solutions, and then the user experience was nonexistent. It was terrible. And so that's what inspired the idea of Mammoth technology. We started with creating an onboarding platform where we could digitize subscription documents. But on top of just digitizing subscription documents for a fund manager, how do we take that and relate it so that a financial advisor can access that and white label it and control the experience for the LP?
00:15:09
Speaker
because that's what that's what we felt was the most important is putting the financial advisor at the center of this transaction not just from the introduction but also all the way through the paperwork and then the servicing of that paperwork and so we started with that ir solution for funds
00:15:27
Speaker
Today we can digitize those subscription documents. We maintain the investor profile. We have an investor portal with a document vault where those LPs can come and retrieve all their tax documents and their completed subscriptions and updates on the fund itself. And then we also tie into fund administration. So if you want to launch a new fund,
00:15:49
Speaker
we have the fund admin built in there as well. And that's the way that we kind of took that from a fund manager and got into wealth management as we started finding all these firms who wanted to pull client assets. They weren't necessarily gonna launch their own private equity fund or their own VC fund, but the use of special purpose vehicles, SPVs became very, it was an awesome tool for them to pull these client assets to make a single investment.
00:16:19
Speaker
And...
00:16:21
Speaker
they needed it to be more scalable. And so kind of going from our framework of servicing fund managers to helping wealth managers build and launch SPVs and service those funds over time is what led us to where we are today, which is building out our advisor portal and our advisor platform where you and I have partnered. Because when we look at the SPVs, well, next thing you know, I got three SPVs that I'm servicing and these clients have other alternative exposure, whether I place them there or not.
Streamlining Investment Processes
00:16:51
Speaker
So how do we bring that all into one place for them to see, but also how do they introduce new deal flow? Right. You know, I'm an advisor under a large firm and my golfing with my client and they introduced me to this new venture opportunity or a new private equity or private credit deal. I want to allocate to it. I bring it to my advisor. What's the advisor supposed to do with that? They want to help their client, but they don't know what the next step is. Right.
00:17:16
Speaker
Yeah, and that's the interesting part. So one of the cool things about the partnership that we're doing is that on our side, we do all the due diligence, and we really do vet and curate this list to ensure that the advisors have all the information they need to make that educated choice. So in the scenario you just talked about, that advisor could go to Mammoth and say, look, I have this all set up, but my client just came to me with this random thing, and I don't know even where to begin.
00:17:43
Speaker
And that is where Bonrion could come in. But above and beyond that, as I mentioned before, our two systems complemented each other. When I kind of had a vision for Bonrion, I really wanted it to be like the most seamless way for advisors to allocate to alternatives across the board from the liquid alt side with the models to the more esoteric capital call vehicles and everything in between for clients that are accredited, qualified, not accredited.
00:18:13
Speaker
And part of that vision was providing the analytics, the education, the due diligence. We were able to build that out well. What we weren't able to do was the second part, which is all of the operational compliance and the integrations with the traditional
00:18:30
Speaker
software and tools that advisors use to do their reporting and their client reviews, their householding to your point, the digitization of those documents. And that is where Mammoth excels. So from that standpoint,
00:18:48
Speaker
with our partnership, we're able to provide the advisor from start to finish. And then it's a really nice feedback loop. Because once an investment is made, and now we're getting real-time performance data, that goes right back into our solution so that those analytics can be used and create reporting and snapshots and hypotheticals and everything of that nature. And then
00:19:13
Speaker
and your system can be integrated with your regular reporting. I think that's really compelling. And I don't think there's anything like that out there. We share that passion. And I'd love if you could talk a little bit about that, how Mammoth does integrate with the Orions and the Black Diamonds, and the whole process of digitizing subscription documents. Because let's start from the basics. For advisors who are listening, who have never allocated to a private fund,
00:19:40
Speaker
you know, what's that process look like? What are the documents involved? What is the operational process? Why is the digitization that you're doing so important? Yeah, and I'll start and this is maybe the most obvious answer and probably the most frustrating, which is that it depends on which private investment because they're all different. And that's part of the issue is that there's no standard forms. There's no standardization across which, I mean, there's basic,
00:20:10
Speaker
requirements of what you need to collect, but that's it. Other than that, it's the Wild West. And so the digitization of the forms comes in where you can create a standardized repeatable process that you drive. So digitizing
Client Relationship Management
00:20:25
Speaker
that experience, A, it reduces friction because normally when you get a PPM or a subscription agreement, which you're super familiar with, right? That's like first, that's step one of doing due diligence. You're looking at a hundred plus page document.
00:20:41
Speaker
And so getting through that and making sure that we're filling it out the correct way, I can't tell you how many fund managers or advisors I've talked to where they are trying to help a client go through this process. And they have to go back to the table. They send it in for signature, not in good order, right? Like MAGA back, you need to sign here, or you filled this section out incorrectly or this section. So digitizing that and just being a little bit more intelligent and intentional about guiding you.
00:21:11
Speaker
You know, Hey, I am going to make this investment through my LLC. Great. We're going to jump right to filling out all the required information for your LLC so that you don't accidentally fill out the wrong section happens all the time. And it seems obvious, but, um, that's where we really needed to start with the subscription documents. And then again, I think by, from a firm's perspective, when you can own that experience, now you become a valuable and critical part of that transaction for your client.
00:21:42
Speaker
Or if I throw the ball over the fence and I just introduce you to a GP and have you work directly with them, I've lost control of the relationship, you know? And, you know, from a financial advisor, sometimes that's a conscious and intentional decision, right? This is going to be an ancillary part of my business. It's not how I'm going to scale. I want to help you, but I'm not going to, I'm not going to grow this way. So here, go do this by yourself.
00:22:06
Speaker
But for a lot of us, we know that allocations to alternatives and privates is growing and it's becoming more necessary. I mean, just look at it. When I was at Hidden Leverage, we had a screening tool and we used to laugh at how many people would search for private companies looking for the ticker symbol, right? And that's kind of where you come in. I was laughing the first time I saw your platform because I'm like, man, having that back then,
00:22:33
Speaker
is just such a powerful tool to be able to blend private investments with your public and see how that changes the risk analytics and statistics associated with your portfolio is such a cool thing.
00:22:44
Speaker
Yeah, and it's always hard to do because private investments don't report daily. So you have to normalize the data to get the information you need and the analytical tools that we offer automatically do that, automatically normalize. Whereas some of the more robust ones that are out there that institutions use, you have to tell it to normalize, you have to
00:23:09
Speaker
point out the frequency because it's always different. Ours just, it might be weekly, it could be monthly, it could be quarterly. Our system automatically recognizes it and then normalizes it so that everything is aligned. To your point, that's a big deal. You know, you touched upon like the digitization process, but let's talk about the pre-population aspects of it because that's a big deal, you know, for an advisor who might come on boundary and
00:23:33
Speaker
uh and find a manager they really like and they go to make the investment but they have like five clients they're interested in you know what you guys do with that pre-population and those integrations with those service providers i think is what is actually the key to this being such an efficient process yeah 100 so you know at the core we understood the wealth management industry and and
00:23:59
Speaker
we've been along for the ride along the whole way and integration is key. And so we knew that if we built Mammoth and it was a standalone system that was isolated that didn't integrate that we weren't gonna make it very far.
Scalability and Efficiency
00:24:13
Speaker
At our core beliefs, if we look at where we think the puck is going, I think more and more wealth management firms want to own their data. And we're seeing these trends where people are building out their own data warehouses, et cetera. And so being able to integrate and be flexible with that. So at the core, your CRM and your Orion, you have a list of your clients.
00:24:35
Speaker
pretty much all the information we need to complete a subscription document across two or three of your systems today. And so building out those integrations and building out an investor profile is where we can get started. So if I'm in your system and I find a fund manager and that fund manager has partnered with Mammoth, you can jump right into Mammoth, select the client that you want to invest or the five clients,
00:25:02
Speaker
launch those subscription agreements, we're gonna pre-populate it, you go through and review, make sure it's accurate, and then you can go ahead and send that out for signature, right? So it's literally that simple, or it can be that simple. And then now, once that investment's been made, now what? You know, we talk to advisors all the time and they say, oh, well, those investments are just being reported from Schwab. I made the investment on Schwab.
00:25:27
Speaker
Well, I don't think it's a secret that Schwab treats most of these private investments just like a public investment. And to your point, they're only gonna report the change in the value of the investment. So along the way, when there's these transactions that occur and there's changes, whether it's a capital call or there's a return of capital or there's payment that's made, none of that's showing up. And so you actually need to go and interpret those statements. And so that's where our portal comes in is where
00:25:55
Speaker
You know, all of those daily transactions that occur across the book are all made transparent. It's digitized. It's available for you, your client, their CPA, as well as all those documents so that they can come retrieve it all in one place. And, um, and then we push that right back into, into your system so that they can go ahead and look at how that changes the portfolio. It's pretty beautiful. Yeah. It's, it's actually, you know, genius. And then, and then I'll just say that.
00:26:23
Speaker
We got to get that back into your reporting system. It has to be back in your reporting system. That's, that's where you're doing your fee billing, right? So this, this chain around all the private investments is what allows you as the financial advisor to say, look, I'm demonstrating value. I'm reporting on these investments accurately. We're create, we're doing work that creates transparency for you.
00:26:49
Speaker
as a client, as an investor, and make it simpler for you to understand your net worth and make it better for us to do our planning, we've earned our fee. And how you set up that fee structure is totally up to you. But now you have a system in place where you can show, look, we can help you with your alternatives. We can help you with those investments. We can help you onboard to new ones and we can help you with the ones that you've already made. Yeah, I just love the fact that
00:27:17
Speaker
Cap calls, being able to track cap calls. It's amazing because you can set ticklers for yourself. Oh, I have to raise cash in such as such account because I have a capital call coming up. For our audience who may not understand that term, that's with these private vehicles, you make an initial investment and then as the fund ramps up and they have things to invest in, they will call capital into the fund until it's fully raised. So you commit the capital, but you don't necessarily invest and wire the money all at the same time.
00:27:44
Speaker
So there will be times where there will be capital calls that you need to be aware of so that you make sure that your client has enough cash in their account to meet the call that they're getting, to meet the commitment that they made in terms of investment wise. That is the one. And today, a lot of the systems out there, when we talk about access, again, you've become the product. You introduced an LP to a GP.
00:28:09
Speaker
And you're not even being notified when there's a capital call, right? Same thing with tax documents. How exactly there are planners out there that do tax planning. I know personally, we've talked to several advisors who are also CPAs, you know, if the K one is being sent to the client, then you have to
00:28:25
Speaker
What if it gets lost in the mail? What happens if the client forgets to tell you? What happens if you forgot, because you have 10 clients, you forgot to check in and now you're doing their taxes and you're like, oh shoot, and they're looking for it. The K1s go right into the system. So you can see them too. So all of those things I think are such game changers. And you know, you mentioned the access platforms that are out there now, you know,
00:28:50
Speaker
they certainly opened the door to help advisors understand that this was even an option. And they have certainly played a really important role in opening up and making alternatives accessible. But what they lack is that
00:29:05
Speaker
thoughtfulness of how advisors businesses are run, and what those pain points are in all aspects, everything from
Adapting to the Advisor Market
00:29:13
Speaker
like you said, the capital calls or the K ones, you as the advisor want to have control or at least know what's going on at all times. And the systems that exist today don't don't have don't allow for that. Yeah, no, I mean, it's it's
00:29:29
Speaker
It's crazy to think about. I mean, if I'm a client and I come to you and you help me make an investment, and then you're calling me and you're like, Hey, did you get a capital calls statement and email from fund XYZ?
00:29:42
Speaker
Like all of a sudden, wait, I have to do work. Like, why am I paying you? I have to do work. Exactly. I thought I don't want to do work. And, uh, so now it starts, now it puts me in a position where as a client, I'm questioning the value I get from this relationship. Right. And I don't ever want to be in a position like that as a financial advisor. I always want my clients to feel like they're getting way more value from our relationship than they're paying for. Right.
00:30:09
Speaker
And if I call them always asking them to go do work, to look in their email address or look in their email inbox for something, or did you get something in the mail that you didn't send to me? Now, all of a sudden it's, it's flipping the script there. I don't want to do that. I want to be at the center of the transaction. I want to be aware of all the communication between the GP and the LP. I want to be able to set that up so that I can be proactive and say, Hey, we already got that taken care of. Hey, I got this email. Do you need this? Nope. Kind of taken care of. We're all set.
00:30:38
Speaker
Exactly. And the other thing I think is really interesting is man's platform and ours are quite scalable. So, you know, if you're a small independent advisor, that CPA that has a small book of business, and you want to use this, you can use our platform.
00:30:54
Speaker
But if you're a huge aggregator and you want to make it available to your clients and have more control, you can do that too with the white label enterprise level, where you can control what your advisors see, you can see the due diligence, you can make sure that it meets your criteria, like what the TAMPs have been doing for a long time. I always like to say that when I built Bondry and it was because I helped build the foundation for what is now the Orion TAMP.
00:31:18
Speaker
And advisors like to interact with tools that are comfortable. And so if I could build my platform to feel like a tamp and not like an access platform, then it would be easier for them to adopt. And I think what you guys did, it feels the same way.
00:31:39
Speaker
Yeah. No, I think intentional design and, you know, um, some of our partners here at MAMA spent quite a bit of time in Orion as well. And I think that when it comes down to how, not just Orion, but when we look across, I think it's pretty remarkable, you know, when we think of how the industry has developed, um, 15, 20 years ago, the center of an advisor's business was their custodian. Mm-hmm.
00:32:05
Speaker
And today the custodial relationships, I feel like, um, maybe they're becoming more, more relevant recently. There's some new, new entrance, but it shifted to becoming the centerpiece was your accounting system. Like how crazy is that? Right. Like go, go Eric Clark, man, to taking it, to take an accounting system and say, Hey, you should build your entire business around this.
00:32:28
Speaker
Yeah, what Orion built and what you see with some of the other providers in that space is not just an accounting system, it's an accounting system, a CRM system, a reporting system, a compliance system, all of that is in it. And it makes it really easy for advisors and for firms, even large independent broker dealers use these and it also allows those larger firms to have that control where they wanna make sure that they're
00:32:58
Speaker
providing that oversight that advisors join them for. We've talked on our own and we definitely talk about this sometimes with asset managers more than anything about how there's different types of advisors. There's the ones that work with a BD.
00:33:16
Speaker
there's the fully independent REAs, there's the hybrids. And so understanding that and what's involved and why an advisor would choose each one is an important part of understanding how that advisor approaches business, which I think is a good segue into talking about, we've talked about a lot why our partnership and what we offer is great for the advisor, but I think more importantly,
00:33:42
Speaker
you know, why it's great for the asset manager, as we mentioned, you know, we don't want the advisor to be the product. So we, at least at Bonry, and I know, same with Mammoth, we kind of function as thinking it more of it like,
00:33:59
Speaker
a fee to be on the platform, a fee to maintain those connections, that technology, that oversight that we do. But we aren't third-party marketers. Neither one of us are third-party marketers. And a lot of time, these asset managers will be like, well, then why would I join you? Because the traditional access platforms have acted more like third-party marketers.
00:34:21
Speaker
some sort of guarantee and some sort of incentive to push funds and get assets. And, you know, thinking about like the ROI on something like that, a lot of asset managers ask like, why would I bother if you can't guarantee me flow? But I think, you know, we've talked about this before, there's a reason it makes sense to do something like this. And maybe you can touch upon how there's a real benefit to a fund manager or an asset manager
00:34:49
Speaker
to be on the platform in this way. Yeah, absolutely. I mean, even if we just go back to the last, one of the hurdles that are faced is capital calls. Um, if I'm a GP or a fund manager and I'm sending out my capital calls directly to my LPs and they're being missed or they can't honor it or it takes too long, right? Like that's not an awesome experience. If all I have to do is to be on a platform and partner with, you know, a partner like Banran and, and Mammoth,
00:35:20
Speaker
And now the investments that are made through that platform I know are going to be followed up with by their financial advisor, who is the quarterback and the coach on all the finances. Is it going to have a workplace or a workflow in place to take care of capital calls? Why wouldn't I sign up for that?
00:35:39
Speaker
When I can partner with us to digitize my onboarding and make it easier for a financial advisor to allocate money to my fund, why wouldn't I sign up for that? When I see all of the hurdles that are in place that people are tripping over to allocate to my fund, if I can eliminate that,
00:35:59
Speaker
through a flat fee that doesn't create a a conflict for the advisor because that you know today when i go out there and i see these fund managers who approach it like no it's tit for tat right like we'll help we'll share in a success fee that creates a conflict that creates a conflict for the financial advisor
00:36:22
Speaker
to go recommend the product immediately. It's the same thing that we deal with with commissions. It's all it is, right? And so how do we eliminate that conflict to make it easier? And we believe that with our platform, we've done that.
00:36:34
Speaker
I agree wholeheartedly. And I think the other thing is as our integration grows and as more and more advisors join, there's going to be this desire because there's so much flexibility to it for advisors to kind of make it what they want it to be. There will eventually become a point, why would they bother going outside of the ecosystem?
00:36:55
Speaker
and making things more complex when their entire workflow and their business can be very efficient and streamlined in a way. You didn't touch upon this, but it made me think of it when you were talking about capital calls. Another great attribute of Mammoth is the fact that you can actually create ACH transactions to send the funds for your client.
00:37:18
Speaker
How many times I can't even tell you, I've talked to advisors who have been frustrated because they get to all of the documents, but then they got to give their client and say, like, go to your bank and create the wire.
00:37:31
Speaker
Like there's no sense of urgency at that point. The client's like, yeah, whenever I get to it, they're not like excited to like, you know, move the money or give the permission, whatever. But like the advisor has to put that again, to your point, another task for the client to do. And you can't control when it's going to happen. And it can oftentimes, it's not a priority for the client. It's priority for you as the advisor. You want to get the investment made, you want to get the timing. The client might be like, yeah, I'll get to the bank when I get to the bank, or I'll log in when I get there.
00:38:00
Speaker
And maybe they even forget, but all the systems that exist today, you have to rely on the client to do that. And within mammoth system, you don't.
Challenges for Non-Custodied Managers
00:38:10
Speaker
Right. Nope. You can, you can set it up right from in the system as part of onboarding, um, ACH wire. If you're doing a check, um, all the KYC, AML, OFAC check that's required is built in. So that's all automated fund managers should.
00:38:27
Speaker
be moving in this direction. And I think, you know, you think of it more and more, if you could talk to any fund manager for the most part, you know, if you look at like the run of the mill, they don't approach this industry because it's too expensive for them to build relationships. It's also a completely different service model that they're not, and they'd have to potentially hire new people. You know, that was one of the things that when Bonrion went to market and when I started talking to asset managers, we wanted to be,
00:38:57
Speaker
their resource to help understand the market so that they could effectively service it. But if you're a asset manager who's always had institutional clients, the service model and the sales approach to the advisor market is completely different. And you can't take the same approach.
00:39:14
Speaker
Yeah. And that's exactly what I'm getting at is that, um, you know, this isn't just like the traditional throw money at it wholesale, put somebody on a plane model. Um, the, the world has changed. And so allocating to these products needs a lot more automation and needs, you know, we have to think data first. We have to think complexity and long-term relationship management. And so if I like your product, but it's going to be a pain for me to honor the deal I made with my client long-term it's a note. It's a non-starter.
00:39:45
Speaker
The other thing it's all for is a lot of asset managers don't approach the market because they just don't custody at the places the advisors custody. You know, it wasn't until the last 18 months that Schwab started to really build out their private fund.
00:40:01
Speaker
platform. Fidelity's had one forever, but it's complex to get on those. Fidelity, for example, it's actually not that hard to get on, and they've been doing this robustly, but a fund manager can't go and request it. The advisor has to. So if a fund manager wants to be on the Fidelity private funds platform, they can't just go to Fidelity and be like, hey, I want a custody and have be available on your platform. It actually has to become a request from the advisor saying, hey, I want to use this fund on the platform, which
00:40:30
Speaker
makes it more difficult. And Schwab is still working the kinks out. I've heard from advisors that it's a little clunky. It doesn't update as much as they would like. It's not as robust as they'd like, like you see at Fidelity. And again, same thing. It has to come from the request of the advisor. So then the problem becomes if the asset manager doesn't custody at Fidelity or Schwab, which they probably don't because those are not traditional places of hedge fund,
00:40:57
Speaker
private equity with custody, those guys tend to custody at things like Mellon, BNY, and firms of that nature, JP Morgan, that's who their custody is. That's traditionally what the custody would be because there are services involved like Prime Brokerage, they tend to custody with investment banks who can offer those additional services. And now there's a mismatch making it harder for the advisors to your point to invest because
00:41:25
Speaker
they don't custody where you custody. So that means it's not ever gonna show up on your Schwab statement or fidelity statement. And you can't streamline it into your back office solution either. And in many ways, this is kind of a workaround for those managers to start working with the advisors and take that headache out, but at the same time start to work towards being able to get on those platforms as well.
00:41:50
Speaker
Yeah, 100%. I mean, these large fund managers, 100% should be working towards being on those custodial platforms and the custodial platforms, which I imagine they will, they're starting to, will be opened up to, obviously,
00:42:05
Speaker
as their workflows get more ironed out, opened up to this whole ecosystem. We saw a lot of movement in the last 10 years around open architecture. TD Ameritrade was a, they were a leader in that front. I imagine that same policy is going to be adopted by Schwab, but we're seeing it more and more. But when it comes down to like private allocations, when it comes to an advisor,
00:42:29
Speaker
You have this infrastructure when you want to recommend something. And I think it's a good press best practice to pay attention to where are these assets custody? What's the protocol there? How do I fulfill that? And do I have a system in place to do it? But I promise when you get into that.
00:42:45
Speaker
ultra high net worth, high net worth, ultra high net worth range. Those clients, those investors are being thrown deal flow left and right all the time. And it's not these big funds that you're going to find on Schwab. It's direct investments in startup companies, right? They're, they're getting pitched with angel opportunities constantly, um, small VC deals. And it's all these things that are coming at them left and right. And so how do you service all of it?
00:43:14
Speaker
How do you bring it all together? How do you measure it? You got to have, you got to have your own system in
Infrastructure for Private Investments
00:43:19
Speaker
place. No fund manager is going to take care of that for you. Yeah. And I think that's an important point. You know, um, I think what I find most interesting is, you know, the efficiencies, but you touched upon this other part, which is important. There's an essence of feeling confident in the viability.
00:43:39
Speaker
of a manager that is using certain technology protocols or service providers. So you touched about it in custody, but when we do our due diligence at Bondurant on any manager, we focus on who are their service providers, who is their TPA, because you want to see that they're with legitimate, well-known
00:44:02
Speaker
high quality service providers. It's always a red flag if you see somebody changing their TPA all the time or their legal counsel. But you want to see some consistency there. So when you work with a manager who has gone through the process of integrating and working with Mammoth, there's a level of confidence you can feel because Mammoth
00:44:25
Speaker
does some due diligence on that operational side, like who's the TPA? Who's the legal counsel? I imagine you guys have some level of, I've never heard of this TPA, we've never worked with them, sorry, you can't be on the platform. And that should give advisors confidence too, that from the front end investment due diligence and the back end operational due diligence, mammoth and boundary are working together to ensure that what is available to you, you can feel really good at as a fiduciary.
00:44:51
Speaker
Yeah, 100%. And, and, you know, just to close that thought, a big part of our partnership with binary is being able to make due diligence accessible. You know, when we first started our, when we were helping these firms build out their own funds, and they asked about getting due diligence done, and we went out there and looked
00:45:08
Speaker
You know, a lot of the firms were looking at having to pay a pretty large retainer with a big institutional due diligence company, and they would get access to this library or reports that they didn't need. They don't have deal flow that that that's that big, right? They need more pointed solutions and real people who they can build a relationship and rely on. And so we've built out the integration where firms, when you do come across a deal and you need due diligence, or if there's something in the mammoth catalog that you say, Hey, I want to run this past, past my team at Bonrin.
00:45:38
Speaker
One click, you can push that over requested due diligence report. And assuming you have a relationship with both of us, Shana's team gets working on it. And once the due diligence report is available, it's available on both systems. And, um, you know, it's, it's, I think thoughtful workflows like that, that really will help an advisor kind of streamline this area of their practice and help them grow with alternatives.
00:46:03
Speaker
And I think it helps the aggregators too. As you and I have both found, a lot of the aggregators, they do have ALTS teams. They're not big. Advisors are now more and more interested in ALTS. So their ALTS teams are getting inundated with requests about this manager, that manager. My client came to me with this. They have like two people and they can't handle it. So I've talked to firms, big firms that are like, we have a one year backlog.
00:46:27
Speaker
under diligence requests. So having that mechanism at which they can have a complementary team supporting them I think is really important in this space because we know the demand is there. Now there's one last thing I really want to touch upon and it really is more in the vein of the asset manager.
Opportunities in the Mass Affluent Market
00:46:45
Speaker
You know we had some conversations recently with some asset managers where they kind of
00:46:52
Speaker
We're not on board with the idea of the mass affluent market. And I think it's really important that we highlight that this is a massive market and opportunity. Oh, yeah. That has been completely overlooked. And these advisors actually want these products. They view it as not even now. It is no longer a way to differentiate yourself. It is a must have.
00:47:20
Speaker
Let's talk a little bit about, you know, why this market is so important and why, you know, advisors are asking for these products for their clients in this space. So without trying to claim like some kind of crazy expertise or insights that if I just go back to my original experience in leverage, where we had this screener and we have advisors advisors looking for ticker symbols of companies that are private.
00:47:52
Speaker
That is the canary in the coal mine. The private market is growing. Access is growing. I mean, we're talking to managers where we're bringing on private funds and they're launching interval products. There's a large asset manager we're talking to right now that is
00:48:10
Speaker
as a very robust, long history in the hedge fund world. It also has a suite of mutual funds that are in the same space. And they want to have a place where both those things can be available and accessible. But with the ability to access these types of strategies, as a younger couple grows in their wealth, they get really comfortable with these types of strategies through the liquid form. And eventually, they're going to want to move over to the more efficient
00:48:38
Speaker
greater excess return possibility, more potential alpha of the less liquid things, but also having conversations about liquidity, liquidity budgets, alpha of liquidity, all those things are part of that, but it's what's happening in that mass affluent market right now.
00:48:55
Speaker
Yeah, no, it's a hundred percent and it's what's happening in the mass affluent market. And I'll tell you, I was just in a meeting the other day where liquidity risk, um, was kind of the topic of discussion and it was a very obvious, but great point that was made, which the question that was posed is when will you start dealing with retirement assets?
00:49:13
Speaker
We're constantly making recommendations and allocating money to non-liquid vehicles like an IRA. So if I'm a young couple and I'm advising for a young couple in their 40s and we're making allocations in their IRA, sure we might be able to buy and sell, but that money is locked up until retirement without a substantial fee if you need to access it outside of that IRA account.
00:49:34
Speaker
And so as we make these allocations, we're already doing it. It's just a matter of ourselves looking at that liquidity as which most have come to, to view as an asset, right? So something not re pricing so frequently and not having liquidity, um, can create stability in a portfolio, which you and I understand.
Benefits of Non-Daily Pricing
00:49:54
Speaker
And I think more and more mass affluent is coming along to that. And now more than ever, I just saw a, um, an article.
00:50:03
Speaker
I believe it was New York times. Maybe it was wall street journal, but the title of the article was what does it take to be in the 1%. Right. Right. So what are based on your income? Are you in the top 1% the entire article?
00:50:16
Speaker
was about the type of investments that 1% are making that are illiquid or in the alt space. It was all about real estate. It was all about getting increased yield in private credit and private debt. It was all about private equity and the maturity of private equity and the access that that gets you when we think of diversification.
00:50:34
Speaker
Um, that isn't available in public markets because the public markets are shrinking, right? Not necessarily in sizes as far as assets, but in size as demographics across our country. And so it's pretty interesting. It's becoming a lot more mainstream. And I think advisors being at the forefront of that and how they create access and how they manage the transactions is going to be the key. That's really going to be the key.
00:50:58
Speaker
No, completely agree. I completely agree. There's so much complexity here, you know, tax planning, liquidity budgeting, you know, risk budgeting. And then I think if you were to talk to behavioral finance folks like a Daniel Crosby or Brian Portnoy, they would also say that, you know, from a psychological standpoint as an advisor, having
00:51:21
Speaker
some things in the portfolio that don't price daily, actually, psychologically is a good thing for the client. They're not constantly watching the movement and freaking out and having that, you know, emotional response when things aren't going their way, because you can't. And it's it's there's there's a psychological benefit to that type of thing as well.
00:51:43
Speaker
Yeah, absolutely. And then, and then not to mention that you just, you can't make the gut reaction. So you have the psychological, but then you're also restricted from having the gut reaction where all of a sudden I can't deal with it. I'm going to pull the plug. It prevents us from getting our own way too.
00:52:00
Speaker
Yeah, I mean, I did the Compound and Friends podcast and Michael Batnick was talking about like, if you had to be like stuck in investment for 10 years and he couldn't look at it, like, how would he feel? And he was like, I love that. And I think there's something to be said about, you know,
00:52:16
Speaker
It kind of prevents you from making your own bad decisions. Yeah, exactly. In that respect. But I really want to thank you for being with me today, for taking this time. I'm really excited about our partnership. I really do think what we're doing is
00:52:32
Speaker
So amazing. And we've already been talking to advisors and getting excellent feedback. And even with the asset managers, the entire process for them has been really remarkable. They comment about how easy it's been, how high level the service has been. I know we referred one of our managers over to you guys and he raved about how
00:52:53
Speaker
quickly you guys get back to him how often you communicate and how easy the entire process was for them to get up and running and feel like they were well supported. And I think anybody who chooses to do business with us will find that that's kind of like, you know, our core philosophy is, you know, the point of both of our firms building what we built was to have a good experience. And number one way to have a good experience is to have good service. And so that's, you know, that's one of the key things that
00:53:23
Speaker
both our firms really
Commitment to Service Excellence
00:53:24
Speaker
focus on. Um, so tell us where we can find you, um, and where people can find information about mammoth. Um, and I'll also put it in the notes underneath the, uh, the episode. Um, but, um, feel free to tell our audience where they can find you. Awesome. Well, me personally, find me on LinkedIn. It's the only place I am. I'm kind of old school that way. And then, um, mammoth technology.com. Awesome.
00:53:52
Speaker
Look us up and we'd love to meet with you. We'd love to answer your questions and we have great resources on the website. So feel free to browse that. And if you want to talk, my calendar links right there on the website.
00:54:04
Speaker
Yeah, and I'll also put a link in the episode notes where advisors or asset managers can sign up to get a demo if they want to see the technology and get a feel for it. I'm just going to throw it out there because my marketing hat is on. But as we are launching this technology, especially on the advisor side, we're certainly looking for advisors who are interested in helping us ensure that the technology is what we want it to be.
00:54:31
Speaker
You can't, we call them beta testers, but the whole point is we think we built something great, but until people are actually using it every day, we'll never know if it's actually meeting what we want. So if you're an advisor who finds what we're talking about compelling and want to be part of that group that helps us ensure that this is exactly what we want it to be in the experience, exactly what we hope it will be, you know, please reach out. We'll put a link in the notes, uh, to set up that as well. Great. Thanks, Shannon. Thanks for having me.
00:55:01
Speaker
Thank you.
00:55:22
Speaker
To determine which investments may be appropriate for you, consult your financial advisor prior to investing. Only past performance discussed during this podcast is now a guarantee of future results. The guests featured on this program are participants on Bonnerin Capital Management's platform. As such, Bonnerin may receive payment for their participation as a platform partner. Any indices referenced for comparison are unmanaged and cannot be invested into directly.
00:55:48
Speaker
As always, please remember, investing involves risks and possible loss of principal capital. Please seek advice from a licensed investment professional. Investments are not FDIC insured, nor are they deposits of or guaranteed by a bank or any other entity so they may be valued.
00:56:04
Speaker
Investors should carefully consider investment objectives, risks, charges, and expenses. This and other important information is contained in the fund prospectus and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing. Statements attributed to an individual represent the opinions of that individual as of the date of the published podcast and do not necessarily reflect the opinions of farming and capital management or its affiliates.
00:56:30
Speaker
This information is intended to provide educational guidance, highlight issues, and should not be considered advice, an endorsement, or a recommendation. All Bonner & Capital trademarks mentioned are owned by Bonner & Capital Management Inc., an affiliated company, or its funds. All other company and product names mentioned are the property of their respective companies.
00:57:17
Speaker
The opinions expressed on the What's the Alternative podcast are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or in any specific security. This is only intended to provide education about the financial industry,
00:57:34
Speaker
To determine which investments may be appropriate for you, consult your financial advisor prior to investing. Any past performance discussed during this podcast is no guarantee of future results. The guests featured on this program are participants on Bonrion Capital Management's platform. As such, Bonrion may receive payment for their participation as a platform partner. Any indices referenced for comparison are unmanaged and cannot be invested into directly.
00:58:00
Speaker
As always, please remember investing involves risk and possible loss of principal capital. Please seek advice from an licensed investment professional. Investments are not FDIC insured, nor are they deposits of or guarantees by a bank or any other entity, so they may lose value. Investors should carefully consider investment objectives, risks, charges, and expenses
00:58:22
Speaker
This and other important information is contained in the fund prospectus and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing. Statements attributed to an individual represent the opinions of that individual as of the date of the published podcast, and do not necessarily reflect the opinions of boundary and capital management or its affiliates.
00:58:43
Speaker
This information is intended to provide educational value, highlight issues, and should not be considered advice, an endorsement, or a recommendation. All Bonrion Capital trademarks mentioned are owned by Bonrion Capital Management Inc., an affiliated company, or its funds. All other company and product names mentioned are the property of their respective companies.