# Alternate Investing: Masters in Business with Kristin Olson

An episode of [Masters in Business](https://invisiblenetwork.ai/podcast/730188152), 12 Nov 2025, 52 min.

Audio: https://podtrac.com/pts/redirect.mp3/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/4e4cd910-40a1-4619-a5f3-ae2b0012ffff/bfc94cde-6b8a-40b4-8691-b39301224bbe/audio.mp3?utm_source=Podcast&in_playlist=5873a3cb-298f-40bc-b71f-ae2b0013000d

Barry speaks with Kristin Olson, global head of alternatives for wealth at Goldman Sachs. They discuss the alternate investing space. Kristen and Barry also discuss allocating money long-term and making alternatives more accessible to individual investors. See omnystudio.com/listener for privacy information.

## Transcript

[0:02] Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. This is Masters in
[0:11] Speaker 1: Business with Barry Ritholts on Bloomberg Radio.
[0:16] Speaker 2: This week on the podcast, I have an extra special guest.
[0:20] Speaker 2: Kristin Olsen is Goldman Sachs's global head of Alternatives for Wealth.
[0:25] Speaker 2: She's a self described Goldman Sachs lifer. She went to
[0:29] Speaker 2: the firm straight out of Georgetown twenty seven years ago.
[0:33] Speaker 3: She's been running the Alts.
[0:35] Speaker 2: Group for the past twenty four years. There aren't many
[0:38] Speaker 2: people in the world of either wealth management or alternatives
[0:43] Speaker 2: that are as knowledgeable and experienced as Kristin is. I
[0:47] Speaker 2: thought this conversation about everything from private equity to private
[0:52] Speaker 2: credit to real assets including real estate and infrastructure investing
[0:57] Speaker 2: was absolutely fascinating, and I think you will also with
[1:01] Speaker 2: no further ado my conversation with Kristin Olsen. Kristin Olsen,
[1:06] Speaker 2: Welcome to Bloomberg.
[1:07] Speaker 4: Thanks for having me, Barry.
[1:08] Speaker 2: Well, I've been looking forward to having this conversation. Alts
[1:12] Speaker 2: are obviously a super hot topic these days, but before
[1:16] Speaker 2: we get into that, let's talk a little bit about
[1:19] Speaker 2: your background. You arrived at Goldman Sachs directly from undergraduated Georgetown.
[1:25] Speaker 2: What led you to finance and what led you to Goldman.
[1:28] Speaker 5: So I would say, you know, corraduating from Georgetown, I
[1:32] Speaker 5: actually wasn't sure what I want to do. I was
[1:34] Speaker 5: interested in corporate finance, but I was particularly drawn to
[1:37] Speaker 5: the idea of joining a big analyst class with great
[1:39] Speaker 5: training at one of the big investment banks. And then
[1:42] Speaker 5: I'd say I was fortunate enough through the in unity
[1:44] Speaker 5: process to land at Goldman Sacks and that turned out
[1:48] Speaker 5: to be a fantastic place to start my career in
[1:52] Speaker 5: investment banking in the Financial Institutions group.
[1:55] Speaker 2: And you started as an analyst in investment banking, did
[1:59] Speaker 2: you go the whole CFA route one, two, and three.
[2:02] Speaker 4: Nope, just two years.
[2:03] Speaker 5: I got my CFA as an analyst at Goldman Sachs.
[2:06] Speaker 5: That was my that was my training, two years in FIG.
[2:09] Speaker 2: And then how did you end up pivoting to ALTS?
[2:12] Speaker 2: It seems so different to go from transactional banking, especially
[2:17] Speaker 2: when you started heading right into two thousand.
[2:20] Speaker 3: What was the appeal of ALT?
[2:22] Speaker 5: Well, it's funny I didn't go directly into ALTS. It
[2:24] Speaker 5: took a little segue. So in two thousand, as a
[2:27] Speaker 5: third year analyst, I wanted to do something different. It's
[2:30] Speaker 5: hard to think. Way back then, that was the dawn
[2:33] Speaker 5: of the Internet, and you know, everyone was going to
[2:36] Speaker 5: work on different dot coms, different startups, and I took
[2:40] Speaker 5: a little bit of a safer route and decided to
[2:41] Speaker 5: work on the Goldman dot Com.
[2:43] Speaker 2: Project, which is what which was really their own build
[2:46] Speaker 2: out of their own website exactly.
[2:48] Speaker 5: That's how long ago it was, if you think about it,
[2:50] Speaker 5: we didn't have an online ability for our clients to
[2:54] Speaker 5: access their accounts, to trade stocks, to access information as.
[2:58] Speaker 2: Late as two thousand, Hey maybe we should get a website.
[3:01] Speaker 4: That was the start of it.
[3:02] Speaker 5: And also thinking about what kind of business we could
[3:05] Speaker 5: evolve around self directed investors going to Goldman dot com
[3:10] Speaker 5: versus at that time, E Trades, schwab right, all the
[3:15] Speaker 5: online access that was happening, and so I decided to
[3:18] Speaker 5: spend my third year focused on that business endeavor, and
[3:21] Speaker 5: then that led right to the DOCM bubble bursting, which was,
[3:27] Speaker 5: you know, pretty much I was pretty much done with
[3:29] Speaker 5: my third year analyst program.
[3:30] Speaker 4: I had a few more months.
[3:31] Speaker 5: That was kind of February March of one, and so
[3:35] Speaker 5: when that happened, they went to the you know, US
[3:38] Speaker 5: poor third year analysts and said, you've got a few
[3:40] Speaker 5: more months on your program, why don't you move into
[3:43] Speaker 5: this investment management division at Goldman Sachs, which I knew
[3:45] Speaker 5: nothing about at the time. And you're going to interview
[3:48] Speaker 5: with a bunch of people. And it was sort of
[3:50] Speaker 5: a group interview. And this is funny, but.
[3:53] Speaker 2: Meaning you with a bunch of people or what person
[3:56] Speaker 2: with a bunch of people.
[3:57] Speaker 5: At a bunch of analysts? Wow, and funny story. My
[4:01] Speaker 5: mentor and longtime boss. I heard this after the fact.
[4:05] Speaker 5: We'll say I won Kristen and the analyst lottery or
[4:08] Speaker 5: the analyst draft. He drafted me. And I didn't know
[4:12] Speaker 5: anything about alternatives. I didn't know anything about investment management.
[4:15] Speaker 5: I didn't know anything about wealth management. And the seat
[4:17] Speaker 5: I got put into at the time was called our
[4:19] Speaker 5: Special Investments group. So that's what we called alternatives back then.
[4:22] Speaker 5: Special investment.
[4:23] Speaker 3: Huh.
[4:23] Speaker 2: Really interesting? And to be clear, Goldman has long had
[4:28] Speaker 2: a reputation as very savvy traders and very savvy participants
[4:34] Speaker 2: in public markets, and very very savvy in terms of seating. Hey,
[4:42] Speaker 2: we have this great trader, but he wants to leave
[4:43] Speaker 2: and start his own hedge fund. Let's be his prime
[4:48] Speaker 2: broker and let's see them and participate in the upside.
[4:51] Speaker 2: So I typically think of Goldman as a big public player.
[4:56] Speaker 2: This has been developing for you know, longer than you've
[5:01] Speaker 2: been there. What's the total assets that Goldman runs in
[5:04] Speaker 2: terms of privates.
[5:06] Speaker 4: Over five hundred million dollars.
[5:07] Speaker 3: That's real money.
[5:08] Speaker 5: Yeah, I mean, I think it's one of the things
[5:09] Speaker 5: that people don't realize, which is you talk about going
[5:12] Speaker 5: back twenty seven years ago. We've had a private investing
[5:15] Speaker 5: business going back well over three decades wow, and over
[5:18] Speaker 5: five hundred million assets today. We are one of the
[5:21] Speaker 5: largest managers of alternative assets.
[5:24] Speaker 4: So people don't know.
[5:25] Speaker 2: So how has this space changed over the twenty three
[5:29] Speaker 2: twenty four years you've been working in.
[5:33] Speaker 4: Alts incredibly, right?
[5:35] Speaker 5: I mean I think if you thought about the expansion
[5:38] Speaker 5: of the different asset classes that sit under alternatives, right,
[5:41] Speaker 5: So that's a broad word that describes lots of different
[5:44] Speaker 5: types of strategies.
[5:45] Speaker 2: Break it down for us, what are the key.
[5:47] Speaker 5: You were starting with hedge funds, So that's one sector.
[5:50] Speaker 5: But if you actually think about where we focus more,
[5:52] Speaker 5: it's much more on the private side than the public alls.
[5:55] Speaker 5: So if you think about under that umbrella, it's private equity.
[5:59] Speaker 5: But again, under private equity, let's think about the different
[6:01] Speaker 5: strategies there, everything from buy out through growth equity, through
[6:05] Speaker 5: venture capital, then the advent up a big private credit
[6:09] Speaker 5: asset class with an alternatives right, and even within that
[6:11] Speaker 5: everything from direct lending to hybrid capital solutions to distress right,
[6:15] Speaker 5: all of that falls under this private credit bucket. And
[6:18] Speaker 5: then you have real assets, real estate, infrastructure, and so
[6:23] Speaker 5: the asset class has become much more mature and much broader.
[6:28] Speaker 5: And then obviously we've seen tremendous inflows over the last
[6:31] Speaker 5: two three decades, and it's.
[6:33] Speaker 2: It's still a fraction of the size of the public market.
[6:35] Speaker 2: So I think that kind of gets lost in all
[6:38] Speaker 2: the enthusiasm. Well, it's relatively small compared to stocks, bonds,
[6:44] Speaker 2: or any other private.
[6:46] Speaker 5: Exactly, Yet a lot of the economy is driven by
[6:51] Speaker 5: private companies, right, And so I think that's part of
[6:53] Speaker 5: the impetus right now as we see kind of the
[6:54] Speaker 5: aperture opening for alternatives to individual investors, right, is how
[6:58] Speaker 5: do you tap into other sources of growth in the
[7:01] Speaker 5: economy if you're only investing in public markets? Right? So
[7:04] Speaker 5: I think there's an imperative for a lot of investors
[7:06] Speaker 5: to learn more and start to invest in private markets.
[7:10] Speaker 2: So some of the drivers of the growth in the
[7:12] Speaker 2: space are obviously privates are the majority of economic activity
[7:17] Speaker 2: in the country. At the same time, we've seen the
[7:21] Speaker 2: number of public companies shrinking between buybacks and mergers and
[7:26] Speaker 2: the limited number of IPOs, the total number of public
[7:31] Speaker 2: companies are becoming smaller as privates get bigger. I'm going
[7:35] Speaker 2: to ask you to speculate what might reverse that shrinkage
[7:39] Speaker 2: in the number of US public companies.
[7:42] Speaker 5: Well, look, I think high quality, high growth companies are
[7:45] Speaker 5: many of them are still going to revert back to
[7:47] Speaker 5: the public markets, right, and hopefully we're starting to see
[7:49] Speaker 5: a pick up an IPO activity. I think you'll see
[7:51] Speaker 5: some of the marque growth companies, tech companies, AI companies
[7:56] Speaker 5: that need massive amounts of capital to fund themselves.
[7:58] Speaker 3: There's no alternative to go back to.
[7:59] Speaker 4: The IPO markets, right.
[8:01] Speaker 5: But you've seen a lot of innovation in the private
[8:04] Speaker 5: markets to allow companies to say private for a lot longer, right,
[8:08] Speaker 5: And so I think average time to IPO now is
[8:10] Speaker 5: ten years. But what you're seeing the interim are secondary
[8:14] Speaker 5: funds doing things like continuation vehicles right to allow to
[8:17] Speaker 5: change the investor base but stay private for a.
[8:20] Speaker 4: Longer period of time.
[8:21] Speaker 5: There's just a lot more liquidity in private markets to
[8:24] Speaker 5: allow these companies to maybe not have to ever go
[8:27] Speaker 5: public if they don't want to.
[8:28] Speaker 2: You know, it felt like in the nineties there was
[8:31] Speaker 2: this mad rush to go public, very often with flimsy
[8:34] Speaker 2: business models, clicks and eyeball stuff like that, And now
[8:38] Speaker 2: it seems like we've swung the pendulum completely in the
[8:41] Speaker 2: other direction, where there is no rush to go. But
[8:45] Speaker 2: at a certain point, some of these companies get so large,
[8:48] Speaker 2: really there's no alternatives there. So at that point size
[8:53] Speaker 2: matters and you have to go public once you're looking
[8:55] Speaker 2: for Well, we just sort of take private for fifty
[8:58] Speaker 2: five billion, So maybe that IPO line is higher than
[9:02] Speaker 2: I imagine, maybe it's seventy five billion. Let's bring this
[9:05] Speaker 2: back to alternatives. What was it about the alternative investment
[9:10] Speaker 2: world that you found so compelling versus your early experience
[9:15] Speaker 2: with public stocks and bonds.
[9:16] Speaker 5: Well, I think one of the fortunate things that I
[9:18] Speaker 5: had with that pivot into alternatives was it was the
[9:20] Speaker 5: intersection of not just alternatives, but alternatives and wealth management, right,
[9:26] Speaker 5: thinking about how we deliver alternative investments to our Goldman
[9:29] Speaker 5: Sacks wealth management clients, right, and you think about the industry,
[9:33] Speaker 5: it really started alternatives focused on big institutions, pension funds, endowments,
[9:38] Speaker 5: sovereign wealth funds. But actually at Goldman Sachs, we've been
[9:42] Speaker 5: investing in alternatives for our wealth clients for over thirty years.
[9:46] Speaker 5: So that intersection has been really interesting, and obviously, you know,
[9:50] Speaker 5: fast forward to today. You know, the intersection of wealth
[9:53] Speaker 5: and alts is a topic that you hear about pretty
[9:55] Speaker 5: much every day.
[9:56] Speaker 3: Right.
[9:56] Speaker 2: When I think about the original institutions, you think of
[9:59] Speaker 2: the Yale model and David Swinson and what was that
[10:03] Speaker 2: the early nineteen eighties something like that, So that's forty
[10:07] Speaker 2: something years ago. You guys have been doing this for
[10:09] Speaker 2: thirty years. Not only has that market change, but there's
[10:15] Speaker 2: been strategy and culture changes over the same period. Explain
[10:19] Speaker 2: what you've observed and how you've helped shape this.
[10:23] Speaker 5: Yeah, So, look, I think the process of allocating to
[10:26] Speaker 5: alternatives for individual investors we've sort of honed and shaped
[10:29] Speaker 5: over the last you know, twenty five years. Part of
[10:32] Speaker 5: that starts with what do we advocate in terms of
[10:34] Speaker 5: how much our clients should have in alternatives. Right, So
[10:37] Speaker 5: go back to you know, when I started doing this
[10:39] Speaker 5: in two thousand and one, for a moderate risk client,
[10:42] Speaker 5: we already had at that point of twenty percent or
[10:44] Speaker 5: so allocation alternatives. Fast forward to today, we would tell
[10:47] Speaker 5: a moderate risk client they should have closer to twenty
[10:50] Speaker 5: seven percent of their.
[10:51] Speaker 2: I've heard some people say sixty twenty twenty is the
[10:54] Speaker 2: new sixty forty. Is that just a cute line or
[10:58] Speaker 2: is there anything.
[10:59] Speaker 3: To those No?
[10:59] Speaker 5: No, I think we're heading in that direction, right. I
[11:02] Speaker 5: think for the clients that can withstand the liquidity, which
[11:05] Speaker 5: we should talk about and understand kind of the risk
[11:08] Speaker 5: return of alternatives, the idea of having a twenty percent
[11:12] Speaker 5: or so allocation to alternatives is something I think we're
[11:15] Speaker 5: going to talk about a lot more across all levels
[11:18] Speaker 5: of investors.
[11:19] Speaker 2: And it sounds like given that even where current rates are,
[11:24] Speaker 2: it's still historically relatively low, which means we're not seeing
[11:28] Speaker 2: a lot of yield on the fixed income side of
[11:31] Speaker 2: the ledger. If we're talking sixty twenty twenty, it sounds
[11:34] Speaker 2: like all or most of the shift into alts are
[11:38] Speaker 2: coming from low yielding bonds.
[11:40] Speaker 5: So look, I think the twenty percent is the part
[11:42] Speaker 5: that I think I'm convicted on in the Alts piece.
[11:45] Speaker 5: The question of where you fund it from, I think
[11:47] Speaker 5: there's debate around, right, You've heard people say fifty thirty,
[11:50] Speaker 5: twenty sixty, twenty twenty. I think that depends a little
[11:54] Speaker 5: bit on where where are you going within alternatives?
[11:57] Speaker 4: Right?
[11:57] Speaker 5: Are you leaning into private credit to your point and
[12:00] Speaker 5: looking for a high single digit yield in private credit?
[12:04] Speaker 5: Then yes, then maybe you're funding it out of the
[12:05] Speaker 5: fixed income bucket, or if you're leaning more into equity
[12:08] Speaker 5: related strategies right, than maybe the funding source comes a
[12:10] Speaker 5: little more of equities.
[12:11] Speaker 4: Right. So I think the part that I'm focused on
[12:13] Speaker 4: is the.
[12:13] Speaker 5: Idea that people should have that twenty percent in there, right,
[12:18] Speaker 5: And then I think it's a bespoke conversation about is
[12:20] Speaker 5: it fifty or sixty equities?
[12:22] Speaker 4: You know, where's it fun from?
[12:24] Speaker 2: And last question about your career, you describe yourself as
[12:28] Speaker 2: a Goldman lifer. What's kept you there for almost three decades?
[12:33] Speaker 5: So the number one thing is definitely the people, right,
[12:37] Speaker 5: I mean going somewhere for twenty seven years, which I
[12:39] Speaker 5: never thought I would be doing. You know at the
[12:41] Speaker 5: same firm. It's all about the quality of the people
[12:43] Speaker 5: and the engagement. I think it's high quality people I
[12:46] Speaker 5: enjoy working with every day. I think the second part
[12:49] Speaker 5: is I think I got lucky falling into a really
[12:52] Speaker 5: interesting part of Goldman's Acts where I get to watch
[12:54] Speaker 5: the evolution of the alternative investment's asset class and the
[12:59] Speaker 5: growth of our wealth business. And I think that dynamism
[13:01] Speaker 5: of that has also kept me engaged for.
[13:03] Speaker 2: That interesting super fast growing and constantly evolving. I would
[13:08] Speaker 2: imagine that no week is the same over the past
[13:11] Speaker 2: twenty three twenty four years running ALTS exactly.
[13:14] Speaker 5: And I think the other interesting part about it is
[13:16] Speaker 5: when you have a dislocation in the markets in the world,
[13:20] Speaker 5: alternatives is actually a part of the portfolio where you
[13:23] Speaker 5: usually go to capitalize on that, Right.
[13:25] Speaker 4: So I think that's also really interesting. Right.
[13:27] Speaker 5: So you have a dislocation, well, let's look at special
[13:30] Speaker 5: situations or distress managers, right, or Wow, you have incredible
[13:34] Speaker 5: innovation happening in technology, You're going to do private growth
[13:38] Speaker 5: equity investing, right, And so I think that that's the
[13:40] Speaker 5: dynamism I'm talking about in terms of tapping into dislocations,
[13:43] Speaker 5: tapping into innovation.
[13:44] Speaker 4: A lot of that happens in the private market.
[13:46] Speaker 2: Really super interesting. Coming up, we continue our conversation with
[13:50] Speaker 2: Kristin Olsen, Goldman Sachs, Global head of Alternatives for Wealth
[13:54] Speaker 2: clients describing the Goldman Sachs alternative wealth experience.
[13:59] Speaker 3: I'm very rich Helts.
[14:00] Speaker 2: You're listening to Masters in Business on Bloomberg Radio.
[14:24] Speaker 3: I'm Barry red Halts.
[14:25] Speaker 2: You're listening to Masters in Business on Bloomberg Radio. My
[14:28] Speaker 2: extra special guest this week is Kristen Olsen. She is
[14:31] Speaker 2: Goldman's global head of Alternatives for Wealth. She's been with
[14:35] Speaker 2: the firm for twenty seven years, and she's been running
[14:38] Speaker 2: the old Capital Markets group for twenty four of those
[14:41] Speaker 2: twenty seven years. So we were talking earlier about sixty
[14:45] Speaker 2: twenty twenty or fifty thirty twenty. How do you think
[14:50] Speaker 2: about those allocation ranges? How do you determine what's the
[14:54] Speaker 2: best recommendation for an ultra high networth portfolio line portfolio
[15:01] Speaker 2: who maybe they're not all that familiar with alternatives, but
[15:04] Speaker 2: they want to diversify and have a little bit more
[15:08] Speaker 2: of non correlated returns.
[15:11] Speaker 5: So I think we are blessed at Goldman Sachs to
[15:14] Speaker 5: have the benefit of our CIO and our investment strategy group.
[15:17] Speaker 5: So that's sort of where we start writing a conversation
[15:19] Speaker 5: with a client, which is how much of the portfolio
[15:22] Speaker 5: should we have in alternatives? And we need to look
[15:25] Speaker 5: a lot of factors in terms of risk tolerance, tolerance
[15:28] Speaker 5: for illiquidity, what are they looking to derive from that
[15:30] Speaker 5: portion of the portfolio. But sort of as a starting point,
[15:33] Speaker 5: we talked a little about this earlier. We would talk
[15:35] Speaker 5: to a client who has a moderate risk appetite about
[15:37] Speaker 5: having twenty seven percent alternatives, and so we'd have that
[15:40] Speaker 5: conversation around does that feel right? Is that the number
[15:43] Speaker 5: that we want to get to? And then once we're there,
[15:46] Speaker 5: then it becomes how do we get there? Because that's
[15:48] Speaker 5: actually the really hard part and alternatives.
[15:50] Speaker 3: When you say how do we get there?
[15:51] Speaker 2: How do we over time allocate from some other bucket
[15:56] Speaker 2: into the Olds buck exactly.
[15:57] Speaker 5: And the complication is traditional private alternatives are capital commitments
[16:03] Speaker 5: that generally call down capital and make investments over five
[16:06] Speaker 5: to ten years, and so there's a lot of art
[16:09] Speaker 5: and science of how do you get to twenty seven percent?
[16:12] Speaker 5: In alt right, it's going to take you five, seven,
[16:15] Speaker 5: ten years to get to that target as you sort
[16:18] Speaker 5: of ladder into these different commitments that you make. So
[16:22] Speaker 5: we spend a lot of time with clients talking about
[16:24] Speaker 5: that process.
[16:26] Speaker 2: So I'm very familiar with capital calls, typically from venture
[16:30] Speaker 2: capital funds, occasionally for some oversubscribe funds, that you do
[16:36] Speaker 2: all the docks and then you wait for a window
[16:38] Speaker 2: to open up where they'll take your money. I don't
[16:41] Speaker 2: usually think of private equity of private credit in those terms,
[16:46] Speaker 2: but you have a whole lot more experience in this
[16:48] Speaker 2: space than I do. Is that what typically takes place
[16:51] Speaker 2: Someone says, hey, I want to commit up to ten
[16:54] Speaker 2: million dollars to this fund.
[16:56] Speaker 3: How long does it take for those capital calls to
[16:58] Speaker 3: come in?
[16:59] Speaker 2: How long is the client waiting? And then what are
[17:02] Speaker 2: they sitting in while they're waiting? Are they just sitting
[17:04] Speaker 2: in treasuries?
[17:05] Speaker 5: And this is where alternatives are complicated, right? So if
[17:09] Speaker 5: you thought we'll talk a little bit about where alternatives
[17:11] Speaker 5: are going, right and when we talk about evergreens and
[17:13] Speaker 5: open ended which kind of get rid of that capital
[17:16] Speaker 5: called dynamic, But if you thought about ultrahigh network clients
[17:19] Speaker 5: who historically and continue to really invest in traditional closed
[17:22] Speaker 5: down alternatives. You need to be very close to that
[17:26] Speaker 5: client and how you build that portfolio year and year
[17:28] Speaker 5: out making commitments they are going to call capital in
[17:31] Speaker 5: private equity, in private traditional private credit funds, in real
[17:34] Speaker 5: asset funds. General is a ten year fund and they're
[17:37] Speaker 5: making investments over the first five years and trying to
[17:39] Speaker 5: harvest those over the second five years. And so our
[17:42] Speaker 5: job as advisors to our clients is how do we
[17:45] Speaker 5: build that laddered portfolio. How do we commit every single
[17:48] Speaker 5: year so that when we get to five to six
[17:49] Speaker 5: years in you hopefully have a self funding portfolio and
[17:53] Speaker 5: hopefully you have money you're invested. Capital is getting you
[17:57] Speaker 5: to that twenty seven percent of your portfolio in the ground,
[18:01] Speaker 5: but it's hard to get there, and so we spend
[18:02] Speaker 5: a lot of time advising clients on how to how
[18:05] Speaker 5: to build those portfolio.
[18:06] Speaker 2: So typically, all right, I have fifty million dollars, I'm
[18:09] Speaker 2: going to put ten million. I'm going to commit ten
[18:12] Speaker 2: to this. How long will it take before about five
[18:15] Speaker 2: years before that's fully general? And then what are am
[18:18] Speaker 2: I sitting in treasuries or money markets?
[18:20] Speaker 3: What am I doing in the meeting?
[18:21] Speaker 4: Then you're diluting your return right. And so this is
[18:23] Speaker 4: the other part.
[18:24] Speaker 5: You need to be really fully invested other than what
[18:26] Speaker 5: you think the short term capital call needs are. So again,
[18:29] Speaker 5: this is where the complexity comes in, which is how
[18:31] Speaker 5: do I not have drag and make sure I'm fully
[18:33] Speaker 5: invested right, but still have liquidity to fund a capital
[18:36] Speaker 5: that might come up the next month. And so that's
[18:38] Speaker 5: where our advisors spend a lot of time with clients
[18:41] Speaker 5: on making sure that we're not sitting in cash while
[18:44] Speaker 5: we're waiting for capital calls.
[18:45] Speaker 2: So ten million over five years sounds like two per year.
[18:48] Speaker 2: So in other words, it's not like I'm going to
[18:51] Speaker 2: allocate that money to this, correct I just am anticipating
[18:54] Speaker 2: a call for each of the next five years for
[18:57] Speaker 2: about two million, and the money is already invested rather
[19:01] Speaker 2: than sitting around waiting for this exactly.
[19:04] Speaker 3: It's a lot of moving parts.
[19:05] Speaker 4: It's a lot of moving parts.
[19:06] Speaker 5: But by the way, but that's what leads to when
[19:08] Speaker 5: you think about opening up the aperture and trying to
[19:11] Speaker 5: make alternatives more accessible. What you've seen over the last
[19:15] Speaker 5: few years is this incredible innovation around different structures that
[19:20] Speaker 5: are catering to individual investors. So if you think about
[19:22] Speaker 5: evergreen and open ended alternatives, you take away the complexity
[19:27] Speaker 5: of capital calls and distributions and managing liquidity because that
[19:30] Speaker 5: all gets done then within the vehicle, and there's trade
[19:34] Speaker 5: offs to that. But that's where you're seeing over the
[19:37] Speaker 5: last five years a tremendous amount of growth in alternatives
[19:41] Speaker 5: targeted at individual investments.
[19:42] Speaker 2: So you might be giving up some performance in exchange
[19:46] Speaker 2: for a whole lot more simplicity exactly. So let's shift
[19:50] Speaker 2: from the process of allocating and getting calls to the
[19:53] Speaker 2: actual ALT managers. I'm assuming you have dozens and dozens
[19:58] Speaker 2: of not hundreds on your platform, some in house, some
[20:01] Speaker 2: outside of the firm. How do you start the process
[20:04] Speaker 2: of figuring out what do we want this spread of
[20:07] Speaker 2: managers to look like?
[20:08] Speaker 5: Yeah, so that's what I think we spend a lot
[20:10] Speaker 5: of time focused on. I think our north star is
[20:13] Speaker 5: how do we have the best platform of opportunities for
[20:16] Speaker 5: our clients, and so one I think that starts with
[20:19] Speaker 5: diversification right across a number of different vectors. So one
[20:24] Speaker 5: is we talked about the different strategies under the ALT banner.
[20:28] Speaker 5: We need to have different opportunities in each of those
[20:30] Speaker 5: lanes buy out, growth, venture, private credit, real assets, right.
[20:36] Speaker 5: And then we want to be open architecture for our clients, right,
[20:39] Speaker 5: so meaning.
[20:40] Speaker 3: Not just gold Man, not just gold Man.
[20:41] Speaker 5: So product we have, as we talked about, a phenomenal
[20:44] Speaker 5: alternative capability over five hundred million dollars in assets under management.
[20:48] Speaker 5: We have a thirty plus year track record, and we
[20:50] Speaker 5: have strategies that span all those various alternabasset classes. So
[20:55] Speaker 5: that's one way we implement for clients. The other is
[20:58] Speaker 5: open architecture. So we have vehicles where clients can invest
[21:03] Speaker 5: in different fund of funds, different strategies like our Secondari's funds,
[21:07] Speaker 5: our co investment vehicles, and then lastly curating direct access
[21:13] Speaker 5: to some of the best alts managers out there on
[21:15] Speaker 5: a single name basis. And so there's different ways that
[21:18] Speaker 5: clients can actually implement their portfolio right across those three
[21:22] Speaker 5: different implementation methods.
[21:24] Speaker 2: So it's interesting we're talking about diversification and lack of correlation,
[21:30] Speaker 2: and I'm really hearing two distinct types of diversification. One is, hey,
[21:34] Speaker 2: these aren't public stocks, they don't follow that cycle, so
[21:37] Speaker 2: you should get some sort of non correlated returns. But
[21:42] Speaker 2: within each of the major subgroups of alternatives, and then
[21:48] Speaker 2: across those groups, this should be somewhat non correlated. Is
[21:52] Speaker 2: that is that affair of someone uncorrelated?
[21:54] Speaker 3: Yeah?
[21:54] Speaker 5: Look, I think what clients are looking for in alternatives
[21:57] Speaker 5: is diversification, so different return drivers than what they're getting
[22:02] Speaker 5: from public markets, hopefully, a lack of correlation to those markets,
[22:08] Speaker 5: and alpha to those markets, meaning outperformance relative to what
[22:11] Speaker 5: they otherwise would have gotten had they gone in the
[22:14] Speaker 5: public markets.
[22:15] Speaker 4: Right.
[22:15] Speaker 5: So, when we think about returns and alternatives, some of
[22:18] Speaker 5: it is absolute, right, so what type of returns are
[22:21] Speaker 5: those managers underwriting to in the portfolio? And that's an
[22:24] Speaker 5: absolute target, But then there's also a relative target, which
[22:27] Speaker 5: is how do we think about the premium you're getting
[22:30] Speaker 5: for that illiquidity? Right, So, if I'm going to tie
[22:33] Speaker 5: my money up for in a ten year private equity fund,
[22:36] Speaker 5: I want to be paid for that illiquidity. And so
[22:39] Speaker 5: then we think about am I getting several hundred basis
[22:41] Speaker 5: points a year better return then had I put that
[22:45] Speaker 5: money in at the same time and we're taking the
[22:48] Speaker 5: money out at the same time from the relevant public
[22:50] Speaker 5: market benchmark, Right, then I think I've been rewarded if
[22:53] Speaker 5: I've gotten three hundred basis points a year or something
[22:56] Speaker 5: in that ballpark better than the public alternative, and then
[23:00] Speaker 5: maybe you would say it was worth it for that.
[23:01] Speaker 4: Inliquidity, well, that's the.
[23:02] Speaker 2: Whole idea of the liquidity premium, right that not only
[23:07] Speaker 2: are you getting paid for illiquidity, but it becomes a
[23:10] Speaker 2: somewhat less efficient market, which means there's greater opportunity for
[23:14] Speaker 2: upside exactly.
[23:15] Speaker 5: I mean, look, the private markets, they have a lot
[23:17] Speaker 5: more information than the public markets. Many strategies they have control, right,
[23:22] Speaker 5: so they can actually change the outcome at their portfolio companies.
[23:25] Speaker 5: They can change management, they can change strategy, a lot
[23:29] Speaker 5: of different ways to drive return that are not available
[23:32] Speaker 5: in the public markets.
[23:33] Speaker 4: Right.
[23:34] Speaker 2: So, given the fact that information is so important and
[23:38] Speaker 2: so different than publicly traded stocks and or bonds, how
[23:42] Speaker 2: do you start out doing the due diligence that has
[23:45] Speaker 2: to be like a giant lift, especially if you have
[23:48] Speaker 2: a few hundred managers on the platform.
[23:51] Speaker 4: Yeah.
[23:51] Speaker 5: Look, I think most investors need to seek the help
[23:55] Speaker 5: of a professional organization that can help them do that diligence.
[23:59] Speaker 5: So I think for us we have a group called
[24:01] Speaker 5: our External Investing Group it's over four hundred people globally,
[24:04] Speaker 5: it's two hundred and fifty people doing manager selection and diligence.
[24:08] Speaker 5: And so we like to deploy that team to do
[24:12] Speaker 5: the fiduciary diligence and all the outside managers that we're
[24:15] Speaker 5: partnered with, and that's a pretty intense process, right, Each
[24:18] Speaker 5: manager is going to take a couple months to do
[24:21] Speaker 5: the diligence. It's going to go through an investment committee process.
[24:24] Speaker 5: And as you know, like you look at a track
[24:26] Speaker 5: record from a manager, you really need to dig in
[24:28] Speaker 5: and understand kind of what's behind that track record, right,
[24:31] Speaker 5: lots of caveats sometimes, and so that's the work that
[24:35] Speaker 5: they're doing and going to their investment committees and getting approval.
[24:38] Speaker 5: So we work with that team to diligence the managers
[24:41] Speaker 5: that we think makes sense for our clients.
[24:42] Speaker 2: So I'm going to guess there's some analysts, some lawyers,
[24:45] Speaker 2: some compliance people, some regulatory specialists. Like this isn't the
[24:49] Speaker 2: sort of thing that the average investor.
[24:51] Speaker 3: Can undertake on their own.
[24:52] Speaker 2: You really need a team of professionals to dive in.
[24:55] Speaker 5: I think you want to have the advice of professionals.
[24:58] Speaker 5: The other part that we've found as we talk about
[25:00] Speaker 5: diversification being so important. So when we think about an
[25:02] Speaker 5: individual investor, I always think there's a couple of vectors
[25:05] Speaker 5: of diversification for them. One is diversification of strategy, which
[25:09] Speaker 5: you talked about under the al umbrella number two, diversification
[25:12] Speaker 5: by manager, right you want to work with different managers,
[25:15] Speaker 5: and then diversification by vintage year. So we think it's
[25:18] Speaker 5: very important for clients to be pretty programmatic about making
[25:22] Speaker 5: allocations every single year, because again, you don't want to
[25:25] Speaker 5: market time. You don't know when the best opportunities are
[25:28] Speaker 5: going to be, and actually it's usually when times feel
[25:30] Speaker 5: the worst is probably the best time to be allocating, right,
[25:33] Speaker 5: And so you know, and then when you dial that back,
[25:36] Speaker 5: you might be needing to make ten commitments a year,
[25:39] Speaker 5: fifteen commitments a year. How can you diligence enough managers
[25:42] Speaker 5: to decide that you've picked us the best one, right,
[25:44] Speaker 5: And so it gets very challenging and very complicated, and
[25:47] Speaker 5: that's why you see a lot of individual investors partnering
[25:50] Speaker 5: with an advisor or an advisor that has diligence capabilities
[25:53] Speaker 5: to help navigate them through who are the best managers
[25:55] Speaker 5: in each of their each of those lanes.
[25:57] Speaker 2: So diligence is the first step, and that is all
[26:02] Speaker 2: the legal and the paperwork that has to be done.
[26:04] Speaker 2: Let's talk about risk assessment. How do you figure out
[26:08] Speaker 2: when you're looking at a variety of different investment strategies
[26:11] Speaker 2: and managers, Hey, how much bang am I getting relative
[26:16] Speaker 2: to the risk the client is assuming in this investment?
[26:19] Speaker 2: It would it would seem that's really challenging.
[26:22] Speaker 4: Also, yeah, look, I mean there's things that you need
[26:24] Speaker 4: to look at.
[26:25] Speaker 5: Obviously, you're going to look at the track record over time,
[26:27] Speaker 5: and you're going to look at the stability of the
[26:29] Speaker 5: team and do they have all the fundamental things that
[26:31] Speaker 5: lead to a repeatable investment process, right, which should argue
[26:36] Speaker 5: that you can rely on that track card as being
[26:38] Speaker 5: hopefully something that you could look at that could be
[26:40] Speaker 5: repeatable in the future.
[26:41] Speaker 4: Right.
[26:43] Speaker 5: I think the other important part is what's the concentration
[26:45] Speaker 5: of that strategy?
[26:46] Speaker 1: Right?
[26:46] Speaker 5: How many investments are they making? Is it highly concentrated,
[26:49] Speaker 5: is it more diversified. So, for example, one thing that
[26:53] Speaker 5: our clients have been long time investors in is secondary
[26:57] Speaker 5: private equity. And one of the interesting things about sexonies
[27:00] Speaker 5: is underneath one single fund, you may have thousands of companies,
[27:05] Speaker 5: so you have a tremendous amount of diversification. And because secondaries,
[27:09] Speaker 5: if you thought it secondary private equity, it's already partially invested.
[27:12] Speaker 5: So most traditional private equity funds it's a blind pool. Right,
[27:16] Speaker 5: you're committing capital that's going to investor in the next
[27:18] Speaker 5: five years. Secondaries allows you to take a look at
[27:20] Speaker 5: some of the money that's already in the ground and
[27:23] Speaker 5: actually buy that theoretically at a discount to it fair values.
[27:26] Speaker 4: Right.
[27:26] Speaker 2: So there are two types of secondaries that I'm familiar with,
[27:29] Speaker 2: and I want you to comment on this. One of
[27:32] Speaker 2: them is, Hey, a co investor in a fund suddenly
[27:36] Speaker 2: has a change in their liquidity needs, and hey, we
[27:39] Speaker 2: will want to sell this for you know, fifteen percent
[27:41] Speaker 2: discount from what the last closing date was, so you
[27:45] Speaker 2: get to buy in an earlier vantage at a discount.
[27:49] Speaker 2: That's one secondary you Is that something you were talking about.
[27:53] Speaker 4: Yes, So that's an LP secondary.
[27:55] Speaker 3: Right.
[27:55] Speaker 5: Could be a big institution that for whatever reason wants
[27:58] Speaker 5: to do so that earlier this year he bounce their portfolio,
[28:01] Speaker 5: big university that as liquidity needs, right, we'll look to
[28:04] Speaker 5: go and get liquitting in the secondary market be individuals,
[28:06] Speaker 5: So that's sort of a traditional LP secondary.
[28:09] Speaker 2: So the other thing I occasionally see is, hey, one
[28:13] Speaker 2: of our portfolio companies suddenly is adding this or pivoting
[28:17] Speaker 2: in this direction, and we're comfortable with how much US
[28:20] Speaker 2: as a fund they're putting into this company, and we're
[28:23] Speaker 2: going to continue maintaining this investment, but they need additional capital.
[28:27] Speaker 3: Do you want to do well one off.
[28:29] Speaker 2: Side pocket or people call it all sorts of different things.
[28:32] Speaker 2: How often you see that sort of thing coming?
[28:34] Speaker 5: Yeah, So the other so when you look at the
[28:35] Speaker 5: secondary market, you have the LP secondaries, which you just
[28:38] Speaker 5: talked about. The other would be GP led secondaries. So
[28:41] Speaker 5: that's not initiated by the LP of the fund. It's
[28:43] Speaker 5: actually the manager of the fund to your point, saying, hey,
[28:45] Speaker 5: we have a company that we don't want to sell
[28:47] Speaker 5: right now. We want to continue to own, but we
[28:50] Speaker 5: need to find new capital to fund it. Right So
[28:51] Speaker 5: you might want to take out some of the old investors,
[28:53] Speaker 5: the GP might want to roll their capital, roll their
[28:56] Speaker 5: incentive fee. So that's the GP LED secondary also to
[29:00] Speaker 5: continuation vehicle. Many times you're hearing a lot about this
[29:04] Speaker 5: and so that's another part of what we do within
[29:06] Speaker 5: our secondary franchise that our clients have exposure.
[29:08] Speaker 3: To really really interesting.
[29:10] Speaker 2: Coming up, we continue our conversation with Kristin Olsen, Goldman's
[29:14] Speaker 2: global head of Alternatives for wealth, discussing the state of
[29:18] Speaker 2: alternative investing today.
[29:20] Speaker 3: I'm Bury Results.
[29:21] Speaker 2: You're listening to Masters in Business on Bloomberg Radio. I'm
[29:38] Speaker 2: Bury Results. You're listening to Masters in Business on Bloomberg Radio.
[29:42] Speaker 2: My extra special guest is Kristin Olsen. Kristen is the
[29:45] Speaker 2: global head of Alternatives for wealth management clients at Goldman Sachs,
[29:50] Speaker 2: a position she's held for twenty four of her twenty
[29:53] Speaker 2: seven years at Goldman. So before we get into the
[29:58] Speaker 2: state of altern of investing today, I'm fascinated by this
[30:03] Speaker 2: big survey you guys do each year. Over a thousand
[30:07] Speaker 2: clients and other people participat in it, and some of
[30:10] Speaker 2: the answers that come along are kind of expected, some
[30:13] Speaker 2: are really kind of surprising. Let's go over a few
[30:17] Speaker 2: of these because they're really fascinating. So, first, your survey
[30:21] Speaker 2: reveals wealthy individuals adopt alternative investments as their net worth grows.
[30:28] Speaker 2: That wasn't a surprise surprising but some of the specifics,
[30:32] Speaker 2: some of the percentages were really really like wow, look
[30:36] Speaker 2: at that. Tell us a little bit about the response
[30:39] Speaker 2: you get to that survey question.
[30:40] Speaker 5: Yeah, so well, first I would say, this is our
[30:42] Speaker 5: inaugural survey, So this is the first time that we're
[30:45] Speaker 5: actually surveying a broad universe.
[30:47] Speaker 3: Put me on that list.
[30:48] Speaker 2: I want to see that data every year. I'm a
[30:50] Speaker 2: junkie for that sort of stuff, and I think.
[30:52] Speaker 5: Part of the impetus for that too is just what
[30:54] Speaker 5: we've talked about, sort of the incredible interest by individual
[30:57] Speaker 5: investors and figuring out should they invest in alternative how
[31:00] Speaker 5: do they invest in alternatives? And so that was sort
[31:02] Speaker 5: of the impetus to this, you know, opening the door
[31:05] Speaker 5: to alternatives survey that we just did. I think the
[31:08] Speaker 5: data that you mentioned is not surprising, obviously from my seat,
[31:11] Speaker 5: starting with ultra high net worth clients.
[31:13] Speaker 4: Sure, it's been.
[31:14] Speaker 5: Investing alternatives for you know, twenty five plus years. I
[31:18] Speaker 5: was surprised by down the well spectrum, the fact that
[31:21] Speaker 5: there's a fair amount of participation all the way down
[31:24] Speaker 5: to the you know, one to five million dollar clients, right,
[31:27] Speaker 5: And I think as it becomes easier for these individuals
[31:30] Speaker 5: to invest in alternatives, and as there's more education around it,
[31:34] Speaker 5: those numbers are going to continue to go up.
[31:36] Speaker 2: So I'll tell you what surprised me at first, blush,
[31:40] Speaker 2: and then as I thought about it, made a lot
[31:42] Speaker 2: of sense. Millennials are at the forefront of a significant
[31:46] Speaker 2: shift in investment behavior towards ALTZ. And as I began
[31:50] Speaker 2: to think about it, hey, these are the kids who
[31:53] Speaker 2: more or less came of age right into the Great
[31:55] Speaker 2: Financial Crisis. They're like, wait, stocks can go down also,
[32:00] Speaker 2: So I'm not terribly surprised by that once I thought
[32:03] Speaker 2: about it. But still, how significant of a shift is this?
[32:07] Speaker 5: Look, I think we're it's fun to watch. Obviously we're
[32:08] Speaker 5: just starting to see it and you know, digesting the
[32:11] Speaker 5: survey results. But you know what I one part I
[32:13] Speaker 5: think about as millennials is their interest in accessing innovation, right,
[32:17] Speaker 5: Like this is a digital first generation, no doubt. And
[32:21] Speaker 5: so when you think again to our earlier comments, how
[32:24] Speaker 5: do you access innovation in healthcare in tech? A lot
[32:28] Speaker 5: of that is in the private markets, right, And so
[32:30] Speaker 5: I think part of that also might be the reason
[32:32] Speaker 5: why you see millennials, you know, being more inclined to
[32:36] Speaker 5: alternatives and being sort of kind of this shift in behavior.
[32:41] Speaker 2: So let's talk about the percentage of people whose wealth
[32:45] Speaker 2: is professionally managed. And obviously the data set that this
[32:49] Speaker 2: question goes to is pretty significant. But fifty nine percent
[32:53] Speaker 2: of wealth amongst a thousand individual surveyed were professionally managed.
[32:58] Speaker 2: And I kind of scratched my head that because my
[33:01] Speaker 2: assumption has been amongst the ultra wealthy, it's even higher
[33:06] Speaker 2: just as a matter of a and I have time
[33:08] Speaker 2: or interest in this. Amongst most people, they're running their business,
[33:11] Speaker 2: they're continuing to accumulate more wealth. But I'm curious about
[33:16] Speaker 2: who was the data set this one went to, and
[33:18] Speaker 2: what do you think of that fifty nine percent number?
[33:21] Speaker 3: High, low, somewhere in between.
[33:22] Speaker 5: Well, so it went to one thousand investors million dollars
[33:26] Speaker 5: of investable assets plus and twenty five years old or older.
[33:31] Speaker 3: So not necessarily Goldman Sachs call.
[33:33] Speaker 4: Not necessarily the ultra high networth.
[33:34] Speaker 5: And frankly, part of the intention was to try to
[33:36] Speaker 5: get a better sense for the broader individual market, not
[33:39] Speaker 5: just the ultra high networth market. I think, you know,
[33:42] Speaker 5: we have a long history in our wealth business. We
[33:44] Speaker 5: know the ultra high network space very very well. And
[33:46] Speaker 5: I think in that space, if we were to run
[33:48] Speaker 5: the survey, I mean very high percent ninety exactly right.
[33:52] Speaker 5: So my guess is that not professionally managed peace are
[33:56] Speaker 5: more self directed at the lower end of the well
[33:58] Speaker 5: spectrum would be my gaes and maybe younger.
[34:01] Speaker 2: Right when you see black Rocket twelve trillion and Vanguard
[34:04] Speaker 2: at eleven trillion, Hey, someone's running their own portfolio. So
[34:07] Speaker 2: what would make sense forty one percent or so of people,
[34:11] Speaker 2: if not more doing it. It's really interesting to think
[34:15] Speaker 2: about what is the mass affluent doing, what is the
[34:18] Speaker 2: high net worth doing, what is the ultra high net
[34:20] Speaker 2: worth and multi family office doing. I think as you
[34:23] Speaker 2: go up that scale, is it's safe to say most
[34:26] Speaker 2: of them are working with professional advisors? Is that that
[34:29] Speaker 2: would be?
[34:29] Speaker 5: That would be my guess for sure. The other part
[34:32] Speaker 5: is if they're self directed. And there's some of the
[34:34] Speaker 5: other survey data that also shows that, I think something
[34:38] Speaker 5: less than fifty percent of advisors have even brought up
[34:41] Speaker 5: alternatives with some of that's really interesting, right, And so
[34:43] Speaker 5: you have the self directed that probably are not accessing alternatives,
[34:46] Speaker 5: could very hard to do that without an advisor. And
[34:49] Speaker 5: then you only have something less than fifty percent of
[34:51] Speaker 5: advisors bring up alternatives like this is where the opportunity
[34:55] Speaker 5: is right on educating the advisors to feel more comfortable
[34:58] Speaker 5: talking to investors about altern internatives, and obviously the educating
[35:02] Speaker 5: the investor and investors.
[35:03] Speaker 2: So one of the questions you ask led to an
[35:06] Speaker 2: answer that I adore because I'm constantly saying to not
[35:12] Speaker 2: only the.
[35:12] Speaker 3: People I work with, other people.
[35:15] Speaker 2: Your clients aren't telling you the truth. They have money
[35:17] Speaker 2: away from you. Your wild share is much lower than
[35:20] Speaker 2: you realize until you're with the same advisor for five
[35:23] Speaker 2: or ten years and the client is comfortable in shares.
[35:27] Speaker 2: But I love this data point. Households with ten million
[35:31] Speaker 2: dollars and up in investable assets typically engage two different
[35:36] Speaker 2: advisors compared with one advisor at the mass affluent and
[35:40] Speaker 2: high net worth groups. Tell us a little bit about
[35:43] Speaker 2: that dual advisor approach. These are We're not saying two
[35:47] Speaker 2: people at the same firm. These could be two completely
[35:49] Speaker 2: different firms.
[35:51] Speaker 5: You know, I think as people go up the well spectrum,
[35:52] Speaker 5: they want to have different options, different viewpoints. You know,
[35:56] Speaker 5: have some capital at different organized, different.
[35:58] Speaker 2: Firms, a little diverse internally exactly.
[36:02] Speaker 5: I do think though from my experience on the well
[36:05] Speaker 5: side Altra Hinder recite at Goldman, it does tend to
[36:08] Speaker 5: be that over time though, there is a lead relationship, right,
[36:11] Speaker 5: And I think as you get higher up the well
[36:13] Speaker 5: spectrum and you have more complexity in your portfolio, a
[36:17] Speaker 5: lot of that, namely coming from alternatives, it becomes more
[36:20] Speaker 5: and more imperative to have somebody that's the quarterback or
[36:24] Speaker 5: the driver, you know, in the pole position, as opposed to,
[36:28] Speaker 5: you know, as opposed to two people both managing parts
[36:31] Speaker 5: of the portfolio.
[36:32] Speaker 3: No one overlap.
[36:33] Speaker 2: You don't want, you know, one overlap.
[36:35] Speaker 5: And you also want you know, we talked about how
[36:37] Speaker 5: hard it is to build these alternative portfolios, you know,
[36:40] Speaker 5: doing that in two places, and how are you managing
[36:42] Speaker 5: the liquidity and how are you knowing how you're actually allocated? Overall,
[36:45] Speaker 5: I think you start to see this shift to one
[36:48] Speaker 5: advisor really being the lead advisor and the other advisor
[36:51] Speaker 5: maybe being a secondary advisor.
[36:53] Speaker 2: So as much as I thought that was a fascinating
[36:55] Speaker 2: data point, this one kind of terrifies me. Millennials site
[37:00] Speaker 2: social media more often, while boomers rely on traditional media
[37:05] Speaker 2: outlets for their investing and financial planning information. Social media
[37:12] Speaker 2: really well.
[37:13] Speaker 5: You know one of the things that I say, and
[37:15] Speaker 5: I'm not definitely not a millennial, but you know, if
[37:17] Speaker 5: you going on your LinkedIn feed, you see videos or
[37:21] Speaker 5: you know, on Instagram from major alternativesting firms, right, and
[37:24] Speaker 5: so you can see why. I don't know what percent
[37:27] Speaker 5: of their time they're spending on social media, but naturally
[37:30] Speaker 5: these ads and these videos are getting served up to
[37:33] Speaker 5: them there, so it seems logical to me then that
[37:36] Speaker 5: that's where they're going to.
[37:37] Speaker 2: Well. LinkedIn is probably the most credible of all the
[37:41] Speaker 2: social media outlets, but I think of TikTok and Instagram
[37:45] Speaker 2: and Twitter. A couple of years ago, the IRS put
[37:49] Speaker 2: out a list of forty tax statements that they had
[37:53] Speaker 2: culled from various social media that were wrong, some of
[37:58] Speaker 2: which would lead to penalties, interest or jail time if
[38:02] Speaker 2: you followed them. And they literally forty here are forty
[38:05] Speaker 2: one things that we got from social media. Do not
[38:08] Speaker 2: do any of these things. So that's why I say,
[38:10] Speaker 2: I get a little nervous when I see millennials with
[38:12] Speaker 2: citing social media. LinkedIn, of all the places, seem to
[38:17] Speaker 2: be the most credible because it's business oriented, not some
[38:21] Speaker 2: wacky guy telling you that if you're on a boat
[38:24] Speaker 2: offshore on April fifteenth, you don't know any taxes. That
[38:28] Speaker 2: was the one that really stayed out with me, right,
[38:31] Speaker 2: all right, So that's all I have to do is
[38:32] Speaker 2: just be out on the water at fifteenth could save
[38:35] Speaker 2: myself a lot of money.
[38:35] Speaker 5: I mean, look, I think it all goes back to
[38:37] Speaker 5: the number one thing that I think we're focused on
[38:40] Speaker 5: with respect alternatives and individual investors, which is education, right absolutely,
[38:45] Speaker 5: and so you know, hopefully they're not getting their education
[38:48] Speaker 5: off of TikTok, but you know, all of all of
[38:51] Speaker 5: us need to think about how do we better educate
[38:54] Speaker 5: around the role of alternatives, the risk of alternatives, how
[38:58] Speaker 5: you invest in alternatives. And so I think we're spending
[38:59] Speaker 5: a lot of time thinking about advisor education and client
[39:03] Speaker 5: education and by the way, education that we roll out
[39:06] Speaker 5: on social media, right because if that's where they are.
[39:08] Speaker 3: Right, you got to meet them where they are.
[39:10] Speaker 4: That's where we're going to have to put the education.
[39:12] Speaker 2: So let's bring this back around to alts today. Let's
[39:15] Speaker 2: talk about themes. What are you most excited about in
[39:17] Speaker 2: private markets? What's new? Interesting and you know thrilling. Can
[39:22] Speaker 2: I use the word thrilling about alts?
[39:24] Speaker 5: Well, look, I think when you say thrilling, I think
[39:27] Speaker 5: about all what are you enthusiasts innovation that's happening right
[39:30] Speaker 5: now in technology? Obviously, how can we have a podcast
[39:33] Speaker 5: and not mention AI on any topic.
[39:37] Speaker 3: I'm not familiar with it. Tell me a little bit.
[39:39] Speaker 3: I haven't heard enough about that.
[39:40] Speaker 5: But look, I think that what we're seeing in terms
[39:42] Speaker 5: of the incredible advances in AI is bringing back a
[39:45] Speaker 5: lot of risk appetite to invest in venture and in
[39:49] Speaker 5: growth and to participate in what they think is going
[39:51] Speaker 5: to be you know, transformational technology advancements you know around AI,
[39:56] Speaker 5: and that permeates not just the venture tech and growth space,
[39:58] Speaker 5: but how AI is going to transform additional businesses. Right,
[40:03] Speaker 5: So I think that segment is quite interesting. And then
[40:08] Speaker 5: a lot of the other things that we think are
[40:09] Speaker 5: interesting are a little more not thrilling, which was the
[40:12] Speaker 5: word you use.
[40:13] Speaker 2: Maybe that's the wrong word, but what's really interesting with
[40:16] Speaker 2: great growth potential? Well, look that's thrilling too.
[40:19] Speaker 5: So look, I would say we talked a little about secondaries.
[40:22] Speaker 5: We really like secondaries because again, if you think about
[40:25] Speaker 5: the primary alter markets growing right, more money is going
[40:29] Speaker 5: to alternatives. That naturally means the secondary market's going to
[40:32] Speaker 5: grow right to spill over. It's correlated to the growth
[40:35] Speaker 5: of the primary markets and alternatives. So there's me more
[40:37] Speaker 5: opportunity there, and we really like the risk return for
[40:40] Speaker 5: clients there in that segment. So I think that's one
[40:43] Speaker 5: space that we very much like. What else would I say?
[40:48] Speaker 2: You mentioned real assets, and very often when you talk
[40:52] Speaker 2: about real assets I think that has morphed over the
[40:56] Speaker 2: past decade and evolved. I used to think of real
[40:59] Speaker 2: ass that says timber or coal or whatever, but now
[41:05] Speaker 2: it's things like infrastructure and data centers, laboratories and healthcare.
[41:10] Speaker 2: Tell us a little bit about what the real assets loft.
[41:13] Speaker 4: Yeah, that's where I was going to go.
[41:13] Speaker 5: I would say for our clients, I think for a
[41:15] Speaker 5: long time, real assets was real estate, right. I think today,
[41:19] Speaker 5: if you wanted to talk about some of the more
[41:20] Speaker 5: interesting parts, it's the things you alluded to, which is
[41:22] Speaker 5: what's happening in infrastructure. Infrastructure is one we're spending a
[41:25] Speaker 5: lot of time with our clients on. Because institutions have
[41:28] Speaker 5: invested for a long time in infrastructure assets. Individuals less
[41:32] Speaker 5: so and so trying to understand the rule of infrastructure
[41:35] Speaker 5: and a portfolio which has a lot of unique benefits.
[41:37] Speaker 4: Right.
[41:37] Speaker 5: A lot of times it's not correlated to GDP growth. Right,
[41:40] Speaker 5: This is a lot of times critical infrastructure things that
[41:42] Speaker 5: we need to do. It has inflation protection benefits, right,
[41:46] Speaker 5: something we didn't need to talk about inflation ten years ago,
[41:48] Speaker 5: but now, you know, how do we think about things
[41:50] Speaker 5: that are inflation protected with long term contracts with built
[41:53] Speaker 5: in escalators. And then the other part is educating around
[41:57] Speaker 5: It's not your grandfather's infrastruct sure, right, people tend to
[42:01] Speaker 5: think right about bridges and toll roads, right, exactly Today
[42:04] Speaker 5: it's the things you talked about. It's digital infrastructure, it's
[42:07] Speaker 5: data centers to support AI, you know, right, it's energy transition, right,
[42:12] Speaker 5: It's a lot of the very I guess maybe the
[42:14] Speaker 5: more thrilling parts of investing are actually in the infrastructure
[42:18] Speaker 5: asset class, and so that is part of the real
[42:20] Speaker 5: assets that's grown a lot and where there's a lot
[42:22] Speaker 5: of interest.
[42:23] Speaker 2: I wish I can remember where I read this somewhat
[42:26] Speaker 2: technical piece because we always talk about AI, but you
[42:29] Speaker 2: alluded to AI plus another sector of all the different
[42:33] Speaker 2: parts of the economy that AI is going to have
[42:37] Speaker 2: a big impact. This author had made the claim. I
[42:41] Speaker 2: read it like two weeks ago. So it's gone that
[42:44] Speaker 2: AI and genomics, oncology and healthcare are going to be
[42:49] Speaker 2: amazing because what you can do with AI in terms
[42:54] Speaker 2: of testing new molecules and new treatment regimes is just
[42:59] Speaker 2: a whole other less Are you looking at AI plus
[43:03] Speaker 2: another sector or is it just all AI all the time?
[43:06] Speaker 5: No? Definitely plus other sectors. And you're completely on point
[43:09] Speaker 5: that life sciences hows that can be impacted by AI
[43:13] Speaker 5: healthcare right and by the way, every sector in the
[43:16] Speaker 5: economy is likely going to be impacted. So you know,
[43:18] Speaker 5: how do when you look at this best your diligence question,
[43:21] Speaker 5: you look at private equity firms that you're diligencing today,
[43:24] Speaker 5: how what kind of value creation playbook do they have
[43:27] Speaker 5: for their portfolio companies and how are they thinking about
[43:30] Speaker 5: the AI opportunity or threat for their portfolio companies?
[43:34] Speaker 4: Right?
[43:34] Speaker 5: So it's going to infuse really all the different sectors
[43:38] Speaker 5: of investing within alternatives.
[43:40] Speaker 2: So what other alternative strategies are you seeing the most
[43:43] Speaker 2: demand for clients? Like I'm enthusiastic about AI and life sciences.
[43:49] Speaker 2: Are people asking for real assets or for infrastructure or
[43:53] Speaker 2: for sec Like, what are you hearing from the bottom up?
[43:56] Speaker 4: Well, that would be private credit.
[43:58] Speaker 2: Really yeah, response to a relatively low rate and correct.
[44:02] Speaker 5: What I would say, what we're hearing from clients for
[44:05] Speaker 5: the last few years has been a search for yield.
[44:08] Speaker 5: It desire for yield, and that's led to a lot
[44:10] Speaker 5: of interest from the bottom up in private credit. Right
[44:13] Speaker 5: a place where you can be top of the capital structure,
[44:16] Speaker 5: so a lot of protection below you and get yields
[44:19] Speaker 5: that are high single digits with quarterly cash flow. That's
[44:23] Speaker 5: been an area of pretty broad interest across the well
[44:27] Speaker 5: spectrum in alternatives.
[44:29] Speaker 3: Huh really really interesting.
[44:30] Speaker 2: So last question before I get to my favorite questions
[44:33] Speaker 2: that I ask all my guests when it comes to alternatives.
[44:37] Speaker 2: What are investors not talking about or thinking about, but
[44:42] Speaker 2: perhaps should be. What sort of it could be asset
[44:45] Speaker 2: data point policy, what's important that they might be overlooking?
[44:51] Speaker 5: I guess the thing that comes to mind for me
[44:53] Speaker 5: right now and we think about the advent of all
[44:55] Speaker 5: these evergreen, open ended perpetual perpetual f funds, and there's
[45:02] Speaker 5: been a lot of enthusiasm a lot of growth in
[45:04] Speaker 5: some of the sectors. Our investors spending a lot enough
[45:07] Speaker 5: time thinking about how big some of these vehicles are getting,
[45:10] Speaker 5: and then what does that actually mean in terms of
[45:12] Speaker 5: how much origination that they need to have to be
[45:15] Speaker 5: able to deploy the capital? Right, because in these evergreens,
[45:18] Speaker 5: if you don't actually have if you have more capital
[45:20] Speaker 5: coming in then you can actually invest, You're going to
[45:22] Speaker 5: start diluting your returns, right, You're going to have cash drag.
[45:25] Speaker 5: And so you know, our investors spending time and thinking
[45:27] Speaker 5: about who they're investing with and do they have enough
[45:29] Speaker 5: origination capabilities to be fully invested in high quality investments.
[45:35] Speaker 5: So I think that'd be one thing that I would
[45:36] Speaker 5: think about. The other thing that I'm interested to see
[45:39] Speaker 5: how it evolves is, you know, we're new in this
[45:42] Speaker 5: perpetual evergreen alt space, you know, last five years. You know,
[45:46] Speaker 5: how do we start to see performance divergence over the
[45:50] Speaker 5: next five years?
[45:50] Speaker 1: Right?
[45:51] Speaker 5: I don't think we've seen a lot yet because we're
[45:53] Speaker 5: still in the early innings, and so I'll be curious
[45:56] Speaker 5: to see how investors react to performance divers or negative
[46:00] Speaker 5: performance on some of these and what happens do we
[46:03] Speaker 5: see redemptions or are investors long term minded? And do
[46:07] Speaker 5: they stay the course?
[46:08] Speaker 3: Huh? Really really interesting.
[46:10] Speaker 2: Let me jump to my favorite questions that I ask
[46:13] Speaker 2: all of my guests, starting with something that you hinted
[46:17] Speaker 2: at but didn't expand on. Tell us about your mentors
[46:20] Speaker 2: who helped shape your career.
[46:23] Speaker 5: So I have to mention Eric Lane. So he was
[46:26] Speaker 5: the one who won me in the Analyst draft and
[46:30] Speaker 5: I then worked with him for decades and I owe,
[46:34] Speaker 5: you know a lot of my success to Eric, and
[46:39] Speaker 5: part of it is we sat in like a trading
[46:41] Speaker 5: desk type of format when I started, and the benefit
[46:45] Speaker 5: of that was just getting to hear him on the
[46:47] Speaker 5: phone every day with clients and see how he managed
[46:51] Speaker 5: difficult situations, how he explained things. You know, there's an
[46:54] Speaker 5: ability to sort of really apprenticeship right next to him.
[46:57] Speaker 5: And the other thing that I just really loved about
[46:59] Speaker 5: working with Aaron, and maybe maybe I hate it at
[47:01] Speaker 5: the time, was he would throw you into situations that
[47:05] Speaker 5: you felt ill prepared for, but he knew you could.
[47:07] Speaker 4: Handle deep into the pool exactly.
[47:10] Speaker 5: And sort of just forced you to go into the
[47:13] Speaker 5: situations that you may have not thought you're ready for.
[47:15] Speaker 5: And that really allowed you to sort of step function
[47:17] Speaker 5: I think, improve in your job and really learn, and
[47:20] Speaker 5: then he was always there to support you if it
[47:22] Speaker 5: didn't go as well.
[47:23] Speaker 3: As you really really super interesting. Let's talk about books.
[47:27] Speaker 3: What are some of your favorites? What are you reading
[47:28] Speaker 3: right now?
[47:29] Speaker 5: So I've really been enjoying the Walter Isaacson biographies, and
[47:34] Speaker 5: we talked a little about life sciences.
[47:35] Speaker 3: And one that I I was going to say, which
[47:38] Speaker 3: one of you?
[47:38] Speaker 2: So I have Leonardo sitting on a night table out
[47:45] Speaker 2: east waiting for me to have gotten to that one.
[47:47] Speaker 3: What it's like, it's a giant.
[47:48] Speaker 4: Yeah. So I actually just finished the one on Elon Musk.
[47:51] Speaker 3: Huh.
[47:52] Speaker 5: But the one that I really liked was Codebreaker about
[47:56] Speaker 5: Jennifer DOWDNA discovered Crisper.
[47:58] Speaker 2: All right, next question, what are you streaming these days?
[48:02] Speaker 2: Give us your favorite podcast? Netflix, Amazon Prime? What's keeping
[48:05] Speaker 2: you entertained?
[48:07] Speaker 5: I just started watching an old series I'm only two
[48:09] Speaker 5: episodes in, which is Scandal. So that's what I'm watching
[48:12] Speaker 5: right now, Little Washington, d C Intrigue. In terms of podcasts,
[48:19] Speaker 5: of course, all the Bloomberg podcasts, and you don't have.
[48:22] Speaker 2: You don't have to do that.
[48:23] Speaker 5: That's if I were to say one that I listened
[48:27] Speaker 5: to from time to time just for some comedy, SmartLess.
[48:30] Speaker 3: I love that.
[48:30] Speaker 2: I'm a big fan of just Justin Batement, Jason Bateman,
[48:34] Speaker 2: you his sister Justine.
[48:35] Speaker 4: It was a great guest and they're so funny.
[48:37] Speaker 2: So I've interviewed Michael Lewis a million times, and after
[48:41] Speaker 2: his daughter was killed in a car accident, they had
[48:44] Speaker 2: him on and it was a few months later and
[48:48] Speaker 2: he describes the grief process. He's just such an extraordinary
[48:52] Speaker 2: human being. To listen to someone share that it was,
[48:56] Speaker 2: it was both amazing and terrible the same time. But
[49:01] Speaker 2: they're always fun and they all seem to torment each other.
[49:05] Speaker 2: They're very amusing. Final two questions, what sort of advice
[49:09] Speaker 2: would you give to a recent college grad interested in
[49:13] Speaker 2: a career in either alternatives or wealth management.
[49:16] Speaker 5: Well, I think that the benefit that a recent college
[49:19] Speaker 5: grad has is there's so much information at their fingertips
[49:22] Speaker 5: to get smart and to get be interested, and to
[49:25] Speaker 5: learn about the industry before they come into it, and
[49:27] Speaker 5: to be really well educated. You know, it was a
[49:29] Speaker 5: lot harder twenty seven years ago. Right now, everything's at
[49:32] Speaker 5: their fingertips. So I think be prepared and then don't
[49:35] Speaker 5: be scared to network right, user relationships, meet people, reach out.
[49:40] Speaker 4: I think that would be the best advice.
[49:41] Speaker 3: Really really good.
[49:43] Speaker 2: Final question, what do you know about the world of
[49:46] Speaker 2: alternative investing today would have been helpful back in two
[49:49] Speaker 2: thousand when you were moving into this space.
[49:51] Speaker 5: Well, I think about it a little bit personally, which
[49:54] Speaker 5: is you know, we have evolved a lot in how
[49:56] Speaker 5: we advise clients to INVESTMENTULTI where we talked about the process,
[49:59] Speaker 5: how do you think about sizing and building it out
[50:01] Speaker 5: year and year out? And if I look back to
[50:03] Speaker 5: what I started, I definitely didn't have that rigor in
[50:05] Speaker 5: my own personal investing in alts and definitely undersized, was
[50:08] Speaker 5: not diversified enough. And so I think I wish all
[50:11] Speaker 5: of the rigor we've put into it I had known
[50:13] Speaker 5: back then in terms of how we were building portfolios
[50:16] Speaker 5: personally and for our clients.
[50:18] Speaker 2: Really super interesting, Kristin, Thank you for being so generous
[50:21] Speaker 2: with your time. We have been speaking with Kristin Olsen.
[50:25] Speaker 2: She's Goldman Sachs's global head of Alternatives for Wealth. If
[50:30] Speaker 2: you enjoy this conversation, well, be sure to check out
[50:32] Speaker 2: any of the five hundred and sixty eight we've done
[50:35] Speaker 2: before over the past eleven years. You can find those
[50:40] Speaker 2: at Bloomberg iTunes, Spotify, or here on YouTube or wherever
[50:45] Speaker 2: you find your favorite podcasts. And be sure and check
[50:48] Speaker 2: out my new book How Not to Invest The Ideas, numbers,
[50:52] Speaker 2: and behaviors that destroy Wealth and how to avoid them
[50:55] Speaker 2: How Not to Invest at your favorite bookseller.
[50:59] Speaker 3: I would be.
[50:59] Speaker 2: Remember if I do not thank the Crack team that
[51:01] Speaker 2: helps with these conversations together each week. Alexis Noriega is
[51:06] Speaker 2: my video producer. Anna Luke is my audio producer. Sean
[51:11] Speaker 2: Russo is my head of research. Sage Bauman is the
[51:14] Speaker 2: head of podcasts here at Bloomberg.
[51:16] Speaker 3: I'm Barry Ridholts.
[51:18] Speaker 2: You've been listening to Masters in Business on Bloomberg Radio.

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