Over the past decade, robust asset growth and accelerating deal activity have positioned the RIA industry as a focus area in Wealth Management, driven by tailwinds from both advisors and investors. Moving forward, will industry dynamics continue to evolve at such a rapid pace and what will be the major drivers of change in the next 5-7 years? Join EY-Parthenon, one of the largest global strategy consulting firms, as we discuss the future of the RIA industry with a panel of distinguished industry leaders representing some of the most prominent firms in the RIA ecosystem.
Transcription:
Tom Scott: (00:07)
Hi, good afternoon, everybody. Hey, we'd like to get started by just thanking everyone for joining us today to talk about next generation opportunities for RIAs, my name is Tom Scott. I'm a management consultant With a. Pathon one of the largest global strategy consulting firms. And over the past few years, we've worked extensively with RIAs, with competitors, RIAs like wirehouses and broker dealers, the wealth techs that serve the community, the asset managers that distribute the community, the investors that help to capitalize the ecosystem and through all of these touch points, we've developed a strong conviction that the RA space will continue to be, one of the centers of innovation and growth for the broader wealth management industry, in the coming years. So for those of you who are less familiar with the RIA space, if we were to characterize the past, 10 years or so in the space, I think the one word the way we describe it is growth growth in assets, both relative and nominal, growth in deal activity and the center of innovation for all those who are plugging into the ecosystem. And so today we want to talk about the future. We've seen tremendous growth in the past 10 years, but what's going to continue that what are gonna be the drivers of growth that bring us, into the next 5, 10 years, of the industry and what is that gonna mean for firms, in the ecosystem and those that are adjacent to it. So joining me today our group of industry veterans right on the front lines of innovation, the RIA space, Mark Tibergien, the former CEO of Persian advisor solutions and advisor and resident CEY, Nick Trepp a principal at wealth partners, capital group, a private equity firm focused on the RIA space and Molly Weiss, the chief product officer at BestNet, unfortunately our Sears from dimensional fund advisors was gonna join us as well, but was unable to attend. So thank you all for attending and let's jump right into it. So to start things off, mark, in your opinion, what's gonna drive growth in the next five to seven years. And what are some of the assumptions that we need to make to have strong conviction that this growth will continue?
Mark Tibergien: (02:27)
Well, there are series of headwinds and tailwinds in the RIA space. The first thing to remember is that we are now in the second generation of the retail RIA, obviously RIAs has been around since the 1940s. but, the concept of what we see today is so much different. So the good news is that there's an oversupply of clients and an undersupply of people to provide advice. So that probably is the biggest driver, unfortunately age is our partner, both in terms of the average age of the clients of the average advisory firm and the average age of partners. So one of the reasons we see so much consolidation is that there's something like 30% of the advisor population that intends to retire within the next 10 years. And that could be a significant factor. But as we look at this transformation from practice to business to enterprise, what we find is that there is greater efficiency, greater effectiveness, and an improved experience, that is allowing the RIA community to compete more effectively with all the other financial services providers. But the thing to remember is that the RIA community represents a professional buyer where the rest of wall street represents a professional seller. So the challenge for them is really thinking about what that, what that positioning is going to be in the market.
Tom Scott: (03:49)
Great, thanks mark. And as we think about some of those, drivers that you mentioned, and some of the industry dynamics, what are some of the underlying assumptions that we need to make to, hold true and make sure that this growth is something that continues at this current trajectory?
Mark Tibergien: (04:08)
Well There are, several things that are happening in the marketplace. One is that the RIAs are not very clear in their positioning and branding, so that is a challenge to overcome, two they are not literally at scale, in fact, I think people are tending to confuse scale and size. They're not one and the same. And that is a challenge when we look at the, consolidation strategy, because in many cases, these are just small practices that exist in different communities as a result of it, three, there is an acute talent shortage the challenge ahead for the profession, every advisor firm I know, is looking for talent and oftentimes they haven't created a career path within their business in order to transform that. So, that becomes an issue. And then, fourth is really clearly positioning what the fiduciary model means in the marketplace is important.
Tom Scott: (05:04)
I'd like to double click on that. First one, you mentioned scale, and Molly, as someone sending in the technology industry and enabling scalability, I guess, first off, what does scalability mean to you in terms of individual advisors, practices and firms?
Molly Weiss: (05:20)
What we're always talking to advisors about is that their relationship, they should be focused on the client relationship. So however they can use technology to achieve scale so that they're spending time with the client and they're cultivating talent within their firm, and they're becoming or evolving into something that's much more of a financial life coach rather than just an investment advisor, in order to do that, we really believe in what we hear from them is that they need scale. They need the system, the technology systems that they're using to be fully integrated, they need to be able to outsource as much as possible. And then what we're hearing a lot too, in the theme of outsourcing is advisors who are looking to outsource the investment management piece as well. So that's another area where they can achieve a lot of scale.
Tom Scott: (06:04)
And what are some of the innovations? You mentioned the investment management space that's enabling scalability or productivity or increasing, size for firms, if you could hit on that for a minute.
Molly Weiss: (06:16)
Yeah. So, at Investnet, we're very focused on bringing a technology and outsource investment management to the RIA space in a way that is easy for them, so they can retain trading for some high net worth clients. But in a lot of cases, they're looking to outsource that. So bringing technology to that advisor is a key focus for us. And then the other thing that, also helps with scale is putting more digital tools into the hand of the client. So allowing the client to do more in a digital engagement with the advisor versus always, being on the phone or having a lot of human involvement in paperwork and things like that. So a lot of what we're focused on at Investnet is the client experience, the digital client experience and how that can help the RIA.
Tom Scott: (07:03)
And given that in the RIA space, you have a number of breakaways from more traditional models, fairly smaller, compared to the scale of some of the national brands that are out there. Do you see any, headwinds in terms of uptick and adoption of technology solutions among the RIA advisor community?
Molly Weiss: (07:22)
Yeah. The breakaways tend to be slower to adopt technology, which is definitely a challenge. So, in conversations that I have with those RIAs, I focus a lot on how they can not only outsource the investment piece or the technology piece, but also some of their business operations. So as they're trying to grow, not focusing on, the operations of their business, but focusing on clients and client retention and kind of grooming the next generation of clients really is where they should be focused.
Mark Tibergien: (07:52)
I might just a add one point there. I think that what makes Molly's comments, especially poignant these days is that there are so many firms that have multiple locations that it's not just a practice in a single location. It's all those touch points that now have to be in a branch network, ironically for the RIA space, which used to be a single location business.
Molly Weiss: (08:15)
Yeah.
Tom Scott: (08:18)
And in terms of talent, cuz in the beginning, mark, you mentioned scalability and talent as kind of the two main drivers in this area, I mean there's certainly, a view that talent is hard to find and good advisors are hard to find. Nick, in terms of some of the deals that you work on as we see the industry consolidating and increased focus on the aggregation model, how does M and A incorporate into the growth playbook in terms of being able to add talent and otherwise?
Nick Trepp: (08:50)
Yeah, I mean a lot of firms out there today think of M and A as just a way to grow AUM revenue EBITDA, but actually there's a real benefit in acquiring talent. we think advisors and founders are, better spent, growing the business, focusing on clients than focusing on ops, administrative tasks. So you can acquire a firm that has great talent back office staff you can bring them on and not only have them, focus on their highest and best use, but also specialization, and therefore that would just enhance the scalability of the firm and the, obviously the long term success and longevity of the firm too. Cause you're building out that G2 and that deeper bench, as part of your team.
Tom Scott: (09:41)
We've talked about technology a lot in terms of an enabler for scalability, for growth, but outside the technology space, open question what do you see as other drivers that are enabling improved outcomes and efficiency in terms of being able to operate in multiple locations and establish more of a national operating model?
Mark Tibergien: (10:00)
Well, I think the key point to think about, especially for this audience is that the, best experience you have anywhere is the same experience you want everywhere. Right? So when you think about all the things that you compare, how you interact with whichever businesses you interact that becomes critical. I think, however that, when we look at, effectiveness and efficiency and experience, we have to remember that this isn't just the interaction with the client. It's the interaction with the staff, those who support the lead advisors and it's in how we use tools to build out career paths so that people actually have an educational source as well. So I think that we have opportunities here for transformation of the profession and it's going to be more critical because, the cost of running an advisory business is increasing by orders of magnitude. We used to have a target of a 60% gross profit margin and a 30%, net margin, but that gross margin is getting squeezed and overhead costs are also rising. So, we have to think about these tools in those terms in order to drive, cost down that ultimately is where scale comes into.
Molly Weiss: (11:13)
I think that's a good segue. So picking up on that, and then also what said about specialization. I think that as advisors, as fee compression is happening and it's, advisors are working harder to find new clients and retain the revenue that they have. I think they're being pushed to offer more services. So not just being a financial advisor in the traditional investment sense, but also offering things like loans and insurance and whatever the client might need. And I think in order to do that effectively, a lot of times they need to specialize. So bringing a team of advisors together who have different specialties, allows them to scale their business, provide more services to the client and ultimately retain that revenue and grow it as well.
Tom Scott: (11:56)
So I'd love to hit on that point for a second. So it's interesting, kind of the incorporation of other types of financial services into a channel that, historically was focused on investment management. And that was the core value proposition. You mentioned scale, and being able to bring in people with different levels of expertise and different expertise around different products. Do you think that could result in a bifurcation of the industry where you continue to have smaller, independent shops of single digit advisors that may not have that ability to, leverage other types of products or financial services or more diversified value proposition and then larger firms that have that more almost, it's interesting, a boomerang back into more of a traditional financial service and a traditional warehouse type model.
Molly Weiss: (12:41)
I think for those smaller firms, that aren't diversifying and bringing more services to their clients, it'll be harder and harder for them to compete with fintechs who are starting to bring investment services to the marketplace. And so without, broadening what they're offering, I just think it will be harder for them to get new and retain existing clients.
Nick Trepp: (13:02)
On the go forward for the next decade or so. what I would think is that we'd see a lot of firms, emerge as a national player with a national footprint or even super regional, but then there's gonna be a lot of firms that decide to say small, they want to collect, increased payments to the owners and partners, but ultimately I think there's gonna be up firms, not really call the middle. So you're gonna have this barbell effect where a lot of firms are gonna join up and team up with larger firms to increase scale. And then as we were just talking about increased services for the clients, cuz at the end of the day, clients wanna go to their advisor and have a one stop shop. They want to have planning ability. They want to have whether it's elder care and focus on different kind of healthcare benefits going forward all that analysis real estate that's the one shop that I think clients are ultimately looking for.
Mark Tibergien: (13:54)
I think my counterpoint to that would be there is really an advantage for advisory firms to think about the positioning based on the characteristics of their clients rather than on the AUM of their clients. And so if you're dealing in the pre-retirement market or the retirement market, the set of needs, there is gonna be very different than if you're dealing in the closely held business owner market as an example, or the ultra high net worth where the level of complexity is greater. So, I think what happens in many advisory firms, they actually become over diversified where they, don't systematically touch their clients with the range of services, but in the end, what's interesting about all of this to your point, exactly is that no matter how much an advisor will talk to their clients about being full service, and we do all these things from, state planning to philanthropy, to financial planning and so forth, the only thing they get reports on is the investment. And so they're not reinforcing the brand in the marketplace. They're not showing progress in the choices that individuals are making. And so this is a gigantic gap in the experience that advisors are reinforcing among their clients.
Tom Scott: (15:04)
And what do you think that gap is caused by? Is it a function of the ability to report on it? Is it a data issue? What seems to be kind of the solution to shorten that gap?
Molly Weiss: (15:14)
Well, the solution is I think in what hasn't happened is the transformation. I think that that it's exactly right, that we're still focused on reporting on investments and we're forgetting that there is a plan and all of the other things that we've been talking about there's an annuity, there's all kinds of things and what's your progress to actually achieving your life goals. And I think we're still focused on performance of investments. And so I think it's just the industry and we think a lot about that at an investment because we are broadening our ecosystem to bring all of those things from a technology perspective and solutions perspective to the advisor, but we also have to catch up and be able to enable the advisor to report progress back to their client in a much different way. And we're not doing it yet the way that we need to.
Mark Tibergien: (15:58)
Yeah. In fact, I've often said this, but my wife and I, when we work with our advisor, if they spend more than five minutes talking about investments, we get irritated because it's alright, it's done. That's what we hired you for. But it's all those other choices that we really want guidance and input and insight on. And, that's exactly how they approach the business, but I still would love to see greater reporting on other things that actually show metrics related to my philanthropic strategy and my estate plan and my, whatever else I'm making choices about.
Tom Scott: (16:32)
Yeah. Goals 2.0.
Mark Tibergien: (16:34)
Yeah.
Tom Scott: (16:35)
Now in terms of this diversification question, right. Diversification in terms of the types of clients you're working with, the services that you're providing them, it's a lot to handle. And Molly, I think you hit on an interesting point, which is the concept of outsourcing, and the ability for firms to focus on a core value proposition and take other parts and maybe more modified, and transition them to third parties. So one thing that I think has been interesting in the past few years has been the rise of not only outsourcing, but also the blur between kind of the traditional FinTech model and the advisory model where you have firms starting to develop in-house capabilities and then white label those I think recently we saw pathstone acquire, advisor partners, a direct indexing, platform that they'll use in-house, but also commercialize as, another revenue stream. So as value propositions kind of focus in core areas, there's increased outsourcing to meet a more diversified set of needs. I'm curious, do you see kind of this blur between the traditional advisory firms and the technology firms starting to become more of an overlap?
Molly Weiss: (17:46)
I do and I think, that underscores why it's so important for the advisor, for the financial advisor who really is about the client and the client relationship for them to focus on that. And, that almost makes outsourcing even more compelling because that's where the FinTech can't really compete. That I think mark, you said it in a great way. You're, looking to your advisor for reassurance, not just about your investment but reassurance about your progress to where you need to be and potentially where the next generation needs to be. And I think that that's not something that FinTech can do at this point.
Tom Scott: (18:21)
Great. And in terms of the, gap between the small and the large players then to use kind of the barbell analogy that you mentioned, Nick, it sounds like between the ability to outsource, to concentrate a value proposition, do you foresee any sort of bifurcation in the types of people who are moving into a smaller advisory firm versus a larger advisory firm, both on the client side, those who are seeking more of a diversified value proposition or larger scale as well as the advisor side?
Nick Trepp: (18:56)
Yeah, I think some clients at the end of the day, they don't wanna be a client of a very, very large firm, and even some of the largest RAs are still small compared to big banks wire houses, but at the end of the day, they want that kind of personal touch. they want to know that they're one of 80 or one of a hundred clients, and then, in terms of that barbell effect that I just mentioned earlier, it's gonna be the advisor's choice to stay small, they might not, instead reinvest in the business for future growth. They're just gonna take those earnings from, for themselves. And, again, that's okay. I mean, that's part of the fragmentation and why we think fragmentation will continue to persist over the next decade, we really won't see some of these smaller firms selling until they really need liquidity, cuz they're ready to retire. versus some of the firms from earlier kind of, joining one of the larger platforms that are out there aggregating.
Mark Tibergien: (19:53)
Yeah, I think my response to that is advisors are just like people. I mean, they have the same behaviors, the same some have an employee mindset, some have an entrepreneur mindset, some want to be partners in a firm, some want to be in a bigger community, some don't. And so the opportunity for this business is just like every other industry that's gone through consolidation. So whether they're funeral homes or medical practices or accounting firms or law firms we've seen consolidation happen where there tends to be a, dominant big four, for example, in accounting, or a dominant big five in banking, but then you see the whole fragmentation of the industry for a variety of reasons. And, I think that generally speaking in a professional service business, it's firms are challenged in how they develop and lead people. They have to be conscious of the nature of the work and the nature of the worker, but ultimately they have to be conscious of the nature of the workplace. And I think creating this dynamic environment where people have the opportunity to grow is, critical. And, I guess the one parallel I'd make is that if you look at a traditional brokerage firm where they pay on the grid, the theory is that the grid motivates people to sell more. But the reality is that there are a lot of very average producers in the brokerage firms. And so money clearly isn't motivating, because they've reached the pinnacle of mediocrity. And so what do you do at that point to drive growth?
Tom Scott: (21:28)
Yeah, so it sounds like we're gonna have a barbell industry. We have to come up with a new name for it as a nonunified RIA ecosystem, but in terms of going now inside the firm, right, we've talked a lot about the market dynamics about the value proposition, but as we start thinking about the impacts of technology of outsourcing of increasing scale, how does that impact the way firms are structured, the role of the advisor and some of the impacts on the middle and the back office?
Molly Weiss: (22:01)
I think, I guess I'll go back a little bit to the concept of specialization, but also, I think that as they achieve scale advisors are going to need maybe less back office and they'll start to focus maybe on higher touch with the client. And so what does that mean? Does that mean that there are more relationship managers that work with the advisor so that they can retain that contact? and I think that will be sort of an interesting evolution as technology does continue to come in and sort of replace a lot of what the back office staff might have been doing or assistance might have been doing, and, I think obviously I have a bias towards technology. So my hope is that technology can come, and really enable the advisor to, achieve that scale while retaining that really high touch service with the client.
Tom Scott: (22:55)
That's a really interesting point. It sounds like almost the disaggregation of advisor responsibilities historically the advisor being a one stop shop, a do it all from, acquiring clients, servicing them, establishing financial plans, underwriting investments, continuing their relationship. Do you see that, value chain beginning to break apart from an org perspective and having increased specialization in different functions that are specifically going to market to address those different points?
Molly Weiss: (23:27)
So we work with a lot of larger firms who are aggregators and, we see almost exactly that. So the back office and the billing and a lot of the operations get centralized and outsourced and technology comes in to take a lot of the place of the human capital that was there, and the advisors, what we hear and what we see is that those advisors do start to specialize and they do start to kind of focus in on the segment of their book that they wanna focus on, or going back to thinking about what do their clients need as opposed to focusing so much on the operations of their business.
Mark Tibergien: (24:06)
I think that, where the dichotomy occurs is in the nature of the advisory business. So I think, in a advisory practice mindset, there's a tendency for individual advisors to think of these are my clients and this is the stuff I like to do. And these are the things I don't like to do, but advisory businesses, as they unfold, this will be the interesting part where real operating leverage occurs is how much are they behaving in line with the brand and positioning of the firm, and how much is the organization organized from a technology and offering standpoint, align with everything they're doing as a business. So I use that analogy of the different client segment. So for example, if your focus is on the 401k or retirement market versus the ultra high net worth market, your processes, your structure, your people, your positioning is gonna be completely different, I think that smaller firms struggle because they are, as I put it before over diversified larger firms struggle because they haven't created a coherent framework for how they're making decisions. So this is where the opportunity for dynamic change exists, this is an entrepreneurial business that's becoming more formal in its management process, but it hasn't arrived yet.
Tom Scott: (25:26)
That's a great segue to the next question that I wanna pose to each of you. So with all the changes that we've talked about with some of the repositioning of the advisor value proposition diversification the barbell effect, if you had to picture the industry in 10 years and what it looks like in just a minute or two, how would you describe the RIA industry in 10 years? Mark, we'll start with you.
Mark Tibergien: (25:51)
Well, I'm a better diagnostician than a prognostician but I, think at one time, I believe that there would be something like 10 national firms, I'm not sure if I believe that though, because the nature of the, roll up strategies are they're quite random in the locations that they're, building firms, so what I expect, to see are more, either super regional firms or firms that are positioned as, top providers and market segments. And that's, what I expect rather than a Merrill Lynch of RIAs or JP Morgan of RIAs. I think I expect to see more, focus on either the, services that they offer or the markets that they're serving is where the evolution will be. And I think that we will see much larger firms. I mean, it wasn't too long ago that a billion dollars was a big deal. Now it's not a big deal. And so there's probably a thousand firms that are multi-billion dollar RIAs. And so I wouldn't be surprised to see that grow by multiples.
Nick Trepp: (26:59)
I would tend to agree in terms of how many national players that are out there. And then I would also tend to agree that there's still gonna be some smaller firms, mom, and pop shops practices. what do those larger firms look like? again, one stop shop additional services for clients at the same fee. so we fight fee compression with service expansion. I'd say it's very tech friendly, easy user interface for the end client, and then I'd say there's access to solutions, investment solutions, not products, I'd say there's access, whether you have, $200,000 or whether you have, 2 million, $20 million. So I think that's gonna come to play for all these kind of national firms. And the smaller firms, I think, are still gonna, maintain that close relationship with our clients, but keep things kind of simplistic from an investment in planning focus.
Molly Weiss: (27:52)
I agree I guess I would just add there was a recent survey of RIAs and the question was posed, what are you most worried about looking out into the future and, what are the biggest risks? And, a lot of the responses were, not thinking about the next generation and how they might look different as investors from their current investors, and then not adopting, as much of a enhancing their practice in a digital way. So whether that's digital marketing or digital client engagement tools, so missing that opportunity would just be kind of a dangerous thing to do for the practice, and so, I agree they'll be diversified. I think we'll see a lot of the trends that we've been talking about, but I think that the successful advisor will use technology, use automation, focus on that client relationship and expanding their services.
Tom Scott: (28:43)
Well, that's a great segue into the final lightning round. If you had to provide just a very quick sentence on the biggest risk facing the RA space in the coming years, what would it be? Go reverse order
Molly Weiss: (28:56)
Fee compression and how they respond to that?
Nick Trepp: (29:01)
I'd say complacency because, things have been pretty good up until a few months ago. And, I'd say it's easy to say that, my firm's growing, my firm's growing when, the S and P's up 20% in a year, but I think advisors will need to find different ways to innovate and provide, services for their clients, to continue to show that value.
Mark Tibergien: (29:24)
I would say the lack of regulatory and legislative advocacy there' no association or organization representing the retail RIA at all compared to banks and brokerage firms. And so, I think that as we see bigger firms having bigger problems that's gonna be a bigger issue.
Tom Scott: (29:46)
Great. Well, I'd like to thank the panelists for joining us today, but before we adjourn wanted to open up to the audience to see if there's any questions. Yes.
Molly Weiss: (30:31)
So do you wanna take the general?
Mark Tibergien: (30:33)
Sure. So, obviously I, there are 12 different types of wealth management providers. And, I think that one of the, actually this was a great comment that Nick made is that complacency is a real challenge for the profession, because oftentimes when people are asked to use our competitor, they say, well, we don't have any competition. I mean, we get all the clients we want, which is really, one of those great over assumptions and overconfidence. That is a problem. So right now I can tell you I'm on the board of a broker dealer where they have, over 300 of their former registered reps who no longer have a FINRA license, they are operating as RIAs, but using the broker dealers or infrastructure, that's an interesting development
Molly Weiss: (31:24)
On the technology side. we clearly empower large institutions, broker dealers, and then we power, RIAs as well. And in the past, the technology kind of usage or personas have been pretty different, but we've been seeing them start to merge a little bit. And I think it's, directly related to what mark was saying. I think that in the past there was heavy kind of compliance technology oversight of the broker dealer or institutional platform and less so on the RIA side. But what we're seeing more and more is that there is a demand for greater compliance and oversight on the RIA side too. So while they might, use portfolio management tools slightly differently from one segment to the other, the it we are seeing it start to converge a bit, especially also with RIA starting to outsource investment management. So we're, seeing a lot of, kind of the same tool set solving for both. So in terms of making them competitive with one another, we don't really think about it like that. We wanna enable, all of them to be successful and use investment technology, but like I said, we are seeing them start to converge a bit
Tom Scott: (32:31)
In the back.
Speaker 5: (32:34)
So Molly earlier, you mentioned, do you traditional Downing?
Molly Weiss: (32:57)
well, I think in keeping with our theme about, scale and, how advisors can grow their practices, it's most cost effective and probably, easiest for them to do a lot of outsourcing. So a lot of now you can use technology to sort of outsource some of the oversight that you might need to provide of some of those additional services. So I think it would be in their best interest to do again, like we talked about before specialization, so focus on what they're good at and then leverage technology and solutions and outsource providers to do, maybe some of the things that they don't wanna focus on.
Mark Tibergien: (33:33)
I think related to that it's important for any business to own what is core to their proposition and to rent what is not, so if the services that you're talking about are incidental, it's probably better to outsource that, but anything that compromises the brand and the positioning and the client experience is not something that advisors would be inclined to do, unless it's purely a cost question. So, it really has to have a strategic context around what would you outsource. And I think that we, we are now seeing, demo Molly's point a greater tendency to outsource things that are more commoditized and to hold on to things that are more customized.
Tom Scott: (34:16)
All right. I think we have time for one more question,
Mark Tibergien: (34:27)
Boy, we nailed it.
Speaker 6: (34:29)
yes.
Mark Tibergien: (34:45)
Actively versus passive in light of volatility. That's a, let's put it this way. I think there still is a market for actively managed assets. And in fact, the evolution of direct indexing in a way is kind of a step back into a less passive approach ironically so, I think that the more upmarket people go, the more the greater tendency is to, is to have, maybe investments in private equity, which is a very active strategy in, some cases. So, it, may actually look like an evolution away from a funds approach to more individual investments, the higher up with the net worth you go. So, I don't think that either will disappear, there's just more money coming in, and it depends on the characteristics of the client.
Tom Scott: (35:41)
I agree, and I think one interesting distinction that we're going to see is what exactly defines passive and active. and we're starting to see kind of a middle ground with values based investing and screening criteria for more, index based approaches that blend a little bit of both, and not even in response to recent market volatility, but just in terms of investor preferences. And I think then accelerated by some of the volatility that we've seen, I think that the needle likely will shift a little bit more towards, that active passive kind of mix
Mark Tibergien: (36:17)
And there's, and there's a certain irony in all of this is that the firms that are going through consolidations now have passive shareholders where before they had active shareholders. So the question is when those passive shareholders, particularly the PE firms will become more active in the management of the businesses and times of volatility when they show a particular interest in that.
Tom Scott: (36:41)
Excellent. Well, we're out of time. I wanted to thank Molly, Nick and mark for joining us today, hopefully everyone enjoy the conversation. Thank you for joining us and enjoy your weekend.