Event Highlights from Bloomberg Wealth Summit | May 4

Event Highlights

Bloomberg Wealth Summit
May 4, 2021

By Bloomberg Live

Against the ongoing backdrop of the Covid-19 pandemic, we see encouraging signs of a resurgent economy, aided by the Biden Administration’s plans to push for significant tax changes. The challenges of managing cash and debt, of developing investment strategies, of planning for retirement and for the future of estates are all magnified by increased risk and uncertainty. As life begins to return to some approximation of normal, how should we think about how much to spend and where to spend it?

The Bloomberg Wealth Summit is a virtual event designed to provide private investors, family offices and financial advisors with actionable intelligence and news they can use. Through smart panels, one-on-one interviews and interactive audience Q&As with leading investors, economists, money managers and policy professionals, we unearthed insights and shed light on some of the most vexing questions, and surprising opportunities, in wealth management.

Click here to view video of today’s event.

Speakers included:

  • Louis Barajas, Chief Strategy Officer, MGO Private Wealth
  • Jason Chandler, Head — Wealth Management US, UBS
  • Emilie Choi, President & Chief Operating Officer, Coinbase
  • Gregory J. Fleming, President & CEO, Rockefeller Capital Management
  • Todd Jablonski, Chief Investment Officer, Principal Global Investors
  • Catherine Keating, CEO, BNY Mellon Wealth Management
  • Kevin Kelly, Co-founder and Global Head of Macro Strategy, Delphi Digital
  • Anna N’Jie-Konte, Founder and CEO, Dare to Dream Financial Planning
  • Sarah Levy, CEO, Betterment
  • Ida Liu, Global Head of Private Banking, Citi Global Wealth
  • Penny Pennington, Managing Partner, Edward Jones
  • Robert Roman, CEO and Managing Director, MGO Private Wealth
  • Michelle Seitz, Chairman & CEO, Russell Investments
  • Michael Sonnenshein, CEO, Grayscale Investments
  • Eric Stevenson, President, Retirement Plans, Nationwide Financial


Bloomberg Moderators:

  • Gina Martin Adams, Chief Equity Strategist, Bloomberg Intelligence
  • Eric Balchunas, Senior ETF Analyst, Bloomberg Intelligence
  • Romaine Bostick, Anchor, Bloomberg Television
  • Caroline Gage, Executive Editor for Global Finance, Bloomberg
  • Caroline Hyde, Anchor, Bloomberg Television
  • Jason Kelly, Chief Correspondent, Bloomberg Quicktake
  • Taylor Riggs, Anchor, Bloomberg Television
  • Erik Schatzker, Editor-at-Large, Bloomberg
  • Suzanne Woolley, Personal Finance Reporter, Bloomberg
  • Renita Young, Personal Finance Correspondent, Bloomberg Quicktake

Event Highlights:

  • On Rockefeller’s investment outlook: Gregory J. Fleming, President & CEO, Rockefeller Capital Management, said, “given that our client base is primarily high-net-worth and ultra-high-net-worth, we can do a fair amount of work in the alternatives, in the illiquid space all the way through to directs and that’s the right thing for the profile of those clients. Public equity markets and public markets go up and down with volatility, they’re hard to predict – who’d have thought the market would fall 35% last March, even less likely the snapback. So, we want our clients to have a percentage of their assets in alternatives and direct investments that are more illiquid but that smooth out those cycles and allow them to tap the phenomenal growth in private markets that has occurred over the last couple of decades.” Fleming went on to say that he believes digital currencies are going to be part of the future.
  • On digital investing trends: Sarah Levy, CEO, Betterment, said, “Covid has been a catalyst for digital investing generally – so, whether that’s about a long-term perspective, which we have, or shorter term, what we’d call a gambling perspective, there continues to be a spotlight shone on this digital transition. The fact that people are staying at home – it’s really forcing all the generations, not just those who are comfortable with technology, but all generations to say ‘wow there’s a better way.” Levy added: “A global diversified portfolio over the long term delivers better results. If people want to play and have some FOMO and gamble on other platforms that’s ok, we’re not going to do that, but we think we can complement that when setting yourself up for a long-term secure future.”
  • On the future of retirement: Michelle Seitz, Chairman & CEO, Russell Investments, said, “a third of American’s before Covid couldn’t withstand a $400 disruption to their income – many surviving on credit card debt. At a macro level, the retiring savings gap today is $70 trillion worldwide and it will grow to over $400 trillion in 2050 – magnitudes higher than the GDP of various countries. This is a critically big and important problem, especially as we all live longer, but the good news is because it’s long term even small shifts that we make as an industry and we make in terms of partnership with public policy really can close this gap over time. The industry needs to have a clarion call and that is around making sure that we can solve for the liability need, the retirement need, instead of focusing people on beating benchmarks.” Seitz went on to say that any retirement solution needs to be individualized and solved for actual problems and not for the industry problems.
  • On the cryptocurrency landscape: Kevin Kelly, Co-founder and Global Head of Macro Strategy, Delphi Digital, said he believes that institutional investors will be the next wave of crypto adopters. “One, because there’s client demand for it,” he said. “And two, because the outlook for the broader traditional asset landscape is a bit more bleak than it has been in the past decade.” He continued, “There’s a number of factors that will push people to look to crypto and crypto assets as a way to outperform or maintain similar return levels they’ve seen in the past decade.”
  • On stability, predictability and the opportunity of crypto: Michael Sonnenshein, CEO, Grayscale Investments, said that cryptocurrencies are not for everyone.  “You need to generally have a medium to longer term time horizon for it, you need to be able to stomach some volatility along the way,” he said. He added, however, “given that it is here to stay, we encourage investors to evaluate crypto like they would any other investment opportunity. I think now you see the development of a much more robust, healthier, two-sided market with the ability to access crypto at a level we just haven’t seen before. If you were to rewind the clock a few years ago, you’d probably have been laughed out of the boardroom for suggesting that a company allocate to bitcoin, but today you can certainly do so quite easily with regulated counterparties and in a way that dovetails with your corporate governance. That’s why you’re seeing so many individuals wake up to the opportunity,” he said. (Grayscale Investments is a sponsor of the event.)
  • Bloomberg Intelligence Senior ETF Analyst Eric Balchunas shared his insights about 21 ETFs on his radar for 2021. Perhaps the biggest story in his ETF analysis is not an ETF at all but an over-the-counter traded Bitcoin Trust Grayscale (GBTC.) “It’s going to have a lot of premium and discount action,” said Balchunas. “That said, it’s really a sign of this race for Bitcoin ETFs, and, until a Bitcoin ETF launches, the flows in this have been pretty good. I think it has $30 billion at this point, which is a lot.”According to Balchunas, September 30, 2021, could see the launch of the first Bitcoin ETF. “There’s now nine ETFs filed, we’ll see if they get launched. If and when that happens, look for some people to leave GBTC or look for GBTC to convert to an ETF,” he explained.
  • The United States is going through a huge demographic transformation. Anna N’Jie-Konte, Dare to Dream Financial Planning Founder and CEO, said she believes the wealth management industry is not meeting the challenge of serving this shift. She discussed how she is working to build wealth for all Americans, including generational wealth for women of color, millennials and first-generation wealth builders. Last year “was the first year where the majority of children born are ethnic minority,” she said.“The U.S. is slated to be a majority minority country in the mid 2040s, just about 20 some odd years away. Forty percent of wealth is managed by women. The wealth management industry from my perspective is not really poised to meet that,” N’Jie-Konte said. “We are not diverse and I think that also affects the quality of advice that we are able to give to diverse populations. We’re not able to necessarily prospect in the ways that will attract those clients. We might not even necessarily understand what their needs are in terms of creating services for them that really can add value.”She noted that, “the financial services industry loses out on $60 billion of annual revenue by not creating products and services that specifically meet the needs of Black Americans. That is a huge amount of money, and that’s just that one population,” she said.
  • MGO Private Wealth Chief Strategy Officer Louis Barajas and CEO and Managing Director Robert Roman discussed how they are developing wealth planning strategies and investment portfolios for a premier roster of high-net-worth individuals and top earners in entertainment, sports and media.“We have a lot of people that actually come from no wealth to sudden wealth,” Barajas said. “Over the last few years if they were making money outside of their profession, they were brand ambassadors. Now they are brands. Brand ambassadors focused on getting income. Now, we’re trying to focus on building wealth and building equity.”Roman said a major change he sees in the thinking of MGO private wealth clients is a desire to become more financially literate.

    In an example drawn from a conversation with one of his top clients, Roman demonstrated how he approaches this issue: “Let’s start with some basic concepts and public markets. You’re walking down the aisle of the grocery store and buying toothpaste. Flip that box. Who owns that toothpaste? Is it Procter & Gamble? Can you buy that stock? That is ownership. That is equity. What are you drinking? What are you using? What apps excite you? Are these things organic and authentic to you? Are they private companies or other public companies. If they are private companies, well, let’s find out who’s invested in those companies to see if we can gain access to them,” Roman explained.

  • Three top private investing and wealth management leaders shared their insights on where they see the biggest trends to watch as we transition into a fuller economic recovery. “Investors always need to be concerned about inflation,” said Catherine Keating, CEO for BNY Mellon Wealth Management. “We see a bit of a tug-of-war, in the short term, some very inflationary factors. An economy reopening with significant pent-up demand and over $6 trillion in fiscal stimulus. A household savings rate that has tripled with $3 trillion now sitting in household deposit accounts. You see markets tipping at all-time highs. You see household real estate, the value of homes, which is often a consumer’s biggest asset, tipping at all-time highs. So these things tend to be inflationary,” she said. “And, right now, we’re continuing to expect it to be transitory, because we do see some longer-term factors in that tug-of-war that could be deflationary. And those things like demographics. All of the major economies in the world are aging,” Keating explained. “Another thing that tends to be deflationary is large amounts of debt. We’ve seen debt grow in this country,” she added. (BNY Mellon Wealth Management is a sponsor of the event.)Jason Chandler, Head — Wealth Management US, UBS, said he’s seen a shift in his clients’ priorities and concerns over the past year. In a recent survey, Covid moved from his clients’ number one concern to number 10. “Clearly our clients have pivoted,” he said, “and moved towards the future — thinking about the reopening of the economy and how to position themselves accordingly.”Among their top-of-mind concerns is Biden’s tax proposal. “Generally,”  he said, “we think about it in three main perspectives: liquidity, how much money you need to really carry out your life day to day. Longevity, investing for you and your family’s future and then legacy, what kind of imprint do you want to put on your family, the community that you live in and the people you love? When it comes to a changing capital gains rate, that would hit in that longevity perspective, if it comes to a possible change in the estate tax law, that would be legacy,” he explained.Penny Pennington, Managing Partner for Edward Jones. said, “If we look back over the arc of history, fundamentally taxes have not been the primary driver for economic or market performance. Interest rates really have had much more of an effect on economic growth and on market performance. That notwithstanding, each individual is going to be faced with different types of decisions.”  She noted, “We shouldn’t let the tax tail wag our portfolio in terms of how we invest fundamentally, but things like bringing forward income perhaps into 2021, perhaps going ahead and recognizing some capital gains, while capital gains tax rates might be at a lower point today than they could be in the future. Those are going to be strategies that I’m sure we’ll all be talking about with our clients.”

    In a lightning round of questions on the most attractive part of the market right now, Chandler said “sustainable investing.” Keating said, “reopening trades, small cap versus large cap, international versus domestic, value versus growth.” And Pennington said, “If you haven’t rebalanced your portfolio in the last six months, the best investment is whatever you’ve gotten underweighted on, given your tolerance for risk and the longevity of your objective.”

  • On the biggest opportunities, and challenges, for high-net-worth individuals in the coming months, Ida Liu, Global Head of Private Banking at Citi Global Wealth, said, “We’re looking at thousands of different client portfolios all around the world and generally we see a couple of similar themes. A lot of investors are sitting on cash. And a lot of investors have a tendency to have a home tilt, so home bias in their portfolios.” She said she is recommending more diversification “particularly geographic diversification,” to “get away from the home bias.”Investing trends that she believes will be viable for the next decade include opportunities in Asia, digitization, healthcare and ESG. “We’ve been saying this for a long time to our clients, ‘invest in Asia.’ Asia returned 24% last year, and is up already 5% this year — some significant more upside there just given the massive middle class, the middle class being 2 billion today, going up to 3.5 billion in the next 10 years.”

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