How Financial Advisors Can Add Value Through Investment Management

Speaker: 00:00:12

Go!

2

: 00:00:18

Ryan Nauman Market Strategist Zephyr:

Hello, everyone, and welcome to

3

: 00:00:20

Zephyr's Adjusted for Risk podcast

from the shores of Lake Tahoe.

4

: 00:00:24

I am Ryan Nauman, the market

strategist here at Zephyr.

5

: 00:00:28

talk a lot on this show about the

evolution of the wealth management space.

6

: 00:00:33

That evolution may be most evident in the

investment management segment of wealth

7

: 00:00:39

management, driven by fee compression,

changing client demands, and technology.

8

: 00:00:46

Well, I have on an industry expert who

is gonna share what he believes is the

9

: 00:00:51

biggest trend in investment management

and how it provides an opportunity

10

: 00:00:56

for financial advisors to add value.

11

: 00:01:00

But first, today's episode is sponsored

by the award-winning Zephyr, which

12

: 00:01:04

helps investment professionals

make more informed investment

13

: 00:01:08

decisions on behalf of their clients.

14

: 00:01:10

All right, enough from me.

15

: 00:01:11

I've already talked enough.

16

: 00:01:13

Let's go ahead and bring

on the star of the show.

17

: 00:01:17

I'd like to give a very warm

welcome to Manju, Manju Borah.

18

: 00:01:22

Manju is a head of systematic fixed income

and co-head of custom SMAs at Allspring.

19

: 00:01:31

Manju, thank you so much

for coming on the show.

20

: 00:01:34

It's an honor to have you, and I'm really

looking forward to this conversation.

21

: 00:01:38

It's gonna be a fun one, very insightful.

22

: 00:01:42

can you please tell us a little bit

more about yourself and Allspring?

23

: 00:01:46

Manju Boraiah Head of Systematic Fixed Income, Co-Head of Custom SMA Allspring:

Yeah, no, absolutely, Ryan.

24

: 00:01:47

Thank you for having me.

25

: 00:01:49

Look forward to our conversation today.

26

: 00:01:51

So in terms of just my background,

Ryan, just to set the context.

27

: 00:01:54

So started off my journey in computer

science engineering, then my passion

28

: 00:02:00

in mathematics and finance took me

into the world of systematic investing.

29

: 00:02:06

So started my career at a place

called Barclays Global Investors back

30

: 00:02:10

in the day after graduate school.

31

: 00:02:12

And it was a fascinating place

for-- to kinda start as a, as, as a

32

: 00:02:17

professional in systematic investing.

33

: 00:02:19

It really grounded me to think about the

intersection of kinda data technology,

34

: 00:02:25

investment acumen, and how do you actually

turn that into investment insights.

35

: 00:02:29

So started there building kinda hedge

fund strategies in the fixed income space.

36

: 00:02:34

Then kinda evolved, worked at

Goldman and a few other places.

37

: 00:02:39

And my journey kinda got

me to Allspring here.

38

: 00:02:42

And today I kinda lead two verticals

within Allspring the systematic

39

: 00:02:46

fixed income vertical and also

co-lead the custom SMA vertical.

40

: 00:02:51

In terms of Allspring itself Allspring is

a global asset manager, privately owned.

41

: 00:02:56

We manage about six hundred and

twenty-five billion in assets across

42

: 00:03:00

fixed income, equities, and multi-asset.

43

: 00:03:03

And our kinda core mission, Ryan,

is to really be at the forefront of

44

: 00:03:07

investing We have different investment

styles, fundamental and systematic, and

45

: 00:03:12

we've been bringing the two together.

46

: 00:03:15

We've been working with clients to

really kind of meet them where they

47

: 00:03:18

are, provide solutions to them across

both institutional and the retail space.

48

: 00:03:23

And our mission is to really you know,

be the best and the easiest asset

49

: 00:03:28

manager to work with for our clients.

50

: 00:03:31

Ryan: Yeah, Manju, that's fantastic.

51

: 00:03:33

I love that you said the

easiest a- asset manager to

52

: 00:03:37

Manju Boraiah: Great.

53

: 00:03:47

Ryan: Important.

54

: 00:03:48

And I've had the privilege of I had Noah

from Allspring on the fixed income team.

55

: 00:03:54

Fantastic people you guys have on at

Allspring doing some re- I love working

56

: 00:03:59

with you guys and, and great conversations

and insights, so a lot of fun.

57

: 00:04:03

Manju Boraiah: That's

58

: 00:04:03

Ryan: And

59

: 00:04:04

Manju Boraiah: Yeah.

60

: 00:04:05

Ryan: interesting you said that,

you know, systematic fixed income.

61

: 00:04:11

Do you

62

: 00:04:11

Manju Boraiah: Mm-hmm.

63

: 00:04:13

Ryan: A lot of people when they think

of systematic investing are, you know,

64

: 00:04:16

really more on the side of investing,

they focus more on equities than

65

: 00:04:23

Manju Boraiah: Great.

66

: 00:04:23

Ryan: Income?

67

: 00:04:24

Do you come across that sometimes?

68

: 00:04:25

They're like, "Oh, systematic fixed

income, we don't see that very often.

69

: 00:04:29

Normally it's more on the equity side."

70

: 00:04:32

Manju Boraiah: No, it is true, actually.

71

: 00:04:33

I mean, I would say when people

refer to systematic, they're

72

: 00:04:36

mostly talking about equities.

73

: 00:04:37

I know fixed income is hard to

model systematically, right?

74

: 00:04:41

Because if you think about what

the asset class represent, it's all

75

: 00:04:45

about avoiding the left tail risk.

76

: 00:04:47

It's all about avoiding

the, the bad stuff.

77

: 00:04:49

So it has been, y-you know, interesting

in terms of evolution of systematic

78

: 00:04:55

investing in fixed income, Ryan.

79

: 00:04:56

It really started off,

you know, in credit.

80

: 00:04:59

But back in the day when I was at BGI,

I think we were one of the two you know,

81

: 00:05:04

kind of establishments working on creating

systematic strategies in fixed income.

82

: 00:05:10

We covered the gamut in those days, right?

83

: 00:05:11

So if you've, you know, kind of

fast-forward to today it kind of

84

: 00:05:16

goes across sovereigns, FX, credit,

and, and munis as well, where you

85

: 00:05:22

can apply systematic rules to turn

your investment insights into factors

86

: 00:05:29

and, you know, really use those

factors to drive portfolio creation.

87

: 00:05:33

But I actually think that fixed income

or even in equities, you've gotta

88

: 00:05:38

have a hands-on-the-wheel approach

in systematic investing because

89

: 00:05:42

no model is perfect, as you know.

90

: 00:05:44

And you know, as regimes change,

models actually underperform, so

91

: 00:05:47

you have to have the flexibility

and agility to kind of make changes.

92

: 00:05:53

So I would say, you know, you have to

have the best autopilot, but you gotta

93

: 00:05:57

have hands on the wheel all the time.

94

: 00:06:00

Ryan: Yeah.

95

: 00:06:01

Th- that's fantastic, Manju.

96

: 00:06:03

I just can't imagine, you know, with

the fixed income space, it's huge, it's

97

: 00:06:09

vast, and I feel like creating a model

based on just all the factors that go

98

: 00:06:14

into fixed income, whether, you know,

inflation, the macro side, interest

99

: 00:06:19

rates, just a lot more goes into it.

100

: 00:06:22

I'm simplifying it here, but on

equities, you know, you focus on

101

: 00:06:26

earnings and, and stuff like that.

102

: 00:06:28

But,

103

: 00:06:29

Manju Boraiah: Great.

104

: 00:06:29

No, it's different.

105

: 00:06:30

Like, I mean, if you think about I'll

just give you one example, right?

106

: 00:06:32

Sovereign versus credit,

way different, right?

107

: 00:06:34

So the factors that you would focus

on, you know, when you're investing

108

: 00:06:38

in government bonds you know, you

have to think about the macro factors

109

: 00:06:42

to your point, like, you know,

growth, inflation monetary policy.

110

: 00:06:46

Obviously sentiment is kind of common,

like, you know, investor sentiment

111

: 00:06:49

and how do you express it, either

momentum or cross-asset momentum.

112

: 00:06:53

That, to some extent, is kind of

common across the different sectors.

113

: 00:06:57

And then you go and get into valuation

space, like how do you express, you

114

: 00:07:01

know, in sovereigns it's about carry

and roll down and thinking about the

115

: 00:07:05

different aspects of the yield curve.

116

: 00:07:07

In credit, it's different.

117

: 00:07:08

It's you're really thinking about

valuation more from an issuer perspective.

118

: 00:07:12

So there are all these nuances, but I

would say, you know, the approach that

119

: 00:07:17

you take where you think about the return

drivers in that particular asset class,

120

: 00:07:22

and then turning those return drivers

into factors, and then ultimately bringing

121

: 00:07:27

them together in a multi-factor approach.

122

: 00:07:30

I think that's, that's really

the, the process, right?

123

: 00:07:34

Ryan: Yeah.

124

: 00:07:35

Well, Manju, we'll have to

schedule another podcast

125

: 00:07:39

Manju Boraiah: Yeah.

126

: 00:07:39

Ryan: talk about, about that side.

127

: 00:07:41

That sounds fantastic, very

interesting conversation right there.

128

: 00:07:45

So get you on the podcast for that.

129

: 00:07:47

Let's talk about some of the trends

you're seeing in investment management.

130

: 00:07:52

Like I said at the open, there's a lot

of evolution in this space, especially

131

: 00:07:57

investment management, whether it's

been driven by fee compression,

132

: 00:08:01

that race to zero or technology.

133

: 00:08:05

But a lot of a- lot's happening

there for financial advisors.

134

: 00:08:09

And, and their, their plate's

getting bigger too, right?

135

: 00:08:11

Not only is it just investment management,

they've got to worry about, you know,

136

: 00:08:16

compliance, marketing, financial planning.

137

: 00:08:18

What do you feel is the biggest

trend investment management?

138

: 00:08:24

Manju Boraiah: I mean, I think all

the trends that you highlighted, Ryan

139

: 00:08:27

are essentially unfolding as we speak.

140

: 00:08:30

From a wealth management perspective,

I would say the biggest trend

141

: 00:08:33

that that I'm personally seeing is

really the, the notion of outsourced

142

: 00:08:38

investment management, right?

143

: 00:08:39

So if you think about You know, with the

advisor you know, how their time is spent

144

: 00:08:44

on a given day, they have lots to cover.

145

: 00:08:47

You know, practice management is

a big portion of what they do.

146

: 00:08:51

But being able to manage portfolios

for clients to drive those

147

: 00:08:55

portfolios to optimal outcomes,

that's, that's a challenging role.

148

: 00:08:59

And being able to navigate the, the

different macro scenarios it's not easy.

149

: 00:09:04

So what we've seen is the evolution

really started a few years or decades

150

: 00:09:08

ago, where parts of the portfolios were

being outsourced, obviously, through

151

: 00:09:14

funds or ETFs as, as the vehicles evolved

that those wrappers have evolved as well.

152

: 00:09:20

But what we have seen in the last

few years is really as customization

153

: 00:09:24

and the need for tax efficiency has

taken hold, more and more advisors

154

: 00:09:29

are looking to places like custom SMAs

or even active ETFs to essentially

155

: 00:09:34

deliver optimal outcomes to clients

and, and also bake in tax efficiency.

156

: 00:09:40

So we saw a pretty huge influx in

the last, call it like half a decade,

157

: 00:09:45

where advisors started embracing custom

SMAs across both fixed income and, and

158

: 00:09:50

equities, I would say active and passive.

159

: 00:09:53

So that has grown.

160

: 00:09:55

So taking that to the next level,

what you've seen in the recent past

161

: 00:09:59

is asset allocation itself, right?

162

: 00:10:02

Going beyond sleeves to the

overall portfolio, that's now

163

: 00:10:06

being outsourced through models.

164

: 00:10:08

So the concept of third-party models,

again, that has evolved from just pure

165

: 00:10:14

off-the-shelf models to now what's

referred to as the custom models.

166

: 00:10:18

The idea is bringing the best-of-breed

solutions from different managers and,

167

: 00:10:24

you know, offering those kinda like

white-labeled portfolios to clients,

168

: 00:10:29

and then evolving that through time.

169

: 00:10:31

So I would say that that's really

what I see as the, the biggest trend

170

: 00:10:35

so that, that frees up advisors

to focus on what they really--

171

: 00:10:39

where they can really add value.

172

: 00:10:42

Great,

173

: 00:11:15

Ryan: they want

customization, they want tax

174

: 00:11:18

Manju Boraiah: yeah.

175

: 00:11:18

Ryan: and SMEs provide

176

: 00:11:20

Manju Boraiah: No,

177

: 00:11:20

Ryan: Due to the outsourcing of that

investment management piece, like you

178

: 00:11:24

said, you could say manager selections

become, you know, commoditized.

179

: 00:11:29

You don't, you know, financial advisors,

like you said, they don't necessarily

180

: 00:11:32

have time to sit behind their desktop

and search for with the best sharp ratio

181

: 00:11:39

or lower, lowest standard deviation.

182

: 00:11:42

That's not where they're

getting their value from.

183

: 00:11:45

How can financial advisors add

value now in this new space of

184

: 00:11:49

outsourcing investment management

compared to when I started, Manju?

185

: 00:11:54

You know, financial advisors added

value in their manager selection.

186

: 00:11:59

"Oh, I'll provide you the best returns.

187

: 00:12:00

I'll provide you with

the best investments."

188

: 00:12:03

Now let's commoditize.

189

: 00:12:04

How can financial advisors add value?

190

: 00:12:07

Manju Boraiah: Yeah.

191

: 00:12:07

Yeah, no, it's a great question, Ryan.

192

: 00:12:09

I mean, I think it-- that's really

where I would say there are certain

193

: 00:12:13

gaps in the industry that advisors

can really fill, in my view.

194

: 00:12:16

So if you think about like,

you know, let's take financial

195

: 00:12:18

planning as an example, right?

196

: 00:12:20

So financial planning it's a

commoditized tool where you know,

197

: 00:12:24

advisors will get their clients,

they fill out a questionnaire that

198

: 00:12:27

questionnaire gets turned into a score.

199

: 00:12:30

And what happens generally is that

that score gets mapped to a portfolio.

200

: 00:12:35

And that portfolio is kind of

what the advisor would suggest to

201

: 00:12:38

their clients that they invest in.

202

: 00:12:40

Obviously, that there are

evolutions and flavors or…

203

: 00:12:44

of, of this process, but the process

of taking the financial planning and

204

: 00:12:48

mapping that to the portfolio, in

my view, is a critical task, right?

205

: 00:12:53

That's, that's where you're mapping

the objectives, the goals, and the

206

: 00:12:57

constraints of your clients to portfolios

that can be optimally structured to

207

: 00:13:02

meet those goals and constraints.

208

: 00:13:03

And that process is, in

my view, not trivial.

209

: 00:13:07

And to me, that is really where

advisors can add a huge amount of value.

210

: 00:13:12

And that's just for one account, right?

211

: 00:13:14

Or one individual within a household.

212

: 00:13:16

But can I extrapolate that

to the entire household?

213

: 00:13:19

How do you then kind of manage the, the

different entities and the different

214

: 00:13:23

individuals within the household

and create the best outcome for

215

: 00:13:27

clients or for the entire household?

216

: 00:13:29

So to me, going beyond financial advice

and, you know, kind of mapping that

217

: 00:13:35

to portfolios and ultimately managing

the goals and the constraints across

218

: 00:13:40

the entire household, that to me is a,

is a place where advisors need to step

219

: 00:13:46

up and add value The other piece is,

like, really driving tax efficiency.

220

: 00:13:52

So if you really think about what's

happening right now is as multi-asset

221

: 00:13:55

SMA managers Allspring gets to manage

parts of different sleeves within the

222

: 00:14:01

portfolio, be it fixed income or equities.

223

: 00:14:04

You know, we obviously manage that

sleeve in a tax-efficient way, but

224

: 00:14:08

that's just one piece of the pie, right?

225

: 00:14:10

So imagine what's happening

across the entire pie.

226

: 00:14:13

How do you coordinate tax outcomes

across the entire portfolio?

227

: 00:14:17

To me, that is also not easy, right?

228

: 00:14:19

So being able to do that across one

account and then again going beyond one

229

: 00:14:24

account to the entire household, driving

tax efficiency holistically across the

230

: 00:14:29

entire household is also something, in

my view advisors can add a lot of value.

231

: 00:14:35

And finally, you know, organic growth,

as you know, is hard to come by be it

232

: 00:14:38

asset management or wealth management.

233

: 00:14:41

So managing those relationships and,

you know, preparing for, as we refer

234

: 00:14:46

to as the Great Wealth Transfer, you

know, building those relationships

235

: 00:14:49

with the, the spousers or the, the

children is, is a key aspect as well.

236

: 00:14:55

So to me, you know, it goes

beyond just practice management.

237

: 00:14:58

It's and also relationship management.

238

: 00:15:00

It's really the aspect of managing the

entire household and, you know, driving

239

: 00:15:05

the outcomes, be it tax efficiency

or customization, but doing that in a

240

: 00:15:10

much more effective, scalable fashion.

241

: 00:15:12

I, I think that's really where

advisors can add a lot of value.

242

: 00:15:17

Ryan: Yeah, I completely agree.

243

: 00:15:19

And, you know, it add-- you can add a lot

of value despite, like, tax efficiencies.

244

: 00:15:26

You get more of a holistic plan when

you take into effect all the different

245

: 00:15:31

accounts within the household.

246

: 00:15:33

that can be a challenge too.

247

: 00:15:36

Not very many households

just have one account,

248

: 00:15:39

Manju Boraiah: Right.

249

: 00:15:39

Yeah.

250

: 00:15:40

Ryan: so that's a challenge.

251

: 00:15:42

What do you think is the

biggest unsolved problem?

252

: 00:15:44

Do you think that is?

253

: 00:15:45

You, you talked a lot about,

254

: 00:15:47

Manju Boraiah: Yeah.

255

: 00:15:47

Ryan: know, how to provide

256

: 00:15:48

Manju Boraiah: I,

257

: 00:15:49

Ryan: how financial advisors can

provide value in this era when maybe

258

: 00:15:53

investment management's commoditized.

259

: 00:15:56

But where-- what do you think

is the biggest unsolved problem?

260

: 00:16:00

Because there are some problems there

when you think of just time and resources.

261

: 00:16:06

Manju Boraiah: the biggest problem

I see really, the way I would

262

: 00:16:09

phrase it is really aggregation

without integration, right?

263

: 00:16:13

So if you think about the individual

account level what's happening

264

: 00:16:17

is, like these sleeves are getting

outsourced to managers, but being able

265

: 00:16:22

to coordinate tax outcomes across the

entire portfolio is currently missing.

266

: 00:16:27

So you're-- the advisor is aggregating

these different sleeves, but,

267

: 00:16:31

like, how do you coordinate across

these different sleeves, and how

268

: 00:16:34

do you deal with the best outcome?

269

: 00:16:36

You know, within that account.

270

: 00:16:38

So that's a s- that's a gap.

271

: 00:16:40

But, you know, again, taking it

to the next level how do you do

272

: 00:16:43

the same across multiple accounts

and entities within a household?

273

: 00:16:48

That is also, in my view,

something where there's a gap,

274

: 00:16:52

you know, needs to be addressed.

275

: 00:16:54

The bigger challenge, as you know, is

the app, and especially in the RA space,

276

: 00:16:58

as we've gone through consolidation and

there's a massive aggregation that has

277

: 00:17:02

happened, there is definitely integration

that yet to be, you know, happening

278

: 00:17:07

across the front, middle, and back office.

279

: 00:17:09

So that has definitely led

to portfolio management being

280

: 00:17:13

kind of like fragmented, right?

281

: 00:17:14

So the different teams are

still operating as silos.

282

: 00:17:17

The client experience

is fragmented as well.

283

: 00:17:19

So how do you actually deliver a

holistic portfolio management or

284

: 00:17:24

investment management and client

experience, not just within a single

285

: 00:17:29

book, but across the entire practice?

286

: 00:17:32

To me, that's, that's-- it's a big,

big problem for the industry, but

287

: 00:17:35

it's also a huge opportunity, in my

view, for the industry to transform

288

: 00:17:39

and evolve and, and get to a, a better

place from an efficiency perspective.

289

: 00:17:45

Ryan: Yeah, that's really interesting.

290

: 00:17:47

You talk about I love that,

aggregation without integration.

291

: 00:17:52

And you talked about, you know,

consolidation, a lot of M&A on the,

292

: 00:17:57

you know, fin- financial advisory

space, but there's also M&A on the

293

: 00:18:02

inve- asset management side too.

294

: 00:18:05

Manju Boraiah: Right.

295

: 00:18:05

Ryan: Some management firms

integrate, you know, merging.

296

: 00:18:09

So that

297

: 00:18:11

to, you

298

: 00:18:12

the problem of aggregation without

integration, which I think is really

299

: 00:18:15

fascinating, is it for financial advisors?

300

: 00:18:19

All right, just go with

one asset management firm.

301

: 00:18:23

They've got equities, international,

domestic fixed income.

302

: 00:18:27

They've got

303

: 00:18:28

Manju Boraiah: think

304

: 00:18:28

Ryan: whole suite of products.

305

: 00:18:29

Manju Boraiah: there

306

: 00:18:30

Ryan: that the solution?

307

: 00:18:31

Just go with one asset management

firm and try and have that

308

: 00:18:34

aggregation of household there?

309

: 00:18:36

Or are there other solutions to

this aggregation without integration

310

: 00:18:40

problem that you've discussed?

311

: 00:18:43

Manju Boraiah: are two

aspects to this, to…

312

: 00:18:46

You know, you, you made

a great point, right?

313

: 00:18:47

I mean, we have seen the consolidation

happen in the asset management world as

314

: 00:18:52

well, where the bigger become bigger.

315

: 00:18:55

And you need scale to be able

to cater to different needs.

316

: 00:18:59

Like, for example, at Allspring, we

have taken a more vehicle-agnostic

317

: 00:19:02

approach to solutions, right?

318

: 00:19:04

So we wanna meet the clients where

they are it doesn't matter if they're

319

: 00:19:07

interested in funds or ETFs or SMAs.

320

: 00:19:12

We wanna deliver the best solutions to

clients and meet them where they are.

321

: 00:19:15

So to be able to do that, you

need scale, as you pointed out.

322

: 00:19:19

You need to have those different

capabilities and the different

323

: 00:19:22

flavors, and ultimately deliver

those investment you know, expertise

324

: 00:19:27

through the vehicle that's actually

preferred by the advisors and clients.

325

: 00:19:31

But beyond that, at the-- on the wealth

management side, I think the challenge

326

: 00:19:36

really is Ryan, you know, how do you put

that all together on one chassis, right?

327

: 00:19:41

So if you really think about how the

portfolios are managed especially

328

: 00:19:46

in the RIA space these days, is you

might have the public part of the

329

: 00:19:49

portfolio sitting on one platform.

330

: 00:19:52

The privates might be

completely held separately.

331

: 00:19:55

So that unification of publics

and privates in o- on one

332

: 00:19:59

framework doesn't exist.

333

: 00:20:01

The other piece is like, you

know, how do you coordinate

334

: 00:20:03

across the different portfolios?

335

: 00:20:06

You really need going beyond the UMA.

336

: 00:20:08

You need a unified managed

household platform, right?

337

: 00:20:12

A UMH platform that is scalable,

that can actually provide a holistic

338

: 00:20:18

view of the entire household,

not just taxable accounts, but

339

: 00:20:21

also the other entities, right?

340

: 00:20:23

And then the, the kind of the integration

of the, the weaving of those different

341

: 00:20:28

pieces together and the coordination

of that, the orchestration layer as

342

: 00:20:32

I call it, that's really, in my view,

the biggest gap in the industry, right?

343

: 00:20:37

If you can solve for that, then, you

know, you can then embrace a total

344

: 00:20:42

portfolio approach on one chassis

where you can actually manage publics,

345

: 00:20:47

privates on the same platform.

346

: 00:20:49

Then you can evolve the portfolio as the

client's needs change, and then deliver

347

: 00:20:53

customization and tax efficiency at scale.

348

: 00:20:57

Ryan: Yeah, that makes a lot of

sense, Manju, because it goes

349

: 00:21:01

along with the holistic planning.

350

: 00:21:03

There should be holistic planning

on the investment management

351

: 00:21:05

side too, so you know that you're

getting the best tax efficiencies.

352

: 00:21:09

Manju Boraiah: Mm-hmm.

353

: 00:21:10

Ryan: Maybe there's not a bunch of overlap

and You're not overly concentrated in

354

: 00:21:15

tech or something like that, right?

355

: 00:21:18

Where you've got the full

holistic picture there.

356

: 00:21:22

You talked about separately

managed accounts.

357

: 00:21:24

A lot of people went from separately

managed accounts to unified managed

358

: 00:21:28

accounts to kind of bring all

those separate accounts together

359

: 00:21:32

Manju Boraiah: Yeah.

360

: 00:21:33

Ryan: Is that a solution here or is

there something even better or, you

361

: 00:21:37

know, maybe more comprehensive and

holistic than the UMA structure?

362

: 00:21:43

Manju Boraiah: The UMA structure is great.

363

: 00:21:45

I think what, what you really need to

do is going beyond UMA to UMH, right?

364

: 00:21:50

So the unified managed household to me

is an extension of an UMA's structure.

365

: 00:21:55

Now, UMA is great.

366

: 00:21:56

It solves for, to your point,

like, you know, how do you

367

: 00:21:58

bring in the different sleeves?

368

: 00:22:00

How do you kind of coordinate

across the different sleeves?

369

: 00:22:02

Now, not all UMA solutions are created

equal because there are certain UMA

370

: 00:22:06

solutions, as you know are name only, but

they don't really do what they need to do.

371

: 00:22:11

But the UMH is theoretically

a great concept, right?

372

: 00:22:15

So bas- basically, you have a UMA

construct but extends beyond one

373

: 00:22:20

account to the entire household.

374

: 00:22:22

You can onboard the different

entities, you know, be it like

375

: 00:22:26

taxable accounts, retirement accounts,

trusts, you know, public and privates

376

: 00:22:30

all sitting side by side, and then

orchestration of these different

377

: 00:22:34

sleeves happening on one chassis.

378

: 00:22:37

But to me, that is harder to

actually implement, right?

379

: 00:22:41

Because if you think about h-

what are the different pieces

380

: 00:22:44

for UMH to actually be scalable.

381

: 00:22:47

So you need a framework that can

actually house these different entities,

382

: 00:22:51

public, privates on the same platform.

383

: 00:22:54

You need a data and a risk framework

or architecture that can actually

384

: 00:23:00

provide a holistic risk view for your

privates and public on the same platform

385

: 00:23:04

Ryan: I

386

: 00:23:05

Manju Boraiah: or the different

vehicles on the same platform.

387

: 00:23:07

You need a tax-aware optimization kind

of engine that sits alongside these

388

: 00:23:12

things that can optimize different

sleeves in the entire portfolio or

389

: 00:23:16

the entire household for tax outcomes.

390

: 00:23:19

And finally, I think the biggest missing

piece is the orchestration layer.

391

: 00:23:24

How do you stitch this all

together and do this at scale?

392

: 00:23:28

So the individual pieces exist, right?

393

: 00:23:31

And they're also kind of like bare bones,

I would say, like, you know, early f-

394

: 00:23:35

you know, phase UMH platforms out there.

395

: 00:23:38

But to actually do this at scale,

I, I think to me, that's really

396

: 00:23:43

where the industry is heading.

397

: 00:23:44

I haven't seen a platform that can do all

of these things at scale yet, but I know

398

: 00:23:49

different folks are working towards it.

399

: 00:23:52

But that to me is the Holy Grail, right?

400

: 00:23:54

I think that's really where

the industry is heading.

401

: 00:23:58

Ryan: was just gonna ask why you were

explaining the unified managed household

402

: 00:24:02

structure and, and the benefits of it.

403

: 00:24:05

I was gonna just ask you,

like, how do you do it?

404

: 00:24:07

It sounds complicated, but most

importantly, how do you do it at scale?

405

: 00:24:11

I think you just answered that question.

406

: 00:24:12

Like, it, it's has not been done yet.

407

: 00:24:15

Is that true or are we close so

financial advisors can leverage it?

408

: 00:24:20

Manju Boraiah: Yeah, I think there are

structures out there, Rand, which come

409

: 00:24:23

close, but I think the biggest gap in

my view is I think the, again, bringing

410

: 00:24:28

the publics and the privates together,

and not just the publics and the

411

: 00:24:31

privates, but also the different pieces.

412

: 00:24:34

Like, you know, how do you have a

portfolio that can house mutual funds,

413

: 00:24:38

ETFs, SMAs, privates on the same

platform, and being able to manage

414

: 00:24:45

the tax efficiency across them, being

able to manage cash and liquidity

415

: 00:24:49

across these different sleeves.

416

: 00:24:51

That to me is still missing.

417

: 00:24:54

I know there are providers out

there that are close to the

418

: 00:24:56

finish line, but not there yet.

419

: 00:24:58

But we're getting there.

420

: 00:24:59

I, I do feel that that would be the, the

ideal solution for advisors to embrace.

421

: 00:25:06

Ryan: Mm-hmm.

422

: 00:25:07

I would-- I'm assuming technology

plays a big role in that.

423

: 00:25:10

Maybe AI, I'm assuming it, it

could evolve very quickly with AI.

424

: 00:25:16

Is that where it's kinda heading

towards in order to implement

425

: 00:25:19

it, is AI and leveraging that?

426

: 00:25:22

Manju Boraiah: Yeah.

427

: 00:25:23

No, I think AI is a great enabler, right?

428

: 00:25:25

AI, in my view, would play a huge role.

429

: 00:25:28

I tend to think about AI adoption

in different levels, right?

430

: 00:25:31

So there are, in my view, at

least five different levels.

431

: 00:25:35

So level one is really the easiest in

my view, where, you know, if you're

432

: 00:25:40

an advisor and using the AI-enabled

tools for note-taking or e-drafting

433

: 00:25:45

emails, it's really a productive

productivity enhancement tool, right?

434

: 00:25:49

Level two is where it gets a bit more

interesting, where you really think

435

: 00:25:53

about- You know, information retrieval

or research syn-synthesis tool, right?

436

: 00:25:58

And we do that all the time.

437

: 00:26:00

You know, you have a document, you

wanna extract information from it, or

438

: 00:26:03

you have a whole, you know, trove of

documents you need to kind of combine

439

: 00:26:08

information across these different things.

440

: 00:26:10

So that's happening as well.

441

: 00:26:11

You know, I know advisors and,

you know, professionals are

442

: 00:26:14

using it across the board.

443

: 00:26:17

Third level starts getting a bit more

interesting, where you go from just

444

: 00:26:21

information retrieval to more like

a, a decision support system, right?

445

: 00:26:25

So it's like a co-pilot where, you know,

working hand, hand in hand with a human

446

: 00:26:30

expert to actually do things, right?

447

: 00:26:31

You know, I wanna generate a new trade

idea, or I wanna do a certain task where

448

: 00:26:36

the AI is actually making investment

decisions or decisions in general.

449

: 00:26:41

And, and that to me is where

the industry mostly is, right?

450

: 00:26:44

So these three levels.

451

: 00:26:46

The fourth level is where you can

start orchestrating workflows.

452

: 00:26:50

So the workflow orchestration using

AI, where you're stitching together

453

: 00:26:54

different things and making decisions,

that is really where you can start

454

: 00:26:59

leveraging AI to do meaningful things.

455

: 00:27:02

And then the last level, which

is like the, the god mode, right?

456

: 00:27:06

Which is the agentic you know,

systems where, you know, AI--

457

: 00:27:10

where you're actually building,

learning and adapting dynamically.

458

: 00:27:14

That is harder to achieve.

459

: 00:27:16

There are very few firms that

are AI native that are actually

460

: 00:27:20

heading in that direction.

461

: 00:27:21

But level four and level five

is what really unlocks the true

462

: 00:27:26

advantage of AI, in my view.

463

: 00:27:29

Ryan: Yeah.

464

: 00:27:30

Manju, and I'm sure with their background

in computer science and then also

465

: 00:27:33

systematic investing, you have a good

grasp on AI and technology, so it's

466

: 00:27:39

always great to get your insight there.

467

: 00:27:41

Manju Boraiah: Mm-hmm.

468

: 00:27:53

Ryan: of AI.

469

: 00:27:54

Like you said, they're probably at level

one, two using chatbots and stuff like

470

: 00:28:00

that versus more the decision-making.

471

: 00:28:02

Do you think they're kind of

missing an opportunity there?

472

: 00:28:05

Or maybe they're just a little

apprehensive because of compliance

473

: 00:28:09

and stuff to really get to level five?

474

: 00:28:12

Manju Boraiah: Yeah.

475

: 00:28:13

So level five is, is

harder for sure, Ryan.

476

: 00:28:16

But level four, in my view, where

you're orchestrating workflows,

477

: 00:28:20

and to me, that is a key input to

solving what we discussed earlier,

478

: 00:28:25

aggregation without integration, right?

479

: 00:28:26

That integration piece where you're

trying to bring different practices

480

: 00:28:30

together, different investment

processes, and different, you

481

: 00:28:34

know, kind of like workflows you

might have in an organization under

482

: 00:28:38

one kind of cohesive umbrella.

483

: 00:28:41

That is where I think wealth

management and even asset

484

: 00:28:44

management should be embracing AI

and kind of taking that next step.

485

: 00:28:48

And it's harder for an

individual advisor to do, right?

486

: 00:28:52

I mean because you do require different

skill sets to kinda get there.

487

: 00:28:56

Because, you know, all of us do

wipe coding and all we can build,

488

: 00:28:59

you know, applications on the fly.

489

: 00:29:01

But just integrating something that

you've built with the broader workflow

490

: 00:29:06

and, and kind of testing the end-to-end

and making it really work is not easy.

491

: 00:29:11

But my view is like the home

offices should really embrace this.

492

: 00:29:15

I think this is really more for

the home offices to help integrate

493

: 00:29:18

the front, middle, and back office

so that it makes the, the overall

494

: 00:29:23

process for advisors more easy.

495

: 00:29:24

Yeah.

496

: 00:29:26

Ryan: Yeah.

497

: 00:29:27

Manju, that's a perfect way of

wrapping up this conversation

498

: 00:29:30

because you're exactly right.

499

: 00:29:31

With AI, a lot of what you just

talked about that, you know, unified

500

: 00:29:36

managed households becomes a lot

easier, and at the end of the day,

501

: 00:29:40

it benefits the end investor, the

end client because then they can have

502

: 00:29:45

more of a holistic approach to their

investment management tax efficiencies.

503

: 00:29:50

Like you said, maybe more diversification,

a better understanding of exactly all

504

: 00:29:55

their investments across the board.

505

: 00:29:57

So important and a lot to come there.

506

: 00:30:00

A lot to come, Manju.

507

: 00:30:04

Wow.

508

: 00:30:04

Thank you so much, Manju,

for coming on the show.

509

: 00:30:07

Really fun conversation.

510

: 00:30:09

You brought a ton of great

insight, a lot of information.

511

: 00:30:13

Like I said earlier, really like

this topic due to our, you know, my

512

: 00:30:18

interests, and I really feel that

separately managed accounts are a great

513

: 00:30:22

vehicle for investors and for financial

advisors to help with their investment

514

: 00:30:28

management portion of their business.

515

: 00:30:30

So thank you so much.

516

: 00:30:32

Really fun conversation.

517

: 00:30:34

Where can our listeners get more

information about Allspring?

518

: 00:30:38

Manju Boraiah: No, definitely.

519

: 00:30:39

And, and thank you so much, Ryan.

520

: 00:30:40

Really enjoyed this conversation.

521

: 00:30:41

And in terms of Allspring, you know

advisors can go to allspringglobal.com

522

: 00:30:46

or please follow us on LinkedIn.

523

: 00:30:49

And I'm sure you know there's a

friendly Allspring representative in

524

: 00:30:53

your territory if you're interested

to learn more about our products.

525

: 00:30:56

But thank you so much for having me.

526

: 00:30:57

It was a great conversation, Ryan, and,

If you're ever in the San Francisco

527

: 00:31:01

Bay Area you know, ping me and we

can catch up for a cup of coffee.

528

: 00:31:05

Ryan: Well, Manju, I'm just up

the road, up in the mountains

529

: 00:31:08

Manju Boraiah: Great.

530

: 00:31:09

Ryan: San Francisco, so not far.

531

: 00:31:12

Manju Boraiah: Oh.

532

: 00:31:12

Ryan: Careful what you wish for.

533

: 00:31:13

I might come down for a Giants game

and I may knocking on your door,

534

: 00:31:17

Manju Boraiah: Oh, yeah, please do.

535

: 00:31:18

And yeah, no, it'll, it'll-- it's

always fun to catch up in person.

536

: 00:31:22

Ryan: Yeah, exactly.

537

: 00:31:23

Awesome, Manju.

538

: 00:31:24

Thank you so much, and thank you

everyone for listening to this episode

539

: 00:31:28

of Zephyr's Adjust It For Risk podcast.

540

: 00:31:31

You can watch all of our other

episodes on the Zephyr YouTube channel

541

: 00:31:34

and all the other platforms where

you catch your favorite podcasts.

542

: 00:31:38

Please be sure to like and

subscribe to those channels and

543

: 00:31:41

give us a follow on LinkedIn.

544

: 00:31:43

Thank you very much and have

a great rest of your week.