Will AI Displace Financial Advisors? (EP. 455)

Summary

Animal Spirits Podcast: "Will AI Displace Financial Advisors?" (EP. 455)

Date: March 11, 2026
Hosts: Michael Batnick & Ben Carlson
Live from Miami – Special Guests: Michael Kitces & Phil Hughes

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Episode Overview

In this lively, forward-looking episode, Michael and Ben dive headfirst into two of the biggest themes currently shaking the world of finance: the disruptive potential of AI on financial advisors, and the controversy swirling around the private credit market. Featuring industry experts Michael Kitces (on the “AI vs. advisor” debate) and Phil Hughes (private credit deep dive), plus a friendly roast battle, this episode is a blend of insight, candid debate, and signature Animal Spirits humor.

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Key Discussion Points & Insights

1. Market Turbulence and Resilience

[00:46–03:56]

• The hosts recap wild swings in oil and S&P futures the night before, noting how quickly panic can turn to calm.
• The ability of markets to "take so much" is likened to Rocky Balboa:

  “It's like Rocky IV… This market is made of iron.” — Ben Carlson [03:47]

• Despite little time for traditional market talk in this live episode, both underscore that tumult continues to create anxiety, but the “market keeps rebounding.”
• Observations about after-hours volatility and buyers stepping in to stabilize markets.

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2. Will AI Replace Financial Advisors?

With Guest: Michael Kitces
[05:09–22:09]

Listener Email & Existential AI Fears

• A listener email lays out the core concern about comprehensive AI replacing advisors by being more thorough, always available, and able to customize instantly:

  “Financial advice seems like the perfect prey for AI to take over almost immediately.” — Listener Email [07:26]

• Michael Batnick recounts Ben’s prior “existential freakout” (hot sweats!) over this topic.

The Hosts’ Evolving Views

• Ben’s perspective: DIY-ers have always existed—those who value their time or lack technical proficiency will still pay for human advisors.
• Michael’s addition:

  “Wealthy people aren’t going to trust robots… that’s where I’ve fallen on this.” [09:26]

Michael Kitces: Tech Hype vs. Industry Reality

• Kitces pushes back hard on “AI as existential threat.”

  “There’s always been do-it-yourselfers. They don’t hire us. They never hire us.” — Michael Kitces [10:23]

• The real bottleneck in advisory firms is not technical minutia but managing people and relationships—roles AI may not take over.

Historical Context: Tech Evolves, Roles Shift

• Kitces recounts the long arc of advisory jobs:
  • 25 years ago, 3 advisors required 8 support staff for filing, statement collection, mail sorting, etc.
  • Today, tech has replaced those tasks, but overall firm expenses and margins stayed the same.
• “Betty’s job is gone”—but now automation enables higher-complexity work, deeper client relationships, and paraplanning roles.

Impact on Advisor Roles and Industry

• Key Change Identified:
  • “The only material thing that’s changed in our industry in 30 years of technology evolution is client loads. And they went down...” — Michael Kitces [16:22]
• Rather than servicing more clients, advisors use freed-up bandwidth to deepen services and go “deeper” with each household.
• Margins, fees, and overhead ratios have not drastically changed.

The Advisor as Life Coach?

• Referencing a McKinsey report that predicts advisors will become life coaches, Kitces concurs directionally (more client-facing services) but tempers the “life coach” label.

  “Increasing depth and the increasing service expansion, I think is real... CFP is now baseline, you go deeper beyond that.” — Michael Kitces [18:33]

• Kitces muses about a future where financial abundance (aided by AI everywhere) raises client questions about purpose, meaning, and next-level problems.

Takeaway

• AI won’t make advisors extinct but will elevate the level of service clients expect.
• DIYers will have better tools; human-centric, advice-driven practitioners will remain essential for many.

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3. Private Credit: Bubble or Bad Rap?

With Guest: Phil Hughes (Cliffwater)
[22:09–38:59]

Setting the Scene

• Private credit has exploded, growing nearly $40 billion at Cliffwater alone.
• Media drumbeat calling private credit the “next bubble”—FT, Bloomberg, and Substacks amplify any signs of trouble.

  “They’ve come to the correct conclusion: if you write a negative headline about private credit, you’ll get likes and clicks.” — Phil Hughes [24:54]

Common Criticisms and Realities

• Yield skepticism: Many believe the reported yields can't be real—Phil explains decades of data show default rates and realized losses are historically low, with defaults below average even now.
• Market size: Over 10,000 unique borrowers in the middle market, default averages about 2% annually (approximately 200 defaults expected per year).

Are Software Loans the Achilles’ Heel?

• Much press centers on large allocations to software (e.g., BCRED at 26% software loans) and anxiety over possible defaults.
• Phil notes software’s historical status as low-default, but acknowledges “period of transition” with AI-impacted companies.
• Lenders are first in line; private equity bears the first loss.

Liquidity Concerns & Redemption Pressures

• Growing redemptions at BlackRock, Blackstone, etc.—but mechanisms exist (lockups, liquidity management, revolver capacity) to avoid forced selling.

  “Best-run evergreen structures have a thoughtful liquidity program… The last thing you want to do is ask for money when you need it.” — Phil Hughes [33:13]

Bubble or Not?

• Dispersion of lender quality is always present.
• “Bubble” implies irrational pricing—spreads are tighter, but still compensate for risk.
• Returns in GFC: Even in 2008, private credit index losses were modest; during actual realized credit losses (2009–2010), the index posted double-digit gains due to over-reserved marks and income.

The Real Risk

• Ben’s view: The danger isn’t the loans—it’s nervous clients flooding out at the wrong moment due to scary headlines, leading to forced redemptions.
• Phil advocates: This current stress will prove which managers built for resilience.

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4. The Animal Spirits Roast

[39:00–45:31]

• Inspired by a listener’s email poking fun at Michael’s repeated use of “Anywho,” the hosts (and Michael’s kids) deliver a series of playful, often self-deprecating roasts.
• Notable moments:
  • Michael’s twins roast both with kid-friendly zingers (e.g., “Dad, you’re so short, you can high five an ant.” [39:52])
  • Ben and Michael take shots at each other’s quirks, catchphrases, and investing clichés:

    “Ben has published more words about index funds than Vanguard’s entire legal department.” — Michael Batnick [42:11] “You use the word .'ostensibly.' more than any human being I know...” — Ben Carlson [41:54]

  • The roast closes on a mutual note of appreciation and humility.

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5. Exhibit A: New Software Announcement

[45:58–46:48]

• Ben and Michael announce “Exhibit A,” their new software company for advisors providing charts and now a monthly, white-labeled commentary report authored by Ben.
• A direct response to advisors consistently asking for “more than just charts.”
• The humor: “Now you can have them, Ben. AI.” — Michael Batnick [46:41]

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Notable Quotes & Memorable Moments

• “This market is made of iron.” — Ben Carlson [03:47]
• “I guess you must, like, really like doing that. That’s awesome. You probably don’t want to delegate that to an advisor... Because you know what people who don’t like handling all that stuff do? They’re like, that sounds like an awful lot of shit. I’m just going to hire an advisor and have them do that for me.” — Michael Kitces [10:23]
• “The only material thing that’s changed in our industry in 30 years of technology evolution… its client loads, and they went down.” — Michael Kitces [16:22]
• “If a fund has to prorate investor redemptions, the authors love to throw out, oh, the fund is gated. No, most people are getting most of their money out. Even when funds are prorated, it’s not like 100% of their capital is trapped. That’s just not the case.” — Phil Hughes [34:41]
• On the roast:
  “Your stories are so bad, not even ChatGPT can understand it.” — Michael’s daughter, Kate [40:29]
• “Buy and fold.” (On Ben’s fashion habits.) — Michael Batnick [43:20]

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Timestamps for Key Segments

• Market Turbulence Recap – [00:46–03:56]
• AI & Advisor Future – Michael Kitces segment – [05:09–22:09]
• Private Credit Deep Dive – Phil Hughes segment – [22:09–38:59]
• Roast Battle – [39:00–45:31]
• Exhibit A Software Announcement – [45:58–46:48]

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Conclusion

Tone: Insightful, conversational, irreverent, and reassuring. Michael and Ben combine a willingness to tackle existential finance questions with their trademark humor and camaraderie. The expert guests add depth, historical grounding, and skepticism to the headline-fueled industry anxiety over AI and private credit. For listeners, this episode is a masterclass in seeing beyond the latest fear or hype—grounding innovation in human relationships, long-term perspective, and, above all, humility.

Transcript

[Michael Batnik]

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[Ben Carlson]

Today's show is also brought to you by Janice Henderson at Janice Henderson Investors. We believe working together is the way to work better. Like combining your portfolio plans and our in depth strategy, your valued assets and our valuable insights. Your mission and our vision always working in perfect harmony to find the right investment opportunities. Janice Henderson Investors Investing in a brighter Future together visit janishenderson.com welcome to Animal

[Michael Batnik]

Spirits with Michael and Ben. We're live from Miami.

[Ben Carlson]

That's right, Ben, it is.

[Michael Batnik]

I don't know what time it is. It's the afternoon we recorded a live animal spirits at 11:45am and we tried to do something different.

[Ben Carlson]

This time we did some AI stuff. Listener email sparked that conversation. Listener email sparked a roast. Ben and I roasted each other. This guy told me that I say, what do I say? A lot.

[Phil Hughes]

Anywho.

[Ben Carlson]

Anywho. And I said, you know what, let's roast each other. I don't know that I say any who, but I take his word for it. I believe it. And I thought the jokes were okay. I mean, listen, we're not professional comedians obviously. Ben's certainly not and I'm told so we couldn't hear it and we couldn't hear it on stage. So it was like pretty awkward. It felt like they landed like with a thud. But apparently there were some laughs. We just couldn't hear it.

[Michael Batnik]

Yeah, the wind just carried them away.

[Ben Carlson]

Yeah, it was the wind.

[Michael Batnik]

It wasn't our jokes.

[Ben Carlson]

I blame the wind. So anyway, we're doing an intro because it's Monday and last night at dinner the futures market opened and the only thing that people cared about was crude oil. Futures were up 27% and the S&P was down 2.2%. And I'm sitting with friend of the show Dan Ives. And I said to Dan, and this is true, you weren't there, but trust me, people could verify it. I said to Dan, bitcoin's flat. Like not to. I'm obviously, I'm just talking about for the market. If, if bitcoin was down 8% and the SP was down too.

[Michael Batnik]

I'd be like, oh, so you weren't worried?

[Ben Carlson]

Not that I wasn't worried. I was worried. Like, you know, I'm worried.

[Michael Batnik]

Everyone around the table was kind of quietly freaking out, like, oh my gosh, this could be bad.

[Ben Carlson]

Not me. Dan was there, Alex was there. I have witnesses. Anyway, the market crude is now flat on the day the S and P has. Where's the S and P? Futures are flat ish. Down 30 basis points. Listen, I feel like the market can only take so much. Like at some point one of these punches will land. Like it just feels like there's just. We're very vulnerable. Giving every excuse for the market to sell. It's like, why not already? Why does the market keep rebounding?

[Michael Batnik]

It's like the economy, people just won't.

[Ben Carlson]

It's very bizarre. It's very bizarre that the buyers just keep on stepping in. Again, I think that the more this goes on, like we had a chart last week on the show on TCAF that showed 1% intraday bullish reversals. 1% intraday reversals are bullish, obviously. Right. But not if they keep happening in succession. So if you get a down 1% day that closes green and it happens for the first time in a three month period, historically, that's very bullish.

[Michael Batnik]

Right.

[Ben Carlson]

It's a sign that buyers are stepping in. The fear is overblown. But the more of those you start to stack up. Like eventually the market breaks and you saw that in the previous breaks. I'm not going to name which names because which breaks is the particular breaks don't matter. But the market can only take so much. So we need to find stable footing. I'm happy that the markets are flat. I'm happy that the VIX came in that crude oil is flat, but my God, like it's so give the bulls credit. But how much can they withstand? It's like Rocky 4. He's.

[Michael Batnik]

When all the movements.

[Ben Carlson]

What did Ivan Drago say? He's made of iron. Yeah, this market is made of iron.

[Michael Batnik]

It seems like it. Because all the movement is happening after hours, when there's no liquidity and then the market opens and things are fine. Yeah, it's bizarre.

[Ben Carlson]

Anyway, we didn't do any market stuff on the show this week, so we couldn't like not talk about it because

[Michael Batnik]

there was a. Yeah, but we had two interviews. We had Michael Kitces, come on. Who talked about AI at our dinner last night. We had to bring him on the show. Cause it was so compelling. I thought about, is AI gonna be an extinction level event for advisors? And then we talked to Phil Huber about private credit. So we're covering everything here. And then the roast, and then we roast each other. Duncan's gonna have to do a scoreboard to see who won. I don't know who won the roast. It was pretty even. I think. Duncan says it was a tie.

[Ben Carlson]

All right.

[Michael Batnik]

He's gonna split the baby.

[Ben Carlson]

As always, thank you guys for listening. Personal emails, personal responses. We'll see you in the inbox.

[Podcast Narrator]

Welcome to Animal Spirits, a show about markets, life, and investing. Join Michael Batnik and Ben Carlson as they talk about what they're reading, writing, and watching. All opinions expressed by Michael and Ben are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Ritholtz Wealth Management may maintain positions in the securities discussed in this podcast.

[Michael Kitces]

Put your hands together for Ben Carlson and Michael Batman.

[Ben Carlson]

Let's go. What's up? What's up? How we doing? Good to see you guys. Oh, my God. Sun is in between two things. That's okay. How's everybody feeling? Good. All right, so the past couple of live animal spurts that we've done at future proof, whether it be here or California, I would say, like B minus, like hit or miss, touch and go, so to speak.

[Michael Batnik]

In our defense, last year we did Animal spirits live at 8:45am after your 40th birthday party.

[Ben Carlson]

Yeah. Not great planning, although we did get a gem out of that. That was the. This guy. There he is. I'm sure you guys remember that land. Did I say a nod? There we go. Okay. All right, so here's what we're going to do this time. We're going to change it up a little bit, make our lives easier, hopefully get a few chuckles, make this smoother for everybody. We're going to do some AI stuff. We're going to bring Michael Kitces out to engage the audience and us and give us his take on where we're going. We're going to bring out a surprise guest, and then Ben and I are going to roast each other. Okay. All right, cool. All right, cool. All right. Okay, here we go. So I got an email. We got an email a couple weeks back. Hey, guys. Regarding the effect of AI on jobs, one area I think you discussed briefly is how AI will affect financial advisors. I've been doing some experimenting by taking questions that you and other online financial personalities have answer and asking various AIs. Its answers are very good, more thorough and often better than the human quote, experts quote. Okay. Provided for the exact same questions. Not only that, but I can import every financial document, my personal information, my feelings about risk or market downturns and any other thoughts I have for the AI to tailor an investment exactly for me instantly. I can then ask questions about anything and everything. Further, I can have it adjusted and recalibrated whenever I want in an instant. It shows expertise in seemingly every area. Retirement, withdrawals, tax implications, inheritance, etc.

[Michael Batnik]

Apparently AI didn't help this guy summarize his email better.

[Ben Carlson]

Yeah, seriously, I'm almost done. I know you'll say people want face to face human interaction and I'm not trying to be a dick, but financial advice seems like the perfect prey to for AI to take over almost immediately.

[Michael Batnik]

Listen, you had this freak out five or six months ago and you called me in the morning and you were like had a hot sweats and you're like what if AI really does disrupt financial advisors? And I think there's a lot of people who are having that existential worry right now.

[Ben Carlson]

Yeah. So here's I think where I am today and I'll probably Change my mind 10 times between now and next week. But this person is not your client. I mean obviously, right. And we are getting these questions from prospective clients. I'm sure everybody in this room is too, whether they're curious or pointed, like why would I use you? Or how do you. Where do you think this industry is going? And here's where I am today. There have always been do it yourselfers, Right. We've all spoken to them. Most of the time they don't become a client and if they do, it's like a, it's difficult for them to take their hand off the wheel. And there are always those sort of people and the tools that are available to them, it's true, are incredible and doing a lot of the work that traditionally financial advisors would have done or do do. I said do do. So it is I think going to get incrementally harder because there will now be more potential do it yourselfers. Okay. You could say that about anything. So for example, I can go on YouTube and I can figure out step by step how to do anything, how to fix my sink. I will never fix my sink ever, ever, ever, ever. Because people who value their time and are not that sort of like brain to import their documents, whatever they're going to pay somebody for it. And that's never, ever, ever going to change.

[Michael Batnik]

Wealthy people aren't going to trust robots. That's kind of where I've fallen on this.

[Ben Carlson]

Not yet. I mean, we've got a couple of years, so any.

[Michael Batnik]

So we had dinner last night. And we had a big discussion at the table about it. And Michael Kitces gave a resounding no. Everyone needs to settle down a little bit. So I said, all right, you're coming on stage to talk about us. And make the advisors of the world feel better. So why don't we bring him out? Let's hear his take.

[Ben Carlson]

Let's go, Michael. I'll slide over here.

[Michael Batnik]

Okay. So, Michael, we were talking last night. And you kind of said, you guys are a growing firm. What's your biggest issue? Like, what's your bottleneck? What's your roadblock? And I said, well, we're. Since I've joined the firm, we've gone from seven people to almost 90. And you said, so, what are you doing now? And we said, managing people. And you said, is AI going to help you manage people better? And I don't think that job is going away for AI. So maybe you could just give your take that you gave me last night. About why people need to settle down about this.

[Michael Kitces]

Oh, I mean, they're like, there's so many parts. I have a challenge to sort of this, like, AI is a threat narrative. I mean, I start by, like, very much where. Michael, where you did. There's always been do it yourselfers. They don't hire us. They never hire us. I mean. I mean, just. I was listening as you were. As you were reading the email. Like, I trusted all the different AI platforms. I ran all this stuff against all of them. I have all my financial information sorted out in documents and file folders. Which I uploaded to each of them. And I read through each of the. All the different analysis. Like, my goodness, that sounds like that took a lot of time. I guess you must, like, really like doing that. That's awesome. You probably don't want to delegate that to an advisor. Because you know what people who don't like handling all that stuff do? They're like, that sounds like an awful lot of shit. I'm just going to hire an advisor and have them do that for me. Because I don't want to. I don't want to do that. Or I don't want to deal with that. Or I could do that at one point. But now my life is more complex. And I don't know if I really Want to keep doing that.

[Michael Batnik]

So what about the idea that, okay, fine, the people who had wealth management advisors are probably going to still go to them? The people who had diy, there's maybe just more of them. But what about the idea that, okay, we won't need to hire as many advisors though the young people are never going to have a job and maybe you could go down that route.

[Ben Carlson]

I am in that camp. For the record, I think the power planner role is basically done.

[Michael Kitces]

I like to look at these things through the lens of history. History never repeats, but it often rhymes and gives us a lot of guidance. So I look at this in the context of, of my own career. So the second firm I was at 25 years ago was an independent broker dealer office 3 Advisors, about $1.3 million of GDC, which back then like that was a pretty good, like sizable, very successful advisory firm practice. And they had eight support staff for the three advisors. So we had this wonderful woman named Betty. Betty's primary job was to collect all the mail every day, open every client envelope and pull all the paper statements so that she could file them. Every single client's file folders that we would be certain that we had up to date information for the next client meeting. She would also check to make sure there were any paper checks in there because heaven forbid you hold onto one of those for more than 24 hours for anyone who's in the business. And then she would then prepare Morningstar Principia Pro reports of all of the mutual fund holdings in our clients portfolios so that we could have review meetings with them. So Betty's job doesn't exist anymore. Right. Betty's job is Orion or Black diamond or one of the other portfolio management software platforms that pulls all the information. Money moves electronically, statements are continuously updated. Frankly, it gives much better performance reporting than Betty did. I mean, we didn't actually report on a client's portfolio performance. We pulled the report for each fund in their portfolio and showed them fund reports because we actually didn't even have tools to do the calculation and Betty was not doing that kind of math. So Betty's job is gone. Right? We can say like it got technology away. So then I reflect on that for a moment. First of all, if I adjust for inflation, Orion for three advisors today costs more than Betty's salary used to. So we didn't save any money on this technology transition. We have, I would argue, much better end result to the client. Like the end experience for the client is much better. The portfolio management process is better. There's all sorts of quality improvements here, but we didn't make any margin, we didn't save any dollars directly. And when I look at that on a whole long list of changes that have played out. If you then go back and just look at industry benchmarking studies back then, because this was when Mark Diversion and Moss Adams, like just started coming out with, with industry benchmarking studies. And the median, and back then, like the median advisory firm had was charging 1% fees and today they charge 1% fees. The median advisory firm had about a 40% overhead expense ratio, plus or minus 5 points. Today the median advisory firm has a 40% overhead expense ratio plus minus 5 points. The median advisory firm had about 30% margin. And the median advisory firm say it's about 30% margin. So nothing changed. I mean, we weren't even using the Internet. I mean, it was technically 2001. We had the Internet, but like no software ran on it yet in our business. We had the Internet, the smartphone, robo, AI, like all this technology automation. And we charged the same fee for the same overhead expense ratios for the same margin. We did slightly change staffing. A three advisor firm today does not have eight support staff. So we did shift some of the jobs a little bit. But in general the jobs rotated up. Like, Betty was pure admin. We have fewer admin now because we actually have more paraplanners and associate advisors doing higher level, more complex work than what Betty was doing.

[Michael Batnik]

So do you think all the note taking and the email stuff that's going to do for you, is that going to give advisors at least more efficiency to have more clients? No.

[Michael Kitces]

Well, so if I look back to like the firm of 25 years ago, it's like same advisory fee, same overhead expense ratio, same average profit margin. Almost every metric of a firm today and a firm 25 to 30 years ago is the same, except one major metric is really materially different. Average client load. And it's dropped massively. I mean, for anybody who remembers back in the business 20, 30 years ago, I mean, like everyone had like 200 to 300 plus clients. The first firm I was out there was like a guy who'd been there for 30 years and he had two offices, his office and his client file office. As client file office was the bigger of the two offices because the dude had like 1500 clients, which was basically 1,500 people he had ever met and sold a product to over the preceding 30 years. And we called them clients. But the only thing that's Actually shifted is client loads went down because we

[Michael Batnik]

do more services, because we do more

[Michael Kitces]

services, because we go deeper. Right. Average average revenue per client went up. We offer a deeper value proposition than what we did because the technology lets us go deeper and do more and be more awesome for clients. But to me, I mean, it's the striking thing when you look at the landscape. The only material thing that's changed in our industry in 30 years of technology evolution. It's not fees, it's not margins, it's not overhead costs. Its client loads, and they went down very steadily in a straight line for like, all the years of the benchmarking data. They didn't, they didn't go up because when we get the time, I mean, for most advisors, early on, any. Any client's revenue you can get is good because you're like, just trying to make it survive. And then eventually you get, like, you get past survival stage. You get past, like, Maslow's hierarchy of like, you know, security, survival needs, and some other priorities start kicking in. You say, like, I make pretty good money now. What do I, you know, okay, I got some tech. It saved me a little bit more time. What do I want to do? Like A, go get another client, B, go to my kid's soccer game, B.

[Michael Batnik]

Right.

[Ben Carlson]

It's always B. Yeah, yeah.

[Michael Kitces]

So what happens? Even as technology starts to lift up, working hours go down slightly once advisors are at a crucial, crucial level of income that they feel comfortable and safe. Or if you're like, no, actually, like, I do want to work a certain number of hours. I'm enjoying the work that I'm doing. I don't go get another client. I go deeper with the client. I've got. Like, there is always some clients. Like, I would love to be more proactive with some of my top clients. I know I should be calling them more and doing more things for them. And I'm kind of time constrained because of all the other stuff. So what do I do if I do actually manage to free up a new moment? I don't go get a new client. Once I'm at a comfortable level, I go deeper with the clients that I've got.

[Ben Carlson]

All right, so last question. We've got two minutes for this. McKinsey did a study recently about the future of AI and the advisors and the work, etc. And one of the things that they list, and I actually thought it was a decent report, was that advisors are going to become more life coaches, offers all sorts of other adjacent things. That was the one thing That I said, I don't know that I believe that part of it. What was your thought on that? And if there's anything else in the report that you wanted to rip apart, feel free.

[Michael Kitces]

I do think directionally it's probably right. I mean, just life coach is kind of a loaded term. There's a lot, there's a lot to that. But the, I mean, the general arc is clearly more services. I mean, we're already seeing by our kids research data, like one in six advisory firms has brought tax prep in house for at least some subset of their clients. Like that was no one 10 years ago, unless you actually came from a CPA firm and you just already did that for your clients. We're going deeper on tax, we're going deeper on estate. You know, CFP marks used to be like a special differentiating factor, and now that's basically like a mandatory expectation for young people coming in today. So that's becoming a new floor. And then you're supposed to go into. Get deeper beyond that. So the, the increasing depth and the increasing service expansion, I think is real. If you want to get kind of, you know, a little bit meta to it all. Okay. When we leave like wives of one, when we lead lives of wonderful financial abundance because AI is making the world better and more rich, and then we're just trying to figure out what the hell do we do with our lives and purpose on earth. When I don't necessarily need jobs in the same way and money is abundant, what do I do? I'm like, I guess I have like a lot of life. Life coaching questions at this point about what the heck is my purpose on earth more generally? I mean, I think a lot of us have had experiences that there comes a point, at least for a subset of clients, where if they're still in accumulation mode, they're trying to get to a certain accumulation, and if they get to a point where they feel like they're financially safe and sufficient, other questions start cropping up about what am I doing? Where do I want to spend my time? It's why retirees often have crises of purpose and meaning. What do I do if I'm no longer attached to the work that was meaningful for me so that that dynamic still exists and I think continues. And if we make the other stuff simpler and easier, I do think directionally we probably spend more time there. But I don't know if that means like full on life coach. That, that's, that's, that has some other.

[Ben Carlson]

All right, this was awesome. Thank you for Doing this. Your, your report that you did on the stage this morning was fantastic. For people that are listening who didn't, who weren't able to be here. Is that available?

[Michael Kitces]

Yeah, yeah, it's, it's, it's online. So if you text advisor tech all one word like advisor tech to three. Was it 33777. You should get it. If for some reason the text then gets. Doesn't work. Kids.com wellbeing.

[Ben Carlson]

Okay.

[Michael Kitces]

Has the print out of the full.

[Ben Carlson]

So Advisor tech to 337-733-7777. Okay.

[Phil Hughes]

Okay.

[Ben Carlson]

All right. Michael, thank you.

[Phil Hughes]

Awesome.

[Michael Kitces]

My pleasure.

[Phil Hughes]

Thank you.

[Michael Batnik]

Do you feel better?

[Ben Carlson]

Nicole, Nicole, Nicole. Do I feel better? I feel great. I mean we're in Miami.

[Michael Kitces]

Oh, the AI stuff.

[Michael Batnik]

How are you doing today? Do you feel better about the advisor space? Because there are a lot of AI pilled people, I'm not going to mention any names, Chris, who think that no, this really is going to change the world and it's going to make everyone more efficient and we're not going to need advisors.

[Ben Carlson]

You know, I think Michael's point this morning about when advisors get to a critical mass and they're serving 80 households and a lot of their redundancies are stripped away and now they have all this time. They don't want 50 more clients like that. Nobody wants seven meetings. It's as Michael said, it is exhausting. It is draining. You have the time back and you're going to do other things with it. So I feel great about our space. I think this is a wonderful industry, a wonderful career. The clients need us, they value us. I don't think that they're looking to replace us. And if they are, then fine, they're not your client anyway. Or you're not doing what they need

[Michael Batnik]

and do better and it expands for everyone. And I think the people who don't use an advisor, they're going to have a better experience.

[Ben Carlson]

I think so too. All right, so in a little bit we're going to, we're going to. We're going to roast each other. But what's it. Oh, that's Phil. Hugh. No wrestling fans. Come on, Mr. Hughes. Okay, so we're going to talk about private credit today. It's been in the news a lot and I guess let's just start here. Phil, wait.

[Michael Batnik]

We got to start with the fact that we. A middle aged man came out the wrestling music.

[Ben Carlson]

Yeah. Felt. What did you do?

[Phil Hughes]

What did I. I didn't do anything.

[Ben Carlson]

What did you do? Causing all these headlines.

[Michael Batnik]

All right, how busy have you been

[Phil Hughes]

lately busier than normal? I would say so.

[Ben Carlson]

Let's start here.

[Phil Hughes]

Yeah.

[Ben Carlson]

What do you think?

[Michael Batnik]

Introduce Phil for the people.

[Ben Carlson]

I'm sorry. Phil is a good friend of mine. I just feel like everybody is inside my brain. I guess. That's not true. So Phil is the something something. What's your title?

[Phil Hughes]

Head of Portfolio Solutions.

[Ben Carlson]

All right, so Phil is head of Portfolio solutions at Cliffwater and Cliff water is the OG of private credit. The first index creator. Correct.

[Michael Batnik]

Correct.

[Ben Carlson]

Biggest allocator. Biggest. I mean, $30 something billion portfolio. Bigger.

[Phil Hughes]

Yeah. About almost 40 billion across two credit funds. And yeah, we've been allocating in the space for almost 20 years now.

[Ben Carlson]

All right, so if advisors are allocating to private credit, there's a very good chance that they're using Cliffwater. Not to brag. Right. Okay, so there's been a lot of smoke and for a lot of different reasons. What do you think is. What is the thing that you see repeated over and over by the media who is just dying for a meltdown? Like dying for a meltdown? What is the one thing that you see? You're like, that is bullshit. Like, that part is not true.

[Michael Batnik]

What did you do to the Financial Times?

[Phil Hughes]

There's no one thing. There's many things. And we'll talk about all of them. The summation of what they're all trying to. Yeah, the summation they're all trying to arrive at is private credit is in a bubble. And much in the same way Michael Kitces just hopefully alleviated any concerns people have of AI making advisors obsolete, I'm here to say that private credit is not in a bubble. A lot of what you've been reading over the past six months or so is conflating a variety of different issues that have nothing to do with the actual health of the private credit ecosystem. And we could touch on a number of those. What I'll say is that this didn't start six months ago. There has been a steady negative drumbeat in the financial press around private credit for at least the last six years. And I think in the last six months it's been turned up to 11. Why is that? Because, well, you have an asset class that while we know it's been around for over two decades, it's relatively new to a lot of investors, advisors that given the growth that it's had over the past five plus years. And so naturally it attracts a lot of attention. And I think the FT and Bloomberg and the financial press broadly and increasingly a lot of substackers have come to the correct conclusion is if you write a negative headline or a negative story

[Michael Batnik]

about private credit, I think it's also,

[Phil Hughes]

you'll get likes and clicks, etc.

[Michael Batnik]

People see the yield and they go, it can't be real. There's no way that it's got to be fake. That can't. There's no way the math works out. So I think, I think people have been skeptical from the start as they learned about this class.

[Phil Hughes]

Part of the position we sit in and having the benefit of this index that we have that has history dating back to 2004 is that we can measure how the asset class has performed over two decades, over many different market and economic cycles and have an understanding of, okay, what have total returns been, what has income been, what have realized credit loss has been historical default levels, et cetera. So we have a good base rate to go off of. And I think what you're seeing now is anytime there's a write down or a default, the article wants to attach that to, oh geez, this thing is blowing up. There's a canary in the coal mine, there's cockroaches to level set with everybody. You have an asset class, the middle market that has over 10,000 unique borrowers in it today. If you add to that another call it maybe 1400 or so borrowers in the broadly syndicated loan market and you use a historical default rate which has been the average over 20 years of about 2%. Guess what? You should probably expect over 200 defaults in a given year. Obviously there's going to be years where there's more years where there's less. Right now defaults are below average still, which you wouldn't know by reading the headlines. And so if you try to treat every default as if it's something that's a harbinger of the next financial crisis, I think you're going to be disappointed.

[Ben Carlson]

It is weird. The negative momentum is feeding on itself and you're seeing massive redemptions. You saw it at BlackRock this week, you saw it at Blackstone and it's just very bizarre because the equity of these companies are getting demolished. All of the publicly traded BDCs are trading at a severe negative discount to their NAV. So there is, I think the primary concern is a lot of these portfolios are heavily based in software. BCRED was 26% and the nature of the borrower. Yeah, the defaults look fine today, the fundamentals of the portfolio look fine today. But clients are worried about what is it going to look like over the next five years. So, so I think that's 100% valid. I think they should be worried. I also think though that a lot of the let's use the publicly traded marks as a benchmark they're pricing it in. So it's weird. Like they're pricing in some of the worst potential scenarios that we've ever seen and we haven't seen it yet. And it's just like a bizarre sort of environment.

[Michael Batnik]

Is there anything. Is any of the stuff that people reporting, like the one people keep saying is oh my gosh, 25% of the loans are software related. And that's the big thing I think really. Is any of it valid? The criticism? Is any of it?

[Phil Hughes]

Yeah.

[Ben Carlson]

One more thing, Phil. No, because, because those negative headlines about the software defaults like it's not going to stop.

[Michael Batnik]

Phil, today Bill's having to defend himself more than Daryl Hanna for Love Story, any JFK junior people out there anyway.

[Ben Carlson]

But it's, it's, but it's good. These negative headlines about the AI stuff like that's going to continue and it's just going to continue to scare people.

[Phil Hughes]

Yeah. So I'll try to tackle it a few ways. So we'll start with software. It's the largest technology, probably the largest sector of the index. Like we have the index, we see it's the biggest. Why is it the biggest? Well historically it's been the sector with the lowest default rates. There's a reason why lenders have liked it. Obviously software as a category is going through a period of transition. I'm not of the mind that software is not a going concern.

[Ben Carlson]

You know the Winnie the Pooh meme getting wrecked period of transition.

[Phil Hughes]

AI will absolutely disrupt certain software legacy, one guy like companies and many companies will thrive and utilize it to their advantage. Obviously that rerating has already taken place in the public stocks that have been wrecked. Senior lenders to companies are in a very different position than the equity in front of them. Often what gets left out of a lot of these private credit related headlines is any mention of private equity, which is where most of this financing is going. To private equity backed companies who are in a first loss position. And so if you are a private credit bear and you're not a equal if not more bearer private equity, you're not being entirely forthcoming or true.

[Ben Carlson]

That is an interesting point because kkr, all of these names that are getting destroyed, it's always like the private credit headline. It's like wait a minute, KKR is like the private equity shop and the Equity of KKR is getting smothered.

[Phil Hughes]

Right. And so I think what's software rerating like as a lender to these businesses? You don't benefit from the growth. You're lending for yield. You're not necessarily in need of the upside long term, while the terminal values of a lot of these businesses are challenged, hence why they're now being valued lower and they're not being treated like these low risk annuities. You're not lending it to them on a perpetual basis. Near term cash flows are not necessarily at risk. And so to be paid back at par as a lender requires a pretty aggressive set of assumptions.

[Ben Carlson]

Let me ask you this. So that's a, this is a very important part of the story. So the, the rates are floating, right?

[Phil Hughes]

Right.

[Ben Carlson]

So when rates went up in 2022 and these companies were able to withstand it, everybody loved it. No defaults, my binds got killed. The loans pay me, high yields and everything was copacetic, all great. But the duration of some of these loans. So let's say that like it's, it's five years, whatever, right? You owe us money, you pay us back and then good. But where does the, where does the demand? I guess, who knows, where does the demand for loans come after that? And if these companies are healthy today, I think that's what people are worried about. It's like, yeah, the loans look fine, the fundamentals look fine today. But I'm worried about what is this middle market? If Salesforce is down 60%, what is this middle market software company going to be like in three years? How are they going to pay us again?

[Phil Hughes]

It's going to vary by company and they'll have to, you know, again they're going to see what happens when they need to go refinance the loans themselves. Historically in this asset class, while they might be five to seven years in term, typically they have an effective maturity of three or four years. So part of what also gets left out of a lot of these conversations is relative to say private equity or real estate or venture capital, there's a lot more organic liquidity in this asset class. Typically if you have an average effective maturity of 3, 4 years, about a third of your portfolio is repaying on an annual basis. So you have a natural source of liquidity just from maturing loans. So this asset class, relative to, I would say any private market asset class is the best suited for semi liquid evergreen structures.

[Michael Batnik]

Is there any credence to the fact that, listen, there's so much more money that's in this asset class now, and they're just because of it. There had to be poor lendering standards for some of these funds. Maybe not you, but maybe other funds. And those are the ones that are going to blow up. People are going to go, see, look, that's not new.

[Phil Hughes]

There has always been a dispersion of really good lenders and not so great lenders. That's not new. There's over 300 direct lenders in the marketplace. We've been, again, we've known all of them for years now. We have a ABC rating system for lenders and we think about 50 of that 300 plus kind of meet our A rated standard. So there's always going to be a bifurcation of, you know, the better, the better performers and the better lenders and the ones that run into issues. And so I think again, a credit cycle will expose some of those weaker lenders that we don't have those anymore.

[Michael Batnik]

Credit cycles we've literally had.

[Phil Hughes]

Well, that's the other thing. Again, there's a difference between a bubble and a credit cycle. And I think this term bubble gets thrown around so much these days. And to me, a bubble implies valuations or prices that make no sense for any future return expectation. When you actually look at where spreads are today, both on an absolute basis and in relation to broadly syndicated loans, they're tighter than they were a couple years ago, but they're not at levels that would indicate, okay, you're not being compensated for the risk that you're taking.

[Ben Carlson]

Here's the problem with this asset class. And it's not the loans per se, it's the people that are buying them and the people that are selling them. Because the advisors might understand exactly what's going on, but the client is going to see the headlines and they're just going to say, I don't care, like. And the advice, the advisor is not. The advisor is not going like, stand up for private credit. It's like, fine, let's, let's get our money back before everybody else wants it. And that's one of the fears that I have, is that it's just going to be this thing that is a slow death by a thousand cuts, for lack of a better word,

[Phil Hughes]

the constraints on liquidity in these vehicles. And again, it varies. It's a little bit different for BDCs than it is for interval funds versus others, et cetera. Those are there for the benefit of remaining shareholders. And as much as redemptions are a bit elevated today versus history, the vast majority of investors still have conviction in the asset class and like having these guardrails in place so that a fund is not necessarily forced in a position where they need to sell illiquid assets to meet redemptions. A big part of managing these vehicles effectively is having a thoughtful liquidity and liability management program implemented. Some do it much better than others. I think there's a perception out there that to meet redemptions, these managers have to sell private loans to meet investor redemptions. The ones that do their best job have. The last thing you want to do is ask for money when you need it. The best run Evergreen Structures have built out liquidity management programs that are not predicated on holding a bunch of public credit securities that they can sell at a moment's notice through building out significant revolver capacity, working with a variety of different lenders, each of these structures has different amounts of leverage they can incorporate at the fund level. Some of that is to maybe offset fees a little bit so investors can capture more of the expected return. Another is it's a flexible source that you can utilize in order to meet investor redemptions by tapping into those credit facilities that most funds have. Right.

[Michael Batnik]

So you're not just doing a fire sale because these things are liquid, so it's harder to sell them.

[Phil Hughes]

Right. You should build the liability management program around understanding that there are going to be periods of stress. There are going to be periods of inflows slowing, outflows going up. You want to be able to withstand what are likely going to be, in hindsight, cyclical periods. And if you can weather those without being a forced seller, you should come out the other side stronger. And I think if we're sitting here in a year, hopefully we're looking back at that. This was a great proof point for the asset class and for these structures that they can and do work. It doesn't mean everyone's going to work. Again, there's going to be dispersion in terms of fund performance. But again, these mechanisms are in place for a reason. It's to protect remaining shareholders. And I think the other thing that gets tossed out in some of these articles is that if a fund has to prorate investor redemptions, the authors love to throw out. Oh, the fund is gated. They're not letting. No, most people are getting most of their money out. Even when funds are prorated, it's not like 100% of their capital is trapped. That's just not the case.

[Ben Carlson]

I have a question. So, so here's, here's. I think where I'm at with, with this Asset class. If software is a third of the index, I think that a lot of these companies will have stress, not a third.

[Phil Hughes]

But go ahead. What is it about like a little over 20%.

[Ben Carlson]

Okay, so I'm making this up. Let's say that defaults distress hits 10%, which is high. Right? Like what was the GFC12?

[Phil Hughes]

Yeah. So here, this is actually a great exercise to go through. So we hit our index goes back to 2004. So I'm going to ask a question. What would you think is the calendar year with the worst index returns? And it's not a trick question, I promise. Okay, 2009, 2008, as everybody would expect, the GFC, the epicenter of the biggest recession and crisis we've seen in years. The index was down about six and a half percent in 2008. Do you know what credit losses were in 2008? About 60 bips.

[Ben Carlson]

Wow.

[Phil Hughes]

So why, why is that the case? Well, because as much as the naysayers will try to say that all these lenders are holding every loan at par until it becomes a zero, that's not true. We see in practice that unrealized losses in loans, in other words values being marked down are done so in anticipation of expected realized credit losses in the future. Often the market actually is over aggressive in marking down lows. So what happens typically is that some loans priced for default end up defaulting. And there are credit losses, a lot that were priced. If they don't turn into a realized loss, it becomes a gain. And so the real credit losses in the crisis that three year period were in 2009, 2010, I think there was about 7% roughly credit losses in 2009, about 3% in 2010. Do you know what the index did in those years? It was up meaningful double digits in both those years. So in other words, the income is the consistent piece of returns. And then you have the dynamic of unrealized and realized losses. The realized losses should follow unrealized losses. In other words, much in the same way that a, a bank has loan loss reserves. Again, lenders are, I think, thoughtful about marking positions that are at risk accordingly. And some of them turn out to be to be realized losses. But that happens after the fact.

[Michael Batnik]

Michael's buying Blackstone right after.

[Ben Carlson]

Everything that guy just said is bullshit.

[Phil Hughes]

So I think when you have to have a long term perspective in the asset class, I think what happened when rates went up in 2022, a lot of new money flooded in, yields were at 12 plus percent and everyone expected that to be like the baseline of what they expect in returns. The reality is this is more of an 8 to 10% return asset class. And when yields, when spreads came in, when base rates went lower and returns weren't the same, that they got. Yeah, you have some capital exiting that was maybe temporary in nature and a bit more touristy. Those that really understand the long term nature of it is that yes, you're going not. It's not always going to be sunshine and rainbows. It's still credit. There's a reason you're paid significantly higher yields than the risk free rate than public credit, et cetera, over time. We think it's a risk that you can thoughtfully mitigate by working with great lenders and by building a maximum leader.

[Ben Carlson]

All right, we get it. Yeah. All right. So I, I don't think that in three years we're going to look back like, could you guys believe what we did with private credit? That was a crazy bubble. I also think that there's, there's obviously smoke, like, duh, I don't know, that turns into a fire. I think I'm a little bit. I think I'm, I'm team fell on this one. All right, Phil, thank you.

[Michael Batnik]

Thanks, Phil.

[Phil Hughes]

I don't get to stand up for the roast.

[Ben Carlson]

You can stay.

[Phil Hughes]

Yeah, maybe I can separate you two. No, I'll get off.

[Ben Carlson]

All right.

[Michael Batnik]

Thanks, Phil.

[Ben Carlson]

Okay, so here's thanks, Phil. So in thinking about what we were going to do to have a few chuckles, we got an email last week and I was like, you know what, let's do this. So what was the email?

[Michael Batnik]

Okay. In case no one in Michael's life is calling him out on this. I figured I would. Haven't counted the transcript, but feels like Michael has used Anywho as a transition at least 15 times over the past three episodes. I didn't even notice.

[Ben Carlson]

I didn't realize I was an anywho guy.

[Michael Batnik]

You're an any who guy. So Michael said, yeah, let's roast each other. And I said, okay. This is like when the eagles broke up. This might be the last animal spirits we do, but we're gonna. I guess before we start. I have eight year old twins, George and Kate, and they are big into roast battles. That's what they do at school now. They roast people and they're really not good at it. But they found out we were going to do this and they got really excited and they wrote out roasts for us. So we're going to warm up the crowd a little bit by reading some of their Roasts. Okay. And they roasted both of us.

[Ben Carlson]

Oh, okay.

[Michael Batnik]

This is from my son, George. Michael, you're so lazy. Your favorite sport is sitting on a couch. That's not bad. Okay, Michael, I'll do one. Dad, you're so short, you can high five an aunt. That's not bad. Michael, you're so broke, when burglars broke into your house, you had to help them look for your money. Dad, this is my daughter. Did you get dressed in the dark or did you do that on purpose? That could have been both of us last night. Maybe. Michael, Kate went really hard into the bald stuff. Your bald head is so shiny, it looks kind of like the sun. Michael, the sun hit your head today, and suddenly we got a lighthouse. And finally, both of you. Your stories are so bad, not even chatgpt can understand it. All right, all right, all right.

[Ben Carlson]

George and Kate. All right, all right. You go first. We'll do like a back and forth.

[Michael Batnik]

Let me have it.

[Phil Hughes]

Okay.

[Ben Carlson]

All right, I'll go first. Okay. Sorry, sorry, sorry.

[Michael Batnik]

By the way, comedians are safe because AI stinks at comedy so bad.

[Ben Carlson]

Yeah, I tried it, too. Okay. Last night at dinner, when oil spiked 27%, Ben said, Zoom out, and then ask the waiter for another diet of Pepsi.

[Michael Batnik]

All right. I mean, the easy one. I got feedback from our team. I said, what do I roast Michael on? And the easy one was, every time we do the podcast, you are on social media, watching one of your 36 tabs that open, you're on slack, and you're just constantly ignoring me. It's kind of hurtful.

[Ben Carlson]

Is there a joke?

[Michael Batnik]

That's it.

[Ben Carlson]

Okay. Oh, man. My next one's not great. All right. The first thing that Ben bought when he opened up a brokerage account in 1994 was a target Date Fund. And that's not a joke. That's just literally the truth.

[Michael Batnik]

It actually is. Sidebar. I didn't know you were actually writing jokes like you're a comedian. I'm giving real things that you do.

[Ben Carlson]

Oh, okay. All right. Go.

[Michael Batnik]

Okay. Apparently, we didn't discuss. All right. You use the word ostensibly more than any human being I know. And maybe it's jealous because I've never been able to use that word, but you really use that word a lot. Ostensibly. Oh, yeah.

[Ben Carlson]

Really?

[Michael Batnik]

Yeah. 5% of people use word, Chris.

[Ben Carlson]

Do I?

[Michael Batnik]

Ostensibly.

[Ben Carlson]

Okay. All right, all right. Ben has a new book coming out called Risk and How to Handle Market Volatility and Build Long Term Wealth. This is his fifth book about doing nothing. I just saved you $30 and 200 pages. Ben has published more words about index funds than Vanguard's entire legal department.

[Michael Batnik]

It's 20 bucks. All right. Duncan can attest to this when we record the show. I think Michael was potty trained at gunpoint because he gets up so fast to go to the bathroom in the middle of the. Anyway, one's a show. All right, all right.

[Ben Carlson]

Most of you know this. Ben is a big fashion guy. He actually. He looks like he was dressed. He's like a male Jesse Spano today. That's not funny for the listeners, but that's how you look. Ben has been dollar cost averaging into J. Crew pastel since 1997. The closest Ben gets to active management is a Stitch Fix account that delivers him a package of new clothes every month. Ben calls it buy and fold.

[Michael Batnik]

That sounded like an AI joke. Come on.

[Ben Carlson]

Nope, nope.

[Michael Batnik]

That's not bad. I'll just give a couple here. You've literally never once got a saying right. Grain of sand. Or you call that a grain of.

[Ben Carlson]

Is it salt or sand?

[Michael Batnik]

It's a grain of salt. It's not a grain of sand. You have absolutely psychotic taste in movies. Just the people who like the same movies as you are psychos.

[Ben Carlson]

Sam Rowe likes my movies.

[Michael Batnik]

Hey, hey, Sam. All right, all right.

[Ben Carlson]

Speaking of movies, Ben loves coming of age movies. He shares his love for the genre with Stephen Hawking. Okay. All right.

[Michael Batnik]

By the way, Michael had to remove a Jeffrey Epstein joke from his list. Move on from that one whenever. My favorite thing Michael does is when we have a talk. Your book interview. And someone comes on the screen and Michael notices that the guy on the other end is bald. His face lights up and he uses the same icebreaker every time. Nice haircut. Eh? Nice haircut. And credit to you, though, it works.

[Ben Carlson]

It gets the person every time. Nobody's ever said, all right, all right. Yeah. Everyone smiles. All right. We'll end with this. A good way to bookend the show.

[Michael Batnik]

I got one more.

[Ben Carlson]

Okay, well, it's my end.

[Michael Batnik]

Okay.

[Ben Carlson]

Ben wants to ban AI, Right?

[Michael Batnik]

Is it going to make us more depressed? Probably.

[Ben Carlson]

I'm not quite sure what you're so afraid of. Jack Bogle discovered buy and hold 50 years ago and you still have a high paying job.

[Michael Batnik]

Fair. Last one.

[Ben Carlson]

Thank you. Thank you. Thank you. Hamilton.

[Michael Batnik]

Yeah. A lot of times you call Chris and Josh and Barry your partner, but you say it in a way that makes it sound like you're in a long term, committed, monogamous relationship. But you're not gonna actually do the vows until like all the polar bears are saved or something. You're a partner. My partner. Chris, it sounds like you got a relationship. All right. That's all I got.

[Ben Carlson]

All right. All right. We'll do better next time. Thanks, guys.

[Michael Batnik]

Thank you. Then you have an announcement to make.

[Ben Carlson]

Oh, yeah, yeah. Whoa, whoa, whoa, whoa. Okay. Thank you, Ben. All right, so that was just good hearted fun, right? We're still friends?

[Michael Batnik]

Yeah. I didn't storm off the stage. We're good.

[Ben Carlson]

Okay. So Ben is obviously one of the best financial writers of this generation, and we are the greatest generation of financial writers, so ostensibly one of the greatest writers of all time.

[Michael Batnik]

You're going to notice it now that I told you.

[Ben Carlson]

Yeah, that was my last time. All right, so we started a software company called Exhibit A where we build the charts, chart kit and team build the charts, and the advisors just upload their logo. You know, the spiel, you get the charts in your own color. We do a chart of the week. There's 150 charts in the library. It's great stuff. One of the things that we just announced today, actually, is that this guy is going to be writing a monthly report for the platform that you all can white label with the platform to share with your clients. So still going to be using charts, still your labels and all the disclosures and all that good stuff. But we've had a million people over the years ask about, how do you find the time, how do you do this? And now you can have them, Ben. AI.

[Michael Batnik]

Yeah. People said, I love the charts. I just want you guys to provide some commentary too. That's what we're going to do.

[Ben Carlson]

All right, thank you, everybody. Enjoy the rest of the conference.

[Michael Batnik]

Okay.