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- [00:00]
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- [00:19]
Financial Technology Expert / Patrick Daniel
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- [00:45]
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- [00:48]
Hiscox Insurance Announcer
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- [01:15]
Bloomberg Intelligence Podcast Host
Bloomberg Audio Studios Podcasts Radio News. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10am Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app Listen on demand wherever you get your PODC podcasts or watch us live on YouTube.
- [01:37]
Bloomberg Intelligence Host / Interviewer
Looking at the shares of Apple 52 week high, there's a little bit better feeling I think, about iPhone sales in particular. It's kind of helping this story here today. Mandeep Singh joins us. He's our Senior Technology Analyst for Bloomberg Intelligence. Mandy, what's going on with Apple here? A little bit of a rerating, is it? Just trying to catch up? Is there a different view that's forming out there on these shares?
- [01:58]
Mandeep Singh, Senior Technology Analyst
I mean, I would call it a positive data point after the new iPhone launch. And look, you know, everyone was quite negative about Apple's ability to grow unit shipments. What they're suggesting here is people who are waiting for a new device are upgrading and especially China is always a focus given, you know, what is going on within video. So Apple being a hardware company, you know, being able to sell into China is always a positive and looks like there are positive data points over there as well.
- [02:37]
Bloomberg Intelligence Interviewer / Host
So Mandy, what's the attraction to this phone? I mean, I'm sitting here with the iPhone, I don't even know what this is. I don't. I Don't even know what model I've got the 60. But what's the attraction to this new phone? Why is it doing so much better?
- [02:48]
Mandeep Singh, Senior Technology Analyst
Well, so that's why I want to put it in context. It's not as if, you know, at least from my vantage point, we shouldn't be thinking about a big upgrade cycle here. This is normal refresh here. With that being said, you know they launched a couple of new SKUs. There is a lighter iPhone this time around. So the attractiveness is just people who want to upgrade for a new battery, for a faster processor, probably for a lighter form factor are doing that. But to my mind the missing ingredient here is a large angular model running natively on device and that is where Android still is a better experience when it comes to, you know, the side of things. And Apple has to step up either through their own efforts or through a tie up with one of these Frontier LLMs. But there is no doubt that they need more to do when it comes to generative AI.
- [03:49]
Bloomberg Intelligence Host / Interviewer
Is there any sense, Mandeep, that Cupertino shares your sense of we got to get going now kind of thing?
- [03:57]
Mandeep Singh, Senior Technology Analyst
I think so. But look, I mean there are two ways to go about it. One is you step up in terms of your capex investments the way hyperscalers have done, you know, whether it's your Microsoft, Google or Amazon or Oracle. The other is, you know, you take the acquisition route and everyone is sort of thinking, you know, Apple will go the acquisition route or maybe partner with someone like Google. Now that that antitrust overhang is. So either of those two I think should work because Apple still controls the distribution. And look, when it comes to hardware I am excited about an AR Glass form factor. I think they are working on a chip when it comes to these new AIR glasses and there will be relevance of AI when it comes to your, you know, glasses form factor. So from that perspective there is something to look forward to from a hardware standpoint. They already launched one, you know, AirPod Pro 3 with real time transcription. That's exciting. So those are the kind of features they would be looking to add. But I don't think they are going the CapEx route in terms of, you know, $100 billion in CapEx the same way hyperscalers are doing.
- [05:09]
Bloomberg Intelligence Host / Interviewer
Stay with us. More from Bloomberg Intelligence coming up after this.
- [05:14]
FIFA Hospitality Announcer
The FIFA World Cup 26 is coming to North America next summer. It's the ultimate celebration of sports and culture and an opportunity to elevate your get closer to where business meets the beautiful game with a premium hospitality package. Build partnerships in the best seats and suites. Achieve goals over world class food and beverage. Get closer to wins on and off the pitch. Register interest@hospitality.FIFA.com interest so have you heard.
- [05:42]
CVS Caremark Advertiser
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- [06:05]
Hiscox Insurance Announcer
Hiscock Small Business Insurance knows there is no business like your business. Across America, over 600,000 small businesses, from accountants and architects to photographers and yoga instructors, look to Hiscox Insurance for protection. Find flexible coverage that adapts to the needs of your small business with a fast, easy online'@hiscox.com that's his c o x.com there's no business like small business. Hiscox Small Business Insurance.
- [06:37]
Bloomberg Intelligence Podcast Host
You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at 10am Eastern on Apple CarPlay and Android Auto with the Bloomberg business app. Listen on demand. Wherever you get your podcasts, watch us live on YouTube.
- [06:51]
Bloomberg Intelligence Host / Interviewer
Let's get to another story here today in the luxury business here, Kering, the big company that owns a lot of big brands, I think Gucci as well, they're backing away from their beauty business. They're selling it to L'. Oreal. $4.7 billion. Let's get a breakdown of what's going on there. Andrea Felstead, she's a Bloomberg opinion columnist. Andrea, can you tell us what, what Kering is doing here? What, what this transaction shows?
- [07:13]
Andrea Felstead, Bloomberg Opinion Columnist
Well, it's being, it's being dressed up as a partnership between Kering and l'.
- [07:18]
Bloomberg Intelligence Interviewer / Host
Oreal.
- [07:19]
Andrea Felstead, Bloomberg Opinion Columnist
But what, what it really is sale of their beauty brands to, to l'. Oreal. They've got a new CEO, Luca demeo. He's come in at a time when the balance sheet is very stretched. His predecessor, who is now chairman, bought a lot of things, including Creed, it's very, very upmarket perfume business as Share in Valentino to try to make the group less dependent on Gucci. But that really increased debt. At the same time, Gucci's really slowed down and they're having to revive it so that they're saying it for 4 billion euros in cash. That gets some money in to deal with the debt and gives the new CEO a bit more time to turn around Gucci.
- [08:08]
Bloomberg Intelligence Interviewer / Host
Andrea, isn't this a complete turnaround? I mean, didn't the company want to bulk up the beauty and cosmetics division.
- [08:16]
Andrea Felstead, Bloomberg Opinion Columnist
Exactly. I mean, they're saying, you know, this is built on the potential that they created. I mean, to be fair, they bought Creed. They paid a lot for Creed. 3.5 billion euros try. Worked out to be about 14 times sales, you know, an awful lot. But what they did, it had a supply chain. It was. They. They did that as a platform to build for beauty. And the argument is they have been able to do this deal because of that platform. That's probably kind of rather generous. Luca May had a big decision to make when he got in. He either had to stick with beauty and invest in it, but with that debt, it's got an all. And the need to reinvigorate Gucci. It's got an awful lot more calls on its cash. So he just decided beauty wasn't a priority.
- [09:02]
Bloomberg Intelligence Host / Interviewer
All right, I consider myself a Gucci expert. I read the book. I saw the movie. The movie, yes, exactly. So, Andrew, I mean, it's obviously an iconic brand. What are the experts saying that needs to be done? Because it's such an important part for caring.
- [09:16]
Andrea Felstead, Bloomberg Opinion Columnist
It is. It really is. It was at its peak in. In sort of 2018, 19. Around that time, it was 60 group sales. Now, you know, caring had an amazing run with Gucci. They put in this quite unknown designer, Alessandro Michele, and the prevailing look has been very minimalist. And he came in with these big logos, clashing print, granny chic. And it was just a bread of breath of fresh, fresh air. And it changed prevailing fashion. But that was in sort of 2016, after the pandemic, when obviously nobody was feeling terribly good. Soaring inflation. It just felt very out of sync with how people were feeling. And they tried to turn it around and have a much more minimalist look, and it just wasn't Gucci. Gucci works best when it's very fashionable, whether it when it's over the top. So they brought in Demna Visalia, who was at Balenciaga, and he is trying to, you know, really revive it. He's gone back to the Tom Ford days when it was very successful. He's gone back to the Alessandro Kaylee days. He did this crazy film in Fashion Week that was absolutely bonkers, but it got people talking about Gucci again. I was in New York a couple of weeks ago and I went to the store in soho and there was a big installation of all his things and a capsule collection. It's. It's trying to get people interested in Gucci again. And he's sort of going back to the future to try and revive its magic. Whether it's going to work, I'm not sure. I thought he was the wrong person to be appointed, but so far he seems to be doing all the right things.
- [10:56]
Bloomberg Intelligence Interviewer / Host
Andrew, can you tell us some of the challenges Keri has been facing? I mean, there's that slump in Chinese demand, higher US Tariffs as well. What are they facing?
- [11:06]
Andrea Felstead, Bloomberg Opinion Columnist
So what we, we, what we've got at the moment Is, is the 1% are still doing very well. But they're not buying Gucci, they're buying Hermes. They're buying Brunello, Cucinelli, Laura Piano. They want these very expensive upmarket things now. The rest for the rest of the luxury market. That aspirational customer is coming under pressure and Gucci had a lot of those aspirational customers, particularly in the U.S. so you've got the sort of aesthetic going out of fashion. You've got these aspirational customers coming under pressure. It's really had a bit of a perfect storm and it needs to really revive Gucci and it had Bottega Veneta wasn't doing too bad and their designer went to Chanel. So, you know, every brand is sort of, you know, got its challenges.
- [11:57]
Bloomberg Intelligence Host / Interviewer
Stay with us. More from Bloomberg Intelligence coming up after this.
- [12:03]
CVS Caremark Advertiser
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- [12:27]
Hiscox Insurance Announcer
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- [12:58]
Financial Technology Expert / Patrick Daniel
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- [13:29]
Bloomberg Intelligence Podcast Host
You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at 10am Eastern on Apple CarPlay and Android Auto with the Bloomberg app. Listen on demand wherever you get your podcasts or watch us live on YouTube.
- [13:43]
Bloomberg Intelligence Host / Interviewer
Talking about AI, that's been a theme for this marketplace for seemingly three years now. Everybody says that AI is going to revolutionize their business. Even McDonald's say it's going to revolutionize how you go through the drive thru. I'm like all right, whatever, just get my order right. It's also true here in the financial services business. Patrick Daniel joins us here, Vice President Advisor Digital Solutions at Commonwealth Financial Network. Patrick, is AI going to replace the financial advisor?
- [14:10]
Financial Technology Expert / Patrick Daniel
Absolutely not. The you know what we're seeing today in terms of there's an experimentation and a scale that's happening within the AI space in terms of advisors and you know we heard that with the Robo Advisor years ago in terms of will it replace and so from an AI capability, absolutely there's going to be an elevation of the advisor in terms of what they are possible and what they can do in terms of the art of the possible. But absolutely not. There's going to be a need for empathy, there's going to be a need for understanding human behavior and really from a technology perspective that's going to be very difficult to do. Now with that said, you know, if I were to look into the three to five year sort of glass in terms of what's going to look like, it's going to be very difficult in terms of how that may look like. You might have digital assistants, right that are paired up with a human advisor that is using hyper personalized information and services to help the advisor support those clients. But generally speaking you're not going to see that replaced completely in terms of what a financial advisor can provide their clients.
- [15:10]
Bloomberg Intelligence Interviewer / Host
So the human relationship not, not dying basically. So how is AI then changing the way you manage money?
- [15:17]
Financial Technology Expert / Patrick Daniel
So there's just a tremendous opportunity in that space in terms of right now what we've seen over the last two to three years in terms of experimentation has been around client meetings and note taking and efficiency within the space. And so you're seeing advisors freeing up time to focus more on financial conversations with their clients or asset management. And so what we're going to see in the future as this technology evolves and we're starting to see it already is in the space of doing business modeling or financial modeling or you know, looking at it from a models perspective in terms of where I should be putting, you know, from a next best action perspective and so, so we're going to start to see a lot of that in terms of informing advisors to make sure that they're having those conversations in a timely fashion and potentially identifying maybe gaps that if they didn't have say an agent or this digital assistant next to them that they could identify in a timely fashion from a tax efficiency perspective or just from a, from a, from a scale perspective or from a, an asset allocation perspective.
- [16:14]
Bloomberg Intelligence Host / Interviewer
You know, when I talk to some of the advisors here at a conference like at Commonwealth, they say, you know, I really want the platform to kind of free up more of my time so I can go out and work with my clients, prospect for new clients, really help me with the back office, help me with the technology, help me with all that. How are you guys integrating AI into that part of the platform?
- [16:34]
Financial Technology Expert / Patrick Daniel
Yeah, absolutely. So where we started. So first off, before we started from an AI implementation perspective with our affiliates, there was a, there's a risk obviously, right From a compliance and regulatory perspective. So years ago we formed an AI or gen AI risk committee at Commonwealth to try to make sure that whatever we provide from a support perspective as we move forward within the AI space that we do so in a compliant and make sure from a data retention and a risk perspective that we take care of that. As I mentioned earlier, two years ago it was more around a, around a curiosity with the technology. I'd say a year ago, 12 to 16 months ago it was more around experimentation. And now what we're seeing at Commonwealth, we just rolled out an AI meeting tool, or a couple of them actually earlier this year and we're seeing now scale and that's where I think you're going to start to drive the adoption. So we rolled out a new platform. It's a third party platform from the AI meeting perspective. We already have 20% adoption on that. And just folks talking to one another at events like this, from a networking perspective, we're going to start to really see that driven in terms of adoption and acceleration within our space.
- [17:38]
Bloomberg Intelligence Interviewer / Host
Now I see the excitement coming from you when you talk about AI and all that can do, but what concerns you when it comes to AI in this space?
- [17:46]
Financial Technology Expert / Patrick Daniel
Yeah, there's a lot, there's a lot of things. And honestly the first thing I think about is just deep connections and I think about AI not just generally speaking in terms of, from a financial management or in our space, but you think about, and I think about my own personal life where I would call my folks, whether it's my dad on some advice or I Need, you know, help with whatever it might be in terms of life. What I think you're finding a lot now are people are just going to gen AI or to large language models for that. And so the face, the face, the deep connections and that's what really our industry is rooted in. You know, that, that's what really concerns me in terms of how do you balance, you know, from, you know, making sure that the human's still in the loop and the technology. And I think there's going to be a way to do that. But that's what really concerns me. It's the connections, it's the people, it's the face to face.
- [18:33]
Bloomberg Intelligence Interviewer / Host
Well, it's true some people go to chat GPT for financial advice.
- [18:36]
Bloomberg Intelligence Host / Interviewer
I mean it's.
- [18:37]
Financial Technology Expert / Patrick Daniel
Well, 80% of the people that are using a large language model today have actually used IT financial advice and it's a little bit higher for the younger, the millennials, etc. It's about an 82 to 83% adoption of people using it for financial advice. And so again, that's an opportunity for financial advisors to make sure that they get in front of that and to guide that direction in terms of where they go and how they use it.
- [18:58]
Bloomberg Intelligence Host / Interviewer
My number three offspring is in the financial services business. He's at the stage of his career where he is dialing for dollars, doing all that basic grunt work. But he finds it as a challenge that a lot of the young people that he prospects come back and say, well, I've got ChatGPT. How do you put that in your training? What's the response to that?
- [19:15]
Financial Technology Expert / Patrick Daniel
Yeah, so, so from a financial advisor, in terms of when they're having that conversation. Yeah, so it's all about guidance. And so, you know, there's an opportunity there, I think, in terms of making sure that you're directing and that's where the value of the advisor comes in. Right. And so it's trying to get in front of that and providing information that's more curated and, and, but also recognizing that there's this other and that's been in the industry for years in terms of, of whether it's various websites you can go to, etc. It's just getting elevated, more accessible. But I think you just need to make sure that you call, you know, you sort of, you, you address it and then you, you, you account for it.
- [19:47]
Bloomberg Intelligence Interviewer / Host
So, and what emerging technology are you.
- [19:50]
Hiscox Insurance Announcer
Keeping an eye on?
- [19:51]
Financial Technology Expert / Patrick Daniel
Oh yeah, so, so for me, from an AI perspective, there's a couple of things. One is quantum computing actually and so with quantum computing, you're seeing it's a, it's a symbiotic relationship, actually. So you're seeing AI improve the quantum computing in terms of what's capable of and then from a quantum computing perspective in terms of the power and what can be provided, it's elevating the AI.
- [20:12]
Bloomberg Intelligence Podcast Host
This is the Bloomberg Intelligence Podcast, available on Apple, Spotify and anywhere else you get. Your podcasts listen live each weekday 10am to noon Eastern on Bloomberg.com, the iHeartRadio app, TuneIn, and the Bloomberg Business app. You can also watch us live Every weekday on YouTube and always on the Bloomberg Terminal.
- [20:38]
Hiscox Insurance Announcer
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- [21:35]
Bloomberg Intelligence Interviewer / Host
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