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- [00:05]
A
Welcome to Educational Alpha. I'm Bill Kelly, CEO of CHI association and your host. Bringing you on the ground conversations with business leaders, educators and industry colleagues from around the globe. Educational Alpha is sponsored by iCapital, the financial technology company with a mission to power the world's alternative investment marketplace. Part innovator, part educator, and part navigator of the alternatives industry, iCapital offers intuitive, scalable digital solutions that have transformed how private market and hedge fund investments are bought and sold. With iCapital, financial advisors, wealth managers and asset managers around the world now have access to everything they need to deliver the return and diversification potential of alternatives to high net worth investors. To learn more, visit icapital.com in this.
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Season finale of Educational Alpha, host Bill Kelly welcomes John Bowman, the incoming CEO of Kaya Association. Reflecting on the evolution of Kaya and their professional journeys, the two explore major themes shaping the investment diversification, digitization and democratization. They discuss the organization's transition from Bill's tenure to John's, emphasizing Kaya's mission to educate and advocate for better portfolio construction, transparency and investor outcomes. Bowman also lays out a roadmap for Kaya's future, highlighting challenges and opportunities within a rapidly evolving financial ecosystem. This conversation is not only a handover of leadership, but but also a deep dive into the principles driving the association forward. Listen in.
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A
John Bowman, welcome to Educational Alpha.
- [02:02]
C
Thanks Bill. Great to be here.
- [02:04]
A
Long overdue. And before we start with the preliminaries of your background, I think when this airs it'll be my very last session where the opening will say I'm your host Bill Kelly, CEO of the CHI association, because this will be the last of the season in the last of 2024 and then when the calendar clicks the other way, I move on to other roles still supporting Kaya, but you step into the CEO role. So an important distinction and well earned and well planned out and we could talk a little bit more about that transition of it fits into the narrative. But before we get to any of that, maybe a little bit on your background. And I think like so many people that have come up in this industry, having an association background is important, but understanding what goes on in the field of investment management is critically important there too. And check a lot of those boxes. So I'll let you run with that.
- [02:53]
C
Yeah, well, first of all, thanks for having me on. I think you were the pioneer in Kaya's foray into podcasting, so the fact that I've been invited onto Educational Alpha is perhaps the most important symbol of the transition that I have fully arrived. So I appreciate being here after being a longtime listener throughout this time. So like you, Bill, now, although in a slightly different order, I'm kind of a product of a tale of two chapters in my career. Started out in Boston like you, and while we didn't cross over, we sat in a lot of the same buildings, at least at different stages of our career. But I ran to make kind of things simple, non US equity portfolios at State Street Global and then at the Boston company for the first part of my career. So was an analyst and then moved into the largely IFA mandates. So non US developed market equity mandates long only and grew up in that world, kind of a CFA long only world in many ways, and then joined CFA Institute as a staff member. Having earned my charter, having graded, having volunteered for the what they called the Curriculum Committee at that point, I was drawn to kind of the virtue of staying close and guiding the industry, but actually having a different perch and platform that I know you appreciate well, given your last 11 years of being a bit more objective and having a complete lack of an agenda that allows you to really speak your mind and try to lead the industry in small ways better than you entered it. And so I was there for 14 years. Over the course of this final two years, you and I, I think, started rubbing shoulders and running into each other on stages and conferences around the world. Most of the listeners probably don't know this, but Bill was actually a reference of mine as I was searching out for my next gig and had a couple processes in which you were hugely helpful as both a champion of mine publicly, but also as a private confidant and advisor. And then somewhat surprisingly to me, I remember In April of 19, Bill, my phone rang and it was you, which wasn't surprising in itself. I mean, we were talking fairly regularly and you said, you know, I appreciated this reference role that you've given me, but what if we kind of get together here at Kaya? Would you consider that? And one thing led to another and in July, thankfully I was able to jump in the shotgun seat with you and the rest is history.
- [05:22]
A
Oh well, it's been a great run and this will be the first time in the history of Kaya we have promoted from within at the top of the house. And I think that's maybe a sign of an organization that's going through the right level of maturity 20 plus years into our. So a couple things. And you and I, John, unfortunately, have had the opportunity of working side by side at Kaya for the Last five years. So you know the business as well as I do. But if somebody said to me, well, if you look back on what will be 11 years for me, when I stepped down in a few short weeks, what was your main objective and your main accomplishment at Caiogen those 11 years? And I think I'd have to leave the accomplishment maybe to the historians and hopefully history will be kind. But I do look back and I think this has been a bit of an evolution that you and I have taken up together and moving forward. And when I joined at the beginning of 2014, CAIO is very much in the B2C space. And you could argue, well, if you're selling exams to individuals and those individuals are becoming members, once B2C, always B2C. But I saw an opportunity when I came in and like you, having been in and around this space, growing up in CFA shops, growing up in the traditional space, which most of us did back then because alts weren't really present. And when I began my career, I knew the cfa and that was kind of the category killer in the asset management space. But as the industry started to develop different sectors around wealth management, which we're going to go back to in the resonance of a CFP and then alternatives in a residence. Okay, and off we went. But even when I joined, I'm saying, wow, at that point, I've been in this industry for over three decades. I'm saying I've seen the kind of designation, but I'm not even sure when I joined if I could have told you what it stood for. And when I heard the story, I said, wow, this is so very awesome. And I saw the biggest opportunity for us. And the challenge for where we were historically is that our members are awesome and they obviously have signed up and believe in what we do, but they want our credential, our standing, our mission, to be resident in the hearts, minds and souls of all the big asset managers and asset owners. And I saw an opportunity to really take the message to the top of the house asset managers, the media, the biggest regulators, certainly the suites of the CIOs, and really turn Kaya more into a B2B machine. And if we get that right, then the consumers come. And I think you can never declare success there. It's an ongoing thing that we must continue to push. But I think there's one thing I can point to. I think the visibility of what we stand for continues to grow. We still have a lot of work there. But back and maybe to finish this narrative, back when I started diversification really meant diversification. I could go and dial up some private equity, some infrastructure, some hedge funds, and probably get a differentiated return without doing a tremendous amount of due diligence. Meaning the name of the game was not always manager selection, but it has now evolved where pick a title. Private equity, hedge funds. These are very, very complex industries. No longer asset classes. And maybe I'll end this and turn it over to you. I found a couple of quotes by David Swensen, and I think he was practicing TPA by not even stating it as such. And one of them was that they asked him to explain his idea of asset allocation. He said, asset allocation is the tool that you use to determine the risk and return characteristics of your portfolio as a whole. I'll add for emphasis. It's overwhelmingly important in terms of the results you achieve. In fact, studies show that asset allocation is responsible for more than 100% of the positive returns generated. And the interviewer said, more than what else could it be? Security selection and market timing are net negatives. So it's interesting. I don't even know tpa total portfolio approaches in the vernacular, but the serious investors recognize that the endowment model of maybe 1970, you could go and just pick asset classes. It has gotten a lot more complicated than that. So maybe we could focus a little bit on diversification and then move toward where we see Kaya going in the next five to 10 years.
- [09:29]
C
Yeah. So there's a lot there. Let me look backwards first with you. The same place you started. And, you know, you didn't ask for a reflection on your tenure. But I do think it's helpful from my perspective, 11 years ago, when you joined, I had the blessing of being part of the latter half of that. But if I were to look back very simply, if you kind of pressed me and said, you know, what was the legacy of Bill Kelly's CEO tenure? One, it was kind of fiscal stability and fiscal strength. Right. You took over at a different time that needed a very different set of skills than, frankly, I would be good at. And you were for such a time as that, as the old adage goes, you were the perfect CEO for that kind of first stage in the latter half, as you described and as I alluded to in that fateful April conversation and call you made to me, I'd say brand affinity, raising, the kind of recognition and reputation and credibility of Kaya mostly manifested through to your point. The way we partnered globally is around getting the top asset owners and asset managers and consultants to know who we were and Partnering with them on whether it was content or influencing the KAYA credential curriculum, working together on webinars, even seeking their advice on which regulatory battles to pick and which to look the other way. And so as we look forward now with this, handing over the baton, I think you're right on the diversification. The challenges you faced in looking back, you personified so well, Bill, were entering at your own risk. To your point, these things had grown up from these far off frontier strategies that were providing sustainable outperformance almost without trying very hard. And the message there had to be as it grew and expanded and proliferated and all kinds of folks jumped into the pool that you had to be much more careful, enter at your own risk that these to your point, as you often like to say, these are now strategies, not asset classes. Due diligence is everything. If you can't get median or above, don't bother. That was I think the narrative, the story, the progression of what was your tenure. And I think the narrative has changed or evolved rather a little bit now, which is alternatives are no longer alternative anymore. It's not so much about if you're going to go over to that high octane, somewhat idiosyncratic corner, be careful. It shifted to now everything's an alternative. As we like to say, 100% of your portfolio has options. And how do you construct a portfolio that's best going to meet the needs and deliver the investment outcomes of your particular client? And I think Mark Rowan at Apollo said this so well recently. He talked about in the old days, whatever that means, portfolios had a little bit of chocolate, a little bit of vanilla, and then you sprinkled in a little bit of strawberry. Strawberry being alternatives. And now asset owners don't think that way. It's not three big buckets and the binary decision of how much alternatives or not, there's no mental map for that anymore. It's one long risk premia of options. And so this great convergence, Bill, I think is the challenge of what will be my tenure is how does KAYA position itself when we're not specialized over in the corner and putting up a be careful if you enter sign any longer, but rather how do you construct a portfolio of all of this type of stuff, conventional and what we used to call alternative in a way that suits, as I said, your particular client needs. It's not new, it's not mutually exclusive, but it certainly is an evolution of I think where we've been spending our time publicly in the past and I.
- [13:11]
A
Think with you joining five years ago, John, I think we really amped up the content side of that business and portfolio for the future being the first long form piece Kai has ever put out and that still has residents today. But if you think about, and I just occurred to me as listening to you talk right now, the ultimate definition of impact investing, if our board of directors or one of your direct reports comes to you and says, John, this content stuff I kind of get, but how are we being paid for that tomorrow? The answer is literally tomorrow we're not. And I think that's the problem when you think about impact investing or investing in anything worth doing is that if you look for the return in the short term, you're not going to be able to see the forest from the trees. But if you look out in 5 and 10 year increments, being able to tell a story that doesn't have you boxed into alternatives. And as you said a moment ago, the smart allocators look at all of this risk premium in front of them and decide how to put together the very best risk adjusted portfolio. And I think the bookend from Portfolio Future was tpa and maybe we can stay on that for a moment. I referenced it with Swensen is really tried to find that very next opportunity to go into the portfolio and everything's competing with something else as opposed to, well at the end of 2022, well, I just lost some of my juice in my public equity bucket. I need to fill that back up again versus zooming out and saying if I've got sort of a top down view in terms of growth exposure I want in the portfolio, I'm primarily going to get that in the equity bucket markets. So why not think about public private using options? Hedging some of it is drawdown risk is part of your concern as well. So maybe before we leave diversification, it hasn't changed, it's evolved. But if I look at through the Swenson lens, it hasn't changed at all. But maybe some of the key tenets of TPA and maybe we can move on from diversification.
- [15:09]
C
Yeah, no, I think you're right. These long form pieces for us are a critical branding piece, to be seen as on the cutting edge, to be seen as an authority having our finger on the pulse of where the industry is going, what's coming around the corner, not what's been nostalgic in the past. And so they play a certain role. But I think you and I would agree and those that are listening, perhaps that have read it or heard One of us speak about it. I don't think any of us realize when we drop these papers how viral or resonant they're going to be. TPA by a long shot. For whatever the formula was, we nailed this one and it has created momentum and a flywheel acceleration that I just couldn't ever imagine. So I'm thrilled. But I think it's exactly what you've just articulated, Bill, which is the timing is perfect because the asset owners are struggling with this dilemma and this burden. You're absolutely right. Instead of an SAA being kind of cast and heralded upon high from the board and then the cio, and I'm going to be particularly crude, this is a little bit unfair. But largely what SAA means is the CIO gets their assignments and says Mrs. Private Debt go find me 8% and Mr. Private Equity go find me 14 and Mrs. Public Equity go find me 40. And you're right. If you sell a manager or if it draws down and you have to rebalance, you're asking those bucket leads to refill, right? And if we step back, with all due respect to Harry Markowitz, God rest his soul, he gave us an amazing multi decade gift. I think some of these asset owners have said, is that really the best way to think about this? It feels fairly arbitrary. Does it really allow us at the holistic portfolio level to ensure that every dollar is competing against every other dollar it's earning its place? As New Zealand super likes to say, to think about the reality. Is the portfolio the best reflection of your future investment thesis or is it just a aggregate bottom up roll up of what the bucket leads, what your asset class leads, think is best in their buckets. And so this idea of pure competition for capital, everything competing against everything else, and there are some constraints in there to manage risk, budget and to move towards an absolute return target. I don't want you to think this is the Wild west, but it opens up the degrees of freedom significantly from saa. And I think ultimately this creates not only more flexibility philosophically, but it allows for optimization of strategies that are particularly geared and designed, purpose designed for that particular fund or pension, whatever the particular corpus is. And I've seen this play out where I think often CIOs can feel imprisoned by an asset allocation and to some degree it neutralizes who they are as a university endowment or a sovereign wealth fund or a public pension in trying to meet the specific liabilities and goals of their beneficiary or their client. And in this case tpa, I think Allows for a much more bespoke alignment of strategy, return, outcome, risk, budget, and ultimately the construction of the portfolio.
- [18:20]
A
Yeah, agreed. Across the board. And maybe moving from diversification, which marked probably a good part of what I focused on the first five years of my tenure, but the second half of it, clearly that's there and it always will be. And what's great about this business is something new every single day. And we've just added geopolitical risk to the curriculum. But the two other Ds, digitization and democratization. And maybe I'll start with digitization, where we now have a micro credential in this space. But you could take virtually any asset out there and tokenize it. And when you've got a spot, Bitcoin etf. And Bitcoin itself is worth over a trillion dollars. Whether you believe in that as an asset class or not, it's risen to some level of maturity. And a lot of institutional investors are contemplating how to play this game, especially as Bitcoin approaches $100,000. But put aside the cryptocurrency, the plumbing underneath distributed ledger. We've been covering this in our curriculum. I think we're still really trying to understand the power of what that could do. But the thought of digital assets and tokenization is not being an increasingly important part of consideration for investors. I don't see it any other way of getting more as opposed to less important.
- [19:37]
C
Yeah, I have often said publicly things like Bitcoin or cryptocurrency, to your point, is the greatest distraction from the real story, the real transformative power of arguably the next computing platform in blockchain coming down the pike. And we are mesmerized by the siren song of Bitcoin or cryptocurrency. That said, just quick disclaimer or commercial break. Bill, I do think this new regulatory regime could kick off a new acceleration of cryptocurrency acceptance at the institutional side. So I do think there has been some changes in appetite and resonance evolution on the currency side. But to your point, the bigger story is always going to be the underlying technology and what that frees up and the opportunity for both efficiency in the back office, but even more importantly, the idea of accessibility democratization, which is an overused word, but I use it in this particular context as the ability for individuals to get smaller portions of larger real assets, to your point, at a fraction of what the traditional system would require of you. As far as minimums, having to buy a full share, having to buy a full building, this really allows for fractionalizing in a way, and in a very safe and confidential approach that creates some level of liquidity, some level of assurance, some level of protection from an IT perspective that I think really could change the nature of the average retail portfolio. This is not going to happen overnight. You need both regulatory approval and you need products that actually are able to do this. And then you need a general sense of comfort by the individual investor that they can move forward with this. But I think you're right. Real assets in particular are going to be the huge winner here for retail and mass affluent clients.
- [21:31]
A
And maybe one last point, and this is certainly going to segue us into democratization. But I had on as a guest Jan Robarts, the founder of Dawson Partners, who you know or know of, and it was a very interesting discussion about the secondary market. And he quickly points out that at about 100 billion, it's 1% of private capital. So it's tiny, and he expects it to go to a trillion. And after the discussion, I not only believe him, but I made the point. A trillion sounds to be pessimistic to me, not optimistic. So that's one data point. I was down in Cayman last week, and our friend Simon, who runs the Cayman radio program, Simon Cowdery, who's also with the CFA Society, very interesting, clever guy. And I say that in a very respectful way. Just a very smart guy. He was on a panel of mine and we got into a discussion where I think we've maybe disagreed, but then I think agreed at the end, which is, if you think about the public equity market, it's one large secondary market. We've created a mechanism where you could go and buy a hundred shares of Apple, but without the specialist network and settlement, it's not a liquid asset. So I do wonder that if we're talking about this five or ten years from now, if a combination of using the power of tokenization through blockchain and the need to have a larger secondary market, we've created some kind of a trading mechanism for what was once private assets. I don't think it should be everything, but I think maybe it'll allow for maybe a little bit more grease to allow a transaction where right now these are not traded assets. So the bid ask spread is really not that transparent. And the secondary market once was a place where you went holding your nose. It's gotten a little bit more efficient. But maybe some of your thoughts around how you look at tokenization and digital assets as you think about a transition toward democratization, where you've got a Very different consumer coming to the table.
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C
Yeah, well first of all on your secondary point, because I think it's such a good case in point, you're right, it's a few hundred billion and growing the secondaries world, it certainly has evolved and we did on our sister podcast Capital Decanter, we did a whole episode on this. So it has been top of mind but it has grown from I would say the frontier world of distress selling and urgent get this asset or manager off my book because my board's all over me or I need liquidity to an entire well functioning, efficient industry. Now to your point, it's not particularly scalable because if you get past Blackstone and Landmark and Lexington and a few European players, suddenly there's not a lot of specialists and what you might call agents that are structuring and matching the seller and the buyer. And so that's exactly where this technology I think can come in because it opens up hundreds to thousands of potential buyers, secondary buyers, that simply from an efficiency standpoint and an access standpoint, a relational structure standpoint, these big organizations don't have any capability and I would even say the talent or the know how to reach these individuals. And what better way than if you had at least a portion of your liquidity in said fund that is available to be traded on the blockchain. And as you've often said, Bill, this is not something that that portion at least liquidity. You don't need a mediator, you don't need a middleman, you don't need a broker in the general sense of the lowercase B broker. It can simply trade point to point. That's the whole point of blockchain is this secure transfer from person to person. I think there's huge legs, as I said, to allow those that have not had any access to these illiquid off chain real assets to get different cash flows and different return streams that are not available in your typical 401k menu through Vanguard or Fidelity and maybe completing.
- [25:24]
A
The Ds, maybe a few minutes on democratization, then I'm going to maybe ask you to sum up what Kaya 2030 looks like. And maybe these are the building blocks to sort of define it in longer form. But yeah, I think about democratization, John, and maybe a capital decant that we've talked about in this platform as well. It's two sides to the same coin and one side is if you and I through Kaya are in a 401k plan and ultimately if that's my primary vehicle to Fund my retirement and Kai is throwing a matching contribution at it. That's all good, but then I've got to manage investment risk and longevity risk across. Not an insult to Kai necessarily, because I think you and I might be on the investment committee. Pedestrian options and there's nothing private about them. These are public. Some of them are actively traded mutual funds. I think a lot of them are low cost index providers and off we go. But if capital formation, value creation on the equity side has happened in the private markets and yield has now moved private as well, and I just saw, I think we've now gone through the $2 trillion mark in private credit on its way to 3 or 4 in the next couple of years. Why shouldn't we have access to that if we have to manage our own retirement? And I think most people would say you're right, have at it. Well, have at it is very, very complicated because the median returns look like the public market proxy and the performance dispersion is wide enough to drive a truck through as you get up to that top quartile. So who solves for that? And you could touch upon regulation as well. I'll just posit that here that where's the client's lobbyist who's out there to protect them? And I think fortunately for people like you and I, John, having been in this space a long time, having credentials after our name, we can kind of fend for ourselves to some degree. But how does the average investor get access to advice that they can trust and invest around and invest in? Very, very difficult. So I think democratization, short answer is yes, we must do it, how we do it. I just don't know if I see the pathway.
- [27:27]
C
I completely agree. I think there's two truths to this that feel somewhat separate, but I think they're the two sides of the same coin. So on the one hand, I agree, Bill, it is no longer in 2024 politically or socially viable to look a retiree or an aspiring retiree in the eyes and say you've only got access to 60, 40 or public equity and debt. It's not fair. And maybe that's an American sentiment as far as fairness, but it's certainly not equitable in many ways when the larger plans, if you're a firefighter and happen to be part of a big public pension, and yet you're next door and you don't and you have a completely different menu or a much greater menu. Right? So that's the one truth on the other side, of course, is we have to Be really careful because if we open up the spigots of this, the underbelly of capitalism starts to take over and product, as we often say publicly, gets way over our skis and we start delivering garbage that is going to be higher fee relatively and lower or same return, which is not a good combination. Where there's an information gap, I guess I would hit on that information gap. The challenge with this versus institutional investors, or even what you might call sophisticated investors like you and I that have a credential, that have industry experience, is that the large majority of people, whether they're high net worth or not, which is why the old 40 act rule of income is left less than optimal, is that just because you happen to be wealthy doesn't mean you're sophisticated. And just because you're not doesn't mean that you've not done your homework. And so what we've all often said to a couple different regulatory regimes, Bill, is that some type of a representative in the form of a registered advisor, in the form of a plan administrator, in the case of your example of a 401k or the individual opting out through an educational test, I think that three legged stool solution is really the best approach to ensure that we meet both sides of that coin I described earlier. As I've often said too, this is less about gaining access to higher returns. I think if we get into a debate about that, we lose the headline, which is the global economy is now largely within the private markets. If you want beta access, forget alpha for a minute. If you simply want a diversified access to the global economy, you have to be in the private markets. 90% of companies globally are private. That oscillates a little bit between the US and China and Europe, but it's the large, large majority. So to suggest again, going back to where I started, that someone has a diversified portfolio when you've got S&P 500 experience and some Treasuries is foolhardted at best.
- [30:16]
A
Yeah, I agree. So to sum this all up, John, I took the CEO chair when I was probably five years older than you are. For argument's sake, say that you have at least a decade of Runway in front of you and maybe the halfway point if it's just 10 years, but let's just pick that for the time being is 2030. What does Kaya look like? And I don't mean so prescriptively in terms of revenue mix, but you must have a vision coming into this, and I know you do. And not everything goes in a straight line but if you look out five years, what does Kaya look like in terms of the mix of things we're focused on? We're very, very global to begin with. But I know you've got big plans in apac, which is tiny, tiny, tiny part of our business today. But maybe your outlook and vision as to where we could be at 2030.
- [31:01]
C
Yeah, well I kind of hinted at this in an earlier portion of the discussion Bill, but I think this idea of a great convergence in a couple of different lanes and so let me explain. So I talked about one which is instead of 6040 and then all that other high octane weird stuff that we've shifted to this convergence of the way that we look at a portfolio, the way that conventional asset managers are structured. So I mean who would have thought 10 years ago if you would have hibernated for 10 years and woke up and one of the top 10 largest alternative managers is Franklin Templeton or Wellington or T. Rowe Price and Blackrock. Ironically, the largest representation of 6040 just bought one of the largest infrastructure GPS in the world. So convergence is happening not only in our portfolios at the gps, they're certainly occurring and in the hearts of minds of every investment professional. So I think carving out what is the Chartered Alternative Investment association mean or look like? What is our identity, what is our differentiation? I think differentiation is going to be a lot harder and more important now than it was 10 years ago, certainly 20 years ago when we were birthed, when we were the only game in town. The great convergence is also happening amongst a lot of our friends in the professional association space because we've got a lot more company in our pool. Let's just say a lot of people are running towards where the tide is going, which thankfully we've been headed in that direction for 20 plus years. But certainly I understand why private equity and private credit and digital assets and all these newer asset classes that are becoming larger and larger portions of both AUM allocations and the educational needs are in great demand. And so how do we differentiate ourselves as an organization both against our other brethren and contemporaries in the association educational space? And how do we also tell that narrative to those gps and those asset owners where we are trying to help them from the top down perspective of constructing a diversified portfolio? We've been telling that story for some time. So this is strength upon strength in many ways. But I would just say that we've got to be more acute and sharper in articulating and carving out our unique value proposition. Let's put it that way, being relentless about our unique value proposition. And then I'd say, Look, we're at 14,000 members, we're at approximately 6,000 candidates a year. There's no reason by 2035, so that's 10 years from now. 2030 is obviously halfway there that we shouldn't be double that you look at on any measure, even directionally, if you're off by a standard deviation and we're probably 5 to 10% penetrated into individuals that have some level of discretionary responsibility to allocating alternatives. And that's not even to mention the convergence point I just mentioned, but just alternatives. Right. Consulting, managing, analyzing, recommending, regulating, whatever the case might be, we're a fraction of that. So I think the Capstone Kaya program has a long, long way to go. And then you've alluded to what I think arguably could be an even bigger product, if you want to put it that way. It sounds a bit commercial for us, but the point is maybe solution is a better approach. But this unified platform, this on demand ecosystem of training for the advisor, for the wealth manager, for the asset manager that is selling now not just ETFs and managed accounts that have 60, 40 in them, but suddenly they're trying to sell a private credit fund or an interval fund that packages a bit of both, or an etf. If you look at the news recently that has both private credit and public credit in it, that convergence is happening very, very quickly and we've got to make sure we train that wealth management stack to get the democratization trend and theme right. So I think those are the two big stories. And I would suspect that not only should our members double, but that democratization solutioning should be a higher portion of our revenue, I would expect, than even our capstone program.
- [35:15]
A
Yeah. And if that's not the case, then I think we fail. But I very much believe that we have the right person in you, John, and the right team that's going to get this done. So I want to go back to a made on this platform a couple of times and you've probably have heard me state it publicly too, Jack Bogle, when he talks about the asset management organization of yesteryear and today. And I think this quote was from circa 2005, 2008, somewhere in there it said the asset management CEO cannot serve two masters. He's got clients on the one side and employees and shareholders on the other. I think you could almost argue the same could be said of Kaya in that we have members that have expectations about the Membership that they're paying good dollar for and we owe them a level of transparency trust. And they have expectations too. But our mission is a bit broader than that too because we're trying to serve the end investor at the same time and better outcomes. So we're trying to serve two masters. We're running a global business even though we are a not for profit. But I think Kaya has been a little bit unique in that. I think our starting point is truth, transparency, education, better outcomes for the end investor. And I say to anybody, including our members who I love, and I'm one of them myself, is that if I can get that right, the better outcomes of the end investor, I guarantee you I could walk that back and the members should be high fiving me. But sometimes there'll be mismatches there. But I think Kaya is unique in that regard in that we do start from the client first and walk our way back. And I think when we had many of the associations out there doing that in lockstep, arm in arm, I think we'd have better outcomes. And I think the more you can continue that, I think the world will be a better place for the end clients and for our members too.
- [36:59]
C
Well, amen and amen to that. Bill, I know you know that we are completely aligned on that. And just to quote another icon you know yet Bogle, but Sir John Templeton had something to the effect of the role of the investment professional is actually closer to the clergy than it is the mercenary. Now leave aside the religious element of that. What he was getting at was the point that you have this ethos of service. It's not about making money, it's about serving in other individuals and stewarding their hopes and their dreams and their aspirations. Right. That's I think a quote we should all remember at any stage or level of our organization. But I think that extends over to your point. Zakaya. I often say publicly and I think folks often think this is just semantics, but you just alluded to it, Bill. There is a huge difference between a professional association that ultimately their true north is raising the standards and making this ecosystem. Or our good friend Roger Irwin likes to say this system that we operate in better aligned with the client's goals, the greater good is ultimately our true north. That is a whole lot different than a trade group and we have a lot of good friends that we often do work with. So I'm not disparaging them, but that's very different from a trade group which by definition their existence is to serve and represent a certain subsection of the industry itself to represent their needs, to advocate on behalf, to fight and argue and push back on regulation. And I think, to your point, we are a unicorn in that respect. We're the only ones on the professional body space that started and ended and have our entire existence based upon ensuring that clients have a diversified portfolio with all forms of risk premia so that they can achieve their retirement goals. I think that story is certainly one that will sustain well beyond your tenure. My tenure. That is why KIA existed and was founded and certainly what we will continue to be, our foundation going forward.
- [39:00]
A
Well, keep that unicorn well watered and fed. And just a final observation, John. I'll give you the closing word. This has been a great run for me, and as I've said so many times, Kaya has been an absolute gift to me. And I leave with a global network of 14,000 members, a lot of them who have become very, very good friends. And I said, I think when I was in Cayman last week, there's not a single major city in the world where I could not find somebody to have a cup of coffee with. But I think the greatest reward I've gotten over these last 11 years is the power and the outreach of our members, collectively and individually. And I found if I took the time to acknowledge any praise they gave me, which I just loved, but also when I did something, to disappoint them, to be transparent as to why I did it and listen to their feedback. And I think pound for pound, they are our shareholders and they've been just an absolute gift to me and it keeps on giving. And that's really what drives me and what I take away the most, is I leave this organization. So I would encourage you, and I know you have and will continue to anyway, but staying close to those members is, I think, going to be one of the greatest psychic rewards you'll have in the course of your tenure.
- [40:13]
C
Yeah, absolutely. Well, as I said, our true north is always to create and leave a better industry than we started. But our most important constituent and stakeholder are our members. They are our shareholders is another way to say that. And they are very much the shoulders that we stand on. Bill, you kind of brush aside praise from me, but there's just a couple things I want to mention that will stick with me from our time together and your mentoring and friendship of me that I want to make sure I commit to. And as I've said a couple times publicly with you in audiences, you know, you've got very big shoes to fill but there's two particularly iconic statements if you know Bill listeners. He is a walking sound bite of phrases, some satirical and some serious. The two more serious ones that stick with me. One is a statement about the fact that the CEO title is borrowed, it is stewarded. We are a regent, a caretaker of said title, and Bill has made that abundantly clear. And in that same way, he is passing this perhaps even before he was ready, before certainly he needed to. And I am deeply appreciative of that because I know that was very much in caring for me and the organization as much as it was you. And then secondly, which I know you are parroting from your mentor, Desi, which is this constant voice, this whisper throughout the day. What would the client do? What would the client think? Right. And that anthem that should be kind of peppering and almost irritating the ear and the mind and the heart constantly keeps you certainly on the right track. And so those are two that will always stick with me. And the way that you've managed has been inspiring. Our friendship will sustain, of course, obviously, a slightly different relationship, but you will be still on speed dial, so I hope you'll still pick up once in a while.
- [42:02]
A
I always will. And I thank you, John, for five great years as a colleague. And our friendship, as you say, sustains and will sustain. And I'll support Kaia where I can, I think, More so in 25 than in 26, than in 27. So it'll be maybe more of a gradual fade. But like you, I've never met a stage or a microphone I didn't love and. And I can hopefully fill in a little bit in this coming year and support a mission I love. But I wish you and the team Godspeed. And if you cut me open, I'll always bleed Kaya orange.
- [42:33]
C
Indeed. Indeed. Well, Bill, it's been a pleasure. The ride and Even the last 45 minutes, it's always a joy.
- [42:39]
A
Thank you, John. Thank you for listening to Educational Alpha. I'm your host, Bill Kelly. Learn more about the Kayasu association and subscribe to the show@kaya.org that's C-A I A dot org. See you next time.