Generating Alpha Podcast
00:19:27 · Michael Anders
[00:19:27] S1: So, no surprise. The previous experience really is what created an awareness of some of the problems of the wealth management industry. So, while Fidelity and their charitable gift fund was raising billions and billions and billions of charitable dollars into their charitable fund, most of those dollars were coming from ultra high net worth clients of Goldman Sachs, Morgan Stanley, JPMorgan, etcetera. So the idea for me to create a competitive product and white label it for these big firms that naturally should be marketing this product to their high net worth individuals really made sense. And as we signed up almost every single one of these clients, I thought the business was going to be a huge success. It ultimately failed because while we had all these clients, which I thought would be the hard part, the really hard part was getting the attention of the wealth managers. Their job is to sell stocks and bonds and funds. They understand how to do that, and they get paid a lot of money to do that. And here was this little old charitable product that was cute but didn't really pay them, had the complexity of understanding trust and estate, philanthropy, talking to clients about their emotions and what they cared about. And so sadly, my company failed because the product basically sat on a shelf and collected dust at JPMorgan, Morgan Stanley, Smith Barney, Northern Trust, etcetera. And it was there that I saw the wealth management industry and really the relationship managers on these platforms as more interested in selling hedge funds that pay them lots of money than engaging their clients in a conversation about impact and making the world better. Not true of everybody, but at least back then, true of the industry. And it left a scar. So that was the beginning of my understanding of what felt broken to me.
00:22:01 · Amir Fischer
[00:22:01] S0: And around that time, a lot of your clients were saying you should meet this guy named Divesh Makan, and you eventually go and have a coffee with him and you describe it as love at first sight. What was it about that meeting that convinced you that he was the right person to build with? What was the start to Iconiq? Where did the idea come from?
00:22:19 · Michael Anders
[00:22:19] S1: Yeah, so it is true that a handful of people, some of them were friends of ours and intermediaries and some clients, did continue to say, You got to meet this guy, Divesh. And my first impulse was, Thanks, but no thanks. I'm done with anyone who's a wealth manager at a wealth management firm. And the pushback was always, No, this guy's different. This guy's special. So, given we both worked with similar types of clients but did two very different things for them, we agreed we should go for a coffee. And within a very quick moment, he understood that I had a pretty interesting background. I had spent half of my career either in investing, investment banking, or in and around capital markets, or advising very affluent individuals on their philanthropy and had an understanding of trust and estate and tax and philanthropy and some of the softer issues, which are really important to ultra high net worth individuals. And so, he quickly sort of said, what are you doing at Fidelity Charitable Services? Why don't you come join me at Goldman? And I was immediately torn because in my mind, was no way I was going to go into the wealth management industry and certainly at one of these firms that I saw as challenged. And on the other hand, there was this wildly intelligent, charismatic, entrepreneurial mind that was already thinking about building the business differently than most people would do. And so, that conversation did go on for a long time. I would continue to show up skeptical and leave inspired. And after some period of time, I agreed to join Divesh because he really was a force of nature, very, very talented, very smart. And he had a real love for his clients that was unique and real and something that I shared with him in terms of how I really admire people and wanted to serve people.
00:24:59 · Amir Fischer, Michael Anders
[00:24:59] S0: And I want to talk a little bit about what Iconiq is now. But before we get there, what do you think is necessary for me and my listeners to understand about the building of Iconiq all the way from when you started it to today to kind of just get a sense of what it is, what the core principles are, what the tenants are? Yeah. [00:25:14] S1: So I think the core tenants of Iconiq are listen more than you talk, even though I'm doing a lot of talking right now, build genuine, lasting relationships, not with some transaction in mind, but because you genuinely care about the human and you want to help them in any way you can. Create goodwill, not for the sake of it, but because you genuinely want people to live a happier, healthier life, and you want to create this goodwill, and always be learning. I think generally speaking, a lot of industries, certainly wealth management can be a mile wide but an inch deep. And one of the things that was a tenant for us was go deep and go wide. If you're not learning, you should quit. And being an inch deep is you become a commodity and you become transactional. And so those are the sort of the tenants of building Iconiq, and it wasn't something we wrote down, It just was who we were. And I think in the end of this long party, I think it will go down that while Divesh and I have many strengths and weaknesses and differences, I think those core tenets are foundational in our DNA. That was sort of an unwritten thing. It just was. And I think that's very core to who Iconiq is.
00:25:14 · Michael Anders, Amir Fischer
[00:25:14] S1: So I think the core tenants of Iconiq are listen more than you talk, even though I'm doing a lot of talking right now, build genuine, lasting relationships, not with some transaction in mind, but because you genuinely care about the human and you want to help them in any way you can. Create goodwill, not for the sake of it, but because you genuinely want people to live a happier, healthier life, and you want to create this goodwill, and always be learning. I think generally speaking, a lot of industries, certainly wealth management can be a mile wide but an inch deep. And one of the things that was a tenant for us was go deep and go wide. If you're not learning, you should quit. And being an inch deep is you become a commodity and you become transactional. And so those are the sort of the tenants of building Iconiq, and it wasn't something we wrote down, It just was who we were. And I think in the end of this long party, I think it will go down that while Divesh and I have many strengths and weaknesses and differences, I think those core tenets are foundational in our DNA. That was sort of an unwritten thing. It just was. And I think that's very core to who Iconiq is. [00:27:02] S0: And Iconiq now manages over $100,000,000,000 yet remains relatively unknown under the radar outside of the world of finance. And I love the analogy you describe it as, as a caddy to a golfer. Can you kind of just expand on that and tell my listeners a little bit about that?
00:27:17 · Michael Anders
[00:27:17] S1: Yeah. I mean, I think taking one step back and going back to one of our early tenants, we understood from the very beginning, and we were really kids, We didn't know anything. And it wasn't about what schools we went to and what grades we got. Life is also about real experiences, running businesses, being exposed to volatility and facing adversity. And in our lives, we had some of that, but not nearly as much as folks that are ten, twenty, thirty years older than us and running things. So, for us in the beginning, it was less about how much wealth someone had or didn't have. It was really about who they were and what they ran and what could we learn from them by listening to them. And if we could curate a group of clients, founders and CEOs, star athletes, star entertainers, and we could spend our time listening to this diverse group of thought leaders, the collective wisdom of these clients who sat around the proverbial living room table would really help us form a view of the world. And because we were managing everybody's wealth, their incentive was to share the whole truth and nothing but the truth with us. But it was the aggregate of all this wisdom versus any one individual that helped us really think about where the world was and where it was going. And similarly, each of these folks, because they were well known and ran something, their brands collectively opened up a lot of interesting, unique investment doors for us. So there was always a focus on creating and curating an exceptional network of clients who we worked for. And because the job is really intimate and we end up having some incredibly exciting but also hard conversations over the course of these relationships, there's a level of trust that's built up that's incredibly intimate and vulnerable. But we understood from the beginning that no matter how close these relationships became, there was a client and we served the client. And these clients were mostly incredibly well known. And so if they were the professional golfers, if they were the Tiger Woods, we wanted to always remind ourselves we were the caddy and we should be anonymous. We should be below the radar. And that would allow us to operate on their behalf more effectively.