Q. I saw a great quote in a book I was reading, *ldquo;reporters have a calm genius for putting a moment in a bottle”. Think about that for a minute. I like that. In your opinion how has journalism and editing changed in the last couple of decades and how has it not changed at all?
A. Massively. Back when I got into the business there were far fewer media voices. You had thousands of newspapers and trade journals, but only three major networks. Social media changed all of that. Newspapers have been decimated by social media. I don’t necessarily decry that, but it would be nice if everybody got their voice through social media while newspapers were able to remain strong. Today, with all that’s going on with social media, people are starting to realize they really do need a responsible, authoritative news source to get straight information. So the industry that I got into was full of romance and power, but those have bled away. On the plus side though, there’s far more voices out there; an individual expert in science or technology or politics, you name it, can be a one-person blogger and be very relevant to thousands or even millions of followers, and really make a mark in an industry.
Q. So, regarding IREI, and then your role with running Real Assets Adviser, what have you seen in terms of changes since you joined the organization up until today?
A. When I joined, I was editor of Institutional Real Estate America, our flagship magazine. I call it the flagship magazine because it has published for more than 30 years and is our largest revenue producer. One of the changes that happened, and there have been many changes at IREI — including that we’ve put in a very robust website that has much more capability than it did when I joined the company — is that we do a tremendous amount of daily reporting through our websites, sending out emails daily to our Newsline subscribers. We also created our first private wealth magazine eight years ago, which is Real Assets Adviser. As soon as that was created and the editorship became available, I jumped at the opportunity because it has a broader portfolio of coverage. In addition to real estate, we cover infrastructure, energy, commodities, artificial intelligence, blockchain, quantum computing, aviation, maritime and all manner of alternatives and hard assets. It’s more interesting to me because it’s such a broad menu of asset classes, strategies and technologies. So that was a big change, moving into the private wealth business.
Q. How have you transitioned and sort of worked around not being able to run your conferences, and some of the things that 2020 brought us with COVID-19, and maneuvered around all that?
A. We’ve done it in a lot of ways comparable to what everybody else has done. We’ve gone to cyberspace, we’ve used video-conference systems, primarily Zoom, and have started doing smaller format virtual meetings — and live ones in some cases. That has actually been, in a lot of ways, a real benefit, because what we have found is many people like the smaller formats, they feel like they have an opportunity to interact more than in the past. There’s more intimacy and sense of connectedness. It has its limitations, but, on the other hand, a lot of our meetings have a few hundred people.
Q. I find that fascinating. I mean, basically you’ve got this core intellectual property and you just have different wrappers for delivering it to your constituency.
A. Different wrappers, yes, but it’s not all the same material being repurposed. For example, we’ll have somebody do a podcast that does not show up in print. Ninety-nine percent of our daily Newsline content never appears in the magazine, and vice versa. It’s pretty powerful stuff, but it all comes down to the content. Everybody has access to the tools because they’re not inexpensive, but content development is pricey, especially if you’re creating content that’s worthwhile for the reading and listening public.
Q. Is it fair to say that the pandemic simply accelerated what you were in the process of doing anyway?
A. Yes. For sure. It’s forced the issue. Fortunately the tools were sitting there and waiting.
Q. So the term “alternative investments” is thrown around the way, you know, “hedge funds” was years ago. What are the misnomers and misconceptions about what alternative investments really are in your estimation amongst both the investing public, as well as the advisers who are in between the product manufacturers and the investing public?
A. Alternatives are somehow seen as exotic instruments or assets when in reality they’re basically anything other than stocks, bonds and cash. So, for example, real estate is a real asset, but it’s also considered an alternative investment, because it doesn’t fit what I’d call a two-dimensional investment portfolio, which has been traditionally what people have invested in, which is just stocks and bonds.
Q. It seems to me just as a person in the industry and a person who invests that, the simpler, the story, the better I like it, instead of, you know, wading through a 500 page prospectus. And I know some of that’s necessary for compliance purposes, but the simpler the story, the better.
A. Warren Buffet says, “If I don’t understand it, I don’t invest in it.”
Q. While you obviously have deep relationships with the product sponsors, the manufacturers of alternative investments, your constituency is Financial Advisers who utilizing alternative investments across their platform, or are considering it. You’ve interfaced with many advisory firms, RIAs, broker dealers, family offices; what are the characteristics that the really good advisory intermediary firms have in common?
A. I’m going to back up and elaborate a bit on what we are about. We are trying to provide information to the chief executives and CIOs at RIA firms to, hopefully, push them in the direction of alternatives, and real assets in particular, because a lot of them are still living with those two-dimensional stock and bond portfolios. A lot of them just haven’t moved in the real assets direction. If you look at the projections for stocks and bonds and how they’re going to perform over the next 10, 20, 30 years, they’re not going to bring returns like they have in the past. We’ve had a tremendous stock market run and that is not necessarily going to be the case going forward, so there needs to be some other assets brought to the party. Many RIAs have been involved in M&As to scale up so they can afford the cost of technology and compliance and the sophistication required to bring alternatives and real assets into play in portfolios. Secondly, the way many RIA operate is with a chief investment officer and team members that creates investment models for their advisers. The advisers are not typically making independent decisions; in many cases they are utilizing off-the-shelf models. There are some RIAs — the bigger ones that are working with high-net-worth and ultra-high-net-worth individuals and families — they will literally put a team together and do a truly customized portfolio, using a three- or five-person team together that looks at timelines, asset classes, tax implications and so on. It’s impressive.
Q. So it’s our contention here at Gladstone that there’s a significant number of multifamily offices and RIAs that cater to truly ultra-high net worth clients that have street exposure to true alternatives and allocate them. But the vast majority of advisers, whether they’re fee-only or duly licensed hybrids sort of stay away from alternatives because maybe they sold a windmill 25 years ago that didn’t work out, they’ve gotten burned by a Real Estate Investment Trust that didn’t do what it said it was going to do, right? And so they’re either anti-alternatives or not knowledgeable in alternatives, and by not being knowledgeable, they don’t want to talk to their clients about something they’re not an expert at. So my point is we believe there’s an information gap and an educational gap between really quality, alternative product opportunities and the people who would be expected to present them to their end user clients. First of all, do you agree with that statement? And secondly, how do you bridge the gap to raise the education level amongst the Advisers who want to know more about things that they ought to put their clients into?
A. Not only do I agree with that, but that’s the reason Real Assets Adviser exists. It’s educational, it’s for advisers to be able to read and learn about asset classes that they’re not particularly familiar with. Our sources are experts in their respective categories and advisers can call on for guidance. For instance, consider cryptocurrency. We’ve written about crypto a bit in recent months, and there are people whose names and affiliations readers find in our magazine, and from there it’s just a matter of a adviser picking up the phone and asking them for help in accessing bitcoin or Ethereum for their clients, and how it should work within a portfolio. I’ve worked hard at making sure the magazine doesn’t have the same merry-go-round of names and faces and perspectives month after month. The idea is to have a constant parade of new faces, companies, perspectives and so on, because it serves the reader better than the repetitiveness of going back to the same old well.
Q. Absolutely. So in the context of Real Asset Adviser, in your role as the editor and the sort of the face of the publication, what, if anything keeps you up at night?
A. Well, you know, it’s always has been and always will be a deadline business. It doesn’t so much keep me up at night as it wakes me up early in the morning. I’m one of those people that probably doesn’t need an alarm clock, if I’m not ahead, I feel as though I’m behind. That’s my psychological makeup. It has served me well because deadlines are something I’ve always been really good about making, I like to hit the deadline and move on to the next one. I have to say, we put out a beautiful magazine, and I don’t take credit for that; we’ve got a magazine designer who puts together a real piece of art.
Q. I would concur with that. What I hear you saying is your clients and your constituents have actually become a community; and when you have a community, you’ve got people who are looking out for you and feeding you ideas and, introducing you to people, and it sort of becomes a virtuous cycle, doesn’t it?
A. It’s an ever expanding community, absolutely.
Q. If Real Asset Adviser were to be an automobile, what make and model would it be?
A. : It would be a BMW M series. Obviously BMW is high end, which is our audience. It’s also an automobile that people who like to drive opt for; if all you’re into is comfort and you don’t want to feel the road, you buy a Mercedes or maybe a Lexus. But if you really like to drive and you want to feel the relationship between you and the road and you want to feel that performance, it’s a BMW. I think Real Assets Adviser fits that ethos. Because we’re not a large organization, we’re very close to the ground and we feel every twist and turn, and that’s what’s exhilarating about doing what we do. I don’t want it to get to be too comfortable or remote. I want it to be something that keeps me waking up early in the morning and keeping us on edge — and producing an actual physical product that is beautifully engineered.