Most people think wealth is about picking the right stocks.
That’s adorable.
In reality, wealth is a systems problem. A long-horizon, low-drama, deeply unsexy systems problem. And in a world where public markets have been feasting on tailwinds for 15 years, that truth is about to matter again.
In this episode of the Ignite Podcast, we sat down with John McArthur, Senior Partner and CIO at Krillogy, to talk about what happens when the old playbook starts to break, and what disciplined investors are quietly doing about it.
If you didn’t listen, here’s the short version. If you did listen, here’s the zoomed-out pattern hiding underneath the details.
The Golden Age of Easy Returns Is Probably Over
For most of the last decade and a half, public markets were generous. Liquidity everywhere. Valuations climbing. Mistakes forgiven.
That era trained a generation of investors to believe markets mostly go up and patience alone is a strategy.
John’s view is calmer, and more unsettling.
When you strip away narratives and look at structure, debt levels, demographics, and starting valuations, forward-looking public market returns may be far lower than what people are anchored to. Not zero. Not catastrophic. Just… lower.
And that’s a problem if your entire plan assumes yesterday’s returns will fund tomorrow’s life.
Private Markets Aren’t “Riskier”, They’re Just Less Forgiving
One of the most useful reframes in the conversation was this, risk is often confused with illiquidity.
Private markets feel scary because:
You can’t click a button and sell
Prices aren’t updated daily
Losses don’t scream at you in real time
But structurally, private equity and venture have delivered strong returns for decades, largely because they live where innovation happens before it’s sanitized for public markets.
The real risk isn’t going private.
The real risk is going private badly.
Small portfolios. Too few managers. Overconfidence in picking. Not enough shots on goal.
Private markets punish concentration and reward process.
Why Fund-of-Funds Exists (And Why It’s Boring on Purpose)
There’s a reason endowments, pensions, and family offices obsess over diversification inside private markets.
Venture and private equity returns are wildly dispersed. A few managers drive most of the gains. Miss them, and your “private markets exposure” is mostly vibes.
John’s philosophy is simple:
Start broad
Maximize probability
Let math do the heavy lifting
Fund-of-funds structures exist not to be clever, but to be statistically sane. They trade ego for consistency. They accept that you won’t pick every winner, and design a system where you don’t have to.
It’s not exciting.
It works.
Liquidity Is a Lifestyle Question, Not an IQ Test
One of the more subtle points in the episode is that allocation decisions have less to do with intelligence and more to do with life design.
Are you still accumulating?
Approaching distribution?
Funding future generations?
Running a business with uneven cash flow?
Liquidity isn’t good or bad. It’s contextual.
The mistake most people make is allocating as if all dollars have the same job. They don’t.
Some capital needs to be flexible.
Some capital should be patient.
Confusing the two creates stress, not returns.
Process Beats Brilliance, Every Time
John repeated this idea in different forms throughout the conversation, and it’s worth underlining.
Markets reward discipline over drama.
Doing nothing is still a decision.
Diversification is still underrated.
Boring strategies still compound.
The job of a CIO, and frankly of any long-term thinker, isn’t to predict the future. It’s to build a portfolio that survives multiple futures.
That means fewer heroic bets, more repeatable frameworks, and a willingness to look wrong in the short term to be right in the long term.
The Bigger Pattern
Zooming out, this episode wasn’t really about private markets.
It was about maturity.
Mature investors stop asking, “How do I beat the market?”
They start asking, “How do I design a system that holds up when the market doesn’t cooperate?”
That shift changes everything, from asset allocation to time horizons to how you define success in the first place.
The irony is that it looks conservative from the outside and radical from the inside.
Which is usually a good sign you’re onto something.
If you’re building wealth, managing capital, or just trying to think clearly in a noisy market, this conversation is a reminder that the edge is rarely found in speed, hype, or cleverness.
It’s found in patience, structure, and the humility to let probabilities work in your favor.
Unsexy. Effective. Durable.
Just like the best systems tend to be.
👂🎧 Watch, listen, and follow on your favorite platform: https://tr.ee/S2ayrbx_fL
🙏 Join the conversation on your favorite social network: https://linktr.ee/theignitepodcast
Chapters:
00:01 Origin Story and Early Career
01:55 From D1 Quarterback to CIO
03:10 What Krillogy Does
05:05 Scaling Through People and Culture
06:40 Early Move into Private Markets
09:10 Defining Private Markets
11:30 How the Ultra-Wealthy Allocate Capital
14:00 Access and Innovation in Private Markets
17:05 Fund-of-Funds and Diversification Logic
20:10 Liquidity and Time Horizon Management
23:05 Portfolio Allocation to Private Markets
26:10 Diversification and Dispersion in Venture
29:05 Public Market Return Expectations
32:00 Building Durable Portfolios
35:13 Transition to Rapid Fire
Transcript
Brian Bell (00:01:03):
Hey everyone, welcome back to the Ignite podcast. Today, we’re thrilled to have John MacArthur on the mic. He is the senior partner and chief investment officer at Krilogy, where he conducts a multi-billion dollar orchestra of portfolios with precision and vision. Thanks for coming on, John.
John McArthur (00:01:19):
My pleasure, Brian. Thanks for having me.
Brian Bell (00:01:20):
Well, usually how I start these episodes is just getting your backstory. What’s your origin story?
John McArthur (00:01:25):
Yeah, so I’ve been in the business for 25 years in the wealth management space, having the benefit of being at really large firms such as Morgan Stanley, and then kind of Central States focused AG Edwards back when it existed prior to joining Krilogy at the beginning of 2012. So it’s been an absolute blessing to have seen kind of the lens through the traditional wire house world and then the independent space now for a number of years.
Brian Bell (00:01:50):
Yeah, that’s quite the journey. And I have here in my notes that you were a D1 college quarterback. Is that true?
John McArthur (00:01:55):
I was many moons ago. Our founder and CEO, Kent Scornio, and I were we were college teammates together at the University of Missouri before
Brian Bell (00:02:05):
we that’s amazing I’m learning new things about you so you know let’s talk about Krillogy you know what is Krillogy what’s your goal what do you guys do yeah so
John McArthur (00:02:13):
Krillogy its meaning is art of accomplishment and when the firm was founded in mind the inspiration was to was to get all things done for clients to simplistically put it and obviously folks have a number of unique and complex needs often and when we kind of put the flag in the ground way back when the the mission was to to solve for for everything in clients lives much of that goes beyond what many think about traditional wealth management which is of course the portfolio management side which is where my team and I focus and spend the majority of our time. But, you know, it’s in addition to kind of the simplistic meaning our mission is to and purpose is to inspire and serve and enrich lives. You know, our focus is to not only do that with the folks that we get the pleasure of working with, but in our communities, with our teammates and you know i it’s it’s been a it’s been a really fun journey i feel like in so many ways we haven’t really done anything yet you know when i came over we were managing about 100 million in assets and we’re at about 4.5 billion now which are which are big numbers but again i you know in many ways our team feels like we’re just getting warmed up
Brian Bell (00:03:21):
yeah yeah i mean for for folks listening you know 4 billion sounds like a lot but there are as asset managers out there that have you know hundreds of billions or trillions, like a trillion even, right?
John McArthur (00:03:32):
Absolutely. Yeah. Four and a half billion is on the smaller side in today’s standards, you bet.
Brian Bell (00:03:37):
But you were able to grow at 40X, which is pretty incredible. What do you attribute that growth to?
John McArthur (00:03:41):
You know, I think this may sound really cliche, but we’ve just been disciplined around hiring great people. So much of us spend so much of our working lives in office and together. And so in a business that typically is a little bit more individualistic by nature, we’ve created an atmosphere and environment that people love to come into every day and collaborate well with one another. And that’s been, I think, the number one thing that i would point to we have so much i mean one of our differentiators is is in-house expertise i mean we have so many experts literally under under our roof that are well versed in so many different areas and i think that’s really what a big part of what makes us go so over time you guys have gotten
Brian Bell (00:04:27):
more into private markets in addition to public markets maybe you could talk about that transition you know how that’s been over the last you know 10 or 15 years for you and Yeah, that balance looks like in your firm.
John McArthur (00:04:37):
Yeah, it’s interesting. You know, a lot of so I took over the CIO role in 2012. And, you know, a lot of the firms that we work with, the asset managers have continually told us over time that we’re on kind of the leading edge of proactively thinking about private markets and implementation and so forth. And we’ve really been in private markets since 2012. And it used to be really kind of a finely curated list of exposures in private markets that have different risk characteristics, different return expectations, lack of correlation to one another, such that advisors can complement a number of different opportunities to their public markets portfolio, which our team, of course, manages on a discretionary basis. And I think what we’ve learned over time is that it’s so challenging when we’re slow and methodical in our diligence process as an investment team. We come to understand each of these individual opportunities so well, and it leaves such a wide gap between not only the advisors kind of getting up to speed, but ultimately advisors then educating with conviction to their clients. And that’s been a key learning for us. Really, I would say over the last five years is that there’s been so much thoughtfulness and pride around this platform that we’ve approved, yet utilization has been low relative to expectations. Now, utilization is probably greater than some of the averages. I don’t know if it was, I want to say it’s Morgan Stanley that maybe had some data and research out around utilization of private market exposures in the in the wealth channel broadly maybe you could unpack what that means for people who aren’t familiar with all the cio terminology yeah so you know investing in anything other than public stocks and bonds for the most part so so private markets all kind of loosely defined as that’s broad umbrella that has a profile of anything less than daily liquidity and you know i think when you look at the opportunity for global wealth think individuals and families across the globe the utilization of of those less liquid structures is really really low for the for the ultra high net worth it might be 10, 20, (00:06:59): 30 percent or beyond, you know, for what’s called the mass affluent, those percentage exposures, generally speaking, are probably between one and three percent.
Brian Bell (00:06:59):
So what you’re saying is, is like the ultra wealthy, which I don’t know what the cutoff is, 10, 20 million assets or more. Sure. They tend to put a higher percentage into the private markets than the public markets. Why do you think that is?
John McArthur (00:07:11):
Well, I think if we look at the data, historically speaking, the opportunity set in the returns historically, whether we’re looking at venture, whether we’re looking at private equity, I mean, you look at what those asset classes have done for decades, even relative to public with, ironically, the public markets at all time highs, there’s really attractive risk reward profiles there. And so, you know, I think as we look forward, I think there’s going to be a lot of loosening of the restrictions around access. you know, supply has dwindled for decades now on the public market side of things. And so, and you see it firsthand in your work on a day-to-day basis, the incredible innovation and, you know, opportunities that exist in private markets and venture specifically and in private equity. It’s just the access is just limited. And I think that will significantly change as we look forward. So, you know, kind of getting back to our journey with a lot of pride, we approved these curated list of, private market exposures, again, anything other than public securities and utilization was lower. And so it finally took the light bulb you know, say a handful of years ago that we should really think about how we’re doing this, really put our best foot forward in raising a closed-end fund, which we embarked on at the beginning of this year. And, you know, it’s an institutional quality type of fund that has diversified exposure within private equity and venture opportunity.
Brian Bell (00:08:36):
So basically a fund of funds.
John McArthur (00:08:37):
That’s exactly right. And I think the key for us is it’s, we’re driven to provide a great experience and ultimately results for the folks that we work with. So we have no economics in it.
Brian Bell (00:08:48):
interesting it’s just a service so you’re you have clients and they’re they’re paying you like a what a basis point of exactly you know the that’s the asset management piece and of course the public markets portfolio that we run we also have a law firm in-house and a tax firm in house for a number of years. So there’s a number of things that we’re doing for folks. And this on the investment management side is, you know, a differentiator.
Brian Bell (00:09:11):
Just another way to add value.
John McArthur (00:09:12):
Like, hey,
Brian Bell (00:09:12):
you’re already paying us to get you the best returns, manage your money, get the best risk adjusted returns on the best horizons possible for you individually. Part of that is the private markets have really good returns historically. Especially as you’re talking about the compression of public market opportunities, because companies are waiting until they’re worth tens, if not hundreds of billions of dollars now to go public. So a lot of the multiple is out. If you can get into companies and funds that invest that 10 and 20 caps, 10 and $20 million valuations, and those companies turn into multi-billion dollar opportunities, you’re talking 100,000x returns inside that portfolio.
Brian Bell (00:09:49):
That’s right.
John McArthur (00:09:49):
Yeah.
Brian Bell (00:09:50):
potential yeah you invest in an ipo at a 10 billion or 50 billion valuation you’re not going to get 100x on that most likely you know right yeah you hit the nail on
John McArthur (00:09:59):
the head you know and allocate which is our which is our partner kind of a diligence partner and technology platform for the fund has a great slide that that identifies a number of those companies that you just kind of alluded to on the public market side of things and the value creation that took place prior to IPO, whether it’s Uber or you name your company, it’s really astronomical. It’s really the challenge has been about access. I think it’s getting it’s getting better. But if you look at like the accredited investor rules and qualified purchaser i mean there’s just so many there’s so much red tape and limitations and i think that i think that’s really going to change and evolve over time because the opportunity set is so great in the and it’s so amazing to see
Brian Bell (00:10:42):
asset managers like you guys stepping up to the plate and solving the problem which is I’m a retail investor, right? I got a million, 2 million in my 401k or IRA or whatever. And I want to get the best returns. And I have a long horizon, right? And maybe 20, 30 years until I retire or more. And I can, you know, I could afford to take some risk here.
John McArthur (00:11:02):
Absolutely. Right. For the chance at outsize returns. And the beauty is, as we think about it from a portfolio construction lens, I mean, take venture as an asset class. I mean, the correlation to public equities is low. Yes, it’s long cycle, long duration. asset class, but the returns for decades have been incredible. And so let’s add to that, this AI innovation cycle that we’re in and however long it goes and however it evolves. I mean, there’s no question, you know, when we look at prior periods with cloud and mobile and internet, I mean, there’s There’s just, I feel great conviction on the opportunity.
Brian Bell (00:11:36):
Yeah. Yeah, we’re in a very, like a super cycle, I would call it, of AI platform shift innovation where, yeah, everything’s going to change. And so you kind of, you want to be holding equity in as many companies as possible during the change. Because on average, the vintage years will look really good. How do you advise your clients on time horizons for private markets like venture capital and risk appetites and portfolio allocation percentages and stuff like that? How do you help them think through? And obviously, for anyone listening, this is not investment advice. Seek the services of an investment advisor.
John McArthur (00:12:10):
Absolutely. Thank you for that. As you know, it’s all customizable on the particular situation. I always like to think about it through the lens of if you have a diversified solution, so take the fund to funds just as an example, and we have to think about this in terms of it being 10-year money. of course you’ll see are likely to see the benefits in return of capital prior to that but it should be enough to make a difference and really move the needle from a long-term portfolio return perspective but not enough to kind of overwhelm and and you know to your point around liquidity i think that i think the liquidity and duration management while it’s it tends to be more of a focus for the ultra high net worth family office type of client. We launched a multifamily office about six months or so ago. And so we’re focusing more in this space, but that tends to be a conversation that’s much more front and center for that cohort from a wealth perspective. I see that evolving over time and it being much more common for the mass affluent, generally speaking, as their participation in this space becomes greater. But I don’t know where you start. I mean, I think you should be at least 5% to 10% allocations, again, such that it makes a difference over time, but yet Not too much to overwhelm. Understanding, though, what liquidity and kind of continual cash flow needs look like from a lifestyle perspective. Is one still in their accumulation phase or are they approaching kind of the distribution phase of retirement or are they in retirement? and really thinking about the investment portfolio and longevity for next gen. You know, those are all potential considerations. And then, you know, the obvious, I think too, is that the quality around diligence and process of all the underlying private market exposures is really important because and you know this in the spirit of the work that you do, the dispersion between, when you get into private markets, especially within venture and private equity, the dispersion between performance of managers is, really, really large.
Brian Bell (00:14:21):
And we’ve talked about this. If you look at the underlying strategies, a big reason for that is they concentrate, right? They’ll do 20 or 30 investments, right? And if you remember statistics class, if you take a very small sample, you have a very high variance or high standard deviation around the ground truth. And private markets, as you said, as a whole, a private equity venture capital return very high high return on average over time but you’re looking at it like an index right it’s like oh like the asset class right and that’s why i like so much about what you guys are doing with the fund to funds approach which you’re basically saying hey we’re going to go out and select a basket of funds for free just for as a service there’s no there’s no two in ten there’s no one in ten there’s no incentive for you guys other than to with your existing clients under your whatever your agreements are to to pay you for for your services you’re going to go out and do the fund to fund strategy which i think is super value add and if i’m a fund of funds listening to this right now i’m like oh man that’s like really terrible that you’re doing that because now you’re ruining my business but the fund to fund strategy it works because because you’re getting a very broad basket right you think about like a fund of funds are typically doing what 10 or 15 maybe 20 different funds and you know so they’re selecting all these gps and you think about what each gp is investing in let’s just take venture capital It’s a venture capital fund to funds. Maybe they do, I don’t know. What would you say, 25? 20 to 30 on average investments. So you’re getting a basket of 300 underlying stocks, which if you actually run the research for private market, private equity, you want about a basket of 300. to get a nice diversified return and maximize your chances of hitting that average. How do you guys think through all that? I know you and I have talked about this a lot offline, but how do you think about it in your fund of funds?
John McArthur (00:16:05):
We have. I mean, we think about it in that same way. I mean, it’s around the probabilities and to be broadly participating is so much more important than that concentrated risk and kind of failing to participate in anything close to what the asset class has done from a historical perspective.
Brian Bell (00:16:28):
I think you and I, why we always, you know, we connected so easily is we almost feel the, we think the same way. We’re both like finance guys. I was series seven, CFA, all that stuff. One guy said it to me like this. He goes, what’s changing in venture capital is people are creating fund to funds and other financial products like Team Ignite, where it’s a repeatable financial product. So there’s no stochacity of returns between the funds. It’s like, Very consistent because it’s a very consistent strategy. And that’s what fund-to-funds do, right?
John McArthur (00:16:57):
And that wins over time. And that’s true for public markets. As we think about process around managing the public markets portfolios that we run, and we’ve got GIPS verified numbers for the public market models that we run because they’ve shown attractive risk-adjusted returns over time. And it was worth the time and expense and effort to go through that process to validate what we’re doing and why we’re doing it. It’s processed. Absolutely. I mean, you hit the nail on the head.
Brian Bell (00:17:22):
Yeah, because we’re talking about people’s livelihoods here.
John McArthur (00:17:26):
That’s right. And to that point exactly, I can never put our advisor base in a situation where where they lose a relationship over investment returns. Can’t happen, completely unacceptable. Now, the client service aspect and that piece and doing a lot of the things that advisors are expected to do is separate, but we have to be really disciplined and really thoughtful and process oriented and diversified on the investment side so that that the statistical probabilities align with what their financial plan objective speaks to. Yeah.
Brian Bell (00:18:01):
So for the LPs listening, I’d love to shift gears a little bit and put our CIO hats on. I’m an LP. I’m not going to pay you to do this. I just want to do it myself. How do I get started? How do I think about private markets? How many funds should I put in there? What kinds of funds? How do I evaluate the GPs running those funds and track records and all that stuff? And we can take all those one at a time, but I kind of want to kind of steer the conversation to like, for the LPs listening.
John McArthur (00:18:24):
Yeah. So so an LP that’s not participated really at all thus far. It’s a great question. You know, I think there are solutions in the marketplace that are kind of private asset fund oriented overall, such that you might not get your traditional private equity or venture returns, but you’ll have higher probabilities around a favorable outcome, lower volatility. And it’s probably a foot in the water type of an approach to just start participating. You know, I think about kind of myself when I put my personal LP hat on, starting from a diversified funds approach or even fund-to-funds approach and then kind of, you know, core satellite type of thought process there where you’re starting a little bit more middle of the road or plain vanilla. You know, you may have a solution that has... a little bit of venture, perhaps some secondaries, a little bit of private equity, private credit. I mean, there are solutions in the marketplace that kind of have exposures in all of those areas. Like I would start slow to just develop kind of the education and knowledge and learning and get a sense for what that cadence looks like. As it relates to managers, you know, we’ve touched on the diversification point, but really understanding what the process is of the manager, how many the holdings underneath the hood, so to speak, are you actually owning? As you know better than anyone, the failure rate in venture historically is extraordinarily high. So if you don’t have enough company exposure- Shots on goal. Shots on goal, then outcomes are much less probable relative to what you’re seeking or what your expectations are. So those are just kind of some high level thoughts. I would always kind of start more broad-based, diversified, no different really, I guess, if I think about it from the public market side of thing. If I have a new investor, up and they’re the child of a client and and they’re wanting to get started in investing and we’re not going to go out and recommend individual equities for them i mean they’m starting with a diversified etf broad-based exposure and just get used to the like i said the cadence there and how it works you can always you can always kind of build that that nest egg your kind of serious money if you will and if you as you get comfortable and learn more and are intellectually curious over time and want to begin to kind of build satellite exposures around the edges, maybe with individual equities in the public markets example. And I think that makes great sense.
Brian Bell (00:20:58):
Yeah, you know, it’s interesting. As you get more sophisticated and you have more AUM, you seem to put more, like a higher percentage of your AUM into private markets. And I think about, you know, the individual 401k investors probably just doing like 100% ETFs, you know, basically or index funds or target date funds and things like that. You know, and then you get a little money and then you put a little bit higher percentage, five or 10 percent into some riskier stuff because you have longer horizons, more risk appetite. You can afford to lose a little bit. And then as you get into the ultra high net worth and even foundation level and pension fund level, you know, I think about the Yale Foundation putting, you know, 30 percent into private markets, private equity and capital because they’re taking a very, very long, long term view and they have a lot of assets and they can afford to take the really long view.
John McArthur (00:21:47):
Yeah. And they don’t, you know, it’s interesting, they don’t have like the endowments, for example, they don’t have the challenge that an individual or household will have in that they’ll have to, at some point in time, more than likely, generate cash flow from that. from that asset base, which makes sense why the private market exposure at the individual and household level would be lower than endowment. Yet still, it becomes a really important long-term growth engine to complement public market equities. I mean, it’s really interesting when we look at a lot of expected return studies and you can pick any manager or any firm that has just tremendous intellectual capital and brand Fidelity, T. Rowe Price, BlackRock, Vanguard, you name it. I mean, they’re all singing from a similar hymn, which is public market investors get ready for a third or less of what you’ve been accustomed to in terms of returns over the last 15 years. You know, Vanguard’s, for example, they do it every six months. And I believe they’re expected returns for U.S. equities and is in that two to four percent range. I think you have to take that with a grain of salt. I think it’s prudent to do that. But when they look at, you know, the structural backdrop of the market economy and debt, I mean, there’s a lot of valuations. I mean, there’s a lot of factors that that go into their work. But if they’re generally correct, In my opinion, it’s really prudent to have a private markets portfolio, at least in some capacity to complement that. Now, I’m not suggesting that it would be immune from what happens in public markets, but studies have shown when we’re in a lower public market return regime, the differential of those private market asset classes that we’ve discussed is really significant, historically speaking, to the upside. And so Going back kind of to the planning lens, if one is to assume whatever their long-term return assumptions are, call it a conservative 5% or 6% return for decades, and public equities or even fixed income for that matter don’t deliver, you need to find kind of a complementing growth engine to outpace inflation and meet your long-term cash flow objectives ultimately and some of those kinds of things.
Brian Bell (00:24:02):
Let’s go back to your fund to fund. So how are you guys evaluating the funds and firms and managers to put place into this fund to funds for your clients?
John McArthur (00:24:10):
Yeah, that’s, it’s, it’s not easy. That’s for sure. there’s a volume is high one of the things that was important to us when we set out on this journey is you know we talked to a number of different platforms and firms and you know a co-diligence partner was really important to us so you know outside of the platform itself having someone that is really kind of entrenched in the ecosystem of of venture and private equity was really important so you know for us we’re cognizant that we’re not in that ecosystem yes we have some resources and access but we’re not fully immersed and so that piece around sourcing and accessing and help helping pick was important so that’s been a great benefit for us and that allocate has been a firm again with their expertise and kind of team and talent helped us through that process some some of the opportunities in the fund we’ve sourced some of them they’ve sourced. And either way, we’re coming together to collaborate and share a diligence. So that’s kind of the... Yeah.
Brian Bell (00:25:12):
How are you guys thinking about portfolio construction, right? Because you have early stage venture, mid-stage, growth stage, you got private equity, you got buyouts, you got... What do you think about all that stuff?
John McArthur (00:25:21):
Yeah. So with this being our first fund, I kind of go back to the conversation a few minutes ago and that we’re starting slow. So starting slow, I guess, in the sense of you know, in the emerging manager space in venture, we’re actually starting fund-to-funds, which you could look at that and say, well, gosh, that doesn’t make sense. Isn’t that additional layers of fees? And you’ve got a fund-to-fund structure.
Brian Bell (00:25:48):
It’s not in your case, right? It’s a fund-to-fund funds, but it has like a zero-zero fee.
John McArthur (00:25:52):
Correct. From our lens, for sure. You know, so, you know, as an example, the emerging manager venture space, going the fund-to-funds route with, you know, 20 to 25 different managers, has been a place to start. I would imagine though, Brian, as we evolve, we’ll get to a place with future vintages where we’re selecting individual managers. We’re doing that on the private equity side with some more recognizable name brands that have kind of a focus. Maybe they’re generalists, maybe they’re specialists or a combination thereof to compliment each other. But I see this evolving in more of kind of a bespoke type of way where We’re building relationships, getting to know managers and that we have, you know, there may be on a fund two, fund three or beyond, and they’ve been at this for a while, so we can have conviction around. All right, instead of hiring a fund of funds in the emerging manager venture space, for example, we’re going to hire, you know, five to 10 individual managers to round out that space that we’ve gotten to know. That’s how I see this evolving over time.
Brian Bell (00:26:58):
Yeah. I can imagine kind of being fun to have a hybrid approach for some clients that are wanting to have a little bit more control, right? They don’t want to just hand it over, but maybe they want to say, well, I want to put 10% of my 10 million or 20 million into venture capital, right? So I got a million or two to put in there. So call it a 250 check size across eight funds. And then you kind of have a choose your own adventure, right? Yeah. Like what we recommend is this kind of allocation across these different kinds of funds. And here’s the list of pre-approved funds that you can, that are raising right now that you can invest in.
John McArthur (00:27:30):
That’s exactly how I think about it. And, and, you know, thus far the investment team has said, okay, here’s, here’s what we’re doing. And it’s been less really in venture and private equity, but more like your traditional private credit and opportunistic real estate and, you know. real assets, some of those types of spaces, which are historically lower risk, lower return. But I envision it being, instead of having to do the fund that we’re raising for, here’s the approved list of managers within the fund. And you may, I think to your point, may want to just round out your exposure and say, hey, I’d like to just grab fund X or fund Y instead of taking the whole you know, the whole fund itself. So getting a little bit more curated. That’s really fun.
Brian Bell (00:28:15):
Yeah. Let’s talk about the future. What are you excited about over the next year or two and five and 10 and all that?
John McArthur (00:28:20):
Well, yeah, that’s a good question. I think at the company level, we just took on a strategic capital partner, Rise Growth Partners, and we’re really excited about that relationship and the growth capital that can help us have a much greater footprint in the Midwest. I mean, we’re based in St. Louis, Missouri and have a really growing presence in Dallas. And the thought leadership and consulting aspect to the partnership with Rise is really exciting for us as we venture out to really just take on more and become a larger, more relevant firm and ultimately driven to um make client experience better than it is today always always client focused in mind so so that chapter is really exciting that’s very recent for us that’s new the investment team i’m surrounded i’m so lucky to be surrounded by such talented folks on our team our analysts Jake Thornton, Dan Laritz, Jamie Setley I mean the folks that I get to work with and spend time on every day it’s um It’s humbling and it’s fun for us. I mean, we love rolling up the sleeves. So I think continuing to build out the work we’ve done so far is exciting for me and us. And that’s both on the public and private market side of things. I mean, this is our first fund, this Atlas fund that we’re building. That’s been an exciting project. I see that evolving over time and some of the ways that we’ve touched on so far. but we’re also for the advisors that we work with we’re all we’re always innovating too with models that we bring to market we have a director of technical research who complements a lot of our more traditional asset management approaches and so we’re you know it’s fun to launch new models for our advisor base.
Brian Bell (00:29:59):
Yeah, very cool. Well, let’s wrap up with some rapid fire questions. What question do you wish more clients asked you?
John McArthur (00:30:06):
I would say to be able to get people to zoom out. I think for many people, it’s natural to just put the head down and go and you just go to work every day and kind of grind through whatever you’re grinding through. I think thoughtfulness to kind of step back and think about what they want their next chapter to look like. So it’s less of maybe a question, but more, I would say, thoughtfulness around really controlling the outcome that they want to have in the next chapter of their life.
Brian Bell (00:30:33):
Which non-finance book has shaped how you think about risk?
John McArthur (00:30:37):
Nate Silver, On the Edge, which is really kind of psychology and strategy around risk takers.
Brian Bell (00:30:44):
That’s a good one. I haven’t heard of that one. I’ll have to check that out. In one sentence, or I guess a short phrase, how would you define wealth in 2030?
John McArthur (00:30:50):
Focus around liquidity and duration management becoming much more prevalent as private markets continue to explode higher.
Brian Bell (00:31:00):
Yeah. Yeah. I think we could do a better job as an industry of creating liquidity. The problem is, and I’ve done a lot of these secondaries, right? Is there’s so much friction. There’s so much friction. You have to get the company to agree and wave their rofer. The seller has to agree. The buyer has to agree. Like it’s, it’s a three-party transaction. Basically it’s, it’s pretty complex and there’s just not a lot of liquidity in those markets.
John McArthur (00:31:25):
yeah i’d like to think that that will become easier over time but i guess i think
Brian Bell (00:31:29):
so i think we’ll figure it out you know people you can take a test or and or you know verify their accreditation and you know let’s let some of those shares float of private companies i guess maybe it’s a different kind of stock market right where it’s an accredited you know investor stock market you know right you can only trade there if like you’re you’re verified have the test and and or are accredited and then that way you can just let these shares kind of flow and then there’s not as many like um, reporting requirements and stuff like that. It’s crazy. We let people go online and bet about random stuff or call she sure. Yeah. Or go into a casino and, you know, just bet on whatever, whatever table you’re at. Perfect.
John McArthur (00:32:09):
Perfect.
Brian Bell (00:32:09):
You have a diversified, you know, betting strategy really is what it is. It’s a diversified betting strategy on the future of these companies. Yeah. Yeah. Well, what’s your top role for staying calm when markets are roaring or oppositely?
John McArthur (00:32:22):
I would say to stay objective and discipline. I mean, doing nothing is a decision. And so, which doesn’t mean that’s the right answer, but I think just sticking to process.
Brian Bell (00:32:32):
Yeah. If you could send a single piece of advice to a younger version of yourself, what would it be? And at what age?
John McArthur (00:32:38):
Getting out of the comfort zone and take sensible risks. That’s probably a, I don’t know, age. That’s tough. That’s probably a early professional career as as one kind of especially nowadays i feel like more than ever really trying to find out it’s it’s tough right like you know to be a college student and have a sense of not only what you want to do but who you are right as a young 20s to really know yourself well enough to get a sense of what you want to do for the rest of your life so i think it’s i would say just Yeah. Comforts are risks.
Brian Bell (00:33:09):
Yeah. I heeded that, you know, uh, actually when I talked, when I was working on wall street, I talked to guys that were my age and they’re like, get out. Yeah. Tell me more. Let’s go to, you know, they tell me like, yeah, it’s great. I make millions of dollars a year and got that, you know, a couple of houses and stuff. But like, I’m a slave, man. I’m just like a slave to the whole system and I cannot get out of this, you know? Yeah. Yeah. Yeah.
John McArthur (00:33:36):
There’s a point where you can be too far in the journey.
Brian Bell (00:33:38):
Too far into it. Take, take more risks.
John McArthur (00:33:41):
How do you reach? Exercise is just a daily ritual for me. Exercise and cold plunge. Funny enough, I’ve gotten into that for the last, I don’t know, 18 months or so. And it’s crazy. You know, one of the things that surprised me the most is I was a guy that would, I think as a function of stress, my immune system would break down fairly frequently. So I would get sick and colds and whatever, like, really frequently, that’s almost completely gone away. And I haven’t done anything different lifestyle wise. Besides the cold plunge. Besides the cold plunge. I don’t know. There’s got to be something there.
Brian Bell (00:34:14):
I grew up in Seattle. So like the winter was a cold plunge every year. So you’re just walking around. It’s like 38 degrees and rainy on you. Right. I love it. What is one myth about wealth management you’d love to bust?
John McArthur (00:34:27):
Just not about managing money. Strategic advisory and consultation, philanthropic. proactive tax in a state. There’s just so many more facets than, you know, can I give you a dollar and can you beat the S&P 500 kind of thing? I think there’s just so much more to it.
Brian Bell (00:34:45):
So I’m sure there’s some people listening out there that are like, I like what Krilogy stands for. How can they get in touch?
John McArthur (00:34:51):
Our website’s probably the easiest. Krilogy.com is probably the best place to start. A whole bunch of contact information exists there.
Brian Bell (00:35:01):
Great. Well, thanks so much for coming on. Really enjoyed the conversation. Great to catch up.
John McArthur (00:35:04):
My pleasure. Thanks for having me. It’s a blast. Thanks, Brian.
