Firms have quickly ramped up the incentives to recruit and retain financial advisor talent, but those efforts are even stronger for women and minority groups. Merrill Lynch chair of Diversity and Inclusion said the “war for talent is alive and well” and they are trying hard to hire women and people of color in their ranks. No firm is outright saying they are paying women more money in advisor roles, rumors are trickling out that women are seeing higher salaries in order to be attractive to firms. There has been a huge increase in press events and speeches pairing ‘women’ and ‘wealth management’ from major brokerages. UBS, Edward Jones, and Merril Lynch have set high bars for their target percentage of their advisors are women or people of color.

Finsum: Women are an extremely valuable part of financial firms and efforts to attract and retain them will only intensify. 

In this episode, Marty Nesbitt joins Melissa Francis and Magnifi by TIFIN to share his views on Private Equity and how the asset class is poised for periods of rising prices.

To watch the full interview with Marty Nesbitt, in addition to interviews with Anthony Scaramucci, Kyle Bass and Jeffrey Gundlach, check out Magnifi by TIFIN.

Melissa Francis: We have a very special guest to talk about private equity investments, Marty Nesbitt. He is co-CEO of The Vistria Group, which is a Chicago based private equity firm. 

He is also on the board of directors of publicly traded companies like CenterPoint Energy, Norfolk Southern Corporation, and American Airlines group. Marty, thank you so much for being here. 

First of all, tell us a little bit about Vistria, some of your founding principles and maybe some of your current assets or maybe the deals you like the most.

Marty Nesbitt: Yeah, sure. I'm happy to do so. Vistria was birthed from a set of personal experience by my co- founder Kip Kirkpatrick and I, who had both been in the investment world, in public service and obviously operated as entrepreneurs. 

And we thought, as we harvested our experiences, that at the intersection of public and private interest, there was a value proposition that we felt hadn't been recognized in the marketplace. 

And so we thought if we invested at the intersection of what was important to the public and what was important to the private sector, we could figure out how to harvest value. 

We thought about the three industries where that opportunity set was greatest and settled in on healthcare, education and financial services, where we thought the value or the opportunity set was greatest. 

And so, Vistria is a name that we made up because that's one of the hardest things there is to do when you start any business, that's find a name, but it means the power of three. 

And it's the power of investing with the requisite amount of investment experience and expertise, the requisite amount of operating expertise, but then also a long term policy perspective so that you can be invested in places that are not only good for the businesses, good for employees, customers, and investors, but also good for the broader public. 

That policy perspective is the third dimension that we invest behind. 

Watch the full episode with Marty Nesbitt HERE

Melissa Francis: Yeah, I know, that brings up so many questions. Let me start with just a few. Private equity in general, you see really great out sized returns. How do you keep that up when stocks and bonds are having such a rough time like they are right now? 

Marty Nesbitt: Well, look, one of the beautiful things about building a private equity platform is the opportunity to be really focused in an industry or a sub- sector of an industry where you can develop real expertise. 

And so we spend a lot of time developing themes that we want to invest behind and then going very, very deep so that we know the levers to create value what the long term proposition is. 

And so even in an environment where we see prices rising, as there's so much capital competing for these opportunities, we have confidence about the value creation plan we can put in place and the way that we can generate our return objectives in a very difficult, challenging pricing environment. 

So being focused is a way to mitigate some of that risk. 

Watch the full episode with Marty Nesbitt HERE

Magnifi, 2440 Junction Place, Suite 300, Boulder, CO 80301

Advisory services are offered through Magnifi LLC, an SEC Registered Investment Advisor. Being registered as an investment adviser does not imply a certain level of skill or training. The information contained herein should in no way be construed or interpreted as a solicitation to sell or offer to sell advisory services to any residents of any State where notice-filed or otherwise legally permitted. All content is for information purposes only. It is not intended to provide any tax or legal advice or provide the basis for any financial decisions. Nor is it intended to be a projection of current or future performance or indication of future results. Moreover, this material has been derived from sources believed to be reliable but is not guaranteed as to accuracy and completeness and does not purport to be a complete analysis of the materials discussed. Purchases are subject to suitability. This requires a review of an investor’s objective, risk tolerance, and time horizons. Investing always involves risk and possible loss of capital.

Magnifi LLC does not charge advisory fees or transaction fees for non-managed accounts. Clients who elect to have Magnifi LLC manage all or a portion of their account will be charged an advisory fee. Please see Magnifi’s Form ADV Part 2A Brochure available at www.adviserinfo.sec.gov for additional information about fees and charges that may apply. Magnifi LLC receives compensation from product sponsors related to recommendations. Other fees and charges may apply.

Larry Swedroe, Chief Research Officer for Buckingham Strategic Wealth, said investors are paying for elevated valuations due to the huge swell in inflows to ESG and the ‘greenium’ on assets. He calls for ESG to continue to outperform before leveling off and underperforming afterward. Swedroe has been criticized for this thought process because of the success of sin stocks, but he contends sin stock success has really been due to outside factors. The best thing to do in the short run according to Swedroe is to perform the fundamental value analysis but check ESG criteria afterward to get an extra boost in price.

Finsum:  If greeniums are due to greenwashing, ESG could be in dangerous territory when regulation inevitably shows up.

Oil prices have started to recede but that could just be temporary as reserves flooding isn’t a permanent solution. While demand destruction is possible if oil remains elevated near $130 a barrel, international countries are feeling the pain. Developing economies in Latin America, Southeast Asia, and Africa are being pushed to the limits with energy cost burdens. That effect could trickle into the US. Latin America is already experiencing demand destruction. If oil prices climb and stay above $100 a barrel, energy costs could burden Americans and lead to a recession, but given the security on other energy fronts—unlike in Europe—the US is in a better position to weather the storm.

Finsum: Demand destruction driving a recession is unlikely in the US alone, but if international markets are hit heavily, globalization could cause trickle effects in America.

The bond market has given investors pause, and the international bond market especially so. While continuing Covid-19, international war, and rising rates may scare investors, international bonds still add enough diversification to justify their place in the portfolio. Investors are more worried about inflation/interest rates now than Ukraine and Russia, and that risk is heightened domestically. As the Fed hikes rates, yields will rise and hurt domestic bond and equity portfolios. The Euro area has significantly less interest and inflation risk in the near term. Additionally, the deglobalization of covid is slowly going away, and as markets open up that will only improve the position of international bonds.

Finsum: ETFs with large exposure are best in international markets because tensions surrounding global issues are heightened right now.