Partner perspectives

MS: Hello, I'm Madeleine Sinclair, Head of Distribution for Private Wealth here at Blue Owl Capital. This is Partner Perspectives, and I'm joined today by Mike Rosloniec. He's going to talk to us about how he uses alternatives with his clients.

MS: So Mike, let's start with—how did you decide to become a financial advisor?

MR: Sure. Um, so I've always had a passion for the investment markets. I was one of those nerdy kids who bought stocks, and I had a father who was very supportive of my horrible decisions as a young man about what to buy and things. But it's always been kind of a lifelong passion. Additionally, I really enjoy helping people. So between the institutions we work with or the individuals we work with, it's very rewarding for me to get to share some financial advice and help people plan for their wealth.

MS: One of the things I so enjoyed in meeting you recently was hearing your story about how you determined that private markets are important for your clients. Talk to us about what made you decide to start allocating to private markets for them.

MR: So we have a very diverse client base—from large institutions to $500,000 individuals with their retirement money. And for us, it was looking for solutions that either could reduce risk or increase returns for clients—or gosh forbid, something that could do a little bit of both in the portfolio. So we traditionally had large allocations to the traditional assets and were just looking for things that would complement those traditional assets with some better risk and return characteristics.

MS: How did the conversation go with clients in the beginning? What did you find was your go-to to simplify the strategy for them?

MR: Yeah, for sure. A tremendous amount of education from the very beginning—literally, what is a hedge fund, what is a private equity investment, private credit investments in marketplaces. What I found through clients though is people really do like to learn, and they saw that there was some potential benefit. We didn't stop with the initial education—it's continuous education for us just to get people comfortable with the role. I think additionally, helping explain each little area of alternatives—because they really truly are very, very different—what's the role we're looking for from that investment and what are we trying to do to complement the rest of the portfolio. So it's ongoing education for clients.

MS: If you had to cite the two to three benefits that you think are the strongest when it comes to private markets for estate planning, what would they be?

MR: Yeah, so for estate planning, that adds a whole second kind of thought for us. Because I'm usually trying to do one of a couple of things. One is reduce taxes—that's very commonly something there. The other I would highlight though is there are times where we just need increased income with certain trusts or certain capabilities. And so understanding the differences between each plan. And so when I look at something like a credit opportunity there, that's something that can enhance yield for those clients, where maybe the beneficiary currently gets the income out of the trust, but someone else gets the remainder beneficiary and stuff. Utilizing alternatives can be a really good complement just to the traditional stocks and bonds we use.

MS: You have an incredibly successful practice that has grown over the decades. Do you utilize private markets as a prospecting strategy?

MR: It's definitely a differentiator. A portion of our practice is larger nonprofit foundations and endowments. And very honestly, we can't go into a meeting without talking about alternatives. The expectation now for larger clients and for institutions is that we have great capabilities in that space. So we really do have to know our stuff when we go into one of those kinds of meetings. Right now, I will say we're given the opportunity still in this day and age where certain providers don't have familiarity with alternative investments. So oftentimes we're brought in as the alternative specialist. Maybe they'll say, "We'll put 20% in alternatives," and they'll have us manage that sleeve of alternatives. Now of course, doing a really good job on the most complex part of their portfolio often gives us the opportunity for the full assets at some point down the road. So it unequivocally has been kind of a lead-in for business opportunities for us.

MS: What's your advice to other advisors who are looking to navigate and just starting for the first time?

MR: Yeah, I think the same way that we educated clients at the very beginning—finding those sales representatives or portfolio managers from the teams that can do a really good job of explaining what they do and differentiating themselves from others in the marketplace. It does take the dedication of time. This is not something that goes very easily, so you have to spend some serious time and resources learning as much as you can about the different factors. I will say it's a competitive landscape, so some people are highlighting maybe what they do better than others and things. So the same way we had done it with traditional managers for years—just finding those you really trust and you think do a very good job for both you and your clients—is very important.