In this episode of Zephyr’s Adjusted for Risk, Ryan Nauman speaks with Pete McGratty, Executive Director of RIA Development at Verdence, about the evolution of wealth management and the shifting landscape of the independent channel. Pete outlines three phases of change, from early broker-driven models to the breakaway movement and today’s emerging split between traditional independent RIAs and large PE-backed consolidators. They discuss how scale is expanding service menus (technology, planning, tax, private investments) while differing values can recreate “wirehouse” behaviors inside independence. Pete frames a “four-legged stool” for evaluating firms—fiduciary alignment, proactive client relationships, planning, and investments—and explains how smaller firms can compete by leveraging community resources, succession solutions, and shared capabilities. The conversation also dives into private markets, especially private credit, emphasizing client fit, education, due diligence, and the risks of interval fund liquidity mismatches.

Learn more about Zephyr here.

Learn more about Verdence here.

00:00 Welcome and Sponsor

01:02 Meet Pete McGratty

03:07 Wealth Management Evolution

05:55 Third Wave of Independence

10:42 Consolidators vs RIAs

16:35 Ecosystem Choosing Sides

19:47 How Small RIAs Compete

23:17 Private Markets Opportunity

27:46 Interval Funds and Risks

33:23 Due Diligence Solutions

38:39 Wrap Up and Resources

Connect with Ryan Nauman: LinkedIn

Let's go.

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Ryan Nauman Market Strategist Zephyr:

Hello everyone and welcome to

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zephyr's adjusted for Risk podcast.

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I am Ryan Nauman, the market

strategist here at Zephyr.

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One of the hottest trends in the

wealth management space has been the

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question whether to go independent

or remain as a captive advisor.

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Well, I have on the perfect

guest to share his great.

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Insights about the evolution of the

wealth management space and the current

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landscape of the independent channel.

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But first, today's episode is sponsored

by the award-winning Zephyr, which

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helps investment professionals

make more informed investment

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decisions on behalf of their clients.

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Alright, enough from me.

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Let's go ahead and move on

to the star of the show.

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I would like to welcome Pete McGrady.

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Pete is the executive director

of RIA Development at Verdant.

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Pete, thank you so much

for coming on the podcast.

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It's really an honor to have you and

we had a great conversation last week.

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Really looking forward to this one.

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It's gonna be a good one.

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Can you please tell us a little bit

more about yourself and verdant?

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Peter McGratty Executive Director RIA Development Verdence:

Sure.

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Thank you very much for having me.

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I'm honored to be part of your program.

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a little background about me.

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I spent the first half of my

career on the institutional money

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management side of the equation.

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I spent a portion of it as a sell side

research analyst and was fortunate to

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be awarded wall Street Journal, Allstar

bank Analyst while I was doing that.

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And then subsequently I was on

the buy side managing money.

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But about 15, 16 years ago, I pivoted

to the Wealth Management Channel and

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in the wealth management channel.

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What I've really been doing is working

with independent across the country

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working with them typically on items

like continuity and succession planning.

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Helping firms break away from

existing or from wirehouse or broker

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dealer firms to create their own

independent RIA but primarily working

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with existing independent RIAs.

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To help 'em free up their time and

to help 'em be more competitive with

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the firms that they're out there

competing with, how do we do that?

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We can provide them a lot of support

around public and private investments.

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We can provide them support

around financial planning, around

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operations, around compliance.

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But again, the whole idea is to free

up their time and provide them the

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tools so they can be competitive.

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Ryan: Yeah, that's fantastic.

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And as we know, financial advisors,

especially on the independent side, they

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have to wear many different hats and man.

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Manage a lot of different

roles of their practice.

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So helping them so they can do

probably what's most important.

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And that's the relationship management

practice part of it is most important.

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So Pete, let's start just by talking

about the evolution in this space.

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I'm gonna age myself.

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20 years ago when I started, it was.

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It was more brokers, right?

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There wasn't financial planning.

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It wasn't you know, it was all

commission based for the most part.

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Can you just add a little bit more

color to the evolution over the

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years of the wealth management space?

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Peter McGratty: Yeah so as I mentioned,

I've been a part of the wealth

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management space for about 15, 16 years.

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I really pivoted from the

money management world

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into the wealth management

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so I can speak.

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To my experience since then.

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And I really see three, evolutions,

and you'll have to forgive me since

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I haven't been around for 30 years.

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But my understanding is, you know

that the independent channel really.

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Started probably when I

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Maybe earlier than that, the industry

was really dominated by the FINRA world

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the wirehouse and broker dealer world.

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And then you saw the CFP program emerging

and you started to see independent I

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can't speak a lot to that 'cause a lot

of that was before my time, but I do

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remember those independent firms starting

to, and that whole independent channel

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starting to form as an alternative.

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when I pivoted from the institutional

money management world, in back

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around 2010 that really had

started, the independent channel

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was really more fully formed.

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And I think we were moving into the

second evolution of the of the channel.

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And that was the breakaway movement where.

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a sufficient the independent channel

had become sufficiently established.

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and there was a growing ecosystem

of firms that were there to support

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independent and then I think

following a series of high profile.

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Mistakes by the wirehouses or

conflicts by the wirehouses.

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One that stands out in my mind was

the auction rate preferred securities.

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That they thrust down their client's

throats and then they blew up.

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I think you saw greater and greater

interest upon by the wirehouse advisors

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to start to consider the independent

channel as an option, and you really saw

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that accelerate between 2010 and 2020.

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And now I think and now I think the reason

you and I are talking and we can talk

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about this some more when the time comes,

I think we're on the precipice of a, of

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a third evolution, and that evolution is

gonna redefine the independent channel.

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Ryan: Yeah, we are definitely,

let's, yeah, let's go there.

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Pete, I think that's a perfect

segue and, and the evolution

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of the space is, is spot on.

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I think you what, let's talk about the

independent space is it's one of the

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hottest topics now, going independent,

as you mentioned, what isn't being

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talked about in the independent

space, everyone talks about just.

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You go independent or not?

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A lot of talk about m and a activity

right now, but is there an aspect to

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going independent or being independent

that maybe he's not talked enough about

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that , is kind of behind the scenes?

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Peter McGratty: Yeah.

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I really think it's this idea that we're

on the precipice of another evolution

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of the channel and what I mean by

that is, You know, if you go back to

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2010 and 2010 to 2020, what you found

is a lot of these advisors had gone

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independent and they really liked it.

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For the first time, they had the

freedom to do what they wanted to do.

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They had the freedom to do the

things that they saw were necessary

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to take care of their clients.

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I think they liked.

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The idea of a fiduciary duty where they

can do well by doing right by their

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client and being fully aligned with them.

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And it was also a fantastic sort of a

marketing differentiator versus the world

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that they'd come from in the wirehouses.

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And so most of them were.

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Very happy and saw a long

future ahead of them.

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And I would describe them as all

wanting to die with their boots on.

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And so during that that period from 2010

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become more interested in this business

model and consolidating the independent.

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wealth managers, there wasn't as much

interest on the part of the advisors.

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They were happy with the new world

that they'd found and created and

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weren't really looking to exit.

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but of course, as we all know, the

average age of an advisor today is 58 or

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60, depending on the survey you look at.

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so as the decade progressed,

there were more and more

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folks approaching retirement.

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And some of the multiples that were

being offered by these consolidators

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became more and more attractive.

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And so over the decade, some of

these consolidators went from being

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smaller, relatively smaller to some

of them have become quite large.

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And now that they have become quite large.

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There's sort of two dynamics

that folks have been dancing

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around for the last few years.

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that is one that these firms, as they've

gotten larger, they have the scale.

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To invest in resources and expand

their menu of solutions to clients

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that some of the smaller independent

firms just don't have the scale and

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don't have some of those resources.

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So that's one delta.

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And then the second, I think

more important one is the

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rec growing recognition.

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That the two types of firms, the

independent and the consolidator, have

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different agendas, they have different

goals, they have different values.

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what do I mean by that?

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The the consolidators are

really driven, a much more

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institutional p and l type model.

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They're looking to grow profits.

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They're looking to grow they're

looking to grow revenues.

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They're looking to grow profits.

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They're looking to grow the firm with

the idea of ultimately, selling out to

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another private equity firm or going

public at some point down the road.

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So they have a very, they're very

focused on running a business.

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I think that the traditional

independent wealth management firm,

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of course they're also running

a business, but their priorities

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their values are very different.

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on.

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First on on the client, and really

try and have a relationship with the

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client and taking care of that client.

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And for most of these folks, those

clients over time become almost friend.

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Not only friends, but almost family.

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and secondly, they've

remained very focused on.

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On planning and providing a very

strong planning and investment

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solution for their clients.

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And so their values are very different.

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One is very much to grow and

get bigger and to monetize

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the success of that growth.

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And the other is really still focused

on client first, planning first.

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So to tie it back to your question,

this next evolution, we've now

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reached a point where the large firms.

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a competitive advantage

because of their scale.

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And that's starting to create

differences that folks need to address.

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And secondly, recognition that

there's two very different value sets.

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And so the question is how does,

how do we how does the independent

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channel respond to those differences?

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Ryan: Well, let's talk

about those differences.

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PE.

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Mentioned the different value sets,

which I think make a lot of sense.

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And exactly what you said, the independent

side, they're more about, the planning,

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their clients become family, whereas

more of the consolidators they, are

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looking to grow and, to increase their

multiples, so there's different values.

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How do you really distinguish the two

the consolidators from the independence?

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Peter McGratty: So in terms of,

like I said, there's two sort of two

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ways that I think about the issue.

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One is scale.

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So clearly the consolidators these

days have become very large and they

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have more resources which means they

can invest in technology to facilitate

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operations and administration.

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can also invest in resources like having.

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Multiple investment options on the

menu which could range from passive

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to passive plus to active strategies

could range from portfolios that

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own ETFs or mutual funds or SMAs.

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And then more recently it might also mean.

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Making private investments

available to clients.

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On the planning side, it also

may mean, you know, you can do

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some more sophisticated planning.

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In some cases family office type services.

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you're starting to see firms

offer tax services, so the menus

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are expanding so that's one big.

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Differentiator and that has to

be addressed as we go forward.

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But the values question, I think is

the more interesting one that you ask.

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And how do I think about values?

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I really think of, a wealth management

firm as being a four-legged stool.

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The first leg is around the

fiduciary responsibility that you

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are really going to do what's in

the best interest of your client.

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Not only, because you have to from a

regulatory standpoint, because that's

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what you believe is the right thing to do.

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So no conflicts of interest, transparency,

do what's best for the client.

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That's leg number one.

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leg number two, is to have a proactive

relationship with your clients,

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which means I'm a client first type.

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I'm doing what's in their best interest.

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I have limited the number of folks

that I am working with so that I

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can have a proactive relationship.

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I can know who you are.

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As oppo I can know who you are.

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The third leg is the planning focus and

the fourth leg is an investment focus.

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And in those two, those are

planning and investments obviously.

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You can do, you know, planning

or investment light, or you can

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do planning and investment strong

or heavy, to do a good job.

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And I think that's the best way to

evaluate it because what you find

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is the traditional firms, continue

to be fiduciary, transparent,

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no conflicts of interest.

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some of the larger firms are

starting to offer products that are

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paid for as a product, so there's

a conflict of interest there.

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A good example is they might sell

insurance, separate from the management

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fee on the second leg in terms of

the number of clients that you have.

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I think Michael Kitsis has done a lot

of really good research on how many

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clients you should have, and history

suggests that, any individual can

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really, can only really know about a

hundred to 125 or 150 clients before

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you start to forget who they are.

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And I've seen some of these larger firms.

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Stacking numbers much higher

than that on their advisors.

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On the third one, in terms of planning,

there are clearly firms that are very

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planning heavy where the advisors or

a team that is supporting the advisor

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believes in doing very comprehensive.

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Planning and doing updating that

planning over the client's lifecycle.

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also seen some of these larger

consolidators use it as a loss

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leader and doing planning light

upfront to help win the business

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and bring the assets on board.

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And then the fourth one under investments.

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Having been a former money manager myself.

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There are only so many best portfolios

that you can put your client in.

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I've seen larger firms, the

consolidators offering, even bragging

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about 10,000 models, and they're

just not 10,000 best portfolios.

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That reeks to me of I'll give

you whatever you want, Mr.

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Client, as long as you bring

your assets over to us.

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So what I'm saying around the values is.

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A lot of the independent RIAs are sticking

to their knitting and trying to stay true

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to those four, four legs to the stool.

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The concern amongst the independent, the

more traditional independent RIAs, and

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a concern that I increasingly have is

that some of these larger consolidators,

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not all of 'em, I don't wanna blanket

everybody but we're seeing more and more.

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Some of these folks are simply

recreating the old the old wirehouse

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model within the independent channel.

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And that that only we believe is not in

the best interest of the client, but it

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also makes it, more difficult for, the

independent RIAs because they look the

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same, but they're not, in fact the same.

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Ryan: Yeah, Pete, I'm really glad

because as you were describing that,

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kind of talking about the consolidators,

I was just, I was like, aren't we?

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Is this maybe like wirehouse

part two or two point?

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Know or wirehouse light, it kind of seemed

like those consolidators are starting

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to take the model of the wirehouse.

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Peter McGratty: Yeah.

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And that's why I said earlier that

we've been, I think that the independent

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channel or the folks in the independent

channel have been dancing around this

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issue for the last few years because.

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I think people have been starting to

sense that this change is going on

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and that, yes, just like you said,

that they are starting to recreate

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the old model in new clothes.

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But I think in the last six

months or so, it's increasingly

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becoming clear that this split.

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Is no longer something we think might be

happening, but we know it is happening.

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And I think there's a growing sense that

we know it's happening and we need to

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start to circle the wagons and figure

out how we're gonna deal with this issue.

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what do I mean by that?

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One of the things that's starting,

you know, so before it was, oh, how

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are we gonna distinguish our brand?

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Because they're actually different.

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it's more than that now

it's becoming very material.

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Where even the Echo, the folks in

the ecosystem that have been there

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all along to support the independent

RIA are starting to choose sides.

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So I hear stories of firms who are

saying, you know, it's much easier to

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work with one large consolidator who's

gonna continually send business to me

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than go Chase 50 independent RIAs who

are only periodically gonna have business

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that in a number of places.

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I've seen it specifically

with the custodians.

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Obviously they like more

assets with fewer clients.

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That's good for their business

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and I was at a large custodian's or

wealth management conference and of

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last year, and they basically came

right out and said in their keynote

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that we are gonna support these large

consolidator firms and that the smaller.

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Independent firms have to figure out how

they're gonna be able to compete with

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the scale of these large consolidators.

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And then I've also heard of

recruiting firms who are reorienting

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towards, I'll do lots of recruiting.

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Jobs for one large firm, rather

than focus on chasing marketing to

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and chasing lots of smaller firms.

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And so now you're starting to see

not only do we think there may be a

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change, a difference in values that

we need to distinguish ourselves from.

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But we also are now seeing the

industry starting to choose sides,

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and that also puts pressure on the

smaller firms to find a solution,

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which brings us to where we are today.

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I think that, I think the

stakes are on the table.

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People understand what's

happening and they're starting

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to talk about it out loud.

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And I'm seeing lots of,

a lot more conversations.

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And a lot more action starting to

emerge on how the more traditional

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independent can leverage that community,

the resources within that community

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to find solutions to a, make sure

that they can brand and differentiate

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themselves from the large consolidators.

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And second, and equally important is

borrow one another's resources or scale

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so they can offer the same kind of.

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longer menu that the larger firms can do.

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Ryan: Yeah, Pete, I completely agree.

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Great stuff there.

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What, so then how can smaller truth.

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Independent firms compete in this

new environment where, like you're

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talking about larger consolidators,

they have scale, they have access

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to more like resources and so on.

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How can the smaller firms

compete against that?

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Peter McGratty: So like we're

having I'm a member of nafa,

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Ryan: Okay.

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Peter McGratty: which as works

with the sort of the more

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traditional independent RIA.

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This is a big topic of

conversation within our community.

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And really what we're, so

what we're starting to focus

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on is how can we leverage.

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The folks in our community who

still believe in first client

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first and second financial planning

is important and we wanna do

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comprehensive and ongoing planning.

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how can we find, let's identify the

resources, of the folks within our

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own community and see how we can,

leverage one another within the

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community to get those resources.

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Use myself as a, as an example.

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But I know there are others.

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Vernon's Capital Advisors is a, is an

independent wealth management firm.

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We are a NAFA member firm.

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We're on the larger

side of that community.

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We happen to have a lot of resources.

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We have resources in financial planning.

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We have resources.

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Investment management, both on

the public and the private side.

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We've got financial planning resources.

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We've got operations compliance.

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And through Burden's, RIA Plus, which is

a division I run at Vers we are now making

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some of those resources available to

independents who wanna remain independent.

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They still wanna run their own show,

they wanna have their own clients,

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they wanna take care of those clients

the way they see fit, but they may not

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have the scale, for example, to offer

five public investment strategies.

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Ranging from private to active, or they

may not have the facility to do private

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investments, which is increasingly

important for if you wanna chase larger

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clients or family office clients, so that

there's an opportunity that they can find

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enough that a NAP firm member can find.

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firm that has the same values that are

still client first but has developed

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some of these resources and is

willing to allow them to borrow them.

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That would be one example.

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Another big conversation we're having in

the community is developing a a continuity

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and succession planning solution.

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So again, rather than having

NAFA community members.

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When they're ready to retire, sell

to one of these large consolidators

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that don't have the same values

and may not be as good for.

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clients or their employees, once they're

absorbed, can they identify other firms

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within the community that might be a

better succession solution for them?

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so I just give, I'm, you know,

I'm certainly not the only one.

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There's a lot of firms

that have solutions.

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But to make it concrete, what

the simple idea is are there f.

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Are there firms within our community

that are still true to the values that

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we think are important that we can

leverage one another in order to be

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competitive with the larger firms and

not forfeit our what we believe to be

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the right way to take care of the client?

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Ryan: Yeah, Pete, that's fantastic.

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You brought up private markets.

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The, the hot topic in the space is

private markets on the investment

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side, particularly private credit.

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And I've had a lot of conversations

like whether you're a consolidator

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small, independent advisor, but one

way to distinguish your practice

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from your competitors is offering

private markets or, different types of

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alternatives to investment portfolios.

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ETFs Mutual.

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They're table stakes.

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You gotta do something else to help

create those investment portfolios?

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Can you talk a little bit more about

the impact private markets are having

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on the independent space and, and are

we there, are we trying to force, , a

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square peg into a round hole right now?

384

Or is that merger or that

marriage gonna work out?

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Peter McGratty: I would say there is

very definitely a role for privates.

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In the wealth management

business for certain clients.

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What do I mean by that?

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We know today that clients are

interested in privates because they

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hear about 'em on TV all the time.

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and they're asking about them.

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The reason they're asking about

them is because if you look at the

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track record of private investments.

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Over the last, I don't know, 10

or 15 years, there is evidence to

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suggest that they generate better

returns with less volatility.

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And therefore, by adding it to a

portfolio, you can improve the the return

396

and the diversification of the portfolio.

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From a, an advisor standpoint, there's

clearly interest in it because.

398

It is differentiating.

399

Not everybody can offer it.

400

And it also because it improves

the out investment outcomes of the

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clients that is also differentiating.

402

They also like it because honestly

the illiquidity of the the, of the

403

investment means that client is

gonna be one of your clients for.

404

If it's locked up for five or 10

years, there it helps with the

405

longevity of the client relationship.

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But the real reason is because there

is an appropriate role for it in

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some people's investment portfolios.

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What does that mean by some

people's investment portfolios?

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It means.

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Typically larger clients qualified

purchasers north of 5 million in

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investible assets or family office

type clients where they've got a

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sufficient amount of assets, in their

portfolio that they can tolerate.

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A portion of their investments

being longer term and less liquid

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without impacting how they live

their lives in the shorter term.

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so it's not for everybody but there

is good reason to offer it to some

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clients, and there is good reason

for the advisors to want to offer

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it to those particular clients.

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The difficulty to your question becomes

how does an A wealth manager offer it?

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And difficulty there is that most

advisors have been trained in

420

planning and in doing research and

due diligence for public investments.

421

and private investments are

very different in terms of.

422

How you do the due

diligence and selection.

423

They're very different in

how they're structured.

424

And there's a whole vocabulary

and knowledge base associated with

425

how these things are structured.

426

And the most important piece is that

there's, are clearly less liquid than

427

what people are accustomed to using.

428

and so so the first part of it is.

429

These advisors need a certain amount of

education so that they can understand it

430

and make good decisions and communicate

effectively with their clients.

431

And secondly.

432

going back to our previous

discussion, a scale issue.

433

You need to have the right people who have

experience, which means adding somebody

434

to staff that has experience doing this.

435

And you gonna need some technology to help

manage the administration because there's

436

a lot of paperwork associated with this.

437

And oftentimes that's too

much for the smaller firms.

438

To take on.

439

And so they really need a a third party

solution and borrow somebody else's scale.

440

so that's the addition.

441

That's that sort of covers why

it's difficult to offer it that

442

as a consequence of that, what

you've seen, and I'm gonna, I'm

443

gonna summarize a little bit here.

444

of that.

445

seen is that there's been a lot of

interest that, you know, the private

446

investments world, the private

markets world has identified that is,

447

there's a lot of assets that could be.

448

Invested in the Wealth Management Channel,

they've identified that there is interest.

449

There's a role for client private

investments in client portfolios.

450

They've identified that there's

interest from advisors themselves.

451

But the thing that has not been

tackled are these education and

452

due diligence and selection issues.

453

That the industry has not prepared to do.

454

And then once the private markets

providers, the funds realized that, that's

455

a, that's gonna be a difficult obstacle

to getting those dollars invested.

456

They started creating what the, what

they call interval funds, where they

457

put a long duration, illiquid private

investment in a semi-liquid wrapper

458

that looks and feels more like.

459

A public investment where there's a

daily NAV and there is some liquidity.

460

While it's not daily liquidity,

it's often quarterly liquidity,

461

and that liquidity is limited.

462

You know, you may only, well, maybe

only 5% of the fund can be liquidated.

463

And that creates, I think the difficulty

that you're alluding to and that we're

464

seeing in the news today is that it

feels like a liquid public investment.

465

when there's trouble and the

client wants to get out the,

466

they can't, the exits are closed.

467

And so they're all caught off guard.

468

I thought this was just like the rest

of my public investments and it's not.

469

and that can create some difficulty.

470

So the industry tried to take a shortcut

around the two things that we said.

471

You need more education and you need,

and the advisors needs more support

472

around due diligence and selection.

473

This just can't be a supermarket where

they go in and choose, and if they're

474

wrong, they can get out immediately.

475

Does that make sense?

476

Ryan: Yeah, Pete, that's fantastic.

477

And really, that's exactly what

I'm seeing on my side too, is.

478

I think you said at the beginning,

there's that misalignment.

479

Private markets, whether it's credit

equity, any illiquid investment, it can

480

be a fantastic, just like you say, it

can be a fantastic investment in the

481

right portfolio for the right investor.

482

At the very same time, that same

investment can be a terrible investment

483

in the wrong portfolio, wrong client.

484

So the alignment is so important.

485

And then you mentioned education.

486

That's so important all the way from

to the financial advisor to the client

487

because the worst thing that can happen

is when there's that first sign of

488

distress like we're having now, market

uncertainty, the crisis, the conflict.

489

Guess what a client's gonna do?

490

They're gonna run to the exits.

491

And we know it's behavioral and

that's what we're seeing now is.

492

They want liquidity and

whether even an interval fund

493

there, it's, it's semi-liquid.

494

And it, it poses issues and

that's what we're seeing.

495

And it all, I, like I said, it

all comes down to alignment and,

496

and education, so Fantastic.

497

Peter McGratty: just add to that what

we're seeing in the press right now

498

with some of this private credit news.

499

Everybody is experiencing this.

500

So again, this goes back to

due diligence and selection.

501

A, there's a very simple rule that

you often follow in when you're

502

investing in private markets.

503

And that is you wanna be in the

funds that don't want you as

504

an investor 'cause those funds.

505

Are doing so well at the investment

side that they don't really have

506

to work hard to raise capital.

507

They're very focused on

the investments themselves,

508

they tend to have a much.

509

I tend to have a more limited amount

of capital and a much narrower focus,

510

which allows 'em to really know what

their niche market is and manage.

511

And that makes it easier to

generate alpha and to manage risk.

512

You know, some of these interval

funds, the reason they created them

513

is 'cause they wanted everybody.

514

and they, maybe they weren't doing such

as good a job on the investment side.

515

And so I say that because.

516

for example, our private credit

fund has had no issues to date.

517

We tend to work with mid-tier

firms that are not the ones

518

at the conferences or on tv.

519

They're very, they're specialists in

their particular niche of the market.

520

And.

521

Knock on wood.

522

The private credit fund that we're

working with has had no issues because

523

they have a very narrow focus and are

not invested in this type of stuff

524

that some of these bigger funds are.

525

so I don't want everybody to

think, you know, use a broad

526

brush and say all funds are bad.

527

It again, comes back to this

due diligence and selection.

528

There are very good opportunities

even when markets are

529

difficult like they are now.

530

But clearly, I think you nailed

it on the head that the interval

531

fund, in particular, the structure

of that has, what was the word

532

you used in con misalignment.

533

and it absolutely is misalign

taking a long duration asset and

534

putting it in a short duration

vehicle, and that doesn't work.

535

Ryan: Yeah.

536

Yeah.

537

And let's talk about the due diligence.

538

I'm really glad you brought

that because I've gone to some

539

private market like super return

private market conferences, and.

540

Just the terminology they use.

541

I, I am, I'm moderating

a session and here I am.

542

I gotta pull up my phone

and Google it real quick.

543

Be like, oh my gosh.

544

What, what are they talking about?

545

It's not like they're talking about

when they're doing due diligence,

546

sharp ratios and standard dv.

547

It's a whole different world

for terminology due diligence.

548

How can you overcome, I mean, as

a financial advisor at that point,

549

should just kind of stick to what

you know and outsource that part.

550

Or like you said earlier, go

to somewhere where maybe yes,

551

you want private credit and.

552

There are some great managers out there.

553

Like you said, you got the right

clients, but then it's that next

554

step doing the due diligence,

which could be the hardest part.

555

Peter McGratty: It is the hardest part.

556

So I like to this is the interesting thing

about the whole evolution into private.

557

So there's, like I said, there's clearly

an interest and there's clear on the

558

part of advisors, clearly an interest

or role for it in a client's portfolio.

559

so why isn't it happening?

560

It's because of this education hurdle

and this due diligence and selection.

561

So it's very interesting to

watch the presentations of some

562

of the platforms out there.

563

They say.

564

give you access, you can come on

our platform and there's thousands

565

and thousands of funds that

you can choose from, and we've

566

put together some technology.

567

To you manage the administration of these

funds over their lifetime so that you can

568

do what you do best, which is pick funds.

569

that's their presentation.

570

And in my experience, when I go out

and meet with these they're saying

571

it's that choosing the fund is the

part that they're most terrified

572

of, which is why the adoption has

not happened as quickly as everybody

573

expected, because we have very strong.

574

Last 15 years, we've had very strong

public market returns, which are liquid.

575

And so why do I wanna risk my

client putting them into something

576

I don't fully understand?

577

That's not liquid because if you do it,

if you do the due diligence and selection

578

and you choose wrong, the, I like to say

the golden goose can become a rotten egg.

579

I mean, you could blow up your

client by doing something like that.

580

And so a lot of folks have said, you know,

I'm, I can't get my arms around this.

581

I'm just gonna stick to my knitting.

582

and so the two choices that you see.

583

Firm's takeout.

584

There are, I have the scale and size

to invest in a team and the technology

585

to actually do this correctly.

586

So, for example, using us Matt and

Ott, who runs the private market

587

investing function, advertent,

he's been doing this for 25 years.

588

He started doing it.

589

For the wealthiest folks in the Fidelity

network, including the friends and

590

family of the owners of Fidelity.

591

So he's grown up with a

lot of these managers.

592

He's seen how the different funds

and fund structures have behaved over

593

multiple market cycles over 25 years.

594

That requires.

595

firm that's willing to spend

to build that capability.

596

It's really an institutional capability.

597

And firms like us do that.

598

You see a lot of large

family offices do that.

599

But that's not something that a

lot of the smaller firms can do.

600

And even some of the big firms that

have tried it have found that they

601

haven't been terribly successful at it.

602

And so, so what you're seeing is the

emergence of a second a second option.

603

And that is, partnering with a third

party firm to provide you the due

604

diligence and support associated with it.

605

Some of 'em are literally

third parties much like the Ts.

606

Some of them are consultants.

607

in our case we're an independent RIA.

608

And when we do our due diligence

selection, our private our

609

principles, invest in everything

we recommend to our clients.

610

We put our best clients into them.

611

We've been doing this for a while

with knock on wood good success and,

612

we decided a couple of years ago

that we would invite, other RIAs to

613

invest their clients side by side

with ours if they chose and leverage

614

what we've put together in terms of a

team and the technology and structure.

615

knowing that.

616

We have as much to lose as they do.

617

We're doing it we're offering

it for the exact same reasons as

618

they do, and they can invest their

clients side by side with ours.

619

And the advantage for us is

that we get some more investing

620

in some of these funds.

621

We can negotiate better terms and

conditions for both our clients and

622

theirs when we invest in those funds.

623

Lower fees, lower

minimums, better covenants.

624

So if ever.

625

God forbid ever anything, ever go wrong.

626

We're on the advisory committee.

627

We have a say in how we just

how we solve the problem.

628

Ryan: Pete, that's fantastic.

629

Such a great conversation.

630

I knew it would, but you covered a lot,

brought a lot of great insight just from

631

the evolution, the difference between

consolidators, the independent channel.

632

Of the obstacles that's bringing how

they're different and then how you

633

can distinguish as a financial advisor

from your competitors get that leg up.

634

And that's potentially private

markets and the what that presents

635

the opportunity and challenges.

636

So thank you so much.

637

Where can our audience get

more information about vers?

638

Peter McGratty: They can visit our

website, Vernon's Capital Advisors or

639

they can if they wanna learn more about

how they can partner with us for some of

640

these solutions, and while they remain

independent, they can go to ria.plus

641

which is our website's web address

642

or they can clearly reach out to

me directly at p [email protected].

643

Ryan: Awesome.

644

Peter McGratty: See.

645

Ryan: thank you so much.

646

It was an honor to have you

on such a great conversation.

647

Thank you.

648

And thank you everyone for

listening to this episode of

649

zephyr's Adjusted for Risk podcast.

650

You can watch all of our other

episodes on the Zephyr YouTube channel.

651

Spotify.

652

Please be sure to like, subscribe

and give us a follow on LinkedIn.

653

Thank you very much and have

a great rest of your week.

654

Peter McGratty: So much Ryan.