Ardian’s Ava Mallin - “managing money is managing emotion”

0:00Welcome back to the Altgo's Mainstream podcast. We were live from iCapital Connect in Phoenix, Arizona. We had the opportunity to talk with Ava Mallin. Ava is Private Wealth Managing Director at Ardian, where she's responsible for private wealth relationships in the US for one of the largest secondaries firms and global diversified private markets firms in the industry with over 200 billion in AUM. We had a fascinating discussion and I really enjoyed it. We hope you enjoy. This episode of Altgo's Mainstream is brought to you by Ultimis, the full service fund administrator and transfer agent, powering asset managers in private and public markets.

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1:21Ava, welcome to the show. Thanks. You're live. It is an honor. It's an honor to have you on the show. Thanks. We are live here from Connect. I think that's actually a great jumping off point for what we want to talk about, because while you are part of an incredible secondaries platform, which is coming in first and top of mind to many investors today, we're going to do this a little bit differently. We're going to talk about something a little bit different. You run the wealth business at Artyom. And where I'd love to start is the process of selling and how the human connection and emotion comes into working with the Wealth Channel.

2:04Ava Mallin: Just last week or the following week, polled an audience because I was really curious. I asked them, raise your hand in the room if you have a financial advisor. Most of them raise their hand. So put your hands down. And then I said, raise your hand if at some point with this financial advisor, you've had a conversation that resembles something that you would have with a friend or a family or a therapist where you're saying, I don't know if I can do this. This is really scary. I'm stretched. And the reason why that is, is because the business of managing money is the business of managing emotion.

2:38Ava Mallin: And so I think it's really, really important to work with GPs who not only recognize that, but recognize that the capital that's coming in represents someone's hard work, legacy, future legacy. They're not just dollars. And I think if you really find a GP who understands that, that you haven't just found a good manager, but oh, by the way, performance is, of course, important, but that you found a really good partner. And so I really try to incorporate all of that into my conversations, no matter if it's with a bank, an RIA or an individual. How did you underwrite that aspect of Ardian when deciding to join the firm?

3:17Ava Mallin: The culture is everything. So the firm was formed 30 years ago by Dominique Senequier. And her philosophy is clients first. And that has remained, that has completely been unwavering. And the more that I got to know the firm and talk to certain people, the more I realized that the culture was apparent. And we say we have a no-jerk policy. And that absolutely resonates with me. I think the other interesting thing there, too, is secondaries as a business is very much about partnership. There's partnership with your LPs. There's also partnership with the GPs. You have to have relationship to trust with the GPs that you work with and vice versa.

3:59So how do you think about that as a business and how does that play into how you partner with both GPs and LPs?

4:07Ava Mallin: Well, keep in mind that some of our institutional LPs are also our sellers. And so we are constantly in front of them. In fact, today we have 22 offices. Most of those offices are to be in front of LPs because they are an enormous source of deal flow. So we have to think about it in terms of many different hats that we have to wear at all times. But the truth is, communication is first and foremost, no matter who you are talking to, no matter if it's a GP, an LP, those relationships is what has helped us scale from starting the secondaries business in 99 to what it is today, which is we're currently investing in the ninth generation fund.

4:44How have you thought about building out the wealth business in the U.S., taking an institutional business, working with many of the largest institutional LPs in the world, and transposing that to the wealth business in the U.S.?

4:57Ava Mallin: What I'm seeing is that there's a lot more adoption and inclination from the U.S. to lean into Europe to further diversify client portfolios. And so that is really important. But the fact that we have 30 years of experience, the fact that the average tenure at Ardian is, I would presume, much higher than your average firm also is quite important. And the people that have been investing have really never strayed from what their core competencies are. We have at the firm something called Artie and Babies. These are people who literally started out of college and have worked their way up. That is a very common theme that tells you a lot about the culture.

5:37Ava Mallin: And so it seemed like a very necessary step to move into private wealth in a more fervent matter in the U.S. that we've been investing with high net worth individuals since our inception in Europe mainly. And so given what's going on in the private wealth market today in the U.S., it was really exciting for me. I think that's a great segue to something you talked about early on in our conversation, which is human emotion. I think we're seeing that manifest itself in private wealth right now with evergreen structures in markets generally. Secondaries are, I think, an interesting angle to look at that through.

6:17So how would you say that investors are thinking about investing in private markets, thinking about some of the more emotional or human behavioral aspects of investing as it relates to things like liquidity and risk?

6:33Ava Mallin: Semi-liquid at Ardian is a banished word. We only talk about evergreen. And I think you'll constantly hear people talk about the need for education. I think that there's an element of protectionism, if that's a word, with respect to investing in private markets, because you cannot be reactionary with tying up your money for long term. I genuinely think that's how you should go into an evergreen fund or, of course, drawdown. But if you are investing in an evergreen fund with the intent to potentially seek liquidity within a year or two, perhaps that's not the right structure for you. Yes, you can, but hopefully.

7:09Ava Mallin: But I think you have to view it as a long-term investment. And private markets does tend to protect individuals from reacting emotionally if the markets are tanking, if there are some geopolitical events that are causing volatility. That's the beautiful thing about private markets. On that point, you think pretty deeply about the emotional aspects of human relationships, about how you work with advisors. How do you think advisors can think about how they're working with clients and helping them understand the why, the how, and the what of investing in private markets, maybe even using evergreen structures?

7:47Ava Mallin: I think education's there, but to some extent, there has to be faith in what you are, in the money that you are giving to your financial advisor and that they know what they are do. So I think it's really important that clients ultimately do have an understanding, whether that's deep or very high level of what they're investing in. But if you believe that your financial advisor is investing your money in the right way, then the education should be there. My favorite graphic was this graphic asking, I think there was like 500 participants, a bunch of different names in finance, call it 100 different names.

8:22Ava Mallin: And one of the responses was, I don't know. And I love this picture, this graph, because what it shows you is that some of the largest names in finance don't resonate with the end client, which I think even when I think about my parents, they probably fall into that bucket as well. And so I actually think it's more important to educate the third party that sits between the GP and the client, because I'm not sure that that information ever fully gets to the client or should it. It's a great graphic. It was a 2022 Bain and Company study. I don't know what's the biggest was the biggest bubble. Thank you for letting me quote that.

8:57But it was the biggest bubble in this bubble chart of what do people know, which firms they know. I think that brings up a really interesting point. Because if you think about the evolution of asset management as a business, particularly as it relates to working with the Wealth Channel, brand is such an important piece of this. Yes. How do you think asset managers can think about creating the right brand essence and emotional response to what their brand is?

9:22Ava Mallin: Well, first of all, I think that there is some level of aesthetic. It's what the visual aspect is what will catch your eye initially. But you have to be moral. You have to be transparent. You have to be communicative. I don't necessarily think size and scale will dictate who is going to be the winner. But I do think more than anything else in private wealth, you have to have support from the top. Private wealth is complex. It often means that you are spending more money. There are operational overhauls. Certainly you're increasing your distribution. And so if you don't have that support from the top, it will feel as though you are swimming upstream.

9:59Ava Mallin: And so that is actually what I would look for more than anything else. Are the people you're investing in good? Have they been doing it for a long time? Have they been doing this type of investing for a long time? And what is their support of the private wealth effort? When you look at the Ardian brand, what does it mean to you? Excellence, loyalty, and entrepreneurship is table stakes. There is just something about the people there that are very authentic. And so I find that Ardian is highly authentic in everything that they do. That's what resonates with me because I want to have a real serious conversation.

10:34First of all, I should say we're doing that now.

10:37Ava Mallin: With everyone. How does that manifest itself, the authenticity that Ardyn has? How does that manifest itself in how you work with the Wealth Channel, the conversations you're having, how you talk about what you're doing, how you talk about partnership? Look, at the end of the day, I'm a fundraiser, right? I'm in sales, but sales doesn't have to be transactional. And also, oh, by the way, these are very long sales cycles, but these relationships take years to form. And at some point, you see people here, for example, and you know everything about them. You ultimately start to build very significant material relationships, and that's where it starts.

11:20Ava Mallin: It doesn't start at what we're selling. That's the authenticity that I seek and I hope I deliver. Without giving away your secrets, what has been the... I have none. That's very authentic. What have been the defining ways in which you've thought about partnering with wealth managers, whether it's independent wealth channel, whether it's the private banks, the wire houses? Is there something that you do that just as a, I'm trying to get to the heart of like what it takes to be a great salesperson. Well, I have no idea if I'm good, first of all, but I think I have a genuine intellectual curiosity about everyone.

12:00Ava Mallin: I basically everyone I speak with. And then that transcends to what do you need? What does your platform need? What do your clients need? What are you hearing? It's simply about sitting back and really listening. And Ardian has a full suite of funds. We invest across private equity, private credit, real assets. There's a lot we could talk about, but to some extent you are more credible when you really just listen instead of pushing a full agenda and you push potentially a more funneled agenda based on who you're talking to. There was something you said a few weeks ago when we were at the PEI Nexus conference.

12:34You were on a panel, thought one of the best quotes of the conference, just because you can doesn't mean you should. Yes. Explain that because I think it's a really important concept as it relates to some of the things that are happening in private markets today.

12:46Ava Mallin: Look, private wealth is hot and exciting and enticing and there's so much blank space and there are so many individuals who need access to alternative investments. However, like I said, it is complex and expensive. And just because you can move into private wealth does not mean you should because it requires quite a lot internally. You also have to want it. You shouldn't necessarily move into private wealth because perhaps your institutional fundraisers are starting to decline. You have to want this type of money. You have to want this type of engagement with clients and third parties. And I just think that in order to make it successful, you have to have a true belief that it's going to scale.

13:31How do you get the entire firm to buy in to all of those things that you said I think are not easy to do? They're very complex. Everybody has to be bought in. How do you get everyone bought in at the firm?

13:42Ava Mallin: It's gradual. We have a conservative approach to everything, which I actually think has benefited us tremendously over the course of our history. but it's gradual and it's education internally. And it's seeing around the corner and preparing everyone for what's to come. We're intending to do this and therefore four other things are going to happen over here. When people understand that, they're more comfortable and more inclined to be accepting of what's to come. What do you think is the biggest challenge when it comes to working with The Wealth Channel? Well, it's a highly competitive space. And so bringing to market the right products and all of that that comes with it is it's a matter of time.

14:27Ava Mallin: You have to time it well. I can't say, look, it's my, I used to work with someone who would say if it was easy, everyone would do it and he was right, but it's fun. And so I don't actually find it to be challenging in that sense. I find it to be really exciting and I'm happy to do it for a firm that believes in it. I think that's such a great way to wrap this up because you You just put such a human element to all of this. And I think if we think about it, one, private markets is about partnerships. That is human connection. There's an important element of what's happening now in private markets and private wealth where you need to humanize the people who are building the businesses.

15:07And I think you've encapsulated that all very well. So thanks so much, Ava. What a great conversation. Pleasure. Thanks for listening to this episode of Alt Goes Mainstream. I hope you enjoyed it. You can read more about alts at my sub stack alt goes mainstream dot sub stack dot com. Thanks a lot and have a great day.