Rubin Miller | Peltoma Capital Partners

Josh Hile: Josh Hile. This is the AdvisorView podcast for Citizen Mint, and we’re here with Ruben Miller. Maybe Ruben, you can tell me about your background and just how you got into wealth management, where you’ve been before, where even the name for your firm came from. That’d be helpful.

Rubin Miller: Sure. Yeah. Thanks for having me. I was a bond trader in my 20s. So after college, I did 6 or 7 years at the Board of Trade, worked for a couple different firms. That didn’t go so well, but I loved markets. But it was a tough period to be a trader Things right when I started were moving to screens, they were getting more efficient. I know a lot more now looking back than I did back then, but, um, so I kind of know why that career probably wouldn’t work out for most people. But back then it was super fun, high-flying prop shops in Chicago trading, uh, so really enjoyable. Learned to love markets and, and the process of designing and implementing strategies. But decided to go to business school. So I went out to California for business school, graduated there, and then I took a job in 2015 with Dimensional Fund Advisors. And Dimensional Fund Advisors is a kind of globally renowned, very eggheady quant investment manager, really thoughtful processes around structuring portfolios to achieve various long-term outcomes. But I would say for those not familiar with Dimensional, kind of best to bucket them with kind of like a Vanguard, so low-cost sort of passive philosophy. And then they just do a little bit, they dance around the edges of that. It’s a little more elegant or sophisticated, I’d say, than just basic indexing. But the philosophy is the same, that if we want a stock portfolio, we’re going to basically own a little bit of every stock in the whole world.

Josh Hile: Yeah.

Rubin Miller: We’re not going to do traditional security selection. I did 7 years at Dimensional. I got poached by a client of Dimensional, an advisor, to go be Chief Investment Officer. So I was CIO of an RIA for about a year, and then I hung my own shingle with Peltoma Capital Partners in 2023. So I just kind of launched my own thing. Peltoma, well, I was I was in a hotel lobby in, uh, Destin, Florida, when it was obvious to me that for leading into that moment that I was gonna have to go launch my own firm, that the vision of the guy who I joined and sort of my vision of what could happen in my career were starting to differ. So we figured out a way to part ways, and I was sitting in this hotel lobby and I was reading, um, I was reading this book and this story in it about back in the 1600s in the eastern seaboard of Canada, this sort of— these Frenchmen arrived in these big ships and there was these natives there, this tribe called the Mi’kmaq tribe. And this, the kind of the head of the Frenchmen, this guy Pierre Biard, was having a conversation with the head of the natives and the Frenchmen like couldn’t understand why these natives didn’t want— to join them and start basically destroying everything in their path, taking all these villages over for the Frenchman way of life. And like, come on, we get all these riches and jewels and like, let’s just go, let’s just go take over everybody. And this native tribe was like, dude, that doesn’t interest us at all. We have a nice life. We hang out with our family. We have this little village and community. And like, you guys just went across the ocean for 3 months and you won’t see your wife and kids. And like, This is awful. And like this gold and silver you’re chasing, like that is not wealth to us. That is not wealth that we want or think about. And this redefining what wealth is to someone is sort of what I have stood for when I left Dimensional and sort of learned about the wealth management business. And then when I was hanging my own shingle, this confluence of these 2 moments, I was about to launch my firm. I was reading this story that really resonated with how I serve clients. And it happened that in this Eastern Seaboard of Canada where this interaction occurred, there is this little lake that they were right next to called Peltoma Lake. And when people launch a firm, a lot of— there’s a lot of things go through your head about stuff that someday probably doesn’t matter that much, but you’re like, what should I call it? Is it going to be Reuben Miller Wealth Management? Like, that’s not really on brand for me.

Josh Hile: Yeah.

Rubin Miller: So that wasn’t going to happen. But all sorts of things. And then I just, I had to do it pretty quickly. I had to register and start my firm. So I just literally within a few hours had read the story, knew the name of the lake. That was where the story happened. I was like, I’m running with it. So I filed for Peltoma Capital Partners shortly after sitting on that couch in that hotel lobby in Destin, Florida. There are hilarious things that happen afterward. Like, All the time, people— we have some jackets that say Peltoma Capital Partners, and people will think it says Patagonia or Paloma. And you just kind of have to make the best of it if you have a firm name that people kind of missay a lot. I’ve had Peloton before. And now it’s kind of fun for us at our holiday party every year. We have like a Peltoma Paloma, and we kind of play with it a little bit. But it had a cool consonance. Like Peltoma sounds kind of cool to me.

Josh Hile: Yeah.

Rubin Miller: It was this body of water. So I just kind of rolled with it and maybe someday I’ll regret that it’s not more, you know, there’s a lot of cool firm names, QuantVex, stuff like that, you know, where you add all these abbreviated bunch of hard to say words that deal with hard finance. But for me, it sort of worked and we’ve kind of evolved from Peltoma Capital Partners, just kind of referred to as Peltoma, and we kind of now love it. Like, welcome to Peltoma. That’s the Peltoma way of doing things, and clients kind of talk that way too.

Josh Hile: That’s awesome. I love that. That’s a really cool story, and that actually makes a lot of sense, and it’s a good story to tell clients, obviously. So with starting the firm, did you have somebody in mind of like who your demographic of clients would likely be, and how has that kind of evolved over time to who your demographics of clients actually are?

Rubin Miller: I knew that, um, I did not want to create a yacht club, so I don’t really have interest in serving wealthy people just because they’re wealthy. That can be a very lucrative financial planning, retirement-focused financial planning business. It doesn’t really interest me as a person. I don’t really care if people are rich. So what I want, I want to be able to run a profitable business and I want to be able to work on interesting things. Definitely there is some overlap in making sure people have enough wealth from the financial wealth side to be able to pay your firm enough revenue so that you can run a nice business. And at the same time, I’m much more interested in the complexities of someone’s financial life and like problems I can solve for them that they probably couldn’t do on their own as I am if you have, you know, $1 million or $10 million. When we talk to prospects and we try to set expectations about whether we might be a good fit to consider hiring, it’s always about complexity, not assets. But from a business standpoint, it obviously does matter. And so We have a minimum fee, for instance, but we have various types of clients. We have clients who maybe don’t have that much investable assets but have a bunch of crazy shit going on in their life on the financial side. And then we have clients who maybe have huge portfolios and we do a really good job on the asset management side, and maybe there’s some complexity that we help them through, but they might not have to reach— they might not reach out that much because their life’s not changing that much for the ongoing part of the relationship.

Josh Hile: Yeah.

Rubin Miller: So I did not have like a niche or anything in mind. I just like solving complex financial problems and the trade-offs that we face as everyday people. So at Peltoma, what we say is we help clients make high-quality decisions and manage trade-offs.

Josh Hile: Yeah.

Rubin Miller: That’s, that’s what we do. So we don’t just work with doctors or we don’t just do XYZ. We work with all sorts of different type of people, which is not as scalable from a business model standpoint as say just working with doctors. But we get to do really cool stuff, meet really cool people, solve cool problems. And for the most part, I would say like retirement plans, you got a 401(k) 401(k) or here or whatever, like they’re all fairly similar. And like whether you are a doctor there, a teacher there, or an entrepreneur here, it’s not that hard. Like I don’t need that much scalability around my clients, a common profession for my clients or anything. But obviously All else equal, it is a little bit more scalable to do it that way. So our client ranges from— we have clients probably in their mid-30s maybe, all the way up to a couple of clients in their 90s at this point. How does that evolve away from kind of like I’m saying, we like to work with all these trade-offs people have in their busy lives, then why are you working with 92-year-olds? You have to make a decision as a business owner of like, where do we set our limits on whom we might work with? And for us, like, I work for a lot of my best friends, and when their parents or uncles or aunts are like, hey, can you help us with this? I kind of start from a place of like, I’m open to it because of who that person is and that relationship to my firm or my life, and talk myself out of it if it’s just a really bad fit. But I will still probably go through some hurdles as a soon-to-be just 4-person firm at Peltoma. We still have plenty of flexibility to build wide ranges around whom we might work with. That said, I have a lot of really smart friends who do it the opposite way. Like one of my closest friends in the industry, Taylor Schulte, who’s a retiree, he does mostly retirees, works out of San Diego. If you don’t look exactly like who he wants you to look with, call someone else. And he will say like, there’s no number that I would work with because I’m not— it’s not what I do. So I think more as firms mature, they can decide what to do about that. At our stage right now, we tend to attract high-performing professionals who have busy lives and trade-offs that they’re managing. We help them do that. But when a client’s mom wants to hire us, we tend to talk ourselves out of that as opposed to saying no as our default.

Josh Hile: Yeah, yeah, no, that makes sense. And then what about a client relationship standpoint, what does that look like for you and how do you kind of deal with clients differently compared to like maybe the average wealth manager out there? And maybe this can go into a broader landscape of like, how do you think about differentiating yourself in an industry where it can be difficult to differentiate?

Rubin Miller: Yeah, that’s a great question. I mean, what’s interesting is that we’re— we have a passive philosophy for the public markets. So I don’t have a value proposition that I know how to pick the right stocks at the right time. But where we differentiate is like, we’re so damn good at communicating that to people. Even if someone knows that it’s like a good idea to buy index funds, they might not know why. They might not even know if they have index funds or actively managed funds in their portfolio. They might not know, right?

Josh Hile: Yeah.

Rubin Miller: From our— from all of us, the 3 of us all worked at Dimensional and especially Rachel, who was also like client-facing there. I mean, she’s so good at distilling the basic principles in language that someone can understand. So clients not only hear what we think they should hear, but they sort of feel what we want them to feel about how we invest. So we differentiate, I’d say, on the communication side, a lot of it stemming from our previous careers and talking about this stuff all the time. Yeah.

Josh Hile: And so do you still use Dimensional?

Rubin Miller: Yeah. So for our investments, I’d say we’re very philosophically aligned with the way Dimensional does things. There’s a lot of great fund companies today where you can get low-cost, broadly diversified portfolios. So we certainly don’t have any partnership with anyone. I’m not into that stuff. We’re an independent firm. We make the best decisions we can for clients, whatever products we choose. stem from our philosophy, not because we like the people at Dimensional or anything, but a shared history there. Obviously very comfortable with the investment solutions there. I’d say we use a lot of Dimensional. Yeah.

Josh Hile: And would that still be the value bias, small-cap bias understanding?

Rubin Miller: Yeah.

Josh Hile: I think Dimensional’s evolved over time to kind of reduce that within their portfolios, but to be broader.

Rubin Miller: I would say the best way to explain, I think, the relationship Dimensional should have with advisors— I think they’ve done a good job of trying to have this with advisors. I think many times advisors misunderstand because Dimensional has this approach that says, okay, we look at all the data of the 100 years we have security research for, and they say, looks like there’s a value premium, so should expect a little bit more overweight value stocks. Looks like there’s a small-cap premium, get paid a little bit more to own small stocks. Looks like there’s a relative profitability premium, means 2 companies have the same price. Looks like if you overweight the one that makes more profits for the same price, that also does better over time. So they’ve identified these premiums, but they never told anyone what to do about that. So a lot of times people will say something like, oh my gosh, value stocks got smoked this year, Dimensional must be having problems. You have no idea what Dimensional funds I use. Dimensional has growth funds. What if I own all Dimensional growth? The thing about Dimensional is they’ve created a suite of solutions, then advisors have to choose which ones are right for my clients. For us, I’d say we have modest tilts or whatever overweights to some of those premiums, but for the most part, Peltoma portfolios look a lot like the market itself. It’s not a value proposition to us to No, we don’t think we know when small caps will do better or value will do better. Some of the research obviously aligns with us, but yeah, we could use Vanguard and have a very similar firm than we do. We do use a lot of Vanguard. I just, we have to, as fiduciaries, make the best decisions we can. And I think advisors in that capacity, they would be crazy not to have some sort of relationship with Dimensional because that’s just simply where a lot of the academics who have done the most important research in finance are associated there, and that approach seems to resonate with them. So it’d be silly if advisors didn’t at least look at it. You said, you said a little bit sort of like, how do we differentiate too? I’d say we’re a very modern tech-forward firm. We don’t have an office. We have a couple annual touchpoints with clients. So in Q1, we have a 90-minute meeting that sort of lays the roadmap for the year. In Q3, we offer a 60-minute meeting But I will shoot you a video on the investments. Rachel, my business partner, will shoot you a video on your financial plan. If you don’t want to meet with us, that’s fine. We’ll shoot you the videos. And then throughout the year, every client has access to our Calendly so they can just schedule a meeting whenever they want. I could see with more growth that not being as sustainable unless we hire a bunch more advisors. But for now, that’s never been a problem. I think clients feel—

Josh Hile: clients take you up on that. like the calendar link. That’s interesting.

Rubin Miller: Yeah, you know, some, you know, some of 80 families we work for, 15 do it a lot and 40 do it never. And the belly of that does it, you know, some amount that’s a more expected cadence. But that’s what we signed up for. Like, that’s how we do it now. Maybe someday that will evolve. But I also think clients love being a client of an 80-person firm. Like we have all the resources and capabilities. We have proof of concept. We’ve been around over 3 years now. We have rabid fans who like telling all their friends about how great the service is. And a lot of people come from a wirehouse where their advisor had 1,000 clients and hardly knew their name, just really did asset management. And here we are doing investments, financial planning, tax strategy, estate planning, insurance planning. We do everything for people. And so it makes sense that we’re gonna have a much lower advisor-to-client— no, higher advisor-to-client ratio for all those things that we do. And at the same time, that has its own trade-offs. Like, we’ve never raised fees. We had to recently, like, evolve our fee structure last year, but we never, like, just, like, raised fees. And, like, someday we might, because, like, clients expect a lot from us. And as the industry evolves and resources that we need to accomplish what we need to do evolve, like, it’s not supposed to be cheap. So like many businesses, we have our own inputs and outputs challenges to deal with.

Josh Hile: Yeah. Yeah. And I think that also, like, to your point earlier around different clients have different needs and those different needs cost different things. In my prior firm, we would do— we had 2 firms come together and one did AUM fees, one did a retainer fee on a yearly basis. And we sometimes just let clients choose between the 2. And sometimes it was like the retainer fee was bigger than the AUM fee and they would still take the retainer fee because they feel that need.

Rubin Miller: Wow.

Josh Hile: And then we would say we would update the retainer fee based on the complexity of how it’s like, hey, if you want us to do this for your kids and do a bunch of estate and it gets more complex, that retainer fee is going to go up. And if we realize it’s not going to be as complex, we’ll move it down a little bit.

Rubin Miller: So I’m always very blunt about what we’re really good at and where we can improve. And I’m not sure that always comes off the best to people, but if someone asked me, how are you guys on investments? I would tell someone we are A+. I’ve never seen a firm that is better at investments than we are. I’m sure there’s many that are as good or very good or whatever, but like, we all come from the institutional investment world. We all like arrived at being financial planners because we already felt like the investment side, like we know exactly what we want to do. Um, most, you know, 90% plus of any advisor you meet, they don’t have an investment background. They have a planning background or insurance background or tax background. So it makes sense to me that we would, this would be a differentiator for us. And where we’re weaker, it’s like we’re a smaller firm, so I don’t have a CPA on staff. I can’t prep your taxes. I don’t have estate planning attorneys on staff. So like, it makes sense to me why we have this setup. I’m trying to remember why I was trying to go down this thread. What was your initial comment?

Josh Hile: Well, I was just talking about like AUM fees and the complexity.

Rubin Miller: Oh yeah, yeah, yeah, yeah. Sorry, that’s where I was going. So when we evolved our fee structure, I left the firm, I left to launch my own firm, had was just AUM. And I did what you did without— I actually started being like, I’m kind of willing to do both. And I had, you know, I’m just starting. So it’s like, you’re just kind of looking for business. And so I had negotiated flat fees or AUM fees, and I basically look at your complexity and try to do it that way. And then the firm worked and we had some success and Rachel partnered with me and she came in. And it was getting too hairy to deal with. Like, these people are on these fees, these people on these fees. But I will say, like, some people want AUM fees, some people will only take planning, like, flat fees. So it’s not as simple as like, this is better, this is better. Like, people also have preferences that may surprise you, is what I found. But where we landed was we’re really good at investments. There’s no reason why if you add value on the investment side, which I would say we do, Even with a passive philosophy, all the elegance we have in portfolios, we’re very active on the bond side where bonds actually tell you what their yield is. So if the bond shape of the yield curve changes, I don’t know why anyone wouldn’t pay attention to that. There’s higher yields here and less yields here, and it switches like the curve, the curve inverts and uninverts, and some people just don’t pay any attention to it. It’s like bonds tell you their yield. There’s things you should probably be doing. Stock side, it’s a little different. There’s no yields. It’s just, everyone’s kind of hoping for long-term growth. But anyway, on the investment side, I’m like, there’s no reason our firm can’t command high AUM fees. I just don’t want to. So what we did was we broke it up into a flat planning fee, which is $8,000, $12,000, or $18,000 a year. That also covers $1 million managed. And then above, above $1 million is just 50 bps.

Josh Hile: Yeah.

Rubin Miller: And what it did was it— and then above $10 million, it’s 25 bps. So there’s another tier. But what it did was it just like really simplified everything for us and the way we talk about fees. The old fee structure was like 1% on the first $750,000, then 75 bps on the next $750,000, then 50 bps. And it was like 7 tiers. And I’m like, A, it doesn’t address some of the fixed planning work like you described. Like if I’m doing all this estate legacy planning for your grandkids, like AUM doesn’t really help me be compensated for all these hours I’m working for. So I like having a flat planning fee. The $8,000, $12,000, or $18,000 is based on complexity. We have a very systematic rubric. And so people come in, we can tell them like, look, your $12,000 planning fee, that covers $1 million. Everything over $1 million is 50 bps. It’s simple, right? And like, that’s kind of what I wanted. And it also allows us so we don’t have to change our fee structure with with inflation through time. Like hopefully the 50 bps keeps up with inflation for us. And so it’s worked out. We’ve had it in place, I’d say about a year. There’s a little bit of a schedule that clients are on to evolve toward it. Some clients have lower fees now, so we switched them right away. Some clients are gonna have slightly higher fees. So we sort of said like, we won’t start it for a year, but like we’re getting everyone to that. We want it to be very simple and easy to understand. And like, I literally want a client to know that like, If you have $4 million with Peltoma, you can do the math. If you’re an $8,000 planning fee client, that’s $8,000 on the first million, then $5,000, $5,000, $5,000. So you’re $22,000 a year. Super reasonable fee for an advisor. I do again think like we could just do AUM and that’d probably be more lucrative, but I honestly like delineating and telling clients like planning makes sense for it to be flat. Investment management makes sense for it to be AUM. And we’ve made it so we’re not like a 1% AUM firm, which, and we still, I think, can run a profitable business.

Josh Hile: Yeah. Oh, 100%. So, and how do you think about differentiating clients and building portfolios around their goals, risk tolerance, or tax considerations? I mean, some firms do this differently, but just wondering if you have any thoughts around how you would think about that.

Rubin Miller: Like our bread and butter client is 40s, 50s, 60s, still working, um, which often means they work at maybe a tech company.

Josh Hile: Yeah.

Rubin Miller: That’d be a really great prospect for us because they’re gonna have complexity around maybe getting paid in RSUs. Now they have all these options, they have concentration risk. So most of our clients come in with stuff. I mean, it would be amazing if someone comes in, it’s like, Ruben, here’s $5 million in cash. Build me the best portfolio you can and let’s talk in a year. The ROI on a client like that is crazy for an advisory firm. That’s what it made, very little work and good pay.

Josh Hile: Yeah.

Rubin Miller: Our clients don’t look like that. They come in with, hey, I’ve had this Robinhood account for 4 years and I really goofed it up. That’s why I’m calling you. But also I did buy some Nvidia and that’s up here and I have these Nvidia call options. I’m I don’t really even know what they do, but my friend told me to buy them and I have these. People just come in with a lot of stuff.

Josh Hile: Yeah.

Rubin Miller: I think we’re pretty good at sorting through stuff. The ending portfolio is always going to have this underlying philosophy, even though we don’t stick people into a model portfolio. So there is no document in our Dropbox that says, this is the Peltoma 60/40 that every client is in. There is a philosophy that we have about what a 60/40 should look like or an 80/20 should look like.

Josh Hile: Yep.

Rubin Miller: And that is all informed, that is all imbued into a client portfolio. But when a client comes with existing Nvidia positions, I need to work around that. That’s a single idiosyncratic risk. It’s a large growth stock, but it doesn’t necessarily mean it’s gonna move like the large growth asset class. But there are all these very hard financial concepts that go into when clients come in with legacy positions. So we work around them. We don’t ask clients to pay tax bills to become a client of ours. So I don’t force anyone to sell their Nvidia, even if I’d rather not own it. I also don’t think it’s necessarily the best move to just sell it and pay— if you live in higher end California, it’s going to pay 25% plus in capital gains. Like, I’m not going to force that on a client. So, um, a long way of getting to like, our client portfolios tend to look the same. They’re going to be The equity portion is going to own basically a little bit of all 13,000+ stocks around the whole world. About 2/3 of that exposure will be in the US, about 1/3 will be outside the US. Why is that? That’s kind of what the world looks like.

Josh Hile: Yeah.

Rubin Miller: Like, is the market cap of the world. I don’t try to outguess stock prices, so if the market’s telling me that’s about what the weights are, we kind of roll with that. To your kind of comments earlier, we do tend to especially value and profitability. So we tend to overweight relatively low-priced stocks. So if 2 companies have similar earnings, we like to buy the one that has a slightly lower price. If 2 companies have similar prices, we like to buy the one that has more profits.

Josh Hile: Yeah.

Rubin Miller: That’s a really sensible way of investing. A company like Dimensional or Avantis, which is kind of another factor quant shop, they both do a fantastic job of cutting the data up for us. You don’t want me, the advisor, to doing that part of the investment management. So we tend to use sort of funds like that, broadly diversified, low-cost, tax-efficient, a little bit of factor data cuts. And then on the bond side, we tend to basically— we deviate a lot from the standard, what people might think about, just buy a portfolio and hold it. That is great on the equity side, in my opinion. It is fantastic to not time the stock market because humans stink at that.

Josh Hile: Yeah.

Rubin Miller: On the bonds, bonds are very different, right? Bonds pay us part of our money back all the time, so we can calculate a yield. You don’t have to do the math anymore, you just Google it, it’ll tell you. But like, we have yields. They literally tell us like, your expected return is 4.4% a year. So if 2 bonds are similar, similar risk profile, one’s a 2-year bond, one’s a 2.5-year bond, the 2.5-year bond yields a ton more than the 2-year bond. Within parameters of a client financial plan, I’m probably going to own the 2.5-year bond and pursue higher yield. So on the bond side, we’re pretty active. I would say we target a duration of, for all else equal, for most people between like 4 and 5. And so what that means for those less familiar, it means like a good chunk of like core bond exposure you’d find in a 401(k), 401(k), like a Vanguard— what do they have in there? Like Vanguard intermediate bond fund or whatever, total bond fund. Those tend to have a duration around 6 to 7. So we pull that forward. So we’ll also complement it with some shorter-term bonds. I think after 2022, I think that advisors really need to think about the journey they’re delivering for clients and ensuring that we keep guardrails so that clients stay on this journey with us. And my experience is that if clients own all intermediate-term, 6+ duration bonds, in a spike of inflation, they could be very, very disappointed with that investment journey and possibly want to get off the bus with you. So all else equal, I would rather improve the journey and decrease slightly expected returns. So we bring in duration a little bit on the bond side. We own both US and ex-US bonds. Right now, we’re slightly overweight outside the US just because those bonds yield a little bit more and the yield curves are a little bit steeper, which if you manage bonds the way we do, you can pursue a little higher yield on steeper yield curves.

Josh Hile: So this is kind of on the same vein, but the market environment today, how I see it, but it’s kind of funky in that you have these companies going public at trillion-dollar valuations, like SpaceX coming public at a trillion-dollar valuation. You have this massive concentration of risk than the top 15 to 20 names now where you see Micron and now coming into being as worth as much as Meta and SpaceX coming in at a trillion and a half, and then Anthropic and OpenAI is probably coming in at a trillion by the end of the year. So it’s like your S&P 500 exposure is probably going to be about 40 to 50%, 20 stocks. possibly by the end of the year. Now, it’s going to take time to get into there, but that’s what it’s going to be. And then on the top of that, all this value creation is happening outside of public markets. So how do you see that evolving the landscape going forward?

Rubin Miller: Fantastic question. On the first one, the first caveat I always have for people on the concentration risk of Now, so few stocks hold such a big weight. I go back to like, the world is different than it was 20, 30, 40-plus years ago. So I also say like, I look at Amazon and I’m like, how many freaking business lines does Amazon have in their one company that could be their own S&P 500 company?

Josh Hile: It’s like their chip business is supposed to be like crazy how much it’s worth.

Rubin Miller: I didn’t even know they had one.

Josh Hile: So it’s supposed to be like a $500 billion business now or something crazy.

Rubin Miller: So that’s what I’m gonna say is like, just because it’s one company doesn’t mean it’s not diversified anymore, which is different. It used to be like just Berkshire Hathaway was the one people would talk about. It’s like, you know, that’s not just like owning one stock because they own a bunch of different businesses. Now it’s different. A lot of these top companies, whether it’s Meta or Amazon or Google, or Apple, whatever. They do a bunch of stuff. It’s not that I don’t care. Of course, I worry that, are we too concentrated in tech and what these companies are all doing? There’s probably some correlation between their various business models.

Josh Hile: Oh, yeah.

Rubin Miller: But it’s very different, and I really don’t like telling the market that it’s wrong. What I would say is, look, what the market is telling us is the weight of that. It may just be highlighting the importance of where the world is going and some of the business lines these companies have. So yeah, sure, there might be elevated risk, but there’s probably also elevated expected reward for making sure you own part of where the market is telling us the world is going.

Josh Hile: Yeah.

Rubin Miller: I think it’d be really crazy for someone to just be like, I don’t want to own AI stocks. I don’t— that just doesn’t make sense to me. It’s like, it’s very obvious this is a big part of where we’re going. Dude, might you want to underweight some of these companies that have this big concentration? I’ve always done that. Like, I do believe that buying lower-priced stocks should lead to higher expected returns.

Josh Hile: There’s not a world where that doesn’t make sense to me. Yeah.

Rubin Miller: I believe that value stocks are riskier than growth stocks. They’re not as good of companies. We have to— like, investors have to be incentivized to own them. Why do you want to own some shitty small-cap company? You don’t. That’s why the price has to be so low to incentivize you to be the buyer. Otherwise, if you’re like, Reuben, you can buy this company no one’s ever heard of, or you can buy Google, and you’re gonna get the same return. we’re all going to buy Google. I sleep way better at night. So you have to be incentivized to buy riskier stocks. So there’s no world to me where it doesn’t make sense there’s a small-cap or value premium. But as we’ve seen, it doesn’t have to show up every year or 5 years or even a decade. So I think most investors should just have very broad market exposure. And if you want to overweight some of those factors, great. And if you do do that, especially small and value, you can remove some of that exposure to those high-concentrated positions that you’re describing. On the second part, which is a place where I’d say an interesting dynamic of being a small firm is like both Rachel and I, I’d say, are investment experts, but neither of us purport the ability to go pick private companies.

Josh Hile: Yeah.

Rubin Miller: I don’t even purport the ability to pick private managers who pick companies. Like, that is just not in my skill set. So I do agree that private companies are a huge part of the capital markets system. And that having exposure to them can make a lot of sense for people. You’re not going to get it at our firm right now. You shouldn’t want it from our firm right now, because that means I’m going to pretend to have expertise I don’t have, or I’m just sort of doing it to keep up with the trends. I’m not even reporting, I’m just putting you in a fund I don’t know about. So that’s a benefit I’d say of a really large RIA. If you find one you think is thoughtful and does a good job, they might have some private markets expertise that I don’t pretend to have. Certainly, I don’t think it’s stupid to own private funds. What I would say is I generally think that markets work pretty well, as you can probably tell the way I talk about stocks and bonds, but I also think about that in the industry itself. So if there is a private fund and everyone’s all jazzed up on it, I’m like, well, that means they’re probably going to raise their fees soon. Like, why do I earn the rents? Why am I the one as investor who doesn’t do any of the hard work? Why do I get to benefit from someone else being a genius? That world doesn’t quite make sense to me. So usually when I find a cool private market opportunity, it’s really expensive or it’s going to be really expensive soon. And to me, that works. Like, that makes sense to me because I don’t think most people— if you’re so good, go take a loan from a bank and go invest the way you think you should invest.

Josh Hile: No.

Rubin Miller: What happens is people open up shops so they can get investors in and start charging fees. And if they’re really good, they should charge more fees. I’ve never felt that none of the data says that people are completely missing out on a good investment journey if they don’t own private markets. But definitely, I would say it is a consideration and your advisor, whether they use them or don’t use them, should have a really good answer about why or why not. And I don’t think what you really want to avoid is an advisor who’s just not using them because they’re hard.

Josh Hile: Yeah.

Rubin Miller: It’s like, oh no, my business is too good right now. I don’t want to deal with that. That’s not the approach we take. I would say we think about this all the time. We wonder if we should hire a private markets person. We look, we do interviews, we talk to managers. At this point, it’s just not a huge part of our business because I don’t really see the incremental value to the design of our portfolios as being something that a firm like mine is going to take down right now, but we think about it all the time and I would not be surprised if in the coming years at some point, we do have private exposure as a more meaningful part of our portfolio. But a big reason why that is, is because I think the fees are going to come down.

Josh Hile: Yeah, no, and I definitely don’t disagree with that. And I think especially on the fee side, and as well as just like, I think there is, I don’t know, and you can tell me how you think wealth management’s evolving, but I think wealth management is becoming more and more personalized over time to the specific client situation. And that’s only going to be more and more customized to like, hey, I need income for this and maybe there’s some income levers on the private market side that could provide something differentiated with like some tax advantages to it for that specific client. Now that has to be in a specific client situation where they can utilize those tax benefits or not. And that’s where we see like a lot of people moving is like, hey, we need to solve for this particular goal issue for this particular client, and we have the ability to do that through the private markets.

Rubin Miller: So I think both in private and public, like, to me, the most innovative things that are happening in the last year and a half in our industry are tax-related. Like, I think most advisors are well served to be like, in the public markets, you should probably just be sort of low cost and diversified and then spend your time on tax because that stuff is changing. It’s arbitrary, right? Like sitting here in Chicago, some quant finance PhD professor writes a paper about how stocks have worked for the last 100 years. That’s super cool. It’s empirical. It’s broad. You can read that in 30 years and it’s still going to be important. Tax law, I could turn on the news tonight, some huge thing changes, it disrupts my whole business. It’s arbitrary.

Josh Hile: And my state at the same time.

Rubin Miller: Totally. So the various mousetraps that a lot of companies are developing and creating products around, I think it’s super important for advisors to have their pulse on. I talk about a lot, a lot of this in my writing, but like, we, we, we focus a lot on tax because it is just nuanced and clients are never going to know that stuff.

Josh Hile: It’s a huge benefit to clients every single day.

Rubin Miller: Totally.

Josh Hile: They love it. I mean, they couldn’t love you more when you save them money on taxes.

Rubin Miller: If you had to build a marketing campaign as an advisor, you would always start with, do you want to pay less taxes? Like, absolutely.

Josh Hile: Yeah.

Rubin Miller: That’s what people listen to.

Josh Hile: Yeah.

Rubin Miller: Cool.

Josh Hile: What about maybe just your thoughts on where wealth management is headed in general? Like a couple minutes on just like, where do you see your business going? Where do you see wealth management going over the next few years?

Rubin Miller: Yeah, I think we’ll, I think, continue to have a lot of pricing power. If you are a good firm that delivers good service and people feel loved and taken care of, I don’t see fee compression as a big challenge to that type of firm. If I see a lot of fee compression challenges at like a wirehouse or brokerage, old legacy-style Wall Street firm, like they’re just, in my opinion, not adding enough value into people’s lives right now. So that’s, that’s one part. I’m not, I’m not super concerned about some of these like AI-driven advisorless advisors. I think they’re cool. I’m glad they exist. I’ve seen it. It’s not that impressive to me. I actually, I even lost, I lost a big prospect to one of these, these like AI online advisory firms.

Josh Hile: Yeah.

Rubin Miller: And then I went through and I was like, okay, let me go learn what these people do. It’s like, to me, like I just don’t see them delivering the experience that the people, that a lot of people want, but they are delivering probably what some people want. And that’s great. We don’t have to be everything to everybody. So if you want an online AI advisor, I think great. What most people don’t get is that I’ve been around, this firm’s been around, Peltoma, for just over 3 years. We still haven’t had one of the inflection points that matters. We still haven’t experienced the moment of why people hire us. We have not been down 30% in the equity market, 40% equity market, where it is panic on the streets. That is why you hire a firm. That is part of the reason why you hire a firm is to make the highest quality decision in the most chaotic moments in the market in your journey. So that’s, that’s the part where I’m like, if you go outsource this to a robo online thing, fine. But like, when the bombs go off, what are you doing when you’re panicking? And so I think that any moment like that further solidifies the human touch of a firm like mine and other firms like us. Where like, I just, I don’t see any of the pressure that I think a lot of the media probably hypes up around advisors. I do think that you have to have a sort of broad value proposition to make sure that your fees are justifiable. Like you can’t just pick stocks for 1.5% or anything like that. For us, a lot of it we were talking about a second ago, a lot is tax-focused on some of the solutions that we’re searching after. So I think people should be paying attention to that. How do clients borrow money? Right? Like you have a portfolio, you don’t want to sell and pay taxes. How do you borrow? There’s a lot of cool innovative solutions there. Um, we work with SyntheticFi, incredible borrowing company. Yeah. BoxSpread. Yeah. BoxSpread. So like I talk a lot about BoxSpreads. There’s just a lot of tools that like, if you’re not keeping up as an advisor, you’re going to get crushed, um, differently than you would have gotten crushed 20 or 30 years ago. It’s because of media. It’s like, If I’m on LinkedIn typing about box spreads and your clients follow me on LinkedIn, that’s not good for you. So the very element that like your clients can see other advisors out there, that is a challenge to me. That just is great for everybody because that means advisors got to keep up. You can’t just sit back and collect 1.5% and like, because you’re just like a cool dude around town and people hire you. Like, I don’t think that’s gonna work anymore. So for us, digital footprint. We’re across the whole country. I think that’s going to keep happening. Like, just because I live in the same town as you doesn’t mean you need to work with me.

Josh Hile: Yeah.

Rubin Miller: So people are going to find the best advisor for their family’s specific situation. Um, there’s a lot of— the pendulum has swung like very far towards financial planning as a value proposition. I think to a point that’s really great. It’s much better than it used to be. But I would say like, I would love to see people not downplay investment excellence. Like, don’t just stick people in 10 mutual funds and act like your advisor is great at portfolio management. It’s like, no, HQ has these models and you just got stuffed into one of them. I think people are going to want advisors who can actually talk about how the markets work, why the products they picked were the end part of the process. They started with the philosophy, they thought about design, and then you have to pick funds, but that’s the last thing you do. For too long, people have just like had a model because HQ has a model and they just stick to it. Like, that’s going away, in my opinion.

Josh Hile: Yeah, no, definitely. So to end it, what’s the one thing people don’t know about you?

Rubin Miller: Well, I mean, I think some people probably know this about me, but I’m a chess master.

Josh Hile: Oh, really?

Rubin Miller: Yeah. Yeah, I spent my childhood playing chess, sort of competitive chess, um, basically through kind of early high school, I’d say. Um, so I was a chess master when I was, I think, 15, 14 or 15, um, a couple years after Bobby Fischer did it. Um, but then I just sort of flatlined and I haven’t gotten any better. Um, I actually just started kind of picking it up again, which is fun. A lot of people play chess now, like especially online. It’s very popular now. I live in Austin, Texas most of the year and like there are all these bars now that host chess nights and like, it was just very different when I was a kid. That was not a thing.

Josh Hile: Yeah.

Rubin Miller: And so that’s, I guess, yeah, that’s, I’d say that that’s always kind of my one thing people don’t know about me. But it’s a fantastic game. I have an almost 4-year-old daughter who I’m trying to teach chess to right now. And that is something I think about a lot as a parent, just like this world she’s going into that’s so much more technology-driven and like, how do I get her interested in activities that aren’t like that. Um, but it’s been a little bit of a challenge. She is way more into just like princesses and TV. Like, she’d rather watch Bluey than play chess.

Josh Hile: That makes sense.

Rubin Miller: It’s all quite hard.

Josh Hile: Yeah.

Rubin Miller: Yeah.

Josh Hile: No, that’s awesome. Well, thank you so much, Reuben. Really appreciate it.

Rubin Miller: This was great. Thank you.