Preparing for the Great Wealth Transfer

I am CJ Follini, and we’ll start by jumping right into the next slide. And there we have it—that’s the title: Preparing for the Great Wealth Transfer: How to Engage Young Investors. Not me, but how to engage young investors in the age of TikTok. Yes, I am on TikTok, and it’s called FinTok. Scary though it may be, that is the title: the Great Wealth Transfer, and that’s what we’re here to talk about.

What is NOYACK? We’re Sherpas—we’re guides. We decode the private investment universe. We don’t talk about public securities; we do not speak about the 60/40 portfolio split (and I have a lot of opinions on that). The private investment universe, also known as alternative investments, is our focus. As the son of immigrants, I don’t agree that public securities should be the default. So why would private investments be considered “alternative”? For us, they were the default—and thankfully so.

What do we do? We educate, we engage with the community. I’m going to challenge what David Cheac said about advisors. One-to-one? I’ll show you the data: one-to-many, in a time of community and peers, is very relevant. Frankly, I have strong opinions on advisors as well. Learn, engage, and invest in private markets through education first—always education, expertise, and access. It’s an insider’s game—that’s what the data shows, that’s what we believe, and we’re here to open that up. We’re all NOYACK—that’s the point.

Yes, I know, the gray hair—I have a bone to pick with my team for that comment. Thanks a lot, guys! By the way, as you can see, there’s quite a difference between how I look on the camera and in real life—thanks to generative AI from Lensa. So there’s a tip! I’ve been doing this since I was 16, and as the son of Italian immigrants, we work hard. My father was a highly decorated New York fireman who built a construction and building company. He built part of Idlewild Airport, also known as JFK, the Whitestone Bridge, and the US Open Tennis Center. He was successful, but at the same time, when I was 16, he said to me, “I don’t know anything about building and developing a foreign trade zone in New Jersey with the Rockefeller Group, CJ. You’re going to have to figure it out.” And I said, “Are you sure? Have you seen me?” And he said, “Yeah, you’re going to figure it out.” And that’s what happened.

That 16-year-old CJ wished he had a community to bounce ideas off of, wished he had access to education asynchronously, wished he had some guidance to figure it out. So NOYACK is really for that 16 or 18-year-old CJ and all of those like him here now. Let’s look at the data. Enough about me —

This number. Why did I stop being a 30-year family office? I ran a fairly significant investment syndicate of nine families, seven of which were immigrants—so, yes, there’s a thread there—and we did pretty well: 23% IRR in commercial real estate, venture capital, private equity, consumer packaged goods, and we were also, oddly, the second-largest owner of New York City taxi medallions. What we called “special situations” and, at a much lower price than 10 years ago. So we did all right. But this number—and COVID—led me to say that there is another chapter here.

Two of our boomer founders of these nine families passed away, and my nine-person investment committee went to 17. Now those conversations were quite different. I know what Mr. Cheac said: they weren’t looking for advisors; they were self-directed. They had ideas; they wanted to discuss them, learn about them, and have people to bounce them off. They wanted community. They didn’t want someone to tell them what to do because I tried, and they told me where to go—and I can’t share that with you right now.

By 2025, that’s 2.5 years from now, $4.4 trillion will be inherited by Millennials. Now, on the cusp, Gen Z—also known as Zillennials—that is ages 5 to 42. You could probably say 23 to 44, but it’s Millennials. $4.4 trillion in 2.5 years. I want you to take that in because that number is the reason we’re doing this. It is immense. And only 20 years later, $38.5 trillion will be transferred to the same generation. We haven’t even gotten to Gen Alpha, which is the current high schoolers and early college students. We haven’t even reached Gen Alpha or the heart of Gen Z—one generation. Okay, so I belabored that point, but I think it’s where everything begins in this entire conference. WealthTech is built on that number.

Some very fancy data—this one age group will have a $4 trillion allocation by 2028. That’s only five years away. $4 trillion in private assets—this is one asset class or sector. This does not include public securities. It doesn’t include what Robinhood, Wealthfront, M1, or anyone here today who is talking about public securities does. This is $4 trillion in one age group’s AUM within 5 years. Look at the growth! That aqua color, unfortunately, is me—I’m Gen X, and we’re going down. We already didn’t start; we don’t have an adoption. I might be an anomaly in terms of adoption of private, but you can see the allocation for Gen X is only 2%. And yet, that’s who Edward Jones and everyone is talking to.

Okay, so you’re going to do more no-fee commissions, but Millennials want to learn about the private investment market—esoterics, private credit, commercial real estate. And it’s going to grow. The numbers, by the way, all of this is sourced from FINRA, government reports, a 1,200 cohort survey by Bank of America, and CI Associates. The data is endless—trust me, we’ve looked at it.

Alright, so behaviorally, I knew my behavioral economics degree would come in handy at some point. Behaviorally, what do they want to do? Where do they want to do it? And whom do they want to do it with? Sorry to break it to all the wirehouses, but they don’t trust public markets. Surveys show 75% think that private investments are necessary to gain generational wealth.

People forget: Warren Buffett, stock market guru, right? Couldn’t care less. Have you ever seen his portfolios historically? Public securities—no. Private equity. Warren Buffett and Berkshire Hathaway have been 68% allocated to the private investment market—mostly private equity—throughout his entire career. That’s why he’s the guru. Millennials believe that now. Their average allocation is already three times my generation’s. What happens if that 16% average—which is 3x Gen X—gets to 30%?

My mentor and North Star, David Swensen, the legendary Yale CIO, literally wrote the book on modern portfolio theory construction, and then there was a postmodern book as well. He said institutions, public, nonprofit, for-profit, and individuals should have an optimal 30% allocation. Again, my group and the nine families I work with were anomalies; we’re way over 30%.

I’ll give you one little anecdote from a person who immigrated here as a bricklayer and became one of the largest residential multifamily owners in Manhattan. He sold his portfolio for $1.2 billion. He arrived here in 1975—a dear friend. I asked him, “Mr. C, why do you have no stocks, no bonds?” And he told me, and I thought at the time how silly it was, but in hindsight, it was pure genius: “Why would I play a game where I can’t control the information or the fundamentals? Why would I let someone else who has better access and information have an advantage over me?” At the time, I just thought, “Yeah, what is he saying?” But now, it’s pure genius.

So imagine 16% of $38 trillion going to 30% in the next five years. Do you see the numbers and the opportunity?

What else? They start earlier—under 21, 31%. So that means if you’re talking to Millennials, you’re late because the first Millennial was born in 1981, which would have been 20 years ago when they reached 21. And if they start earlier, you’re late talking to Millennials. It is not early innings—you’re in the middle of it now. The money is different, and that’s what the great wealth transfer matches to their behavior. That’s why it’s an opportunity—you have to match to both.

48% of young investors want education and personal interaction. This is the most optimistic data point for me. Obviously, we’re an educational firm, so I love this. They’re ready—they’re craving education and community, and they do want some one-to-one interaction but with subject matter experts, contributors—people with specific expertise they can learn from and empower their self-directed investing. So they’re primed to learn. Data shows it.

Now, here’s the one slide that everyone who left the room with Edward Jones doesn’t want to see. I’m not going to say Mr. Cheac is wrong—I don’t know Mr. Cheac. I think the data would suggest that maybe there’s a different take on it. It shows that only 7% respond positively to surveys about advisors. To them, advisors mean legacy—advisors mean their parents’ accountant, or their uncle’s RIA. No offense to anyone here—just reading the data.

Here’s what else: 30% rely on online research. They’re primed to be self-directed; they’re primed to learn. They’re craving education; they’re craving research reports and a community that can empower them, and then access. The thing that bothers me is Uncle Mike—13%. They’re at a party, and Uncle Mike’s got a deal for an oil well in Kansas—yeah, that’s not good. 14% rely on CNBC and Bloomberg. I like CNBC and Bloomberg as much as the next person, but am I really going to make decisions for my family based on what Jim Cramer says? He’s fun, I’ll give him that. Social media, FinTok—yes, we are there because that’s where you have to talk to your future customers. But talking and creating community off-premise on social media is different from educating. That is part of the community aspect. They’re taking it as education.

And the one that bothers me the most: 20% say, “I don’t know.” That’s disturbing. So 93% of the 63% are very questionable sources of important financial information and empowerment—that’s scary. That’s a problem.

Why? Why? Well, listen, we are in a 42-year high. I was there the first time we hit 6%. Paul Volcker—we had the VIP rate from National Westminster Bank at the prime lending rate of 9%. My dad crowed about it—suspenders, the whole bit. Didn’t wear suspenders, but if he did, he would have been very happy: 9% interest, and that was good then. Everything is too expensive now.

But why is our industry so myopic that we should get all these two—the Invest Act hedge, all the alts—2 and 20? Isn’t it time to retire 2 and 20? How about performance-based compensation? How about sharing and co-investing and having skin in the game with your investors? It’s too expensive. 66% say that is the greatest hindrance to adoption.

Complexity? Yes, we need more jargon. More jargon. More Monte Carlo simulations. More jargon—that’s going to be great for Millennials! As you can see, 53% find it too complex. Plain-spoken language—they’re not going to spend time away from their kids talking about Sharp ratios. They’re not.

Lack of liquidity? Okay, that one is a hard one—that’s really potentially insoluble for the private investment universe. But maybe the education will show that the lack of volatility and the incumbent stability that it brings should exist. Maybe that 30% allocation is what you don’t want to trade in and out. And as—I don’t remember her name—the woman on the far right in the prior panel said, “More active trading is historically more damaging.” I agree with that—unless you’re a high-frequency trader with the best information. Lack of liquidity is actually a potential benefit; it’s just not educated and explained properly.

Now, there’s blockchain; there are a lot of digital methodologies to create liquidity. What I don’t like is when major firms pretend to have monthly redemptions to create this faux liquidity that they have never done actuarial back-testing on. And say, “What happens if all of China takes out their money from our non-traded REITs?” Is that okay? Apparently not, as we are finding out now. And I think we all know who I’m talking about. So why pretend to have this fake liquidity when you really don’t? What you need is education.

No access to attractive offerings. That’s the insider game. Yes, we all want the million-dollar ticket, the $5 million ticket—because then we can go sailing on a Wednesday. But that is not right. Access, availability to the best opportunities—that’s what I want. And if you fix these four problems in a way that are all fixable, you’re going to have the largest wealth adoption in the history of this country.

Summary: I’ve said it: complexity, again. We don’t need more jargon. Why? Why don’t we present and be radically transparent on fees, on co-investment, on the potential gains and risks? We don’t need more complexity.

Fragmentation. Yes, we all want to go to seven places to do one thing—that seems natural to me. Of course not, of course not. One place—unified, holistic, a hub. Maybe those things are, yes, about investing, but it’s also about learning. It’s about getting together in a room like this and bouncing ideas—peer-to-peer. We don’t need 85 places.

Inaccessibility. Everyone, of any background—ethnicity, gender, self-identification, amount of money, accreditation, non-accreditation—with compliance, should have access to all deals. They should have access to get successful like the seven out of nine immigrant families and my family. They just need to be spoken to in the right way, where they are, and educated.

Okay, now this is a little wonky for the, maybe for the advisors in the room. Why do we all need 2% and 3% upfront? Because of this—this is part of the problem. It’s expensive. You know, the average cost of acquisition for an advisor, even large ones—Collective, Mercer, Cambridge—is $3,500. So how, if it’s costing you $3,500 to get a customer, are you going to be able to speak to a $5,000 investor? You can’t. Inaccessibility.

But if you don’t think short-term in the myopia of saying, “I gotta get all my money now from them,” and you understand that this is a lifetime relationship, well, if you nurture, they go from meeting you to being your audience—and this is how we describe it—to becoming a consumer, maybe of educational products or bespoke alternatives, to becoming your fervent cult relationship, that subscriber, and ultimately an investor.

Why ask for the transaction upfront? Worry about the relationship and the long-term journey, not, “How much are my upfront fees from this potential investor?” Transaction-first inflates higher customer acquisition costs.

Okay, okay, they really want me off this stage apparently. How do we do it? Yes, the half of this is about us. If you have a nickel, I’ll tell you about NOYACK Investing Club—that is the peer-to-peer group and community that I wished I had 35 years ago. Alright, maybe I’m fudging that—it’s around that time. Education, engagement—that’s community. Lots of ways to do that: off-premise, social media, on-premise, your interactive platform that we’re building, in real life—like right here, live events, community. And last but not least, access, empowerment, and enablement to investments.

Now, for me, for me and for NOYACK, investments are a product extension. Our product is education and community. We are education as a service. But to be a truly holistic ecosystem, you’ve got to have all of it, and that’s important.

How do we do the education? We’re decoding and we’re scoring the entire Invest Act, private placement, private company offerings. Yeah, it’s hard—try reading 500 private placement docs a week—not easy. We have 12 analysts, and we’re giving a score. Gamification is important when trying to attract an audience, but it’s real. Take a look, and we’re doing it with radical transparency. We scored ourselves, one of which did not come up great—we’re improving it. Radical transparency, value first, not transaction first.

Forex: If you pay us $15 for one of these reports or $24, if you don’t do anything else with us, are you getting $100 worth of value? Because if you’re not, we’re failing, and we’ve got to fix that. I think you are. Frankly, to read 130 pages of private placement for some of these funds—the cost alone is worth $24 of your time. But there’s a lot more involved.

And last but not least, plain spoken. We do not use jargon. Yes, I didn’t put on the last T, but I think you know what I was meaning, what I meant there. We do not need jargon. You can explain, you can decode, you can say all these things in a way that aspirational investors will understand and will appreciate.

Okay, more about us—yeah, we only started 16 to 18 months ago, and we have built a pretty big community. Shockingly—I say shockingly only because I’m surprised, I guess, at the adoption. There is a massive wish for this, and we just happened to tap into it. 184,000 accredited investors on our CRM alone, and we’re doing all of these off-premise communities. So, good start—that’s what I mean by community, and then there will be an interactive community.

Okay, yes, I know some people are concerned—I have no aspersions about anyone else here. But what this shows is that there is no one leading with education. And again, I go back to that anecdote about me—that’s what I needed. There’s no one leading with education. Also, very few are totally, holistically focused on the private investment universe. Well, 75% of Millennials and Zillennials want private investments over the dying 60/40.

And by the way, if you want to see that, we have a video called “The Death of the 60/40.” It’s pretty good. Check out our YouTube Shorts—pretty funny. ChatGPT wrote the script in 30 seconds, by the way, while we were having lunch—I was eating a sandwich. It’s pretty good. And then we filmed it—NOYACK YouTube Shorts. Shameless plug.

Obviously, you knew this was coming. We’re here for a reason. We raised $2 million pre-seed, and we’re here for a $9 million SAFE to introduce ourselves for the first time to the world—sort of an exclusive. And if you’re interested, I’ll be in the Galleria—I guess that’s called The Galleria; it’s the only other room here. And if anyone wants to talk, I’m there.

We can go to the next slide.

So I told you that I have a vision of who this is for. And of course, I’m not a Millennial, so it’s a little incongruous in that way that I’m talking about this generation. But I remember when I was, and I remember what I needed. And I remember all the people like me, and all the other young people who were outsiders—outsiders to this insiders’ game—and what they needed. And we don’t have to do this; we get to do this. This is a privilege, and I’m doing it for them. I’m doing it for my old self.

We are NOYACK, but so are all of you. And last but not least, that’s bonus content—you can take a photo of that. We created that—that is the Summit Universe. Feel free, license, one-time, royalty-free license.

Thank you very much for your time. I appreciate it.