Thursday, June 8, 2023

Everybody Wants a Cut: Wealthion Goes PEU

founder Adam Taggert interviewed Bob Long, CEO and partner of StepStone Group.  They discussed private equity investments and how investors with $1 million or more may wish to consider putting a portion of their holdings into a StepStone private equity vehicle.

Taggert's internet image is a financial host pulling for the little guy.  StepStone has $138 billion in assets under management but wants more.


The infomercial implied that people could get their money back and that their investment would hold its value as "realizations" (company sales) closely matched recent valuation marks.

Blackstone's REIT has been an example where neither is true.  Investors have been lined up to get their money back and "nine of fourteen BREIT deals are currently in the red."

Taggert missed two areas of journalistic exploration, private equity valuations and investment return calculations.  The PEU boys are known for fudging on both. 

In February Taggert previewed he would soon bring a private equity offering to followers.  He did so in an interview with Jim Rickards.

At the time I wrote:

I thought Wealthion was leveling the field for the little guy, not serving us up to the greed and leverage boys looking for their next mark.

It turns out Wealthion gets a cut of business they steer to various registered investment advisors.

 Solicitor fees: 

The fees payable to us for these referral services depend upon the fee arrangement between our Firm and the unaffiliated RIA to whom you are referred. We will receive a portion of the unaffiliated RIA's ongoing account management fees as compensation for our solicitation or consulting. Our fee range is 25% to 35% of the fees charged to the referred client by the unaffiliated RIA. The fee shall be paid solely from the unaffiliated RIA and will be paid to us within 30 days of the unaffiliated RIA's receipt of the advisory fee from the client. The fee paid to us will not result in any additional charge to the client of the unaffiliated RIA.

Referred clients have no obligation to pay any compensation directly to Greylock Peak . Greylock Peak seeks payment of its compensation solely from the unaffiliated RIA to whom it recommends clients. Fees are only payable to Greylock Peak upon receipt of funds by the RIA from the prospective client(s).

The duration of payments from the RIA to Greylock Peak shall continue for as long as a given client remains a paying investment management client of the RIA.

There are other ties:

Greylock Peak is indirectly owned, through Greylock Holdings, LLC, by GBI, a precious metals commodity broker-dealer. Clients of Greylock Peak may engage GBI separately for access to its precious metals platform either directly or through their investment advisor. Greylock Peak is also affiliated with GoldSilver, also a precious metals commodity broker-dealer. A conflict of interest exists in that Greylock Peak has an incentive to recommend investment advisers who use GBI's and/or GoldSilver's precious metals platform for their clients. Compensation received by GBI and GoldSilver is separate and in addition to solicitor fees received by Greylock Peak.
This is how Taggert got access to General Wesley Clark for a recent interview.  Clark is a board member for Gold Bullion International (GBI).  Clark was a private equity underwriter (PEU) with Rodman and Renshaw.

Everybody has to make a living.  It's a shame the seemingly good guys want multiple cuts, some in perpetuity. It's the PEU way.

Update 6-17-23:  StepStone attended the RFK Compass Summer Investment Conference:

Clodagh Coghlan – Principal, Private Equity, StepStone Group

This invitation-only event convened key investment decision makers—leading institutional investors and fund managers—for three days of unparalleled thought leadership and disruptive programming around seeking alpha while doing good.

Update 8-12-23:  Adam Taggert from Wealthion interviewed Morgenson.  This is a shift from this StepStone interview on the benefits of private equity and the possibility of endorsing a PEU firm for followers.  In the interview he said "Sunlight is the best disinfectant."

Update 9-9-23:  Wealthion disclosed their business relationship with New Harbor.