Finding Stability in Investing: Masters in Business with Seth Bernstein

Seth Bernstein (0:02)

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Barry Ritholtz (0:07)

This week on the podcast, we have an extra special guest. Seth Bernstein is the CEO of AllianceBernstein, as well as Head of Asset Management for Equitable Holdings. The firm manages $905-plus billion in clients. He's been CEO since 2017 Joining the firm after 32 years of JPMorgan Chase and predecessors. I thought this conversation was really fascinating, and I think you will too. If you're interested in how a firm adopts to changing conditions, you're going to find this to be really a fascinating discussion. With no further ado, my discussion with AllianceBernstein's CEO, Seth Bernstein.

Seth Bernstein, welcome to Bloomberg.

Seth Bernstein (1:02)

Barry, thank you very much. I'm delighted to be here.

Barry Ritholtz (1:04)

I'm delighted to have you. So before we start talking about AB, let's delve a little bit into your background. You study political science and economics at Haverford.

What was the original career plan? Was it always investment management?

Seth Bernstein (1:19)

No, I had no idea what investment management was.

I didn't have anyone in my family who was in the financial services business. The original plan was for me to be an architect, but I came up against two sort of immovable objects. One I wasn't terribly talented, and two I didn't have enough dough. So I discovered that no one makes money in architecture.

Barry Ritholtz (1:41)

Is that true?

Seth Bernstein (1:42)

No, I'm sure someone does, but not many do.

Barry Ritholtz (1:44)

Fathead Longtail, that seems to be the winner-take-all story everywhere. All right, so you come out of Haverford, 84, somewhere around there?

Seth Bernstein (1:52)

84

Barry Ritholtz (1:52)

And your first gig was at JPMorgan Chase?

Seth Bernstein (1:56)

Morgan Guarantee Trust Company.

Barry Ritholtz (1:58)

Morgan Guarantee. How long were you there for?

Seth Bernstein (2:01)

Well, Morgan ultimately was sold to Chase.

Barry Ritholtz (2:04)

So I said this wrong, and I actually had a note to myself. Your first gig after college was at JPMorgan Chase, or one of its 1980s predecessor.

Seth Bernstein (2:15)

That's correct.

Barry Ritholtz (2:17)

Okay, I do my homework, and I literally had to put that into a parenthesis, and I forgot to say it. So, 1984, you start at a predecessor firm to JPMorgan Chase. Tell us about Morgan Guarantee. What were you doing there?

Seth Bernstein (2:32)

I was lucky enough to get into a year-long training program where this firm irrationally was willing to train liberal arts majors like me in accounting and corporate finance and higher level math topics and other areas in order to build bankers and traders. That was the goal.

Barry Ritholtz (2:59)

So, I understand Poli Sci as liberal arts, but did the economics major help at all?

Seth Bernstein (3:05)

I went to a Quaker college.

Barry Ritholtz (3:07)

So, no.

All right. So, you're at Morgan Guarantee. Tell us a little bit about the roll up process and where that ended. How did you end up?

Seth Bernstein (3:17)

Still employed.

Barry Ritholtz (3:19)

At JPMorgan Chase. The reason I ask this is around the same time I got married and our bank accounts are JPMorgan Chase, but that's not where it started. Like nine banks ago.

And we never changed banks. They would just send, oh, all right, manufacturers had over is now Dime, is now this is now that and eventually it became Chase.

Seth Bernstein (3:40)

We were at the end of that merger trail basically. And JPMorgan had been an independent entity until 1958 or nine when they merged at the Guarantee Trust Company. And that was Morgan Guarantee. The holding company was JPMorgan and company, a wonderful bank, overvalued people, almost never went outside to accrued anybody. So it was a fantastic place to have a career, because whenever they go into a new business, whether it was bond underwriting, because they were prohibited under Glass-Steagall, they would essentially retrain people who were already there. So you got opportunities that weren't necessarily available elsewhere.

Barry Ritholtz (4:23)

Promote from within, not a bad strategy.

Seth Bernstein (4:26)

It worked for a long time until it did.

Barry Ritholtz (4:28)

So and Glass-Steagall went away late 99, something like that.

Seth Bernstein (4:32)

Glass-Steagall effectively went away. JP. Morgan was really the first that granted powers. JP. Morgan got equity powers in 1991 or 2002 And I was moved to Equity Capital Markets, a new group. And I went there and then ended up running High Yield.

And then I was responsible for Debt Capital Markets, Loan Syndications. And then at the time of the merger, I was in media and telecom, because that's what you do with people who get bored of doing bond underwriting. You make them bankers, whether they're good or not.