Why This Top-Ranked Advisor Likes Many Alts — but Not Crypto — and Sees a Bumpy Road Ahead — Barrons.com

By Weld RoyalIf you had mentioned "alts" when Rick Migliore entered the wealth management business in 1994, the shorthand for alternative investments would have drawn blank stares. But today, alternative investments such as real assets, private equity, and infrastructure are big business — and important to a range of Migliore's clients. "We were relatively early into the alternative space, and we believe alternatives can be used to increase diversification and, in some cases, to produce income," he says, while cautioning that alts aren't for everybody.Migliore, a 31-year veteran of the industry, serves as managing director of Ellison Kibler, a Merrill Lynch team that has 36 employees in Columbia, S.C., and other offices, and more than $10.8 billion in assets under management. Speaking with Barron's, Migliore, a top-ranked advisor, whose clients include wealthy individuals, foundations, endowments, and businesses, talks about why he likes alts but not crypto, how he sees the market under Trump 2.0, and the book that led him to wealth management.Barron's : Your wealth management story starts with Liar's Poker. How so?Rick Migliore: During high school, I was up late one night channel surfing and happened upon an interview with a relatively unknown author named Michael Lewis, who had just written a book called Liar's Poker. I ended up reading it, and it really piqued my interest in capital markets and financial markets in general.I ended up going to college and majoring in finance with an emphasis on investments. I got a job as an unpaid intern with a young Merrill Lynch financial advisor by the name of Travis Musgrave, who is my best friend to this day. I cold-called for him, and then had the opportunity to work here with Hagood Ellison, in Columbia, on one of the first teams ever formed in the industry.You say Ellison Kibler was a pioneer in teaming. What challenges did it face?Hagood Ellison and Bud Kibler were innovators. They were brothers-in-law who went to their Merrill Lynch manager and said, "Law firms are joining together; your partners are CPA [certified public accountant] firms. What do you think about us partnering?" The manager said, "You're welcome to do that, but it's not something that is done normally."Back then, a stockbroker was an independent person and shared a sales assistant. The broker would get an idea: I like XYZ stock; I'm going to call all my clients and recommend they buy 100 shares. That's how the industry was designed.How long did it take the industry to catch on and offer clients different expertise from one team?When I joined in 1994, Bud and Hagood had been teaming for about seven or eight years, and Merrill Lynch had them going all over the country to talk to other advisors about the benefits and the value of teaming. It caught on.Today you recommend investment allocations from your seat on Ellison Kibler's asset management committee. That includes alts. What's the appeal of alternative investments?For every client where we are discussing alts, increasing diversification is the key point. But in the case of, for instance, private credit, it also would likely be recommended for clients who want more income from their portfolio. Likewise, with private real estate — which has a very high correlation to the real estate market and relatively low correlation to the stock market — it's another area where a client can receive diversification as well as a potential income stream.Private equity may be added to a portfolio to try to enhance return, recognizing that there is more risk inherently because of the illiquidity of the investment.Some consider crypto part of an alts portfolio. How do you see it?It's speculative. It's as simple as that. If I have a client that asks me about investing in crypto, I have to tell them that I can't advise them because I have nothing to base the advice on. If I recommend a stock, it's based on the earnings, the prospects of that company, its sales, its revenue. It's based on fundamentals. There have been stocks about which I've told clients the same advice: It's trading at a level that the fundamentals don't justify, so it's in a speculative range. When you speculate, you're guessing. It doesn't mean your guess is going to be wrong. Your guess might be right, but you're still guessing, and that's really what the crypto world is.Investment-grade bonds have performed poorly over the past few years. How do you view fixed income now?For many of the years in the past decade, interest rates were so low that it was hard to justify fixed-income investing. For instance, if a bond paid an interest rate of 1%, in many cases that wasn't a high enough return to help you achieve your goals. Investors today are in a much different interest-rate environment. We feel that for many investors, if not most, fixed-income investing can play an important role in a portfolio where you have low levels of volatility risk and a high degree of predictability.You don't want to discuss politics, but how do you think the market could behave under Trump 2.0?I think that the economy is still healthy, while inflation is probably higher than where the Fed would like it. We at Merrill Lynch think this is a market that's likely to continue to grind higher, but it's going to be in fits and starts because there is so much coming out of the new administration. Uncertainty is something that the market struggles with. We have to continue to evaluate things like tariffs and immigration policy. We think it's going to be a bumpy road to a higher level because of an underlying strong economy, but there is a lot of uncertainty given the new political administration.Thanks, Rick.Write to [email protected] content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.