Non-Beta Alpha Clearing Week:

Tim Oden, Senior Managing Director, Advisor Services, Charles Schwab

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Ryan:

Welcome to Non Beta Alpha. I’m Ryan Morphin. On today’s episode we have Tim Oden from Charles Schwab Advisor Services talking to us about the future of the RA landscape. This is Non Beta Alpha.

Ryan:

Tim, welcome to the show. Thanks so much for joining us today.

Tim Oden:

I appreciate it, Ryan. Thanks for the invitation. It’s a pleasure to speak with you.

Ryan:

Well, I’ll jump right into it. You definitely cover a lot of ground. Schwab has been all over the news in 2019 and 2020. I’d love to hear your thoughts about the changing landscape and the macro trends in wealth management today.

Tim Oden:

Yeah, well it’s interesting. There certainly is a lot of activity and information around things like mergers, acquisitions, things along those lines, ourselves included in that. They’re in the middle of one. So you could certainly point to that as a trend within the wealth management space, is that scale matters and being a scale player is going to make a difference in the way products and services are delivered.

Tim Oden:

It’s going to make a difference in the way firms survive and thrive going forward. So that’s clearly one, but it’s interesting, that’s a spreadsheet kind of activity in many regards and income sets. I think what’s more interesting and intriguing to us is that when you think about some of the trends that are driving wealth management, it really is related to kind of the evolution of the client experience. If there is a silver lining, and I want to be careful here because I really would prefer we didn’t have this pandemic, but if there is a silver lining to what we’re learning in response to the pandemic is that the client experience isn’t defined the way we always thought it was. The wealth management space and the financial services business in general, industry in general, has been stuck a little bit and been slow to move and embrace a lot of the technologies that allow us to change the way we define and deliver client experience.

Tim Oden:

So what’s really exciting to us is when you think about the appropriate application of technology in how you create a more positive client experience. So when you think about even podcasts like this are changing the way we all consume information. To see work from home limitations start to have an impact into the way we are communicating, and advisors are communicating with their clients. This desire to be contact-less, driving a huge demand from owners of wealth, the consumers themselves to change the way they interact. They don’t want to come into the office. They don’t want to get physical analog paperwork. All of that is coming to a boil so very, very quickly and forcing us all to change. So when you think about a macro change in the industry, to us we’re really intrigued by what’s the client experience going to look like and how does technology enable that? That’s really pivotal in terms of to go for it. So that’s where we’re spending a great deal of our time.

Ryan:

The secular trend backing the independent open architecture movement, are you seeing it slow down over the last few months or is it a steady drum beat of people marching to independence?

Tim Oden:

Oh, well, so tale of two stories. Let me frame the response to that question because I think it’s really an interesting debrief here. Advisors, because of market volatility and kind of this work from home environment, have slowed down. Their movement is slowed down. In fact, the second quarter was, after the first quarter, starting off with a bang and just exceeding all expectations. Second quarter really kind of hit the brakes. That makes sense if you think about it. Advisors, regardless of the environment they’re in, the channel they’re in, they’re spending a great deal of time not only trying to figure out, “How do I connect with my clients?” but navigating a lot of volatility in the marketplace. So that slowed down advisor movement.

Tim Oden:

What’s interesting though, is the converse of that is that consumers. What we saw was, in the first half of the year, the strongest organic growth numbers for existing RIAs we have ever seen in our history. So what drives that? Well, that’s consumer driven. Consumers are understanding there is a different model and they are choosing to move to that model, a model that is more enabled to be able to adapt to a more digital environment. And the RIA space is well positioned for that because there’s so many of our best run practices that those advisors have already adapted and have chosen technology that enables them to prosper in a digital environment.

Tim Oden:

So now here comes the pandemic. Here comes the change in consumer sentiment around how they want to receive and consume financial advice and what meetings even look like. They realize, “Wow, where I’m at can’t evolve fast enough. I’m going to seek out a different provider.” And so what we’ve seen is advisors in the second quarter advisory moment to independence has slowed down. Although I will tell you that that is starting to reconcile and remediate back, and it’s really starting to pick up. Second half will be much stronger than the first, but consumers have really driven the growth of our business. That’s been fun to see because consumers are more informed and more in control now than ever before, and that’s a wonderful place to be.

Ryan:

Yeah. You talk about educating and advocating full transparency in this marketplace. One question for you is, as clients look at where their advisor’s clear at, the pricing model has shifted and changed. I’m wondering, how does that pricing model evolve going forward? Is it something you think the other competitors are going to have to match, or is the negative interest rate, potentially low interest rate environment, going to create new bespoke pricing for different types of practices?

Tim Oden:

Yeah. It’s a good question and I’m not sure that we have an answer to that yet. I think the market will tell us what’s the appropriate pricing structure and how to price. What I can tell you is that transactional based pricing is becoming harder and harder to justify. I mentioned earlier scale matters. It allows you the ability to be able to influence pricing in a positive manner. What’s wonderful about this is that from the client’s perspective, which is how we view things, the client’s perspective, all of this is fantastic, right? The cost of engaging in the wealth management industry, the cost of engaging markets, continues to come down, and that benefits more. So more people can participate. We think that’s really critically important. It needs to be.

Tim Oden:

Participation in the equity markets in this country is vital to longterm sustainable wealth development. We all know that, and that’s something we believe very much. So when we think about pricing, we are very committed to looking for ways that are going to enable consumers to participate more in the market in a value oriented cost efficient way. Does that mean we shift the way we receive revenues? Sure. It has to be. I mean, when we drop a transactional pricing for equities to zero, clearly we have to shift because it’s not that the expense of producing that goes to zero. So we have to shift how we’re going to make the revenues up elsewhere. We think scale matters to that, so we don’t have to make a compromise and say, “Okay, we’re going to increase pricing over here.” We don’t have to do that if we’re big enough and we have the scale. We can continue to drive pricing down across all product and services in a way that benefits advisors. That’s really where we’re focused.

Ryan:

In this new normal it’s impossible for advisors, in our opinion, to opt out of this digital moment. So what kind of permanent adjustments to operating models have you started to see play out post COVID?

Tim Oden:

Well, we’re on it. This is a great example. Look how effective your podcast series has been and how informative it is. We’re getting so used to this being the norm for consuming information and opinions and viewpoints. That’s not going back. That genie isn’t going back into the bottle, Ryan. And I credit you. You’ve done such a great job of creating this type of a platform. We as well have tried to look for ways for us to create, whether it’s a podcast series or engagement, a deeper engagement of social and digital outlets, social media, things like using Twitter and LinkedIn and Instagram and Facebook. All of that gives us an ability to be able to distribute a perspective in a way that is consumable to a variety of different people in a way that’s comfortable for them. That genie doesn’t go back in the bottle.

Tim Oden:

In fact, I think it gets accelerated. Now here’s what’s interesting, is not everybody’s going to be able to make that jump. You’re on the forefront of that. We’d like to think that we’re trying to fast follow you, but we’re working hard to try and figure out how to leverage these channels in a way that is appropriate. First of all, we’re in a regulated business that it’s appropriate, but that it meets our clients where they want us to meet them. Not all firms are going to be able to make that pivot. I think consumers are going to not just appreciate it, they’re going to demand it and that they are going to vote with their feet for providers of information and delivers of trust. Trust used to be you and I sitting across the table in person shaking hands.

Tim Oden:

Well, it’s true. There will always be an element of in-person relationship building. More and more that’s going to be secondary to our ability to be able to create a trusted relationship through digital means, contact-less. I think that’s the new norm. So when we think of our top performing, we just, my colleague Lisa Salvie and her team just finished our RIA benchmarking survey. So she and I were speaking recently about some of the findings of that. I don’t want to steal her thunder. She’s got a lot of information coming out for the market to consume, but what we find is, is that-

PART 1 OF 4 ENDS [00:11:04]

Tim Oden:

… for the market to consume. But what we find is, is that those advisers that began to adopt digital and social in their communication string, think about showing up with an iPad rather than a presentation deck, being able to have WebEx meetings, as a normal course of service delivery … Those advisors that were seeing that ahead of time and took that that leap before, are absolutely realizing the advantages now, because it’s not an adjustment for them. They’re already there, and they are growing significantly faster than the rest of the market is. They’re reaping the benefits of that because they already know how to do it so they can leverage it.

Tim Oden:

So, I think that’s going to become more of the norm. Not everybody will be able to make that shift, but I think what we’re onto in podcasts like this is going to become how we consume services going forward. We’re going to see more of it, not less.

Ryan:

Yeah, I think the genie is definitely out of the bottle, and with the technology out there today, it’s not all that expensive. So, it’s about effort and understanding the ways to produce the content.

Ryan:

One question for you, as it relates to, I guess, this new normal. You talk to some of the best advisors in the industry. What are some best practices, in terms of practice management or communication with clients, that you’ve seen people roll out that are creative and also meaningful to clients?

Tim Oden:

Yeah, well, so best practices. Clearly, you need to have a presence. When people are looking for that next solution, when their current solution isn’t meeting their needs, where do they go? Well, they still ask for referrals, but more often than not, they shop digitally. And so, if that’s the work environment they’ve got, you have to be there, and a brochure where website is probably not enough in this new environment. You have to have something more interactive.

Tim Oden:

I’ll leave the names out of it, but when I think of really forward thinking firms, they’re engaging in things like virtual reality. When I think about those that are the next wave below that … Because that’s pretty far out there and that’s pretty interesting. I think that becomes more powerful. Right now, though, you see people that have a regular presence on Twitter, they have a regular presence in LinkedIn, and it is a daily occurrence. So, best practices, not just create a Twitter account and maybe once a week tweet out an opinion that sounds or looks just like everybody else’s. It’s be current, be aggressive, be out there with an opinion. Create a human nature of who you are that demonstrates your individual firm’s culture in a digital format.

Tim Oden:

And so, what does that look like? Well, you see content being developed where you’re in homes. I mean, look at … I’m sitting in my home and every now and then you’ll see a family member walk by. Well, that used to be, “Oh my God, this is so professional.” Now, that’s human, and that human nature is changing the way we are perceived. Advisors who are embracing that are really exhibiting the best practices because it makes them human. And in a very digital world, we need that human connection. We need to equate that. So, that’s some of the best practices.

Tim Oden:

I think the other thing is, and this is something, Ryan, I think, we’ve talked about this for a long time, and that is increasing the pool of talent in the wealth management space. I think this is the next frontier. We can all look at some of the social issues that I think that, universally, we want to address that require a great deal of time and attention and thought. But how do we, at the heart, how do we diversify thinking? How do we diversify employment? How do we bring new perspective and experiences? Certainly, we want to bring gender equality. We want to bring in people of color, people that otherwise have not seen wealth management as a viable career option. We want to bring them into this space.

Tim Oden:

But there was a foundational limitation, that was geography before. Well, when we’re in a work from home environment, or primarily work from home environment, one of the benefactors of that is that the talent pool can increase. We can take away those geographic barriers, and that provides us with access to talent that enables us to pull people in from around the country, around the world. We can bring in new perspectives, we can bring in new experiences. And I think that has this wonderful opportunity, for all of us in wealth management, to be able to diversify and that only makes us stronger. That increases the access to talent, and it makes us able to create more of a national footprint without having to buy expensive real estate in every market we’re expanding to.

Tim Oden:

So, those are some of the new cutting edge opportunities that are coming out. I think we’re on the front end of that, Ryan. To be honest with you, I think there hasn’t been enough work done there, but I think more and more advisors are saying, “What do I need all this expensive space for in downtown Manhattan?” Or, “Why do I need this in Chicago or in LA? Maybe I need a small space, but if I don’t need the space, everybody’s working from home, why don’t I look for talent in other areas of the country?” Could reduce the cost of that talent, but it also brings in diversity of thinking and experience. I think that’s the next big frontier, and we’re excited about that.

Ryan:

Well, I think the wirehouses, James Gorman recently said, “We’re going to probably reduce our footprint in real estate.” And so, I think that’s a calling card for the wealth management division to wake up and I think it’s a huge opportunity for the independent movement. I think they’ve been tethered to the wirehouses because they had real estate. And if that’s no longer an important piece of the puzzle for them, there’s going to be a lot of people who leave the business card on the desk and go independent, I think. Would you agree?

Tim Oden:

I completely agree. Because if you think about the difference, one of the fundamental differences, you know this as well or better than I, is that one of the fundamental differences between the two channels … If you think about the wirehouse environment, you think about the independent channel, the RHEL, is that the wirehouse environment as a broker dealer, you have to create policies and procedures and oversight that applies to a large number of advisors, of registered representatives. And so, you tend to make them fairly restrictive or controlling because you have to account for the lowest common denominator.

Tim Oden:

Well, and RIA doesn’t have to do that, right? They don’t have to worry about that because the majority of them still do not retain affiliation with a broker dealer. Many of them do, but most of them still don’t. But they have the flexibility to be able to pivot in that area much faster, and I think that gives them a structural advantage over the wirehouses and some of the banks that, they can pivot quick. They can create very customized client solutions, client experience solutions. They can adopt technology immediately.

Tim Oden:

When you think about the timeless , and I love this one, when you think about the timeliness of getting that message out … Okay, I’ve got, I’ve got Twitter, I’ve got all these different social media channels, and in a wirehouse environment, I want to get a perspective on market volatility. I want to get a perspective out on what the fed just decided to do. I want to get a perspective out on some of the social unrest and the implications to us. In a wirehouse environment, how long does it take to get something written and through compliance, approved, and back? By the time it comes back, it’s either cut up or it’s so delayed it doesn’t have a relevance. And in an RIA community, they don’t have that delay.

Tim Oden:

Now, they still have responsibilities to ensure that it’s appropriate communication, don’t get me wrong, but the time be able to go from, “I have an idea,” to getting a timely communication out is so much faster than what a wirehouse or a bank can do that RIA advisors are going to be able to take advantage of that. I think that’s going to give them a tremendous opportunity when it comes to developing new clients. Gross, right now, for existing advisors, is off the charts. It’s just off the charts. I referenced it earlier and I think that’s going to continue.

Ryan:

Yeah, I think people who are embracing technology are going to have the best year ever this year. Because you’re right, people are looking for platforms that they can digest content in a no touch economy.

Ryan:

One question I have for you is, going back to the wirehouse discussion, Joe Duran, someone I have a tremendous amount of respect for, United Capital’s a great firm, Goldman bought them. Do you look at that as a exclamation point that this industry, the independent movement, has become institutionalized and that the wirehouses have to come back in and buy assets back? Or, is it a strategic model that they’re trying to go on the consumer banking, main street type of a platform that they’re trying to build out?

Tim Oden:

Yeah, it’s a good question, and I will tell you I’m not, I’m not smart enough to know all the drivers for some of the decisions being made. But clearly, you have to stop, Ryan, and look at that and say, “What’s afoot here?” What I will say is this, that I think the RIA, the movement to independence and the control that it gives you to be able to provide clients with transparent, fiduciary-oriented advice and service, the ability to be able to market and control so many aspects of the way you service advisors, that has been a longterm trend for as long as I can remember. Decades, it has been moving in the same direction.

Tim Oden:

We reached an inflection point a number of years ago, where it stopped being a nuisance and started being just this trend that I think all the wirehouses and all the entrenched wealth management models had to stop and take notice and say, “What’s going on? We’re losing market share, and it’s fast. What’s going on here?” Well, they can’t turn that shit. And so, they’ve got a really tough situation. They can continue to work within that model to make it more attractive to their advisors, but there are limitations to that, how much they can morph that model.

Tim Oden:

So, how do they take advantage of that without completely alienating their existing advisors? Well, that’s got to be a tough decision for them and it’s tough strategic problem to solve. One of them is to buy into the space. And the problem they’ve got is, is that how do you do that at scale? And I think that’s one of the challenges. And so, whether it’s Joe and United Capital or others that have entered into that space, I think there’s going to be a lot more attention paid to those large RIA firms and whether or not some of the entrenched existing models can start to diversify the way that …

PART 2 OF 4 ENDS [00:22:04]

Tim Oden:

… thing models can start to diversify the way they delivered services by buying into this space, because they they can only change tax so much with their existing model before it breaks. So maybe they need to add on to that by buying into that model. I think it will be fascinating to see. I do think that it’s rewarding to see them pivoting and recognizing the value of the fiduciary oriented independent RA space, because there were years where we were just simply, we were laughed at. Why would you ever go independent? It’s the most ridiculous thing in the world, and we heard this time and again. So to go from fringe to now mainstream for all the right reasons, which is what clearly independence is, is mainstream, is rewarding. And it isn’t a Schwab thing. It isn’t a Tim thing.

Tim Oden:

This is a testament to the literally thousands of advisors… Longterm adopters, new entrance into the market, that recognize this is the model that gives them the most choice of control and allows them to service their clients the best. It is a testament to their commitment in their communities to be able to pick up the mantle, take the risks that go into going independent, and to make this model stick. They’re the ones that are carrying the flag. We just get the luxury of being associated with them, and we value that partnership enormously. But at the end of the day, we are simply servicing advisors who are telling us what we need to be so that they could be better for their clients. And that’s an incredibly powerful motivator for us at Schwab, but it’s also incredibly rewarding because when you think about the motivation, it’s not about, “Hey, you need to help me drive more revenue.” No, it’s how do you drive better value and service and control in the client relationship? That’s what we’re about, and so it’s exciting to see actually and rewarding.

Ryan:

What are some of the potential risks or things that the industry needs to be paying attention to that may slow down the pace of development that we’ve had in the last five years?

Tim Oden:

Oh boy. Well, there’s always more out there, right? And so if you think about the move… How far do some of the established participants move to support independent advisors? Do they create semi-independent advisor platforms that give advisors the perception of being independents, when actually they’re not independent? I think that’s a potential… We call those way stations. They’re intermediary steps to full independence. They may be attractive to somebody that maybe is a little bit nervous about understanding how to make the move to full independence. I think those will continue to be, and have been for awhile, they will continue to be issues for the industry to wrestle with.

Tim Oden:

I think there will continue to be this discussion that the wealth management industry will have around regulation. And you get a lot of arguments, appropriate arguments, the right arguments, around how to keep informed, how to be transparent, how to push more transparency and disclosure into consumers so that they can make choices. Not that one model is always going to be better than the other, but we can’t argue about putting information and disclosure in front of clients in a way that they can understand. Not in industry speak, but in ways that a consumer can understand and make an intelligent decision for their best interests. We have to make sure that we are all coming together and sharing in this responsibility that advocates for that transparency, that fiduciary orientation. It should always be about the client first.

Tim Oden:

So I think that’s going to be a potential issue for the industry. Whether or not that actually prevents people from moving to independents, I don’t know. I do know that I hear from some clients who are moving to independents now that say they simply like the transparency and they like the fiduciary orientation, and we refer to those people who are acting as an independent, within a captive model, they simply are making a move to get something that is more encouraging and empowering for the way they were communicating with their clients.

Tim Oden:

I think there’s going to be more and more opportunity for us to educate the next generation, and I think that that is ultimately going to be a differentiator for how many people can get into this space. Right now, we don’t see a lot of independent advisor versus independent advisor competition. There is still model competition. So the independence versus for example, a captive model, we still see that as being the common competitor. At some point, are there so many advisors where that changes? Maybe. And that could be a limitation.

Ryan:

Do you ever feel that maybe the FinTech companies, because they’re valued so highly relative to an RIA or broker dealer, could potentially become competitors of wealth management platforms, or even custodians for that matter? Do you guys have any thoughts that that might play out in the next five years?

Tim Oden:

Yeah, it’s interesting. I will tell you that… Could they be a competitor? Sure. Competition’s good. And I think the next efficient client-facing model that allows people to interact and consume both services in a way that they value digitally is always going to be a formidable competitor. That’s the reason we spend so much time and energy trying to develop our technology and listen hard to advisors and clients about what they need from us, so that we can be in that fight and be providing that value. But do I think there are going to be new entrance into the space? Absolutely. I think there will be. Will they be formidable because they have a technology bias? Absolutely.

Tim Oden:

How far will they go? Will they get into the custody? Well, maybe. I think custody though, custody is certainly a scale business. Be careful what you ask for. Custody’s hard. Providing a front end that allows people to distribute information and to be able to interact with it is one thing, custody is much harder than that. And so I think that’s going to be an interesting play.

Tim Oden:

I do think that it will be interesting to see… As I mentioned earlier, I think the genie’s out of the bottle, as it relates to digital client experiences. That’s going to become the norm. But I think we eventually will be able to get back to in person meetings. When that happens, there is absolutely a place for that. There’s a place for us to be able to connect and to entrench the trust you’ve placed in me digitally through an in person meeting. And I don’t know what form that will take, Ryan. I don’t know, but there will be a place for that.

Tim Oden:

And I think those firms that are exclusively digital are going to be limited because they’re not going to be able to emphasize that as much. Amazon does great in a digital marketplace, but there’s something different about the experience of consuming at a local shop and interacting with the local store owner, that Amazon cannot replicate. So when you think about that in terms of finserv, I think there’s an analogy there that makes sense, which is somewhere there’s going to be a different experience that people will choose. Not all, but many people will choose, “I want digital, but I also want you to be there for these certain circumstances to add that physical presence.” And I think that’s going to be interesting to see. I think some of the people that could potentially enter in on just the technology front are going to struggle to figure out how to make that work, but it is going to be fascinating to watch them move that direction.

Ryan:

And Tim, you lead a large organization. What kind of leadership lessons have you gathered from the last few months, best practices that you guys have rolled out for your business development teams and marketing departments?

Tim Oden:

Yeah, that’s a good question. I think that one of the biggest ones that struck me, and I’ve increased the frequency of my communications, but I’ve made them smaller. Our people are distant and from time to time they’re used to being in physical connection with other people. And so they’re struggling. And so I’m using digital communication to be able to create or try to create as best I can, a human connection.

Tim Oden:

And so something that I value is getting on a phone with our national Salesforce and talking to them, and sometimes it’s just being silly. Sometimes it’s talking about current events, but it’s just interacting with them. And it’s not about here’s our goals today, this is where we’re at, and here’s a deck, and let me show you a graph. It’s let’s just talk. Let’s just create that piece of humanity, that isn’t about execution, it’s about relationship, and let’s use the digital to enable us to be able to do that.

Tim Oden:

So I think the single biggest leadership lesson that I’ve learned, and I’m still learning, is how do I convey to a national organization that what they’re doing matters and that we’re all into this together. It sounds so trite. Everybody’s saying we’re all into this… We are, and we’re all trying to figure it out. And that I’m as interested in what you’ve got going on for this weekend with your family, as I am about what your latest sales endeavor looks like. And so my communications have rotated to that human side, and maybe shame on me for not getting there sooner. But what I’m finding is is that that allows me to connect and I give, but I get back so much more and shame on me for not getting there sooner.

Ryan:

Yeah. I’ve noticed on social media, you guys have been posting some pretty awesome, family stories of your business development officers and stuff, and love reading that and it definitely softens the environment that we’re in because everyone else has gone through the same thing.

Ryan:

Well, what are some silver linings in the industry and maybe in the US economy that you see? Because you sit at a very interesting seat. You have a huge visibility into the wealth management landscape. What do you…

PART 3 OF 4 ENDS [00:33:04]

Ryan:

… Huge visibility into the wealth management landscape. What do you think is going to be the silver lining?

Tim Oden:

Well, let’s first call out the fact that there is so much opportunity for us as a society and specifically us within financial services, wealth management, to stop dragging our feet and to make our industry and our roles more inclusive. How do we do that? And it’s not obvious. How do we do that in a meaningful, sustainable way? And so the silver lining here is listen, out of all the things that are going on, let’s make sure that we understand the message and are working with those in our community to make this a place that anybody could see as a viable career. And so I think that’s a silver lining and I hope we get to that level and continue to emphasize the constructive aspects of that conversation and that that doesn’t get lost in a lot of the challenges that we’re seeing in some of the cities. I want that to survive. I think that’s a silver lining.

Tim Oden:

The other one is that, think about, and this is going to get a little bit into the numbers a little bit, but advisors over the last five years have increased the ratings that they are given for the consumer experience, the client experience. While at the same time, thanks to Lisa again for this data, over that five years, the production on a per employee basis for the RA community has improved by over 12.5%. And so what the advisor community has done, has used technology, that’s been the enabler, has used technology to simultaneously improve their margins, which allows them to keep costs down to their clients, that allows them to be able to expand their services to their clients, to be able to pay for more value to their employees, to be larger community activists so that they can be in the community donating time and money and efforts.

Tim Oden:

All of those positives, they’ve been able to drive down their cost of production while at the same time, improving the way they are perceived from a client experience standpoint. I think that’s just starting to emerge. I think that’s going to get so much better. Both of those numbers are going to get better in the next five years, because we’re going to get better at what we’re doing right now, right? We’re going to get better at you and I talking in digital format and distributing a perspective. We’re all going to see that as the norm. It doesn’t matter your age or your socioeconomic background, your education, you’re going to get better at this, and it’s going to become the norm. As long as we use the efficiencies that are inherent with that model to reinvest in the experience and the communities we serve, that’s a huge silver lining. And how exciting is that?

Tim Oden:

Schwab just had a virtual volunteer day. The company gives every Schwab employee a number of hours where they are paid to go out and volunteer their time every year. We do employee matches around you put money into a charity, they’ll match it, so that we can amplify our community involvement. Well, it’s hard to do in this environment, because you can’t get out and spend the time face to face in many of the charities and the services that we value. And so we did it virtually. I think what you’re going to see is more and more people realize is that I don’t have to get in my car and drive necessarily to make a difference in the communities I serve. And technology will enable me to do that. And so there’s so much more we can do than we were able to do 10, 15, 20, 30 years ago.

Tim Oden:

It’s exciting. And I will say this, something that I told my team recently, which is often you don’t realize you’re in a point of inflection until you have the benefit of hindsight. Certainly along my career at Schwab and in this industry, there are times when everybody says, “Wow, it must’ve been really interesting when you realize you’re in a point of reflection around this and this and this.” And I said, “You know what? We didn’t know we were in it when we did it. It wasn’t until we had the benefit of hindsight to realize how much of an inflection point that was.” Maybe it’s experience, maybe it’s age, Ryan. Maybe it’s just I’ve got a different perspective.

Tim Oden:

We are in that golden age of inflection right now. And all of it points to a better environment going forward than we’ve had in the past. And that’s exciting. That’s motivating, even for an old dog like me, that is gratifying and gets me up everyday in a way. And it means so much to me to see that we have made those changes. I’m excited to see how we all work on it together and how we produce a better outcome.

Ryan:

Tim, last question for you. What, if any books you’re reading right now to keep your perspective sharp and positive? Any recommendations for the viewers?

Tim Oden:

Yeah. Leadership Dichotomy, highly recommended. I read it, I’m reading it again, because there’s so much in there. You may appreciate this, Jocko Willink and Leif Babin. I’m a big fan. I come from a military family and so military service is very important to me and us as a company, which I’m proud to say. They equate lessons learned from the military into life lessons, but also lessons for those of us that are leading in a business environment. And I find that to be interesting. They do a very, very good job of equating that. Now, the outcomes are obviously different, right? The outcomes of a failed leadership in a battlefield environment is very different than what I have to do on a daily basis. So I would never suggest to you that those are the same. What I will say is, is that I can learn from their experience. And that matters to me. That’s an interesting book.

Tim Oden:

And then there’s another book, you’re going to laugh at this one, it’s called, As You Wish, it’s written by a star for one of my favorite movies, The Princess Bride. And it tells the behind the scenes of filming that movie and what the actors were thinking. And so that’s when I really need to escape. I read that one and it’s entertaining.

Ryan:

Oh, that’s awesome. Well, Tim, thank you so much for joining us. We appreciate your experience and your insights in the industry, but most importantly, your leadership. So thank you, sir.

Tim Oden:

Appreciate it, Ryan. Thanks again for the invitation and the opportunity to be able to spend time with you. It’s enjoyable.

Ryan:

Thank you very much. Thanks for watching Non-Beta Alpha. And before we go, please remember to like and subscribe on Apple podcasts or our YouTube channel. This is Non-Beta Alpha, and now you know.

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Ryan Morfin: Welcome to Non-Beta Alpha. I'm Ryan Morfin. On today's episode, we have Pini Althaus, CEO of USA Rare Earth, talking to us about the supply chain glut in rare earth minerals. This is Non-Beta Alpha.

Ryan MorfinPini, Welcome to the show. Thank you for coming on today.

Pini AlthausThank you for having me, Ryan. Good to be here.

Ryan Morfin: So you're an investor and a miner in rare earth minerals. Can you share with our listener base, what are rare earth minerals? Why are they important and why is there a geopolitical race going on globally?

Pini AlthausYeah, I mean, rare earths are an extremely ubiquitous part of all advanced manufacturing or technology manufacturing today's day and age. Several years ago, I had not heard too much about rare earths myself. I was not that familiar with it and being involved in this sector, in this company, for the past few years has given me an education of course. And I mean, I was sad to hear that 50% of all imports into the United States contain are earth elements and it runs the gamut from consumer electronic devices that we use every day. Our cell phones, our laptops, most communication devices, medical equipment. So there's a tie with COVID, which we can touch on at your discretion. Electric vehicles, defense equipment. So pretty much anything or everything high tech today has a rare earth element or critical minerals contained within them.

Ryan MorfinAnd what are some of the names of some of the more important rare earth? I know there's lithium for batteries, but what else is considered in this category, critical?

Pini Althaus: Yeah, so lithium is a separate category to battery material. The rare earths are 17 rare earths. The four, let's call it, key rare earths that we're focused on at our company, the four rare earths that go into the permanent magnets. And these are the magnets that are found, there are a number of them in your back of your cell phone or an iPad. But if you look at an F35 striker jet, you've got about a ton of rare earth magnets in those. And we've got two heavy rare earths and two light rare earths is part of the permanent magnets. You've got dysprosium, ytterbium are the heavies, and then you've got neodymium, praseodymium as the two light rare earths. So those would be key rare earths that are the focus.

Ryan MorfinAnd you use these in, I guess, in military applications as well, but historically, where has the United States sourced the rare earth for supply chain?

Pini AlthausYeah. And that's the shocking part. We've been securing those materials from China. So China controls the rare earth sector and has done so for the past 30 years or so. And it was a significant misstep on the part of the United States, allowing China to have this control. And actually this wasn't a question of China coming in and doing anything nefarious as far as stealing IP or anything. The US government made a conscious decision about 30 years ago to allow China to come to the United States and acquire the processing capabilities for rare earths. So just as part of some background, you've got the rare earth materials containing various mining projects, but once you extract them, you have to then process them and they go through certain phases before they get to the magnet phase. And China, the thought process was let China do the mining, let China do the processing.

Pini AlthausWe don't need to do that here. And we'll buy the materials from China cheaply and the premier of China at the time, Deng Xiaoping made the comment, he said, "The Middle East has oil. China has rare earths." And unfortunately we weren't smart enough to understand what he was saying. And the Chinese understood that the future of manufacturing is going to revolve around control of the rare earth and critical mineral supply chain. So if you think about it today, Ryan, we cannot build... Forget about consumer electronics and medical equipment. We cannot build the equipment that the US Pentagon or the US armed forces require, whether it's F35 fighter jet, Tomahawk cruise missile, communications equipment, without going to China and obtaining those materials. And it's obvious to all that this should be extremely alarming. We've seen China use this as a weapon, if you will, as far as how it interacts with other countries back in 2010, when there was a dispute between China and Japan on the East China Sea.

Pini AlthausSo China cut off rare earth exports from Japan for 40 days. Japan obviously being a significant user of rare earth elements for their high-tech manufacturing sector, that was stopped after 40 days. But in fact, it was President Obama that first made the United States aware of this, formed a division within the Department of Defense to handle this issue, but not much has happened. And we continue to be relying on China for these materials. And what has been made about trade war with China and whether the trade war is really the impetus for China withholding rare earth exports. And that is a huge misnomer. Whilst China had been talking or implying that they would cut off rare earth exports, the truth of the matter is that China, under it's made in China, 2025 mandate, its belt and road initiatives and others. And you seem to control the critical minerals and rare earth supply chain so that it can continue its dominance as a manufacturer or a global supplier of these materials and finished products.

Pini Althaus: It's the backbone of its economy. And in fact, China has become a net importer of rare earths from different countries like Miramar and others. So with that, they are decreasing the exports to countries like the United States, Japan and others.

Ryan Morfin: And was it ever a risk that the Chinese were going to turn off the exports of rare earth to the US during the trade war? How close were we to that? And was that ever some saber rattling that went down during trade negotiations?

Pini AlthausYeah, I think it was saber rattling. I think it would be paramount to an act of war. I can't say with any authority that that would not happen, but it would be probably, aside from war itself, it would be one of the most significant acts of war cutting the United States off from the ability to procure rare earths. But that being said, I mean, if you look at, as an analogy, the oil and gas sector and the reliance of the United States had for many, many years on OPEC countries to supply us with the oil. And we had embargoes and we had price manipulation by OPEC. This is far more significant given the ubiquity of where these rare earths go. And yes, we're always under the threat that China can cut off exports under the guise of a trade war or for any other nefarious reasons.

Pini AlthausBut I think even more importantly, to just as the natural run of the course of things with regards to their business and their desire to maintain themselves as the global leader in manufacturing and exporting of goods, China is in a position now where it actually requires these materials for their own domestic consumption and can legitimately cut off rare earth exports by stating that they need it for manufacturing and that would actually be somewhat correct. So we're in an extremely dangerous position here with this reliance on China. And it wouldn't just be China. If it was another country, it would be similar issues, not to the same extent, but reliance on one country for these materials is dangerous.

Ryan Morfin: And it's been mentioned in the past that in 2010, China flooded the market to really kill all the competitors in the rare earth mining industry. Where was the World Trade Organization during this period? And how did that play out and how does that set the chess board for China to run the tables?

Pini Althaus:

Yeah. So the WTO stepped in when China cut off rare earth exports from Japan, I think it lasted for about 40 days because the US and Japan protested the WTO, and they stepped in and China resumed exports. While I'm not an expert on these trade matters, one thing that I am aware of is that one of the reasons why China had to resume the export of rare earths was it did not legitimately need all the rare earths for domestic consumption. So therefore it was a nefarious act, if you will, to cut off rare earth exports. Now that has changed, which means China have to cut off rare earth exports today, they have a legitimate case to say that they require these materials. There's a shortage of these materials and they require them for their own domestic purposes. It is the backbone of their economy and there's very little we could do about this today, which is why it's becoming an even more urgent issue.

Ryan Morfin:

And the US government started stockpiling some of these after that incident. Can you talk a little bit about what DOD and DOE has done to start making sure that there's not a critical supply shortage going forward, and is it enough?

Pini Althaus:

Yeah, again, there is a national defense stock pile, and there are materials still that the United States needs to procure in order to shore up its stockpile. There are magnets, the finished magnet products as well, the United States government needs to stockpile. Again, there's a limited amount that the United States government has. It requires approval from Congress, whether it's in the NDAA or other approvals from Congress, to allocate monies for the national defense stock pile of these materials. That being said, there's no endless supply of these materials. And unfortunately, the apparatus, the way it's set up right now with the US government, it's going to continue to require having a secure supply chain of those materials for many, many years to come. So it's not a question of stockpiling for 10 or 20 years, and then this complacency and saying, we'll kick the can down the road. But keep in mind as well, Ryan, that US government accounts for low single digits of overall rare earth imports into the United States.

Pini Althaus:

We're talking about defense contractors, we're talking about the manufacturing sector. The direct impact this has on the economy, jobs, the automotive sector, and others is significant. So it's not just limited to the United States government. If you look at over the past couple of weeks, the sanctions that China have put on Raytheon, Boeing, Lockheed, et cetera. I mean, the question is where are they going to get those materials? And if we go beyond that, you need rare earths for the 5G network. Now that Huawei has been banned from installing the network, not only in the US but other countries, we have to have the ability to get a secure supply of these materials as well. Which currently, again, trying to control the hundred percent. So it runs across the board, both for government, defense and manufacturing in this country.

Ryan Morfin:

Well, and so help me paint a picture for our audience. Does China have all the mines for rare earth, or they're the only ones who started mining it? Or are their mines globally dispersed and nobody's been doing the actual infrastructure to do the mining?

Pini Althaus:

Yeah. So finding rare earth projects or rare earth elements is not the difficult part. It's finding them in significant quantities that makes a project economically viable. And part of that consideration are the environmental rigors that companies in the West have to adhere to. And China, even by their own admission, have had a complete disregard for mining these materials and even for processing these materials. And in fact, just the last week or so, the BBC did an expose on this, 60 Minutes has done an expose on this. But the Chinese have not denied this and have talked about cleaning up their act, but it has an effect on the bottom line for what the costs of mining and processing are if you have no environmental standards to adhere to. So China have exploited those rare earth projects they have, primarily in inner Mongolia, and have brought a number of projects online and quite quickly, and in a significant way, with a complete disregard for the environment.

Pini Althaus:

So it was seen as an environmental no-no in the West for many years. Now, what's happened over the past few years is you're starting to see rare earth projects in different parts of the world sprout up. You've got the Mountain World project in Australia owned by Linus, which is a producer of Nd and Pr, neodymium and praseodymium. So two of the light rare earths. They may have some heavy rare earths coming online at some point in time. And you've got Arafura, which is another company in Australia that we're working with to assist them with their processing so they don't have to send the materials to China for processing. But really these are a drop in the bucket for what the requirements are for the United States. And certainly what the requirements are for allied countries, the EU, et cetera. So there is a race, if you will, worldwide to start bringing projects online. The Chinese are very active in trying to secure assets outside of China.

Pini Althaus:

So in Africa. They have ownership of a project in Greenland. So there is somewhat of a race. The Australian government has stepped in and has started limiting the ability for China to own, or have ownership in, or off takes for the Australian rare earth projects. And that's part of the strategic Alliance between Australia and the US. Canada, similar thing as well. There are a number of projects that are looking to come alive, but these projects are, for the most part, will take many, many years to come online. We have to expedite the process. We have to assist with a [inaudible 00:14:41] supply chain and the domestic rare earth sector, because previously investors have been scared off by things like China flooding the market, which is not a possibility at this point in time, given that China can't actually afford to flood the market. They are already very heavily subsidizing their mine to magnet supply chain there.

Pini Althaus:

This is more now a case of being able to get production from non-Chinese sources so that the United States and allies have a viable, secure supply chain of these materials. And it's a concern worldwide. We speak to governments all over the world, and we're all facing the same issue. Some more than others, especially countries like Japan, that don't have their own rare earth projects there and are reliant on Australia where they've made some investments there. And in the United States, they've made an investment recently in Africa. So there is this race, if you will. And I think we've got a five-year window here to at least stand up a few projects worldwide. Otherwise we've lost this race and we will be dependent on China for many, many years to come. And Ryan, it's a bit of a hypocrisy. If you look at it where you've got materials going through clean, green energy applications, like electric vehicles, wind turbines, et cetera.

Pini Althaus:

That we're sourcing these materials from China, where they've, again by their own admission, has been complete environmental devastation to water bodies around these mines and processing facilities, to the communities. People have been getting sick around these projects yet we're putting these materials into our electric vehicles or wind turbines. It makes no sense at all. And people are starting to wake up to this. And that's why the sector is starting to see a lot of support come out of Congress and bi-partisan support. And in fact, it's one of the only bi-partisan issues right now in Washington. And it's good to see that some things decided to move in the right direction.

Ryan Morfin:

And is there a special process? You talk about the expense, is it really difficult to mine these? You have to go through a special chemical process to extract and clean and purify. Is it a lot harder than, say, gold or silver or some of the other, we'll call, more traditional elements?

Pini Althaus:

Yeah. It's all about the processing to some extent. So if you look at MP Materials in California, which used to be Molycorp before they went through their bankruptcy. They are a miner of Cerium and Lanthanum, which are two of the light rare earths, the lower valued light rare earths. Given that they do not currently have processing technology, they are sending those materials to China for processing where China is tariffing those heavily. Linus is also, they're doing their processing work in Malaysia and elsewhere. So it's really about the processing at this stage. One of the things that we've done, after we put out our PDA last year with our upgraded resource, which now includes a significant amount of lithium. We make a decision that, based on the test work that we had done around our processing methodology, that we were not going to send our materials to China. That it's paramount for us to do this work in the United States and in a collaborative effort as well.

Pini Althaus:

We've been asked by some of our investors, "Well, why would you be looking to help other projects with their processing?" And the answer is simple. There's no one project or one company that's going to put China out of business or make a dent, or somehow be able to take care of the overall demand worldwide for rare earths and critical minerals. And it's very important for us to have processing capability in the West. So that was the impetus for us opening up our own rare earth and critical minerals processing facility earlier this year, which we did in Wheatridge, Colorado. And in fact, we've made some significant progress on the method that we're using for this. And we're starting to collaborate with Australian companies, Canadian companies. We're currently talking to a group over in Europe as well, because this has to be a collaborative effort.

Ryan Morfin:

How does Europe solve for these problems? Do they have this better under control than the US?

Pini Althaus:

No, they're in a far worse position than we are. The EU commission recently put out a report, I think, a couple of months ago that the requirement for rare earths is going to increase tenfold within a short period of time. Lithium 18 times. They don't really have rare earth projects. Again, there are the Greenland projects, which people have heard in the news recently. Those need to further development work so they don't have rare earth projects ready to come online there. There are a couple of lithium projects that are spread around Europe, but for the most part, Europe is in an even more precarious position. If you look at Germany with the auto manufacturers, you look at the big companies like ThyssenKrupp and others, all these countries and companies are looking for alternatives to China, because we've already seen in the news about China withholding or reducing exports of some of these rare earths that are required for these industries.

Ryan Morfin:

And you mentioned earlier the regulatory posture of the US makes it difficult to mine. Is it becoming a more bi-partisan issue that we need to maybe relax some regulation around the mining exercise, to incentivize private sector to come in and start producing this? Or is the Republican party versus the Democratic party on two separate pages of music?

Pini Althaus:

Yeah. Good question, Ryan. I mean traditionally the Republican party is obviously being more pro-mining and in favor of less regulation when it comes to these things. With regards to our project, we're on Texas state land. So we don't trigger federal environmental permitting at this point in time. And obviously Texas being Texas, a mining state and oil and gas state, things are a lot easier in Texas than they are on projects on federal land where the Bureau of Land Management controls the environmental process around that. But the thing is here, and I don't want to step into what other companies are doing, et cetera, but we do need to be reasonable about allowing projects to come online if they're adhering to environmental standards that are acceptable worldwide. And what we do know, is that China is destroying the environment and cities and water bodies around their mines and processing facilities.

Pini Althaus:

We have standards here in the United States, and I think what we need to do is make it easier for companies to mine, while at the same time protecting the environment. And there are ways to do that. And we're definitely seeing buy-in from Congress, from both sides, with regards to looking how we can stand up a secure supply chain. And, obviously under the Obama administration, they had very strict regulations when it comes to mining. And that's changed under the Trump administration. Hopefully what we start to see is some normal middle ground that'll allow other projects to come online.

Ryan Morfin:

And typically in these rare earth mines, is it amalgamation of different minerals that are all consolidated together and you have to separate them out? Or do you ever find pure play, Europium, I can't even pronounce some of these. Gadolinium, Cerium. I mean, are they all mixed together and you've got to filter and sift them through, or are they pure play mines?

Pini Althaus:

No, they're generally they have a mix. So they're polymetallic projects. They have a number of different materials. Some projects, you more to what we call the light rare earths like MP in California or Linus in Australia. Our project is actually on the opposite end of the spectrum. We have a very high concentration of heavy rare earths. That being said, we do have to go through a process of separating these materials. But the case of our project where we've got 30 materials. We're not going to produce 30 materials. We're not going to market 30 materials. So what we're doing is we're focusing on the key materials that are marketable, that we need for permanent magnets, lithium as well, and working on the separation and the optimization of those materials in particular. But we're all faced with the same processing challenges and that is something that can't be set.

Pini Althaus:

There's no easy way to do this. There are different technologies that have been used in different parts of the world. So predominantly there's a process called solvent extraction, but it's big, it's bulky, it's not benign. It's a bespoke solution for one particular project. So it doesn't work for feedstock from other projects. What we've done is we're using a processing technology that's actually been around since the 1940s. It was part of the Manhattan Project. It's called continuous ion exchange. In fact, the Chinese use it to increase the purities from 99.99 to four nines, five nines, and even six nines. So for some applications you require higher purity levels. It's a far easier processing method to scale up and to take feedstock from other projects. In fact, we've demonstrated for the Department of Energy that we can take coal waste from Pennsylvania and do high purity separation of rare earths using our processing methods. So it's not a step that can be skipped unless one needs to send it to China for processing, which is not going to help us with our objectives here.

Ryan Morfin:

How many other, we'll call it, going concerns on any other businesses that are doing this, that are trying to, I guess, start the development of these mines. Are you guys one of a few or are you one of many? And is it an international or just a US game? Who's leading the charge at going after this?

Pini Althaus:

Yeah, well, I'd say the Australians are leading it outside of China right now. You've got some really good projects in Australia. Again, more skewed toward the light rare earths. There's one more heavy rare earth project in Australia, which is not yet producing. The United States, you've got MP Materials, you've got Ucore in Alaska, you've got the Bear Lodge project in Wyoming, which is also another light rare earth project. So as far as a heavy rare earth project that looks like it will come online in the near term, that would be our project. In Canada there are a couple of projects there as well, and again, more skewed toward the light rare earths. But we really need to get as many of these projects online as possible. Because again, I don't see it as competition. We all have a problem doing supply agreements or offtake agreements for our materials.

Pini Althaus:

In fact, one of the things that we're going to have to consider is looking at potentially scaling up our production, based on the demand that we're already starting to see. And I think other companies would find that as well. So it's all about the economics of the project. You have projects that were economically viable back in 2012 or rare earth prices with 35% or so higher than they are today, and are not necessarily viable today. So that's the challenge as well, economically viable projects. And we've got to get as many of them online as possible. It takes many, many years. I mean, our project has had over $70 million put into it to get to where we are today, and we're close to getting to the production scenario. It all revolves around processing at this point in time.

Pini Althaus:

We'd be very happy to see another couple of projects come online, because this is extremely important for national security and for the economy as well. I mean, if you think about it, Ryan, if you've got a billion dollars of rare earth materials, that translates into a trillion dollars or I should say trillions of dollars of finished product. So you've got a magnet in your phone there that's worth a couple of dollars and the cell phone's a thousand dollars. And electric vehicles and defense applications even more.

Ryan Morfin:

Yeah, everyone has one of these iPhones now, and there's tremendous amounts of rare earth on the circuit boards here. And I think people take it for granted that that supply chain is not secure right now. So one question for you, there's talk of this maybe medium term to longterm, but there's talk about mining in space. Do you think that's a feasible option in the longterm, medium term? What are your thoughts on that?

Pini Althaus:

No, that's just ridiculous. I mean, we're trying to find ways to make mining on earth economically viable. I think the cost of going up to space would be more than what our capex will be bringing our entire project into production. I mean, we've got about a 350 to $400 million capex to bring 130 year mine life into production. I'm not an aerospace expert, but I think sending a rocket, building a rocket ship and sending it up, I think maybe on the fuel alone, you could bring a couple of projects into production. So unless we have a fortunate situation or an asteroid lands on earth, and fortunate if it lands somewhere where we don't care, I don't see how that happens. And if it's big enough, it's a problem as well. It's nonsense. And even, options aside of the deep sea mining for rare earths, I mean, you've got all sorts of environmental issues around that as well. I think we need to look at projects that we can bring online, that can be done so in an economic way, that can be done so in an environmentally responsible way.

Pini Althaus:

I mean, one of the things that we've done at our project is we've got in excess of 60% of the materials that have come out around top, will have a clean green energy applicability to them. So we're using the benign processing method. We're going to be using renewable energy on site. In fact, we will likely be putting a solar farm on site as well. We've talked to a couple of companies that have approached us about that, and we'll be a net producer of power for the surrounding area. So there are ways to do it which don't affect the environment. Obviously if there's a project that's situated on a sensitive area, that's a unique situation for that specific project. We've seen it with the Pebble project, which is not a rare earth project. The Pebble project in Alaska where their environmental concerns is we've been recognized by both Republicans and Democrats, but we have to be reasonable about the projects that don't have environmental concerns.

Ryan Morfin:

So Pini, in season two, we ask all of our guests a series of six questions. They're usually, yes, no questions, but trying to take a survey of our conversations. And if you want to add a little context to the yes or no, feel free, but here goes the first question. If there was a COVID vaccine available today, would you take it?

Pini Althaus:

Yes.

Ryan Morfin:

Who do you think is going to win the election?

Pini Althaus:

Which election?

Ryan Morfin:

The US election.

Pini Althaus:

Well, I think it looks like Joe Biden's going to win it, but I think what happens, if we go past January six from my understanding is that the house will vote on it and it's one vote per state. But I don't know if I see it getting there at this point in time. I really don't have a crystal ball.

Ryan Morfin:

Third question. What type of economic recovery are we in? What type of shape is it taking? A V-shape, W, U, L?

Pini Althaus:

Yeah, I think 2021 is going to be challenging. I think we've been, and rightly so. I mean, we've had no choice as of almost every other country. We've been printing money for the past year because of COVID. And I think we've got to brace ourselves that, at some point in time, the chickens come home to roost. It was a necessary step. People needed it on an individual level. Businesses needed it as well, but I think we've got to do whatever we can to stimulate the economy, give people confidence to go out and work again, employ people. So I think we've got to watch ourselves, especially in 2021. And I have some concerns, but long-term, I think the approach in the United States is a healthy one.

Ryan Morfin:

During lockdown this summer and quarantine, was there anything in particular that you accomplished that you're particularly proud of?

Pini Althaus:

Yeah. A great amount of family time, which, if you would've asked me a few years ago if I could sit at home and be at home for six months, I would have told you absolutely not. I wouldn't be able to do it for six days, but it has... I'm sure it's done this with a lot of families as well. It's brought families together. We had a baby actually last year on Thanksgiving. So I was doing a lot of travel at the time and thought I wouldn't get to see my daughter in her first year or couple of years too often. And being home with her every day is actually been just the most amazing experience. So thankful at least for some silver lining in COVID.

Ryan Morfin:

Are there any silver linings that you see in the economy going into 2021?

Pini Althaus:

Yeah, I think we've gone through an absolute beating and it looks like we've got the ability to come out of it. And I think that's a testament to how strong the economy was built up in the years preceding COVID. So overall I remain an optimist. I mean, we are a country built on opportunity and going out and making it happen. And we're not a socialist country sitting and waiting for people to send us paychecks or wealth distribution or anything like that. I think the American dream still lives on. I think if you go out and you're willing to work and put your head to it and heart in it, I think we do have the ability to climb out of it. So if we look at what the economy is doing over the past few weeks, it looks like it's starting to rebound. And to me, that's assuring because it could go completely one way as well.

Ryan Morfin:

And the last question is, is there anything that you're watching, or listening to, or reading today that has been impactful on your thinking that you'd like to share with our audience?

Pini Althaus:

Yeah, that's a good question. I think it's been more personal stories. The news, I sort of take that in context or with more than a grain of salt. In some cases stay off the news channels for a number of days at a time, it became quite repetitive. But I think on the personal side, talking to friends, my family's all back home in Australia, they've just come out of 110 day lockdown, which we can't relate to that. It's been very trying on them and seeing the fortitude that they've had to come out of that and stay intact. I think the mental health issues that will come out of COVID are going to have a far longer effect than the economic issues. I think we're going to have to focus on mental health issues in this country for a long time to come.

Pini Althaus:

The impact on kids has been significant with regards to lockdown or remote schooling, et cetera. But to see people come through it. I think it's a testament to people in general and to the country and other countries as well, to see got that fortitude and survival instinct to try to get through whatever adversity we can. So hearing the personal stories, the challenges that people have gone through, I think it's made me a lot more aware of things that I have to be thankful for and where we can help out other people as well. I think we have to be united going forward because there are things...

Pini Althaus:

I think one of the things that COVID has shown us is we can get into this complacency and life goes on and we go one day to the next. And all of a sudden we get hit by something that affects everybody equally. I mean, COVID, whilst there were groups of people, whether it was the elderly or people with underlying health conditions, that got hit the worst. I mean, we all got hit in some form or another. So really, this should be something that unites us, not divides us.

Ryan Morfin:

Well, Pini, I appreciate you coming on today to talk to us a little bit about the supply chain crimp on rare earth and we'll definitely keep an eye on it and would love to have you back in the future.

Pini Althaus:

Thank you, Ryan. Thanks for having me.

Ryan Morfin:

Absolutely. Thank you. Bye-bye. Thanks for watching Non-Beta Alpha. And before we go, please remember to like, and subscribe on Apple podcasts and our YouTube channel. This is Non-Beta Alpha, and now you know.

 

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