This week, we speak with Catherine Keating, CEO of BNY Mellon Wealth Management. Keating oversees $265 billion in client assets of BNY Mellon’s total $2 trillion AUM. Prior to joining BNY Mellon, Keating was the chief executive officer of Commonfund and held a variety of senior positions at J.P. Morgan over two decades. She has been named to the “Most Powerful Women in Finance” list and one of the “Most Powerful Women in Banking” list by American Banker.
BNY Mellon was founded in 1784 by Alexander Hamilton, making it is one of America’s oldest banks. Their very first client was Eliza Hamilton, who was a financial powerhouse in her own right. The firm serves 77% of the Fortune 500.
Keating explains the various “Tax Alpha” strategies that are available to investors. There is a scheduled 2025 “donut” in the estate laws that will lower tax free estate amount (BR: savvy investors should avoid dying that year). Regardless, taking some taxable gains now, especially in highly appreciated concentrated positions makes sense for investors if it fits with their long term plans. Selling that stock and then rolling the proceeds into a more diversified set of holdings make sense for most portfolios. She also explains some of the advantages of carefully selected alternatives in an era of lowered expected returns. Capturing the illiquidity premium could make up the difference for a longer term investor.
Keating notes that in today’s ultra low interest environment, philanthropic gifts are “on sale.” The compelling opportunity today is the low rates makes retained interest very advantageous, and once rates rise, the calculus is very different. There are numerous technical estate and tax planning issues today that seem to be somewhat historically unique.
Be sure to check out our Masters in Business next week with Mike Swell, head of Global Fixed Income at Goldman Sachs Asset Management (GSAM). Swell is responsible for co-leading the global team of portfolio managers that oversee more than $700 billion in multi-sector bond portfolios.