Ep. 214: Kyrill Asatur – Investing like a pro – how Centerfin brings institutional-grade service to individual investors

Centerfin CEO Kyrill Asatur joins Count Me In to discuss how his background making institutional investing and trading operations more efficient lead to founding a Fintech company that brings the same level of service and resources to individual investors.

< Intro >

- Welcome back to Count Me In.

The podcast for accounting

and finance professionals
working in business.

I'm Adam Larson,

and today we're going to
talk about something

that is, no doubt, near and dear to you,

namely, your money.

My guest is Kyrill Asatur, the CEO
and co-founder of Centerfin.

As a longtime advisor to hedge funds

and other large institutional investors,

Kyrill was often asked by
friends and relatives for advice

on how they could better
manage their money.

How the big shots on Wall Street do it?

And for a long time, he didn't
have a good answer for them

because that institutional
level of service and expertise,

simply did not exist
for individual investors.

This is the story of how he decided

to correct that inefficiency,

in the investment and
management ecosystem

through the power of fintech.

This podcast is a must listen
for anyone with a 401K and IRA,

or any other investment accounts,

which means it's pretty
much for everyone.

So let's get started.

< Music >

So, Kyrill, thank you so much
for coming on the podcast.

I'm really excited to have you on.

And I figured we could start off

by just introducing you to our audience,

and just so you can give us

a little bit of background and your story.

- Sure, thanks for having me on, Adam.

So my background is about 20 years ago,

well, a little over 20 years ago now.

Out of undergrad, I joined, at the time

it was called the Global Operations
Division at Goldman Sachs.

And it was an analyst program,
three-year program,

where I got to rotate through 
several different roles.

And, so, I did that.

I was in foreign exchange for a little bit.

Then equities, and then decided
to find an area of the firm

that aligned itself with 
the hedge fund industry.  

So I got, personally, very interested
in the hedge fund industry,

just always been reading
about hedge fund managers.

And at Goldman Sachs
there's many different ways,

as you can imagine, you can
interact with hedge funds.

But the one business that
was directly correlated,

so to speak, with the hedge fund industry,

was the prime brokerage business,

which is basically serving
all hedge fund needs.

And Goldman had, and still does have,

the kind of premier
prime brokerage business,

top three prime brokerage
business in the country.

And, so, I was able to get
myself a role in that business.

So I was there for another six years,

five, six years after that,
after my first three-year rotation.

And then I joined a
hedge fund that I covered,

they were actually ex-Goldman guys, too,

and I was with them
for another five years.

Ultimately, I got recruited

into a couple of different
roles with other firms,

and decided in 2016, so now
about six years ago,

to start my own advisory practice.

And initially focused on
working with hedge funds

and other alternative
investment managers,

very organically and really through,

as they say, necessity is 
the mother of all invention.

I decided to start what is now Centerfin.

And the idea was really because
over the two decades or so

that I've been working on Wall Street,

I've always struggled
to help friends and family

that will come to me and ask me

about what to do with their money.

So they might have a retirement account,

or a 401K, or just savings
that they've saved up,

that they would like to invest.

And, frankly, I just never
saw any great options

out there that I can point them to.

And having spent my whole career,

or at least the biggest part of my career,

interacting with large, sophisticated,

institutional investors like pension funds,

endowments, foundations, family offices.

I, basically, learned the way
that they invest their money,

and it was very different than the options

that were available for if you're
an average Joe or Jane, so to speak.  

And, so, Centerfin was founded

to address that need, in my mind.

And we're basically two years into it,

a little or two years into it.

We went live at the beginning of this year.

We have a tech-enabled,
kind of tech-forward service.

And, so, we spent a bunch
of time building it,

but we went live at the
beginning of this year

and growing nicely in
these crazy markets.

- Yes, the markets are very crazy

with everything that's
happening, the inflation.

And in the past three years with
the market, the way it's going,

I know it's been really crazy for everybody.

And I know organizations,

and our focus will probably
be more on organizations

and people within those organizations.

I know organizations are looking to invest

and trying to build their wealth,
as well as they're trying to keep 

above water in this industry.

What do you think the future of finance

is looking at as things are, continuously,

changing and the finance team
has to adapt as they go along?

- Yes, absolutely, so really technology

is playing a bigger role in everything.

So one of the reasons why
we started our company

and the way we structured it,

it was because we felt like technology

was something that could be used

to just create more efficiency
in really any process.

But, for us, it's the investment process,

managing people's money.

And by "Create efficiency",

I just mean do things in a way that
are cheaper to the end consumer.

So for us it's an individual.

But this works all the way up
and down the chain internally

at an organization or
externally depending on,

we all have clients we serve.

And, so, I think technology is a major,

and you've heard about it, people
have referred to it as fintech.

It's finance and technology combining,

and the interesting thing is that
it's still early, quite frankly.

Because I do think that technology

is making its headway in
helping create efficiencies

in organizations, and processes,
and procedures.

But, quite frankly, most of the 
financial world infrastructure

is still what existed 20, 30, 40,
50 years ago, in some cases.

And, so, there's just a lot of opportunity.

- There is a lot of opportunity.

And as you mentioned there,
a lot of the systems that are in place,

are still the same things
that were built years ago.

Now, is it more advantageous
to go with a solution

that may be more digitally native,

that doesn't have the backbone
of the original structures,

but it's trying to be more
agile and adaptive

with technology advances?

- Yes, I think it's absolutely advantageous.

So I actually was having a conversation

with a former colleague this morning.

And what struck me is that
even when you try,

and this is somewhat by design.

But even when you try
to structure your business

in a way that's very customer-driven.

And that's really our ethos,

is that we really want to
focus on the customer.

What's the right thing for the customer,

for the client, for the investor?

And even if you try to do
that it's hard, oftentimes,

when you have legacy partnerships.

And, so, our perspective was
always find the right partners

that have the technology

and we spend a bunch of time,
obviously, finding them.

And then build our own technology,
that's completely new.

So it's not building on top of something

that is maybe legacy 20 or 30 years ago.

Which is what often happens in
bigger firms, bigger incumbent firms.

But build something completely 
de novo, as they say.

And by doing that, and by 
focusing on, like I said,

efficiency, cost, I mean, you're able
to pass that through to the client.

- That that makes a lot of sense,

and you're able to kind of,
in a sense, be more agile.

Which is what you're looking 
for, especially in fintech,

you need it to be agile

because you have to adapt
as you're going along, right?

- A hundred percent, yes,
a hundred percent.

I mean, any kind of new firm
you have to be agile,

but in fintech, it's very important.

- So can we talk a little bit about
how this type of software,

these type of solutions,

will affect the accounting
and finance team,

as they're trying to adapt 
within their organization?

- Yes, so I think that accounting
and finance folks,

it depends on at what angle
you're looking at it through.

I think just on a personal level,

so every professional,
or non-professional,

but accounting and finance professionals,

have their own retirement
savings accounts.

They have their own
taxable savings accounts

that they've been able to accumulate.

Using technology, using software,

to help things will just 
make those solutions better,

just solutions that are
available to them better.

And within their roles,
the use of technology,

kind of, more broadly speaking,

should also make their jobs
less labor-oriented, so to speak,

So when you can use technology,

and, actually, as now I'm reflecting on this.

My early days at Goldman Sachs,

I was in operations, it was 
referred to as the back office,

so it was everything that
wasn't the front office.

So once a trade gets done, it comes
down to us and we handle it.

And we were very encouraged to
develop processes and procedures

to make what was, at that point,

referred to straight-through processing.

So that there's very little
manual intervention.

And, I think, fast-forward two decades,

again, for a long time lots of things

were being cobbled together.

But technology just makes that
trend so much more powerful today.

And that's going to have a real ability

for folks in those seats to do
higher value type work.

So to do less stuff that's a little bit
more manual and labor intensive,

and focus on things that
are potentially higher value.

- Yes, definitely, and I was
reading some stats.

There's hundreds of billions of dollars

going through fintech every year.

Do you think that that's
going to continue to grow

as more and more people
move in that direction,

especially as the technology grows?

- I think so, I mean, obviously,

we're going through
a period of time, right now,

where we went through a period of time,

not to take too much of a step back.

But we went through a period of time

where money was abundant,
to put it pretty simply.

We had, in response to Covid,
the Federal Reserve

and other global central banks
printed a lot of money.

You've seen this in the press
over the years, it was there.

It was done to stabilize the economy.

It was done to stabilize markets,

so that we wouldn't go into 
some version of a depression.

And that money, eventually, finds its way

into speculative ventures like 
startup fintech companies.

And, usually, what happens is that,

the more speculative the more

you'll see capital flow into that stuff.

So you saw it in crypto, in 
NFTs, and advertisements.

I'm sure you've seen advertisements

for investing in art, as an investment,

or wine, or things of that nature.

That's very typical of late-stage
behavior in a market cycle,

and we just went through that

and now the air is
coming out, so to speak.

But that being said, as it 
relates to fintech specifically,

I do think, well, it's probably healthy

to have some decline and growth

in the capital that flows into the industry.

I do think it'll continue to
be an important area of focus,

simply because it is really hard.

Not impossible, but it's
really hard, internally, at least,

in some of the big banks
that's, kind of, where I grew up

to innovate that much.

You can make adjustments on the margin,

but if you want to take
a very different approach,

it's hard to do so.

And, so, for that reason,
I think, that money

will continue to flow into fintech.

- Yes, so thinking about individual
employees within organizations.

What role do you think
that employers should play

in helping with their employees'
personal health, financial health,

because you want to keep your top talent.

You have to connect with
a good fintech company

to make sure your investments are good,

to make sure all that stuff's flowing.

What role do you think
that they can play in that?

- Yes, it's a great question.

We actually think they should
be playing a bigger role.

So most companies,
most larger companies,

offer retirement services.

So they'll have a 401K plan

and they'll do a matching grant
up to a certain percentage

of what you put in, or of 
your salary, and whatnot,

and it basically stops there. 

I mean, at least, I've seen 
some of this, recently,

I think some larger companies
and corporations

are embracing a more holistic approach.

So offering their employees,

whether it be managing
their student debt,

or their credit card debt,

or thinking about not just 
their retirement assets.

But if thinking about how
to plan to save for a home

or to make other investments
outside of their retirement world.

So I think that that should be something

that big companies and corporations

are offering their employees.

And it's not very typical right now,

as you probably imagine.

- So what about the small
to medium-sized business?

Who doesn't have the big resources,

that the big corporations,

that the examples you just gave.

What options do they have
for helping regain top talent,

when they're small,
trying to get themselves

or they're just not a large business,

but they're trying to get good people?

- I think they're a great candidate

to work with fintech firms,

relatively younger firms like ourselves.

I actually, in a very early
deck for Centerfin,

I put something at the end
that said something

like, "Eventually, we will hope to be a perk

a company can talk about,

to prospective employees
or existing employees."

And the reason I say that
is because what we do

is very technology enabled.

Again, we can do it fairly 
quickly and we can do it

at a cost that is a fraction
of a traditional provider.

And it's, solely, because
when we were founded,

how we were founded,
what our goals were.

And we're not the only one,

I mean, there's folks out 
there that are talking to,

it's becoming more common,
but it's still very early.

- Yes, that's great.

It's great that they have an option

because sometimes these
great options are available.

But the small and medium-sized
businesses are overlooked

because they may not
have the immediate capital

to invest in something like that.

- Yes, absolutely, and I think it is a big,

again, if you're taking on
something like a 401K,

it's not an easy thing to set up.

We do manage retirement money,

we don't necessarily
manage 401K accounts.

It doesn't mean we can't, but I bet
if that's something that somebody,

a smaller business wanted for us to do,

we can probably get it done fairly cheaply.

- So when thinking about
just personal finances,

everybody has their own struggles.

There are, obviously, issues
in the United States.

There are issues all over the world

with different personal
and financial problems.

Do you think that the
emerging fintech technology

can help solve some of those problems,

that people are running into?

Especially, thinking about 
different types of investments,

and building that wealth
that everybody desires?

- Yes, a hundred percent.

So it's why we started what
we started, when we started it.

Because, especially, today 
the investment approach

of the last couple of decades,
let's just take that timeframe.

Because that's the timeframe
I've been working in,

where most of my contemporaries,

as they develop wealth,
have been managing their money.

There was a fairly, not easy,

but a choice of using
a very low-cost index fund,

obviously, pioneered
40 years ago by Vanguard.

It became a very easily to
implement and accept strategy

for lots of individuals,
for their personal finance.

And it makes all the sense in the world,

except it made sense
in the market environment,

that we were living in 
post-financial crisis up until Covid.

And the reason I say that, is that
you mentioned problems,

and problems not just here but globally.

Well, there are a lot of problems,

and I mean, there's always
a lot of problems.

But the world is always changing,

but the difference between now
and the prior, call it 12, 13, 14 years,

is that we are seeing things that

we haven't seen in 40 or 50 years,

and by that I mean things like inflation.

I think before we started recording
we touched on it briefly.

But inflation is not something,
at least, in the U.S.

that we've seen since the 1970s.

So nobody of our age or younger

has any direct knowledge or 
experience with inflation,

and how markets work with inflation.

And even the professionals, obviously,
that are managing money

don't have experience with inflation.

But one of the things that we do,

given our background is in 
the hedge fund industry,

we're still pretty plugged in to that world.

And there are a whole
slew of hedge funds

whose role is to manage money 
on a global macro basis.

So all they do is try to
interpret these things,

where, "Is inflation a problem?

And if inflation is a problem
what do you do

and what does that mean
for traditional investing?"

And, so, I think in today's environment,

and it's very recent,

and potentially has staying power, you
really need to be cognizant of inflation

and the effect it has on traditional
investing strategies.

And, so, that's one of the things
we talk to our clients about,

we write about, is that
the low-cost ETF approach

made all the sense in the world,

from, call it 2009, even if you want to

fast-forward to 2021,
at the end of last year.

There are some real scenarios out there,

and smarter people than I
have talked about this.

But there were some
real probabilistic scenarios

out there that, that approach,

just buying a very cheap
Vanguard equity index fund

could yield no to negative results
over some foreseeable future.

So what's not often talked about

is that that approach from 2000 to 2010,

a whole decade, yielded no return,

you actually lost a little bit of money.

And it's not widely talked about

because it's not convenient
to talk about it.

But the truth is that if
you tell somebody today,

"Hey, listen, if you start investing

and in 10 years you're not going to have

any more money than you started with.

You might have, on a real basis,
less money because of inflation."

They're probably going to
be surprised by that.

But that's really the world 
we're living in right now.

- So, basically, what I'm
hearing you say is that

if you're going to start investing,

if you are investing, if you have
investments right now.

As we look at the inflation that's
happening, start educating yourself.

Start having conversations
with whatever company

you're using to invest because
we need to talk about this.

We need to learn from history

because the people who
were working at that time

when the inflation was hitting,
they're probably retired

or they're doing all that stuff,
are retiring now.

And, so, we need to find that balance

because we need to get
that education out there.

- Yes, 100%, that's what
we would recommend

is talk to a professional, bring it up.

All these big organizations
have economists

and they all have opinions
on this, that, and the other.

However, again, none of them,
maybe very few,

but none of the ones that
I see on TV, every day,

were actually alive, or adults,

when the last time we had
this kind of environment.

And not that we were, but what
we try to do is educate ourselves

so we can help our clients
navigate this environment better

than just what has been 
working in the recent past.

- Now, do you think it's up to the employer,

who is providing this to their employee
to provide that education?

Or do you think, as individual people,

we should be researching that ourselves,

or is it kind of like a dual?

- I think it's in line with what I said
earlier about employers

providing their employees with resources,

that are above and beyond, what
historically, was thought to be enough.

More so today than in recent past,

that advice is really
valuable to individuals.

And I'll give you another example,

so cryptocurrency, a very popular topic.

It has been around for just over a decade,

but really has gotten
mainstream attention,

probably, over the last five or six years.

And I, like everybody else, heard of it

when it first became more popular.

I started to research it myself,

or myself started to think 
about, "If it makes sense?"

Came to the conclusion that,
"I think, there's something there,

but it's still early, it's risky."

And, so, when I think about how
much money to put in it,

it has to be small.

In my opinion, especially, five years ago

when I first got involved.

It's not any different than gambling

with potentially huge returns,
but also potentially huge losses.

And, so, any friends and family,

and again, going back to my motivation

for starting Centerfin.

Any friends and family that 
would come to me, over the years,

before we started Centerfin,

and say, "What do you
think about Bitcoin?

What do you think about Ethereum?

There's this other token
that I heard about?"

I tell them all the same
thing, "I think Bitcoin

and Ethereum are kind of interesting.

But make a small allocation, call it
one to 3% of your overall assets

that you invest and see how it goes,

and keep yourself educated, 
but don't over risk it."

And then you hear, in the press,

as crypto went boom and bust,

a lot of other speculative 
assets in the last cycle.

You hear stories that make me really sad,

and it's not because people 
are stupid by any means,

it's just they're just not educated on it.

But you hear professionals,
in various different fields,

that put 90% of their savings

into a token that then went to zero.

Or put it in a platform 
that wasn't researched well

and it went bankrupt.

And you hear these stories
time and time again,

and I think it affects
hundreds of thousands

if not millions of people.

And if that person's employer 
gave them a resource,

where they can go and ask that question,

and get professional advice,

maybe they would've avoided that.

But now they're potentially
in a catastrophic situation

for themselves and
potentially their families.

- Yes, I can see how that could happen.

So, anyway, as we wrap up
the conversation,

I just wanted to kind of get your view,

Wall Street looks one way right now.

We have a number of exchanges,

and we've got stuff in Congress
for possible other exchanges,

for smaller companies
that could be going through.

What's your view on Wall Street right now,

and how do you think it'll look
as we go into the future?

As things are constantly changing?

- Yes, it's a great question.

I think there's a movement,

and to your point about 
exchanges for smaller companies. 

I think there's a movement
to make the products

that Wall Street generally 
pedals in more available.

So that you hear, and I don't like this term,

but you hear a lot about 
democratization of certain things.

And it's meant to mean that you're
leveling the playing field.

Allowing a wider audience
of companies and individuals

to access certain products and services.

And, so, I think that that trend

has been going on for a long 
time, that will continue.

I think, to speak of crypto, actually,

I think there are a lot of folks in the crypto,

blockchain space, that think that
the technology of blockchain

will play a big role in,
which is really just a technology,

but it will play a big role

in the rewiring of some of 
the guts of Wall Street.

And that could mean really good things

for the end consumers of their products.

And there are lots of folks in crypto

who think that crypto
is the parallel Wall Street,

a parallel financial system.

I'm a little less inclined to believe that,

although, I do think there's
some elements that make sense.

But it's just very hard
to get your arms around it

given, it's a highly regulated space,

it's global, and it's just hard to get there.

But I do think that there 
will continue to be a trend

and it'll be good for everybody involved.

In creating, more efficient,

more widely available products
and services on Wall Street.

And, so, yes, I think that
that's going to continue

and I think it's going to be good
for everybody involved.

- Yes, and maybe even something

that could help distribute
the wealth a little bit more.

As opposed to just elite few
who make small moves

and it moves the market in a crazy way

as opposed to allowing for
others to get involved, as well.

- Yes, a hundred percent,
I think that that's part of it.

I think the other part of it is,

you've heard me talk about it
now the whole time.

The way I see the world, and
I don't know if this is too simplified,

but the way I see the world is that,

at least, let's focus on the U.S.,
the reason the U.S. is so special

is because we have
this free market system.

We have capitalism.

If you wanted to start a business,

you can go and find capital

and use that capital
to build your business.

The capital markets,
the access to that capital,

is what Wall Street largely controls.

And I do think Wall Street
as it looks like today,

is just a very big, to your point,
about distributing the wealth.

It's a very big drain of, generally, expenses

that take a big bite out
of those capital markets.

But the basis of those capital
markets is actually our money.

So it's your retirement funds
that are in a pension account.

It's your savings that
you've put in the bank,

even the endowment,
wherever you went to school.

Let's say you contributed to 
the endowment to help out.

That's your money that you've
just given to your endowment.

And, so, the basis is the capital

that runs the capital markets is all of ours.

And Wall Street is really just a machine

that helps create efficiency
in those capital markets.

And I think that that can be
done in a much better way.

And we're addressing it
in one little small niche,

but I think that trend will continue as well,

and that's a big part of fintech.

< Outro >

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