Speaker 1:
From the library of the New York Stock Exchange, at the corner of Wall and Bronx streets in New York City, you're inside the ICE House, our podcast from Intercontinental Exchange on markets, leadership and vision and global business, the dream drivers that have made the NYC an indispensable institution of global growth for over 225 years. Each week, we feature stories of those who hatch plans, create jobs and harness the engine of capitalism right here, right now at the NYC and at ICE's exchanges and clearing houses around the world. And now welcome inside the ICE House. Here's your host, Josh King of Intercontinental exchange.
Josh King:
Working on Wall Street as a father of two kids who became teenagers in what feels like the blink of an eye, I often hearken back, especially when Father's Day rolls around to the depictions of domesticity in the great AMC series, Mad Men. The episode called Marriage of Figaro, Don Draper played by John Hamm, comes into the house to surprise his daughter, Sally, on her birthday with a brand new puppy. Several hours after Sally's party concluded. And who doesn't like having a dog, right? The problem, his wife, Betty played by January Jones knows all too well is that Don's simple mission that day was wasn't to go out and fetch the family a new pet, it was simply to pick up his daughter's cake from the bakery, but one thing led to another. Don had another one of his existential crises, found himself intoxicated again, missed the party entirely and overcompensated by introducing another animal into the Draper household. Such is Matthew Wiener's worldview of '60s parenthood, Manhattan style.
Josh King:
There's a very different multi-generational depiction of fatherhood on Wall Street in the form of the Frankel family, a fixture at the New York Stock Exchange since 1973, when Stuart Frankel parlayed his early interest in investments to open Stuart Frankel & Co, the oldest independent broker on our trading floor. While Stuart still chairs his namesake firm, it's now run by his two sons co-presidents Jeffrey and Andrew Frankel and a third generation of Frankels is now following in their footsteps. A far cry in almost every way from Don Draper working to enlist Sally and Bobby in the Madison Avenue ad business. Our conversation with three generations of the Frankel family and how the trading floor community is leading the change to reopen New York City, working with family and blazing a path to the next generation of stockbrokers. That's all coming up right after this.
Speaker 1:
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Josh King:
Our guests today are filling up the library here at the New York Stock Exchange in our first in-person show recorded since March of last year and our largest podcast ever, based on number of people gathered around the microphone. Our guests from way back on episode 125, Stuart Frankel, chairman and co-founder of Stuart Frankel & Co, and the company's co-presidents Jeffrey and Andrew Frankel are now joined by two of their analysts, Rebecca Frankel Heinemann and Kyle Frankel. Their firm, as I mentioned earlier, is the oldest independent broker on the New York Stock Exchange training floor and offers direct execution in cash equities and derivatives globally. Welcome Frankel family inside the ICE House.
Andrew Frankel:
Thank you.
Stuart:
Thanks for having us.
Josh King:
So Stuart, on the first show that we recorded way back when, you told me the story of how your dad helped you learn the value of investments by dangling a baseball jacket in front as the ultimate prize of good stock analysis, what kind of role model was he?
Stuart:
My dad, who never got past the 10th grade in high school was a terrific coach and really taught me how to be successful. And the best advice he gave me was, "Be out eight nights a week. You can never make any money if you go home. And there's no such thing as working too hard and there's no such thing as ever being off work. Work is 24 hours, seven days a week." And I followed that.
Josh King:
You followed that. So similar question for Andrew and Jeff. Your dad's here in the room with us, so it might be a little awkward to answer, but how did he instill the values that now glues your eyes to the screen from market open to market close and serviced your client?
Andrew Frankel:
Since we were young and sat at the dinner table, it was instilled in us to do everything. Learn, be there, listen. And it was as recently as a few months ago when Rebecca was sitting with our other co-founder, and that's my mother, Sharon Frankel, and Rebecca, do you want to share the work ethic that grandma told you when you were joining the firm, what you had to do?
Rebecca Frankel Heinemann:
I'll never forget it. It's something we learned at the dinner table, but the night before my first day, my grandma goes, "You're never too big for any job. Be the first one there to scrub the floors, wash the windows, whatever you're asked to do." So, we try to live up to that every day.
Josh King:
What was the first job that you guys had as kids?
Andrew Frankel:
Remember?
Rebecca Frankel Heinemann:
I had an internship with a film festival. I also worked at a hospital with special needs kids. So, a little different than Stuart Frankel & Company.
Josh King:
Kyle?
Kyle Frankel:
My first job was actually an internship with Cheddar here on the floor. So, actually not too far from home.
Josh King:
I have come to appreciate over now four years or so, the admiration and focus that Andrew and Jeffrey have for their dad. But did you see them following in his footsteps or were they their own role models for you in terms of their commitment to the work that they did?
Rebecca Frankel Heinemann:
I would say I think my grandparents have always stood as the pillars in our family, the biggest role models, but we've been very fortunate. We've had family dinners every Friday night growing up for as long as I can remember. And the values that started from our grandparent parents were then passed down through my dad, my uncle, my siblings, and I soak it up all the time. So, I think they've always been role models for us.
Jeffrey Frankel:
Josh, what I think is really special for Andrew to be able to teach his nephew and niece as if it's their own. We're that close as a family. And the exchange has done an unbelievable job bringing us back to the floor. It's really almost a year ago today, I guess, right after Memorial Day. And Andrew was on the floor, Kyle was on the floor. And hearing Andrew teach my son reminded me how my dad didn't want to be the person that taught me physically on the floor. And it's so special to hear that interaction between a brother teaching a son or his nephew, the teachings of the business, right, would you agree? It's...
Stuart:
Yeah. Look, when I first came into this business, I had the privilege of working with my brother and a coach with my dad. So even though my father wasn't working shoulder to shoulder with us on the floor of the exchange, I was able to decompress, come home and we'd go through scenarios on the phone. In the trenches, it was special to be with your brother day in and day out. I'm getting that sense now with Kyle working next to me, or using Zoom with Rebecca, being able to share with them my thoughts and learn who they are in a different way in a work environment has been priceless.
Josh King:
How different is it uncle to and nephew in the workplace versus at home? How do you make that shift?
Andrew Frankel:
So I think these guys have seen me as the fun uncle on the weekends. For us the summer is, everybody's getting together at one of our houses, we could be 30, 40 people and they don't see the focus, the diligence of that work environment, obviously on a Saturday or Sunday. I think if you asked Rebecca, or Kyle, the biggest changes is I'm dialed in. So they now see me in a very different light, face on those screens, I'm not doing anything but doing the best I can for our customers, making sure we're working as a team. And I think they saw that, that they're not seeing on a Saturday, they're definitely seeing it on a Tuesday from 6:30 in the morning till 6:00 at night. Saturday nights I'm calling them, they realize as my dad said, "It's a seven day a week game." And that I got to think as a different perspective.
Josh King:
[inaudible 00:09:54] not what you expected, or what you expected?
Kyle Frankel:
I would say it was not quite what I expected. But after being here, it makes complete sense. And it was something that definitely took getting used to, but then I think it made us honestly even closer that we understand each other that much better now.
Josh King:
Did you guys have choices about career tracks that you wanted to follow that might not have ended you up in these chairs?
Kyle Frankel:
Yeah, so I studied Computer Science at college. And then my first job was at Goldman doing engineering there. And then this past summer I wanted to make a change and had to decide what would be the best opportunity for growth and getting out of engineering, kind of little pinhole, let's say.
Rebecca Frankel Heinemann:
I studied the business of sports in college, so very different from the brokerage firm. Was working at a sports agency out of college and ended up doing a transition to work with Dunkin' and with some financial advisory for athletes, which then segwayed to working with the family.
Josh King:
We're going get into both of your prior experiences before coming to Franklin Co. later on in the show. But I think in terms of honoring your father Andrew in the last podcast, we grabbed a quote from it. You said, "Stuart's greatest dream was to have the third generation join the firm." Stuart, so now that it's happened, what's the next goal to reach after that?
Stuart:
To be a great grandfather. That's number one on my bucket list. But I want to just add one thing which amazes me sitting here, that 31 years ago when I was 49 years old, I can remember being on the floor of the exchange and saying I can't keep running around like this in every room. I'm not going to make it. I'm picking up the phone and calling my son Jeffrey, who was working for a hedge fund. And I said, "Jeffrey..." He's 24 years old your guys age. I said, 'Jeff, you got two choices, either you have to come in here and run the business or I'm going to sell it." He goes to his boss and the boss says, "I gave you a big bonus in December. Can you hold on till December?" This was May. He calls me, he says "Dad, can you hang on till December?" I said, "I can." The day he came, the seat was transferred from my name to his on Friday. He came on Monday. We've never been on the floor at the same time and that I think really helped run the business.
Stuart:
And then he called up his brother, who was having a wonderful time at the Wharton School and was going to spend the last six months going to Atlantic City and he said, "Andrew, forget about it. Get in here. I can't do this without you. I need you." And Andrew started after three and a half years. And now we have the next generation. I couldn't ask for any more.
Josh King:
So every family has faced a version of this over the past 15, 18 months. Suddenly, grandparents, fathers, mothers, sons, daughters went from intensely connected on occasions, like Father's Day, like those weekends and Mother's Days to being separated by necessity because of the pandemic. What are some of the ways that you guys frankly struggled but also persevered, managed and ultimately cope to the pandemic?
Jeffrey Frankel:
From a business standpoint, we were really fortunate Zoom, which my father had talked about way, way early allowed us to communicate on a business standpoint, even when the exchange was closed. We were seamless and were able to continue doing what we were doing. We were able to continue with our corporate access calls. We were able to have our Zoom meetings and idea of meetings which we'll get into later with you. But the hardest part was not being able to hug your own children, being afraid of your own kids, of hurting your parents. That said, my daughter Rebecca, got married August 8, we kept it to only 31 people. We were extremely safe and knock on wood. We were all able to get away from that on arm. So we lived through some painful times and some scares of my father testing positive and finding out it wasn't positive, then having a wedding. And we walked away from it just thrilled that we were able to survive and come back to the floor and everyone was okay.
Josh King:
So Andrew, you and I have traded notes on how your son JB found himself suddenly away at boarding school to pursue his passion of basketball with one of the country's best high school teams. What about the puts and takes of that deal?
Andrew Frankel:
I would say he's completely transformed his body physically, got in terrific shape. He was able to play basketball. He got away a little bit and got to be more mature and more independent, self confidence through the roof. The negative is I never wanted my kids to go away till they went off to university. So the premature departure was very hard for me, to my wife and I we have four boys we now have one at home. And in a lot of ways I've been defined by being a father first. And it's been a little rough in terms of the transition of seeing a child go away before before college.
Josh King:
So now that you're all together again, what's the Frankel family plan for Father's Day 2021?
Andrew Frankel:
It's Kyle's birthday also. So lots of hugs, smiles and we'll probably have a barbecue which we always do and get together and-
Stuart:
My wife is planning... Our CO founding partner. Is planning a Father's Day at our house for everybody. And that will be Father's Day, we're all together. But no real different than most any other Saturday or Sunday in the summer when we're all lucky enough to be living in a similar area.
Josh King:
You mentioned your founding partner. My introduction took place somewhere in the mid 1960s. But by 1973 was still pretty much the same model in Manhattan. Dad gotten the train, went down to the office. Briefcase in hand. Was the breadwinner. Mom often was taking care of the kids. You guys are business partners. How did that relationship evolve into that place where you weren't like the Draper's in any way, you were partners?
Stuart:
We were partners, my wife studied business in college. She was the one that really had the foresight to when the clients told me, "I don't know if this idea of cutting out the middleman will work." She was the one that said, "Stuart you must do this. You are an entrepreneur. You got to give this a chance." And without a doubt if she had said to me that day, "Look, we're living a very good life." This firm would have never saw it. And when it started, she figured out with me, and if we went to see clients in Boston, none of our competitors wives were allowed to go. The firm would not send the wife. So we started together, where we would go to see clients and always bring the trader and his wife because my wife was coming with me. And that changed the relationship from just business to personal. And now the brains behind that was my wife.
Josh King:
We're talking about moms. Andrew, you have written on Facebook, I think that your mom lost her father when she was only 11 years old. And given that for all of you, how precious does that make these moments like this?
Andrew Frankel:
I don't take any of it for granted. The opportunity to have everybody together, My children, my nieces and nephews, sister brother and my parents. It's a special thing, but as my dad said what makes these weekends... Especially in the summer. So special's we all try to get together. So quite frankly, the idea of Father's Day Sunday, there's not a ton of pressure that we have to get there and when we're going to get there. Because as my dad said, is really any other Sunday, most of the year of being a family and trying to make it work together.
Josh King:
So I mentioned that Stewart and Franklin Co. is the oldest independent broker on the New York stock exchange trading floor, but Jeffrey remind the audience this idea that your father and mother had in 1973 to start this buy side only firm and how did it differ from most of the other brokers on the trading floor at the time?
Jeffrey Frankel:
So anonymity was the key word and it still is today. We don't look to try to turn an order into five different orders. The cost structure of our business is that we can really concentrate and slowly execute or liquidate or accumulate for one client. And today that hasn't changed. Other people on the floor did what was called $2 business, which meant they did business for Morgan Stanley Goldman Sachs at the time, Bear Stearns Lehman Brothers. Stewart Franklin & Company strictly wanted to do business with the end client, and nobody owned us. So we never had a situation where if I was doing business for Morgan Stanley, and the Bank of Oshkosh, Morgan Stanley would never call me up and say, "What are you doing in XYZ?" Because they didn't own me. I didn't have to give them that answer. And our clients respected us enough to know we were never calling them to shop the other side. Because we did that for one client. They would wonder if we were doing it for them also.
Jeffrey Frankel:
So we've really been the priest in the confessional where they come to us, and it never leaves our desk. And literally 48 years later, we have corporations that are using us for buybacks every day to repurchase their stock quietly, because they know if they go through the larger houses, that order is being seen by eyeballs. We really try to help these corporations accumulate either other companies or buy back their stock quietly without anybody knowing.
Josh King:
You joined the firm first and headed down to the trading floor as your dad headed off to work in the back office. Did you plan to make a similar transition once the next generation arrive?
Jeffrey Frankel:
No, I had a horrible neck surgery this past February and they had told me I might not live through it and it put a lot of stuff in perspective for me. And I told myself after 33 years, if that happened, I was going to think about slowing down. But with the use of Zoom, I was able to still do everything I was doing on the floor. So I took a step back. And then when the floor reopened in May, I thought it was great, especially with Kyle joining the team. And then Rebecca joining the team. How great was it that I wasn't the one beating or teaching or schooling or getting upset as so many other fathers do on the floor of the exchange, that my father did not do to me? And how great was it to have my brother be able to teach this next generation?
Jeffrey Frankel:
And there were times I would listen to it on Zoom from home and I would bite my lip and go "Kyle, answer it the right way. Rebecca, you know better what's the right thing to do?" And Andrew has been great in teaching them. And it's been a great transition for us.
Josh King:
What's this been like is a learning year for both of you? It's
Kyle Frankel:
It's definitely been a pretty steep curve. I would say, Just to put it in perspective. I came from a place with a certain type of culture dynamic kind of in a very much technology or engineering world. And then all of a sudden threw myself into the floor of the exchange which is completely different world really hectic and loud. So first of all getting used to that. And then just the nature of the business and working with Andy and just adjusting a lot of the values that are core values of the business are things I feel I've been taught my whole life with my dad and my grandpa, my grandma. So those things maybe I picked up quickly, but in terms of the finance and the wording and all those little things. There's definitely a pretty steep curve to get used to it and get comfortable.
Jeffrey Frankel:
I think Kyle was great though coming in and showing us what he had learned away with his technology background, Kyle why don't you explain a little bit of what you did to help us with the use of Slack and how you've helped us in the corporate access side?
Kyle Frankel:
Sure. Like I said, bring it back to in joining the firm. I wanted to bring some of a fresh perspective with the computer science background. Everyone else has business school. So I maybe could approach certain problems slightly differently. One of those problems was these idea dinners we do and where clients can share ideas back and forth and converse. During the pandemic we had to shift to doing it over Zoom. And I thought one way to do this maybe slightly differently or have certain advantages would be to use Slack, and Slack allows them to more easily communicate back and forth. Scheduling is a little bit easier. There are all sorts of certain advantages there. It's completely anonymous. So just a different way to do things. That would give us another option in that type of world.
Josh King:
Rebecca, what's been your learning arc over the year?
Rebecca Frankel Heinemann:
I would say my learning curve has been entirely vertical. I joined the firm at what I would viewed as a bit of a bizarre time learning this business entirely remote. Our family has always stressed the importance of communication. And whether it's at the dinner table or over the phone how important it is to stay in touch, stay in front of each other. And to not be able to learn the company, the ins and outs, day to day, face to face with everybody was a little tough, but I go back to our values of always talking. The dinner conversations, the business doesn't end, like we've stressed when the bell rings. So my training has continued from 6:00 in the morning to 6:00 at night. And I feel very lucky to be able to learn from my family.
Stuart:
Rebecca is as Kyle. They're talking to some of the largest mutual funds and pension funds in the world. And in their '20s, they're talking to these portfolio managers and analysts trying to make them aware of management calls we're having, of events that we're sponsoring. And that's terrific exposure to get at a young age. This is a David and Goliath story. In order for us to compete against the larger banks. We have to be better we have to outwork and we have to be creative, and to bring in this new generation is just a perfect way to keep pushing that boulder and it's going to help us be better and smarter. And I'm excited about the next chapter here.
Josh King:
Stuart the family firm model is as old as the exchange itself. But what isn't typical is what we've been hearing the next generation to work elsewhere before joining the family business. This is something that Jeffrey did, as he talked about it earlier. And now both of his children have done both with Goldman and Duncan. Why do you think that's been important for the future of the firm?
Stuart:
I think that's a very good question. One of the things that we always stressed was just because your name was Frankel, you are not entitled. And you had to earn your position with our firm, and part of that was we didn't want to hire you right out of school. We wanted you to get... As grandma's would say, "Scrub the floors and clean the windows," knocked around at other places so that you would learn and when you came with us, you would be as hungry as all of us were. And that wasn't just coming to you because your name was Frankel, and both of you I think you gained an awful lot. Rebecca from working with Dunkin', and Kyle, you're working with Goldman and to me that was a great thing for you and for us.
Josh King:
And we've talked about being in the living room and pretending to be on the trading floor in a crowd with you and your siblings. What other parts of early preparation for this ascension was part of the Frankel regimen?
Andrew Frankel:
So growing up, we always had to have a job. If I was fortunate enough to go to UCLA summer school in high school, I came back and then my dad my mom would say what are you going do now? You got six more weeks left to school. So I went across the street and found a job as a cabana boy, Jeffrey worked as a dishwasher in a Chinese restaurant. For us it was always about work ethic and learning how to serve. And other than that sort of concept of talking in the living room or the dining room table and working over scenarios, it was really that idea that we were getting up. We had a purpose. We had a place to go. We learned what it took to make money, work as a team. And I think that really carried over to this chapter of our lives where we joined our family business and now Rebecca, Kyle are doing the same. They understand what we need to do to compete in this environment of Wall Street.
Josh King:
After the break team Franklin and I, turn our attention to the past year on the floor of the New York Stock Exchange and the future of Stewart Franklin & Co. That's coming up right after this.
Speaker 1:
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Josh King:
Welcome back. Before the break Stuart, Jeffrey, Andrew, Rebecca, Kyle and I were discussing how three generations of Frankel's have come together to form the backbone of Stuart Frankel & Co. Kyle, one of those summer jobs that we were talking about included, as you mentioned earlier, camera work for Charter, one of our major news outlets on the floor. Now we all know that Steve Grasso has been the media face of Stuart Frankel for so long. Does he have any competition?
Kyle Frankel:
Definitely not. I was definitely behind the camera at Charter, and I definitely enjoyed my time there, but decided maybe front of the camera was not quite my place.
Jeffrey Frankel:
Hold on, Kyle why don't you share with everybody what you're doing with a separate firm of Stuart Frankel & Company, with a social media and we're trying to do for the [inaudible 00:30:18]?
Kyle Frankel:
Yeah. So every day we come across for our institutional clients, a lot of good corporate access opportunities, interviews with other experts in industries and things that the investor either my age appear or somebody maybe a more higher end accredited investor would be interested in. So we're trying to develop somewhat on a separate business... Somewhat of a retail arm of information, trying just to share some of the pulse that we have working on the floor of the exchange. So we have an Instagram page for that Inside 11 Wall, and we're developing a website and a subscription model there as well, where we'd offer some of this information.
Jeffrey Frankel:
Stewart you've led your firm through everything from the end of set commissions, to 911, to the demutualization and electronification of the exchange. Did all that experience prepare you and your team for what you've seen over the last 15 months?
Stuart:
I would say that we would never could have been prepared for a pandemic. We haven't had one I don't think so, in over 100 years. But I think our firm did a remarkable job and I credit that to my children and my grandchildren. That the pandemic came and mostly went and I would say because of the integrity of our firm, where the customer knows when they call us, we are working only for them. If that carried us through and that concept people didn't really care if we were on the floor. If the exchange was open or closed. They knew that we did one thing, honesty. Doesn't sound like a big deal. But that is a big deal that we represent that client in an honest fashion. And we managed to get through this period, I would say relatively unscathed. I didn't think that it would necessarily be that way. But that's the way it worked.
Jeffrey Frankel:
Andrew there have been so many days over the last 15 months and I haven't been in for a ton of them. I'm now back pretty much full time. But every time I have been back going down to the floor, a floor that is sometimes fairly empty as more and more members of the community gradually come back. But I come to that door, I look at Stewart Franklin & Co. I see you on that barstool at the end of the desk, ankles crossed staring into the screen. For our listeners who may not understand. Why is being here on the floor, even when so many people aren't here so important to the way you guys do business?
Andrew Frankel:
So we have desk desks globally, but our big desk is on the floor of the exchange. There are advantages that come with being on that floor. We see information around the openings and the closes that you can't see upstairs at an investment bank. You're hearing a pulse, you're getting information from a market maker. You're getting information from your peer group, other brokers at that point of sale. The idea that you could be at the epicenter of capitalism and be trading and have an advantage. That's really one of the key components that still makes us unique and distinct. And not to be down there, you just don't get the same feel if you're working on an upstairs desk. So we want to maintain this desk indefinitely. The idea that we could come back during COVID, we did whatever it took. We were working with masks. We were bringing our own lunch, not being able to eat on a desk but eating outside on the steps of Federal Hall.
Andrew Frankel:
We were taking daily tests, random COVID tests. We were basically ahead of the curve in terms of what a lot of firms are going to first start to do as they come back from working at home and remotely. And it was a absolute pleasure. And as I said we were thankful that we had the seat and the ability for the building to be open and to have this desk running.
Josh King:
The building critically was not open for a key period March 20th 2020 to May 26th 2020, when Governor Cuomo came to reopen it. The floor had to close because the pandemic was sweeping across New York, it wasn't safe. We got reports of new cases Daily. Went to all electronic trading. How did it actually affect the performance of your firm when you can't be at that desk?
Jeffrey Frankel:
I would say as my father pointed out, I think we were really fortunate because the clients used us as an extension of their desk. We were that comfortable shoe. They knew even though some of the advantages as Andrew pointed out, were taken away. They knew if they came to us, we were going to protect them and get it done. Again through the different devices that were eligible to us. We were able to communicate. We were able to make sure we dotted every I and crossed every T. Made sure that regulation was met, we went up and above to make sure... I thought beyond the scheme of what do we need to do, so we're covered. If people were texting us orders, we made sure it went back as an email, so there was a record. But the clients were able to feel like it was seamless, as if we were still on the floor. In fact, when we went back to the floor, they then saw how great it was that we were able to give them the d-Quote. We were able to see how there were repurchase programs that were back on the floor that we were able to give them color, that again some of the market makers when they came back a few weeks later, were able to give us the color for the openings and the closes. The displaced markets were back to us, being able to share.
Jeffrey Frankel:
But while we were off the floor, it was again that communication as we touched on earlier of them knowing we had them. And that's really what we've been about for the 48 coming on 50 years. And what we're trying to teach Rebecca one of the greatest assets she has is getting on the phone with clients that she's never spoken to before, and having them feel that someone is on the other end that is working with them to understand what's coming down the pike in the corporate access world, or what calls are coming that they should be part of. She's great at that. And we were fortunate over the last 15 months.
Josh King:
So I mentioned earlier this unique piece of real estate that you occupy on the floor. Right as you walk into the main door of the exchange, there's Stewart Franklin & Co. You crane your neck a little bit, there's Andrew and the team working and Jeff when he's here. And so you see so much of the traffic, you've seen prime ministers and presidents and CEOs and their entourages both coming in for ceremonies, and also coming in for interviews of the Charter and interviews and CNBC. But for a lot of the last 15 months, it's been pretty quiet, looking left and seeing the traffic not there back and forth. What does it mean to have traffic returning to this place?
Stuart:
Can I say? The most important thing in my opinion that we see every day is the d-Quote, the ability that we can be on the floor, talk directly with an institution and say, "Do you know if you have any interest in the General Electric, there's 700,000 for sale on the bell, and to be able to get that to the client with 20 seconds to go, who says really 700,000? I can buy it at the last sale, buy it." That to me, that piece of information that we're able to get on the floor of the exchange and get it to institutions is absolutely the greatest prize that we have. And other people just can't do that because the firms are upstairs and their people are on the floor. And they're talking to the end client, and that's where our big edge comes.
Andrew Frankel:
That pace, when someone walks on the floor of the exchange they feel it. It's palpable. The idea that companies are ringing the bell it's like their kids at Disneyland, we've talked about this. The absence of those people on the floor has literally been like being a Disney and the rides are only going 10% of the speed. So having the reporters back, having the visitors back, having a full slate of personnel on the floor of the exchange... And I saw Stacy Cunningham last week and she was incredibly excited that we're getting that vitality back. It's been missed.
Josh King:
You played an outsized and newish role in terms of keeping that community together. You've been connecting with them in a different way by writing these daily notes on LinkedIn that covered everything from the next playoff efforts to the reopening that we were just talking about. Why did you start writing and sharing like this?
Andrew Frankel:
So I've been writing a paragraph for the last couple years to clients on Bloomberg. There have been a bunch of friends professionally, personally that aren't on Bloomberg, that wanted to start receiving some of the notes. There's a word limit, so I can't send them everything. But I just started posting it on LinkedIn for people that weren't necessarily seeing my 7:00 AM report. And once I started doing it, I receive feedback of "This is really helping me." Certainly, it helped me because I was able to vent in a lot of respect or when you write it down, it enables you to think about things in a different way. But getting that response from again, personally, professional appears has been really rewarding. And I definitely want to continue to as long as I can.
Josh King:
So putting these older guys aside for a second. Kyle and Rebecca, as the third generation of Stewart Franklin & Co. you represent not just the continuation of the Frankel floor presence but the next generation of investors. The headlines over the last couple months have been focused on meme stocks and Dogecoin But that ignores a vast amount of wealth being put to work by young investors. What's your analysis for how your generation will invest and look to leverage the market?
Andrew Frankel:
Over the last few months, during the pandemic especially, I've seen the number of my friends and younger that are interested in what's happening on the floor of the exchange, what's happening with the market, it's exploded. I have people messaging me all over the place asking about "Why is this stock doing this? Why is this doing this?" And this is someone who won't be interested in basketball or hockey or whatever it would be. So I think that's great. So I think the people my age, my peers are definitely interested. Now that they're interested, I think all of these... First of all the way my generation accesses information, whether that's through Reddit, or Instagram pages or Twitter, it's going to be different than maybe my parents. The things they're interested in are going to be slightly different. They're going to like the forward facing ETFs, the companies that are looking 5, 10 years in the future. At the same time, I also see a lot of them using the betterments or acorns apps that put your money somewhere, let's say more stable.
Andrew Frankel:
So I see them definitely getting involved with some of the more speculative names, the cryptocurrencies, things like that, but at the same time, also being safe. And using some of those other apps that are more just around savings and putting money away and not touching it.
Jeffrey Frankel:
It's interesting, Josh, because Andrew and I and Stuart did business, this kind of old school high touch world. And I remember it's probably about five, maybe six months, so Kyle started this new business where he was putting up stuff on Instagram under a different umbrella. And I turned to Kyle, and said "Kyle, what is this whale of Wall Street? What is that?" And Andrew called me on the side, because we do everything quietly, and we never want to upset anybody out loud. And he was like, "Just let him run with it. He's in touch..." Kyle just shared with you. "He's in touch with the world that's different than our world." And part of us growing and handing this the way my dad handed it to us and we ran with it in a different way.
Jeffrey Frankel:
But under the same principles, Kyle is running with this with some of the other people that work with us. And Rebecca, and my son Ryan, who's still in grad school who works with Kyle to set up this different website in their own way, with a new generation. And it's just great to watch and it was really Andrew who said, "Just let him go."
Josh King:
So tell me about this. What is it?
Kyle Frankel:
Inside a living wall? So it started with a wave, we were on the floor and we felt that the access we had, seeing who's ringing the bell. We thought people would find that interesting especially during the pandemic that the building was open when we were back in there over the summer. Then, slowly as we started getting feedback and people got interested, we started describing to friends of ours what's a short squeeze when that was happening with GameStop. Because they didn't know, they didn't know it was happening. So as things would start to occur with the news it was giving them headlines, and maybe you'd see on a CNBC but the same time giving maybe a slightly different perspective that would explain it to someone who isn't as experienced doesn't know all the wording. Also maybe would just give them the blurbs that they would find more interesting.
Josh King:
From your perspectives, based now being in the working world for a couple years and now being part of the family firm. How would you advise juniors and seniors at Michigan now to stay connected, stay focused, what should they be reading, if not Wall Street bets? Where should they be really educating themselves about the marketplace?
Kyle Frankel:
I would go off of my experience. So I get a lot of my news off of Twitter. And that comes from... There are lists out there that you can go in and find that have a bunch of great reporters, where you'll find your news, their Instagram accounts out there inside of them while there are other ones as well to talk about investing. I think the platforms that you're on for social media and you're looking at what your friends are doing at the same time, with a swipe or a tap, you're looking at information or a new news story or something like that. So I would recommend, integrate it right into the apps you already use.
Jeffrey Frankel:
We've been approached by apps to have if they could buy what Kyle and Alex who's working on it with Kyle, if we would want to sell it to them. And it's things that we're looking at right now. But it's really all been this new way of communicating with this younger generation that understands the blurbs that he's putting out versus, the long paragraphs that you're reading in the Wall Street Journal.
Rebecca Frankel Heinemann:
Yeah. I think our family's always instilled the importance of relationships, I mentioned communication. And one of the silver linings of the pandemic as awful as this past 15 months have been, is it's given people the opportunity just to grow different interests. As Kyle mentioned, a lot of our peers are now interested in investing, interested in hearing what we do. And I think my brother has done an incredible job in finding a new way to reach these people, to continue building relationships with people that may not have been interested in the markets beforehand. So it's been a nice addition for us.
Josh King:
So building off of the 48 years of history, performance, customer service that generation one and generation two have provided and the innovation that you guys have brought to the floor. How do you both see the firm evolving to meet the needs of your customers going forward?
Rebecca Frankel Heinemann:
I have always been taught to pick up the phone. Who can you call? Who can you get in front of, I mentioned-
Josh King:
It still matters doesn't it?
Rebecca Frankel Heinemann:
It still matters. I mentioned I joined during a bizarre time period where face to face conversation just wasn't feasible. So I personally have done my best to pick up the phone whatever I can, and try to get to know people, continue building those relationships. It's been instilled in us from the beginning, your work peers can continue to be your friends and the more you get to know people, basketball relationships off the court, the better it can be when you're working together. So continuing to talk, be in front of people.
Kyle Frankel:
I would say going forward the values that have kept the business going along so well for 48 years, have to stay in place. I think with all the technology going around in the world. Like Rebecca said, picking up the phone is an art that maybe is getting lost. Personal service is an art that's getting lost. So I think maintaining those things, while still embracing new technologies and ways your service can become even better by utilizing those technologies and that cross section is a place where we could really keep excelling.
Josh King:
Middle generation, what are you viewing as sort of the major and biggest market trends as we enter the summer and the full force of the return of the American marketplace?
Andrew Frankel:
I think people are perplexed with market direction. I think market professionals that we speak to are frustrated. They see a Gamestop they see an AMC, it goes against all the fundamentals that they've been studying and learning and they just don't like it. They don't like the fact that before that you had five names, the fang stocks that people were just throwing money in, and it was a no brainer. A lot of the people we speak to would like to see people go back to doing the work to having, to go and study and not to expect that you're going to get 20% returns in a day or a week or a month. The slow and steady the long game. I think that comes back, it's just a matter of when. I just hope the bump is not so bad in the middle of the night that we all get hurt in the process.
Jeffrey Frankel:
The frustrating part when you have the public or people that don't really understand nobody is smarter than the market. And when you have people calling you up and telling you how easy the game is or "We broke the Wall Street banks today." Kids calling from college and think they have all the answers. That's a little frustrating when they don't think a pullback is a pullback but instead it could really be a retracement that hurts. And if we have a quiet day, because things are leveling out, I'll turn to my father and say "Gosh, it's been quiet the last couple of days." And my father has a great way of putting it in perspective. He said "Jeffrey, the market has basically gone straight up in the last 15 months. If somebody was to hand you a million dollars today, what would you do with it? Would you buy stocks up here? Would you sell stocks up here? Or would you hesitate and take a look and wonder what you want to do?"
Jeffrey Frankel:
And the answer is, that's why we're quiet, because I think a lot of people, as Andrew just said, are frustrated, are confused and don't really know what to do with their money other than maybe go to the sidelines a little bit and take a deep breath after the movements we've had the last 15 months.
Josh King:
Andrew, the last time we talked on the podcast, you mentioned that your kids are still a few years off from any thoughts of a career with a firm are there going to be more Frankel's in the pipeline?
Andrew Frankel:
I sure hope so. My oldest is going to be a senior at Michigan as well. He is at an investment banking program for the summer, idea being maybe he learns some things we're not doing here. And hopefully he joins us. My middle son is working for a macro long short hedge fund to try to learn how to model. At the end of the day, I want them to choose their own path but nothing would make me happier if they came and joined us.
Stuart:
We're taken off. We're buyer of all three of his boys come join us tomorrow.
Josh King:
Maybe we have enough chairs in the library for them if that happens, but first generation, you're now only a couple of years from the 50th anniversary of when you and your wife launched your member firm. Can I go ahead and start reserving that 50th anniversary bell for you?
Stuart:
I sure hope the man upstairs allows that. I would love that would be a great, great honor. And you I would say one of the things that we didn't talk about with the advent of the problems getting behind us, is going back to what my family's done so well. And that's face to face meetings. We haven't been out because the clients haven't been going to the office. The clients are home. We're talking to people on the phone. We're on Zoom, but there's nothing like reaching out and touching someone. And I'm hoping that we're weeks or months away from getting on the airplane and being thrilled to fly to California or Seattle or Chicago or Dallas and going back to face meetings. Because at the end of the day, there is no substitute for that.
Josh King:
No substitute for that. No substitute for what everyone at Stewart Franklin & Co. bring to the floor of the New York Stock Exchange. Thanks so much, everyone for joining us.
Andrew Frankel:
Thank you for having us.
Kyle Frankel:
Thank you for having us.
Jeffrey Frankel:
Thank you for having us.
Rebecca Frankel Heinemann:
Thank you for having us.
Stuart:
Thank you.
Josh King:
And that's our conversation for this week. Our guests or is Stuart Franklin & Co. the New York Stock Exchange oldest independent broker, Stewart, Jeffrey and Rebecca and Kyle, thanks so much for joining us. If you liked what you heard, please rate us on iTunes so other folks know where to find us. And if you've got a comment or a question you'd like one of our experts to tackle on our future show, email us at [email protected] or tweet at us @IceHouse podcast. Our show's produced by Pete Asch with production assistants from Cain and Abel and Ian Wolff. I'm Josh King, your host signing off in reality back at the New York Stock Exchange in our library. Thanks for listening. Talk to you next week.
Speaker 1:
Information contained in this podcast was obtained in part from publicly available sources and not independently verified. Neither eyes nor its affiliates make any representations or warranties expressed or implied as to the accuracy or completeness of the information and do not sponsor approve or endorse any of the content, all of which is presented solely for informational and educational purposes. Nothing herein constitutes an offer to sell or solicitation of an offer to buy any security or recommendation of any security or treating some portions of the preceding conversation have been edited for the purpose of [inaudible 00:53:] and clarity.
