A Shark dives deeper into crypto and demystifies DeFi - Issue 104

SEPT 2021

ISSUE 104

ADVISORS

magazine exclusive interview ceo & strategic partners

Beyond TAMPs

Collaboration bolsters platforms

Gateways Open for Business

CoinPayments CEO: Jason Butcher

Josh Richards: WonderFi Investor

TikTok star weighs in on Financial Literacy

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The Creation of WonderFi A Shark Dives Deeper into Crypto -- O’Leary, Samaroo, & Richards take on DeFi

6

How to Choose Your Financial Advisor Exploring three areas of questioning

10

Re-imagining the Family Office Practice Financial planning and management for all

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Josh Richards: WonderFi Strategic Investor Gen Z TikTok star weighs in on financial literacy

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24

COVER STORY: A SHARK DIVES DEEPER INTO CRYPTO

Financial Lit Begins at the Dinner Table Why is financial litercay important?

26

Beyond TAMPS Collaboration bolsters such platforms

6

58

Gateways Open for Business

choosing a financial advisor

CoinPayments CEO: Jason Butcher

24

financial literacy begins at the dinner table

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BEYOND TAMPS

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47

Our Picks From Around the Globe

embracing video conferencing

34

Tax Changes Worry Investors Advisors adept in tax mitigation

46

36

42

the boom of ipos

50

More Millennials Turn to Advisors

ESG VALUE INVESTING

Young people relying on financial planners

38

Balancing Risk and Return

TAX CHANGES WORRY INVESTORS

Pursuing pro-active asset management

40

Engineering Quality Investments Bridging corporate and private clients

34

44 the robots are not ready

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54

A shift to virtual interactions

Two-thirds of Americans are unprepared

44

56

For success in retirement, trust the humans

What’s on your bucket list?

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62

Mixing retirement with a dose of pre-IPO investing

Financial advisors don’t crash

50

64

Investing with a purpose, personal values grow

Retirement’s number one risk

52

68

Part of a successful investing formula

Clients with advisors continue to outperform

Advisors Embrace Video Conferencing

The Robots are not Ready

The Boom of IPOs in 2021

ESG Investments Align with Funds

Strategy, Discipline, & Preparedness

More Estate Planning Needed

It’s Not Just Money - It’s Life

Online Trading Platforms Don’t Do Taxes

Navigating Healthcare Gaps in Retirement

Valuing Financial Guidance ADVISORS MAGAZINE / 5

by amy armstrong

WHAT TO ASK A FINANCIAL ADVISOR and

AND WHAT THEY SHOULD ASK YOU! THE FOUNDATION OF FINANCIAL PLANNING

T

he COVID-19 pandemic disrupted financial activity globally – and it continues to plague our nation. As Americans pivot to keep pace, we examine how the pandemic has affected the dialogue between financial advisors and investors – particularly, we focus on the dialogue between financial advisors and potential clients. Advisors share their thoughts about how clients and advisors can vet each other during a challenging and uncertain economic future.

What to ask your potential advisor.

Fiduciary First Seems like a no-brainer to ask if a prospective financial 6 / ADVISORS MAGAZINE

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advisor adheres to the fiduciary standard of putting the client’s needs ahead of anything else in the relationship. But you may be surprised as to how many financial advisors don’t follow this standard.

“We would recommend that they understand the advisor’s values and whether or not they are a fiduciary, meaning they are required to make all decisions in the client’s best interest,” said Judy Roseberry, marketing strategist at Gryphon Financial Partners based in Columbus, Ohio, when offering advice to those seeking financial advisory services.

Client Centric Processes This is Roseberry’s second

recommendation for those seeking a financial advisor.

“We would also recommend that they understand the advisor’s planning process and investment philosophy,” she said. “The individual should look for indications that the advisor’s process is client-centric, meaning that the client’s goals and objectives are the key driver of the decision-making process.”

If the answers here aren’t to your satisfaction as the client, you might be wise to interview other financial advisor candidates.

Long-term Client Relationships If an advisor has hung a shingle out for twenty-plus years, but their longest client

Your Past Experience with Financial Advising If a prospective financial advisor isn’t interested in what you’ve experienced before or the reasons you do not have a financial advisor now, you may want to question how sincere their interest is in who you are.

Keith Moeller, a wealth management advisor with Northwestern Mutual in Minneapolis, said: “This question helps the client verbalize what they’re looking for and it gives the advisor a sense of their expectations and provides an opportunity to help the client understand what they should expect from an advisor.”

relationship is something like five or ten years, that raises a legitimate question: Why? Asking about relationship longevity is a smart move for prospective clients, according to Frank Higgins and Bridget Riley, co-owners of Riley Higgins & Associates based in Scottsdale, Arizona, who responded to the question posed by Advisors Magazine.

“A great question that nobody asks is: How long have you worked with your longest client?” Higgins and Riley wrote. “That is a very revealing question that tells quite a bit about the advisor and how they treat their relationships.”

If an experienced advisor answers that their longest

relationship spans decades, that’s a good sign. It’s even better when the advisor responds that “X” percent – for fun, we’ll go with 25 percent – of the firm’s clients are 20-plus year relationships.

And, does the advisor boast generational client relationships spanning from grandparents to adult grandchildren? If so, that’s another check in your “Yes” column for that advisor.

What an advisor should ask you.

On the flip side, financial advisors shared their thoughts with MarketWatch.com, a subsidiary of Dow Jones & Company, on what they should ask you – the prospective client – during an initial meeting.

Your Definition of Retirement Success As a prospective client, you want a financial advisor who works to understand what you want out of retirement.

“I want to know where their head is at when it comes to the things they will actually be doing in retirement,” said Jeremy D. Shipp, founder and investment advisor at Virginia-based Retirement Capital Planners. “If we don’t have an ultimate goal towards which to plan, it makes it almost impossible to get started.”

Response to Market Turn Downs A financial advisor should attempt to gauge how a prospective client emotionally reacts to market volatility.

Brian Walsh is a senior manager of financial planning with SoFi in Philadelphia. He believes an advisor should assess a client’s risk tolerance level in order to create an investment strategy ADVISORS MAGAZINE / 7

that won’t panic the client. As an indicator, he asks clients how they responded to the spring 2020 stock market crash due to the COVID-19 pandemic.

“If they sold or were extremely stressed about the downturn, then they might need to be more conservative,” he said.

An advisor should determine your risk tolerance and if it aligns with their investing style.

How You Handle a Sudden or Unexpected Gain A prudent advisor wants to know how you respond when you find yourself on the receiving end of a financial gain such as an inheritance or lottery 8 / ADVISORS MAGAZINE

SEPT 2021

winnings.

Did you save it, or did you go on a spending spree, or did you do with a bit of each?

Advisors want to know your mindset regarding gains because it points to your attitude toward saving.

“Saving not only allows you to invest money for the future, but it also controls the growth of your expenses so you will need to save less money to replace your standard of living when you retire,” Walsh said. “If you are dealing with a person who is a spender, you may need to build extra safeguards into their plan to ensure they stay on track. It is best to know this upfront.”

In Closing COVID-19 and its ongoing grip on the nation’s economic, health care, and educational systems has solidified one thought about financial planning: you better do it; you better have a plan on how to navigate the turbulence created by any kind of uncertainty.

When clients and advisors ask each other the right questions upfront, you both share a vested interest in forming the foundation for a successful longterm relationship.

Preserve your wealth with CitiTrust’s knowledge and

Financial Management Solutions www.cititrust.biz

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By Joe Innace

RE-IMAGINING THE FAMILY OFFICE

PRACTICE Financial planning and investment management for all

Family offices are private wealth management advisory firms that serve ultra-high-net-worth (UHNW) investors, according to Investopedia.com.

“They are different from traditional wealth management shops in that they offer a total outsourced solution to managing the financial and investment side of an affluent individual or family,” Investopedia explains.

“For example, many family offices offer budgeting, insurance, charitable giving, family-owned business, wealth transfer, and tax services.”

I

n fact, the Chicago-based Family Office Exchange (FOX) was founded as what is now described as “the world’s largest peerto-peer network for ultra-wealthy families and their family offices and the leading authority on matters related to legacy wealth management.” FOX pegs the number of family office practices at above 10,000 in the United States, the majority of which have clients with $100 million to more than $500 million in assets.

But what about those with far less in assets?

Could the family office approach be applied?

D. Brad Murrill, owner and founder of Redfish Capital Management in Cypress, Texas, believes the answer is a resounding ‘yes,’ and this year he started to prove it.

“If you’re familiar with the family office scenario, you sit down with someone who’s got a tremendous amount of money and you have a team consisting of a financial planner, a CPA, an attorney and a financial advisor,”

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Murrill told Advisors Magazine in a recent interview. “And they do everything for the client for a fee. I thought, why don’t we change this approach? Let’s create a family office environment for the everyman, not based on assets.”

Murrill’s family office model involves an individual paying a certain amount each month to cover an array of services.

“My average fee for these clients is maybe $185 a month,” he said. “That’s what they pay me, and we create a financial plan for them.”

At Redfish Capital, a CPA does all a client’s tax filings and provides tax advice. An insurance specialist evaluates life, home, auto and other policies to determine the best deal for the client. An attorney with the firm takes care of a client’s will, making sure they have a power of attorney in place and other estate matters.

“It shocks me how many people don’t have a power of attorney,” Murrill noted. “Especially

young people with kids, who are the ones that really need it.”

He continued: “So, we gather all this information together and make a recommendation on what they should be doing, whether it’s holding certain stocks, whether it’s budgeting the money, paying down debt, evaluating their 401(k) – we advise on everything.”

Murrill started Redfish Capital about 11 years ago after having amassed largeinstitution experience. But at the beginning of this year, he decided to pivot and change. There is no minimum investment at Redfish.

“I felt that the industry was leaving out people,” he said. “The notion of minimum investments became popular mainly so firms could increase their margins.”

Murrill explained: “Advisors typically tell people that to invest, you have to have a hundred thousand dollars, but most people don’t have a hundred thousand dollars. And if they do, it’s going to be in either home equity or in their retirement account at work,” he added. “There are a lot of people that cannot participate in such a process.”

By not having a minimum and by not

having asset-based requirements, Redfish is able to help more people who had not been part of that traditional process. And supporting people has long been part of Murrill’s DNA. A Different Journey Murrill’s degree is not in finance. He graduated from Houston Baptist University with a double major in psychology and sociology and had planned on going into counseling. After a few years, he realized that was not his career path.

Looking for direction, he called upon a trusted family friend – David Standridge – who was the president for Smith Barney’s Southwest region. Murrill visited him in his office and explained his situation, asking for advice.

“He really didn’t say anything,” Murrill recalled. “Instead, he made a phone call to the branch manager of one of the largest Smith Barney offices in Houston.” He hung up, smiled, and told Murrill that the branch manager wanted to interview him. “The first thing out of my mouth was, ‘Are you nuts?’ I have no idea what it is you do let alone how to do it,” Murrill recounted.

The resources of a large firm, with the personal attention of a small practice.

- Brad Murrill

ADVISORS MAGAZINE / 11

“He leaned back and his chair, told me to relax and that I would learn all that I needed to know,” Murrill continued. “And that’s how I got started. I mean, I knew absolutely nothing about the business, or the difference between a stock or a bond.

That was 27 years ago. And honestly, I’m more thankful than I ever could express to that man and what he did for my life.”

Murrill joined the firm Solomon Smith Barney as a financial consultant in 1994.

After completing the training in both Hartford and New York, he began opening accounts by focusing on tax-free municipal bonds. As his book of business grew, Murrill started investing in stocks for clients.

Although currently not active in this area, in 1997 he received his Series 3 commodities trading registration and added that asset class to his client’s portfolios.

Much of his business was built through public speaking seminars and in 1998 Murrill began hosting AM radio talk shows in Houston and the Texas hill country. By January of 2005, he moved his business to Wells Fargo where he advised many of the bank’s large clients on their investments, financial planning, and estate planning.

In the summer of 2010, Murrill founded Redfish Capital Management, a full-service family financial practice, and partnered with SCF Securities in 2017.

Standridge, now deceased, helped Murrill at a very young age, and now helping those just starting out is a central mission at Redfish.

“We certainly do have high net worth clients, but we need to be able to reach out to young people,” Murrill said. “I was just working on a financial plan this morning for a young woman. She’s single, just graduated from school. She has some student debt and a small apartment. But this is the time to do the financial planning — not when she’s 50 years old and eyeing retirement,” he emphasized.

Starting young, according to Murrill, allows an individual to avoid the bad habits that could haunt their financial future.

Passion for Early Education Murrill is a strong believer that financial 12 / ADVISORS MAGAZINE

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Managing your money involves more than simply making and following a budget and we’ve got the tools to help.

literacy needs to be taught, not just from parents to children, but must be part of the high school curriculum.

“Make it a year-long class, at least a semester,” he said. “And in this class, you drill down to the basic building blocks of financial planning and investing. Start with teaching how to budget your money. That’s the number one thing that we try to teach people, especially young people — if you get your budget right, you’ll have excess money to invest. If you don’t, you never will.

You’ve got to get the budgeting part set in school.”

After that, in Murrill’s view, the curriculum should cover how a 401(k) works, or a Roth IRA and a traditional IRA, and other finance fundamentals. From there the course should move on to how the economy and markets work.

“Our school systems right now are letting them down,” Murrill shrugged. “People need to learn about where the money is, what it is doing and how it works.”

The previously mentioned young woman is a good example. Murrill urged her to enroll in her company’s 401(k) plan and to make regular contributions.

“She doesn’t have a whole lot right now.

But if she does that — and I showed her just a 7 percent rate of return — a million dollars is possible over time, and her eyes popped wide open,” he said. “That’s what education does.”

Pre-Pandemic Luck One of Murrill’s favorite expressions comes from the wisdom of his father: when faced with the choice of being lucky or being good, always choose lucky.

“And this is where I got lucky prior to pandemic,” he stressed. “Here at the office, I made a change to all the back-office systems. Before COVID hit, I had decided to invest in more online type meetings, mainly because I have a lot of clients who are overseas and in parts of all 50 states.”

Murrill wanted all clients to have the ability to not just hear him and his team over the phone, but to see each other’s faces.

“I also wanted my team to be able to work wherever they needed to be, but still logging

in to our central system where we could all join up and meet,” he added.

The Redfish team of five consists of Murrill; Robert Simpton, his Certified Financial Planner (CFP®); Henry Nguyen, CPA; insurance specialist Dawn Kleinschmidt; and Terry Hogwood, attorney at law.

“So, I put all this in place and then COVID hits, and it really forced us to use the online tools,” Murrill said, noting that such preparedness and the money spent on technology almost immediately began to pay off.

There will always be some clients who are uncomfortable meeting online and they want things handled traditionally. For those clients who insist on Murrill sitting down with them in a face-to-face setting, he’s more than happy to do so. But he recognizes that many more people now have been trained due to COVID to use things like DocuSign for all their paperwork and information.

They’re comfortable using cloud-based systems instead of having to print out and sign statements and return them, and they are now at ease making conference calls on the Internet.

And logging on at whatever time is convenient has been an unexpected perk of the pandemic lockdown.

“It’s opened up new lanes of communication,” Murrill said. “We have more tools in the shed now to use as a result of the pandemic and advisors are actually closer to their clients than they were prior.”

And being close to people — no matter their financial standing — is what Murrill’s family practice approach is all about.

For more information on Redfish Capital Management, visit: redfish-cap.com

At Redfish Capital we are 100% committed to the highest level of personal customer service and open communication.

SECURITIES OFFERED THROUGH SCF SECURITIES, INC. • MEMBER FINRA/SIPC • 155 E. SHAW AVE., SUITE 102, FRESNO, CA 93710 • 800.955.2517 • 559.456.6109 FAX. INVESTMENT ADVISORY SERVICES OFFERED THROUGH SCF INVESTMENT ADVISORS INC. SCF SECURITIES, INC. AND REDFISH CAPITAL MANAGEMENT ARE INDEPENDENTLY OWNED AND OPERATED. This material is for general information only and is not intended to provide specific advice or recommendations for any individual. To determine what is appropriate for you, consult a qualified professional. Investing involves risk, including possible loss of principal. No strategy assures success or protects against loss.

ADVISORS MAGAZINE / 13

by COVER joe innace FEATURE

BY JOE INNACE

COVER STORY

HIG NTER ST V SI AN G O C U T

O U YT R E A M PORTF LIO

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LEND DIGITAL ASSETS. COMPOUND YOUR WEALTH.

BUY AND SELL DIGITAL ASSETS

DeFI Decentralized Finance

ADVISORS MAGAZINE / 15

A SHARK DIVES DEEPER INTO CRYPTO

AND DEMYSTIFIES DEFI

Backed by a diverse group of strategic investors from the Boomer, Millennial and Gen Z generations and managed by a team of experienced Fintech builders, WonderFi will launch a platform (www.wonder.fi) in late September for potentially millions of consumers. Its Android, iOS and web-based apps promise to simplify user interaction with the emerging area of decentralized finance (DeFi) and make cryptocurrencies more accessible to the masses.

Shark Tank and Money Court TV personality Kevin O’Leary—Mr. Wonderful—went from being a cryptocurrency skeptic in 2017 to being one of the crypto’s most ardent flag bearers today.

“With WonderFi, I’m investing in the hundred million people that want to do this,” he told Advisors Magazine on a recent Zoom call.

O’Leary, who invests in many different companies and technology platforms, was attracted to crypto in late 2019. At that time, he saw that a large portion of his portfolio wasn’t even keeping pace with the rate of inflation.

“We started to look for the first time at alternatives and stablecoin at that time was yielding 4.5 percent,” he recalled. In short, a stablecoin is pegged to a less volatile reserve asset like the U.S. dollar or gold.

Structuring such an investment, however, did not go swimmingly for the Shark.

“I had to go to my internal compliance department and also deal with the regulatory environment that I report to because I’m an investor in so many issuing companies,” Mr. Wonderful explained. “And the whole compliance group said, ‘What? are 16 / ADVISORS MAGAZINE

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you kidding? We can’t touch this stuff.

This is radioactive waste.’”

With an eye on 4 percent or better returns, O’Leary was determined to find a way to structure properly his dive into digital currencies.

“It took me four months to figure out how I could be compliant,” he said. “I worked with various institutional platforms, my auditors and all that stuff. I realized, this is hell on earth. This is really hard to do.”

When his 27-year-old daughter called him up also considering investing in digital coins, he advised her: “It’s so complicated. It’s so difficult. It’s such a nightmare. Don’t even think about it.”

O’Leary added: “And that’s when it hit me. What WonderFi is all about is getting my daughter an app that she can actually get 3.5 percent interest with stablecoin. It’s that simple.”

Being compliant and simple to use was the key for him. Decentralized finance, or DeFi, can make one’s head spin. It’s a system by which financial products become available on a public blockchain network, bypassing financial intermediaries, according to Investopedia. WonderFi’s mission is to provide a proprietary platform that integrates the entire DeFi ecosystem.

“My daughter has to be compliant with the 1099. She’s got to be able to go and tell her accountants what she’s done. She’s got to be completely on board to be able to do it herself and do it easily,” O’Leary insisted. “And that’s what WonderFi is. I’m investing in the hundred million people that want to do this; they can’t afford to do what I did and hire four people to do it for them.”

Catching on across diverse generations As an on-the-cusp Millennial, O’Leary’s daughter is one of the crossgenerational demographics WonderFi is aiming to reach. Lining up strategic

investors with millions of followers to introduce WonderFi to their own audiences is a core strategy. Another strategic investor is 19-year-old TikTok phenom, actor, musician and entrepreneur Josh Richards.

“The generational diversity of our strategic partners is something that’s unique for us and really compatible with the DeFi space,” Ben Samaroo, co-founder and CEO of WonderFi said on the same Zoom call. “And one of the areas that we’re really looking to access in an engaged, more meaningful way is the female audience.”

Samaroo added: “We’re really looking

at all angles in terms of how we can create better access through these trusted voices and people that are really engaged with their audiences.”

He noted that WonderFi’s management team comes from the tech world and all have been involved in the cryptocurrency space. Dating back to 2016, WonderFi’s founding team has had experience with public companies like Argo Blockchain, in addition to Galaxy Digital, Hootsuite and others.

Being in the space for a long time has allowed them to build products that solve problems.

“What we’ve focused on is

Steve Krause, CFO

Josh Richards Strategic Investor

Ben Samaroo, CEO & Director

Kevin O’Leary Strategic Investor

ADVISORS MAGAZINE / 17

accessibility. There is no DeFi without your average person whether they’re in North America, from abroad, regardless of age or income,” Samaroo said.

“They should all have access to this in an equal way. And that’s how we, as a management team, approach the challenge.”

Samaroo explains that there is a segment of people that have already had exposure to DeFi and are crypto comfortable, but this is not WonderFi’s target market. The focus is on those people who have heard a lot about crypto and are hearing things about 18 / ADVISORS MAGAZINE

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DeFi, and who want a simple on-ramp.

“There is a big group of people left out of the game because it’s so complex and there’s so much jargon that’s used,” he said. “With a lot of the conversations we’ve had with users and potential users, that is the biggest reason why they’re not accessing the space -- because it’s too intimidating.”

Nonetheless, WonderFi to date has amassed about $28 million in funding.

Still in the beta phase at the time of this writing, WonderFi was also approaching thousands of users in this phase.

“There’s strong interest for sure,”

Samaroo said. “And that’s without really any sort of marketing around the product.”

For Millennials and Boomers, the interest is concentrated around earning interest and the potential for asset appreciation. For Gen Z, Samaroo notices the asset appreciation angle, but also sees a movement toward taking firm control of their assets and their finances.

They can look at money in a different way. Gen Z’ers, for example, more readily see the value of non-fungible tokens (NFTs)—something some others have trouble wrapping their heads

around.

“But the common characteristic is it’s people that see there’s a better way to do finance,” Samaroo emphasized.

The war on fees O’Leary’s interest, in large part, was driven by frustration. He was vexed by financial intermediaries that added no value. For decades he has invested in Swiss francs, euros, British pounds and other currencies, as well as buying equities or debt instruments in their home currencies.

“If you’re buying Nestlé on the native

exchange, you’re buying that in Swiss francs,” O’Leary explained. “So, I have to go through an FX trader or currency trader — and they’re all friends of mine — but they add zero value. There is no value created whatsoever in getting clipped for whatever number of basis points I’m getting clipped for going in and coming out.”

O’Leary added: “And so the promise of DeFi, in the long run, is that it’s part of a payment system that has no friction.

And you only pay friction where value is added, and that’s really what’s going on here.”

DeFi is also a path to productivity enhancement that will eliminate some financial middlemen. O’Leary’s message to them is if they’re not adding any value to today’s financial system, they’ll be gone. “I’m going into war on fees,” he said.

Talk of war aside, the name WonderFi is much more palatable and inviting than anything sounding like DeFi (think defy).

A direct nod to Mr. Wonderful, the name is also pragmatic—and there are hints of spinoffs to come.

“A lot of the companies that I plan to bring to market will be ‘Wonder this,’ and ‘Wonder that,’ because I have millions of followers that understand what I’m all about,” O’Leary said. “I see no problem in helping [WonderFi] bring in customers at a lower customer acquisition cost. Josh Richards is part of the team. He’s got millions of followers too. He gets it.”

O’Leary remarked that social media, media in general, and the ability to tell a story about the benefits of a company are already affecting market capitalizations.

“You saw it happen in the meme stocks, AMG, Robinhood, Reddit, all that stuff,” he said. “It’s not my fault that I have millions of followers, it’s my privilege. And I’m just going to tell the story about this company and what its mission is to them.”

As the story of WonderFi unfolds, people will make their own investment decisions. “We’re not cowboys here.

We’re trying to take advantage of technology to make people’s lives easier and you cut their costs. That’s what I’m all about,” he emphasized.

“I want to show this service to my daughter, all her friends, all my son’s friends. And guess what? They’re all part of the millions of people that follow me,” O’Leary said. “So why not? I’m very proud of the WonderFi name; it’s an uplifting vibe. And it means that it’s part of my family of companies that try and ADVISORS MAGAZINE / 19

FINANCIAL MARKETS POWERED BY TECHNOLOGY, NOT BANKS What is Decentralized Finance (DeFi)?

Traditionally banks have been gatekeepers between people and the markets. They set the rules and decided who got to play and who sat on the sidelines. DeFi democratizes finance through technology. It empowers people to interact directly with financial markets and allows anyone to engage with personal finance. solve these problems.”

And O’Leary thinks such problems will be getting solved regularly in three to four years.

“Hopefully sooner, but I’m a realist,” he said. “I think we’ve got a lot of work to do explaining how this works. We’ve got to get our beta product into final release. We have to do a lot of work explaining it. Certainly, with Ben’s team we have the right team here to do this.

Nothing like this is easy, but I think we’re going to deliver an amazing value proposition.”

CEO Samaroo brings it all back to it being a social movement around fair and democratized access to finance.

“In a way, [WonderFi] is the Robinhood of crypto,” he said. “It’s really just trying to do everything we can from a product perspective, from an education perspective, and then from a reach perspective to get into these different demographics and just make this more accessible for people.”

Dipping into crypto O’Leary mentioned that his portfolio has a 3 percent weighting in crypto 20 / ADVISORS MAGAZINE

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investments across multiple assets. By year-end his goal is to increase that to 7 percent.

Samaroo suggests that getting exposure to the technology is the best way to get started. “It doesn’t matter how much,” he said, “just get in, play around and say, ‘I own my first $10 worth of Ether, Bitcoin,’ whatever.” Rather than diving in to get rich, Samaroo said the mindset of the average person should be to try and understand what the technology is and what it can do.

Meanwhile, O’Leary recently announced a relationship with Sam Bankman-Fried (founder and CEO of the cryptocurrency exchange, FTX).

“I’m going to be using them for my institutional platform because they actually can meet the compliance metrics I have to deal with,” he said.

O’Leary describes the scrutiny on the institutional side as intense. “It’s a mark to market daily problem,” he noted.

“The reason that crypto has not been adopted yet by institutions is they can’t get compliant. The infrastructure is not there yet.”

Despite all the buzz about Bitcoin and everything else crypto, when O’Leary talks to managers of sovereign funds, pension plans, and state plans, he tends to find no interest in getting involved because their compliance departments say there’s no way to integrate.

Much of that hesitancy stems from the nascency of the crypto industry, according to O’Leary. At the same time, therein lies the opportunity. He estimates that there’s a trillion dollars’ worth of interest in just Bitcoin alone once the compliance hurdle is cleared.

“The regulators are making noise, but I think there’s a lot of flexibility in thinking about innovation, financial services, but we’re not there yet,” O’Leary said. “And that’s why there is so much upside as these issues get solved.”

And as far as WonderFi is concerned, beyond its ease of use, O’Leary is convinced it will provide people with the reporting they need to be compliant with regulators and the IRS.

BY JOE INNACE

goes public

W

onderFi Technologies Inc. went public on Canada’s NEO Exchange August 31, 2021, under the symbol WNDR. “Our public listing on the NEO Exchange supports our ability to attract institutional capital into the growing decentralized finance space,” CEO Ben Samaroo said in a statement.

On hand for the opening bell ringing—a Zoom event—were WonderFi strategic investors Kevin O’Leary, Mr. Wonderful of Shark Tank, and TikTok phenom Josh Richards.

“This morning the @ Wonder_Fi team rang the Opening Bell at the @ NEO_Exchange with fellow investor @JoshRichards aka Mr. Wonderful Jr.,” O’Leary noted on Twitter. “This is an incredible company and an important day for DeFi…and anyone who wants to disrupt the financial system.”

“I’m a big believer in the importance of DeFi and that’s why I invested in WonderFi,” Richards said in a tweet the night before the official listing.

Formerly DeFi Ventures, WonderFi rebranded earlier this year, adopting its name from the popular television

shark.

“There's a lot of innovation here, but just to be frank and transparent, I'm doing a 100 percent rip off of Richard Branson, who I know, and I consider a very nice guy and is very smart as a marketer,” O’Leary told Advisors Magazine. He does Virgin; I'm Mr. Wonderful. And I say to Richard, ‘Thank you, Richard— but there will be no royalties to you,’” he laughed.

WNDR shares opened at C$1.50 and closed trading at C$1.70, up nearly 62 percent. Volume was 1,272,150 for a market capitalization of just over C$103.5 million.

Launched in 2015, NEO Exchange is described as the third most active marketplace in Canada, consistently representing close to 15 percent of all volume traded in Canadian-listed securities.

NEO is home to more than 125 unique public listings, including public companies, Exchange Traded Funds (ETFs), Special Purpose Acquisition Companies (SPACs), Growth Acquisition Corporations (G-Corps™), and Closed-End Funds (CEFs).

NEO-listed securities market data is available to all investors in real-time, at no cost, according to the exchange.

ADVISORS MAGAZINE / 21

BY JOE INNACE

Josh Richards: WonderFi Strategic Investor Gen Z TikTok Star weighs in on financial literacy

J

osh Richards is a 19-year-old entrepreneur, actor, musician and TikTok star who has amassed nearly 30 million followers. He’s also one of the cross-generational strategic investors in WonderFi, along with fellow Canadian Kevin O’Leary.

When it comes to financial literacy, however, Richards can more than hold his own and serves as a role model for others from Generation Z. “With the U.S. dollar going through immense inflation, decentralized finance is going to be the future of the world economy,” Richards told Advisors Magazine recently. “I’m excited to be a part of what the future will look like, and I can definitely say DeFi is super exciting, especially with WonderFi which looks to be going in the right direction!”

Richards said he loves being involved in WonderFi because it affords him an opportunity to work on the marketing and creative side. “My experience with my platform and knowing what Gen Z wants definitely works to my advantage and gives me an opportunity to give young people a voice and representation,” he explained.

“I want to be a voice for young generations who missed out on opportunities to learn more about finances – and financial literacy is one of, if not, the most important education components for maturing teens,” Richards added. “We’re seeing the words ‘Crypto’ and ‘NFTs’ being thrown around on social media on a daily basis, but do people really understand what they are? I’m excited to be a part of a reputable asset like WonderFi and to

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bring awareness to this area to a younger, more diverse crowd.”

Richards advised that the first step in such awareness is understanding the pure economic structure of crypto and why some have long-term uninflatable value. And he clearly has done his homework.

“Ben Mezrich’s book Bitcoin Billionaires, the fascinating story of brothers Tyler and Cameron Winklevoss’s big bet on crypto-currency, is a great resource,” Richards said, “and Anthony Pomp’s podcast focused on decentralized finance is a great one to learn more and stay up to speed on the space.”

In fact, Richards has seen positive reactions from his tens of millions of followers. “They are so curious to learn more about financial literacy,” he noted.

“I’ve been blessed to have been involved in so many different partnerships over the past couple of months that

really advocate for financial education.”

In addition to WonderFi, Richards pointed to Cash App, STEP, and Stir.

He views them as “companies that all stand for the betterment of the public in getting a hold of their finances and I’m beyond grateful to speak to Gen Z and let them know the importance of investing early.”

The TikTok star also acknowledged that cryptocurrencies have personally given him the chance to diversify his own portfolio in many ways.

“No cryptocurrencies are the same and they all have something unique to offer,” Richards said. He summarized that crypto is becoming more readily available and he’s eager to see its continued growth and use over the next couple of years.

by bill millar

Financial Literacy Begins at the Dinner Table Why is financial literacy so important?

I

n New Evidence on the Financial Knowledge and Characteristics of Investors, researchers from the Financial Industry Regulatory Authority (FINRA) and the Global Financial Literacy Excellence Center (GFLEC) at the George Washington University School of Business find today’s investors are at risk of falling behind in financial literacy. In recent years and decades, the number of defined benefit programs has been in decline in favor of defined contributions plans such as 401Ks, leaving investors with greater responsibility for their own financial futures.

But alarmingly, the study of 15,000 Americans ages 25-65 found that investors in general had difficulty understanding is24 / ADVISORS MAGAZINE

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sues such as how bond prices are impacted by changing interest rates or how owning an individual security would be more risky than exposure to a diversified portfolio. Those surveyed were also uncertain as to how inflation would impact their investing. In general, the research holds that “knowledge of basic financial concepts was alarmingly low.”

Clint Haynes, CFP®, founder and president at NextGen Wealth in Kansas City, Missouri believes the solution to the challenge of financial literacy is something society has got to begin addressing at a much earlier stage. The sooner individuals are provided with financial insight, the better.

“Financial literacy [at an early age] is important because the financial decisions you make in your younger years can have such a major impact. Like when you’re getting married, starting a family and even beyond,” says Haynes. “If you don’t understand how to properly budget and get into credit card debt, it can have a major impact on your well-being and comfort level for years to come. The better you understand the financial decisions you make earlier in life, the better prepared you will be for the financial decisions that you will need to make later in life.”

The importance of education Jake Guttman is founder and CEO of

dinner table but is exacerbated by the lack of financial education given to those who will soon be in the workforce,” continued Guttman. “Teaching our children, the foundations of financial literacy is critical in creating a more fiscally educated future for our country and our families. If a child doesn’t understand why they should save their allowance, and their parents have the same behaviors for their paychecks, can we expect this child to learn the ‘healthy’ way of doing things? Creating financially responsible citizens starts in our homes, where we have to be strong influences for the young and impressionable eyes that are watching.”

Rosevest Financial in Phoenix, Arizona. In terms of his own financial education, Guttman got an early start as he is the son of a financial planner himself. Though clearly recognizing he has been given a leg up relative to others, at the same time, he is in a position to more clearly recognize the benefits of such early exposure.

“Do you talk about finances at the dinner table?” asks Guttman.

“When I started to shadow my father in his practice, this was almost always the question posed to new clients. I quickly realized that for most, they didn’t have the quirky benefit of growing up the son of a financial planner. The more that we asked these questions, the more often we got the expected ‘No, I never thought to.’”

“The literacy problem starts at the

Financial literacy for teens and beyond Yet another executive with deep insight into the issues of financial literacy is William J. Connington III, a wealth advisor at Connington Wealth Management Group LLC in Fairfield, NJ. With three children ages, 16, 20 and 23, Connington has seen “up close” what he views as a lack of financial literacy being provided to students in schools and colleges. To Connington’ s thinking, while of course the schools need to teach trigonometry, calculus, and literature, they need to meanwhile step up with instruction into basic finance and economics.

In particular, “Kids need a basic understanding of how financial markets, mortgages, credit cards, checking, and savings accounts work,” says Connington. “Young teenage and adults should be taught from a young age about money and how having it or not having it will affect

their ability to achieve a happy financial life and achieve their financial goals.”

Connington explains that he recently sat down with his oldest.

Having received a credit card, the two discussed at length key concepts such as the interest rate, the credit limit and the overall payment terms. They also explored issues such as the way zero interest for 12 months could suddenly shift into a high interest situation if the borrowed sum isn’t paid off over the credit period.

“We also discussed income, fixed expenses, and how that all leads to discretionary income and how federal and state taxes and a special friend called state unemployment insurance works,” says Connington. “As we all know from being in the business for a long time, time value of money, retirement assets, and saving for retirement are things that should be started as soon as young people enter the workforce. Most do not want to have that conversation because to them retirement is so far away, but when you break it down you can show them how saving now will be better for them when they do decide to get married, have a family and buy a house.”

Overall, says Connington, “It Is important that educators as well as parents begin to provide better education on finances so that [these next generations] can better understand how to fund their financial goals and dreams.

These are all basic financial concepts that are not being taught or emphasized in schools, and it makes me wonder how the future for these young men and woman will turn out if we do nothing.”

ADVISORS MAGAZINE / 25

by joe innace

BEYOND TAMPS Collaboration bolsters such platforms

A

lways competitive and often cut-throat, the financial advisory sector has also embraced the spirit of collaboration.

Joel Bruckenstein, CFP®, noted three years ago in an article for thestreet.com that the trend of financial advisors working together would likely continue far into the future.

And so far, it has.

Consider the relationship between Dean Zayed, founder of Registered Investment Advisor/ Turnkey Asset Management Platform (TAMP) Brookstone Capital Management and Jason Glisczynski, CFP®, CAS®, co-founder of Silvertree an independent Investment Advisor Representative.

Brookstone’s specialty is helping 26 / ADVISORS MAGAZINE

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like-minded independent advisors build and grow their practice in a scalable way that makes it both enjoyable and profitable.

Such partnerships can mean mutual growth. Brookstone recently earned the top spot on Financial Advisor (FA) Magazine’s 2021 RIA Survey and Ranking. After ending the year with more than $7 billion Assets Under Management (AUM) and 137 percent growth, BCM captured the honor among the Top 50 Fastest-Growing Firms in the United States.

Likewise, Silvertree had one of its biggest years in 2020 in terms of bringing on new clients, a trend that has continued this year.

“We feel like we’re in a great spot,” Zayed told Advisors Magazine in a recent interview.

“Brookstone is a leader in the industry, and we want to be the thought leader in the RIA/TAMPs space.”

Turnkey Asset Management Platform The entrepreneurial idea fueling BCM sprang from Zayed’s own personal practice, which in addition to Silvertree’s Glisczynski, counts more than a thousand partnerships with some of today’s most innovative advisors who affiliate with BCM. BCM’s own investment expertise spans evaluating and implementing traditional and alternative vehicles, analyzing market trends and investment strategies, in addition to assisting advisors in launching and growing their businesses.

Dean Zayed - Founder of Brookstone Capital Management

Jason Glisczynski, CFP®, CAS®, Co-founder of Silvertree

“We feel like we’re in a great spot,” Zayed told Advisors Magazine in a recent interview. “Brookstone is a leader in the industry, and we want to be the thought leader in the RIA/TAMPs space.”

ADVISORS MAGAZINE / 27

“I targeted like-minded advisors that would have a couple of things very much in common with my philosophy,” Zayed said.

“Number one was to embrace the idea of being a fiduciary; that was important because Brookstone is an RIA. We are not a broker dealer.” Number two was to be independent and provide feebased money management as part of the firm’s offerings.

“I had an epiphany, around 2007 or so, when I had met up with Brookstone Capital Management and had seen the option of working as an investment advisor representative versus as a broker and being able to help clients in a fiduciary capacity,” echoed Glisczynski in a separate interview. “And that was a real game changer for me; it completely transformed all of my client relationships and how I did business.”

It also spurred Glisczynski over the next few years to obtain his CFP designation and to focus sharply on holistic, complete financial planning.

Core values and shared client philosophies give such collaboration a big boost.

Glisczynski’s Silvertree does not require a minimum investment, but there are minimums for different levels of service.

“We have a very basic entrylevel client who maybe is just starting out and doesn’t have a lot of money,” he explained.

“Maybe they’re far from retirement, but they still need some guidance. So, we do have a service package that is available for them at an extremely low cost.”

Zayed, in targeting advisors, was not overly selective and also didn’t require a minimum. “A 28 / ADVISORS MAGAZINE

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lot of our advisors came to us with very low AUM, but it was the idea that we had a cultural and philosophical fit in terms of growing our businesses in sync and doing it together.”

The key ideas behind the creation of Wheaton, Illinoisbased Brookstone Capital Management were to make sure that clients are happy and that advisors were growing their practices. “Nobody would be captive or sell any proprietary products,” Zayed emphasized. “It was all about being an independent fiduciary with a hunger to build a personal practice in partnership with a platform, in this case, Brookstone.”

Zayed saw the win-win potential in creating BCM. “It was really that simple – advisors that were looking to be independent producers and looking for partners to help them build and grow and scale their own personal wealth management practice,” he added.

Of course, there is nothing stopping financial advisors from doing the same on their own, or with other partners.

“But my idea was that Brookstone would provide a turnkey asset management platform,” Zayed explained.

“We would do all those things necessary to help them on the fee-based managed money part of their practice to free them up, to do those other things that we cannot do that they’re really, really good at – like building new client relationships, cultivating existing ones, and so on.”

Education is a critical shared value for the collaborating firms, and it’s at the core of how Brookstone works with clients

We’re not trying to beat the market,” Glisczynski noted. “We try to minimize downside losses as much as possible on the investment side, and then get hyper-efficient with managing taxes and cashflow.

"

– both when they’re prospects and after they decide to come on board.

But Brookstone also has developed extensive training for its advisor partners, especially to help them navigate client meetings and conversations, according to Zayed.

Professor Dean An educational thread runs throughout Brookstone’s training, so much so that several advisors gave Zayed the nickname ‘Professor Dean.’

“It’s kind of funny, but it’s true,” he laughed. “Because I really do honor the idea of educating both advisors and clients in taking the high road and not really being a salesman per se.”

He added that there are not hard sales type people in the

Brookstone organization because of the firm’s consultative and educational approach. “Being more educational gets us to the same result typically -- and that’s getting clients comfortable to hire us to help be their financial go-to person into their retirement years,” Zayed said.

Such training and lessons were not lost on Silvertree’s Glisczynski, who said that most clients discover the firm by attending one of many webinars or classes taught at the office in Stevens Point, Wisconsin.

“We’ll break down social security or health insurance, for example, or long-term care insurance or investments or taxes into these 30-to-60-minute classes that are easy to digest,” he said.

And then, when meeting with clients one-on-one, Glisczynski will

"

lay out and explain maybe a half dozen financial planning options, elaborating on each one until the client fully understands them all.

“We might then say, ‘we think these are the three best suited for you,’ and then we’ll help the client make the very best decisions for themselves,” Glisczynski continued.

“It’s not just a matter of us telling our clients what to do; it’s important for us to have the client involved in the decision-making process.”

The approach reflects Silvertree’s tagline, which is ‘Planning with a Purpose.’

“We do everything with a purpose,” Glisczynski stressed.

“And it is very important for us to be independent, impartial, and to provide clear, concise, easy to understand answers to client questions.”

At Silvertree, where the focus is mainly on retirement planning, another central philosophy is to control risk.

“We’re not trying to beat the market,” Glisczynski noted. “We try to minimize downside losses as much as possible on the investment side, and then get hyper-efficient with managing taxes and cashflow so that we maximize the client’s potential for every financial aspect of their situation.”

His firm also handles estate planning in-house. “So, we can wrap it all up in a neat little bow by making sure that the estate planning is all tied together,” Glisczynski said, “their tax situation, ADVISORS MAGAZINE / 29

their estate and legal position and their financial position. We get all of those singing from the same sheet of music.”

RAISE-ing the bar In fact, when it comes to retirement planning, Silvertree and Brookstone are part of the same choir. Brookstone even trademarked its philosophy as RAISE. “We liked the word raise, it’s a positive word, but RAISE as an acronym does stand for something,” Zayed explained, “It stands for risk appropriate investment strategy evaluation, and that’s trademarked to Brookstone.”

“RAISE truly is our philosophy,” he said. “This risk appropriate investment strategy evaluation leads us to make the right decisions and give the right advice to clients.

And what goes hand-in-hand with RAISE is our investment platform.

We have a very experienced chief investment officer and investment committee, but the platform is an open architecture platform in which we vet all of the funds, whether they’re mutual funds, ETFs, individual securities, and others.”

The open architecture allows advisor partners to customize and tailor portfolios using any number of investment options and tools that are allowed on the platform after being sanctioned by Brookstone’s investment committee.

“But this world has also gone more towards a model portfolio, a direction that allows us to scale things,” Zayed added. “So, we’ve built close to 10 different series of Brookstone-managed model portfolios, each of which has its own particular risk and reward profile and its own philosophy.”

RAISE 360°, for example, is 30 / ADVISORS MAGAZINE

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just one group of select portfolio models designed to adhere to proper diversification and risk appropriate portfolio selection across market cycles.

Such portfolio models can serve the dual benefit of managing multiple clients, but still offering tailored financial planning solutions.

“What becomes really challenging is not so much the actual act of managing the client accounts properly,” Glisczynski said, “but rather helping the client understand that a lot of the things they were taught about how money works are now changing, particularly when it comes to investment strategy.”

Glisczynski remarked that during a typical person’s 20-30 year working life it’s mostly all about how much and what’s the rate of return. That’s an attitude that’s difficult to unwind.

“The mathematical reality is that the rate of return does not solve the retirement problem,” Glisczynski said. “In fact, clients with lower rates of return tend to have a higher probability of success in their retirement because of low

volatility,” he added. “If you’re trying to chase higher returns, you end up with higher volatility, and the probability of running out of money increases dramatically.”

This is why he believes a primary effort is helping clients overcome the mindset that big returns automatically mean a life on easy street. “This is our biggest challenge, because our partnership with Brookstone Capital Management gives us a tremendous amount of behindthe-scenes technology that helps us take care of the actual account management part.”

Glisczynski adds: “And again, that all comes down to controlling volatility, controlling risk, still delivering a fair return, but giving the client the stability and the peace of mind in the knowledge that their money is going to be there and it’s going to last longer than they will.”

Zayed concurs and also notes that the media and the hyperattention on the stock market and cryptocurrencies nowadays adds to the high rate-easy street mentality.

“Anything emphasizing these

Radio Host Jason Glisczynski, CFP®, CAS®, co-founder of Silvertree

Brookstone and Silvertree client meeting

Jason Glisczynski, CFP®, CAS®, co-founder of Silvertree

short-term gains or short-term wins is an issue for the financial advisory industry,” Zayed said. “It often distracts a client from their longer-term plan and goals, which is to build a solid retirement plan with a solid portfolio that matches their overall risk tolerance and their overall financial profile.”

Ongoing mission As one of the leading turnkey asset management platforms in the United States, Zayed said Brookstone has no intent to slow down now.

“We feel like our mission is incomplete,” he said. “While Brookstone has helped tens of thousands of families all over the country achieve their retirement goals in a successful way, that’s very gratifying for us, but we

remain focused on helping as many people and as many advisors as possible with an eye towards the markets being at all-time highs.”

That means staying on top of its platform, Brookstone’s risk management approach and its model portfolios. “We’re very careful to not want to incur any large losses,” Zayed said. “So for us, it’s an extra vigilant time over the next year or so.”

Zayed stressed that he is not predicting a market crash. “But given some of the valuations and

maybe some headwinds we have coming up here, we are very much focused on making sure clients don’t get hurt—should there be a larger correction,” he said.

For more information, visit: brookstonecm.com and silvertreeplan.com

Registered Investment Advisors and Investment Advisor Representatives act as fiduciaries for all of our investment management clients. We have an obligation to act in the best interests of our clients and to make full disclosure of any conflicts of interests, if any exist. For a complete description of investment risks, fees and services review the Brookstone Capital Management firm brochure (ADV Part 2) which is available at www.brookstonecm.com. Investment Advisory Services are offered through Brookstone Capital Management, LLC, a Registered Investment Advisor.

Brookstone Capital Management, LLC and SilverTree Retirement Planning are independent of each other.

ADVISORS MAGAZINE / 31

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Breakthrough Actionable Strategies

by bobby hickman

Tax Changes Worry Investors Advisors adept in tax mitigation key

Financial advisors and their clients are increasingly concerned about how proposed changes in federal tax policies could affect future portfolio growth and retirement planning.

T

ax policy was the number one concern for 74 percent of financial professionals polled in the 2021 Advisor Authority Study from Nationwide, the diversified financial and insurance group. The study also found 88 percent of advisors reported their clients want to talk about how tax policy will impact their financial plans and their investments.

Almost a third of financial professionals said they believe taxes are the most important issue that will affect portfolios over the

next 12 months – even greater than inflation, the federal deficit, Washington gridlock, or lingering effects of the COVID-19 pandemic.

A financial advisor with expertise in tax mitigation strategies can address those issues by identifying problems that would otherwise erode family wealth if not properly addressed according to David Schlossberg, EA®, RFC, AIF®, NSSA, the senior partner at Assured Concepts Group Ltd. in East Dundee, Illinois. Schlossberg is

David Schlossberg, EA, RFC®, AIF®, NSSA™ Senior Partner

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credentialled as an enrolled agent (EA), a federally licensed tax practitioner who can represent taxpayers before the IRS. As both an EA and a financial advisor, Schlossberg offers tax mitigation advice at Assured Concepts Group as well as through their sister firm, Tax Plan For Wealth, Inc. Both businesses develop specific plans for tax mitigation strategies over a long-term planning period, typically twenty years – a specialty that many financial advisors do not provide.

“We believe that tax mitigation should be considered using a minimum window of 20 years” Schlossberg said.

“There are many things that early retirees might do during the early part of retirement that can cost them money. Taking a closer look at that first decade and making changes will pay dividends over and over again.”

The best strategic recommendations come from advisors with experience and credentials in tax mitigation, he explained. Many people

in the financial service industry have learned how to talk about Roth conversions, for example, because that is a popular subject today.

However, those who lack deep expertise in tax mitigation are probably unable to make truly sound recommendations about Roth conversions, IRAs, 401(k)s, and other retirement savings strategies.

“There are some software packages that can handle Roth conversions,” Schlossberg added, “but we found most of those to be inadequate. So, we built our own financial planning model to simulate tax mitigation approaches over periods ranging from

two to 20 years. If we can help reduce our clients’ taxes over two decades of retirement, then we're going to help them create more wealth for themselves and their heirs.”

While tax mitigation is a specific strength at Assured Concepts Group, it is also part of a comprehensive process that takes a holistic approach to financial planning.

“We steer away from claiming that we're investment advisors,” Schlossberg said. “For us it's not about rate of return; it's about wealth management. What matters is what our clients have at the end of the day, which is not always generated by returns. Too much of the

industry dialogue today focuses on rate of return; not enough deals with the entire picture of your wealth.”

He said the firm follows a four-step approach to wealth management: planning, growing, keeping, and leaving.

Each segment of this methodology is discussed with every client or group of clients.

“Planning means having a blueprint for tomorrow,” Schlossberg explained.

“Growing is making sure that investment management is done in a way that is risk-tolerant to the client. Keeping means making sure clients are not eroding too much wealth to unnecessary items – such

as by not having adequate insurance protection or a sound plan for taxation.

Finally, leaving means helping them find the best way to pass on their wealth to the next generation – especially considering how the SECURE Act of 2019 has modified the approach to wealth transfer on a multi-generational basis.”

He continued, “I would never take a client’s money without doing a financial plan within the first three months. I need to know where they are going and what they are doing. Financial planning should naturally be the primary consideration in all the decisions and recommendations that will be made.”

Schlossberg said a good fit for his practice is the client who is genuinely seeking holistic financial advice – not someone who only wants a person to manage their investments.

He finds many of his clients through conducting financial educational events for the general public.

“It's easier to find those ideal clients when you meet them in an educational setting,” he said. “Their attendance indicates they are open to somebody else's opinion about financial matters and are more likely to listen to what you have to say. After the educational presentation, we offer them an initial free consultation. They are usually pretty open

to what we have to offer.

If they are a good fit for our firm, we spend a few minutes talking about how our services may help them on an ongoing basis.

But regardless, we are spending 95 percent of that time giving pro bono advice that can benefit them and providing sound guidance to the community.”

Schlossberg said financial education is an important part of the initial process for new clients and continues during ongoing engagement with existing clients. The goal is to put people at ease throughout the process. He noted everything is designed to make complex topics as simple as possible for prospects and clients.

“We consider ourselves more than just financial advisors,” Schlossberg added. “We consider ourselves financial therapists. Our goal is to help people sleep better at night by understanding what's going on, where they stand now, and where they're trying to go financially.”

For more information on at Assured Concepts Group, visit assuredgroup. com

David Schlossberg is a Registered Rep with National Securities Corp., Member FINRA/SIPC. Investments involve risk and may lose value

ADVISORS MAGAZINE / 35

by bobby hickman

More Millennials Turn to Advisor Growing number of young people rely on financial planners

M

ore millennials are turning to financial advisors as they get an early start on planning their financial future, providing opportunities for advisors to expand their client base.

The number of millennials working with financial advisors and professionals jumped from 50 percent in 2016 to 75 percent by 2020, according to the Nationwide Retirement Institute’s Advisory Authority Study released earlier this year. The survey also found that 81 percent of millennial investors have created retirement and investment plans to ensure they do not outlive their savings.

Most of the clients at Kairos Private Wealth are high-worthindividuals who are semi-retired or nearing retirement age, according to Taylor A. Bauerle, president of the fee-only financial planning firm in Lake Mary, Florida. However, his firm is increasingly serving millennials, who now comprise one-third of the U.S. population.

“Outside of my regular client base, I like to work with my peers, the 30- to 40-year-olds,”

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said 31-year-old Bauerle. “They may not have a couple hundred thousand dollars in a brokerage account, but they do have a good income and they want to make the right choices. My goal is to catch those people early and help them make the right decisions on home financing, credit, and debt. I'm excited about hopefully grooming some really great client relationships that will be with me for decades to come.”

Client services plays a major role in serving those customers at Kairos, a boutique firm with some 100 client families and $100 million in assets under management. Most people want a relationship with an advisor who knows them well and talks to them on the phone.

“When someone calls, the phone is going to be picked up within the first two rings, and it's going to be a human being that works in the office on the other end of the phone,” he explained.

“In most instances, that person is able to take care of whatever the client needs.”

First and foremost, Bauerle said, Kairos is a planning-focused firm.

When new clients come on board, the engagement begins with a comprehensive 13-step financial plan.

“We don’t just plug numbers into a guide, print out reports, and hand it to you,” he explained.

“We have a 30- to 50-page customized book. We gather extensive data about every client and every aspect of their life that affects their financial future.”

The firm uses that information to create a yearbook for each client.

Updated information is gathered annually from each family or individual. Then the yearbook is updated with new data, revised projection assumptions, and potential new strategies.

“Financial planning and investment advice is not just about money management,” Bauerle added. “Anybody can manage money these days; any app can do it. But that’s not where people have questions or run into issues. It's all the ancillary things: insurance, estate planning, and other considerations that make a true financial plan.”

Bauerle also suggested advisors need to have broader conversations with millennials and those nearing retirement about the many ways finances affect every aspect of your life.

“If you can get a handle on those things, put them down on paper, and identify the risks,” he added, “you can really head off problems before you run into them down the road.”

For more information on Kairos Private Wealth, visit: kairosprivatewealth.com

ADVISORS MAGAZINE / 37

by bill millar

Balancing Risk and Return Through Pro-Active Asset Management Should you pursue active investing?

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wo schools of investment thought often collide. One holds “Active Investing”– continuous portfolio monitoring and corrective intervention – adds little value. Indeed, “Passive Investing” advocates believe buying Index funds or ETFs and just holding them for the long term works best. However, U.S. News and World Report holds “the debate between passive and active fund management is one of the great investing controversies.”

For now, passive strategies appear to have gained the upper hand. As USNWR and numerous similar sources report, passive investing has been outperforming active management for the past several decades.

But defenders note a sea change occurring.

Driven by a host of shifting factors, the Financial Times shares that many leaders in the investment industry are urging “a shift from passive to active investing.” In fact, the article cites influential pension manager Willis Tower Watson advice that investors who stick to passive strategies may not be as well positioned or 38 / ADVISORS MAGAZINE

diversified as they might otherwise believe.

Lawrence York, founder and Chief Investment Officer of ProActive Advisors LLC in Lexington, Kentucky believes any investor using a passive investing strategy is making a potentially costly mistake. This is particularly true for those nearing, or in retirement, he says.

York argues that passive strategies typically use fixed allocation portfolios while ignoring risk-forreward data.

“What is really important is to create a balance between a focus on value and risk,” he said. “You need risk management to proactively respond to what the markets are telling you at any specific point in time,” he said. “An active, riskmanagement approach is crucial for principal protection.”

Looking at the 20082009 correction, York points out that active management had big advantages. First, going into the crisis, so many signals were available that the equity markets were at or near their highs alerting active investors to lessen their risk exposure. Then, once the bottom was

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L/R: Lawrence York, CIO & John York, IAR

reached, active managers could see the floor and capture incredible value.

The same can be said for the recent Covid-19 driven market correction.

First the drop, then the recovery, then today, heightened risk again

after a rebound, York added.

“The market is not static, and neither should you be,” he cautions.

“Fixed allocation portfolios should be actively managed with a proven process. For

example, the upside potential for equities versus debt after the correction of 2008-2009 was enormous, but fearful of greater losses investors sold stocks and bought bonds though interest rates were cut to zero leaving little return or upside in bonds.” said York. “Overall, your investment mix should always be based on the risk and return opportunities present.

While passive approaches may periodically rebalance, they tend to always be selling or buying

at the wrong times.”

Owing to the nature of such investments having no managers, there is no means to protect the investor. By law, a fund whose prospectus promises to invest only in securities linked to a specific stock size or theme – such as S&P500 companies or commercial real estate – are limited to investing in their designated lane.

“Many active managers are similarly trapped.

What happens is when the specific sector a manager is invested in reaches its

high and all that is left is risk, they cannot diversify.

All they can do is swap securities in the same category. But that doesn’t achieve anything when the entire category is at risk,” York said.

A key driver behind York’s passion for proactive investing are the lessons he learned in 2006 during his efforts to launch a pioneering website. The goal was to give investors simplified tools for managing their investments. But the project did not go as planned.

York had hired coders in India to do the programming, he never imagined just how much of the work he would need to perform himself.

“I was up almost every night running formula after formula, crunching massive amounts of data to test the formulas.

It was through this process that I started seeing – in great detail and clarity – how various strategies led to good and bad outcomes,” said York. “The experience was like earning a Ph.D. It was remarkably insightful and it drove me to develop a value-oriented, but riskbalancing investment approach.”

The key to consistent success is using a process that manages not just return, but also risk.

Consequently, once any new client’s retirement

goals are defined, York utilizes his 360Portfolios active investment strategy that balances risk and return to target the desired goals. The firm has a fivestep process where step one assesses the health of the market right now: what is changing, where are the opportunities (upside) and where are the risks (downside)? What sectors, regions, securities are going to generate the returns needed? Then during the course of the investment cycle, various other steps unfold, but it all leads to step five which is another deep dive into risk assessment asking what has changed? And then the process repeats seeking to lower risk and improve return.

“I get great satisfaction helping clients gain a more secure retirement and removing financial worries. The majority of financial advisors ask clients to commit to a fixed allocation and then put them on autopilot.

We’re building our firm with clients who have experienced passive investing failures and appreciate the value of someone who actually watches their money,” York said. “It’s a bit of a tortoise and hare way of building a firm but market corrections tend to spread the word.”

For more information on ProActive Advisors LLC, visit: Proactiveadvisors.com ADVISORS MAGAZINE / 39

by joe innace

ENGINEERING QUALITY INVESTMENTS Bridging corporate and private client services

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he SECURE Act became law on Dec. 20, 2019, with the intent to make it easier for small business owners to set up retirement plans.

Short for “Setting Every Community Up for Retirement Enhancement,” the legislation also created Pooled Employer Plans (PEPs) effective January 1, 2021 – a form of “open” Multiple Employer 401(k) Plan (MEP) that any employer can join, according to Forbes Magazine.

“MEP supporters claim PEPs will offer two key advantages over traditional single-employer 401(k) plans: lower fees for retirement savers and liability protection for employers.”

Forbes noted.

Registered Investment Advisors serving as fiduciaries may also be able to expand their practices by specializing in PEPs, especially when they already have experience with MEPs. And that’s one of the immediate goals of California-based 401K Engineers, a business owned

by Paul Marchetti, AIF®. In addition to providing investment and financial planning solutions to private clients, Marchetti provides 401(k) consulting and hands-on services to corporations.

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Specifically, Marchetti serves as trustee and fiduciary for the MEP offered by the Sacramento Regional Building Exchange (SRBX), a trade association comprised of about 1100 member companies in building and construction. It’s considered a closed MEP because it’s made up of more than one unrelated employer (with employees) with a trade association as sponsor in which companies have other shared interests beyond retirement savings.

Any retirement plan requires ongoing care and attention, and Marchetti told Advisors Magazine in a recent interview that’s what he brings to the table. He’ll build, reconstruct, and oversee such plans, working with corporate HR departments, CFOs, and other management as well as owners of smaller companies because the 401(k) rules, regulations and day-today oversight can be daunting.

“For example, just recently I noticed that the SRBX target-date funds were only okay. They were weakening, so I changed the entire suite of funds and explained my rationale,” he said.

Aside from quarterly investment monitoring and analyzing, other 401(k) plan services might include establishing a retirement plan and management committee, drafting an Investment Policy Statement (IPS), arranging quarterly meetings, setting up auto-enrollment and autoescalation, reviewing the plan design annually, offering safe harbor options and expertise, and much more.

“Plan fees are known, openly discussed and reasonable,” Marchetti added, “often cutting a company’s costs by a minimum of 40 percent.”

He said his firm typically follows the 90-10-90 philosophy, meaning a 90 percent or greater participation rate, 10 percent average employee deferral, and 90 percent appropriate.

The fit with SRBX is a good one because Marchetti is formally educated as an Mechanical engineer. “When it comes to building and construction companies, I know the challenges they face and I speak their lingo,” he said.

He started out at his family’s

retail hardware store in the mid1980s, where he learned the customer always comes first. “Being in the hardware business, I helped people solve their problems.

Whatever they needed—that exact screw, nut, bolt or part for a certain project—I liked helping them get things done, creating and coming up with custom solutions.”

Nowadays, instead of helping people build things, he’s helping them build wealth, and he says his practice is pretty much always open. “Clients can call me weekends, whenever—and I’ll jump on whatever it is they need.”

For private clients as well, Marchetti offers estate planning, tax planning, advice on properties to sell and buy, and helping them with virtually anything that impacts their financial lives.

“I go well beyond the portfolio.

It’s about relationships, getting involved in a client’s life. I’ll ask what’s causing them fear, or stress, or what makes them most happy,” he added. “I’m not about simply hawking products, and there is no minimum required.”

Personal touches have helped him grow the business, which increased by 22 percent during the 2020 pandemic. Marchetti is not concerned about the rapid growth of robo-advisors and online trading platforms because he sees them as just computer screens or phone displays with no real relationship or connection to clients.

“Staying in front of clients is vital,” he said. “You absolutely have to enhance the customer experience and instill it in all that you do.”

Toward that end Marchetti makes sure to send his clients some goodies on their birthdays. Women

get fruit arrangements and men get some baked goods. “And during the holidays, everyone gets my mother’s homemade biscotti,” he beamed.

Around the holidays this year and into 2022, Marchetti is aiming to take to market his own PEP, while continuing to gather more assets under management from SRBX MEP members.

The Pooled Employee Plan addition to his practice is a key goal that will allow him to reach out to diverse companies, from restaurants to barber shops to florists, nurseries and more. He notes that it will be more labor intensive and involve more cold calls than a groupsponsored MEP, but he’s looking forward to the challenge.

Marchetti is awaiting authorization from the U.S. Department of Labor because before he begins marketing a PEP, it would need to be up and running with about 16-20 different investment avenues. “Like the MEP, I’ll run it, be the trustee and handle all the filings,” he said. “And I’ll present it to different businesses that might want to start a 401(k) plan or convert an existing one.”

Still, Marchetti is quick to note that he’s not transactional. For him, it’s all about a lifelong process. “It takes hard work to get a client, but you can lose them overnight,” he summarized.

For more information on 401(k) Engineers, visit: 401kengineers.com

ADVISORS MAGAZINE / 41

by bill millar

VIRTUAL TALK

INTERVIEW

WEALTH MANAGEMENT EMBRACES VIDEO CONFERENCING A shift to virtual interaction The wealth management industry is long associated with spacious, luxuriously appointed offices and meeting rooms.

But thanks in large part to Covid-19 all of that may be changing. Note, for example, an article from the Financial Planning Association highlights that tools like Zoom introduce opportunities for advisers “to tailor their service offerings to build relationships.” In particular, it notes that clients “like the ease and convenience of [videoconferencing] and they want it to continue.”

While the industry as a whole is now careening toward digital collaboration, it is important to note that many already had a head start. A good example comes from Round Rock Texas-based Symphony Retirement Partners LLC. This is a group that according to managing partner John Koshy, AIF, began exploring remote collaboration with its clients over 10 years ago.

“It was around 2010 that we were suddenly noticing how many of our wealth management clients had iPads,” says Koshy. “Grandfathers and grandmothers weren’t 42 / ADVISORS MAGAZINE

often all that tech-savvy themselves, but thanks to websites Facebook and their wanting to see photos of their kids or video chat, they had to climb that learning curve.”

Koshy saw the opportunity immediately.

In practice, he is nearly insistent on meeting faceto-face with clients at least once a year. But armed with video conferencing on iPads and similar devices, Koshy found he could improve the frequency of interaction. Moreover, getting it done was a simple operation.

“Our clients were already familiar with video conferencing with their families,” say Koshy. “So all we needed to do was send them a link to our Zoom portal and just like that, we’re having a meeting.”

While the firm was already well ahead of the curve in terms of video conferencing, unquestionably, the arrival of the pandemic forced a remarkable rate of acceleration. Today, face-to-face interaction is the exception, as the vast majority of client discussions now take place virtually. And in a bit of a surprising development, Koshy believes that in many cases, digital conversations are

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preferred.

“First, our clients are busy people – and so it can be a lot more convenient when they can conduct business via Zoom,” says Koshy. “Second, many are a bit older and may have health concerns amid the pandemic.”

But he finds the third reason the most surprising of all.

“I’m finding that often, we can get more done and communicate more clearly when we use Zoom,” he said. “When we’re live, in person, it can be awkward when I have to turn my back to point at a presentation.” But with video conferencing, embedded tools “allow us to share the charts or whatever so we’re always focused on what’s there.”

Going forward, Koshy believes there will be more and greater use of

technology throughout the wealth management industry. In particular he anticipates that more and more individuals will be using online and mobile “fintech” tools to manage their finances. And while some may believe this will drive investors away from the use of human advisors, Koshy believes otherwise.

“Overall, I believe fintech is driving interest in investing overall. But retirement planning is a specialized field and I believe that in the end, people are going to find they want greater assurance. They may start their investing with fintech, but eventually they will need a human – a coach – and I’ll be here.”

For more information on Symphony Retirement Partners LLC, visit: symphonyretirement.com

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BY BILL MILLAR

HUMAN TALK

INTERVIEW

FOR SUCCESS IN RETIREMENT,

TRUST THE HUMANS The Robots Are Not Ready

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echnology is becoming more prominent and useful across the whole of wealth and investment management. Nonetheless, industry-leading research and market practitioners alike strongly suggest: humankind and the marketplace are nowhere near ready to shake free of the human connection.

Robo-advisory, where more and more of investment decision making is being informed by artificial intelligence and then executed and supported on digital platforms is already wellestablished and certainly still on the rise. BusinessWire, for example, expects a combined average growth rate in robo-advisory services of over 40% between today and 2026.

But it is not enough for investment and retirement planning to be carefully conceived. To be successful a plan must be fully-exercised – emphasis on execution. Here, a Deloitte report on robo-advisory and investment psychology shows that the machines may not be fully up to the task.

Deloitte believes investors may of course be able to obtain valid insights from robo-advisors. But even so, they are left with “fraught” choices. These, the report explains, are decisions that remain “complex and difficult for humans in that they require specialist knowledge, are made infrequently, do not have immediate feedback, and have important effects that are only 44 / ADVISORS MAGAZINE

Ryan C. Olds, CFP®

A Customized Approach

Tailoring financial plans specifically for Ohio teachers, smallbusiness owners and medical professionals.

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experienced in the distant future.”

Put another way, you may lead a horse to water but you can’t make him drink.

Ryan C. Olds, CFP® professional and principal at Ridgedale Financial Planning LLC in Northeast Ohio “welcomes” the rise of roboadvisory as it serves to, in general, increase knowledge and awareness in wealth management. Such tools can provide new investors with a better understanding of investment fundamentals and concepts.

Gamification of financial education and planning can go a long way into helping people see what they have to do to get where they want to go.

But, as he explains, such tools tend to fall far short when it comes to execution.

“It is human nature to want a

personal connection,” says Olds.

“You can go to a robo-advisor and maybe you have an 800 number to call, but you’re probably going to get a different person every time – they don’t know you and you don’t know them. Alternatively, when you’re working with an advisor like me, you can always call directly, but often, you don’t even have to make a call. When conditions change, when there’s something you need to consider, it’s going to be your advisor reaching out to you proactively.”

Olds points to another benefit of working with a human advisor – access to a specialist.

“Wealth and retirement planning is complex enough on its own but in addition, it’s always evolving. One of the things I love about this role

“

It is human nature to want a personal connection,” says Olds

is that there’s an intellectual side to this industry. There are so many nuances and strategies, and the regulations and IRS rules are always changing. Because this is such a specialty, I find I’m able to help people – and that’s gratifying to me.”

The human touch in wealth planning often branches out beyond core investment rules and tax regulations.

A specialist can often extend to groups of individuals such as teachers, entrepreneurs or medical professionals – where each group faces its own challenges and opportunities.

Because his mother-in-law retired in 2010 as a teacher, his mother retired in 2020 as a special education instructor, and his wife remains a speech therapist – Olds knows a thing or two about the in’s and out’s of retirement planning for education professionals. In particular, he has hands-on knowledge of how to

understand and work with public school system benefits and pension programs, such as the Ohio State Teachers Retirement Systems (STRS).

Olds has also developed a strong understanding of the needs of small business owners as they work toward their retirements. He understands the efforts needed just to keep the lights on and so he has developed a financial planning process that enables entrepreneurs to coordinate their business and personal financial plans.

Similarly, for over 15 years, Olds has been working closely with area medical professionals. Again, these face-toface human interactions result in deep understanding of the needs, goals, and practical challenges and opportunities for another niche segment of clients.

“Hands on coaching can also go a long way to helping people identify the

most likely sorts of mistakes that can creep into retirement planning intervening in time for course correction,” said Olds. “For example, people will say to me that they’re just never going in to a nursing home. They can certainly believe that now but I tell them from experience that while it may feel like that is so far away they don’t want to deal with it now, that’s a mistake – you’ve got to think about healthcare planning with your financial planning.”

An often-overlooked element in discussions on healthcare planning, what a client wants from retirement, and a specialist, is the degree to which technology actually elevates the quality of relationships between an advisor and their client. Today, so much of the mechanics and leg work of planning, investing, and reporting can be automated enabling greater strategic focus – more time for discussing the issues that matter most.

It bears repeating: you may lead your horse to water, but you can’t make it drink.

A robo-advisory can point to opportunities and strategies. But as the Deloitte report shows, people are notoriously prone to fraught decision making, often putting off what they should be doing. Having an advisor, Olds explains, provides them with coaching and direction that can guide them in their decision making. An advisor will also be there to help clients overcome any lingering hesitation or analysis paralysis.

In the end, says Olds, “I believe it’s good to have access to digital tools where clients can learn as much as they can plus manage their investing as efficiently as possible. But when it comes to retirement planning and execution, the human element is and will remain absolutely essential.”

For more information on Ridgevale Financial Planning, visit: ridgevalefp.com

Ryan Olds is an Investment Advisor Representative with Dynamic Wealth Advisors dba Ridgevale Financial Planning.

All investment advisory services are offered through Dynamic Wealth Advisors.

ADVISORS MAGAZINE / 45

by joe innace

PRE-RETIREMENT WEALTH MANAGEMENT

mixing a dose of pre-ipo investing Initial Public Offerings are booming again in 2021. The first half of the year saw 213 IPOs raise more than $70 billion, according to CNBC. June, in fact, was the busiest single IPO month since August 2000.

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ecognized as a 5-star wealth manager by Chicago Magazine, Richard Babjak, ChFC®, president and partner of Midway Wealth Partners, is also Co- Founder of Midway Venture Partners, a hedge fund that manages and dedicates capital for late-stage IPO companies.

Midway Wealth Partners is an entirely separate entity specializing in pre-retirement holistic financial planning.

But for the entrepreneurial Babjak, there can be some crossover and investment synergy between the two.

“The market in the IPO space has changed,” Babjak told Advisors Magazine in a recent interview. “Companies are raising much more capital and staying private much longer than in the past; many times, the IPO is more of a liquidity event for pre-IPO investors rather than an opportunity for early-stage investors post-IPO as the valuation has already run up considerably before the IPO,” he explained.

This market, Babjak maintains, has few options for retail investors to access. Seeing this as an opportunity for some of his wealth management clients, he created two pre-IPO funds and brought in a manager as the other co-founder with 20 years of experience in the space. Their first fund was WEG Fund 1 and then came a second fund rebranded as Midway Venture Partners.

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“Midway is a series fund that has included Impossible Foods, Space X, Palantir, Eat Just, Apeel Sciences, Klarna and The Zebra as some of the holdings,” Babjak noted. The focus is on laterstage companies that can generally go public within three years. “The disruptive companies, the gamechangers,” he added.

Such companies might have portfolio appeal to higher net worth clients seeking to diversify.

Beyond such high-net-worth individuals, MVP services family businesses, pension plans, brokerdealers, and other institutions representing both buyers and sellers. Simply put, MVP provides liquidity.

“Family offices that are outside of our traditional wealth management are very active in this space,” Babjak said. “And having those institutions such as pension plans trade through us with larger amounts allows us to make larger transactions in this IPO space, which help our individual retail clients gain access to this market. We can provide more doors to pre-IPO opportunities,” he added.

Babjak did not start off in financial services but gravitated to the profession after graduate school.

“Growing up with little if any money I saw what lack of money and financial planning did to relationships,” he recalled. “I wanted things to be different for me and my future family.”

He chose to be a financial advisor and educated

himself about wealth management and creation in order to help others avoid the pitfalls of poor planning and financial management that affected his family life growing up.

Babjak started in the industry with an insurance company, which he said provided a great training program but limited options to effectively implement a financial plan.

“I decided to become independent to provide a more objective way for products, services, and management, and built my own firm called World Equity Group that had close to 200 other financial advisors,” he said.

Babjak ran World Equity Group from 1998 to 2021 before selling to Wentworth Management Services.

“During that time, I always was managing and growing my own personal client base and adding to that team,” he said.

After the sale to Wentworth, his team was rebranded as Midway Wealth Partners, and he also maintained the presence in MVP, the hedge fund.

In addition to Babjak, Midway Wealth Partners has a team of three other experienced financial advisors and support staff. The team of planners is multi-generational to ensure a long-term consistent strategy with clients and natural succession plan.

They act as fiduciaries but are not exclusively fee-

based because, according to Babjak, some situations may arise when buying and holding are in the client’s best interest.

“We analyze everything in a client’s life that has a dollar sign attached to it,” Babjak said, “and then match a strategy to their risk profile, time horizon, and personal financial goals.”

An array of investment strategies is combined aimed at achieving a steadier rate of return with less volatility over time. Risk management is a cornerstone of the practice, and a recipe of passive, strategic and tactically managed portfolios help manage risk. Communication with clients is another core value.

“We want to constantly communicate with our clients and strive for 30 or more client touches through the year,” Babjak emphasized.

Education is also central to the firm’s process.

“Most of our clients have joined us after attending three evening financial classes we offer at different colleges or other teaching locations,” Babjak said.

He added that such classes do not focus on specific companies or products but are purely educational.

“Having that educational base helps clients make better, more informed decisions,” he explained.

“We strive to continue that client education through quarterly refresher programs, newsletters, economic

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we manage and dedicate capital for latestage, pre-ipo investments.

updates, and a variety of communications each year.”

The pandemic did not change anything the firm does on a day-to-day basis except for face-to-face meetings. Its communication, educational approach, frequent updates all remained the same.

“During the onset of the pandemic and early market drop, we accelerated communications with weekly updates and more educational material,” Babjak recalled.

“When we conducted full portfolio reviews, we did these via Zoom or other video services or simply had a conference call,” he said. “All material that was normally printed for a face-to-face meeting was either mailed in advance, emailed, or screen shared.”

Open again for face-to-face meetings, Midway Wealth Partners still makes on-line video conferencing available because some clients now prefer that to driving and meeting in-person.

“Other clients like the personal touch of a face-to-face meeting, so we will always have that option available and make the locations as convenient as possible,” Babjak said.

Adaptability is key during any event such as the pandemic, he elaborated, and being able to improvise is not solely confined to clients.

“We could be running portfolios very differently or have asset classes in a portfolio 10 years from now that we would not think of having today,” Babjak said. “The economic, political, and environmental world is always

our reputation for success has been built over years of helping investors and sellers navigate the private market with confidence.

Babjak in client meeting 48 / ADVISORS MAGAZINE

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changing, and the advisor needs to change with it.”

Retirement planning handled by the firm is customized for each client depending on their available assets, sources of income, risk profile, time horizon and individual goals.

“We focus on clients that are generally 50 and over being five to 15 years from retirement in most cases.” Babjak said.

“There are certain similarities between people in this age group, but risk and strategy can vary depending on each client’s individual scenario.”

High-risk to one person can be moderate risk to another person, he noted, stressing that a primary job for the firm is to fully understand each client.

“About one half of our clients are fully retired and taking income from their portfolios,” Babjak said. “We want to make sure each client has a long-term financial plan, risk management strategy, estate plan, and an income plan at retirement.”

This is especially important with Americans living longer than ever before—to nearly 80 years old now, according to a consensus of government studies. Such longevity is at the heart of financial planning in Babjak’s view.

“We need to build a solid financial plan and conservative income model for each client,” he said, “because we need to make sure that their money lasts longer if they do.”

As such, the firm uses conservative assumptions and variable rates of return

based on how the markets have performed historically.

“We have never had a client have an income issue, regardless of market conditions, if they have followed the plan,” Babjak stated, emphasizing that the numbers and the plan also need to be updated on a regular basis to make sure all remains on track.

“A small adjustment over the years can avoid a much bigger adjustment down the road,” he warned. “Retirees not doing this are just flying blind adding significant risk to their longterm plan.”

Pitfalls of online trading platforms Being mainly in the pre-retirement marketplace, Midway Wealth Partners is not overly concerned with the rapid growth of online trading platforms, robo-advisors, and handheld apps as a threat to its core business. Still, Babjak is glad to see such platforms coming under greater scrutiny and being held accountable.

In fact, in late June the Financial Industry Regulatory Authority fined Robinhood $57 million and ordered the online brokerage to pay some $12.6 million in restitution, plus interest, to thousands of customers for a total settlement of $70 million.

"The sanctions represent the largest financial penalty ever ordered

by FINRA and reflect the scope and seriousness of the violations," the authority wrote. FINRA cited "significant harm" to "millions of customers who received false or misleading information from the firm, millions of customers affected by the firm’s systems outages in March 2020, and thousands of customers the firm approved to trade options even when it was not appropriate for the customers to do so."

Babjak expressed concern with the free trading and selling order flow of online platforms in general.

“If you are not paying for a service, then you are not the client,” he said.

Team Midway

“Whoever is paying for order flow is the client.”

Babjak added: “I am also concerned about the high level of margin through the industry, much of it in online platforms. We have never seen margin levels like these and when things turn the uneducated can be devastated.”

He remembered how such a scenario played out during the dot.com boom with people quitting their jobs to become day traders.

“When we reach bubble levels like at that time, things generally end badly,” Babjak said. “Our clients are looking for help, guidance, and assistance with all their financial affairs – not to be day trading with a mobile platform.”

Another industry concern of Babjak’s centers around the concept of risk and that feeling of complacency after steady, strong growth.

“The government has come to the rescue with huge stimulus during the pandemic and the Federal Reserve has been historically more accommodating than ever,” he observed. “This cannot go on forever and what happens when the free money stops?”

Babjak points to high-margin debt, mobile trading platforms, accelerating valuations and what he sees as “free money,” and wonders what the endgame is to unwind all of it.

“There is significant risk ahead, but what always happens is people lose the connection between risk and return unless they have a quality and experienced advisor in most cases,” he said.

For more information, visit: midwaywp.com and midwayventurepartners.com

Securities and Investment Advisory Services offered through World Equity Group, Inc., member FINRA/SIPC

ADVISORS MAGAZINE / 49

by bobby l. hickman

MORE INVESTORS INVESTING WITH A PURPOSE ESG investments align funds, personal values

A growing number of investors are prioritizing socially responsible outcomes in addition to financial results as they align their assets with personal values through environmental, sustainable, and governance (ESG) investments.

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mall investors and institutions alike are increasingly focusing on nonfinancial factors as they evaluate companies’ performance while making investment decisions. More than 90 percent of those polled for the 2021 MSCI Investment Insights Survey said non-financial performance metrics played a decisive role in their decisionmaking during the previous year. The poll of global institutional asset owners also found 72 percent conducted a methodical, structured evaluation of ESG factors last year – more than double the 32 percent who did so in 2018.

Helping people align their assets with their values to craft a Socially Responsible Investment (SRI) plan is the primary mission at Green Future Wealth Management in Worcester, Massachusetts.

Founder and wealth advisor Nick Cantrell, CFP®, ChFC®, CLU®, CSRIC™ said his firm uses SRI strategies to align clients’ personal values, beliefs, and passions with investments in assets that reflect those values.

“For many of our clients, what is most important to them revolves around environmental stewardship and sustainability, such as getting away from using fossil fuels,” Cantrell said. “These

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clients are really passionate about their ethical values. We work with them to create a financial plan that incorporates what’s most important to them.”

More financial firms throughout the industry are embracing ESG investing, Cantrell noted. For example, UBS Global Wealth Management, one of world’s largest financial firms, announced two years ago that ESG would be its default option for selecting investments.

Returns from ESG investments are often comparable to other investments while presenting lower risk exposure than

conventional assets.

“Even clients who do not have a specific value set believe an ESG investment approach gives them more bang for the buck,” he continued.

“Research on the value of sustainable investing has been strong. We’re finding people who, quite frankly, could care less about sustainability. However, they are incorporating ESG into their investment decision-making on the basis of both pure return and risk.”

Cantrell said that as marketplace demand continues to evolve, he

believes more firms will specialize in sustainable wealth management. There are an increasing number of firms today that focus on ESG and SRI, but most are fairly small.

“I would love for my firm to eventually become a national player in this space because we bring a lot to the table,” he added. “My expectation is that, by the time we are a national player, there will be many other national players. The marketplace demand is insatiable, so I think there will be other firms growing to meet that demand.”

While many Green Future Wealth Management clients are interested in investments that reflect their personal beliefs and values, their basic goals for achieving financial success are much like everyone else’s.

“At the end of the day,” Cantrell said, “the number one reason our clients work with us is because they want to save for retirement.

They want to build wealth to accomplish their financial goals: achieve security in retirement, pass on money to their children or grandchildren, or give more to charity.

Those things are all at the top of the list for everybody who works with an advisor. Our clients just want to do it in a way that also supports their own values.”

When Cantrell launched Green Future Wealth Management, he decided not to set a firm minimum so he could work with clients of all types. Although the firm has many clients who fall within the range of $500,000 to $5 million in assets, it also serves a number of smaller customers.

“I believe financial planning helps improve people’s lives,” Cantrell explained. “I didn’t want to create barriers to people who wanted to use financial education and financial planning to build a better life. We’re serious about working with clients who are just getting started and want to improve their financial situation.”

People from all walks of life can benefit from financial education. Cantrell said many of his clients are highly intelligent and welleducated, including academics with advanced degrees, physicians, researchers, and even a

The Cantrell Family

retired economics professor.

“I often say that all of my clients are geniuses,” he continued, “However, it really takes three things to be able to do financial planning and investing on your own. It takes knowledge; it takes time; and it takes desire. Most people do not have all three. Even if they have the knowledge and the time, they simply don’t have the desire.”

Similarly, many clients can be intimidated by dealing with the financial industry. Cantrell said a number of his clients inherited their wealth, which can introduce additional complexities into their relationship with money. Others are overwhelmed by the entire financial process.

Cantrell’s background as an educator has been particularly helpful in creating satisfied clients. After receiving his degree in education, he spent several years teaching music in public schools.

He then spent 14 years in financial services before opening his own firm in mid-2020 – in the midst of the pandemic.

Cantrell noted many clients say they appreciate having an advisor who will take the time to explain complex

concepts in a way that makes them easily understandable and do so in a patient manner.

“Often I view my job as being an educator-in-chief who brings wealth management to people,” he said.

“Jargon and acronyms are the enemies when you are helping a client feel empowered through their personal financial plan.”

For more information on Green Future Wealth Management, visit greenfuturewealth.com

Securities offered through Registered Representatives of Cambridge Investment Research, Inc., a broker dealer, member FINRA/SIPC. Advisory services offered through Cambridge Investment Research Advisors, Inc., a Registered Investment Adviser. Green Future Wealth Management and Cambridge are not affiliated. Investing involves risk. Depending on the different types of investments there may be varying degrees of risk. Socially responsible and ESG investing do not guarantee any amount of success. Clients and prospective clients should be prepared to bear investment loss including loss of original principal.

ADVISORS MAGAZINE / 51

strategy, discipline, & preparedness Part of a successful investing formula It’s commonly advised that you should not start a business with friends because the risk of failure can be far too great. No rewards to be reaped, however, if one takes no risk. That’s how the team feels at Elevate Capital Management where no one talks about risk without using the word ‘reward’ in the same sentence.

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eremy Bardin and Garo Kochounian met almost 13 years ago working at Oppenheimer’s San Francisco office, which was one of the top-performing institutional teams working at the firm at that time.

“I remember Jeremy had just moved to San Francisco from Dallas, Texas, and I wanted to be a good steward of the city and take him out around 52 / ADVISORS MAGAZINE

town,” Kochounian recalled in a recent interview with Advisors Magazine. “There was a private event at the Carnelian Room, the rooftop of 555 Cal (also known as the Bank of America Building) so I decided to take him there.

The music was so loud that we could hardly hear each other.

It wasn’t the best environment to get to know someone,” Kochounian remembered.

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Although he thought his hosting was sub-par, to Kochounian’s surprise, Bardin said he had a great time. The nearly 40-yearold Carnelian Room shut down shortly thereafter, but a solid groundwork of friendship was cultivated that night, which has grown into an incredibly successful partnership.

Still, ever since meeting and becoming friends in 2009, Kochounian and Bardin had always talked about starting their own firm one day. “At the time, it seemed like such a wild thought for some reason,” said Bardin. “We were loyal corporate soldiers and branching out on our own,

while sounding great, felt remote.” Several years later, they left Oppenheimer with Kochounian going to work for MSCI – the byproduct of Morgan Stanley and Capital International – and Bardin joining Merrill Lynch. The two parted ways but always remained close and Bardin ultimately would stand next to Kochounian on his wedding day in 2014.”

Today, the outcome of that friendship is a San Francisco-based Elevate Capital Management, which is a boutique investment advisory firm providing concierge service to individuals and institutions.

Bardin, who is a CFA® charterholder (widely

considered by many to be the highest designation in finance) says they thought an official launch in 2020 was the right time to do it. “We were at a place in our careers, where we only wanted to do what we loved doing most and were good at,” explained Bardin, “Managing portfolios only, and only for the benefit of our clients – a vindication of the choice of our careers – free from other corporate interests.

We wanted to change people’s lives for good.”

While the firm is relatively new, their track record is exceptional. Since inception and through 1H2021, their performance is far above benchmarks. “Our strategy is to take a little bit more risk,” says Kochounian. “With a reward that equally matches that risk profile.” Bardin chimes in, “We have deep expertise in managing portfolios, which comes from years spent on the institutional portfolio management side.”

The motivation and shared visions may have been perfect, but the timing – as it turned out – was nerve-wracking. The partners’ excitement was shortlived as COVID-19 hit just after

launch. “We went from thinking ‘this is a great time to start our business’ to ‘did we just make a big mistake?’” said Bardin.

Turns out it was a great time to start the firm – when one considers economic cycles and confirmation biases.

“During positive economic cycles – like the one we experienced just prior to COVID – momentum snowballs, investor anxieties

SAN FRANCISCO BASED BOUTIQUE INVESTMENT ADVISOR PROVIDING CONCIERGE SERVICE TO INDIVIDUALS AND INSTITUTIONS

go dormant, and confidence increases,” Kochounian explained. “In a classic confirmation bias, it is simply easier to focus our attention on data that supports our hypothesis rather than seek out evidence that might disapprove it,” he added.

“Understanding your biases and assumptions is crucial to clear thinking and scientific literacy,” Bardin continued. “Value investing has helped create many successful investors in the world, but today’s markets are driven more by macroeconomic events than company fundamentals, dominated by fast growing disruptive and innovative tech companies. “Everyone is susceptible to such reasoning, and that’s when most investors make mistakes,” Bardin noted.

“And this is where we have helped so many clients.

The business exploded and soon we were onboarding more clients than we ever anticipated.”

“Our knowledge of Incentive Stock Options (ISOs) and Restricted Stock Units (RSU) coupled with our proximity to Silicon Valley, helped us onboard many tech executives” says Bardin. “It helps that our portfolio leans more towards disruptive tech. Our portfolio seeks long-term growth of capital by investing primarily in companies that are disruptive in nature” adds Kochounian. “Think Robotics, fintech, genomic revolution, renewable energy, biotech, cloud, cybersecurity and AI to name a few. We are looking

at companies that will outperform their sectors, and sectors that will outperform their industries in the next 5-7 years” he added.

Kochounian maintains that successful investing requires common sense more than a high IQ. “It requires a strategy, framework, conviction, discipline, experience, patience, knowledge and preparedness,” he said.

The partners bring years of institutional portfolio management expertise and believe in the premise that a team of asset class experts working collaboratively better manages portfolios.

They live in the Bay Area and most of their clients are tech executives who value Elevate Capital’s extensive expertise working with Incentive Stock Options (ISOs) and other types of equity-based compensation packages (RSUs), which can be complicated in nature.

“There is no substitute for the experience that we bring on how to deal with complex situations and navigate through difficult market conditions,” Kochounian said. “And there is also no substitute for a successful business to be put together by two best friends. The more time we spend together, the more we love it,” Bardin acknowledged.

For more information on Elevate Capital Management, visit: www. elevatecapm.com

ADVISORS MAGAZINE / 53

by bobby l. hickman

ESTATE TALK

INTERVIEW

More Estate Planning Needed

Two-thirds of Americans unprepared

F

John Ledford - President and CEO

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inancial advisors are leveraging opportunities to broaden their planning portfolios by offering estate planning services to help clients address this significant yet underserved need.

Only one-third of Americans have created estate planning documents, according to 2021 Wills and Estate Planning Study conducted by Caring. com and YouGov.com. The COVID-19 pandemic led more young people to engage in estate planning in 2020, the survey found. However, the total number of adults who have prepared wills, healthcare directives, and related documents continued to decline from 2017’s 42%. One major factor in that shortfall: almost 8% of those surveyed did not know how to go about creating a will or living trust.

Addressing those needs has made estate planning a key focus area for Fortress Wealth Group in Orlando, according to President/CEO John Ledford. In addition to

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the firm’s RIA (Fortress Wealth), the group launched Fortress Family Office in January 2021.

The family office provides full-service tax, insurance, and legal services, with the legal offerings primarily focusing on business incorporation and estate planning.

“We engage all of our clients in investment and financial planning processes that include estate planning,” Ledford said.

“We're fully involved in making sure our clients have a strategic estate plan in place with the appropriate documents. We ensure all the documents are notarized and secured properly, and that any trusts will ultimately be funded.”

Rather than referring estate planning to an attorney or an external firm, Ledford explains, Fortress finds it more effective to manage the entire process in-house and alongside its partners. That part of the firm’s business has grown significantly as more clients engage in estate planning alongside traditional advisory services.

Digital assets have become a significant factor, he added, shifting the paradigm beyond traditional considerations.

The firm maintains an asset ledger for all estate clients that document physical assets as well as digital assets including passwords, account access instructions, and digital currencies.

Tax planning is also a significant part of Fortress’ approach as well as estates, investments, and retirement.

“Many of the complex strategies that we create around advanced tax strategies and legal considerations require a significant amount of client education,” Ledford said. “Through our education process, we identify a critical path that allows the client to see the outcomes we are trying to reach. A welleducated client reads and reviews documents, asks the hard questions, and has more dynamic interchanges with advisors. Those are the best clients for us.”

Estate and tax strategies are part of a comprehensive range of services that include investments, insurance, small business consulting, and retirement planning. Ledford said the firm uses a variety of user-friendly tools to build client profiles. The Fortress suite of integrated tools helps determine asset allocations and risk tolerance, or model possible outcomes over a lifetime.

“One of the great advantages of doing business in 2021 is the access we have to incredible technology tools that assist us,” Ledford said.

“We want to use the best technology, allowing us to customize and build outcomes and manage investments the way we want. We've built a best-in-breed technology stack that allows us to do our jobs extremely efficiently and better serve our clients.”

For more information on Fortress Wealth Group, visit fortresswealthgroup.com

made for you

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In a world of fast food and one-size-fits-all sensibilities, how often does something feel made especially for you? The "Made for You" section celebrates those items that are created with such high quality of hand workmanship and degree of customization that they become individual to you. In each issue, our editors will endeavor to bring you special things from anywhere on the globe, choosing them solely on the basis of outstanding quality. Our goal is to give you guidance on the best of everything.

1 BALVENIE AGED 12 YEARS — DOUBLEWOOD Crafted by expert distillers from start to finish, this Scotch sets itself apart from the rest. Balvenie focuses on using meticulous care and attention from a group of top distillers to produce some of the finest whisky on the market. The distillery has been producing top quality whisky since 1962 and has built up a name for itself over time.

Its character focuses on black pepper, raspberry, cinnamon and milk chocolate. It’s a varied selection resulting in a big-flavoured dram that works very well together.

Balvenie’s 12 Year Doublewood is known for being smooth and especially enjoyable with a cigar. thebalvenie.com

2 ORIBE — BEST LUXURY SHAMPOO FOR MEN Oribe is a haircare authority famed for cult classics like their Texturizing Spray — which seems to add an instant magic and health to your hair. This quality extends to their custom-blended signature shampoo. It’s weightless, it protects your hair from environmental damage, it imparts shine, it restores strength.

What more could you want? Signature Shampoo will make you feel fresh and clean all day long. UV protection and is free from parabens and sodium chloride. mrproter.com 3 UNAGI — BEST OVERALL ELECTRIC SCOOTER Unagi took a little from column A and a little from column B when designing The Model One. And, on top of that, it also included a little from column C, D and E along with basically the rest of the alphabet. Its aluminium and carbon fibre makeup helps you to glide along the road in a slim, portable fashion that works for both commuting and journeying for pleasure. Incorporating into your lifestyle like a second pair of legs. unagiscooters.com

4 BOWLUS TRAVELR TRAILER — BEST LUXURY RV Step into your Bowlus travel trailer for the first time and prepare to feel a little overwhelmed by all of the possibilities running through your mind.

Wake up in the Zen Master Bedroom and make a coffee using the twostage water filtration system. You can even bring a furry friend along, thanks to this camping trailer’s seamless features: remote temperature monitoring, bowls that slide out seamlessly from a drawer and a coordinated pet bed. bowlus.com 5 250 GTO — ANTIQUE FERRARI In 1964, the 250 GTO won the Tour de France Automobile – marking the ninth year in a row that Ferrari won that race.

Only 36 of these cars were made between 1962 and 1963; the specific Ferrari that’s the most expensive in the world, at an unbelievable $70,000,000 price point, was victorious not only in the Tour de France, but it also placed in the Le Mans. www.ferrari.com/en-US 6 RIVIAN R1S — BEST ELECTRIC OFF-ROAD SUV Because we’re focusing on 2021 SUVs, we can’t ignore the fast-growing and incredibly promising EV sector of the market. This year, we award a prize not only to the best off-road SUV – but also to its most promising electric counterpart. It’s certainly powerful: You can select from three different battery sizes in this EV pickup, including 105, 135, and 180 kWh options. With the largest battery, there’s no need to worry about range.

The R1S can travel 410 miles without stopping, perfect for exploring without concerns for recharging. rivian.com ADVISORS MAGAZINE / 55

LIFE TALK INTERVIEW

by bill millar

IT’S NOT JUST MONEY - IT’S LIFE What’s On Your Bucket List?

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ealth management necessarily requires a focus on investments and cashflows – these are the building blocks necessary to assemble a successful retirement.

But a key challenge for the industry and thus an opportunity for any astute advisor, is finding ways to help clients recognize that the underlying reason they’ve been working so hard at saving and investing is in order to create 56 / ADVISORS MAGAZINE

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options for a meaningful life.

A focus on the money is a good thing, but when this rises to obsession, that’s to the detriment of the investor. Incessantly sticking one’s nose to the earning and investing grindstone is no doubt profitable. But a mistake being made by many successful individuals, especially as they’re getting closer to their actual retirement, is that they forget to look at life’s big picture.

Think about bucket lists – those lists of everything you as an investor today want to experience or accomplish in retirement and legacy. As an article in US News and World Report points out, though many soon-to-be or now retired people have indeed created a bucket list, “before you know it, years have passed and those items are still just dreams for someday.”

It is for these and related reasons that John Kadletz, AAMS®, CWS®, NSSA® founder of Kadletz Wealth Management LLC in De Pere, Wisconsin says he often steps in to play the role of an “instigator” – an advisor helping his clients better realize the possibilities before them.

“It’s part of my job to be an instigator to help clients lead their best lives,” he said. That does entail finance, helping them manage and use their money wisely. But in that end, money is just a tool. So, I push my clients to ask themselves: What can I do with this money? How can I use this tool to help me and the people around me enjoy our lives?”

Kadletz explains that he has seen many clients over the years that have been working so diligently their entire careers that they almost forget the wealth they have accumulated puts them in a position to accomplish more of their bucket list ideas than they realize possible. The problem here is that the longer they wait, the lower their chances of getting it all done.

Certainly, people at retirement age are much healthier than in previous generations – life expectancies have grown.

However, if the bucket list includes sky diving in Utah, skiing in British Columbia or hiking on Kauai, the

R/L: Kelly DeWine, John Kadletz, AAMS®, CWS®, NSSA®, Landon Wiese, CFP®, RICP®, CLTC®, Heidi Moseley

longer someone waits, the more likely their health or an injury will prevent the dream from coming true. Consequently, Kadletz believes that as an advisor, he needs to understand his clients’ bucket list ambitions and point out any opportunities to accelerate their realization.

Speaking to a client, Kadletz might be saying, “You know you wanted to build a cottage someday or tear down your existing cottage and build a newer one. But before you know it, it’s been 10 years and then 20 years and you didn’t get around to what you were wanting to do. Let me challenge you on that question. Why wait? Why not do it today!”

“I often find I have to push them to think outside that box and into taking that step, he said.”

A key driver of fuller fulfilment in life and in retirement is a close and trusting relationship with your advisor. Put another way, if you do not feel you can trust your advisor with this sort of intimate insight into who you are and what you and yours want to

achieve in the years remaining, then likely you’re working with the wrong advisor – at least not the right advisor for you. Finding an advisor where the relationship and trust just clicks can make all the difference.

“It's so interesting – and gratifying – how I have clients that when they first come in, it’s with their spreadsheet and they’re talking about this and that, and it’s all about the numbers. But then after about a year or two with us, they no longer bring their spreadsheet,” said Kadletz. “Now they talk about ‘we want to take this trip, or so-and-so is getting married and we were thinking about gifting and legacy planning or estate planning. So they see how they can trust how we are taking care of all this money and their investments that they’ve acquired over so many years of hard work and that simplifies their life. They can focus on the things that matter to their lives.”

One issue that on occasion rises in Kadletz’s practice is that a client will show up and the tables show they’re going to live into their

ARE YOU LIVING AN IMPACTFUL LIFE? WHO IS HELPING YOU CHECK OFF ITEMS ON YOUR BUCKET LIST?

90’s but they remark “I’m never going to live that long.” Here, Kadletz encourages his clients to realize that medicine is constantly improving and that sometimes with just a bit of effort, health trajectories can skyrocket. The outlook is brighter than many realize, so a longer-term, never outlive your money plan is a better approach.

Ultimately, “trust is essential,” says Kadletz.

“It’s not until you have that trust that you are going to be able to get them to share and you listen to help them live their best lives – to help them find the initiative of doing what they’ve always wanted to do,” he said. And something that gives Kadletz great joy is when clients send him their pictures of traveling the country with their RV or building that lake home they always wanted.

“Whatever it is, we want them to share that with us. That's where we get our inspiration and that’s how we know what we’re doing is working.”

For more information on Kadletz Wealth Management, visit: kadletzwealth.com

Kadletz Wealth Management 3311 S Packerland Dr Suite B, De Pere, WI 54115 This article is designed to provide accurate and authoritative information on the subjects covered. It is not, however, intended to provide specific legal, tax or other professional advice.

For specific professional assistance, the services of an appropriate professional should be sought. Neither the named broker dealer nor it’s affiliates may offer tax or legal services.

John Kadletz is a Financial Advisor offering securities through First Allied Securities, Inc. a Registered Broker/Dealer Member FINRA/SIPC. Advisory services offered through First Allied Advisory Services, a Registered Investment Adviser. First Allied entities are under separate ownership from any other named entity.

ADVISORS MAGAZINE / 57

FEATURE

BY JOE INNACE

WITH GATEWAYS OPEN FOR BUSINESS

crypto payments poised to explode

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he fuse is lit for cryptocurrencies to boom as a form of global payment, and within 12 to 24 months there will be a massive explosion in crypto being as readily accepted by merchants and others — as common as credit cards and cash are today.

That was the key takeaway after Advisors Magazine caught up in late August with entrepreneur Jason Butcher, CEO of CoinPayments.net – a global crypto payment gateway for merchants and the masses. Butcher said the global crypto gateway now counts 1.2 million clients.

“In this current phase of adoption, we get about 25,000 to 30,000 new clients every month who sign up with an account,” he said. “And we have more than 100,000 active clients; by that, I mean clients that have actually accepted a transaction.”

The other million or so CoinPayments clients simply haven’t completed a transaction yet, meaning that their customers just haven’t paid them in crypto. Nonetheless, CoinPayments is now handling $500 million to $700 million in annual crypto transactions, according to Butcher, a

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level that has been doubling nearly every year since the company’s founding in 2013.

Butcher likens the development of using crypto as a form of payment to the history, growth, and acceptance of using credit cards. Even before that, in the 1940s and 1950s, local stores and merchants had a network of customers who were approved for and accepted as having credit. When credit cards came along such customer networks grew exponentially.

But in the early years of credit cards, many will remember the carbon paper contraption that took an imprint of the customer’s card. “You had that slider device and the merchant would take your card, lay it in there and make a record of the transaction,” Butcher recalled. “But the merchant wouldn’t really know if there was any money or credit on that customer’s card,” he added. “It was much more of a trust issue or a feeling like, ‘Wow, this person has a credit card, so there must be some sort of value.”

Next came technology and the computer terminals that connected all these credit cards, and the issuing banks with facilities to verify whether

Jason Butcher, CEO of COINPAYMENTS

there was actually credit available.

As credit cards became more popular, so did trust and confidence. Storefronts and restaurants would commonly stick the logo decals on their windows and glass doors of cards accepted at their establishments—one or more of Amex, MasterCard, Visa, Discover, the old Diners Club and others. Such an early adoption/ acceptance stage is now happening with crypto payments.

“This is the stage we’re at now with crypto payments, and it’s

the space we’re in,” Butcher said.

“The technology exists today that allows you to instantly verify and validate that you’ve received that payment through crypto.”

Same with ATM machines in the United States where users see a range of different payment networks—Amex, Cirrus, Maestro, Mastercard, are just a few ubiquitous examples.

“Those are all different payment networks, right?” Butcher said, “Simply put, the combination of cryptocurrencies with blockchain technology is just another type

of payment network. And we are about to see it explode everywhere.”

Like those storefronts of years gone by, signs indicating Bitcoin, Ether, Dogecoin or other digital currencies ‘accepted here’ will become commonplace, according to Butcher.

Helping drive such adoption are many of the solutions and support found on the CoinPayments platform. Among several features for online businesses, the CoinPayments site offers a shopping cart ADVISORS MAGAZINE / 59

Take advantage of our global crypto payment gateway made easy and accessible for everyone — whether you’re a business owner, crypto user, or even from another planet.

plug-in system to accept digital payments. “Shopify is just one using this system, and it has seen 10 times the amount of crypto business volume in the last year alone,” Butcher said.

Key business services also include real-time global payments, reduced fraud risk with no chargebacks, and what Butcher says are industry-low processing fees of only 0.5% (paid by merchants). A strong growth area for CoinPayments is point of sale (POS) terminal enablement, more of which is on the horizon, according to Butcher.

Meanwhile, individuals -- or wallet users -- of CoinPayments can hold more than 2,210 cryptocurrencies on one platform, purchase crypto with a credit card, convert cryptocurrencies, and even buy gift cards.

And whether an old-fashioned physical wallet or a digital wallet, Butcher believes that how to pay for a good or service should be the customer’s choice.

“Some people still carry a wallet and inside that wallet, you may have physical cash,” he explained. “You may also have a Visa or Mastercard.” Likewise, on most phones today, people may have a PayPal account, Venmo, Apple or Google Pay—some form of a digital wallet.

“So, when you go out for a $100 dinner, you should have the 60 / ADVISORS MAGAZINE

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option of paying the restaurant with whatever form of payment you choose to use,” Butcher emphasized.

Almost everyone has experienced being at a restaurant, getting the check and sheepishly realizing their Visa or Mastercard is maxed out. Their physical wallet may also be short on cash. The time is here, according to Butcher, when you might want to pay that $100 restaurant tab partly in cash and partly in crypto—or entirely in crypto. And customers are more likely to frequent those businesses that offer more payment options and flexibility.

“If an establishment does offer the ability to accept payment in crypto, it’s my choice to decide if I want to pay in crypto, or if

I want to make a payment in another form,” Butcher said.

Butcher adds that what’s happening now is a shift to more payments being made in stablecoins. A stablecoin is a class of cryptocurrencies that attempts to offer price stability by being pegged to a currency like the U.S. dollar or a commodity like gold, according to Investopedia.

Personally, the CoinPayments CEO notes that he’s payment agnostic, supporting all forms of payment and cryptocurrencies.

“But I look at a stablecoin or a stable value currency as ultimately what we’re all after -- a global currency that people can exchange and provide value to each other,” Butcher said.

“And when a dominant stablecoin emerges, you’ll see more and more transactions happening in that, more people interacting with their digital wallets using that digital coin,” Butcher said, “because that will be a stable value that’s consistent.”

For more information, visit CoinPayments.net

ADVISORS MAGAZINE / 61

by joe innace

ONLINE TRADING TALK

INTERVIEW

Online Trading Platforms Don't do Taxes And financial advisors don't crash

In the United States, about one out of every 210 people has experience trading online, according to Asktraders. com. The phenomenal growth of internet trading, mobile apps and so-called robo-advisors has helped introduce the benefits of investing to a massive, new generation of those preferring to handle their own financial matters.

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rofessional advisors and other observers view this as largely a good thing—but there are limitations. And increasingly, such platforms are coming under greater scrutiny and are being held accountable when limits are stretched. In late June, FINRA fined Robinhood $57 million and ordered the online brokerage to pay some $12.6 million in restitution, plus interest, to customers for a total settlement of $70 million. Among other infractions, FINRA cited "significant harm" to millions of customers affected by the firm’s systems outages in March 2020.

“For some people, who enjoy doing financial investing themselves, such online trading platforms are excellent,” Hunter Von Unschuld, JD,

Von Unschuld recounts a case from last year when an investor – not a client – approached him on a consulting basis. The individual had done $30 million worth of online trading in 2020, garnering about $1.2 million in gains.

Unaware of wash-sale rules, the investor ended up having a more than $800,000 tax bill.

The wash-sale rule, according to Investopedia – an online financial information platform – is an IRS regulation that prevents a taxpayer from taking a tax deduction for a security sold in a wash sale. A wash sale is one that occurs when an individual sells or trades a security at a loss and, within 30 days before or after this sale, buys a "substantially identical" stock or security, or acquires a contract or option

We value being independent fiduciaries and are legally bound to make decisions in the client’s best interest CEBS and founder of Fractal Profile Wealth Management LLC told Advisors Magazine in a recent interview.

“But markets are not easy to understand,” he continued. “And advisors bring a lot to the table, such as being there with advice in tough times and being more tax efficient. An app won’t help you set up investments in a tax efficient way.”

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to do so.

“If the person who came to me with that $1.2 million gain had an advisor knowledgeable of the tax ramifications, his taxes would have been hundreds of thousands of dollars less,” Von Unschuld said.

Although Fractal Profile Wealth Management counts some retirees among its clients, the firm’s client base

is split along essentially two lines: age 58-70 pre-retirees for whom the firm works to put together all the ingredients for a customized retirement plan, and young professionals who have high incomes but not a lot of assets.

For the older group, it’s about peace of mind. “They see that they can retire, and we make sure they are comfortable with a plan,” Von Unschuld said. The younger professionals learn how to invest money, save, manage a 401(k), which Von Unschuld can actively manage for them, and more.

“For example, we do tax planning and work to build their assets,” he

explained. “The idea is to set them up when they’re young and be as taxefficient as possible because over time that has a huge impact.”

Education is key to Von Unschuld’s practice, which is based in Albuquerque, New Mexico and Tucson, Arizona, and where there is no minimum investment required.

“Ideally, before an individual even becomes a client, we have them take one of our classes,” he said. “So they can learn what’s really out there.”

A big problem today, in his opinion, stems from the constant barrage of financial news, which tends to have little

impact on the 75 percent of people at the average income level. As a result, people get the wrong ideas about how markets work and where they should be investing.

“It’s got that Las Vegas feel to it,” he said. “The financial news coverage, for example, is in fact entertainment and slanted toward how much money someone just made on GameStop.

But what about the people that lost money?”

At Fractal Profile Wealth Management, Von Unschuld’s primary job as a fiduciary who is acting in his clients’ best interests is to educate each

client on all the financial possibilities that fit their individual situation.

“We will not just say invest in this,” he said. “We explain how different portfolios work, how different strategies work, and different products. We show clients how investments will work for them — what they will and won’t do for them — and what they can be expected to do over a number of years.”

Von Unschuld, who has been involved in the financial services sector for more than 30 years, emphasizes that his financial planning process will not end until somebody says they understand what they have chosen to do and why.

“It could be two meetings, it could be five meetings,” he said. “And it’s an ongoing process. When we sit down for a review or just when questions come up, we might change things.”

Von Unschuld is adamant about having a fiduciary handle one’s finances.

So much so that he established the Fellowship of Fiduciary Education in 2014 and founded The American Society of Fiduciary Education (TASOFED) in 2016. The goal is to provide consumers, investors, and retirees across the country with the finest comprehensive financial education courses possible.

“Always ask, are you a fiduciary?” he said. “And there is only one acceptable answer, and that answer is ‘Yes.’” Von Unschuld also shares another good question when seeking out a financial professional: “What do you invest in?” he said, adding, “Does an advisor eat his own cooking?”

For more information on Fractal Profile Wealth Management, visit: fractalprofile.com

FRACTALPROFILE WEALTHMANAGEMENT

ADVISORS MAGAZINE / 63

INTERVIEW by bill millar

NAVIGATING HEALTHCARE GAPS IN RETIREMENT

Retirement’s Number One Risk

T

he bad news: a combination of rising healthcare costs plus people living longer in retirement increases the risks of a medical event bankrupting one’s resources. The good news: specialists are available to help their clients understand the risks, refine their planning and greatly reduce or eliminate such worries.

Viewpoints, a blog from Fidelity, warns that healthcare costs have become a remarkably overlooked aspect within retirement. Their research shows that a couple reaching age 65 and retiring in 2021 can expect their total healthcare expenses in retirement to consume as much as $300,000 – or 15% of an average retired couple’s annual expenses. Large as those sound, these figures do not even account for the potential costs of extended long-term care (LTC), where a private 64 / ADVISORS MAGAZINE

SEPT 2021

room in a nursing home can easily top $100,000 per year. The net result, the report asserts, is that for a growing number of retirees, rising healthcare costs are leading to a “retirement cost gap.”

“Healthcare costs – costs that are not covered by Medicare– are the number one risk that we all face in retirement,” says David Landwehr, founder and Certified Long Term Care Specialist (CLTC®) at LT Care Solutions in Wichita, Kansas. “But not only do people often overlook these costs, when they do get a look the options available can be complex and confusing.”

It is for these and related reasons that Landwehr’s practice, where he is joined by his son Mark, president of the group, offers a holistic approach

to retirement planning. So, in addition to working with clients to optimize their investments and cashflow in retirement, the two Landwehrs bring to bear considerable experience in helping clients to better plan for and make choices in healthcare. Here, their core focus includes guiding clients through Medicare and private insurance elections, supplemental and long-term health care needs, and even LTC programs for veterans and their surviving spouse – David is a VA accredited agent.

“Beyond core financial planning and investment, we are well acquainted with healthcare and, in particular, insurance issues in retirement,” said Mark. “Many who are coming to us have never had to worry about their healthcare or even purchase their own health insurance, when they get to

retirement age, they often don’t know where to focus or what to do. This, we see is an underserved segment of the marketplace.”

Take Medicare for example. Here there are four principal options: A, B, C and D, with some parts mandatory and others conditional.

And, there are many nuances.

Mark provides private seminar and webinar updates for every client annually since many plans change annually. “The only constant in life is change.”

Overall, the many options across Medicare result in a range of tradeoffs,” says Mark.

“The single largest healthcare planning mistake is the failure to put something in place to avoid catastrophic loss. The number one danger is a change in health not covered by Medicare for custodial home care, assisted living, or a nursing home. This can quickly become a $5,000 - $10,000 per month cost. So, you need to select and budget for the right

HEALTH COSTS NOT COVERED IS THE NUMBER RISK WE ALL FACE IN RETIREMENT. WE CAN HELP PLAN TO PROTECT AGAINST YOUR MAJOR REMAINING RISK: LONG TERM CARE.

insurance.”

An intriguing aspect of LT Care Solutions is the path by which the senior David Landwehr saw firsthand the need for greater focus on healthcare in retirement. Barbara, David’s mother-in-law had twentynine surgical operations before passing away. It was 1992 when his mother-in-law with no LTC insurance was forced to move in with David and Brenda four and a half years.

For David, it was an important object lesson and an inspiration for his practice. The experience also left an impression on his wife Brenda, who had been a Kansas State Representative since 1994 but who decided to join the firm in 1996 as a licensed LTC Agent.

Giving her intimate knowledge of aging issues – both personal and legislative – Brenda provides valuable insight into navigating healthcare risks.

Today, the Landwehrs and the rest of their team view their work as a combination of focused planning on Retirement health care and education on health care decisions. “Either you decide or someone else will.”

“Healthcare planning within retirement and particularly longterm care requires specialization.

This is a specialty that is often overlooked by advisors and their clients. Most financial advisors focus on growing assets and lack expertise in extended care planning. But to make the best decisions, you need to work with a planner who knows the ins and outs. From there the role reverts to one of educator,” David said.

“People are often surprised to hear that just one sudden turn of medical events could cost them several hundred thousand dollars.

I feel to be in the financial services world you need to be a teacher, and that’s what we do – help our

clients understand their risks and opportunities.”

Prior to the Covid-19 pandemic, this meant ongoing one-onone sessions with their many clients and prospects. It also meant frequent participation in live presentations and seminars.

Though live seminars are still taking place – such as a popular Medicare 101 workshop – the group has also expanded its use of digital live webinars. But no matter the medium, the issues can be complex, varying according to specific circumstances, meaning live interaction can be essential.

Overall, David and Mark see the pandemic as having improved the practice.

“We’ve been able to update our website to provide more client options. We’ve also put in a link where they can find our schedules to book one-on-one conversations – the client can schedule a time and date they want and they don’t have to play phone tag,” Mark said. “Digitizing the practice and improving organization and operations means we can better serve our clients, helping them to explore important solutions to problems often overlooked by most advisors.”

For more information on LT Care Solutions, visit: ltcaresolutions.com

ADVISORS MAGAZINE / 65

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ADVISORS MAGAZINE / 67

by bobby l. hickman

Valuing Financial Guidance

Clients with Advisors Continue to Outperform Families and individuals who rely on financial advisors continued to outperform investors without advisors, even as the COVID-19 pandemic roiled markets and brought new uncertainty to portfolios.

D

espite those challenges, “The value of advisor-to-client advice was on full display as advisors achieved record client and asset retention” in 2020, McKinsey & Company stated in its annual survey of North American retail wealth management.

Meanwhile, Russell Investments’ 2021 “Value of an Advisor” study found comprehensive wealth management advisors delivered value of 4.83% in the United States. “Given the volatility seen in 2020, it’s no surprise that the biggest contributor to advisor value is your role as a behavioral coach,” Russell told advisors. “In fact, this category on its own more than offsets the 1% fee advisors typically charge for their services.”

Greg Frank, AWMA®, president and owner of Missouri Hills Wealth Management LLC in Jefferson City, MO, noted numerous studies have compared the financial outcomes for people using advisors versus those who do not. That research consistently demonstrates the value financial professionals provide their clients.

“They're not saying that everyone has to have an advisor,” Frank said. “But the studies found that people with advisors generally accumulated more wealth over time than those without. Advisors provide the steady hand during uncertain times. They know when clients might put new money to work and when to pull money out of the market. Those are some of the reasons it makes a lot of sense to have an advisor who provides the human touch.”

Another advantage was the advisors’ ability to prepare clients in advance for the type of unexpected market turmoil of 2020 and early 2021. Frank said few of his clients expressed panic over the market’s direction because he had already told them what to expect when an economic downturn occurs.

“They already understood some of the tough things that can happen to their portfolio,” Frank said. “We had 68 / ADVISORS MAGAZINE

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previous conversations saying, ‘We don't panic; we don't rush out and change our philosophy of what needs to be done to pursue their goals. The just because the market's down 20%.’ Unless something philosophy includes creating an approach that each client drastic changes in your life, we don't really look to change is comfortable with, plus providing the financial education what we're doing overall.” required for them to understand the plan.

Afterwards, once clients see the benefit of staying the “I pride myself on trying to meet course, they will be a little more trusting clients where they're at with their past when the next crisis occurs, he continued. experiences,” he said. “We talk about Frank said he tells clients that rather than TODAY'S ECONOMIC from what they learned as a child panicking when the next crisis comes, they ENVIRONMENT PRESENTS everything through adulthood; how they look at their should look for ways to invest more cash or MANY CHALLENGES. wealth; and what they want to do with it. reallocate their portfolio to take advantage of I ask more questions to understand what potential opportunities during the downturn.

WITH CHALLENGES experiences they've had, and what things Long-term planning for retirement also COME OPPORTUNITIES they like or don't like.” factors into those conversations. With people AND POTENTIAL The firm also educates younger clients on living longer, the retirement window extends how to get started, what it means to have well beyond the previous generation’s 10REWARDS FOR THOSE wealth, and how to build it, Frank continued. year timeframe. Modern plans anticipate WHO CAN IDENTIFY He gets many of his referrals through growth to support a 25-, 30- or 35-year existing client relationships he has with their LONG-TERM TRENDS. retirement – or even longer, for those who parents or other family members. retire early.

“I look at that as trying to help the next “I tell my pre-retirement and retirement generation,” he said.

“It's a blessing to be able to help their clients that investing for retirement is not a brick wall,” Frank children build their own wealth, and to be ready to take on said. “You don't get up the day you retire and immediately wealth when they possibly inherit it in the future.” change your portfolio to something ultra-conservative. The For more information on Missouri Hills Wealth old models of having more and more income exposure no Management, visit missourihillswealth.com longer work. You’ve got to have some growth component, even for somebody who is 65 or 70 years old. Otherwise, the values of your assets will decline over time, and no one wants to see that.”

Part of that approach involves educating clients to understand the long-term process. Frank said a large part of his tailored planning approach is helping people to look beyond what their portfolio did last month and focusing on their investment horizon, which can stretch out for decades.

Securities and advisory services offered through LPL Financial, a Frank said he develops a customized plan for each client. registered investment advisor, Member FINRA/SIPC. He reviews each person’s situation and creates a model

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ADVISORS MAGAZINE / 69

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