Welcome to "Unfiltered Finance," a podcast created by Symmetry Partners, LLC, an investment firm in Glastonbury, Connecticut. As part of our commitment to clients, this new media offering is designed to proactively address questions, and concerns, around a variety of investment-based topics. Your time, attention, and trust are paramount to our success, and, we’re grateful for it. As always, we’re invested in your goals. Symmetry Partners, LLC, is an investment adviser registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, or excluded or exempted from registration requirements. No one should assume that future performance of any specific investment, investment strategy, product, or noninvestment related content made reference to directly or indirectly in this article will be profitable. As with any investment strategy, there is a possibility of profitability as well as loss.
Like a phoenix rising reborn from the ashes - Unfiltered Finance is back! Join us as we strip away the jargon and dive into markets and investing – focusing on small and mid-cap stocks while keeping it honest and real with no hype or hidden agendas.
Welcome to the series finale! After more than six years, we are concluding the Unfiltered Finance podcast. It has been our sincere pleasure to inform both our investors, and financial advisors with this offering. Joining our host Tom Romano, for this proverbial curtain call, is Casey Dylan, Consultant from Story Market Services & the original host of Unfiltered Finance. We'll be recalling some of our favorite memories, and discussing what this podcast has meant to the progression of our respective careers. If you have any questions or would like more information, reach out to us at https://symmetrypartners.com/contact-us/ You can also find us on LinkedIn, Facebook, YouTube, and Instagram. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
Welcome to part two of our podcast episode - "Navigating Global Markets". Many investment professionals believe it is imperative for investors to globally diversify their portfolios, and not put all of their proverbial eggs into one basket. We are joined by Symmetry's Brendan Kruh, Investment Associate, to conclude our discussion on the necessity of global diversification in your investments. If you have any questions or would like more information, reach out to us at https://symmetrypartners.com/contact-us/ You can also find us on LinkedIn, Facebook, YouTube, and Instagram. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice. Opinions and views expressed on this podcast were current on the date recorded. Opinions, estimates, forecasts, and statements of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice, including any forward-looking estimates or statements which are based on certain expectations and assumptions. Although information and opinions given have been obtained from or based on sources believed to be reliable, no warranty or representation is made as to their correctness, completeness, or accuracy. The views and strategies described may not be suitable for everyone. This podcast does not identify all the risks (direct or indirect) or other considerations which might be material to you when entering any financial transaction. Please visit the Symmetry Partners website for important disclosure related to performance of any specific index quoted in this podcast.
With recent turmoil in the Middle East, the continued war in Ukraine, and global inflation, investors want their portfolios to feature more U.S. stocks. After all, domestic investments have performed well as of late. In this episode of Unfiltered Finance we are joined once again, by Symmetry's Brendan Kruh, Investment Associate, for a discussion on the need for global diversification, even during the most tumultuous times. If you have any questions or would like more information, reach out to us at https://symmetrypartners.com/contact-us/ You can also find us on LinkedIn, Facebook, YouTube, and Instagram. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
Rising oil prices have animated market participant's fears of reinvigorated inflation pressures, increasing the chances that the Federal Reserve will impose more interest rate hikes. Join Casey Dylan, CIMA®, Investment Communications Strategist (Consultant), and Tom Romano our Head of Strategic Relationships & Product Development, for a detailed recap of some notable market events from Q3 of this year. If you have any questions or would like more information, reach out to us at https://symmetrypartners.com/contact-us/ You can also find us on LinkedIn, Facebook, YouTube, and Instagram. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
Markets were off to one of the best start in decades during the first half of 2023—then came the third quarter. The Federal Reserve resumed increasing rates, bringing them to a 22-year high at the Federal Open Market Committee (FOMC) meeting at the end of July. This led to ongoing elevated interest rates through August, pushing bond yields higher and challenging lofty equity valuations. In this episode, Casey Dylan, CIMA®, Investment Communications Strategist (Consultant), and Tom Romano our Head of Strategic Relationships & Product Development, will provide timely insights, and analysis, on market activity from around the world this financial quarter. We will also discuss what this could mean for long-term term investors. If you have any questions or would like more information, reach out to us at https://symmetrypartners.com/contact-us/ You can also find us on LinkedIn, Facebook, YouTube, and Instagram. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
"KEEP CALM AND CARRY ON." Not only is this a beloved motto, it's also a great rule of thumb for maintaining your portfolio allocations. Once again, we are joined by Symmetry's Brendan Kruh, Investment Associate, and Eide Bailly Wealth's Brett Myer, CFA, CIMA®, Investment Strategy Director. In this second of two episodes, we'll be discussing why you should maintain growth and value positions during periods of market instability. If you have any questions or would like more information, reach out to us at https://symmetrypartners.com/contact-us/ You can also find us on LinkedIn, Facebook, YouTube, and Instagram. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
Once again, investors are faced with the same debate. Should I invest my money in large scale growth companies (e.g. Apple, Google), or, should I keep faith in the little guy and invest in some smaller companies (that seem poised to grow over time)? In this episode of Unfiltered Finance, we are thrilled to host not just one, but two special guests; our very own Brendan Kruh, Investment Associate, and Eide Bailly Wealth's Brett Myer, CFA, CIMA®, Investment Strategy Director. Together, we'll discuss present trends around both value stocks and growth stocks. Spoiler alert, it's a more complex topic than you might think. If you have any questions or would like more information, reach out to us at https://symmetrypartners.com/contact-us/ You can also find us on LinkedIn, Facebook, YouTube, and Instagram. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
There is risk involved in trying to time markets. We believe it's best to apply multiple decades of research when making investment decisions. Today we are joined by Symmetry's Dr. John B. McDermott, Executive Director of Investments, to conclude our discussion about Evidence-Based investing. This episode will feature a detailed overview of the resources available to investors (who are curious to learn more) and the academic professionals who have helped to develop this investment strategy over decades of time. If you have any questions or would like more information, reach out to us at https://symmetrypartners.com/contact-us/ You can also find us on LinkedIn, Facebook, YouTube, and Instagram. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
This week, we work to define evidence-based investing, and explain some of the potential benefits of using this strategy. In part one of this two-part episode, our own Tom Romano, Head of Strategic Relationships and Product Development, is joined by Dr. John B. McDermott, Executive Director of Investments, for a historical retrospective on this fastidious investment approach. If you have any questions or would like more information, reach out to us at https://symmetrypartners.com/contact-us/ You can also find us on LinkedIn, Facebook, YouTube, and Instagram. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
In this final installment discussing Q2 of 2023, we dive into current events, and their potential effects on the Stock Market. Our hosts, Tom Romano, Head of Strategic Relationships & Product Development and Casey Dylan, CIMA®, Consultant sit down for a discussion of the "magnificent seven" growth stock winners, the current state of inflation, interest rates, heavily tilted tech stocks, changes among international markets, and the recent repeal of the Black Sea grain deal by Russia. Click here to watch the full Quarter-in-Perspective on YouTube. If you have any questions or would like more information, reach out to us at https://symmetrypartners.com/contact-us/ You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
Despite a somewhat lackluster April and May, equities markets ended one of the better first halves of a year in quite some time by the end of June. The Nasdaq, S&P 500, and Dow were up 32.32%, 16.89%, and 4.94% for the year, respectively. It was the Nasdaq's best first half of a year since 1983, primarily due to growth in tech stocks driven by the surge in artificial intelligence. In this first of two parts, we discuss quarterly returns for Q2 2023. Casey Dylan, CIMA®, Consultant, and Tom Romano, Head of Strategic Relationships and Product Development, will provide timely insights and analysis on what happened in markets and economies around the world in the second quarter and what this means for long-term term investors. Click here to watch the full Quarter-in-Perspective on YouTube. If you have any questions or would like more information, reach out to us at https://symmetrypartners.com/contact-us/ You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
Today we conclude our discussion on women investors from AdvisorFest 2023. Symmetry's Andrea Loin, Associate Director of Marketing, leads a discussion along with financial advisors Diana Bacon, CFP®, CDFA®, MBA, and Joyce Bloomquist, CDFA® of Apella Wealth, on some of the critical factors, and life experiences, that should be incorporated into a woman's financial plan. If you have any questions or would like more information, reach out to us at https://symmetrypartners.com/contact-us/ You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice. Symmetry Partners and Apella Wealth are affiliated entities. Transcript: 00;00;00;00 - 00;00;37;05 Unknown Hello and welcome back to Unfiltered Finance. I'm Tom Romano. Your host today, Andrea Line, assistant director of marketing, concludes our discussion on women investors with Dianna Bacon and Joyce Blomquist Financial Advisors with a paella wealth. You'll find some sage advice here for women who are working to assert their financial independence and plan for the future. Enjoy. If I'm an advisor working with several women investors, what are some tips that you could give them to starting that initial and being that that advisor? 00;00;37;05 - 00;01;00;06 Unknown You set it right there. Don't be condescending. What kind of tips would you give to an advisor working with this demographic, say, you know, joint? I mean, it's hard, right? Because you could be a male advisor trying to reach out to the women's group. Absolutely. So but you're probably less likely to join the women's community groups. That might be awkward, but definitely if you're a female advisor, get involved in the community with some of the community groups. 00;01;00;06 - 00;01;16;28 Unknown Even if you're a male advisor and you want to reach out to the women's group and help out, you know, it doesn't have to necessarily be all women's group. There's going to be women who are participating in these community groups. I say branch out in your community and see what kind of groups are related to investments, and maybe that's a good start. 00;01;16;29 - 00;01;37;16 Unknown Webinars. I mean, we have our webinar that we've been doing periodically, and I think we've gotten a really great group of people and they're not all women. We have a lot of men that join our groups too. So I think if you're you're spreading the word out there, you might be casting a wide net too to both groups, but you know, everyone's listening. 00;01;37;16 - 00;01;58;19 Unknown And so maybe it's not just a niche of just women, but they're part of that group can see that there is some understanding and they don't feel intimidated to come in and talk to you. And I think that's what's most important is that making them feel comfortable, because I know that even when I see married couples come in to our offices, you can tell right away the women's fair, the woman is very quiet. 00;01;58;20 - 00;02;17;13 Unknown Maybe the man's taking over the whole meeting. You can tell immediately really who has been doing the finances there. So really try to communicate with that spouse in that meeting and say, hey, you're part of this. What do you have? What's your input on this? But and then, you know, sometimes they're surprised and they they look at me like, oh, gosh, I really don't participate in this. 00;02;17;13 - 00;02;42;21 Unknown I'm just here to listen. But making them feel part of the conversation is so key. And pulling on one of the threads that Joyce touched on. One of the best things to do, particularly if you want to go into this, you're worried about sounding condescending because we know most advisors are men. Depending on what portion of the industry you're looking at, it's either, you know, 23% are women, 18% are women. 00;02;42;23 - 00;03;09;14 Unknown CFP, CFA. So make sure you're talking with them and not to them. Don't talk at them, pull them into the conversation. The best way to find out what their knowledge level is is to be having the conversation going through the accounts. They're going through a tax return, walking them through some of it. They might know, some of it they might not. 00;03;09;16 - 00;03;31;05 Unknown But if you're in a real true conversation, you're using your listening skills, you're keeping your mouth shut a good bit and letting them speak, that that's the first way to get into this area. I couldn't agree more. And people love stories, right? They love to know that you've been through the same things that maybe they have. It makes you real. 00;03;31;05 - 00;03;47;20 Unknown They mentioned a divorce. Hey, you know, I went through a divorce. Sorry to hear that. You did, too. Immediately they connect with you. Maybe that's a story that can relate to them. They know you've had that real life experience. And so they can really relate to that situation and and maybe open up a little bit more towards you. 00;03;47;22 - 00;04;07;11 Unknown Yeah, women are emotional. We make decisions on emotions. And I personally, when I picked my financial advisor, it was a connection I had. It wasn't, you know, they, they listened to me, Diana, They, they heard me. And I was not educated before. I didn't always work in this industry and I wasn't educated, but they didn't make me feel uneducated. 00;04;07;12 - 00;04;25;24 Unknown I don't know everything, so I don't want you to make me feel bad for not knowing everything. So when I met with a financial advisor the first time, that was exactly what it was. It was emotional connection. You know, this is somebody you're telling things you may not tell anyone else in your life. You know, monetary stuff is still taboo, you know, And I wanted a connection. 00;04;25;24 - 00;04;53;24 Unknown So you're totally right there. One of the things there's a lot of inequalities, right, that are still out there. How do you address those? There's gender specific issues, the pay gap, the career breaks, the caregiving responsibilities in that financial plan. So how do you take that? Because there was a stat that I read, it kind of made me sick to my stomach, but it was on average women experience an $80,000 lifetime pay gap when compared to men. 00;04;53;25 - 00;05;18;03 Unknown That's various factors that are, you know, controlled by controlling that. But there is a huge gap. How do you account for that in your financial plan for them? Do you account for that or do we just go by their plan and specific to them? Anyone working with women, if you're working with any marginalized group and in some areas women are marginalized, you need to address those specific issues with that group. 00;05;18;03 - 00;05;45;23 Unknown I am a strong believer that an advisor you have to not deal with gender generalities, but that client. So and I'm going to stay on that marginalize. If you are working with a woman of queer woman. Now that pay group gap has just expanded to women of color. Again, that gap has expanded less opportunities. We can we can put on our rose colored glasses and pretend like that doesn't happen, but it absolutely does. 00;05;45;23 - 00;06;10;13 Unknown And we know because we hear it from our friends, we see it with our clients, it's happening in real time. So not only do you want to look at that decreased salary, likely decrease raises, you want to adjust for that in any long term cash flow. Also increase spending. Mothers are more likely to help their adult children financially. 00;06;10;15 - 00;06;40;19 Unknown They're more likely to be burdened with. Not that it's a burden, but it is on time and resources with caring for parents, which means less time to work, less flexibility. And sometimes you cost on them, especially with the mother, because we know that aging women retire with less assets. I mean, all these statistics are so disheartening. I mean, I get to an area when you're like, I want to read anymore, I want to stick my head in the sand. 00;06;40;22 - 00;07;04;18 Unknown Yeah, you're right, Diane. At 95% of women at some point will be their families. Primary financial decision maker. We have we live longer. Our longevity is there. Many times we will outlive our husbands and be alone. These aren't just divorces. These are. This is widowhood. Later in life, many reasons why at some point in our lives we will be the primary financial decision maker. 00;07;04;20 - 00;07;26;17 Unknown These are important things to talk about. And in the long term plan, I have children health care costs that go along with having children. Your body changes and your health care costs increase. Do you do you incorporate that into the plan? Woman is going to have a family. I know it's not necessarily as big of an issue as you know before, but health care costs are going to be huge for for females. 00;07;26;18 - 00;07;52;21 Unknown Yeah, there's going to be an extra health care cost. Do you include that? Do you think of that in the plan? One thing I do in it is that a personal hard subject, but when I am working with a younger professional single woman, I ask what her fertility plans are. Oh, cause I am seeing a great deal of women. 00;07;52;21 - 00;08;26;06 Unknown Now you say I make great money. I don't. I don't need a partner. You're absolutely right. There have been single mothers since the beginning of time, and a will always happen. But that means you have to have a plan, adoption, you know, whatever they're going to do. Financial. Now you are the only caregiver for that child. So now we have more stress on life insurance. 00;08;26;09 - 00;08;59;21 Unknown You know, estate planning, guardianship. So it's not just the, you know, the increased costs. I have teenagers. Yes, I know that. Braces and broken ankles and broken wrist and yeah, all of that. So we do have those increased cost, but it's also I see more single women than men deciding on their parenthood as single people in the financial side of that is huge. 00;08;59;21 - 00;09;25;16 Unknown And that is an area where we're not only affecting the lives and providing value for that woman, but also for her future children and ensuring their security. Yeah, that makes perfect sense. Any other? I appreciate you both jumping on. And couple of times we've referenced the series that Diana and Joyce are both a part of at Capella. It's the Financial Independence for Women series. 00;09;25;16 - 00;09;45;12 Unknown You can find it on our Web site at Palo Health.com if you're interested. You know, take a listen. They have some great topics on there that are not just for women, but that will definitely help drive home some some great points. So take a look and take a listen. And I do appreciate you both jumping on as we conclude. 00;09;45;12 - 00;10;08;05 Unknown We hope that you as advisors have gain valuable insights into working with women investors by recognizing their unique perspectives, addressing their specific needs, and fostering that inclusive environment that we talked about. You can create a future where women investors thrive and they contribute to the growth and stability of the global economy and hopefully shrink some of those statistics that we started out with in the beginning of this, this webinar. 00;10;08;05 - 00;10;31;10 Unknown So if you have any questions, we can take a few questions for Joyce and Diana right now. I wanted to make one quick comment. Andrea. You had said that women make decisions emotionally. That's actually not been my experience. Oh, women do cling on to their fear much more than men, so that might stop them from taking first steps. 00;10;31;17 - 00;10;57;18 Unknown But I find women to be very pragmatic. And for advisors who are going to be working with women, expect the why? Why am I doing this? Why is that? V There I find that as women become educated and on their finances, they're happy to dig in, but they want to know why and they want every pass to be explained to them so that they know they're getting value for that dollar. 00;10;57;19 - 00;11;28;06 Unknown I've always found women extremely pragmatic. Yeah, that makes sense. I'm detail oriented. I want to know the down in the weeds information. Yeah, that makes perfect sense. So yeah. So make sure make sure you're ready to answer those questions, especially the single moms. Yep. And they know how to balance time and and figure out every little loophole they can to do their time and manage it well. 00;11;28;06 - 00;11;51;11 Unknown So while I do appreciate both Diana and Joyce joining us today and look forward to working with you all more in the future, thank you very much for joining us today. If you're a financial professional and you'd like to learn more, check the link in this episode's description to view all of the presentation from Advisor Fest 2023. As always, you can listen to all of our past episodes anywhere you get your podcasts. 00;11;51;18 - 00;12;18;15 Unknown Thank you very much and we'll see you soon. Cemetery Partners LLC is an investment advisor firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered or excluded or exempted from registration requirements. Registration of an investment advisor does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. 00;12;18;17 - 00;12;48;14 Unknown No one should assume that future performance of any specific investment investment strategy, product or non investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss due to various factors, including changing market conditions and or applicable laws. The content may not be reflective of current opinions or positions. 00;12;48;16 - 00;13;10;06 Unknown Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of or is a substitute for personalized investment advice. Symmetry Partners and APL Wealth are affiliated entities.
Two weeks ago, we held another successful week of AdvisorFest - an annual, week-long live-streaming event where we cover some of the most pressing issues Financial Advisors are presently facing. This year, we decided to host a live panel discussion about the experiences women have when creating long-term financial plans, and asserting an equal amount of authority in the handling of their household finances. Our very own Andrea Loin, Associate Director of Marketing, led a discussion along with financial advisors Diana Bacon, CFP®, CDFA®, MBA, and Joyce Bloomquist, CDFA®, of Apella Wealth. You'll find some genuinely moving stories of challenges faced, and overcome by women investors here. We hope you find this episode to be insightful. Enjoy. If you have any questions or would like more information, reach out to us at https://symmetrypartners.com/contact-us/ You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice. Transcript: 00:00:07:01 - 00:00:37:17 Speaker 1 Hello and welcome back to Unfiltered Finance. I'm your host, Tom Romano. Two weeks ago, we held another successful week of Advisor Fest, an annual week long live streaming event where we cover some of the most pressing issues financial advisors are facing today. In part one of this special episode on Women investors, our very own Andrea Loin associate director of marketing, leads a discussion along with financial advisers Diana Bacon and Joyce Blomquist of Apollo Wealth will discuss some cautionary tales that can help investors learn which mistakes to avoid on their financial journey. 00:00:37:19 - 00:00:41:09 Speaker 1 We hope you find this episode to be insightful. Enjoy. 00:00:41:11 - 00:01:06:15 Speaker 2 Welcome everyone to the final session of our third Annual Advisor fest. Empowering Women Investors Navigating Financial Success Together. We're thrilled to have you here today as we embark on a journey to explore empowerment of women in the world of investing. During this webinar, we want to shed light on the unique perspectives and experiences of women investors and provide practical insights on how to effectively engage and support this growing demographic. 00:01:06:16 - 00:01:30:05 Speaker 2 Graphic It's important that we promote awareness and understanding of the specific challenges and opportunities faced by women investors in doing this, we hope to foster an inclusive environment and equip advisors like yourselves with the knowledge and tools to better serve women investors, which will ultimately lead to their financial success and empowerment. I have with me two financial advisors that work with Capella wealth, one of our sister firms. 00:01:30:05 - 00:01:44:08 Speaker 2 We have Diana Bacon. She's a CFP and a CDPHE and she has years of experience working in this very wonderful demographic. And we've Joyce Bloomquist, who is a cafe as well, also an advisor with Pell Wealth. Welcome. 00:01:44:09 - 00:01:47:00 Speaker 3 Thank you. Glad to be here today. 00:01:47:01 - 00:02:07:21 Speaker 2 Thank you for joining us. I read a statistic in doing research for this whole thing that really it surprised me because I'm a woman. I work in an investment firm. So I just assume I know all there is to know, but I don't. So about 39% of women have no retirement strategy. That seems like a very high number to me. 00:02:07:21 - 00:02:29:11 Speaker 2 So I looked it up and I was like, So what percentage of men don't have a retirement strategy? And it's only 25%. So there's a big gap there. It was shocking to me. And then I just assumed, right, we're in the 2023. Things should be the same for everybody, but they're not. And so coming together to discuss how do we to we do we grow that number or actually shrink that number down to be less. 00:02:29:11 - 00:02:46:17 Speaker 2 We want more women to have a plan for retirement. So, Diana, what are some strategies that you have that you use when addressing women investors with the challenges that are faced by them? How do you give them tools and tips and tricks to help them close that gap? 00:02:46:21 - 00:03:19:05 Speaker 3 Women in general, and you know, this is not some little niche. This is a huge market segment. We are 51% of the population To say women are all like X is very decent, enormous. However, we do see continuing themes over and over. The first is women. And we were raised this way, especially in the Western world. Well, actually, I would say while we're global globally, we never put ourselves first. 00:03:19:05 - 00:03:42:02 Speaker 3 And when I hear the statistic of the number of women who don't have a retirement plan, what do you have to do to have a retirement plan? You have to save. You have to invest. You have to be thoughtful of yourself. Make sure you either have that income stream or the assets to support you. And so the first thing that I work with a client is to change their money mindset. 00:03:42:04 - 00:03:48:22 Speaker 3 They need to put themselves first. I'm going to use the S-word. We got to be selfish. 00:03:49:00 - 00:03:53:12 Speaker 2 And that's really hard. Especially especially for me. I would have a hard time doing that. 00:03:53:14 - 00:04:12:17 Speaker 3 And it is. Yeah, yeah. I mean, think about it. Like having to say, I'm going to give my adult kids less as they're launching in life, but I want to do all this for them. I love them. You know, I have nurtured them, but I'm going to do less for them because I have to do for me for that. 00:04:12:17 - 00:04:32:05 Speaker 3 You know, I want to save for their college so they don't have to go through the things I did. All those things are prioritizing yourself. That is extremely difficult for women. So they got to start in that word, start to be selfish, and then get away with the H word shame. 00:04:32:10 - 00:04:46:18 Speaker 4 That is such a good point. I love it because I'm in this open space now. My kids are 20 and 22 and they see when do we let them go and be adults and when do we start saving like we should for. 00:04:46:18 - 00:05:01:11 Speaker 3 Ourselves that say And so many women start off because we have some credit card debt or paid too much on our car loan or, you know, just all these things that come up and we just put that shame on ourselves and then we don't deal with our finances. 00:05:01:13 - 00:05:19:10 Speaker 2 I like that you put the shame part of that and getting rid of the shame because I think being selfish is hard enough. But then you start to feel bad when you start to look at things. For me, it was matching my 41k, right? I'm like, Well, that takes away from money coming into the family. And and then I started realizing, No, it doesn't. 00:05:19:12 - 00:05:27:00 Speaker 2 It helps the long run. I'm doing it for me. I have to watch out for myself. So taking the shame out of it, that's probably harder than being selfish, to be honest. 00:05:27:02 - 00:05:32:18 Speaker 4 Yeah, We're caregivers, right? That's where we're moms, first and foremost. And it's hard to let that go. Yep. 00:05:32:21 - 00:05:51:13 Speaker 2 Caregivers is a good thing. Diana, your you did a webinar recently on closing that career, the career change and how to approach that career change. And I thought it was a great webinar. Not a lot of women think about that when they're leaving the workforce. I left for a couple of years, went back and not a lot of women think about what happens when you go back. 00:05:51:13 - 00:06:04:12 Speaker 2 And I think your webinar really opened up, you know, how to get back into the game and then how to be, again, selfish, how to focus on you to put yourself in a better space in life, in a better spot when you're trying to get back into the game. 00:06:04:14 - 00:06:32:12 Speaker 3 That's another area to that employment because so many women are underemployed to better support the family. Mm hmm. And the shame of saying, No, I want to do this. I want to have more of my earnings, particularly if, say, maybe your marriage or partnership isn't as steady and strong. The first thing when people are like, oh, I'm taking it, or when women are thinking about getting divorced, I'm like, Get a job or get a better job right now. 00:06:32:14 - 00:06:33:15 Speaker 4 Don't wait. 00:06:33:17 - 00:06:36:02 Speaker 3 Don't wait. Do it right now. 00:06:36:04 - 00:06:53:06 Speaker 2 See how that goes back to that, that shame and that self. Right. And be something I would find hard to do. But my husband is that I am what he calls the breadwinner of the family. And he tells all of his friends about it. And for me, that when I started to take on more, I felt like I was letting my family down. 00:06:53:12 - 00:07:09:06 Speaker 2 Right. You have to make that choice. And I realized I wasn't financially. I was helping my family, my 41k is growing, our family's growing, his 41k is growing. We're all working together. But I had to focus on me and make sure that I did that side of it, too. You actually hit on a great topic, Diana, and Joyce. 00:07:09:06 - 00:07:33:08 Speaker 2 I'm going to I'm going to start with you on this one. But a lot of the marriages might not be as solid, right? So I was divorced young and didn't even know that there was an option for me as far as financial planning goes. But can you explain how you would approach addressing the potential impact of divorce or even what would a heart a change in a lot of part of a big part of your life on a woman's financial situation? 00:07:33:10 - 00:07:48:12 Speaker 2 What makes it unique and different for that? Because I didn't even know what a CDF was until about five years ago and realizing that as someone who went through divorce, I could have had someone helping me too because I didn't realize what I was going through was unique. 00:07:48:14 - 00:08:09:02 Speaker 4 Right. And I have some input on that. You know, I've been through a divorce, too, and I think some of the things that are hard to wrap your arms around are when you're starting, you're kind of going from being with a partner to being by yourself. I mean, I think Diana's first point out of, you know, get back to work if you can and if it's possible, you know, we we want that to be the ultimate goal for the person. 00:08:09:04 - 00:08:26:07 Speaker 4 Why? It might not seem like you're making much at the time. I mean, maybe you got daycare costs and all that and maybe a lot of that money's going to their daycare costs and there's things in your mind or maybe you're saying, why am I even doing this? I mean, when I'm actually take it home isn't much after I pay all these people, but you're participating in Social Security. 00:08:26:07 - 00:08:53:19 Speaker 4 So that's important. You probably get your own health care. That's important, and that might make all the difference in the world by stepping into the workforce. At that point, you got to start accumulating those things for yourself. At this point when you go from where to me. And so that's something to really consider. Might not seem like you're bringing home that much, but you are benefiting from the benefits from the workplace, maybe for one K, maybe some free matching as little as you can contribute to the plan. 00:08:54:00 - 00:09:01:20 Speaker 4 There might be some pre matching that you need to consider as all these things are so important to get started back to you when you're going through that process. 00:09:01:23 - 00:09:24:07 Speaker 2 Makes perfect sense. And as an advisor, how do you educate not just women going through these these life changes, but how do you educate women on things that they need to know about their financial, about their finances, about that for one K, about going back to work? And though you think you're not making an impact with what you're making because it may be less than you want to at the time, how do you educate them? 00:09:24:07 - 00:09:35:01 Speaker 2 What are their tools and resources out there for them? Are there ways that you approach it that are different than you would, you know, approach a normal planning client? Are there tools of resources for them? 00:09:35:03 - 00:09:59:21 Speaker 3 I found that women are not educated when we're growing up on money matters the same way that men are. So first is getting the basics and we have the Internet now. So Internet and podcasts are wonderful. So it's like learning a new language. You have to just start jump in. There's a certain lingo to it, so you need to pick that up. 00:10:00:03 - 00:10:31:07 Speaker 3 So starting to listen to podcasts, you might not understand much. The first few try a bunch of them buying a new pair of jeans. You got to make sure it's a fit, you know, try ones. Once you hear things over and over again, will start to click, go on financial websites, read, you know, nerdwallet, Wikipedia, you know, all of these things where you can just start to learn the lingo and then talk to your friends. 00:10:31:09 - 00:11:13:21 Speaker 3 Men are talking to each other about money. We need, again, a sage word shame. Women don't want to talk about money. They don't want to make. They don't want to feel bad that they don't know something. But many women have found that financial services providers can be a little condescending. And that and that's a real struggle. And once you've been spoken down to getting that courage up again, to put yourself out there and ask questions and feel like someone's going to think you're you're not intelligent because you don't know, but how would you know if you never learned it or or. 00:11:13:21 - 00:11:27:23 Speaker 4 If you weren't married? And maybe the husband had it with his responsibility to take care of the finances. And maybe now you're by yourself, You're maybe you're divorced, or maybe you're widowed, and now it's all on you. So where do I start over with all this? 00:11:28:01 - 00:11:48:16 Speaker 3 Yeah. I've sat down with widows who are like, I don't even know where our checkbook is. I don't know how the, like, bill gets paid. I mean, all of these things where they really put it off on someone else, I will say, being involved in your finances, looking at your tax return, a lot of people don't even look at that. 00:11:48:16 - 00:12:10:17 Speaker 3 Look at your tax return. And I am absolutely biased. I will admit it. I'm a financial advisor. I am a certified financial planner. And I think working with a planner as early as you find one that suits you is really a big step in that. 00:12:10:19 - 00:12:28:00 Speaker 1 Thank you very much for joining us today. If you're a financial professional and you'd like to learn more, check the link in this episode's description to view all of the presentations from Advisor Fest 2023. As always, you can listen to all of our past episodes anywhere you get your podcasts. Thank you very much and we'll see you soon. 00:12:28:01 - 00:12:52:19 Speaker 5 Cemetery Partners LLC is an investment advisor firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered or excluded or exempted from registration requirements. Registration of an investment advisor does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. 00:12:52:21 - 00:13:22:18 Speaker 5 No one should assume that future performance of any specific investment, investment strategy, product or non investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss due to various factors, including changing market conditions and or applicable laws. The content may not be reflective of current opinions or positions. 00:13:22:20 - 00:13:38:13 Speaker 5 Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of or is a substitute for personalized investment advice.
Financial Advisors don't work for free. Depending on how their practice is structured, investors will be charged an assortment of fees for a financial advisor's services. In this episode of Unfiltered Finance, we are joined by JT Lavery, Symmetry's Associate Director of National Sales, to discuss how fees are structured and how advisors can work to be transparent with their clientele. If you have any questions or would like more information, reach out to us at https://symmetrypartners.com/contact-us/ You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice. 0 00:00:06.970 --> 00:00:10.520 Hello and welcome to Unfiltered Finance. This is your host, Tom Romano. 1 00:00:10.520 --> 00:00:13.640 And thank you all for joining us for, uh, this edition. 2 00:00:13.930 --> 00:00:16.320 Today we're gonna talk about something that I think, uh, 3 00:00:16.620 --> 00:00:21.160 weighs on a lot of investors' minds. Um, there, there tends to be, uh, 4 00:00:21.400 --> 00:00:24.320 somewhat of a lack of transparency on this topic in the industry. 5 00:00:24.320 --> 00:00:28.400 And the topic is, is fees and all fees associated with investing. 6 00:00:28.460 --> 00:00:32.400 We have the perfect guest for us here today. Uh, JT Lavery, uh, 7 00:00:32.400 --> 00:00:34.040 longtime coworker and friend of mine. 8 00:00:34.070 --> 00:00:37.320 He's the Associate Director of National Sales at Symmetry Partners. Jt, 9 00:00:37.320 --> 00:00:38.440 thanks for joining us here, 10 00:00:38.740 --> 00:00:40.560 Tom. Thanks for having me. Appreciate it. So, 11 00:00:40.740 --> 00:00:43.280 Jt, tell us a little bit about, about your background, um, 12 00:00:43.310 --> 00:00:44.600 working with advisors. 13 00:00:44.870 --> 00:00:48.000 I've been working with advisors, Tom, for about 23 years now, kind of in, 14 00:00:48.000 --> 00:00:51.920 in different facets. Uh, I started off on the service side of things at a, at a, 15 00:00:51.940 --> 00:00:55.720 at a major mutual fund company up in Boston, answering phones and, and, 16 00:00:55.860 --> 00:00:58.080 you know, trying to solve problems. And I, you know, 17 00:00:58.080 --> 00:01:02.160 transitioned over to the sales side, uh, a few years after that. So I have a, 18 00:01:02.160 --> 00:01:05.880 you know, pretty good background working with advisors that were more on the, 19 00:01:05.880 --> 00:01:07.240 uh, commission side of things, 20 00:01:07.380 --> 00:01:10.640 as well as advisors that are on the fee-based side of things. For 21 00:01:10.640 --> 00:01:14.160 Our listeners, um, describe the difference between the two because I, 22 00:01:14.240 --> 00:01:18.000 I think a lot of folks out there don't know if they're paying fees or 23 00:01:18.000 --> 00:01:18.700 commissions, and, 24 00:01:18.700 --> 00:01:22.760 and I've heard many times talking to investors that they don't think they pay 25 00:01:22.920 --> 00:01:23.630 anything. Mm-hmm. 26 00:01:23.630 --> 00:01:26.120 Yeah. So, uh, you know, commissions are paid out, uh, by, 27 00:01:26.120 --> 00:01:27.240 let's say a mutual fund company. 28 00:01:27.390 --> 00:01:30.680 They will pay out a commission to the advisor who sells that particular mutual 29 00:01:30.710 --> 00:01:32.080 fund to, uh, to their client. 30 00:01:32.460 --> 00:01:36.400 And it's could be paid out in a very various of different ways. Um, you know, 31 00:01:36.400 --> 00:01:39.240 if it's a shares, it'll be an upfront sales charge, B shares, 32 00:01:39.240 --> 00:01:40.760 which don't even think is even a thing anymore. 33 00:01:40.760 --> 00:01:43.760 It was a contingent deferred sales charge. There was no upfront sales charge, 34 00:01:43.980 --> 00:01:46.680 but it was a declining sales charge As time goes on and you, 35 00:01:46.700 --> 00:01:49.120 and you were to sell that particular holding, you know, the, 36 00:01:49.120 --> 00:01:53.120 the sales charge would be reduced. And then you also had c shares that were, 37 00:01:53.140 --> 00:01:56.280 you know, about a 1%, you know, uh, uh, trail that would, uh, 38 00:01:56.350 --> 00:01:57.800 that would pay out to the advisors. 39 00:01:57.800 --> 00:02:00.520 And those are paid through various fees that are within the mutual funds that 40 00:02:00.520 --> 00:02:03.040 the mutual fund companies, uh, structure around, you know, 41 00:02:03.040 --> 00:02:05.520 marketing of their particular products as well as, um, 42 00:02:05.540 --> 00:02:06.920 as selling those particular products, 43 00:02:06.930 --> 00:02:10.200 verse the fee side of things where it's advisors are just simply charging a fee 44 00:02:10.200 --> 00:02:13.640 for their advice. They're advising their clients on what they should be doing. 45 00:02:14.180 --> 00:02:17.240 Um, there's often, there's more than just, um, more advice, 46 00:02:17.310 --> 00:02:20.400 more than just advice that goes into it. It's, you know, financial planning, 47 00:02:20.680 --> 00:02:23.040 holistic planning and things like that. But it's generally a, 48 00:02:23.120 --> 00:02:25.760 a fee that's fully disclosed that they, that they pay. 49 00:02:26.300 --> 00:02:29.560 And the way most advisors will structure their fees, 50 00:02:29.590 --> 00:02:32.440 they'll structure 'em in such a manner that the more money you have, uh, 51 00:02:32.440 --> 00:02:34.840 you'll start to see those fees actually go down. So 52 00:02:34.840 --> 00:02:37.360 What I'm hearing you say, it sounds like, and I think the, 53 00:02:37.460 --> 00:02:39.800 you said contingent deferred sales charge, right? 54 00:02:39.860 --> 00:02:43.280 If if you're earning a commission, that is a, it's a sales charge, correct? 55 00:02:43.370 --> 00:02:48.040 Right. Whereas, uh, fee for advice is exactly that, 56 00:02:48.240 --> 00:02:51.480 right? It's a fee for, for giving advice so that it's not necessarily a, 57 00:02:52.040 --> 00:02:53.600 a sales charge. Um, 58 00:02:53.660 --> 00:02:56.200 why do you think it's important for investors to know the difference between the 59 00:02:56.200 --> 00:02:56.760 two? Well, 60 00:02:56.760 --> 00:02:59.440 It's important for them to know the difference. It's, 61 00:02:59.440 --> 00:03:02.040 I think it's just important for them to know what they're, what they're getting. 62 00:03:02.090 --> 00:03:05.040 First of all, commissions. You can say that there's, you know, 63 00:03:05.280 --> 00:03:08.120 conflicts of interest perhaps. Are they getting sold something that, 64 00:03:08.230 --> 00:03:10.880 that has a higher commission that, that, you know, 65 00:03:10.880 --> 00:03:14.040 the advisor's gonna get paid more money on, you know, verse, you know, 66 00:03:14.040 --> 00:03:14.873 they always say, you know, 67 00:03:15.000 --> 00:03:19.000 a fee-based advisor usually will generally sort of align themselves with the 68 00:03:19.000 --> 00:03:22.040 client, let's say, on the, on the same side of the table, so to speak. They're, 69 00:03:22.040 --> 00:03:25.400 they're, they're going in as a team, we're here to, you know, you got your, 70 00:03:25.420 --> 00:03:27.120 you want to get from point A to point B, 71 00:03:27.210 --> 00:03:28.800 let's figure out the best way to do that, 72 00:03:28.800 --> 00:03:31.680 and then we'll put you in the appropriate investments. And, you know, 73 00:03:31.680 --> 00:03:34.040 because they're not, you know, getting any commissions, you know, 74 00:03:34.040 --> 00:03:35.680 generally speaking, there's a, I think, 75 00:03:35.760 --> 00:03:39.240 a certain comfort level knowing that the investment solution's gonna be right 76 00:03:39.240 --> 00:03:39.780 for them. 77 00:03:39.780 --> 00:03:42.360 No, that, that's a really great explanation. And you know, this, 78 00:03:42.510 --> 00:03:45.160 this podcast where, where our advocates of, 79 00:03:45.220 --> 00:03:47.200 of financial advisors and financial advice, 80 00:03:47.200 --> 00:03:51.400 I've said many times before that I always get asked, you know, what's a, 81 00:03:51.400 --> 00:03:54.520 what's a great stock tip? What's a great tip? What's some advice for investing? 82 00:03:54.520 --> 00:03:57.520 And my advice is always work with a, a fee advisor, 83 00:03:58.030 --> 00:04:00.200 because that advice is extremely valuable. 84 00:04:00.470 --> 00:04:05.280 What are you seeing the average on the fee based side average advisory fees in 85 00:04:05.280 --> 00:04:09.360 the industry? What should investors, what should they know about advisory fees? 86 00:04:09.580 --> 00:04:10.720 Um, just generally? Yeah, generally, 87 00:04:10.720 --> 00:04:13.280 Generally speaking, I would, I would say that the, you know, 88 00:04:13.280 --> 00:04:18.160 the average fee probably comes in around 1%. Um, you know, we see, you know, 89 00:04:18.160 --> 00:04:20.160 just on our, on ourt here at Symmetry, 90 00:04:20.240 --> 00:04:23.360 I think the average advisory fee is somewhere around 97 basis points, 91 00:04:23.380 --> 00:04:24.280 if I'm not mistaken. 92 00:04:24.460 --> 00:04:29.120 And so we'll see advisors charge as little as maybe 60 or 50 basis points, 93 00:04:29.420 --> 00:04:34.280 and we'll see advisors charge, you know, as, as high as 125 basis points. 94 00:04:34.430 --> 00:04:37.760 It's hard to say what's right. It's, what it comes down to is, you know, 95 00:04:37.760 --> 00:04:39.960 your comfort level and what you're getting for those services. 96 00:04:40.350 --> 00:04:44.000 Some advisors will, uh, will charge, let's say lower basis points, 97 00:04:44.060 --> 00:04:47.120 but they'll also charge on top of that for other services, like, let's say, 98 00:04:47.120 --> 00:04:48.320 financial planning. Okay. 99 00:04:48.320 --> 00:04:52.680 Whereas some advisors will charge 125 basis points and let's say maybe financial 100 00:04:52.840 --> 00:04:56.040 planning's included in that. And so it's always good to know, you know, 101 00:04:56.260 --> 00:04:57.520 you know, not only what you're paying, 102 00:04:57.540 --> 00:05:00.960 but also what you're getting for that particular price or that fee that you're 103 00:05:00.960 --> 00:05:01.360 paying. Okay. 104 00:05:01.360 --> 00:05:03.920 So these are a couple things that I kind of want to dive into a little bit. 105 00:05:03.920 --> 00:05:05.840 First and foremost, I think, you know, 106 00:05:05.840 --> 00:05:10.360 it's not fair to talk about price and fees without talking about value, right? 107 00:05:10.360 --> 00:05:10.740 Right. 108 00:05:10.740 --> 00:05:15.600 And so I think that you are going to see varying degrees of fees across the 109 00:05:15.600 --> 00:05:18.600 board, depending on, on, on the advisor's value proposition, 110 00:05:19.180 --> 00:05:23.000 1% that we've seen that fee, that that really hasn't changed. Mm-hmm. Right? 111 00:05:23.000 --> 00:05:27.880 Mm-hmm. Um, we, we do hear a lot about price compression in the industry, but I, 112 00:05:27.880 --> 00:05:30.880 I think when it comes to the, the financial advisor's compensation, 113 00:05:30.940 --> 00:05:33.560 and I would argue that the financial advisor is the, uh, 114 00:05:33.560 --> 00:05:37.040 most valuable person in the value chain. Mm-hmm. That fee hasn't changed, 115 00:05:37.260 --> 00:05:40.800 but investors are looking more for, from their advisors. So there's some, 116 00:05:40.800 --> 00:05:42.520 there's some margin compression there, right? 117 00:05:42.790 --> 00:05:44.000 Yeah. The advisor, you know, uh, 118 00:05:44.000 --> 00:05:47.360 clients are becoming more savvy conversation around fees. It's, 119 00:05:47.360 --> 00:05:49.680 it's out in the open, right? You see 'em on commercials all the time, 120 00:05:49.870 --> 00:05:53.480 whether it's Schwab or Fidelity or Vanguard, you know, talking about, you know, 121 00:05:53.500 --> 00:05:57.720 low fees. So, uh, it's out there and clients are well aware of that. 122 00:05:58.180 --> 00:05:59.760 And so they're starting to ask questions, 123 00:05:59.760 --> 00:06:02.760 they're starting to ask what they're getting for, for that particular fee. 124 00:06:03.140 --> 00:06:05.040 But at the end of the day, you know, you know, it's, 125 00:06:05.040 --> 00:06:07.280 it's only an issue in the absence of value, you know, 126 00:06:07.280 --> 00:06:11.000 so if the advisor's providing value and they see that and they know that, then, 127 00:06:11.020 --> 00:06:12.000 you know, generally speaking, 128 00:06:12.000 --> 00:06:13.680 clients tend to be comfortable with what they're paying. 129 00:06:13.750 --> 00:06:17.800 Certainly, certainly. What are you, you know, the advisors that are charging 1%, 130 00:06:17.800 --> 00:06:21.960 what are the typical types of services that you see advisors performing for, 131 00:06:22.060 --> 00:06:24.120 for that fee to add value to the equation? 132 00:06:24.380 --> 00:06:26.560 That's a great question. You know, we, we kind of see, 133 00:06:26.980 --> 00:06:30.320 we see a lot of advisors that are rolling financial planning into their fee. 134 00:06:30.460 --> 00:06:32.600 You know, we, we, we see that there's, um, 135 00:06:32.600 --> 00:06:36.440 there's a lot of advisors that actually have a, a, um, what I would say, 136 00:06:36.480 --> 00:06:40.320 a very big financial planning focus. So they'll charge for financial plans, 137 00:06:40.540 --> 00:06:43.760 and they may do some advisory business along the way, uh, 138 00:06:43.760 --> 00:06:45.720 just to help out clients. And so they'll, you know, 139 00:06:45.720 --> 00:06:48.760 they may charge maybe a little less, maybe around 80 basis points, 140 00:06:48.760 --> 00:06:51.080 80 to 90 basis points, kind of what we're seeing there. 141 00:06:51.470 --> 00:06:53.040 Okay. That makes a lot of sense. I, I, 142 00:06:53.080 --> 00:06:56.120 I think that the value proposition for the advisors actually shifted quite a bit 143 00:06:56.120 --> 00:07:00.720 over the years. You know, you and I have talked, um, a lot about this and, 144 00:07:00.720 --> 00:07:01.000 you know, 145 00:07:01.000 --> 00:07:05.960 there was a time where the value proposition was thought to be returned. Mm-hmm. 146 00:07:06.470 --> 00:07:10.520 I'll pay you a higher fee for higher rates of return. And is that the case? No, 147 00:07:10.520 --> 00:07:10.720 because 148 00:07:10.720 --> 00:07:15.440 It's, you know, I, I think the, the juries, you know, come in, in terms of, 149 00:07:15.580 --> 00:07:19.160 of returns and in terms of what types of investments you should be in. I mean, 150 00:07:19.160 --> 00:07:19.720 right now, I mean, 151 00:07:19.720 --> 00:07:23.080 you're seeing huge outflows from going from what I would say traditional active 152 00:07:23.860 --> 00:07:28.080 to more traditional passive types of investing. And so I think the, the, 153 00:07:28.080 --> 00:07:32.000 the main role for the advisor is just really being that behavioral coach. Uh, 154 00:07:32.000 --> 00:07:33.880 when we're left to our own devices, we don't make, 155 00:07:33.900 --> 00:07:36.960 we necessarily don't make the best decisions, uh, when it comes to investing. 156 00:07:36.960 --> 00:07:41.040 We, we get very emotional about our, our money and when, when markets are down, 157 00:07:41.140 --> 00:07:43.600 we, we tend to hit, you know, hit the panic button and sell, 158 00:07:43.600 --> 00:07:46.760 and that's the wrong time to sell. And so, um, you know, when you look at the, 159 00:07:46.910 --> 00:07:51.000 like, industry studies that are out there, I mean, the vanguard's out, you know, 160 00:07:51.000 --> 00:07:53.440 advisor Alpha is a big one, shows that, you know, 161 00:07:53.440 --> 00:07:56.280 working with a financial advisor, you can, um, you know, 162 00:07:56.280 --> 00:08:00.840 capture about 300 basis points extra just by working with a financial advisor. 163 00:08:01.260 --> 00:08:02.760 And they actually attribute most of that to, 164 00:08:02.760 --> 00:08:04.920 but I think about half of that to behavioral coaching. Sure. 165 00:08:04.920 --> 00:08:07.160 And the, um, just for our listeners out there, 166 00:08:07.180 --> 00:08:10.480 the advisors Alpha study that was done by, uh, Vanguard, 167 00:08:10.560 --> 00:08:13.880 I believe it's a paper that they put out in conjunction with, 168 00:08:13.880 --> 00:08:15.120 with the Spectrum group. And, 169 00:08:15.120 --> 00:08:19.320 and it does show that investors who tend to work with financial advisors tend to 170 00:08:19.320 --> 00:08:20.400 have better performance, 171 00:08:20.460 --> 00:08:23.400 but it doesn't necessarily mean that the advisors tinkering with the portfolio. 172 00:08:23.500 --> 00:08:27.920 The value proposition, to your point, is coaching. It's competent, 173 00:08:27.920 --> 00:08:32.400 it's communication. It, it's, it's these things that help the investor, uh, 174 00:08:32.400 --> 00:08:34.520 whether the good times and the bad. And, and, 175 00:08:34.580 --> 00:08:37.240 and providing that sort of foundation, 176 00:08:37.270 --> 00:08:41.840 helping the investor stay the course really is the, the secret to, 177 00:08:41.900 --> 00:08:44.240 to having a successful investment experience. I 178 00:08:44.480 --> 00:08:47.240 Think it's also important to add that I think a lot of advisors now, you know, 179 00:08:47.240 --> 00:08:48.920 there is sort of a, a paradigm shift. 180 00:08:48.920 --> 00:08:52.720 It's not necessarily the returns that I can generate for you. Um, it's, 181 00:08:52.750 --> 00:08:55.240 it's the other things that I can do for you, um, 182 00:08:55.240 --> 00:08:58.360 because they know that they're not portfolio manager. Mm-hmm. You know, they're, 183 00:08:58.420 --> 00:08:59.040 you know, they're, 184 00:08:59.040 --> 00:09:01.840 they're running their own business and that business is helping people. 185 00:09:01.900 --> 00:09:04.560 And if they're spending all their time trying to figure out what the best stock 186 00:09:04.580 --> 00:09:07.320 is, they're, they're probably gonna miss the boat on, you know, 187 00:09:07.320 --> 00:09:09.600 helping their clients, you know, with their financial planning and, 188 00:09:09.600 --> 00:09:12.720 and meeting their, you know, their financial goals over time. Sure, 189 00:09:12.870 --> 00:09:16.000 Sure. So, you know, we talked a lot about the advisor compensation, 190 00:09:16.300 --> 00:09:19.720 and I kind of wanna revert back because, you know, the topic today is fees. 191 00:09:19.720 --> 00:09:21.520 Mm-hmm. It's not just advisory fees. 192 00:09:21.520 --> 00:09:24.040 There are a number of other fees associated with investing. 193 00:09:24.220 --> 00:09:27.040 You talked a little bit about the ahas, B shares and CS shares, 194 00:09:27.040 --> 00:09:29.520 which are typically sales charges for mutual funds, 195 00:09:29.520 --> 00:09:33.360 but there are no load mutual funds out there. There are. Correct. And, uh, 196 00:09:33.390 --> 00:09:36.680 what that means is there, there isn't a, a sales charge per se, 197 00:09:36.700 --> 00:09:39.080 but that doesn't mean that they're for free. Correct. Correct. 198 00:09:39.080 --> 00:09:40.000 Nothing's for free. 199 00:09:40.050 --> 00:09:40.860 Right. 200 00:09:40.860 --> 00:09:43.680 So talk to us a little bit about the costs that are associated with investing in 201 00:09:43.680 --> 00:09:47.160 something that, that, that no load or doesn't have a, a sales charge. Sure. 202 00:09:47.160 --> 00:09:47.280 Yeah. 203 00:09:47.280 --> 00:09:50.200 There's a couple costs to think about. You know, there's, I always refer to it, 204 00:09:50.200 --> 00:09:53.600 you know, the cost of investing, right? There's, there's gonna be, you know, 205 00:09:53.600 --> 00:09:56.280 some cost to, you know, running a portfolio. I mean, 206 00:09:56.280 --> 00:09:59.760 that's where your expense ratios come in, which is the really, it's the, 207 00:09:59.780 --> 00:10:02.760 the cost of running that particular, let's say, mutual fund if, 208 00:10:02.760 --> 00:10:05.680 whether it's a no load or, or a loaded mutual fund. I mean, 209 00:10:05.680 --> 00:10:09.040 those are things like, you know, trading costs, management fees, um, 210 00:10:09.040 --> 00:10:11.960 things of that nature. There's also, um, you know, 211 00:10:11.960 --> 00:10:14.760 custody fees that you have to think about, you know, what, uh, 212 00:10:14.760 --> 00:10:17.920 what custodian is gonna be housing those, those, um, 213 00:10:17.920 --> 00:10:21.160 those assets for you and what that pay structure looks like. I mean, we see, 214 00:10:21.620 --> 00:10:25.040 you know, uh, some custodians that'll do a flat, you know, flat rate fee, 215 00:10:25.260 --> 00:10:27.440 and we see some that'll have more of a tiered structure. 216 00:10:27.440 --> 00:10:30.720 So the more that you give them the, the lower that fee will come down. Again, 217 00:10:30.720 --> 00:10:32.320 there's, you know, certain services that are, 218 00:10:32.320 --> 00:10:35.640 that are provided by the custodian that you may seem are valuable. 219 00:10:35.700 --> 00:10:37.960 So maybe paying 15 basis points is worth it, 220 00:10:38.340 --> 00:10:41.760 and you may not see any value in that. And, and paying something like, you know, 221 00:10:41.760 --> 00:10:44.040 five or seven basis points maybe more, more suited. 222 00:10:44.040 --> 00:10:48.600 But those are all sort of what I would say in the category of just the cost of 223 00:10:48.600 --> 00:10:49.430 investing. 224 00:10:49.430 --> 00:10:52.600 Sure. Sure. And, and when you're looking at investment vehicles, 225 00:10:52.600 --> 00:10:54.280 mutual funds mm-hmm. ETFs, 226 00:10:54.770 --> 00:10:58.280 those expense ratios that comprise some of those costs, 227 00:10:58.750 --> 00:11:02.400 what are you seeing on average out there, and are those fees coming down? Uh, 228 00:11:02.400 --> 00:11:05.400 They are coming down, I pulled some numbers, you know, looking at just on, 229 00:11:05.420 --> 00:11:06.920 on averages, the, you know, 230 00:11:06.920 --> 00:11:09.440 the average expense ratio for a large cap mutual fund, 231 00:11:09.440 --> 00:11:13.640 about 86 basis points on the small cap side, it's averaging around, you know, 232 00:11:13.640 --> 00:11:17.360 1.4%. You know, so again, those are the averages. So you, 233 00:11:17.360 --> 00:11:19.880 you do see some mutual funds that can be as high as a, you know, 234 00:11:20.050 --> 00:11:22.600 north of a hundred and twenty five hundred thirty basis points. 235 00:11:22.660 --> 00:11:25.880 And then you can see some that are just a couple of basis points, you know, 236 00:11:25.880 --> 00:11:29.360 two basis points, five basis points for, you know, just a simple, uh, 237 00:11:29.490 --> 00:11:31.440 index tracking strategy. Okay. So 238 00:11:31.440 --> 00:11:34.160 You said a couple things there that I find interesting. First and foremost, uh, 239 00:11:34.500 --> 00:11:38.120 the asset class matters, right? Mm-hmm. Large cap versus small cap. 240 00:11:38.340 --> 00:11:41.680 And I think it would make sense that smaller cap stocks, 241 00:11:41.680 --> 00:11:46.200 smaller stocks are probably more costly to, to manage and maintain. 242 00:11:46.200 --> 00:11:47.240 So you'd expect higher expense 243 00:11:47.240 --> 00:11:49.880 Ratio, right? Yeah. And to trade 'em, it's harder to get access to 'em. 244 00:11:49.880 --> 00:11:52.120 Yeah. And we see the same thing in, in liquid alternatives. 245 00:11:52.120 --> 00:11:55.680 Like those alternative strategies tend to be a little pricey. Um, 246 00:11:57.340 --> 00:12:01.480 so the asset class matters. We are believers of global diversification, 247 00:12:01.540 --> 00:12:05.000 so having a little bit of all of those asset classes I think makes a lot of 248 00:12:05.000 --> 00:12:06.160 sense. Correct. Um, 249 00:12:06.260 --> 00:12:09.080 but you also mentioned something that I kind of want to dive into a little bit. 250 00:12:10.340 --> 00:12:14.840 You know, 86 basis points on average for large cap mutual fund. 251 00:12:15.300 --> 00:12:19.080 But you said you can get asset class exposures with index funds for just a 252 00:12:19.080 --> 00:12:23.240 couple of basis points, correct? Or hundredth of a percent. Mm-hmm. Why is that? 253 00:12:23.780 --> 00:12:25.480 Uh, I think it comes down to, you know, activity. 254 00:12:25.540 --> 00:12:28.480 The more active a strategy is you're, you're gonna see, you know, more turnover, 255 00:12:28.480 --> 00:12:30.520 that's more trading, and that's gonna, you know, 256 00:12:30.520 --> 00:12:33.840 cause the expense ratios to be a little bit higher than a more passive 257 00:12:33.840 --> 00:12:37.360 portfolio. Let's just, let's, let's just say tracking the s and p 500. 258 00:12:37.710 --> 00:12:38.100 Sure. 259 00:12:38.100 --> 00:12:42.960 So someone who is trying to attempt to outperform the s and p 260 00:12:42.960 --> 00:12:47.600 500 will do so by buying and selling Correct. Creating activity, 261 00:12:48.070 --> 00:12:51.400 raising costs, also taxes. Mm-hmm. 262 00:12:52.270 --> 00:12:56.280 Whereas simply buying and holding an index of the s and p 500, 263 00:12:56.310 --> 00:12:59.960 obviously is going to not only be less costly, but also more tax efficient. 264 00:12:59.960 --> 00:13:00.460 Correct. 265 00:13:00.460 --> 00:13:02.400 And it's also important to know what you're, what you're buying. 266 00:13:02.430 --> 00:13:05.520 There's a lot of people out there who, who believe in active management. 267 00:13:05.520 --> 00:13:06.400 They think that that, 268 00:13:06.400 --> 00:13:10.000 that there is alpha out there that a portfolio manager can provide, 269 00:13:10.500 --> 00:13:12.040 and in order to capture that alpha, 270 00:13:12.040 --> 00:13:15.240 they're willing to pay the extra expenses for that. So if you, 271 00:13:15.240 --> 00:13:18.520 if you know that going into it, then knowledge is king. Right? So, 272 00:13:18.660 --> 00:13:21.800 so you're okay with that. It's the people that don't understand that, 273 00:13:21.830 --> 00:13:24.760 that are in a portfolio, let's say a 401K plan, for example, 274 00:13:24.780 --> 00:13:26.360 you go into the menu, you, 275 00:13:26.510 --> 00:13:29.240 most people are probably gonna look at what their historical returns are, 276 00:13:29.240 --> 00:13:32.680 and they're gonna probably make a decision based off of past performance not 277 00:13:32.680 --> 00:13:35.320 knowing what, what's under the underlying securities or, 278 00:13:35.320 --> 00:13:38.240 or what the strategy is behind the individual mutual fund. 279 00:13:38.240 --> 00:13:39.320 And they could be paying, you know, 280 00:13:39.320 --> 00:13:42.480 higher fees and not knowing really what they're paying or why they're paying it. 281 00:13:42.550 --> 00:13:42.840 Yeah. 282 00:13:42.840 --> 00:13:44.880 And it, and it's important, right? At the end of the day, 283 00:13:45.390 --> 00:13:49.160 what you pay in fees comes off the top of what your return is. And over time, 284 00:13:49.160 --> 00:13:52.600 that can be substantial. We say lot on this podcast, you know, we, 285 00:13:52.620 --> 00:13:55.600 we can't control the markets, we can't control asset allocation, 286 00:13:55.740 --> 00:14:00.120 we can't control costs, and we can't control taxes. And we, we, 287 00:14:00.260 --> 00:14:04.600 we educate our listeners that, hey, focus on things you can control. Mm-hmm. 288 00:14:04.680 --> 00:14:08.120 Right? And so fees do matter at the end of the day. 289 00:14:08.380 --> 00:14:11.400 And I think there's been a lot of studies out there, if I'm not mistaken, 290 00:14:11.510 --> 00:14:13.880 Morningstar had one not too long ago that says, 291 00:14:14.060 --> 00:14:17.680 one of the key indicators of a mutual fund's performance is the expense ratio. 292 00:14:17.700 --> 00:14:20.640 The lower the fee, the greater likelihood it's gonna perform well. Yeah. Well 293 00:14:20.640 --> 00:14:22.800 Think about this. So in, in keeping with that, 294 00:14:22.900 --> 00:14:27.520 if you are in a mutual fund that has a 1% expense ratio and that mutual fund 295 00:14:27.520 --> 00:14:28.520 returned 5%, 296 00:14:28.580 --> 00:14:31.720 you're automatically giving up 20% and you're giving that back to the, 297 00:14:31.720 --> 00:14:32.840 to the fund company, right? 298 00:14:33.190 --> 00:14:34.720 501 is four. Exactly. 299 00:14:34.830 --> 00:14:37.400 Just, you know, basic math right there. Mm-hmm. So there, there, there is, 300 00:14:37.740 --> 00:14:40.040 you know, fees do matter and they do erode, you know, 301 00:14:40.040 --> 00:14:42.120 performance particularly over time. Uh, 302 00:14:42.120 --> 00:14:44.800 I got a couple other examples here I can share with you. You know, please just, 303 00:14:45.180 --> 00:14:46.600 you know, keeping things simple, you know, 304 00:14:46.600 --> 00:14:49.600 a hundred thousand dollars investment over 20 years, um, 305 00:14:49.880 --> 00:14:54.320 assuming a 6% rate of return in a mutual fund that has a 1% expense ratio, 306 00:14:54.340 --> 00:14:55.600 forget about, you know, custody, 307 00:14:55.780 --> 00:14:58.120 forget about advisory fees and all that other stuff, 308 00:14:58.150 --> 00:15:01.720 just straight up just investing in a one per, in a mutual fund that's, uh, 1%, 309 00:15:02.020 --> 00:15:04.200 uh, at the end of that 20 years, you know, you'll end up with a, 310 00:15:04.240 --> 00:15:08.680 a gross return of $320,713 and 55 cents. 311 00:15:08.830 --> 00:15:10.800 Take a look at the cost of fees. 312 00:15:10.800 --> 00:15:14.880 The cost of fees of that are actually $55 $383 and 78 cents. 313 00:15:14.880 --> 00:15:17.680 So you're gonna end up, uh, at the, in your account at the end of the day, 314 00:15:17.680 --> 00:15:18.640 after 20 years with, uh, 315 00:15:18.640 --> 00:15:23.120 $265,329 and 77 cents. 316 00:15:23.420 --> 00:15:26.240 And that's if you're invested in a, a, a mutual fund that has, you know, 317 00:15:26.240 --> 00:15:29.960 expense ratio 1%. And some people look at that and they say, that's great. 318 00:15:29.960 --> 00:15:32.680 That's that, that's a good return over 20 years. I'll take that. 319 00:15:32.870 --> 00:15:36.320 When you compare that, everything else being equal, but it's invested. Now in a, 320 00:15:36.320 --> 00:15:40.720 in a mutual fund that has an expense ratio of, uh, 25 basis points, again, 321 00:15:40.760 --> 00:15:44.640 a hundred thousand dollars over 20 years, 6% rate of return. The end of that, 322 00:15:44.640 --> 00:15:45.060 you, you, 323 00:15:45.060 --> 00:15:49.800 you still end up with the $320,713 55 cents, 324 00:15:49.900 --> 00:15:51.920 uh, on the gross end. But on the net, 325 00:15:51.920 --> 00:15:56.720 what you end up with is $305,919 and 75 cents. 326 00:15:57.420 --> 00:16:00.600 And so that's a cost, cost of fees there of 14, 327 00:16:00.620 --> 00:16:03.480 do $14,793 and 80 cents. 328 00:16:03.740 --> 00:16:07.000 So that's a significant difference ends up in your pocket. That's, 329 00:16:07.000 --> 00:16:08.440 That's, that's, that's massive. And we, 330 00:16:08.440 --> 00:16:12.120 we told our listeners there wouldn't be any math, but, uh, no, that, that, 331 00:16:12.120 --> 00:16:13.800 that is very true. But the thing is fees, 332 00:16:14.070 --> 00:16:16.480 it's part of investing like anything else. Mm-hmm. Right. They're, 333 00:16:16.480 --> 00:16:18.480 they're there. And I think it's important for investors to know, 334 00:16:18.820 --> 00:16:21.160 one of the things, uh, I read an article many years ago, 335 00:16:21.300 --> 00:16:25.720 and I think it's still prevalent and it's the notion of transparency, right? 336 00:16:25.780 --> 00:16:28.200 And, and, and what this article did, it was from, 337 00:16:28.310 --> 00:16:32.240 from State Street Global Advisors partnering with, uh, Wharton. 338 00:16:32.860 --> 00:16:37.120 And they interviewed a number of investors, um, about fees and, 339 00:16:37.140 --> 00:16:39.120 and their sentiments around fees. 340 00:16:40.100 --> 00:16:44.680 And what that study showed us was, it's not so much the, 341 00:16:44.700 --> 00:16:47.400 the level of the fee as they just wanted to know what it is. 342 00:16:48.300 --> 00:16:50.960 And why do you think there's such a lack of transparency with, 343 00:16:51.350 --> 00:16:53.200 with costs in this industry? 344 00:16:53.560 --> 00:16:55.960 I just think it's easy to, it's easy to bury. That's 345 00:16:55.960 --> 00:16:56.460 Unfortunate. 346 00:16:56.460 --> 00:16:58.360 You know, I think, and, and I think that's, that's, 347 00:16:58.380 --> 00:17:01.200 that's starting to change a little bit. I know we see it in our business, 348 00:17:01.420 --> 00:17:02.760 you know, and one of the things that, 349 00:17:02.760 --> 00:17:05.760 that we always kind of pride ourselves on are full transparency on fees, 350 00:17:06.260 --> 00:17:07.400 you know? But if you can look, 351 00:17:07.620 --> 00:17:09.760 if you can look less expensive than your competitor, 352 00:17:10.190 --> 00:17:13.680 then you feel that's gonna give you a competitive advantage. And so, you know, 353 00:17:13.740 --> 00:17:14.400 so it's, 354 00:17:14.400 --> 00:17:18.040 it's unfortunately I would say it's not uncommon for investment companies or 355 00:17:18.090 --> 00:17:20.080 other providers to, you know, kind of, you know, 356 00:17:20.280 --> 00:17:24.440 bury their fees or sort of hide them within, you know, the structure of their, 357 00:17:24.620 --> 00:17:26.320 of their, um, of their costs. 358 00:17:26.830 --> 00:17:30.360 Well, I think you, you said it best, right? In in, if there's value, 359 00:17:30.460 --> 00:17:33.560 the fees don't matter. Correct. Right. If you're getting what you're paying for. 360 00:17:34.020 --> 00:17:38.320 And so I think that there's a notion of a lot of advisors out there not wanting 361 00:17:38.320 --> 00:17:39.200 to talk about fees, 362 00:17:39.300 --> 00:17:42.800 cuz they might not be confident in their own value proposition. However, 363 00:17:43.130 --> 00:17:47.960 there are a lot of advisors that you and I work with on a daily basis that 364 00:17:48.190 --> 00:17:50.640 they're very upfront with what their cost structure is. 365 00:17:50.640 --> 00:17:53.800 They're very upfront with the fees are of the underlying investments, 366 00:17:54.300 --> 00:17:58.400 and they bring that transparent to the table because they have a very strong 367 00:17:58.400 --> 00:17:59.520 value proposition of their 368 00:17:59.520 --> 00:18:01.320 Clients. Yep. Yeah. They'll have it on their website, they'll have their, 369 00:18:01.320 --> 00:18:04.520 their fee, you know, their fee schedule on there along with, you know, the, 370 00:18:04.660 --> 00:18:07.240 the various services that they charge and, you know, 371 00:18:07.480 --> 00:18:10.320 whether you feel it's high or whether you feel it's low, at the end of the day, 372 00:18:10.320 --> 00:18:13.280 it's up to you to decide what's best for you. But at least you know, 373 00:18:13.280 --> 00:18:15.880 you have that full disclosure. Um, so you can make the, 374 00:18:15.880 --> 00:18:17.800 the best decision possible. Certainly, 375 00:18:17.800 --> 00:18:20.800 Certainly. So if, if our listeners are out there looking for a, 376 00:18:20.840 --> 00:18:22.080 a financial advisor, you know, 377 00:18:22.080 --> 00:18:24.680 some of the things that I'm hearing you say that they should be looking for is, 378 00:18:24.780 --> 00:18:29.480 is the advisor using a commission-based mo a commission-based model or a 379 00:18:29.480 --> 00:18:32.120 fee-based model? Mm-hmm. Are they, uh, 380 00:18:32.510 --> 00:18:36.080 transparent with their compensation and uh, 381 00:18:36.080 --> 00:18:38.560 are they transparent with their value proposition? Correct. Is, 382 00:18:38.560 --> 00:18:40.480 is there anything else that, that you would add to that? 383 00:18:40.740 --> 00:18:43.720 Um, just knowing what services you're gonna get. You know, I think, you know, 384 00:18:43.720 --> 00:18:45.120 time and time again, we, he, 385 00:18:45.180 --> 00:18:49.520 we hear stories that client felt that they were gonna get something from an 386 00:18:49.520 --> 00:18:50.200 advisor that they're, 387 00:18:50.200 --> 00:18:53.240 they're just not getting and they end up firing that advisor. You know, 388 00:18:53.260 --> 00:18:56.000 so knowing what you're gonna get from that advisor, and, and some advisors, 389 00:18:56.000 --> 00:18:58.720 again, they'll have this right on their website or they'll have it on that first 390 00:18:58.720 --> 00:19:01.720 consultation that they talk to. They'll tell you, Hey, look, you're gonna get, 391 00:19:01.720 --> 00:19:04.000 you know, four, you know, four meetings a year. 392 00:19:04.000 --> 00:19:07.120 You're gonna get six phone calls, you know, from me a year and, 393 00:19:07.120 --> 00:19:09.960 and here's my cell phone number. If there's ever an emergency for something, 394 00:19:09.960 --> 00:19:13.160 you know, give me a call. And then there's other advisors that'll say, you know, 395 00:19:13.160 --> 00:19:16.840 I'll meet you with you twice a year and we'll review your portfolio and if 396 00:19:16.840 --> 00:19:19.040 everything looks good, then we'll, I'll talk to you in six months. 397 00:19:19.540 --> 00:19:20.600 And if you're okay with that, 398 00:19:20.860 --> 00:19:24.080 and you at least you know that going into the relationship, I think where, 399 00:19:24.080 --> 00:19:25.360 where people get burned is they, 400 00:19:25.360 --> 00:19:28.440 they think they're gonna get more outta the relationship than they're getting. 401 00:19:28.700 --> 00:19:31.840 And a lot of times it's just slimy cuz of lack of transparency. 402 00:19:32.290 --> 00:19:34.120 Right. And I think that transparency is a, 403 00:19:34.360 --> 00:19:36.400 a tremendous way for advisors to build trust. 404 00:19:36.400 --> 00:19:38.440 Cause it's all based on trust at the beginning of the Absolutely. 405 00:19:38.440 --> 00:19:39.640 At the end of the day anyway, so Absolutely. 406 00:19:40.340 --> 00:19:41.800 And it's also important, Tom, 407 00:19:41.800 --> 00:19:44.720 to remember that as you're looking for a financial advisor, it's a, 408 00:19:45.100 --> 00:19:48.680 you think of it as a, a mutual interview. It's, it's, you know, they're, 409 00:19:48.680 --> 00:19:51.000 they're looking to see if you're gonna be a good client for them, 410 00:19:51.510 --> 00:19:54.000 just like you're looking to see if they're gonna be a good advisor for you. 411 00:19:54.340 --> 00:19:57.480 And so it's important that, that, uh, that a, your values are aligned. 412 00:19:57.550 --> 00:19:59.520 It's important to look for that full transparency, 413 00:19:59.700 --> 00:20:02.440 but it's also important that it's, you know, somebody that you can connect with. 414 00:20:02.810 --> 00:20:06.600 Absolutely. Absolutely. And, um, every investor's unique. Mm-hmm. 415 00:20:06.700 --> 00:20:09.640 And every advisor's unique in, in trying to find that match, 416 00:20:09.720 --> 00:20:12.800 I think is very important. So for our listeners out there, uh, 417 00:20:12.800 --> 00:20:14.720 those that might be looking for financial advisor, 418 00:20:14.720 --> 00:20:17.360 make sure that you're getting, uh, transparency into costs. 419 00:20:17.870 --> 00:20:20.400 Make sure you're getting transparency into value proposition. 420 00:20:20.790 --> 00:20:25.560 Make sure that you're using someone who is maybe not necessarily earning sales, 421 00:20:26.300 --> 00:20:30.880 uh, charges or sales commissions, uh, but actually giving fee for advice, 422 00:20:30.970 --> 00:20:34.840 which eliminates conflicts of interest. Um, and so I think that's, there's a, 423 00:20:34.840 --> 00:20:39.040 there's a lot there for our listeners to digest. JT, I want to thank you for, 424 00:20:39.100 --> 00:20:41.560 for joining us here today. It's been a pleasure talking to 425 00:20:41.560 --> 00:20:43.200 You. This has been a great time. We gotta do this more often. 426 00:20:43.250 --> 00:20:46.920 Absolutely. We'd love to have you back on the show. Uh, so in closing, 427 00:20:47.040 --> 00:20:50.800 I wanna thank the listeners for, for chiming into this, uh, podcast. And, uh, 428 00:20:50.800 --> 00:20:52.840 we'll get you at the next one. And, uh, 429 00:20:52.860 --> 00:20:56.480 for those of you who are looking for our, some of our previous episodes, uh, 430 00:20:56.480 --> 00:20:58.720 you can find them wherever you're currently finding your podcast. 431 00:20:58.940 --> 00:21:01.840 So thank you so much for your time and, uh, I'll see you at the next one. 432 00:21:01.960 --> 00:21:03.600 Symmetry Partners llc, 433 00:21:03.830 --> 00:21:07.760 it's an investment advisor firm registered with the Securities and Exchange 434 00:21:07.760 --> 00:21:08.580 Commission. 435 00:21:08.580 --> 00:21:13.280 The firm only transacts business in states where it is properly registered or 436 00:21:13.720 --> 00:21:16.760 excluded or exempted from registration requirements. 437 00:21:17.160 --> 00:21:21.720 Registration of an investment advisor does not imply any specific level of skill 438 00:21:21.740 --> 00:21:26.240 or training and does not constitute an endorsement of the firm by the 439 00:21:26.240 --> 00:21:26.940 commission. 440 00:21:26.940 --> 00:21:30.080 No one should assume that future performance of any specific investment, 441 00:21:30.290 --> 00:21:32.560 investment strategy, product, 442 00:21:33.060 --> 00:21:37.320 or non-investment related content made reference to directly or indirectly in 443 00:21:37.320 --> 00:21:41.670 this material will be profitable. As with any investment strategy, 444 00:21:41.920 --> 00:21:46.910 there is the possibility of profitability as well as loss due to various 445 00:21:46.910 --> 00:21:51.390 factors including changing market conditions and or applicable laws. 446 00:21:52.090 --> 00:21:56.430 The content may not be reflective of current opinions or positions. 447 00:21:56.770 --> 00:22:00.790 Please note the material is provided for educational and background use only. 448 00:22:01.110 --> 00:22:01.850 Moreover, 449 00:22:01.850 --> 00:22:05.790 you should not assume that any discussion or information contained in this 450 00:22:05.990 --> 00:22:09.990 material serves as the receipt of or as a substitute for 451 00:22:10.350 --> 00:22:12.390 personalized investment advice.
Alternative Investments are not just "cool" or intriguing products to own. In truth, they have the potential to help you endure tumultuous markets. In this episode, we are joined once again by Philip McDonald, CFA, CAIA, Managing Director of Research Investments & Portfolio Manager, to discuss how Alternative Investments can mitigate risk in your portfolio. If you have any questions or would like more information, reach out to us at https://symmetrypartners.com/contact-us/ You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice. 0 00:00:06.890 --> 00:00:09.120 Hello, this is Tom Romano with Unfiltered Finance. 1 00:00:09.270 --> 00:00:13.400 Welcome back to part two on our discussion of alternative investments here with 2 00:00:13.400 --> 00:00:14.360 us as Phil McDonald, 3 00:00:14.430 --> 00:00:18.720 portfolio Manager and managing Director of Investments at Symmetry Partners. 4 00:00:18.720 --> 00:00:19.760 Phil, welcome back. 5 00:00:20.020 --> 00:00:21.400 Thanks for having me back. Tom, 6 00:00:21.880 --> 00:00:24.880 I think we're getting a lot of questions from investors and and advisors because 7 00:00:24.880 --> 00:00:28.000 of the fact that you look at the performance of some of these alternative asset 8 00:00:28.000 --> 00:00:30.920 classes in a year like 2022. However, 9 00:00:31.640 --> 00:00:35.680 I think we would caution our listeners to, to not chase returns, 10 00:00:35.860 --> 00:00:40.040 and it's more of a strategic allocation that you wanna hold in your portfolio 11 00:00:40.140 --> 00:00:41.120 for a long duration. 12 00:00:41.600 --> 00:00:44.920 I would totally agree with that. And, and you have other considerations here, 13 00:00:44.920 --> 00:00:48.280 like broadly speaking, the expectation of the 60 40 portfolio, 14 00:00:48.300 --> 00:00:49.920 the return on the so-called 60 port, 15 00:00:49.930 --> 00:00:54.680 40 portfolio is likely going to be below average for in, in the near future. 16 00:00:54.780 --> 00:00:56.320 So you start to think about like, okay, 17 00:00:56.320 --> 00:01:00.200 my traditional portfolio isn't gonna return, you know, the 40 year average, 18 00:01:00.350 --> 00:01:03.080 what we saw decades ago. So where else might I be, 19 00:01:03.080 --> 00:01:06.280 might be able to go for returns and diversification? So you, 20 00:01:06.300 --> 00:01:10.440 you have that inflation surprises, you have increased correlation of, 21 00:01:10.460 --> 00:01:12.920 of traditional asset classes in the recent past. You know, 22 00:01:12.920 --> 00:01:16.360 of all these things kind of pointing to the benefit of having a diversified 23 00:01:16.710 --> 00:01:18.880 alternative strategy. And I would agree with you, 24 00:01:18.920 --> 00:01:22.280 I think you were alluding to the strength of 2022. It was, 25 00:01:22.300 --> 00:01:24.880 it was a very good year for certain alternative strategies. 26 00:01:25.000 --> 00:01:27.880 I would encourage people to think of that as an outlier year like that. 27 00:01:27.880 --> 00:01:31.280 That's not a year that can necessarily happen again unless all the bad things 28 00:01:31.280 --> 00:01:36.080 that happen in the equity and fixed income markets and with inflation kind of 29 00:01:36.490 --> 00:01:40.720 recur. So I, I would encourage people to almost think in terms of sharp ratio, 30 00:01:40.770 --> 00:01:43.600 right? So an excess return for a given volatility, 31 00:01:43.920 --> 00:01:47.320 a sharp ratio above 0.5, getting to maybe a 0.8, is, 32 00:01:47.340 --> 00:01:50.320 is the type of realm I think you should think of for, 33 00:01:50.380 --> 00:01:53.000 for a diversified alternative strategy. And, 34 00:01:53.180 --> 00:01:55.160 and to kind of put specifics on that, 35 00:01:55.380 --> 00:02:00.360 so something that has is managed to a 10% volatility or standard deviation that 36 00:02:00.360 --> 00:02:05.240 would be a five to 8% excess return on the risk-free rate. So, 37 00:02:05.660 --> 00:02:10.080 so you know, you're talking single digit excess returns for, uh, 38 00:02:10.200 --> 00:02:14.040 a strategy that's scaled to a 10% volatility. So, you know, 39 00:02:14.100 --> 00:02:16.480 to take people out of this expectation of, 40 00:02:16.780 --> 00:02:21.640 of a home run year kind of happening again, it's less likely to happen again. 41 00:02:21.660 --> 00:02:22.493 Gotcha. 42 00:02:22.900 --> 00:02:25.560 Um, just to clarify some of that, because I think that's some, 43 00:02:25.670 --> 00:02:28.880 some very important advice there. When we talk sharp ratio, 44 00:02:28.880 --> 00:02:32.000 the way I look at that is bang for your buck. Are you, 45 00:02:32.020 --> 00:02:35.960 are you getting the return for the risk that you are taking? 46 00:02:36.300 --> 00:02:37.720 And the higher the sharp ratio, 47 00:02:37.740 --> 00:02:39.800 the greater the return is for the risk that you're taking. 48 00:02:40.540 --> 00:02:44.800 And so when we're talking about, you know, years like 2022, which is an outlier, 49 00:02:44.810 --> 00:02:46.640 which I would agree, you know, 50 00:02:46.640 --> 00:02:51.640 investors could have alternatives in their portfolio for years with a trade off 51 00:02:51.640 --> 00:02:51.880 being, 52 00:02:51.880 --> 00:02:55.720 you might be getting single digit returns while the markets may be producing 53 00:02:55.720 --> 00:02:59.930 double digit returns. We don't know when the next 20, 22, 2 is gonna happen. 54 00:03:00.420 --> 00:03:05.280 But having an allocation of those alts will certainly help weather that storm. 55 00:03:05.820 --> 00:03:07.280 Uh, uh, totally agree. Yes. 56 00:03:07.380 --> 00:03:11.160 So I think a misconception here, and this is just from my conversations with, 57 00:03:11.160 --> 00:03:13.600 with advisors, investors alike, they think alternative strategies, 58 00:03:13.600 --> 00:03:15.000 they think returns. Mm-hmm. 59 00:03:15.080 --> 00:03:18.440 They think even tactical shifts into and hour. Exactly. Yeah. 60 00:03:18.460 --> 00:03:22.000 But what I'm hearing you say that this is more of a risk mitigating strategy 61 00:03:22.190 --> 00:03:24.000 than a return reaching strategy. 62 00:03:24.520 --> 00:03:28.080 I think it's, it's strongly risk mitigating from a diversification standpoint, 63 00:03:28.260 --> 00:03:30.320 but I'm not quite sure how 64 00:03:31.990 --> 00:03:34.760 Much you have to give up in returns. Okay. I mean, it, 65 00:03:34.880 --> 00:03:38.640 I I wouldn't necessarily say it, it's gonna hurt you over the long term. 66 00:03:38.760 --> 00:03:42.240 I think you need to think about the right portfolio you, you want to be in. And, 67 00:03:42.460 --> 00:03:46.000 you know, I dunno if you had a question here, but, uh, you know, there, 68 00:03:46.000 --> 00:03:50.200 there are some very specific use cases that I think make sense and that would be 69 00:03:50.520 --> 00:03:52.960 managing just the life cycle, 70 00:03:53.380 --> 00:03:58.280 how financial plans and asset allocations change as a person ages. Again, 71 00:03:58.380 --> 00:04:03.080 we, we have a finite kinda life here where we're earning and spending and maybe 72 00:04:03.080 --> 00:04:08.080 bequeathing and then preferences. So theoretically, as someone ages, 73 00:04:08.080 --> 00:04:11.640 they're the, the risk of their portfolio should, should come down over time. 74 00:04:11.640 --> 00:04:13.680 They're converting their human capital, 75 00:04:13.690 --> 00:04:17.200 their potential for earning during their career into financial capital. 76 00:04:17.200 --> 00:04:20.160 They're investing that hopefully they're being thoughtful about the 77 00:04:20.160 --> 00:04:23.760 diversification of, of, of those kind of two buckets and say, 78 00:04:23.760 --> 00:04:25.680 equity beta should come down as you age. 79 00:04:25.930 --> 00:04:28.080 Where do you go with that allocation in your portfolio? 80 00:04:28.640 --> 00:04:32.240 Historically and traditionally, someone would say, oh, fixed, fixed income, 81 00:04:32.240 --> 00:04:35.880 of course. But we've been seeing for a decade, you and I right, 82 00:04:35.930 --> 00:04:37.680 we're we're both nodding and smiling. 83 00:04:38.250 --> 00:04:43.120 There have been times when people were strongly opposed to increasing the fixed 84 00:04:43.120 --> 00:04:47.120 income allocation in their portfolio. So if it's just, you know, gas and break, 85 00:04:47.180 --> 00:04:49.360 you know, what do you do? You, you know, 86 00:04:49.360 --> 00:04:52.720 we've seen investors and advisors kind of freeze and, and say, oh, 87 00:04:52.720 --> 00:04:56.080 there's no solution here. But this third or fourth, right, 88 00:04:56.080 --> 00:05:00.560 with cash in the consideration bucket of allocation really opens things up. 89 00:05:00.620 --> 00:05:04.480 You can take down beta risk, uh, equity beta, 90 00:05:04.500 --> 00:05:09.000 and you can allocate and diversify not only into fixed income. 91 00:05:09.300 --> 00:05:10.100 Gotcha. 92 00:05:10.100 --> 00:05:13.640 And you, you know, we, I joke around saying it depends, right? We, 93 00:05:13.660 --> 00:05:18.080 we say that a lot here, um, because I also think it's a perfect portfolio. 94 00:05:18.340 --> 00:05:21.200 You know, we, we look at portfolios as being a series of trade offs. 95 00:05:21.580 --> 00:05:23.360 And so I immediately think, well gosh, you know, 96 00:05:23.360 --> 00:05:25.000 if you don't really give up any of the return, 97 00:05:25.000 --> 00:05:29.480 but you can definitely mitigate some of the risks through sharp ratio, 98 00:05:29.480 --> 00:05:32.920 as you said, like looking at that particular statistic, who, 99 00:05:32.920 --> 00:05:35.960 what are the trade-offs of, of investing in alternatives? And, 100 00:05:35.960 --> 00:05:38.920 and immediately I think, well, well, you're still, there's still cost, 101 00:05:39.030 --> 00:05:42.840 even though you can get lower cost alternative exposures, 102 00:05:42.840 --> 00:05:47.400 there's still a cost element to that. Um, and also, you know, 103 00:05:47.400 --> 00:05:50.320 we talk a lot about tracking error on the behavioral side, right? 104 00:05:50.380 --> 00:05:53.680 If you're gonna add an alternative asset class to your portfolio, 105 00:05:54.660 --> 00:05:58.080 but you're honed in on the s and p 500, you're, 106 00:05:58.080 --> 00:06:00.040 you're not gonna be tracking that index. 107 00:06:00.690 --> 00:06:01.220 Right? 108 00:06:01.220 --> 00:06:03.120 Is that, is that a correct way of thinking about it? 109 00:06:03.370 --> 00:06:04.040 Absolutely. 110 00:06:04.040 --> 00:06:07.600 And I'm glad you brought that up because not only are alternatives difficult to 111 00:06:07.600 --> 00:06:11.720 benchmark, there are some indices that I think, um, are, 112 00:06:11.740 --> 00:06:16.320 are relevant to a diversified, you know, conservative strategy. We, we, 113 00:06:17.220 --> 00:06:19.880 you know, we run an alternative strategy, uh, 114 00:06:19.880 --> 00:06:24.120 in different forms that is not seeking to, to be very volatile, right? 115 00:06:24.180 --> 00:06:28.040 So sub under that 10% volatility that I gave as, 116 00:06:28.180 --> 00:06:32.680 as the example to conceptualize a sharp ratio. So we, we, 117 00:06:32.740 --> 00:06:34.560 we don't even believe in a, uh, 118 00:06:34.560 --> 00:06:38.040 that high level of volatility in an alternative strategy. Um, 119 00:06:38.060 --> 00:06:39.280 but you raise a very good point. 120 00:06:39.300 --> 00:06:42.120 So not only are alternatives difficult to benchmark, 121 00:06:42.740 --> 00:06:44.880 but if you have alternatives in your portfolio, 122 00:06:45.860 --> 00:06:49.880 the appropriate benchmark for your portfolio should reflect 123 00:06:50.660 --> 00:06:55.480 the allocation you have. If it's 50% diversified equity, 124 00:06:56.770 --> 00:06:59.800 40% diversified fixed income, and 10% alts, 125 00:07:00.380 --> 00:07:04.880 you should probably benchmark yourself to a blended benchmark of a 126 00:07:04.880 --> 00:07:07.960 50, 40 10 mix of relevant indices. 127 00:07:08.540 --> 00:07:11.920 Not just look to the s and p 500, because again, 128 00:07:11.940 --> 00:07:14.440 you probably have a 0.5 beta in that portfolio. 129 00:07:14.980 --> 00:07:18.440 You don't want to compare yourself to something that is a 1.0 beta. 130 00:07:18.790 --> 00:07:22.880 Sure, sure. Absolutely. And you know, we, we talk a lot about, on this podcast, 131 00:07:23.480 --> 00:07:26.680 a lot of folks look at benchmarks to look at the performance, their portfolio, 132 00:07:26.740 --> 00:07:28.800 and I think that makes a lot of sense. But the true one, 133 00:07:28.800 --> 00:07:32.000 true benchmark is are you hitting your goals from a financial planning 134 00:07:32.000 --> 00:07:34.800 standpoint? Right? And so I think that's a better way to, to, 135 00:07:34.820 --> 00:07:38.640 to look at it versus just making sure that you may or may not be 136 00:07:38.990 --> 00:07:40.520 outperforming the s and p, 137 00:07:40.520 --> 00:07:44.400 which is a very visible benchmark out in the world today. 138 00:07:44.420 --> 00:07:47.560 And we can think the media outlets for that certainly. Right. 139 00:07:47.740 --> 00:07:50.680 So let's talk a little about, uh, allocation to alts, right? 140 00:07:50.680 --> 00:07:54.280 Let's say you have an investor, let's say it's 60% stock, 40% bond, 141 00:07:54.280 --> 00:07:58.400 maybe a small cash position in there. How should that investor consider adding, 142 00:07:58.820 --> 00:08:01.720 uh, alternatives to the portfolio? Is there a maximum amount you would put in? 143 00:08:01.740 --> 00:08:04.720 Is there a minimum amount? Would you take it from the stock side? 144 00:08:04.720 --> 00:08:07.440 Would you take it from the bond side? How does that work? And how should our, 145 00:08:07.460 --> 00:08:10.320 our listeners be conceptualizing adding that asset 146 00:08:10.320 --> 00:08:13.720 Class? So we, we have some opinions here, but I think in the end, it's, 147 00:08:13.720 --> 00:08:17.960 it's gonna be what is acceptable to the investor and what their financial 148 00:08:17.960 --> 00:08:22.520 advisors would recommend start the starting point matters. 149 00:08:22.900 --> 00:08:27.200 So if you're exceptionally conservative to start, say you're, 150 00:08:28.320 --> 00:08:31.980 you know, 10% equity in 90% fixed income, 151 00:08:32.260 --> 00:08:37.020 I think taking it ha having a a higher allocation alt might 152 00:08:37.450 --> 00:08:41.780 make more sense than if you were starting from the other end. So, uh, 153 00:08:41.840 --> 00:08:45.500 in terms of the distribution of returns and, and you know, 154 00:08:45.500 --> 00:08:47.980 the level of volatility of a diversified AL strategy, 155 00:08:48.250 --> 00:08:51.180 it's a little bit more similar to fixed income. It's, it's, 156 00:08:51.260 --> 00:08:54.540 I like to say those returns are fueled by different things. You know, it's not, 157 00:08:55.260 --> 00:08:59.200 you know, duration and credit risk and illiquidity type of stuff. 158 00:08:59.270 --> 00:09:02.840 It's other drivers that, that give you returns and alternatives. 159 00:09:02.860 --> 00:09:06.480 But our rules of thumb, which, you know, are for people to take or leave, 160 00:09:06.490 --> 00:09:11.000 would be maybe up to about 25% if you're starting from a very conservative, uh, 161 00:09:11.000 --> 00:09:14.800 portfolio. And if you're starting from a very aggressive portfolio, 162 00:09:14.830 --> 00:09:18.240 just say someone's a hundred percent equity invested in says, ah, 163 00:09:18.240 --> 00:09:22.160 I want to add malts to this portfolio, but I don't like fixed income. Um, 164 00:09:22.360 --> 00:09:23.480 I know a few of those, maybe, 165 00:09:24.210 --> 00:09:26.560 Maybe something more in the realm of 15%, 166 00:09:26.800 --> 00:09:31.560 I think lower than 10% allocation of anything to the portfolio is gonna have a, 167 00:09:32.120 --> 00:09:35.760 a, a limited effect on, on the outcome, right? 168 00:09:35.940 --> 00:09:40.200 So 10 percent's probably our general starting point to add something and, and, 169 00:09:40.260 --> 00:09:43.840 and see, uh, beneficial effect to the portfolio and, 170 00:09:43.980 --> 00:09:46.080 and where we've landed on where to fund it from. 171 00:09:46.080 --> 00:09:47.640 So I didn't forget that part of your question, 172 00:09:48.290 --> 00:09:52.560 where believers in prorata from the, 173 00:09:52.700 --> 00:09:53.720 the asset allocation, 174 00:09:54.260 --> 00:09:58.080 so if you're a 60 40 investor and you put say, 175 00:09:58.080 --> 00:09:59.560 20% alternatives, 176 00:10:00.010 --> 00:10:04.880 60% of that should be probably funded from a reduction in inequity 177 00:10:05.060 --> 00:10:07.960 and 40% from a reduction in fixed. And they go, again, 178 00:10:07.960 --> 00:10:12.320 these are starting rules of thumbs. I I am very familiar with people who, 179 00:10:12.910 --> 00:10:17.400 because that returns distribution to alts, you know, the volatility and the, 180 00:10:17.540 --> 00:10:22.520 and kind of the average return to the distribution to alts is a little 181 00:10:22.520 --> 00:10:24.520 more similar to fixed income than it is to equity. 182 00:10:24.760 --> 00:10:29.160 I know folks who want to take 100% on a fixed income, that is an approach, 183 00:10:29.420 --> 00:10:33.800 but if you think about that, you've done nothing to reduce your equity risk. 184 00:10:34.220 --> 00:10:37.920 So if someone is, again, aging life cycle is a consideration here, 185 00:10:38.760 --> 00:10:41.840 diversifying both systematic, traditional, 186 00:10:41.840 --> 00:10:43.600 systematic exposures of equity and fixed, 187 00:10:44.660 --> 00:10:48.160 we think taking from both makes a lot of sense to fund that ALT's position. 188 00:10:48.410 --> 00:10:50.640 There are exceptions, you know, there, there are, you know, 189 00:10:50.690 --> 00:10:54.560 there are people who have different savings or different, you know, 190 00:10:54.560 --> 00:10:58.880 sources of income, maybe people with three pensions, you know, like who, uh, 191 00:10:58.980 --> 00:11:02.280 who look a little different from an average investor. So again, 192 00:11:02.280 --> 00:11:04.840 individual specifics need to come into play, but those, 193 00:11:04.840 --> 00:11:07.720 those are my starting rules of thumb in a vacuum. 194 00:11:08.070 --> 00:11:09.160 Well, that makes a lot of sense, 195 00:11:09.160 --> 00:11:13.640 especially if you're looking at alternatives as a third leg to the stool, right. 196 00:11:13.660 --> 00:11:14.600 Stocks and bonds. 197 00:11:14.740 --> 00:11:18.160 And if the third category is going to be alternative asset classes or 198 00:11:18.160 --> 00:11:20.760 alternative strategies, it should come out prorata. 199 00:11:21.150 --> 00:11:24.160 It's not that the ALS are taking the place of equities or fixed income, 200 00:11:24.190 --> 00:11:26.880 it's something completely, completely different in the portfolio. 201 00:11:27.300 --> 00:11:28.133 Yep. 202 00:11:28.230 --> 00:11:32.480 Fantastic. So, um, Phil, I wanna thank you so much for your time. This is, uh, 203 00:11:32.500 --> 00:11:36.440 uh, super enlightening and just to kind of recap what we discussed, uh, 204 00:11:36.440 --> 00:11:38.000 for our listeners, um, 205 00:11:38.000 --> 00:11:42.040 alternative investments are a great way to diversify a portfolio beyond stocks, 206 00:11:42.280 --> 00:11:43.113 bonds, and cash. 207 00:11:43.690 --> 00:11:48.400 There are ways to get exposures to liquid alternative strategies through 208 00:11:48.670 --> 00:11:50.920 ETFs and mutual funds. With that should, 209 00:11:51.020 --> 00:11:54.920 you should expect a level of transparency to make sure you are getting those 210 00:11:54.920 --> 00:11:59.720 diversification benefits and, uh, certainly, uh, liquidity being a, 211 00:11:59.980 --> 00:12:04.240 uh, a factor there as well. And you know, whether or not alternatives are, 212 00:12:04.240 --> 00:12:07.560 are suitable for you, as we always say and unfiltered finance. You know, 213 00:12:07.560 --> 00:12:10.320 the best advice we can give is to always work with a financial advisor or 214 00:12:10.320 --> 00:12:14.760 financial professional that can take a look at your own personal situation, 215 00:12:15.060 --> 00:12:18.880 assess that situation, and, uh, make sure that they recommend, uh, 216 00:12:18.880 --> 00:12:21.520 an asset allocation, uh, that's suitable for you. 217 00:12:21.810 --> 00:12:24.520 Thank you listeners for joining us today. Uh, Phil, once again, 218 00:12:24.870 --> 00:12:27.760 it's always fun having you on the show. We'll certainly have you back. Great. 219 00:12:27.760 --> 00:12:28.593 Thanks for having me. 220 00:12:29.020 --> 00:12:31.160 For those of you who are looking for additional information, 221 00:12:31.160 --> 00:12:35.920 you can always visit our website@www.symmetrypartners.com. Feel free to, 222 00:12:36.340 --> 00:12:38.080 uh, listen to this podcast, uh, 223 00:12:38.090 --> 00:12:42.200 again or access any of our previous podcasts to the, uh, 224 00:12:42.330 --> 00:12:44.120 venue in which you get your podcasts. 225 00:12:44.460 --> 00:12:46.440 So thanks for listening and we'll catch you next time. 226 00:12:46.720 --> 00:12:48.360 Symmetry Partners, llc, 227 00:12:49.080 --> 00:12:52.600 an investment advisor firm registered with the Securities and Exchange 228 00:12:52.600 --> 00:12:53.420 Commission. 229 00:12:53.420 --> 00:12:58.120 The firm only transacts business in states where it is properly registered or 230 00:12:58.560 --> 00:13:01.600 excluded or exempted from registration requirements. 231 00:13:01.960 --> 00:13:06.480 Registration of an investment advisor does not imply any specific level of skill 232 00:13:06.480 --> 00:13:07.313 or training, 233 00:13:07.660 --> 00:13:11.480 and does not constitute an endorsement of the firm by the commission. 234 00:13:11.780 --> 00:13:14.920 No one should assume that future performance of any specific investment, 235 00:13:15.130 --> 00:13:17.400 investment strategy, product, 236 00:13:17.900 --> 00:13:22.120 or non-investment related content made reference to directly or indirectly in 237 00:13:22.120 --> 00:13:26.710 this material will be profitable. As with any investment strategy, 238 00:13:26.960 --> 00:13:31.750 there is the possibility of profitability as well as loss due to various 239 00:13:31.750 --> 00:13:36.230 factors including changing market conditions and or applicable laws. 240 00:13:36.930 --> 00:13:41.230 The content may not be reflective of current opinions or positions. 241 00:13:41.490 --> 00:13:45.870 Please note the material is provided for educational and background use only. 242 00:13:45.950 --> 00:13:46.690 Moreover, 243 00:13:46.690 --> 00:13:50.590 you should not assume that any discussion or information contained in this 244 00:13:50.830 --> 00:13:54.830 material serves as the receipt of or as a substitute for 245 00:13:55.190 --> 00:13:57.190 personalized investment advice.
Today, we talk about an area of the market that many people have heard of, but haven't chosen to invest in as of yet. Specifically, we're talking about “Alternative Investments” - investment strategies that are different from and diversifying to, traditional asset classes. In this first half of this two-part episode, our own Tom Romano is joined by Symmetry's Phil McDonald, CFA, CAIA, Managing Director of Research Investments & Portfolio Manager, to further define what “Alternative Investments” are, and why you may want to consider their potential benefits. If you have any questions or would like more information, reach out to us at https://symmetrypartners.com/contact-us/ You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice. Transcript 0 00:00:06.730 --> 00:00:10.400 Hello and welcome to Unfiltered Finance. This is your host, Tom Romano. 1 00:00:10.400 --> 00:00:12.160 Thank you for joining us. Uh, 2 00:00:12.160 --> 00:00:15.000 we have a special episode today where we want to talk about, uh, 3 00:00:15.000 --> 00:00:19.400 an area of the market that, uh, a lot of investors have probably heard of, uh, 4 00:00:19.620 --> 00:00:22.640 and probably most investors don't have a lot of exposure to. 5 00:00:23.180 --> 00:00:25.200 And that is alternative investments. 6 00:00:25.780 --> 00:00:29.200 And I have the perfect guest for us here today. Uh, Phil McDonald, 7 00:00:29.300 --> 00:00:33.040 who is a portfolio manager and the managing director of investments at Symmetry 8 00:00:33.040 --> 00:00:35.360 Partners, and is the resident expert on, 9 00:00:35.580 --> 00:00:39.360 on alternative investing here at Symmetry. So Phil, thanks for joining us today. 10 00:00:39.700 --> 00:00:41.280 Thanks for having me. I'm happy to be here. 11 00:00:41.900 --> 00:00:45.080 So I kinda wanna start very high level, Phil, um, 12 00:00:45.080 --> 00:00:49.200 because I think alternative investments is a, is a very, very broad topic. 13 00:00:49.400 --> 00:00:51.760 I mean, it can cover things, uh, 14 00:00:51.760 --> 00:00:55.760 such as precious metals to hedge fund strategies, um, 15 00:00:55.780 --> 00:00:59.760 all the way down to things like NFTs, right? Or, or even, you know, 16 00:00:59.760 --> 00:01:04.240 card collecting to an extent, right? So if you could just very high level give, 17 00:01:04.240 --> 00:01:08.520 give us a very broad definition, uh, on your view on alternative investing, 18 00:01:08.520 --> 00:01:09.020 please. 19 00:01:09.020 --> 00:01:09.720 And thank you that, 20 00:01:09.720 --> 00:01:14.680 that is a highly relevant question because alternatives is one of those labels 21 00:01:14.680 --> 00:01:17.760 and investing that doesn't have, uh, 22 00:01:17.880 --> 00:01:21.080 a perfectly agreed upon definition. I think, you know, 23 00:01:21.080 --> 00:01:24.640 certain people hear it and they think different things. Um, 24 00:01:24.800 --> 00:01:29.200 I think a useful definition to keep in mind is really, uh, 25 00:01:29.200 --> 00:01:33.080 the starting point is anything that is an investment strategy that is different 26 00:01:33.390 --> 00:01:37.800 from or diversifying to traditional asset classes that is 27 00:01:38.100 --> 00:01:41.080 equity and fixed income, right? Um, 28 00:01:41.180 --> 00:01:45.440 but I think you can't really stop there because, you know, 29 00:01:45.460 --> 00:01:48.840 you called attention to, to certain ideas that, you know, 30 00:01:48.840 --> 00:01:52.040 people might think of if, you know, you mentioned alternative investing, 31 00:01:52.320 --> 00:01:54.960 you know, baseball cards or, you know, 32 00:01:54.960 --> 00:01:58.520 a lot of interesting different artwork choices. Yeah. We've talked about, 33 00:01:58.520 --> 00:01:58.840 talked about 34 00:01:58.840 --> 00:01:59.270 That before. 35 00:01:59.270 --> 00:02:04.080 Cars, uh, timber farmland, you know, these are all, some, 36 00:02:04.320 --> 00:02:06.640 a lot of people think real estate, right? Which I think we could, 37 00:02:06.640 --> 00:02:07.600 we could debate that one, 38 00:02:07.700 --> 00:02:12.520 but I think not only should the investment strategy be different, but there, 39 00:02:12.530 --> 00:02:17.240 there should be kind of an economic rationale for why you might 40 00:02:17.510 --> 00:02:21.480 earn a return on that different strategy. And, and more specifically, 41 00:02:22.670 --> 00:02:27.560 where's the premium coming from? Right? So I think very quickly for me, 42 00:02:27.560 --> 00:02:31.600 that collapses down more to specific liquid, 43 00:02:32.380 --> 00:02:34.560 uh, investment in trading strategies. 44 00:02:34.950 --> 00:02:38.800 Sometimes based on themes we're al already familiar with in, 45 00:02:38.820 --> 00:02:40.640 in asset classes we're already familiar with. 46 00:02:40.640 --> 00:02:45.480 You don't necessarily have to go really far a field to find an 47 00:02:45.760 --> 00:02:49.480 addition to a portfolio that will, will make a difference in terms of, you know, 48 00:02:49.480 --> 00:02:51.920 adding an alternative, uh, investment exposure. 49 00:02:52.630 --> 00:02:55.560 Sure. Thank you for that. And, um, you know, 50 00:02:55.560 --> 00:02:58.680 I think it is that broad of a definition, right? I mean, uh, 51 00:02:58.990 --> 00:03:02.800 just to sort of clarify for, for our listeners, um, 52 00:03:02.860 --> 00:03:06.000 the word alternative means alternative, you said traditional asset classes, 53 00:03:06.460 --> 00:03:08.040 stocks, bonds. 54 00:03:08.610 --> 00:03:13.080 There is a correlation benefit to owning both stocks and bonds in a portfolio 55 00:03:13.270 --> 00:03:16.840 Most years. Most years. Yeah. We'll get to that. We will get to that. Um, 56 00:03:17.390 --> 00:03:20.640 however, um, you know, alternatives, to me it is a, 57 00:03:20.640 --> 00:03:25.280 it's a correlation story in, in all of those investments, if you will, 58 00:03:25.280 --> 00:03:30.200 whether it's cars, stamps, baseball cards, commodities, 59 00:03:30.670 --> 00:03:35.480 they are going to have or should have some sort of diversification benefit. 60 00:03:35.540 --> 00:03:37.000 And that's the purpose of it, right? 61 00:03:37.750 --> 00:03:39.200 Totally. You, you nailed it. 62 00:03:39.260 --> 00:03:44.120 The diversification benefit of an alternative strategy performing alternatively, 63 00:03:44.130 --> 00:03:46.480 right? So if you wanna get a little bit geeky, you know, 64 00:03:46.480 --> 00:03:50.160 you can think about something whose return stream looks different. So, you know, 65 00:03:50.220 --> 00:03:54.920 low correlation and expected return from that, you know, economic logic, 66 00:03:55.030 --> 00:03:58.760 that underlying fundamental theme as to if I do this trading strategy, 67 00:03:58.880 --> 00:04:03.760 I should expect a return, hopefully lower volatility than, than say, 68 00:04:03.920 --> 00:04:08.840 a equity market. So right there, you, you can talk about high sharp ratios or, 69 00:04:08.860 --> 00:04:12.560 you know, high excess returns relative to the volatility you're talking about. 70 00:04:12.780 --> 00:04:17.760 And, and absolutely diversification is the benefit. Very often, I, I, you know, 71 00:04:17.900 --> 00:04:21.520 use the, um, analogy of, you know, a third bucket of diversification. 72 00:04:21.540 --> 00:04:23.840 All you thought really all you had was two, well, 73 00:04:23.840 --> 00:04:27.760 there's this third bucket you might want to consider for some clients. And, 74 00:04:27.820 --> 00:04:31.240 and one, one thing I want to clarify here on, on this topic while we're here, 75 00:04:31.710 --> 00:04:35.040 most of these strategies are not a hedge, 76 00:04:35.500 --> 00:04:37.360 diversification is not a hedge. 77 00:04:37.820 --> 00:04:41.000 So if you're diversified with regard to, you know, 78 00:04:41.020 --> 00:04:45.600 equity markets and volatility, it doesn't mean when equities go down 10%, 79 00:04:45.780 --> 00:04:49.680 you go up 10%. It's not that directly, you know, 80 00:04:49.950 --> 00:04:53.360 inverse of a relationship. It's unrelated, you know, 81 00:04:53.360 --> 00:04:58.240 it's not sensitive to what the equity or fixed income market hopefully is doing. 82 00:04:58.420 --> 00:05:00.080 That's really what diversification is. 83 00:05:00.380 --> 00:05:03.360 So it's not the taking the, the counterpoint, if you will, right? 84 00:05:03.390 --> 00:05:08.240 Like something zigs this must zag, so to speak. Right? And so the idea is, it, 85 00:05:08.350 --> 00:05:13.240 it's not going to behave from a return standpoint like any other, 86 00:05:13.260 --> 00:05:17.080 it shouldn't behave like any other asset classes you currently have in your 87 00:05:17.080 --> 00:05:20.680 portfolio. And I really like the way you put that sort of a, a third bucket, 88 00:05:20.680 --> 00:05:24.640 right? I I maybe even a fourth, right? Because I think of cash. Yeah, exactly. 89 00:05:24.700 --> 00:05:29.160 So, so most investors have cash, bonds and stocks, 90 00:05:29.270 --> 00:05:31.120 most of their 401ks. And so what you're saying, 91 00:05:31.120 --> 00:05:35.200 there's this whole other realm of alternatives that can have 92 00:05:36.140 --> 00:05:40.880 diversification benefits because of the fact that they don't behave like stocks, 93 00:05:41.170 --> 00:05:43.120 bonds, and cash. Correct. 94 00:05:43.980 --> 00:05:48.880 So let's talk a little bit because I think alternatives sometimes get a bad 95 00:05:48.980 --> 00:05:52.120 rap. Um, I think a lot of it has to do with the, 96 00:05:52.260 --> 00:05:54.720 so maybe the broad definition has something to do with it, 97 00:05:54.780 --> 00:05:56.920 but let's just kind of pick it apart with some of the, 98 00:05:57.010 --> 00:06:00.920 the arguments I've heard from, uh, investors and financial advisors alike. 99 00:06:00.920 --> 00:06:03.400 And the first one that comes to mind is cost, right? You know, 100 00:06:03.400 --> 00:06:04.040 you think hedge funds, 101 00:06:04.040 --> 00:06:08.160 you think two 20 or three and 30 where you're the managers earning, you know, 102 00:06:08.180 --> 00:06:10.040 2%, 3% plus a, 103 00:06:10.160 --> 00:06:13.360 a large portion of the profits talk to us a little bit about cost with 104 00:06:13.360 --> 00:06:14.090 alternatives, 105 00:06:14.090 --> 00:06:17.920 Right? And that I think is a fair critique of, 106 00:06:18.320 --> 00:06:20.960 I dunno if I wanna call it a traditional model of alternative investing, 107 00:06:20.960 --> 00:06:24.320 maybe older model where some of this, these strategies started mm-hmm. 108 00:06:24.490 --> 00:06:26.840 Which really only offered in limited partnerships, 109 00:06:27.290 --> 00:06:29.760 which tend to have high minimums, you know, 110 00:06:29.760 --> 00:06:33.880 so only high net worth folks can qualify for them. They're illiquid. 111 00:06:34.180 --> 00:06:38.000 So capital could be tied up for something even up to 10 years opaque, 112 00:06:38.060 --> 00:06:41.880 you're not really sure what the manager is doing and, and expensive, you know, 113 00:06:41.880 --> 00:06:42.640 even, you know, 114 00:06:42.640 --> 00:06:46.240 sometimes you have like fund to funds and feeder funds and you have layers of 115 00:06:46.240 --> 00:06:49.440 fees, and then obviously those, those performance fees come into play as well. 116 00:06:50.180 --> 00:06:54.560 Um, so the good news is that that's not the only way to access alternative 117 00:06:54.560 --> 00:06:56.360 strategies. Now, you, 118 00:06:56.580 --> 00:07:00.720 the investor is able to invest in mutual funds and even ETFs that offer 119 00:07:00.950 --> 00:07:04.520 alternative strategies for the most part, liquid, transparent, you know, 120 00:07:04.520 --> 00:07:07.920 you get all the benefits of, you know, the regulatory requirements of, 121 00:07:07.940 --> 00:07:09.880 of being a fund in these structures. 122 00:07:10.580 --> 00:07:14.920 Not all strategies live well in that liquid structure. 123 00:07:15.380 --> 00:07:19.240 So, you know, you don't have quite literally that list of, you know, 124 00:07:19.240 --> 00:07:21.760 that funny list of all the things we could think of that someone might think of 125 00:07:21.760 --> 00:07:25.240 as, as a good investment. So you, you are more constrained, 126 00:07:25.300 --> 00:07:28.760 but still there's quite a bit to, to choose from. And then, you know, 127 00:07:28.760 --> 00:07:29.593 to your point, 128 00:07:29.710 --> 00:07:33.040 most of those strategies are just gonna have a very straightforward expense 129 00:07:33.170 --> 00:07:37.960 ratio on the fund. It'll be very clear what the investor has to pay on average. 130 00:07:38.340 --> 00:07:43.040 You typically see higher fees than, you know, a traditional say, 131 00:07:43.210 --> 00:07:47.320 index fund for equity or, or, or fixed income. But you, 132 00:07:47.320 --> 00:07:51.560 you're getting something different in, in a well-managed alternative strategy, 133 00:07:51.610 --> 00:07:54.280 Right? And you hit on a couple of of points there, right? 134 00:07:54.310 --> 00:07:57.040 Cost is something that always comes up. And uh, 135 00:07:57.200 --> 00:08:01.240 I understand that even in some of these ETF or mutual fund type vehicles, 136 00:08:01.270 --> 00:08:03.280 that there, there could be a higher layer of cost, 137 00:08:03.280 --> 00:08:08.160 but there are ways to get exposures to these asset classes without paying 138 00:08:08.580 --> 00:08:13.480 two and 20. Mm-hmm. Right. Um, you also mentioned liquidity, right? 139 00:08:13.600 --> 00:08:15.080 I think that gets solved for, 140 00:08:15.580 --> 00:08:18.680 if you're not using a limited partnership sort of vehicle. 141 00:08:19.300 --> 00:08:21.880 If you're using an etf, they're very, very liquid. 142 00:08:22.140 --> 00:08:24.520 So you can get your money whenever you may need it. 143 00:08:24.540 --> 00:08:27.800 But you also hit on something that I think is, I think, 144 00:08:27.800 --> 00:08:30.600 important to investors and it's transparency, right? 145 00:08:30.700 --> 00:08:32.880 The opacity of a hedge fund, traditional, 146 00:08:33.100 --> 00:08:37.360 if I can use the word traditional hedge fund tends to be a little bit, uh, 147 00:08:37.370 --> 00:08:41.280 black boxy, if you will, right? Right. And maybe investors are thinking of, 148 00:08:41.620 --> 00:08:44.160 you know, things like Bernie Madoff or things like that, right? 149 00:08:44.160 --> 00:08:45.800 Where you don't know what's going on under the hood, 150 00:08:45.940 --> 00:08:49.440 but an ETF or a mutual fund, 151 00:08:50.260 --> 00:08:54.760 an ETF specifically, you're gonna get a a lot of transparency in that. Correct? 152 00:08:55.030 --> 00:08:55.320 Yeah, 153 00:08:55.320 --> 00:08:55.900 Absolutely. 154 00:08:55.900 --> 00:08:57.080 So you know exactly what you're holding. 155 00:08:57.250 --> 00:09:00.720 Absolutely. And, and, uh, you've touched upon a point, 156 00:09:00.730 --> 00:09:03.560 which I think is very relevant, 157 00:09:03.660 --> 00:09:08.480 and thankfully there's been an evolution in the industry to kind of bring 158 00:09:08.480 --> 00:09:10.960 attention to some of that. So the, 159 00:09:11.100 --> 00:09:14.280 the idea of a global macro go anywhere, 160 00:09:14.410 --> 00:09:19.240 hedge fund a star manager who, you know, returned a thousand percent last year, 161 00:09:19.780 --> 00:09:23.640 you know, raising funds, just like in telling investors, I'm really smart. 162 00:09:23.820 --> 00:09:26.760 I'm smarter than all the rest. Invest with me. 163 00:09:26.790 --> 00:09:29.640 I'll find whatever the opportunity is globally, you know, 164 00:09:29.640 --> 00:09:32.240 regardless of country or region or asset class. Like, 165 00:09:32.360 --> 00:09:36.040 I will go find that opportunity and I will achieve a higher return. That, 166 00:09:36.740 --> 00:09:41.440 that's certainly something to probably be very careful of, right? He, 167 00:09:41.440 --> 00:09:44.920 he might wanna shy away from that. So over the last, I don't know, 168 00:09:44.920 --> 00:09:47.040 I'll say 25 years or so, there, 169 00:09:47.040 --> 00:09:49.840 there's been light kind of shown upon this idea that, you know, 170 00:09:49.840 --> 00:09:52.960 hedge funds don't hedge, you know, some hedge funds have a lot of beta, 171 00:09:52.990 --> 00:09:53.880 some hedge funds are, 172 00:09:54.020 --> 00:09:57.240 are implementing strategies you can get with liquid strategies. You know, 173 00:09:57.240 --> 00:10:00.920 this idea of hedge fund replication was, was an interesting arm of, uh, 174 00:10:00.920 --> 00:10:03.120 quantitative research. So I, I think for, 175 00:10:03.180 --> 00:10:07.000 for those who are interested and have the time as an alternative investor, you, 176 00:10:07.020 --> 00:10:10.880 you should be able to get from your manager a very specific explanation of 177 00:10:11.070 --> 00:10:13.800 exactly what's happening in the strategy, 178 00:10:14.980 --> 00:10:16.480 why it's an alternative strategy, 179 00:10:16.740 --> 00:10:19.440 why the fee being charged on that strategy makes sense, 180 00:10:19.660 --> 00:10:23.320 how it's diversifying to traditional asset classes. And really, I think at a, 181 00:10:23.320 --> 00:10:24.720 on a very basic level, 182 00:10:25.110 --> 00:10:30.040 confirm you're not paying alternative investment fees for 183 00:10:30.270 --> 00:10:32.120 just call it equity beta, right? 184 00:10:32.120 --> 00:10:36.080 Because we know equity beta is available in really high quality ETFs from 185 00:10:36.120 --> 00:10:38.840 Vanguard for probably three basis points. Yeah. 186 00:10:38.840 --> 00:10:42.880 I think that's a very important point, right? And, and we're firm believers on, 187 00:10:42.940 --> 00:10:47.440 on, on transparency. And if you're using alternatives correctly, 188 00:10:47.540 --> 00:10:49.000 if I'm understanding what you're saying, 189 00:10:49.260 --> 00:10:52.240 and it is a diversification play to ensure that you're getting that 190 00:10:52.240 --> 00:10:55.960 diversification, you need that level of transparency. And a lot of times, and, 191 00:10:55.960 --> 00:10:58.400 and we've read about this and talked about this in the past, 192 00:10:58.470 --> 00:11:02.200 sometimes these more opaque type strategies, you know, 193 00:11:02.200 --> 00:11:03.840 if equities are doing really, really well, 194 00:11:04.070 --> 00:11:07.920 they might be very correlated to equities at that very given point in time. 195 00:11:07.920 --> 00:11:12.400 And then the whole story of diversification kind of goes out the window, 196 00:11:12.400 --> 00:11:13.233 doesn't it? 197 00:11:13.240 --> 00:11:14.073 A hundred percent. 198 00:11:14.260 --> 00:11:19.200 And I think financial media hasn't helped in that education, right? 199 00:11:19.500 --> 00:11:23.920 So there's been stretches of time when equity markets were doing very well, 200 00:11:24.100 --> 00:11:27.800 and hedge funds haven't been, and, and you know, the storyline there is, 201 00:11:27.800 --> 00:11:31.280 you know, hedge funds failed. And well, if hedge fund, 202 00:11:31.500 --> 00:11:35.600 if a real alternative strategy has zero beta to the equity market and the equity 203 00:11:35.600 --> 00:11:36.920 equity market's doing well, 204 00:11:37.720 --> 00:11:42.280 I wouldn't necessarily expect to see those hedge funds up just because, 205 00:11:42.450 --> 00:11:43.640 Right? If, if the, 206 00:11:43.780 --> 00:11:47.480 if the alternative investment that you're using for diversification is zigging, 207 00:11:47.480 --> 00:11:49.240 while your equities are zigging, you 208 00:11:49.240 --> 00:11:50.280 Should ask questions. You should ask 209 00:11:50.440 --> 00:11:53.200 Questions. Absolutely. Absolutely. Well, let, 210 00:11:53.200 --> 00:11:56.000 let's talk a little bit about the performance, uh, of, 211 00:11:56.900 --> 00:11:59.720 of alternative investing in relation to portfolio. 212 00:11:59.860 --> 00:12:03.120 And you alluded to this in the beginning when, uh, you mentioned that, you know, 213 00:12:03.120 --> 00:12:07.880 sometimes stocks and bonds do behave alike. Mm-hmm. And we saw that in 2022, 214 00:12:07.880 --> 00:12:11.840 right? Yeah. Both had, uh, extremely volatile tough year, 215 00:12:12.350 --> 00:12:15.200 both ended up in, in the red. Um, 216 00:12:16.380 --> 00:12:18.360 how did alternatives do, or what, 217 00:12:18.360 --> 00:12:21.360 how did alternative asset classes perform during that timeframe? 218 00:12:21.860 --> 00:12:25.680 Uh, certain of them did reasonably well. So, uh, I'll, 219 00:12:25.680 --> 00:12:28.480 I'll maybe run through a few examples of, uh, 220 00:12:28.480 --> 00:12:31.900 strategies that are alternative. Uh, 221 00:12:31.900 --> 00:12:35.060 our diversified alternative investment approach would include. 222 00:12:35.280 --> 00:12:39.420 One of those is something called, uh, manage futures or trend following, or, 223 00:12:39.880 --> 00:12:43.500 you know, if you want to think about, you know, quantitative factor investing, 224 00:12:43.500 --> 00:12:48.020 which you know, is what we think about a lot, you can, you can consider that, 225 00:12:48.640 --> 00:12:51.660 um, longitudinal momentum or momentum over time. 226 00:12:51.920 --> 00:12:56.900 And this is really just a strategy that takes advantage of investing in futures 227 00:12:56.900 --> 00:13:00.660 and forwards. So derivatives that'll cover, you know, commodities, 228 00:13:00.760 --> 00:13:05.460 equity markets, fixed income markets. Uh, and in the simplest sense, 229 00:13:06.200 --> 00:13:10.100 if a trend in an asset class is up, 230 00:13:10.590 --> 00:13:14.900 especially over, you know, short, medium, and long-term time periods, 231 00:13:15.080 --> 00:13:18.580 the managed future strategy would essentially be long that exposure. 232 00:13:19.440 --> 00:13:22.380 And if a trend is down over, you know, 233 00:13:22.670 --> 00:13:27.500 short and long horizon managed future strategy would be short, uh, 234 00:13:27.500 --> 00:13:30.780 that asset class or commodity. So in 2022, 235 00:13:31.530 --> 00:13:35.100 when everything felt like it was going down and continuing down, 236 00:13:35.720 --> 00:13:39.820 the managed future strategy was able to reposition and be short, 237 00:13:40.290 --> 00:13:45.220 many of those strategies that were showing persistent negative price signals. 238 00:13:45.840 --> 00:13:49.580 So in 2022 a year when both equity and fixed income markets globally, 239 00:13:50.090 --> 00:13:51.900 generally speaking on a diversified basis, 240 00:13:52.010 --> 00:13:54.420 were down and very positively correlated, 241 00:13:54.730 --> 00:13:59.460 something like a managed future strategy was up, uh, strongly and, 242 00:13:59.460 --> 00:14:01.260 and very diversifying. That's 243 00:14:01.260 --> 00:14:01.740 Really interesting. 244 00:14:01.740 --> 00:14:06.740 And so would you'd have the same expectation if both stocks and bonds were 245 00:14:06.740 --> 00:14:09.580 up, that the mayor's future strategy might be down, or does it depend? 246 00:14:10.160 --> 00:14:10.993 It depends. 247 00:14:11.080 --> 00:14:14.900 So it depends on the strength of those signals and the persistence of those 248 00:14:14.900 --> 00:14:19.100 trends. So in, in certain stable, neutral, slow, 249 00:14:20.090 --> 00:14:24.900 generally up markets, those signals may be too choppy to, to make use of. 250 00:14:25.160 --> 00:14:28.940 And maybe if there's conflicting signals, say, you know, 251 00:14:29.560 --> 00:14:32.900 up in the short term, down strongly in the medium term, 252 00:14:33.000 --> 00:14:35.460 up slightly in the long term, you know, 253 00:14:35.460 --> 00:14:38.020 you can't always make sense of those quantitative signals and, 254 00:14:38.020 --> 00:14:42.260 and you might have no exposure in that type of underlying market or commodity or 255 00:14:42.260 --> 00:14:43.000 asset class. 256 00:14:43.000 --> 00:14:46.540 So that'll conclude part one of our, uh, conversation alternative investments. 257 00:14:46.610 --> 00:14:49.300 Phil, thanks for joining us. And for our listeners, uh, 258 00:14:49.300 --> 00:14:50.900 if you're looking for additional information, 259 00:14:51.160 --> 00:14:54.920 please feel free to visit our website, www.symmetrypartners.com, 260 00:14:55.260 --> 00:14:58.400 and to access more of the Unfiltered Finance podcasts. 261 00:14:58.580 --> 00:15:01.800 Please feel free to find us wherever you're getting your podcast today. 262 00:15:02.020 --> 00:15:03.480 Be sure to stay tuned for part two. 263 00:15:03.840 --> 00:15:08.320 Symmetry Partners LLC is an investment advisor firm registered with the 264 00:15:08.320 --> 00:15:10.080 Securities and Exchange Commission. 265 00:15:10.420 --> 00:15:15.120 The firm only transacts business in states where it is properly registered or 266 00:15:15.560 --> 00:15:18.600 excluded or exempted from registration requirements. 267 00:15:19.040 --> 00:15:23.680 Registration of an investment advisor does not imply any specific level of skill 268 00:15:23.700 --> 00:15:24.533 or training, 269 00:15:24.660 --> 00:15:28.520 and does not constitute an endorsement of the firm by the commission. 270 00:15:28.860 --> 00:15:32.000 No one should assume that future performance of any specific investment, 271 00:15:32.210 --> 00:15:34.480 investment strategy, product, 272 00:15:34.980 --> 00:15:39.240 or non-investment related content made reference to directly or indirectly in 273 00:15:39.240 --> 00:15:43.690 this material will be profitable. As with any investment strategy, 274 00:15:43.940 --> 00:15:48.890 there is the possibility of profitability as well as loss due to various 275 00:15:48.890 --> 00:15:53.370 factors including changing market conditions and or applicable laws. 276 00:15:54.070 --> 00:15:58.450 The content may not be reflective of current opinions or positions. 277 00:15:58.790 --> 00:16:02.890 Please note the material is provided for educational and background use only. 278 00:16:02.970 --> 00:16:03.670 Moreover, 279 00:16:03.670 --> 00:16:07.810 you should not assume that any discussion or information contained in this 280 00:16:08.010 --> 00:16:12.050 material serves as the receipt of or as a substitute for 281 00:16:12.370 --> 00:16:14.490 personalized investment advice.
Stories of historically atypical interest rate hikes, and multiple bank failures, concerned many advisors in the early days of 2023. Join us for the second (and final) part of our discussion with Casey Dylan, CIMA®, Consultant, and the host of Unfiltered Finance, Tom Romano, Head of Strategic Relationships, as we discuss some of the more prominent news events, and their effects, during Q1 of this year. If you have any questions or would like more information, reach out to us at https://symmetrypartners.com/contact-us/ You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice. Transcript: 0 00:00:01.900 --> 00:00:07.800 Let's let's 1 00:00:07.600 --> 00:00:10.600 shift a little bit to some of the headlines that we saw because there was 2 00:00:10.600 --> 00:00:15.100 there's quite a bit. It felt like it was a very long quarter. Yeah, and you 3 00:00:14.200 --> 00:00:17.700 know as we did see some positive results, but can we 4 00:00:17.600 --> 00:00:21.300 talk a little bit about just in general some of the headlines that we saw and 5 00:00:20.600 --> 00:00:25.000 then specifically I want to take a dive into inflation 6 00:00:23.600 --> 00:00:26.700 and then the banks because that was 7 00:00:26.700 --> 00:00:30.200 a really big headline. We got a lot of a lot of calls regarding that look 8 00:00:29.800 --> 00:00:31.200 there there were 9 00:00:33.300 --> 00:00:35.900 Striking headlines around things like 10 00:00:36.800 --> 00:00:40.800 shocks to sort of economic surprises on 11 00:00:42.000 --> 00:00:45.300 job numbers to what was going on with the FED 12 00:00:45.100 --> 00:00:48.400 to Banks not just near the United States but 13 00:00:48.100 --> 00:00:51.600 internationally and yet what you see is kind 14 00:00:51.400 --> 00:00:55.000 of, you know markets do what they do in in any given day. They respond 15 00:00:54.600 --> 00:00:57.900 to that but they are quick to incorporate the news 16 00:00:57.600 --> 00:01:01.300 and get back to pricing on other kinds of things. And 17 00:01:00.600 --> 00:01:05.200 so I would say as a micro dosage of 18 00:01:04.600 --> 00:01:08.400 what the ride is for investors. It's 19 00:01:07.800 --> 00:01:11.000 this it's if you can sort of 20 00:01:11.000 --> 00:01:14.400 take in stride that there are going to be lots of headlines and 21 00:01:14.100 --> 00:01:17.500 that there may be short-term Market reactions headlines over the 22 00:01:17.400 --> 00:01:21.000 longer term that kind of gets filtered out on 23 00:01:20.400 --> 00:01:23.700 the upside and downside right and what you get back 24 00:01:23.400 --> 00:01:26.600 to is. Hey one of my paying for right I'm paying for some kind 25 00:01:26.500 --> 00:01:30.100 of future earnings or I'm lending with some expectation that 26 00:01:29.800 --> 00:01:33.800 I'm going to get paid and income stream based on that and that tends 27 00:01:33.000 --> 00:01:36.700 to drown out the short term noise and now 28 00:01:36.400 --> 00:01:40.200 you're back to factors of how much did I pay did I 29 00:01:40.100 --> 00:01:41.700 get my earnings did I not is 30 00:01:42.000 --> 00:01:45.600 We're upside to that right and markets are kind of a weighing machine 31 00:01:45.500 --> 00:01:48.900 in that sense. Right? They're weighing those earnings. They're weighing those 32 00:01:48.900 --> 00:01:52.200 cash flows in the future. Right? So I would say 33 00:01:52.000 --> 00:01:55.900 lots of lots of news lots of scurrying 34 00:01:55.000 --> 00:01:56.300 around the news. 35 00:01:57.100 --> 00:02:01.000 You know at the end of the day we're sort of where we started one 36 00:02:00.100 --> 00:02:03.200 of the headlines and one of the things that we've been getting a lot 37 00:02:03.200 --> 00:02:06.300 of questions about I'm talking about is is inflation. I know we've spent some time 38 00:02:06.200 --> 00:02:09.600 already today talking about that. We did 39 00:02:09.400 --> 00:02:13.500 see US inflation ease a little bit but there 40 00:02:13.100 --> 00:02:16.300 might be some pressures coming up. So if you don't mind commenting on that, that 41 00:02:16.100 --> 00:02:19.200 would be great. Yeah, you bet. I think it's helpful to kind of 42 00:02:19.200 --> 00:02:21.200 take a step back and look at 43 00:02:22.200 --> 00:02:25.700 With the onset of the pandemic right everything kind 44 00:02:25.400 --> 00:02:28.800 of shut down and then when we went to reopen things back up 45 00:02:28.600 --> 00:02:32.000 factories didn't necessarily open up, especially in 46 00:02:31.900 --> 00:02:36.600 places like China right for some time. Right and the the 47 00:02:35.300 --> 00:02:39.700 supply chain was suddenly 48 00:02:38.300 --> 00:02:41.500 constrained and so we 49 00:02:41.300 --> 00:02:44.300 had a hard time getting Goods, right but there was a lot 50 00:02:44.300 --> 00:02:48.400 of demand because we were at home, you know person stuff and so 51 00:02:48.200 --> 00:02:51.700 as you have demand shoot up but supplies constrained 52 00:02:51.200 --> 00:02:54.500 price shoots up, right? That's just sort of Economics 101 53 00:02:54.200 --> 00:02:57.400 and we saw that and at the time, you know, the Fed was quick 54 00:02:57.200 --> 00:03:00.500 to say, hey, look we think this is transitory think eventually things 55 00:03:00.200 --> 00:03:03.700 settle down we get manufacturing back online. We work 56 00:03:03.400 --> 00:03:06.700 out the bugaboos associated with the supply chain 57 00:03:06.500 --> 00:03:09.600 and those the price pressure doesn't inflationary pressure should come back 58 00:03:09.500 --> 00:03:13.100 down over time and in large respect 59 00:03:12.800 --> 00:03:16.500 this seems to have proven that out right? 60 00:03:15.800 --> 00:03:19.100 I think what really got the fed's 61 00:03:18.800 --> 00:03:21.800 attention and started them down the path. 62 00:03:22.200 --> 00:03:26.100 Of really dramatically raising rates was 63 00:03:25.400 --> 00:03:28.700 the fact that well while goods were 64 00:03:28.500 --> 00:03:31.800 sort of starting to come back down. It was 65 00:03:31.600 --> 00:03:34.900 inflation associated with services that was going up. And 66 00:03:34.600 --> 00:03:37.800 in fact, what we've seen is good coming down 67 00:03:37.600 --> 00:03:40.700 the the overall inflation of 68 00:03:40.600 --> 00:03:44.500 the CPI number or that PC number coming down from its 69 00:03:44.100 --> 00:03:48.100 highs last summer, but while that's been happening underneath 70 00:03:48.900 --> 00:03:52.300 Inflation associated with Services has continued to 71 00:03:52.100 --> 00:03:52.600 go up. 72 00:03:53.200 --> 00:03:56.500 And so even if we're at a point now where the latest inflationary readings 73 00:03:56.200 --> 00:03:58.100 are half of what they were. 74 00:03:58.900 --> 00:04:00.400 Just a year ago this time. 75 00:04:01.600 --> 00:04:05.500 Services inflation is up and continuing to go the wrong direction. Right? And 76 00:04:05.200 --> 00:04:08.400 so the the FED has said hey, look 77 00:04:08.200 --> 00:04:11.400 first of all, we don't look at kind of the overall CPI number. We don't 78 00:04:11.300 --> 00:04:15.500 that's not how we measure it. We're looking at these underlying statuents and 79 00:04:14.900 --> 00:04:18.600 they prefer the the pce as 80 00:04:18.200 --> 00:04:21.300 opposed to CPI, but they're all just kind of ways of measuring, you know 81 00:04:21.300 --> 00:04:24.900 inflation in the economy. And so 82 00:04:24.400 --> 00:04:27.400 one of the ways that we've looked at 83 00:04:27.400 --> 00:04:30.600 this for a very long time is core CPI, right? We're stripping out the 84 00:04:30.400 --> 00:04:34.100 volatility of energy and food because those tend to move around so much and then 85 00:04:33.900 --> 00:04:37.300 you know, we've been introduced to this concept that not 86 00:04:37.000 --> 00:04:40.500 only is it core CPI, but it's core Goods CPI and 87 00:04:40.200 --> 00:04:44.100 course Services CPI. And so the FED now is very focused 88 00:04:43.600 --> 00:04:48.000 on core Services looking at Services minus 89 00:04:47.000 --> 00:04:50.400 services for energy and food and what 90 00:04:50.100 --> 00:04:54.000 we see are again our sort of troubling Trends 91 00:04:53.100 --> 00:04:56.500 around services and housing 92 00:04:56.100 --> 00:04:59.400 in terms of the impact that that 93 00:04:59.200 --> 00:05:01.400 has now pushing. 94 00:05:01.600 --> 00:05:04.700 Up or holding up those inflation numbers and if they 95 00:05:04.600 --> 00:05:08.100 continue on the wrong direction, that's what the fed's concern about and the 96 00:05:07.600 --> 00:05:11.500 the whammy that potentially comes 97 00:05:10.600 --> 00:05:13.900 from if Services costs go 98 00:05:13.700 --> 00:05:16.800 up at some point that starts to impact Goods costs as 99 00:05:16.700 --> 00:05:20.600 well. Right? And so if you look at this where the the white 100 00:05:19.800 --> 00:05:23.200 bars are coming down, right the the concern 101 00:05:22.800 --> 00:05:26.400 is that Services cost the cost of producing goods 102 00:05:25.800 --> 00:05:29.200 and delivering them right is going to impact the the cost 103 00:05:29.000 --> 00:05:32.500 that gets passed through and goods start to come back up and there's sort 104 00:05:32.100 --> 00:05:35.500 of a double double impact of inflation if 105 00:05:35.400 --> 00:05:38.700 you will and that's what I think the FED is incredibly concerned about 106 00:05:38.500 --> 00:05:41.600 and and why they say look we're gonna ratchet rates up 107 00:05:41.600 --> 00:05:45.700 and we're gonna keep them up there long enough until we're convinced that we've we've 108 00:05:44.800 --> 00:05:48.000 stamped this out and brought it back down to a level that's 109 00:05:47.800 --> 00:05:51.000 livable because the last thing you want to do is take your foot off the pedal. 110 00:05:51.800 --> 00:05:55.300 And then suddenly have a Resurgence of these 111 00:05:55.000 --> 00:05:58.300 inflation Air Forces which that we've saw 112 00:05:58.000 --> 00:06:01.400 in the 70s, right if you think about what we've we've 113 00:06:01.200 --> 00:06:04.800 seen this show before the early 70s the FED raising 114 00:06:04.500 --> 00:06:08.400 rates taking their their foot off the brake, I guess and then 115 00:06:08.000 --> 00:06:11.900 Resurgence of inflation in the late 70s stagflationary 116 00:06:11.200 --> 00:06:14.500 environment and it took the volcker FED in the 80s 117 00:06:14.200 --> 00:06:17.800 taken rates to places. We'd never seen until recently right to 118 00:06:17.400 --> 00:06:20.700 to stamp that out. And so I think the FED 119 00:06:20.500 --> 00:06:24.000 is taking a lesson from history and said we don't want to repeat those mistakes. 120 00:06:23.600 --> 00:06:27.000 We're gonna stay on this until we're sure right absolutely and 121 00:06:26.600 --> 00:06:30.200 speaking of the fed and it says been a very fast pace 122 00:06:29.600 --> 00:06:32.800 in terms of Ray hikes. Yeah 123 00:06:32.600 --> 00:06:36.200 historically exactly exactly so 124 00:06:35.800 --> 00:06:40.400 they they have meant business and I 125 00:06:39.500 --> 00:06:44.100 think Market participants repeatedly made 126 00:06:43.200 --> 00:06:47.000 the mistake of not taking 127 00:06:46.700 --> 00:06:48.200 the FED at its word. 128 00:06:48.700 --> 00:06:51.900 Right and and equities markets have 129 00:06:51.700 --> 00:06:54.900 definitely gotten well ahead of the FED particularly at 130 00:06:54.700 --> 00:06:58.600 the end of last year and maybe potentially the beginning of this year bond markets 131 00:06:58.200 --> 00:07:01.500 now are pricing that the FED 132 00:07:01.200 --> 00:07:05.000 will pull back and yet the FED is saying no. No, we're we're 133 00:07:04.600 --> 00:07:08.600 gonna raise rates and we're gonna keep them there longer and that's 134 00:07:07.600 --> 00:07:10.900 you know, we have no expectation that we would 135 00:07:10.800 --> 00:07:14.300 pull back from that anytime this year. Right? So the market 136 00:07:13.800 --> 00:07:17.000 participants are our forward looking forward pricing, but 137 00:07:16.900 --> 00:07:20.500 they seem to not be taking the FED at its word. I think that's pulled 138 00:07:20.100 --> 00:07:23.800 back a little bit in February and March we started to 139 00:07:23.500 --> 00:07:25.400 see Market participants kind of get their arms around. 140 00:07:26.300 --> 00:07:29.400 Actually be coming and we see you know 141 00:07:29.400 --> 00:07:33.400 investors like hedge funds really sort of looking at volatility 142 00:07:32.400 --> 00:07:36.000 Bets with the expectation that hey this 143 00:07:35.600 --> 00:07:39.300 may get a little more turbulent before it gets better. Right? So 144 00:07:39.000 --> 00:07:44.200 there's a lot of sort of now Market positioning 145 00:07:43.200 --> 00:07:46.500 for the fed me 146 00:07:46.300 --> 00:07:49.800 actually do this and we may see an economic pullback, 147 00:07:49.300 --> 00:07:52.800 but that may not necessarily mean the FED response to 148 00:07:52.800 --> 00:07:56.500 it. Right? I think again as we look forward the 149 00:07:55.900 --> 00:08:00.100 the way that I would think about this as an investor as a the 150 00:07:59.200 --> 00:08:03.000 stock market is not the economy, right? The 151 00:08:02.400 --> 00:08:06.200 markets are definitely driven by 152 00:08:05.700 --> 00:08:09.400 interest rates and fed movement 153 00:08:09.000 --> 00:08:10.200 and yet 154 00:08:12.500 --> 00:08:16.400 Much like headlines the markets take that 155 00:08:16.200 --> 00:08:20.200 news and stride it gets built into prices and there 156 00:08:19.800 --> 00:08:23.000 may be short-term volatility associated with this but if you look out over 157 00:08:22.800 --> 00:08:26.300 time, you know, what what do we see going back to 158 00:08:26.000 --> 00:08:29.200 you know, as long as we have records 1926 and Beyond 159 00:08:29.000 --> 00:08:32.600 right Imperial heads when interest rates 160 00:08:32.300 --> 00:08:36.300 go up interest rates go down inflationary environments disinflationary environments 161 00:08:35.900 --> 00:08:40.100 recessionary environments across all of those things markets 162 00:08:38.900 --> 00:08:42.400 tend to produce a return 163 00:08:42.100 --> 00:08:45.700 of you know, seven to ten percent average annual 164 00:08:45.400 --> 00:08:49.000 you don't get that every year but you get on average over time and it's 165 00:08:48.700 --> 00:08:52.200 paying you for those cash flows so much like, 166 00:08:51.900 --> 00:08:55.100 you know, the all the comments that we've had prior to 167 00:08:54.900 --> 00:08:55.200 this. 168 00:08:56.500 --> 00:08:59.900 As investors, it's important to sort of take in its Stride 169 00:08:59.800 --> 00:09:02.900 Right put some blinders on there may be volatility associated with 170 00:09:02.800 --> 00:09:06.400 this ride. You will get wet on this ride. Right but we 171 00:09:05.800 --> 00:09:08.900 promise you'll come out in the other side, right and when you do, 172 00:09:08.800 --> 00:09:11.900 you know, the markets will get back to doing what they 173 00:09:11.800 --> 00:09:15.000 do, which is you know, paying you for putting Capital to work 174 00:09:15.000 --> 00:09:18.400 in there. So so that I would say again we watch these 175 00:09:18.100 --> 00:09:21.300 things. We we sort of especially working 176 00:09:21.100 --> 00:09:24.200 in the industry. It's a incumbent upon 177 00:09:24.100 --> 00:09:27.200 us to have some product prognostication about where this could 178 00:09:27.100 --> 00:09:30.800 be headed at the end of the day what we think matters very little it's 179 00:09:30.100 --> 00:09:33.300 what actually happens and we build portfolios to 180 00:09:33.100 --> 00:09:36.600 be as robust as we can because Anything Could Happen. Yeah, that's that's fantastic. 181 00:09:36.100 --> 00:09:39.300 And that's a really good way of putting it. We don't know what's 182 00:09:39.100 --> 00:09:40.000 happening, but we're 183 00:09:41.000 --> 00:09:45.000 We're invested in a way to endure what's to come? Right? Exactly. So 184 00:09:44.100 --> 00:09:47.500 one of the headlines that we we spent 185 00:09:47.300 --> 00:09:50.700 a lot of time talking to advisors and investors alike is the 186 00:09:50.600 --> 00:09:54.200 the notion of the banks and we saw from Silicon Valley 187 00:09:54.000 --> 00:09:56.100 and First Republic and a few others. 188 00:09:57.000 --> 00:10:00.200 I think it's a it's a risk reward story. But I also think 189 00:10:00.000 --> 00:10:04.400 this is the diversification story there. I'd love to hear your thoughts. Yeah. Well, yes, 190 00:10:03.700 --> 00:10:05.500 I think 191 00:10:06.600 --> 00:10:08.300 the the situation with the banks 192 00:10:09.300 --> 00:10:13.300 has a lot to do with other stuff, right? Yes, the 193 00:10:12.600 --> 00:10:15.800 the banks were quick to come out and say well this 194 00:10:15.600 --> 00:10:18.800 is a consequence of how rapidly the FED is 195 00:10:18.600 --> 00:10:22.300 raised interest rates. And this is potentially impaired the 196 00:10:22.200 --> 00:10:25.300 asset base of these Banks and there's no question right over the 197 00:10:25.200 --> 00:10:28.600 course of 2022. You saw the asset base 198 00:10:28.200 --> 00:10:31.500 drop significantly across banks in 199 00:10:31.400 --> 00:10:34.800 general because right so, you know first principles, 200 00:10:34.400 --> 00:10:37.500 what is a bank do they take money in when they 201 00:10:37.500 --> 00:10:41.100 take that money in as a deposit? It's a liability to them. Right? 202 00:10:40.500 --> 00:10:43.600 So they take that liability and they got to go match it up 203 00:10:43.500 --> 00:10:47.000 with an asset and they do that either by making loans and if 204 00:10:46.900 --> 00:10:50.800 they can't make enough loans, then they got to go buy bonds treasuries. 205 00:10:50.300 --> 00:10:53.800 For instance, right? Yes. That's the old against the 206 00:10:53.300 --> 00:10:56.600 liabilities. So if you if you've got a bank that 207 00:10:56.300 --> 00:10:59.600 has a bunch of bonds that they're holding as an asset 208 00:10:59.300 --> 00:11:03.000 and the value of those bonds dramatically drop. They've lost 209 00:11:02.600 --> 00:11:06.000 a lot of money against the liabilities that 210 00:11:05.900 --> 00:11:08.800 are still where they are, right and 211 00:11:09.200 --> 00:11:13.400 So that's that's the the challenge for 212 00:11:12.900 --> 00:11:13.900 the financial. 213 00:11:15.800 --> 00:11:19.200 sector and it no surprise the financial sector 214 00:11:18.900 --> 00:11:22.600 was sort of the worst performing sector for the first quarter in large 215 00:11:22.400 --> 00:11:23.700 part because of these Dynamics 216 00:11:24.800 --> 00:11:28.300 It was a part of what happened at svb. It was a catalyst 217 00:11:27.800 --> 00:11:31.300 for the bank run that followed but the bank 218 00:11:31.000 --> 00:11:34.500 run followed because of the unique dynamics of 219 00:11:34.400 --> 00:11:38.100 svb, correct? Right and the the failure 220 00:11:37.500 --> 00:11:40.900 of silvergate was 221 00:11:40.500 --> 00:11:44.200 function of crypto and had as 222 00:11:43.800 --> 00:11:47.500 much to do with FTX the failure of FTX, which 223 00:11:47.200 --> 00:11:50.300 was a Ponzi scheme, right? So you have 224 00:11:50.200 --> 00:11:54.300 a lot of kind of very unique situations Signature Bank, 225 00:11:54.100 --> 00:11:58.000 very crypto focused right First Republic the 226 00:11:57.100 --> 00:12:00.900 very very heavily on 227 00:12:00.200 --> 00:12:04.200 the asset side writing interest only mortgages 228 00:12:03.400 --> 00:12:06.700 right in to a degree that other 229 00:12:06.500 --> 00:12:10.500 Banks didn't have some unique characteristics of these Banks which cause 230 00:12:09.900 --> 00:12:13.600 them to be sort of the canary in the coal mine if you will right 231 00:12:12.900 --> 00:12:16.100 and Credit Suisse just 232 00:12:18.000 --> 00:12:21.100 Has struggled for years, right? And this was 233 00:12:21.000 --> 00:12:24.500 just the nail in the coffin form. The concern is are they 234 00:12:24.200 --> 00:12:27.600 the canary in the coal mine or are they just being punished because 235 00:12:27.400 --> 00:12:29.900 the malfeasance and poor management? 236 00:12:31.000 --> 00:12:34.700 And I think the answer is a bit of both, right? So the the 237 00:12:34.400 --> 00:12:38.400 fed and other institutions got 238 00:12:38.000 --> 00:12:41.900 together and said, hey, we got a backstop this thing to keep any contagion 239 00:12:41.300 --> 00:12:45.300 from spreading and assure depositors that 240 00:12:45.200 --> 00:12:48.600 they're deposits are safe, even if the value of the bond the assets 241 00:12:48.200 --> 00:12:51.600 that these banks are holding have dropped down. We the the government 242 00:12:51.200 --> 00:12:54.300 are going to step in and and backstop not just 243 00:12:54.200 --> 00:12:57.300 your 250,000 but everything right that was 244 00:12:57.300 --> 00:13:00.500 the strong message that they sent and that sort of seem to 245 00:13:00.300 --> 00:13:03.600 work, right it calm markets. Thanks for still being sort of reviewed and 246 00:13:03.500 --> 00:13:06.500 I would say look there's there could be more to this story. There could be 247 00:13:06.500 --> 00:13:09.800 other shoes to drop in time. Right? So you'll continue 248 00:13:09.500 --> 00:13:12.600 to watch it. I think as in as a person 249 00:13:12.500 --> 00:13:15.600 who has money at a bank, right am I rushing to pull my money 250 00:13:15.500 --> 00:13:18.800 out? No, I'm fairly confident that you know, 251 00:13:18.800 --> 00:13:21.500 we're we're gonna survive this right now. 252 00:13:22.400 --> 00:13:26.100 Did I say the same thing in 2008 when when I 253 00:13:25.700 --> 00:13:28.900 really thought hey, man, the whole financial system could go down. 254 00:13:28.800 --> 00:13:32.300 These Banks had collapse in Mass. I don't think we're anywhere 255 00:13:31.900 --> 00:13:35.300 near that I think banks are much healthier than than they 256 00:13:35.100 --> 00:13:39.900 were then and I think the issues that they have have to do with treasuries and 257 00:13:39.800 --> 00:13:43.200 the FED has said look, we're gonna step in and provide as much liquidity 258 00:13:42.800 --> 00:13:46.400 as necessary for the banks. So this becomes 259 00:13:45.900 --> 00:13:49.700 a potential issue down the down the pike, right? If 260 00:13:49.200 --> 00:13:52.700 in fact the FED has to step in and provide the 261 00:13:52.300 --> 00:13:55.700 Surplus liquidity to the treasury market, 262 00:13:55.500 --> 00:13:56.800 why might they have to do that? 263 00:13:57.800 --> 00:14:01.000 Well, if for some reason we default on the debt ceiling for instance, 264 00:14:00.800 --> 00:14:04.200 right that could be very problematic and the FED 265 00:14:04.000 --> 00:14:07.200 might have to take aggressive steps in a way that we've 266 00:14:07.100 --> 00:14:11.300 never seen before to step in and try and provide Surplus liquidity 267 00:14:10.700 --> 00:14:14.000 specifically to the treasury market. That would 268 00:14:13.800 --> 00:14:17.300 be a complete roll reversal of where we've been right? That's that's 269 00:14:17.000 --> 00:14:20.900 taking the quantitative tightening off the table and now we're back to quantities, right 270 00:14:20.400 --> 00:14:23.600 so so could things come down the bike that 271 00:14:23.500 --> 00:14:26.900 would cause a, you know, real dislocation to 272 00:14:26.500 --> 00:14:29.900 banking to markets sure it could happen 273 00:14:29.700 --> 00:14:32.900 again. Who knows right? Everybody's got a crystal 274 00:14:32.800 --> 00:14:33.100 ball. 275 00:14:34.100 --> 00:14:37.700 Nobody's usually right spot on about what's gonna happen, but 276 00:14:37.200 --> 00:14:40.400 it's a potential risk that you want. Hey, look this might happen, but 277 00:14:40.300 --> 00:14:41.000 we'll survive. 278 00:14:41.600 --> 00:14:45.200 Yeah, no, absolutely. And as you said before, I mean, it seems like the markets 279 00:14:44.600 --> 00:14:45.300 have. 280 00:14:46.100 --> 00:14:49.600 sort of shrugged off those headlines because we've seen some pretty decent returns 281 00:14:49.100 --> 00:14:52.000 and in q1, but I think you know in 282 00:14:53.200 --> 00:14:56.500 Let's let's go back to the text docs, right? I mean that's what's really 283 00:14:56.300 --> 00:14:57.800 leading the charge here, isn't it? 284 00:14:58.800 --> 00:14:59.000 well 285 00:15:00.000 --> 00:15:01.800 I think there are a lot of Dynamics at play. 286 00:15:02.400 --> 00:15:06.000 But underpinning all of that is risk and reward right? 287 00:15:05.500 --> 00:15:08.800 I mean that at the end of the day, it's that simple 288 00:15:08.600 --> 00:15:11.700 what are the risks and what are the rewards and how much am I 289 00:15:11.600 --> 00:15:15.400 willing to pay for those rewards? And am I underestimating those 290 00:15:15.200 --> 00:15:18.800 risks? Right? So everything is sort of a function of those things 291 00:15:18.600 --> 00:15:22.000 and so I would say look in equities. The the 292 00:15:21.600 --> 00:15:25.200 tech stocks is a risk, right? There's there's certainly reward 293 00:15:25.000 --> 00:15:28.400 there's upside there. We're seeing it in terms of markets, but I think there's risk 294 00:15:28.100 --> 00:15:31.800 right in fixed income. There's potential 295 00:15:31.200 --> 00:15:34.600 risk associated with the yield curve 296 00:15:34.400 --> 00:15:39.000 and what happens with the fed and raising rates in areas, 297 00:15:38.100 --> 00:15:41.600 like financials. There's risks 298 00:15:41.200 --> 00:15:44.800 right associated with that. I think the key 299 00:15:44.500 --> 00:15:47.800 takeaway for that for anybody looking at 300 00:15:47.600 --> 00:15:48.300 it is 301 00:15:49.200 --> 00:15:52.500 Broad diversification not just in 302 00:15:52.200 --> 00:15:55.600 one geography not just inequities not just in fixed income 303 00:15:55.300 --> 00:15:58.300 across factors as much as you 304 00:15:58.300 --> 00:16:01.800 can broadly diversify the more robust your portfolio is to 305 00:16:01.300 --> 00:16:04.200 stand up to any of those unique risks. 306 00:16:04.900 --> 00:16:06.800 And so I would I would say. 307 00:16:08.200 --> 00:16:12.100 That that would be where I would encourage investors to 308 00:16:11.700 --> 00:16:13.100 sort of keep their heads. 309 00:16:14.100 --> 00:16:17.400 I it's always challenging when you have tech stocks doing 310 00:16:17.300 --> 00:16:20.800 as well as they are because they drive 311 00:16:20.400 --> 00:16:23.700 markets you want to be there. You want to participate in it. 312 00:16:23.500 --> 00:16:27.400 There's a a benefit socially to 313 00:16:26.700 --> 00:16:30.100 holding names that people are familiar 314 00:16:29.700 --> 00:16:33.000 with and talk about right if you think about the 315 00:16:32.700 --> 00:16:36.000 fomo experience that people have 316 00:16:35.700 --> 00:16:38.900 missing if you're missing out, right? Yeah, my next 317 00:16:38.900 --> 00:16:41.900 door neighbor. He's he's got Google and apple and they're tear on 318 00:16:41.900 --> 00:16:45.800 the cover off the ball. Never mind. What happened last year right now, I gotta you 319 00:16:45.100 --> 00:16:48.500 know, keep up with the Joneses on that water cooler. Alpha 320 00:16:48.100 --> 00:16:51.600 is what I call that. Yeah water cooler Alpha and I would just 321 00:16:51.300 --> 00:16:54.900 say hey look at the end of the day. We're people right if we 322 00:16:54.600 --> 00:16:57.800 were autonomous, you know Vulcans. This would just be 323 00:16:57.700 --> 00:17:01.000 economics and math and we can figure it all out reality is 324 00:17:00.900 --> 00:17:04.700 we're people and you got to build a portfolio you can live with right as 325 00:17:04.200 --> 00:17:07.300 our as our good friend Phil Henry says, you 326 00:17:07.200 --> 00:17:10.700 got to build a portfolio you can live with and then live with it, right? I think 327 00:17:10.700 --> 00:17:13.400 that's absolutely true. And so you have to take into account. 328 00:17:14.000 --> 00:17:17.700 The the investor psychology associated with this that's 329 00:17:17.000 --> 00:17:20.200 why I think momentum is such a 330 00:17:20.000 --> 00:17:23.500 powerful factor to build into your portfolios 331 00:17:23.000 --> 00:17:26.200 because momentum picks up 332 00:17:26.000 --> 00:17:29.400 these like when tech stocks going to run you end up 333 00:17:29.400 --> 00:17:33.400 owning things like Apple and Google and because they 334 00:17:32.900 --> 00:17:37.100 are demonstrating positive momentum, right? So you you're picking 335 00:17:36.400 --> 00:17:39.800 up some of that you're participating in that upside and I 336 00:17:39.800 --> 00:17:42.900 think as a as an investor, that's that would probably be enough for 337 00:17:42.800 --> 00:17:46.400 me, right? It's a modicum of the things that I everybody else 338 00:17:46.200 --> 00:17:49.400 is holding that that's working but it's also stuff that's not working 339 00:17:49.300 --> 00:17:52.400 because eventually that circles around and that becomes the thing 340 00:17:52.300 --> 00:17:55.600 that's worth. I don't have to try and time it. I'm just holding it and I'm 341 00:17:55.400 --> 00:17:58.600 waiting keeping my powder dry in that area so that when it 342 00:17:58.400 --> 00:18:02.100 does I benefit that that's how I would think about it look again 343 00:18:01.700 --> 00:18:03.100 tech stocks are 344 00:18:04.300 --> 00:18:08.300 The amazing thing about markets is they run longer than you think they should right. They're 345 00:18:07.900 --> 00:18:12.100 fueled by stuff. Sometimes you don't understand and and 346 00:18:11.600 --> 00:18:15.100 in many cases, I think the 347 00:18:14.700 --> 00:18:18.500 tech stock Dynamic is is part 348 00:18:17.800 --> 00:18:21.300 fairy dust, right and you know, 349 00:18:21.200 --> 00:18:24.500 we watched it run for a decade and drive markets, you know 350 00:18:24.500 --> 00:18:28.800 for you know, double digit returns for years because 351 00:18:27.800 --> 00:18:31.900 that happen again, of course, it could right. I'm not 352 00:18:31.900 --> 00:18:35.700 gonna tell you again. I am cautious about the 353 00:18:35.200 --> 00:18:38.600 dynamic being set up looking very similar to 354 00:18:38.500 --> 00:18:42.200 the dynamic that we saw at you know, 2019 2020. 355 00:18:41.700 --> 00:18:45.000 Yeah. No, absolutely and you know that seems like that tech 356 00:18:44.700 --> 00:18:47.900 store keeps popping up. I started my career in the late 90s and that was the 357 00:18:47.800 --> 00:18:50.600 whole story and then I saw a lot of portfolios. 358 00:18:51.300 --> 00:18:55.100 A lot of people see their portfolios blow up but because of overexposure to 359 00:18:55.000 --> 00:18:58.500 to technology and they having a 360 00:18:58.400 --> 00:19:02.400 balanced portfolio Diversified across multiple asset classes regions geographies. 361 00:19:01.900 --> 00:19:05.000 That's that's the best course of action at the 362 00:19:04.900 --> 00:19:10.100 end of the day. So yeah, I think I go back to the the E-Trade 363 00:19:09.300 --> 00:19:12.600 baby, right if you remember the E-Trade baby so easy 364 00:19:12.500 --> 00:19:15.800 baby. Yeah that was born right on the text actually and then 365 00:19:15.600 --> 00:19:18.700 they they put the baby away for a while baby's back right now. I was 366 00:19:18.600 --> 00:19:21.800 a little bit older now, he's out of the wedding, you know hanging out 367 00:19:21.700 --> 00:19:25.200 with this guys and gals but to 368 00:19:24.800 --> 00:19:28.200 me that a Hallmark of a caution, right because 369 00:19:27.900 --> 00:19:32.000 the reality is it's it's easy but 370 00:19:31.600 --> 00:19:34.900 hard right it's not you know, it's not 371 00:19:34.700 --> 00:19:38.500 difficult to say. Hey look broadly based diversification sit still it's 372 00:19:37.700 --> 00:19:41.000 incredibly difficult to do. Yeah, right and that's where 373 00:19:40.900 --> 00:19:45.100 the real benefit of working with financial professionals comes in because everybody 374 00:19:44.300 --> 00:19:47.900 thinks they can do it everybody. They're gonna be Spock 375 00:19:47.300 --> 00:19:50.600 and devoid of emotion, but then the moment of truth comes 376 00:19:51.200 --> 00:19:54.200 The market drops 40% and you're looking at like am I gonna 377 00:19:54.200 --> 00:19:57.400 be able to retire? Right and the fear grips hold and it's 378 00:19:57.200 --> 00:20:00.900 2 am and you're thinking what do I do? Right. That's 379 00:20:00.300 --> 00:20:03.400 when you need to have that dispassionate third party 380 00:20:03.300 --> 00:20:07.700 to pick up the phone and say I want to sell everything. They whoa. Let's 381 00:20:07.100 --> 00:20:11.000 revisit right like is anything changed? Oh the 382 00:20:10.400 --> 00:20:13.700 market drop 40% right has anything in your life changed right? 383 00:20:13.400 --> 00:20:16.800 Maybe that's not the best course of action. Let's take a beat having that 384 00:20:16.600 --> 00:20:20.000 dispassionate a third party to keep you from blowing yourself up 385 00:20:19.700 --> 00:20:23.000 at that exact moment is invaluable. Yeah 386 00:20:22.700 --> 00:20:26.400 and making sure you have the right mix between stocks bonds 387 00:20:26.000 --> 00:20:29.900 and maybe even Alternatives depending on the investor and if someone 388 00:20:29.500 --> 00:20:33.000 can't sleep at night, it's not necessarily that they should take action, 389 00:20:32.600 --> 00:20:35.800 but they might be in the wrong asset allocation for 390 00:20:35.600 --> 00:20:36.200 their 391 00:20:37.300 --> 00:20:41.000 The risk, you know their ability to accept right? Yeah, 392 00:20:40.600 --> 00:20:45.800 it could be that often. What I've 393 00:20:45.500 --> 00:20:48.800 experienced is when it's that it's because the client wanted 394 00:20:48.500 --> 00:20:52.000 more Tech right in their portfolios or more of what's 395 00:20:51.700 --> 00:20:55.100 working, right? And then when that's no longer working, they 396 00:20:54.700 --> 00:20:57.700 can't sleep at night, but cautionary Tale the other 397 00:20:57.700 --> 00:21:01.900 piece of that is we're surrounded by the news 24/7 398 00:21:01.000 --> 00:21:04.600 right? It's just and it's always the whatever 399 00:21:04.100 --> 00:21:07.700 bleeds leads right? And so it's this constant 400 00:21:07.100 --> 00:21:12.200 drum beat of kind of negative stuff. And I think that investors 401 00:21:10.400 --> 00:21:13.700 need a voice. 402 00:21:14.600 --> 00:21:18.000 That that they trust to say. Hey, yeah. No I 403 00:21:17.800 --> 00:21:21.600 saw that too. Yes, that bank went out of business. Here's 404 00:21:20.800 --> 00:21:24.600 why we shouldn't Panic here, right? Yep. We 405 00:21:24.500 --> 00:21:28.300 see all that. Here's why we're gonna stay the course. Here's why we're not gonna Panic. Here's 406 00:21:27.800 --> 00:21:31.200 what let's you know, our long-term goals are and we're in good 407 00:21:31.100 --> 00:21:35.000 shape to hit those. I think that sort of calming reassurance 408 00:21:34.500 --> 00:21:37.700 helps people get back to sleeping at night. Yeah. No, 409 00:21:37.500 --> 00:21:40.800 I agree Casey as always. It's a pleasure talking to you. 410 00:21:40.700 --> 00:21:43.800 Thanks for joining us great having you here and I want to thank all of 411 00:21:43.700 --> 00:21:47.400 our listeners and these feel free to access other podcasts 412 00:21:46.800 --> 00:21:49.800 that we have done and they can be 413 00:21:49.800 --> 00:21:53.300 accessed anywhere you get your podcast. 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The sudden failure of Silicon Valley Bank in March jostled investors' confidence in the market. But, the overall performance of various tech stocks in Q1, such as Tesla, Meta, Alphabet, Amazon, Salesforce, AMD, and Broadcom, served to revive optimism for the stock market's near future. Join Casey Dylan, CIMA®, Consultant, and our host Tom Romano, Head of Strategic Relationships and Product Development, in this first half of of our Q1 recap, as we discuss both market, and factor performance, in the first few months of 2023. If you have any questions or would like more information, reach out to us at https://symmetrypartners.com/contact-us/ You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice. Transcript: 0 00:00:01.900 --> 00:00:07.400 Good afternoon, 1 00:00:07.400 --> 00:00:10.700 everyone. This is Tom Romano head of strategic relationships at 2 00:00:10.700 --> 00:00:14.200 symmetry partners and joined with me. Today is Casey Dillon 3 00:00:13.200 --> 00:00:16.900 a long time friend of symmetry and our 4 00:00:16.900 --> 00:00:19.500 internal communication strategist. Thank you Casey for 5 00:00:19.500 --> 00:00:22.400 joining us today. Tom is excellent to be here with you live in 6 00:00:22.400 --> 00:00:25.100 person. Yeah, fantastic. Fantastic So today, we're gonna go 7 00:00:25.100 --> 00:00:28.900 through our q1 2023 quarter in 8 00:00:28.900 --> 00:00:31.700 perspective. It's been quite the 9 00:00:31.700 --> 00:00:34.800 interesting quarter to say the least we've had 10 00:00:34.800 --> 00:00:37.800 some volatile markets. Although 11 00:00:37.800 --> 00:00:40.400 I'll be at some positive results. We've seen things 12 00:00:40.400 --> 00:00:43.300 like banking collapses in the headlines. There's still of 13 00:00:43.300 --> 00:00:46.600 course the concerns about inflation. And so 14 00:00:46.600 --> 00:00:49.800 Casey thank you for joining us to give us some perspective 15 00:00:49.800 --> 00:00:52.300 of what's going on in the market. So in a 16 00:00:52.300 --> 00:00:55.800 nutshell what happened in q1 of 2023, yeah 17 00:00:55.800 --> 00:00:58.300 in a nutshell, I'll be brief if I 18 00:00:58.300 --> 00:01:00.500 can so if you recall 19 00:01:01.800 --> 00:01:04.300 The fourth quarter of last year, right? The 20 00:01:04.300 --> 00:01:07.600 last year was a brutal year across a number of metrics, but 21 00:01:07.600 --> 00:01:10.500 the fourth quarter we started to see some respite 22 00:01:10.500 --> 00:01:13.300 from that and the first two months of the fourth quarter, 23 00:01:13.300 --> 00:01:16.600 right? We saw markets actually rebound pretty 24 00:01:16.600 --> 00:01:19.500 significantly in October and November and much of 25 00:01:19.500 --> 00:01:23.000 that was driven by the sense across 26 00:01:22.700 --> 00:01:25.900 the markets Market participants that maybe 27 00:01:25.900 --> 00:01:28.500 the Fed was done raising interest rates, maybe 28 00:01:28.500 --> 00:01:31.400 that the inflationary pressures that 29 00:01:31.400 --> 00:01:34.700 we had seen in the spring of 2022. We're 30 00:01:34.700 --> 00:01:37.400 starting to Abate and the market is 31 00:01:37.400 --> 00:01:40.800 a forward-looking forward pricing mechanism. And so 32 00:01:42.200 --> 00:01:45.200 In the fourth quarter, that's what it did. It looked forward. 33 00:01:45.200 --> 00:01:48.700 It started to anticipate a period when the the 34 00:01:48.700 --> 00:01:51.300 Fed was not raising interest rates and inflation would be tamed. 35 00:01:51.300 --> 00:01:55.100 And of course what happened in December was 36 00:01:54.100 --> 00:01:57.800 a bit of a comeuppance for 37 00:01:57.800 --> 00:02:00.400 those Market participants who got a little bit ahead of 38 00:02:00.400 --> 00:02:03.500 the fed and we saw a pullback in 39 00:02:03.500 --> 00:02:03.700 December. 40 00:02:04.400 --> 00:02:07.600 And markets responding to the fact that the FED said well, no, 41 00:02:07.600 --> 00:02:10.500 we're pretty set on continuing to raise rates. 42 00:02:10.500 --> 00:02:12.800 And and we think we're gonna keep them higher longer. 43 00:02:13.700 --> 00:02:16.500 As we rolled into the first quarter of this year. We saw 44 00:02:16.500 --> 00:02:19.900 a replay of a lot of those Dynamics coming into 45 00:02:19.900 --> 00:02:23.000 January Market participants 46 00:02:22.300 --> 00:02:24.000 again. It's sort of 47 00:02:25.400 --> 00:02:28.200 Determined that this was the year the Fed was 48 00:02:28.200 --> 00:02:31.100 going to stop rate and Market participants started to 49 00:02:31.100 --> 00:02:34.200 look forward and price as if the not only 50 00:02:34.200 --> 00:02:37.600 with the FED stop racing rates, but they would start to pull rates 51 00:02:37.600 --> 00:02:42.400 back by the end of the year given where people 52 00:02:41.400 --> 00:02:45.300 reading the tea leaves assumed the 53 00:02:45.300 --> 00:02:47.500 economy would be by mid-year. 54 00:02:48.200 --> 00:02:51.800 And so you saw a really robust Rebound in 55 00:02:51.800 --> 00:02:54.000 January for a lot of the names that have been 56 00:02:54.200 --> 00:02:57.900 really beat up in 2022 specifically the 57 00:02:57.900 --> 00:03:01.000 large cab growth and Tech names and 58 00:03:00.300 --> 00:03:03.200 so there was something of a reversion to 59 00:03:03.200 --> 00:03:06.300 the mean in terms of those names really 60 00:03:06.300 --> 00:03:09.500 leading the charge in January. Those are 61 00:03:09.500 --> 00:03:12.200 the names that were most beaten up in 2022. Those are the 62 00:03:12.200 --> 00:03:15.500 names that snap back fastest in the 63 00:03:15.500 --> 00:03:18.500 first quarter. And so January where we 64 00:03:18.500 --> 00:03:22.900 saw for instance the S&P down 20% for 65 00:03:22.900 --> 00:03:25.200 2022. We saw 66 00:03:25.200 --> 00:03:28.100 a Resurgence just in the month of January the SP was up 67 00:03:28.100 --> 00:03:31.400 like eight percent and the NASDAQ double that right just on the 68 00:03:31.400 --> 00:03:34.400 strength of kind of those large cap Tech names and of course what happened 69 00:03:34.400 --> 00:03:38.100 as we rolled into February the news that 70 00:03:37.100 --> 00:03:40.400 came out on the sort of 71 00:03:40.400 --> 00:03:43.400 economic underpinnings specifically job data for 72 00:03:43.400 --> 00:03:47.100 January really surprised Market 73 00:03:46.100 --> 00:03:48.100 participants because 74 00:03:48.200 --> 00:03:52.400 It was so robust. So strong it exceeded expectations. It 75 00:03:51.400 --> 00:03:54.800 served as a really Stark reminder that we're 76 00:03:54.800 --> 00:03:55.500 not out of the woods yet. 77 00:03:56.200 --> 00:03:59.500 And and it sent shock waves 78 00:03:59.500 --> 00:04:02.400 across the market in the sense that everyone who 79 00:04:02.400 --> 00:04:06.000 had said. Okay. Well now the FED is gonna have to wind this down all 80 00:04:05.200 --> 00:04:08.400 the sudden the the realized maybe not 81 00:04:08.400 --> 00:04:11.400 right not only is the fed maybe not gonna wind this 82 00:04:11.400 --> 00:04:14.700 down because the economy is hotter than we thought it was but we potentially 83 00:04:14.700 --> 00:04:17.600 risk sort of a flare-up of inflation 84 00:04:17.600 --> 00:04:20.100 just as it was coming down and the FED may have 85 00:04:20.100 --> 00:04:23.500 to get more aggressive in in tackling that and 86 00:04:23.500 --> 00:04:27.000 so February saw sort of a revisitation of 87 00:04:26.400 --> 00:04:29.500 those expectations that market participants 88 00:04:29.500 --> 00:04:33.100 had and as we rolled into March then all 89 00:04:32.100 --> 00:04:35.800 eyes were on the Senate 90 00:04:35.800 --> 00:04:38.700 hearings with the the chairman 91 00:04:38.700 --> 00:04:41.200 of the fed and based on his 92 00:04:41.200 --> 00:04:44.700 comments Futures skyrocketed for an expectation 93 00:04:44.700 --> 00:04:47.200 of a 50 basis point raise at 94 00:04:47.200 --> 00:04:50.500 the end of March the Futures went up to like a 70% chance that 95 00:04:50.500 --> 00:04:53.300 the Fed was gonna raise 50 basis points, and 96 00:04:53.300 --> 00:04:55.500 of course what happened then you know days later. 97 00:04:56.100 --> 00:05:00.000 Started imploding right and that sort 98 00:04:59.100 --> 00:05:03.000 of Royal financial markets and 99 00:05:02.500 --> 00:05:05.200 the FED did end up raising rates. But 100 00:05:05.200 --> 00:05:08.200 only by 25 basis points after they had worked to 101 00:05:08.200 --> 00:05:11.200 sort of rescue. I don't know rescues the 102 00:05:11.200 --> 00:05:15.500 right term but step in aggressively and calm markets 103 00:05:14.500 --> 00:05:17.200 particularly folks who 104 00:05:17.200 --> 00:05:20.600 had cash on deposited Banks to keep sort 105 00:05:20.600 --> 00:05:23.200 of a contagion effect and a larger Bank Run taking place. 106 00:05:23.200 --> 00:05:26.800 Right? So we end the first quarter with a really 107 00:05:26.800 --> 00:05:29.900 sort of wild trip of markets shooting 108 00:05:29.900 --> 00:05:32.500 up coming back down a lot of volatility a lot 109 00:05:32.500 --> 00:05:35.400 of fear injected in markets in March with the 110 00:05:35.400 --> 00:05:38.300 headlines and yet at the end of the quarter you finished up 111 00:05:38.300 --> 00:05:41.900 pretty again pretty solidly across 112 00:05:41.900 --> 00:05:45.000 us markets International Development markets emerging 113 00:05:44.400 --> 00:05:47.700 markets in fixed income inequities, right? 114 00:05:47.700 --> 00:05:50.400 We it was a it was a pretty decent first 115 00:05:50.400 --> 00:05:53.800 quarter from a return perspective despite all of that. Yeah sure. 116 00:05:53.800 --> 00:05:56.000 It was like it's a very interesting quarter. 117 00:05:56.100 --> 00:05:59.200 And I'd like the way you put it on the things the kind of the Resurgence of 118 00:05:59.200 --> 00:06:03.100 these tech companies that didn't have a great year last year, but you're 119 00:06:02.100 --> 00:06:05.500 seeing asset classes such as the energy 120 00:06:05.500 --> 00:06:08.600 sector right who had a great year last year is to 121 00:06:08.600 --> 00:06:11.300 use your your term of aversion to the mean right? They had 122 00:06:11.300 --> 00:06:14.500 a tough time in the first quarter, right? Yeah. Yeah and and frankly 123 00:06:14.500 --> 00:06:18.200 prices have been coming down in oil and gas pretty 124 00:06:17.200 --> 00:06:18.800 consistently. 125 00:06:19.200 --> 00:06:22.800 Since last fall so we did see a continuation of that. I 126 00:06:22.800 --> 00:06:27.300 do think and likely there's 127 00:06:26.300 --> 00:06:29.200 more conversation to be had 128 00:06:29.200 --> 00:06:32.900 around this but the concern that I have or 129 00:06:32.900 --> 00:06:35.500 or would have based on 130 00:06:35.500 --> 00:06:38.600 how markets performed in the first quarter is that 131 00:06:38.600 --> 00:06:41.900 it was so dominated by a 132 00:06:41.900 --> 00:06:44.100 handful of names, right? We we've seen 133 00:06:44.100 --> 00:06:47.300 this Dynamic before where we're 134 00:06:47.300 --> 00:06:51.000 sort of the top largest growth Tech 135 00:06:50.300 --> 00:06:53.800 names sort of dominate performance 136 00:06:53.800 --> 00:06:56.500 of the market and we and we saw that again in 137 00:06:56.500 --> 00:07:01.500 the first quarter right? You think about Facebook alphabet 138 00:07:00.500 --> 00:07:04.700 Apple Google Netflix, right? 139 00:07:03.700 --> 00:07:06.500 All of those firms were 140 00:07:06.500 --> 00:07:09.500 really been challenged in 2022 had a 141 00:07:09.500 --> 00:07:12.300 nice Resurgence across the first quarter, but when 142 00:07:12.300 --> 00:07:16.000 you dig deeper into the performance particularly here domestically what 143 00:07:15.200 --> 00:07:18.900 you see is they were the lion 144 00:07:19.100 --> 00:07:22.400 Care of that return that we saw the market it was once again 145 00:07:22.400 --> 00:07:27.100 the fact that these top handful of names represent twenty 146 00:07:25.100 --> 00:07:28.600 plus percent of the overall 147 00:07:28.600 --> 00:07:32.000 market, right? So think S&P 500 has got ostensibly 500 148 00:07:31.500 --> 00:07:34.700 names in it the top 10 names 149 00:07:34.700 --> 00:07:38.000 accounted for all at 150 00:07:37.100 --> 00:07:40.400 least 80% of that return right the 151 00:07:40.400 --> 00:07:43.300 top top five names half of it, right? So so 152 00:07:43.300 --> 00:07:46.400 again, you're getting a lot of that return concentrated in 153 00:07:46.400 --> 00:07:47.000 these names. 154 00:07:47.900 --> 00:07:51.600 Because they're so large disproportionately to 155 00:07:50.600 --> 00:07:55.200 the other names in those indices 156 00:07:54.200 --> 00:07:57.300 and it lit. It's the rising tide lifting 157 00:07:57.300 --> 00:08:00.200 all boats, but the concern that you 158 00:08:00.200 --> 00:08:03.100 have with that and we saw that in 2022 when the 159 00:08:03.100 --> 00:08:06.600 air goes out of the balloon to a degree. Well that 160 00:08:06.600 --> 00:08:09.500 can be a double-edged sword. Right if those names start 161 00:08:09.500 --> 00:08:13.000 to pull back in valuations, you 162 00:08:12.300 --> 00:08:15.400 could see that turn around and become an anchor pulling 163 00:08:15.400 --> 00:08:19.000 markets down, right and that can happen very quickly just based 164 00:08:18.100 --> 00:08:21.600 on the fact that it's so concentrated in a 165 00:08:21.600 --> 00:08:24.000 handful of names that are all sort of in the 166 00:08:24.300 --> 00:08:27.100 same kind of economic Waters right in terms of kind of 167 00:08:27.100 --> 00:08:30.600 this large growth Tech, you know richly valued. 168 00:08:30.600 --> 00:08:33.100 Yeah. It sounds a lot like me, you know, I've 169 00:08:33.100 --> 00:08:37.200 had these conversations over the years even going back before 2022 170 00:08:36.200 --> 00:08:39.700 coming out of the pandemic 171 00:08:39.700 --> 00:08:42.300 and those tech stocks. They were the story they were leading 172 00:08:42.300 --> 00:08:45.400 the charge and what I'm hearing you say, is that sort 173 00:08:45.400 --> 00:08:47.800 of the casing q1, but that double-ed 174 00:08:47.800 --> 00:08:50.700 word is just going back 2022 would 175 00:08:50.700 --> 00:08:53.700 be an example of if you're not well Diversified 176 00:08:53.700 --> 00:08:56.800 that could be a painful experience it can and I'm 177 00:08:56.800 --> 00:08:57.900 I'm reminded of 178 00:08:59.300 --> 00:09:02.400 The experience that we had coming out of the tech bubble, 179 00:09:02.400 --> 00:09:05.300 right? So if you think about if in fact 180 00:09:05.300 --> 00:09:08.300 the run-up invaluations in this sort of handful of 181 00:09:08.300 --> 00:09:11.400 techniques is analogous to what we saw in 182 00:09:11.400 --> 00:09:12.000 the late 90s. 183 00:09:14.200 --> 00:09:17.300 They were so richly valued that when the 184 00:09:17.300 --> 00:09:20.600 tech Bubble Burst it took a decade the Lost 185 00:09:20.600 --> 00:09:24.200 decade right of just you know, subpar returns 186 00:09:23.200 --> 00:09:26.300 for the valuations to get 187 00:09:26.300 --> 00:09:29.500 back to a place where markets could then start 188 00:09:29.500 --> 00:09:32.400 to take off again. And so the concern that 189 00:09:32.400 --> 00:09:36.200 that one might have is valuations are 190 00:09:35.200 --> 00:09:40.400 still Rich, right? Even after 2022 on 191 00:09:39.400 --> 00:09:43.200 a Price to Book basis very 192 00:09:42.200 --> 00:09:45.600 expensive on a price to 193 00:09:45.600 --> 00:09:50.500 forward earnings basis. It's expensive and 194 00:09:48.500 --> 00:09:51.600 so it's not 195 00:09:51.600 --> 00:09:54.600 as if these are our Bargains to 196 00:09:54.600 --> 00:09:57.800 be had in a Marketplace that that's discounting 197 00:09:57.800 --> 00:10:00.700 them. They are still incredibly expensive. And so 198 00:10:00.700 --> 00:10:03.400 anything that goes wrong right if the 199 00:10:03.400 --> 00:10:06.300 if in fact the economy runs into turbulence at 200 00:10:06.300 --> 00:10:09.700 some point or the expectations for growth, I mean, 201 00:10:09.700 --> 00:10:12.600 you know, we're in earning season and Netflix had sort 202 00:10:12.600 --> 00:10:14.100 of positive numbers, but 203 00:10:14.100 --> 00:10:17.700 They sort of gave lackluster guidance for next quarters 204 00:10:17.700 --> 00:10:20.400 growth. Right? So all you need is for for Market 205 00:10:20.400 --> 00:10:23.400 participants to to a once again sour on the 206 00:10:23.400 --> 00:10:27.400 prospects of these names and you're right back to it's 207 00:10:26.400 --> 00:10:29.300 too too rich like I'm paying 208 00:10:29.300 --> 00:10:32.500 too much today for for earnings in 209 00:10:32.500 --> 00:10:35.100 the future that may or may not materialize right? And so 210 00:10:35.100 --> 00:10:38.700 I've got to pay less and so the price has to come down. Yeah, right. And 211 00:10:38.700 --> 00:10:41.300 again, I'm not suggesting that we have a lost decade 212 00:10:41.300 --> 00:10:44.200 in front of us, but this potentially room to run 213 00:10:44.200 --> 00:10:48.300 if markets turn and I think that's the the concern that 214 00:10:47.300 --> 00:10:50.100 I would share with investors. That's what I 215 00:10:50.100 --> 00:10:53.500 prepare them for. Hey, we'll take what we get. Right? We're happy 216 00:10:53.500 --> 00:10:54.700 to get those returns, but 217 00:10:56.200 --> 00:10:59.500 This could still be valve this this, you know, we're in the third inning potentially 218 00:10:59.500 --> 00:11:02.900 look or fourth ending. There's a lot of game left and we're 219 00:11:02.900 --> 00:11:05.000 just gonna buckle up and be ready for it. Yeah, and what is 220 00:11:05.300 --> 00:11:09.200 interesting what this quarter and you detect upon that I'd love to get your thoughts developed International 221 00:11:08.200 --> 00:11:11.300 to having a very good quarter. 222 00:11:11.300 --> 00:11:14.400 I mean when we saw these large Tech 223 00:11:14.400 --> 00:11:17.600 names and in the past when they had their run prior to 2022, it 224 00:11:17.600 --> 00:11:20.600 was a pretty much us dominated run up. 225 00:11:21.800 --> 00:11:24.500 Give us some commentary on what we're saying in the developed International 226 00:11:24.500 --> 00:11:27.100 Space. Yeah, I think some of 227 00:11:27.100 --> 00:11:31.600 it is the Resurgence of the 228 00:11:32.900 --> 00:11:35.700 strength of the sort 229 00:11:35.700 --> 00:11:38.200 of the the companies that are there that have 230 00:11:38.200 --> 00:11:42.000 sort of suffered through a decade of kind of sub-par performance 231 00:11:41.300 --> 00:11:45.400 and they were in a much stronger financial 232 00:11:44.400 --> 00:11:47.300 position. Then they 233 00:11:47.300 --> 00:11:51.300 were for instance going into the global financial crisis, right and they 234 00:11:50.300 --> 00:11:53.700 weren't super expensive. Right? 235 00:11:53.700 --> 00:11:58.100 So from a perspective of they were kind of relatively cheaply 236 00:11:56.100 --> 00:11:59.100 priced compared to 237 00:11:59.100 --> 00:12:02.500 US stocks. And so if we look at just the performance 238 00:12:02.500 --> 00:12:06.100 the they don't have to have that much right 239 00:12:05.100 --> 00:12:09.300 surprise upside. 240 00:12:10.300 --> 00:12:14.300 To have nice performance right across the board or 241 00:12:13.300 --> 00:12:16.200 relatively decent performs. 242 00:12:16.700 --> 00:12:19.800 So I think people were pleasantly surprised by 243 00:12:19.800 --> 00:12:23.500 some of the financial resilience in 244 00:12:22.500 --> 00:12:25.200 Europe particularly coming out of 245 00:12:25.200 --> 00:12:28.900 the effects of the the Russian Ukraine 246 00:12:28.900 --> 00:12:31.600 conflict and looking at the impact that 247 00:12:31.600 --> 00:12:34.500 for instance the the price of gas price 248 00:12:34.500 --> 00:12:37.100 of oil I had in places like Germany and the fact 249 00:12:37.100 --> 00:12:40.300 that they sort of got through that not unscathed but 250 00:12:40.300 --> 00:12:43.700 you know, the the avoided the apocalypse 251 00:12:43.700 --> 00:12:47.000 right the gasoline apocalypse over the course of the 252 00:12:46.600 --> 00:12:49.300 winter right that it was relatively mild. So 253 00:12:49.300 --> 00:12:52.600 I think that from that perspective markets sort 254 00:12:52.600 --> 00:12:55.600 of said rewarded International developed 255 00:12:55.600 --> 00:12:58.900 businesses with valuations that 256 00:12:58.900 --> 00:13:01.400 seemed a little more reasonable than the 257 00:13:01.400 --> 00:13:04.000 valuations in the US. Yeah, that makes a lot of sense and thank you 258 00:13:04.200 --> 00:13:07.900 for that. Yeah, and and I would call I would suggest that 259 00:13:07.900 --> 00:13:10.200 Emerging Markets are in a similar but 260 00:13:10.200 --> 00:13:14.300 different position right again a little more financially 261 00:13:13.300 --> 00:13:16.300 robust in terms of the underpinnings. 262 00:13:17.300 --> 00:13:20.100 Of those companies relative to where we've seen Cycles where people 263 00:13:20.100 --> 00:13:23.100 are risk off and and sort of beating down 264 00:13:23.100 --> 00:13:26.200 in price. I think anytime you have a lot of volatility people are 265 00:13:26.200 --> 00:13:29.700 hesitant to take a bunch of risk. So Emerging Markets 266 00:13:29.700 --> 00:13:32.800 could be a little more volatile as you would expect but 267 00:13:32.800 --> 00:13:35.100 I think from evaluation standpoint there's room to run 268 00:13:35.100 --> 00:13:38.600 as well over time relative to the US let's let's 269 00:13:38.600 --> 00:13:41.300 look at the other side of the coin and talk a 270 00:13:41.300 --> 00:13:44.500 little bit about bonds because that's been quite the Hot Topic lately. We've been 271 00:13:44.500 --> 00:13:47.900 getting a lot of inquiries from advisors and investors alike 272 00:13:47.900 --> 00:13:50.700 about the fixed income market. So give us 273 00:13:50.700 --> 00:13:52.300 a little perspective of what's happening in. 274 00:13:53.500 --> 00:13:57.300 Global fixed income right? Well, if you recall 2022 275 00:13:56.300 --> 00:13:59.500 was a historically bad year 276 00:13:59.500 --> 00:14:02.900 for Boston certainly, right as as fed as 277 00:14:02.900 --> 00:14:05.500 the FED raised interest rates are not just the FED but central banks 278 00:14:05.500 --> 00:14:08.500 essentially around the world except for the Asian 279 00:14:08.500 --> 00:14:11.100 China and Japan those central banks not quite 280 00:14:11.100 --> 00:14:14.600 as much but globally central banks at the 281 00:14:14.600 --> 00:14:17.600 impact of course of challenging the yield right 282 00:14:17.600 --> 00:14:20.900 and as we know yield in price or are sort of inverse Lee 283 00:14:20.900 --> 00:14:23.300 related and so as yield was pushed up by raising 284 00:14:23.300 --> 00:14:26.900 rates price came down and and it had a pretty dramatic 285 00:14:26.900 --> 00:14:29.900 impact across the yield curve 286 00:14:29.900 --> 00:14:32.400 and that was globally as well the United 287 00:14:32.400 --> 00:14:32.400 States. 288 00:14:33.200 --> 00:14:36.400 2022 pretty much a very bad. No good year for 289 00:14:36.400 --> 00:14:39.400 Bond holders rolling into the first quarter 290 00:14:39.400 --> 00:14:42.400 a lot of those same sort of macro dynamics that 291 00:14:42.400 --> 00:14:45.400 we talked about with equities was 292 00:14:45.400 --> 00:14:48.500 true to fix income as well the expectation the bond 293 00:14:48.500 --> 00:14:51.800 market pricing that they think the FED will essentially 294 00:14:51.800 --> 00:14:54.600 be done at some point this year raising rates 295 00:14:54.600 --> 00:14:58.100 had the impact of markets rallying 296 00:14:57.100 --> 00:15:01.300 to a degree and then of course when there 297 00:15:00.300 --> 00:15:04.100 was volatility injected because of banking issues 298 00:15:03.100 --> 00:15:07.300 you continued to see a pullback 299 00:15:06.300 --> 00:15:09.700 on the the yield 300 00:15:09.700 --> 00:15:13.000 right? So at at some points we saw for instance 301 00:15:12.200 --> 00:15:15.400 the the 10 year get up over four and we 302 00:15:15.400 --> 00:15:18.500 saw a pullback as yields come down then of course prices go 303 00:15:18.500 --> 00:15:21.400 up. And so you saw a nice robust kind of response over 304 00:15:21.400 --> 00:15:24.500 the first quarter of prices coming up for bonds that had 305 00:15:24.500 --> 00:15:27.500 the impact and that was true for treasuries and corporates 306 00:15:27.500 --> 00:15:30.400 and international bonds, right? So across the 307 00:15:30.400 --> 00:15:32.900 Spectrum you had sort of a nice performance. 308 00:15:33.300 --> 00:15:37.100 For bonds for the first quarter. And again, it's unusual 309 00:15:36.100 --> 00:15:39.400 for fixed income and Equity to look and 310 00:15:39.400 --> 00:15:42.100 behave very similarly. That was one of 311 00:15:42.100 --> 00:15:45.700 the things that was so unusual about 2022, but there's still 312 00:15:45.700 --> 00:15:48.500 sort of Behaving the same way based on the same Outlook 313 00:15:48.500 --> 00:15:51.500 that at some point interest rates stop going up 314 00:15:51.500 --> 00:15:54.500 or stop getting ratcheted up by central banks. 315 00:15:54.500 --> 00:15:57.100 And so that Dynamic is is kind of 316 00:15:57.100 --> 00:16:00.700 floating all the boats to this degree and so 317 00:16:00.700 --> 00:16:03.500 fixed income has had a robust first quarter. 318 00:16:04.400 --> 00:16:07.700 Remains to be seen how the rest of the year plays 319 00:16:07.700 --> 00:16:10.400 out and and you know, frankly we 320 00:16:10.400 --> 00:16:13.200 continued to see the a deep 321 00:16:13.200 --> 00:16:16.200 inversion in the yield curve, especially at the 322 00:16:16.200 --> 00:16:19.100 very shortest end of the O curve relative to the 323 00:16:19.100 --> 00:16:22.700 10 year. And as you know that has historically sort 324 00:16:22.700 --> 00:16:25.300 of been a warning sign of 325 00:16:25.300 --> 00:16:28.600 potential economic stress recessions right 326 00:16:28.600 --> 00:16:32.100 as an indicator and it has remained it 327 00:16:31.100 --> 00:16:34.100 inverted for some time now 328 00:16:34.100 --> 00:16:37.900 and that inversion has only gotten deeper on the shortest end. So, 329 00:16:37.900 --> 00:16:40.200 you know again you would want to continue 330 00:16:40.200 --> 00:16:43.700 to watch that and be cognizant of it. I think the takeaway 331 00:16:43.700 --> 00:16:46.500 from this is much like with equities. It's best 332 00:16:46.500 --> 00:16:49.200 to be sort of broad based Diversified. You never 333 00:16:49.200 --> 00:16:53.000 know what part of the Yoke curve is gonna move relative to this and 334 00:16:52.900 --> 00:16:56.800 it's good to have exposure 335 00:16:55.800 --> 00:16:58.600 not just us treasuries, but 336 00:16:58.600 --> 00:17:01.200 the corporates and not just us bonds, but the international 337 00:17:01.200 --> 00:17:04.300 bonds that there are benefits built into the pricing of all 338 00:17:04.900 --> 00:17:08.400 And as we start to see a decoupling of Central 339 00:17:07.400 --> 00:17:10.400 Bank activity, yes, they've been 340 00:17:10.400 --> 00:17:13.700 acting pretty much in concert, but at some point central banks 341 00:17:13.700 --> 00:17:16.800 start to peel off right and they get back to focusing on 342 00:17:16.800 --> 00:17:19.100 the handling kind of 343 00:17:19.100 --> 00:17:22.300 their domestic concerns. And as they do that it will 344 00:17:22.300 --> 00:17:25.600 have varying diversification impacts for bonds 345 00:17:25.600 --> 00:17:28.500 around the globe the way stocks and bonds behaves 346 00:17:28.500 --> 00:17:31.300 in 2022 with similar and then into this quarter. We're 347 00:17:31.300 --> 00:17:34.500 seeing some decent returns globally across those two 348 00:17:34.500 --> 00:17:37.800 macro asset classes. We're seeing 349 00:17:37.800 --> 00:17:40.300 some of a mixed bag that last Factor investors 350 00:17:40.300 --> 00:17:43.400 from a factor perspective, right? But let's 351 00:17:43.400 --> 00:17:46.200 shift a little bit and talk about factors for a moment. 352 00:17:46.200 --> 00:17:49.300 We're a factor investors are listeners The Avengers that 353 00:17:49.300 --> 00:17:52.300 we work with our have clients invested in 354 00:17:52.300 --> 00:17:55.500 these Factor portfolios. What did we see from a factor standpoint 355 00:17:55.500 --> 00:17:58.800 in the first quarter of 2023 if 356 00:17:58.800 --> 00:18:01.400 you think about the factor of value, it's just the the 357 00:18:01.400 --> 00:18:04.300 cheaper stocks outperform the more expensive stocks over time and as 358 00:18:04.300 --> 00:18:04.500 you know, 359 00:18:04.800 --> 00:18:07.800 We had a long run where that wasn't true. Right we're 360 00:18:07.800 --> 00:18:10.300 growth stocks were just outperforming value to the 361 00:18:10.300 --> 00:18:13.200 point that everybody was sort of Naval gazing wondering his value 362 00:18:13.200 --> 00:18:16.800 dead. Does this even make sense anymore? And and what 363 00:18:16.800 --> 00:18:19.400 we sort of looking at it determined was 364 00:18:19.400 --> 00:18:22.400 no actually values kind of in line with what it's always done. It's 365 00:18:22.400 --> 00:18:25.300 growth. That's so unusual. Yeah, right and that we're 366 00:18:25.300 --> 00:18:28.300 back to the story about the large tech stocks and get over evaluation. Right? 367 00:18:28.300 --> 00:18:31.900 And so last year was a great year for Value, right? Even 368 00:18:31.900 --> 00:18:34.500 though it was down right value outperform growth 369 00:18:34.500 --> 00:18:37.800 by a good 20% Oh, yeah, absolutely and it 370 00:18:37.800 --> 00:18:40.700 was sort of that Snapback to recognition of 371 00:18:40.700 --> 00:18:43.300 hey one of my paying for right and and these things 372 00:18:43.300 --> 00:18:46.200 have gotten incredibly overvalued on the 373 00:18:46.200 --> 00:18:46.600 growth side. 374 00:18:47.300 --> 00:18:50.500 And so it shouldn't come as a surprise then if there's a reversal of 375 00:18:50.500 --> 00:18:53.600 that Dynamic that value might underperform growth 376 00:18:53.600 --> 00:18:56.500 over the first quarter. And of course, that's what we observed right 377 00:18:56.500 --> 00:18:59.300 that value underperformed growth. It was 378 00:18:59.300 --> 00:19:02.300 those large kind of growthy names that took off and and so that 379 00:19:02.300 --> 00:19:05.700 that factor shows up and demonstrates 380 00:19:05.700 --> 00:19:08.300 that thighs right. So again kind of 381 00:19:08.300 --> 00:19:11.600 the academic research that smaller cap 382 00:19:11.600 --> 00:19:14.400 names tend to outperform larger cab 383 00:19:14.400 --> 00:19:17.800 names over time rolling into the first quarter large 384 00:19:17.800 --> 00:19:20.500 caps outperform small caps, right again being led 385 00:19:20.500 --> 00:19:23.500 by that large growthy and so small caps 386 00:19:23.500 --> 00:19:26.800 tended to underperform in general. What's interesting 387 00:19:26.800 --> 00:19:29.300 is across factor is 388 00:19:29.300 --> 00:19:32.300 one of the reasons you want to hold small caps isn't necessarily the size 389 00:19:32.300 --> 00:19:35.300 Factor premium associated with that because 390 00:19:35.300 --> 00:19:38.700 that's come under some scrutiny of 391 00:19:38.700 --> 00:19:41.400 Lee as academics kind of look at that. Say what 392 00:19:41.400 --> 00:19:42.200 do we actually getting here? 393 00:19:42.900 --> 00:19:46.000 But what really expresses itself 394 00:19:45.300 --> 00:19:48.500 in small camp names or all the other factors, right? So 395 00:19:48.500 --> 00:19:51.100 the reason you'd want to hold a small cap is not just 396 00:19:51.100 --> 00:19:54.200 because you get a benefit versus large caps, but because you get 397 00:19:54.200 --> 00:19:57.600 a really strong value signal a really strong momentum really 398 00:19:57.600 --> 00:20:00.200 strong quality, right all of these things. And so if we 399 00:20:00.200 --> 00:20:03.300 look at small caps the performance of small caps for 400 00:20:03.300 --> 00:20:06.700 the first quarter, you actually got to really strong quality signal 401 00:20:06.700 --> 00:20:09.700 in small caps. So again a reason 402 00:20:09.700 --> 00:20:12.400 why you want to have a multiple exposures for your 403 00:20:12.400 --> 00:20:15.400 factors not just pick any one of these right so small 404 00:20:15.400 --> 00:20:18.400 caps under form large caps, but quality did really well inside 405 00:20:18.400 --> 00:20:21.300 small camps that makes up the next category is 406 00:20:21.300 --> 00:20:24.400 momentum. And what's interesting about markets that are sort of 407 00:20:24.400 --> 00:20:27.500 whipsawing one way or the other that momentum tends to 408 00:20:27.500 --> 00:20:30.400 have a tougher time in markets where the signal is really 409 00:20:30.400 --> 00:20:33.100 hard to pick up where there's a lot of whipsawing effect up and down on the 410 00:20:33.100 --> 00:20:37.000 other way momentum tends to kind of get whipped around with that. 411 00:20:37.700 --> 00:20:40.200 Eventually when markets start to pick 412 00:20:40.200 --> 00:20:43.300 up Trend whether that's down for a significant period of 413 00:20:43.300 --> 00:20:46.500 time like in 2022 momentum does well or up right 414 00:20:46.500 --> 00:20:50.000 for a significant period of time and so you 415 00:20:49.200 --> 00:20:52.400 would expect momentum to kind 416 00:20:52.400 --> 00:20:55.400 of settle down as markets kind of settle down 417 00:20:55.400 --> 00:20:59.600 and we see less whipsawing and more directionality. However, and 418 00:20:59.600 --> 00:21:03.300 I mentioned it earlier with small caps quality this idea 419 00:21:02.300 --> 00:21:05.000 that there may be 420 00:21:05.200 --> 00:21:08.800 a flight to Quality in times when the 421 00:21:08.800 --> 00:21:11.100 there's a lot of volatility. Well one of the 422 00:21:11.100 --> 00:21:14.800 reasons you see that is because higher quality earnings tend to 423 00:21:14.800 --> 00:21:17.400 hold up better in downturns. They have a premium 424 00:21:17.400 --> 00:21:21.300 associated with them and we saw that very clearly quality 425 00:21:20.300 --> 00:21:23.200 was one of the areas that outperformed the market 426 00:21:23.200 --> 00:21:26.200 over the first quarter and that was true not just in the 427 00:21:26.200 --> 00:21:30.200 US but internationally as well interestingly in 428 00:21:29.200 --> 00:21:33.500 Emerging Markets value quality 429 00:21:32.500 --> 00:21:35.600 and low volatility did quite 430 00:21:35.600 --> 00:21:37.600 well so value was still doing well in emerging. 431 00:21:37.700 --> 00:21:40.700 Markets again a reason why you'd want to diversify 432 00:21:40.700 --> 00:21:43.400 your Factor exposures not just in the US but 433 00:21:43.400 --> 00:21:46.900 internationally as well and minimum volatility was 434 00:21:46.900 --> 00:21:49.800 a contributor in us but lagged Market 435 00:21:49.800 --> 00:21:52.500 beta on the whole a broadly 436 00:21:52.500 --> 00:21:55.900 Diversified Factor exposure was I'd 437 00:21:55.900 --> 00:21:58.700 say depending on what your tilts are helpful on 438 00:21:58.700 --> 00:22:02.200 the downside when Market was volatile, but lagged 439 00:22:01.200 --> 00:22:04.900 Market beta to a degree for the 440 00:22:04.900 --> 00:22:07.500 first quarter where it outperformed in 441 00:22:07.500 --> 00:22:10.400 2022. So again factors are a 442 00:22:10.400 --> 00:22:13.500 long term investment. You wouldn't do it on based 443 00:22:13.500 --> 00:22:16.700 on one quarter, but we we watch the horse race, right? Yeah. 444 00:22:16.700 --> 00:22:19.200 Absolutely and I think a point that you 445 00:22:19.200 --> 00:22:22.400 you said that really resonated with me is the notion of how these factors work 446 00:22:22.400 --> 00:22:25.800 together right size and quality you mentioned 447 00:22:25.800 --> 00:22:29.200 and so having a diverse portfolio 448 00:22:28.200 --> 00:22:30.700 of integrated factors. 449 00:22:31.500 --> 00:22:32.800 maintaining that for the long term 450 00:22:34.200 --> 00:22:37.400 Should reward you over the long term. Yeah, and that's the 451 00:22:37.400 --> 00:22:40.800 expectation. There are lots of factors out 452 00:22:40.800 --> 00:22:43.800 there that have been identified in the academic literature when you 453 00:22:43.800 --> 00:22:46.400 selectively go out and pick a handful of 454 00:22:46.400 --> 00:22:49.500 those factors. The expectation is every single 455 00:22:49.500 --> 00:22:52.500 one of those is going to be a positive contributor to 456 00:22:52.500 --> 00:22:55.400 your portfolio over time, right you you 457 00:22:55.400 --> 00:22:58.300 wouldn't necessarily pick one that you thought. Well, it's gonna be a loser but we're gonna hold on 458 00:22:58.300 --> 00:23:01.100 to it, right you're picking all of these different factors of the 459 00:23:01.100 --> 00:23:04.700 expectation that each one of those is going to be a 460 00:23:04.700 --> 00:23:07.300 positive contributor over a period of time when you 461 00:23:07.300 --> 00:23:10.400 weave them together you sort of iron out 462 00:23:10.400 --> 00:23:13.400 the highs and lows of any one particular factor and 463 00:23:13.400 --> 00:23:17.100 you get that very nice steady stream of 464 00:23:16.100 --> 00:23:19.500 return into your 465 00:23:19.500 --> 00:23:22.300 portfolio. That's generated by those Factor exposures. Yeah. 466 00:23:22.300 --> 00:23:25.400 It's the old the old adage we're going for singles and doubles 467 00:23:25.400 --> 00:23:28.200 not home runs, right? Yeah. Yeah exactly. So let's 468 00:23:28.200 --> 00:23:31.200 talk a little bit about factors and fixed income and then 469 00:23:31.200 --> 00:23:34.100 we can take a look at some of the the factors overseas. 470 00:23:34.100 --> 00:23:37.800 As well, but I do want to spend some time on some of 471 00:23:37.800 --> 00:23:40.100 the headlines. So why don't we 472 00:23:40.100 --> 00:23:44.000 talk a little bit about us fixed income factors? Sure. So 473 00:23:43.600 --> 00:23:46.200 as you know, right fat factors are 474 00:23:46.200 --> 00:23:49.800 not an equity only thing. In fact, we see factors across 475 00:23:49.800 --> 00:23:53.600 all different kinds of assets fixed income Commodities 476 00:23:52.600 --> 00:23:55.400 housing real 477 00:23:55.400 --> 00:23:58.400 estate, right all these I the concept of value for 478 00:23:58.400 --> 00:24:01.500 instance and the concept of momentum right anything that has a price associated 479 00:24:01.500 --> 00:24:04.400 with it stores can demonstrate these sort of 480 00:24:04.400 --> 00:24:07.200 factors. And that's true. In fact fixed income the way we 481 00:24:07.200 --> 00:24:10.400 think about factors and fixed incomes specifically is is kind 482 00:24:10.400 --> 00:24:13.400 of interest rate risk, which is time, right? So think 483 00:24:13.400 --> 00:24:17.300 about what we talked about with the yield curve inversion 484 00:24:16.300 --> 00:24:19.400 and what was going on on the short end versus the 485 00:24:19.400 --> 00:24:23.500 long end what we've observed in the 486 00:24:23.500 --> 00:24:26.200 past. Let's call year was a really 487 00:24:26.200 --> 00:24:29.800 strong interest rate risk lack 488 00:24:29.800 --> 00:24:32.600 of benefit that you got for sort of being paid 489 00:24:32.600 --> 00:24:34.000 over time, right? 490 00:24:34.100 --> 00:24:38.300 And in theory, right you should get paid to hold 491 00:24:37.300 --> 00:24:41.100 over time because there's less certainty 492 00:24:40.100 --> 00:24:43.500 about what the future holds so you demand a 493 00:24:43.500 --> 00:24:46.800 premium to hold something over time to lend over time. And 494 00:24:46.800 --> 00:24:49.200 so when you have the short end 495 00:24:49.200 --> 00:24:52.500 of the curve come up that tends to impact that interest 496 00:24:52.500 --> 00:24:55.500 rate sets that risk that sensitivity because you're 497 00:24:55.500 --> 00:24:58.800 not getting paid over time. You're getting paid actually on the 498 00:24:58.800 --> 00:25:01.700 the shorter end potentially. So when you 499 00:25:01.700 --> 00:25:04.800 see a pullback of rates, 500 00:25:04.800 --> 00:25:07.700 right and price is going up you're seeing 501 00:25:07.700 --> 00:25:10.800 that benefit playing out through the first quarter as well credit risk 502 00:25:10.800 --> 00:25:13.300 is just the difference the buildup over 503 00:25:13.300 --> 00:25:16.300 the risk free rate treasuries to account 504 00:25:16.300 --> 00:25:19.200 for hey, you know a corporation has more risk than a government 505 00:25:19.200 --> 00:25:22.500 and I should be paid that difference. And so you're investing 506 00:25:22.500 --> 00:25:25.200 up and down the various yield curves that 507 00:25:25.200 --> 00:25:28.900 build up on that and in this case credit risk really as 508 00:25:28.900 --> 00:25:31.900 a factor wasn't a very solid contributor 509 00:25:31.900 --> 00:25:33.200 for the first quarter slightly positive. 510 00:25:34.100 --> 00:25:37.200 The the show really has been frankly for the 511 00:25:37.200 --> 00:25:40.500 past 18 months were interest rate risk is in 512 00:25:40.500 --> 00:25:43.500 terms of factor Premia in your portfolios. 513 00:25:43.500 --> 00:25:46.500 And then Market is is again just Market 514 00:25:46.500 --> 00:25:49.800 beta which is a buildup of all these different factors expressing themselves. 515 00:25:49.800 --> 00:25:53.200 So on the whole positive Bond performance 516 00:25:52.200 --> 00:25:55.500 being driven by changes to 517 00:25:55.500 --> 00:25:59.500 the the yield curve in many cases and some 518 00:25:58.500 --> 00:26:01.400 expectation that Bond markets are looking ahead 519 00:26:01.400 --> 00:26:04.600 and pricing for a cessation of rate raises 520 00:26:04.600 --> 00:26:07.500 by central banks. So so my expectation would 521 00:26:07.500 --> 00:26:10.200 be for for fixed income investors again much like 522 00:26:10.200 --> 00:26:13.400 Equity potentially more volatility here, right? The 523 00:26:13.400 --> 00:26:16.400 the rodeo is not over the big bull riding 524 00:26:16.400 --> 00:26:18.200 could yet be to come so 525 00:26:19.200 --> 00:26:22.400 You know stay patient the the benefit here is 526 00:26:22.400 --> 00:26:25.400 there's return associated with fixed income 527 00:26:25.400 --> 00:26:29.500 to a degree. We haven't seen in 15 years. And so 528 00:26:29.500 --> 00:26:32.700 let this play out. And again, these Factor 529 00:26:32.700 --> 00:26:35.600 exposures are the expectation is over time. These are 530 00:26:35.600 --> 00:26:38.100 going to be a additive to the returns that you 531 00:26:38.100 --> 00:26:40.700 get from the bond market you had mentioned this in some of your previous comments. 532 00:26:42.500 --> 00:26:45.400 Factors perform differently geographically too 533 00:26:45.400 --> 00:26:48.500 right like value in the US might give you a different return 534 00:26:48.500 --> 00:26:51.300 versus value and the international develop during the 535 00:26:51.300 --> 00:26:54.500 Emerging Markets Arenas. So I think there's diversification story 536 00:26:54.500 --> 00:26:57.600 there. Can you comment on that, please? Yeah. Well, yes, of 537 00:26:57.600 --> 00:27:00.100 course and and I sort of made a comment 538 00:27:00.100 --> 00:27:01.300 about as 539 00:27:02.300 --> 00:27:05.500 central banks become decoupled and start to operate a 540 00:27:05.500 --> 00:27:09.000 little more independently that it has an impact on the 541 00:27:11.300 --> 00:27:14.600 local economies in all of these different markets as 542 00:27:14.600 --> 00:27:17.200 an impact on their currencies. And so 543 00:27:17.200 --> 00:27:20.600 when you think about fixed income the benefit that you get from 544 00:27:20.600 --> 00:27:23.300 not only where you hold on 545 00:27:23.300 --> 00:27:26.500 the curve and and the amount of credit that you're willing but that 546 00:27:26.500 --> 00:27:29.900 you're going to diversify the various curves 547 00:27:29.900 --> 00:27:32.300 that you hold and the where you 548 00:27:32.300 --> 00:27:35.900 are on that across geographies and 549 00:27:35.900 --> 00:27:38.200 then take into account the impact that 550 00:27:38.200 --> 00:27:42.200 currencies might have right and so we know for equities 551 00:27:41.200 --> 00:27:45.100 the the volatility signature 552 00:27:44.100 --> 00:27:47.100 of equity is is so robust that 553 00:27:47.100 --> 00:27:50.600 you're you tend to be willing to hold the volatility of 554 00:27:50.600 --> 00:27:53.900 fluctuations and currency in in 555 00:27:53.900 --> 00:27:56.000 fixed income. It tends not to pay you to do 556 00:27:56.200 --> 00:27:59.400 that. And so I know for instance 557 00:27:59.400 --> 00:28:03.100 that here at Cemetery you folks hedge back 558 00:28:03.100 --> 00:28:07.000 to the dollar sure and that takes some of that volatility out, 559 00:28:06.600 --> 00:28:09.400 right? And again, I think that's a benefit 560 00:28:09.400 --> 00:28:11.000 for Factor investors because what you're 561 00:28:11.200 --> 00:28:14.300 Is less volatility associated with fluctuations currency and 562 00:28:14.300 --> 00:28:18.000 you're getting maybe stronger signal from these these 563 00:28:17.200 --> 00:28:20.900 different sources of return across 564 00:28:20.900 --> 00:28:23.400 different markets and they're all going to be hitting at 565 00:28:23.400 --> 00:28:26.700 different times. Once the sort of the global economy 566 00:28:26.700 --> 00:28:29.200 comes unpegged to what's going 567 00:28:29.200 --> 00:28:33.100 on fighting inflation. Yeah until I think it's a perfect diversification story 568 00:28:32.100 --> 00:28:33.300 and 569 00:28:34.100 --> 00:28:37.600 we have a saying here that the only free lunch and investing is diversification. And 570 00:28:37.600 --> 00:28:40.900 so we tout that investor should be embracing that Casey. 571 00:28:40.900 --> 00:28:43.400 Thank you so much for joining us that concludes part one. 572 00:28:43.400 --> 00:28:46.600 Please feel free to access other podcasts 573 00:28:46.600 --> 00:28:49.000 that we have done and they can be 574 00:28:49.400 --> 00:28:52.600 accessed anywhere you get your podcast. So please join Casey and 575 00:28:52.600 --> 00:28:56.000 I for part two and our next series symmetry Partners 576 00:28:55.700 --> 00:28:58.800 LLC is an investment advisor firm 577 00:28:58.800 --> 00:29:01.700 registered with the Securities and Exchange Commission The 578 00:29:01.700 --> 00:29:04.600 Firm only transacts business in states where it 579 00:29:04.600 --> 00:29:07.500 is properly registered or excluded or 580 00:29:07.500 --> 00:29:11.200 Exempted from registration requirements registration of 581 00:29:10.200 --> 00:29:13.600 an investment advisor does not imply any 582 00:29:13.600 --> 00:29:16.400 specific level of skill or training and does 583 00:29:16.400 --> 00:29:19.100 not constitute an endorsement of the firm by the 584 00:29:19.100 --> 00:29:22.300 commission. 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Not all financial advisors are created equally. Some have certified credentials, some charge their clients fees, and others may get paid on commission (if they offer investment products). In part two of this podcast episode, our own Tom Romano, Head of Strategic Relationships and Product Development, is joined by Symmetry's Michael Storer, Senior Regional Director, and a financial advisor from our sister firm, Apella Wealth, Peter Leppones, CFP®, to discuss the important credentials of, and differences between, financial advisors. If you have any questions or would like more information, reach out to us at https://symmetrypartners.com/contact-us/ You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice. Transcript: 0 00:00:01.900 --> 00:00:07.500 Welcome back 1 00:00:07.500 --> 00:00:10.500 to part 2 of choosing the right financial advisor. This 2 00:00:10.500 --> 00:00:13.100 is Tom Romano with unfiltered finance and I'm back 3 00:00:13.100 --> 00:00:16.200 here with my guests. Mike store senior Regional director at 4 00:00:16.200 --> 00:00:20.000 symmetry partners and Peter laponis financial advisor 5 00:00:19.200 --> 00:00:22.200 and cfp at Apollo wealth. Thank you for joining us 6 00:00:22.200 --> 00:00:25.400 gentlemen, so go Peter certified financial 7 00:00:25.400 --> 00:00:28.400 planner see FP Mike. I'm 8 00:00:28.400 --> 00:00:31.800 asked this question to you because Peter is a cfp. What 9 00:00:31.800 --> 00:00:34.700 are the credential what other credentials that investors should 10 00:00:34.700 --> 00:00:37.200 be looking for as they're going through this process of choosing a 11 00:00:37.200 --> 00:00:40.500 financial advisor. I mean cfp certainly is one of them sure. There's 12 00:00:40.500 --> 00:00:43.200 you know, I mean I come across a wide variety 13 00:00:43.200 --> 00:00:47.500 of different advisors and that have different different designations 14 00:00:46.500 --> 00:00:49.300 and it and sometimes it 15 00:00:49.300 --> 00:00:52.400 depends on it depends on you know, what type 16 00:00:52.400 --> 00:00:56.400 of work they're doing for the client. It may not always be, you know 17 00:00:56.400 --> 00:00:59.400 cfp, but most of the advisors that I'm working with their 18 00:00:59.400 --> 00:01:01.500 certified financial planners, but there's 19 00:01:01.900 --> 00:01:05.000 there's SEMA, you know, which is a certified Investment 20 00:01:04.500 --> 00:01:07.800 Management associate, I 21 00:01:07.800 --> 00:01:10.500 believe and that I look 22 00:01:10.500 --> 00:01:13.500 at CFA and see Sima as kind of two different 23 00:01:13.500 --> 00:01:14.300 designations that 24 00:01:15.500 --> 00:01:18.200 Are are very strong. I mean these people are incredibly smart. 25 00:01:18.200 --> 00:01:21.700 They pass a lot of tests to get where they are. But I 26 00:01:21.700 --> 00:01:24.500 look at the see the SEMA and the 27 00:01:24.500 --> 00:01:27.300 the CFA which is a chartered financial 28 00:01:27.300 --> 00:01:31.100 analyst as more geared towards Investments to 29 00:01:30.100 --> 00:01:33.300 a certain extent. So they're if you've 30 00:01:33.300 --> 00:01:37.000 got an advisor that is more seamors or CFA oriented. 31 00:01:36.500 --> 00:01:40.300 I think you're probably you could and Peter 32 00:01:39.300 --> 00:01:42.900 you can correct me if I'm wrong lean more 33 00:01:42.900 --> 00:01:45.800 towards them probably approaching it from an investment perspective. 34 00:01:45.800 --> 00:01:49.100 Whereas I think a cfp is 35 00:01:48.100 --> 00:01:52.100 going to approach the relationship from everything 36 00:01:51.100 --> 00:01:54.400 that Peter just talked about in terms of how they 37 00:01:54.400 --> 00:01:57.200 want to how they want to work with you moving 38 00:01:57.200 --> 00:02:00.300 forward Investments are important no doubt, but I think from 39 00:02:00.300 --> 00:02:03.700 the standpoint of the approach if 40 00:02:03.700 --> 00:02:06.200 you're looking for a planner, you know a cfp is 41 00:02:06.200 --> 00:02:10.000 where you want to be if you want someone that's more focused on. Okay, I'll construct 42 00:02:09.300 --> 00:02:12.800 a portfolio for you, but I think Sima and 43 00:02:12.800 --> 00:02:15.300 CFA tend to lose tend to 44 00:02:15.400 --> 00:02:18.200 Themselves more towards investment only to a certain 45 00:02:18.200 --> 00:02:21.400 extent now that's not every single or CFA but I think from that 46 00:02:21.400 --> 00:02:24.400 perspective those types of designations. Those are the ones that I come across 47 00:02:24.400 --> 00:02:27.700 primarily obviously, there's other designations with 48 00:02:27.700 --> 00:02:30.400 the insurance realm that you know, you like a 49 00:02:30.400 --> 00:02:33.200 chfc that would be which I 50 00:02:33.200 --> 00:02:36.400 I don't even remember that. It's a chartered leave its chartered Financial 51 00:02:36.400 --> 00:02:39.700 consult consultant, right which is different than a chartered financial analyst 52 00:02:39.700 --> 00:02:42.400 which is kind of interesting but you know, they'd be focused more on 53 00:02:42.400 --> 00:02:45.500 and probably the insurance side of the investment process. 54 00:02:45.500 --> 00:02:48.200 So I come across a lot but I would say 55 00:02:48.200 --> 00:02:51.900 that I feel comfortable saying it that the 56 00:02:51.900 --> 00:02:55.400 cfp is the designation where you know, mostly you're 57 00:02:55.400 --> 00:02:58.600 going to be getting more of a planning approach. Whereas I 58 00:02:58.600 --> 00:03:02.200 think the other designations might lean towards something else within 59 00:03:01.200 --> 00:03:04.700 the whole scope of planning but more, 60 00:03:04.700 --> 00:03:07.100 you know designated or specific on that 61 00:03:07.100 --> 00:03:11.000 side sure. I think it's important, you know, individuals professionals 62 00:03:10.500 --> 00:03:14.000 regardless of the industry having credentials after 63 00:03:13.400 --> 00:03:15.400 their name shows that they're 64 00:03:15.400 --> 00:03:18.600 to the business. They're probably lifelong Learners, 65 00:03:18.600 --> 00:03:23.000 which is something you probably want to look for in a financial advisor. And 66 00:03:21.200 --> 00:03:25.300 I would agree with you a cfp 67 00:03:24.300 --> 00:03:27.600 is probably the starting point. However, the 68 00:03:27.600 --> 00:03:31.000 the SEMA the Cima in the CFA, 69 00:03:30.200 --> 00:03:33.900 which I would agree are more investment driven. 70 00:03:35.700 --> 00:03:38.100 Um working with a firm who has a cfp has the point 71 00:03:38.100 --> 00:03:41.300 of contact Peter, but that doesn't mean you don't have access to 72 00:03:41.300 --> 00:03:44.500 cfa's and seamas as well. Right, correct. And 73 00:03:44.500 --> 00:03:47.500 that's that's part of the teamwork approach here that you 74 00:03:47.500 --> 00:03:51.200 know behind the scenes. I know that there's cfas working on our portfolios. 75 00:03:50.200 --> 00:03:53.100 So so I think 76 00:03:53.100 --> 00:03:57.500 you could see someone with another non-cfp designation 77 00:03:57.500 --> 00:04:00.200 but is what's their firm like do they have a team behind 78 00:04:00.200 --> 00:04:04.100 them is maybe they have a a young hire 79 00:04:03.100 --> 00:04:06.700 a new hire coming out of college who's studying 80 00:04:06.700 --> 00:04:09.200 for his or her cfp and that's their parent plan 81 00:04:09.200 --> 00:04:12.600 who works on the financial plan. So I mean to I think 82 00:04:12.600 --> 00:04:15.300 you might be doing a disservice just because 83 00:04:15.300 --> 00:04:18.400 someone doesn't have cfp understand more about what's 84 00:04:18.400 --> 00:04:21.200 what's going on at the firm and not just 85 00:04:21.200 --> 00:04:25.100 the designation. But I do agree having a designation and you 86 00:04:24.100 --> 00:04:28.400 made you reminded me. My continuing 87 00:04:27.400 --> 00:04:30.500 ed is coming up and it's it's comprehensive. I've 88 00:04:30.500 --> 00:04:34.000 got I've got a lot to do several hours to to 89 00:04:33.000 --> 00:04:34.100 keep 90 00:04:34.600 --> 00:04:37.500 Cfp designation current I've 91 00:04:37.500 --> 00:04:40.800 got to do some continuing education requirements online. Yeah, me 92 00:04:40.800 --> 00:04:43.100 too. Thanks for the reminder. I would say I didn't 93 00:04:43.100 --> 00:04:46.300 mean to say that, you know, the cfp is definitely starting point. But Peter 94 00:04:46.300 --> 00:04:49.800 brings up a great point that you when you visit with these cfps. They 95 00:04:49.800 --> 00:04:50.800 do have those other. 96 00:04:51.600 --> 00:04:54.400 People in their organizations that cover those parts 97 00:04:54.400 --> 00:04:57.200 of the planning process for them from that standpoint 98 00:04:57.200 --> 00:05:00.200 So and I've met many cfps that have their SEMA or have their CFA as 99 00:05:00.200 --> 00:05:03.400 well. So depends on who I'm speaking with, but there's there's a 100 00:05:03.400 --> 00:05:06.400 wide variety of different designations and some have won 101 00:05:06.400 --> 00:05:10.000 some have many or some have, you know, more than one right? So something 102 00:05:09.200 --> 00:05:12.400 that you would recommend investors look for as they're gonna 103 00:05:12.400 --> 00:05:15.200 go through absolutely. Absolutely. Absolutely. Yeah Mike we 104 00:05:15.200 --> 00:05:18.100 for all the cfps out there yet. We're definitely the top 105 00:05:18.100 --> 00:05:21.200 designation. No doubt about no doubt about it. We can 106 00:05:21.200 --> 00:05:25.900 leave it at that. Very good very good. So I 107 00:05:25.900 --> 00:05:28.500 have a few more questions and this has been great gentlemen, but 108 00:05:29.700 --> 00:05:32.800 What are some of the resources online resources 109 00:05:32.800 --> 00:05:35.400 right, you know, I don't think people use phone books 110 00:05:35.400 --> 00:05:39.100 anymore to find Financial professionals. What are 111 00:05:38.100 --> 00:05:41.100 some of the things my gear you're working 112 00:05:41.100 --> 00:05:44.000 with thousands of advisors. Like how do you how do you 113 00:05:44.100 --> 00:05:47.200 go about and find an advisor that that you would want to work with 114 00:05:47.200 --> 00:05:50.600 a professional level but not only professional of 115 00:05:50.600 --> 00:05:53.900 us person maybe from even personal standpoint where can 116 00:05:53.900 --> 00:05:56.300 investors go? Well they can they can you 117 00:05:56.300 --> 00:05:59.800 know go online and you know, there's a couple of different organizations that 118 00:05:59.800 --> 00:06:02.700 are out there that you could look at like the Financial Planning Association is 119 00:06:02.700 --> 00:06:05.600 a great place to start that's that's a 120 00:06:05.600 --> 00:06:08.600 big one National Association of 121 00:06:08.600 --> 00:06:11.800 personal financial advisors is another great site 122 00:06:11.800 --> 00:06:14.600 as well the certified financial planner 123 00:06:14.600 --> 00:06:17.100 board. You can go that route as well. I mean, 124 00:06:17.100 --> 00:06:20.400 that's probably the best place to start you can find someone in your general area 125 00:06:20.400 --> 00:06:23.100 that could help you there. There's another firm out there 126 00:06:23.100 --> 00:06:26.600 XY Planning Network which is which 127 00:06:26.600 --> 00:06:29.300 is a pretty good tool for to search for fee only. 128 00:06:29.700 --> 00:06:32.200 Financial advisors you mentioned, you know 129 00:06:32.200 --> 00:06:35.200 word of mouth or referrals from from your friends 130 00:06:35.200 --> 00:06:38.200 or family that may be working with a financial advisor. So all of 131 00:06:38.200 --> 00:06:41.100 them are great great ways to to identify some of 132 00:06:41.100 --> 00:06:44.300 that you might want to work with at least get the opportunity to interview them to see 133 00:06:44.300 --> 00:06:47.700 if they would be a good fit for you. Yeah. I think there's a lot of great resources online, 134 00:06:47.700 --> 00:06:50.500 you know, one of the things that Peter and 135 00:06:50.500 --> 00:06:53.500 I talk about quite a bit is you know working with someone 136 00:06:53.500 --> 00:06:56.200 who understands you someone who's working with 137 00:06:56.200 --> 00:06:58.600 other investors like me. 138 00:06:59.300 --> 00:07:02.900 Right in a lot of times if someone has a very specific need or 139 00:07:02.900 --> 00:07:05.500 specific sort of outcome. They're 140 00:07:05.500 --> 00:07:08.800 looking for they can identify the right Financial professional 141 00:07:08.800 --> 00:07:11.200 by not only looking at those websites, but 142 00:07:12.200 --> 00:07:15.100 LinkedIn Facebook. Look, who are these? 143 00:07:15.100 --> 00:07:18.300 Look who at the who these advisors are look at 144 00:07:18.300 --> 00:07:21.500 the circles that they're in right? You know it a funny story my parents 145 00:07:21.500 --> 00:07:24.200 who are not great investors. They were 146 00:07:24.200 --> 00:07:27.400 both School teachers had a pension but when they were looking for 147 00:07:27.400 --> 00:07:30.400 financial advisor, they didn't look any 148 00:07:30.400 --> 00:07:33.700 further than you know, the Connecticut Teachers Retirement Financial 149 00:07:33.700 --> 00:07:36.400 advisory. It was a really long name like 150 00:07:36.400 --> 00:07:39.500 that. I know I'm butchering it and talking it right but they will 151 00:07:39.500 --> 00:07:42.600 work Connecticut Teachers that must be the guy that we work with without even 152 00:07:42.600 --> 00:07:45.800 thinking twice about it, but they knew they felt comfortable and 153 00:07:45.800 --> 00:07:48.500 they trusted that the this particular individuals working 154 00:07:48.500 --> 00:07:49.900 with other, Connecticut Teachers. 155 00:07:50.800 --> 00:07:53.400 Here to add to any of that Peter. I mean, I think that 156 00:07:53.400 --> 00:07:56.400 you know, I've had done. Oh my 157 00:07:56.400 --> 00:07:57.600 second cap. We have pulled that one back. 158 00:07:58.300 --> 00:07:59.300 I won't ask that question better. 159 00:08:00.300 --> 00:08:00.300 All right. 160 00:08:04.500 --> 00:08:05.500 so Peter 161 00:08:06.900 --> 00:08:09.200 You know, I've talked about this it it's a mutual 162 00:08:09.200 --> 00:08:12.400 interview between an advisor and an investor the investors making 163 00:08:12.400 --> 00:08:16.000 a choice, but the advisors making a choice as well. So talk 164 00:08:15.200 --> 00:08:17.800 a little bit about that process if you will. 165 00:08:18.400 --> 00:08:21.700 Yeah, I think that's that's a great question. And I definitely 166 00:08:21.700 --> 00:08:24.300 encourage people to come up with a 167 00:08:24.300 --> 00:08:28.000 list of questions and interview multiple 168 00:08:27.500 --> 00:08:30.200 advisors definitely. But yeah, when when 169 00:08:30.200 --> 00:08:33.500 I'm meeting with with a New Prospect, I'm interviewing 170 00:08:33.500 --> 00:08:36.700 them as well. And there's things I'm I'm looking 171 00:08:36.700 --> 00:08:39.900 for I want to make sure that number 172 00:08:39.900 --> 00:08:43.600 one there. They're gonna be happy working with us. I've 173 00:08:42.600 --> 00:08:45.500 told people who I refer to 174 00:08:45.500 --> 00:08:48.000 them as Gunslingers. They want to pick stocks. They want to 175 00:08:48.100 --> 00:08:51.500 be in and out of the market they want they want action and I've told 176 00:08:51.500 --> 00:08:54.800 people I go I don't think we're gonna be a good fit. I'm a 177 00:08:54.800 --> 00:08:57.000 nice person. You seem like a nice person you seem to get along but 178 00:08:57.800 --> 00:09:00.300 we're going to have different philosophies and and I want 179 00:09:00.300 --> 00:09:03.200 you to be happy and I don't want to waste your time and I 180 00:09:03.200 --> 00:09:06.200 don't want to have my time wasted and so I've had to tell people I just don't think 181 00:09:06.200 --> 00:09:09.800 that this is necessarily going to work. Um, also there's 182 00:09:09.800 --> 00:09:12.300 when I start to hear people talk and I say this 183 00:09:12.300 --> 00:09:12.800 to clients 184 00:09:13.500 --> 00:09:16.600 and Prospects I start to get a gut feeling about what's 185 00:09:16.600 --> 00:09:19.400 going on. And when I start to hear about things like 186 00:09:19.400 --> 00:09:22.300 well a lot of debt, you know, you've got 187 00:09:22.300 --> 00:09:25.600 and not good. You don't have good financial habits. 188 00:09:25.600 --> 00:09:28.300 You're spending all your money. You've got 189 00:09:28.300 --> 00:09:31.200 a lot of debt a lot of bad debt. It's one thing to have a mortgage your car 190 00:09:31.200 --> 00:09:34.100 payments. Those are those are necessary. We'll call those 191 00:09:34.100 --> 00:09:38.200 good debt necessary debt. We start talking about large student 192 00:09:37.200 --> 00:09:40.500 loans. We start talking about large credit 193 00:09:40.500 --> 00:09:41.300 card balances. 194 00:09:42.500 --> 00:09:45.900 I may not be able to work with you. I you may be better off going 195 00:09:45.900 --> 00:09:49.600 and having credit counseling done first because I 196 00:09:48.600 --> 00:09:52.000 can maybe give you some pointers but I've 197 00:09:51.100 --> 00:09:54.400 had to unfortunately tell people that we may 198 00:09:54.400 --> 00:09:57.600 not be a good fit. There wasn't a whole lot I could do because they 199 00:09:57.600 --> 00:10:00.700 just they just didn't have the assets. They needed to get really the 200 00:10:00.700 --> 00:10:03.400 basics of their budgeting or spending plan 201 00:10:03.400 --> 00:10:06.600 down and start to work on that debt. And that's not something we're 202 00:10:06.600 --> 00:10:07.000 necessarily. 203 00:10:08.500 --> 00:10:11.600 Working on it'd be more of sort of a credit agency 204 00:10:11.600 --> 00:10:14.600 helping them to kind of get that square away. Absolutely. You 205 00:10:14.600 --> 00:10:17.500 mentioned working with, you know, other sort of 206 00:10:17.500 --> 00:10:20.200 financial professionals that you you work with 207 00:10:20.200 --> 00:10:20.400 other. 208 00:10:21.500 --> 00:10:25.400 Financial professionals as well. I mean maybe not direct financial 209 00:10:25.400 --> 00:10:28.400 advisors, but tax advisors and things like that. Oh, definitely. 210 00:10:28.400 --> 00:10:31.400 I like to say that the analogy is I'm 211 00:10:31.400 --> 00:10:34.600 I'm sort of the quarterback or I'm your 212 00:10:34.600 --> 00:10:37.700 your primary care physician if we need to bring in a specialist, 213 00:10:37.700 --> 00:10:40.300 you know cardiologists so forth 214 00:10:40.300 --> 00:10:41.900 weekologists. 215 00:10:44.400 --> 00:10:46.100 So but I'm working with. 216 00:10:47.200 --> 00:10:50.300 I'll work with the client's attorney to talk about their state plan 217 00:10:50.300 --> 00:10:54.500 work with a client's accountant or CPA to 218 00:10:54.500 --> 00:10:57.500 talk about if we need to do some rebalancing in the portfolio before 219 00:10:57.500 --> 00:10:59.200 I do any of that. 220 00:11:00.200 --> 00:11:04.000 And start triggering capital gains. I want to make sure that the accountant is 221 00:11:03.400 --> 00:11:06.400 on board with it and we understand what the 222 00:11:06.400 --> 00:11:09.500 ramifications are of those actions or in 223 00:11:09.500 --> 00:11:12.800 actions because the last thing a client wants is a 224 00:11:12.800 --> 00:11:15.800 surprise attack time. There's something psychological about 225 00:11:15.800 --> 00:11:18.700 a big tax bill staring you in the face and it's 226 00:11:18.700 --> 00:11:21.100 one thing to not know about it and have to 227 00:11:21.100 --> 00:11:24.200 pay it. It's another thing. All right, you know what we knew about this, but we know why we 228 00:11:24.200 --> 00:11:27.300 did it. So I'm constantly working with 229 00:11:27.300 --> 00:11:30.900 with other Professionals in helping clients 230 00:11:30.900 --> 00:11:32.800 with taxes and in legal issues. 231 00:11:33.700 --> 00:11:36.300 That's fantastic. Yeah, so that's another thing that investors should 232 00:11:36.300 --> 00:11:39.100 be looking for. Is there a true team approach? Maybe not even under the 233 00:11:39.100 --> 00:11:42.700 same roof under the same corporate umbrella if you will but making 234 00:11:42.700 --> 00:11:46.100 sure that the advisors acting in that quarterback capacity 235 00:11:45.100 --> 00:11:48.700 and has the right Specialists for 236 00:11:48.700 --> 00:11:51.200 those needs that might be outside of the scope of 237 00:11:51.200 --> 00:11:54.700 what the advisors doing on a day-to-day and that could be another point 238 00:11:54.700 --> 00:11:57.300 of reference for a client. If you have an accountant who 239 00:11:57.300 --> 00:12:00.400 you've been working with for a long time and you happen to like him 240 00:12:00.400 --> 00:12:03.800 or her in the way that they work maybe they could be a place 241 00:12:03.800 --> 00:12:05.100 where you could go to get a referral. 242 00:12:05.900 --> 00:12:08.800 Because I'm in all likelihood that that CPA 243 00:12:08.800 --> 00:12:11.600 or that attorney is has some 244 00:12:11.600 --> 00:12:14.400 type of relationship with a financial advisor and could give 245 00:12:14.400 --> 00:12:17.100 you a couple of places to go. Yeah, I think that's a great 246 00:12:17.100 --> 00:12:20.200 great piece of advice there. All right. 247 00:12:20.200 --> 00:12:23.300 I want one more topic here because this comes up a 248 00:12:23.300 --> 00:12:26.800 lot and it's the notion of compensation for financial advisors. 249 00:12:26.800 --> 00:12:29.700 I've heard individuals say 250 00:12:29.700 --> 00:12:32.200 that I don't pay my financial advisor or anything. He does 251 00:12:32.200 --> 00:12:35.100 it for free sure right there is 252 00:12:35.100 --> 00:12:38.200 there's a problem this industry, I think with transparency at times and 253 00:12:38.200 --> 00:12:41.500 there's a number of different ways financial advisors are 254 00:12:41.500 --> 00:12:44.100 being compensated. I didn't like frankly I think advisors should 255 00:12:44.100 --> 00:12:47.300 be fairly compensated. They're doing really good work, right? 256 00:12:49.100 --> 00:12:52.300 Depending on the advisor. Of course, Mike tell us 257 00:12:52.300 --> 00:12:54.500 a little bit about the couple of different. 258 00:12:55.300 --> 00:12:59.000 Fee structures or compensation structures there are for financial advisors. 259 00:12:58.600 --> 00:13:01.800 And if there's one that you would recommend over 260 00:13:01.800 --> 00:13:04.300 another I'll rattle them off because it's a 261 00:13:04.300 --> 00:13:07.100 lot of different ones. There's feel only which we've talked a little 262 00:13:07.100 --> 00:13:09.400 bit about there's fee-based. There's Commission 263 00:13:10.100 --> 00:13:10.900 There's retainer. 264 00:13:11.800 --> 00:13:14.900 There's subscription. There's 265 00:13:14.900 --> 00:13:17.400 another one I've heard that I know is out there not as 266 00:13:17.400 --> 00:13:20.600 popular but it's there and there's flat fee. 267 00:13:20.600 --> 00:13:23.600 So there's a number of different ways that advisors are 268 00:13:23.600 --> 00:13:26.700 compensated and the one 269 00:13:26.700 --> 00:13:29.300 of course in my line of work and in terms 270 00:13:29.300 --> 00:13:32.400 of what I do on a daily basis working with us, I come across primarily 271 00:13:32.400 --> 00:13:35.100 not always I would say fee only 272 00:13:35.100 --> 00:13:38.100 in fee based or the two that that primarily I work with 273 00:13:38.100 --> 00:13:41.300 although there are there are others that are 274 00:13:41.300 --> 00:13:44.100 less. So like a retainer I've seen I've come across that 275 00:13:44.100 --> 00:13:47.400 but I say primarily it's fee only and fee-based that 276 00:13:47.400 --> 00:13:50.000 I typically work with advisors and you know, 277 00:13:50.300 --> 00:13:53.100 I'll let Peter elaborate but I'll just say generally that fee only would be 278 00:13:53.100 --> 00:13:56.100 just be be charging, you know, 279 00:13:56.100 --> 00:13:59.300 a fee for services. It could 280 00:13:59.300 --> 00:14:02.100 be it could be a flat fee or could be a fee based 281 00:14:02.100 --> 00:14:05.400 on assets under management that the investor might have with that advisor 282 00:14:05.400 --> 00:14:08.000 fee base is is kind of 283 00:14:08.300 --> 00:14:11.600 a combination of the only and commission if you will it has 284 00:14:12.100 --> 00:14:16.600 The concept of building on assets but also the advisor 285 00:14:15.600 --> 00:14:19.300 has the ability to offer commission-based 286 00:14:18.300 --> 00:14:22.300 products that would follow outside of the fiduciary scope. 287 00:14:21.300 --> 00:14:24.800 I believe Peter and so those are the two that primarily 288 00:14:24.800 --> 00:14:27.500 I see in my kind of interactions with 289 00:14:27.500 --> 00:14:30.400 advisors around the country. Yeah, I think most of our listeners are 290 00:14:30.400 --> 00:14:33.800 probably falling into the fee only fee-based camp 291 00:14:33.800 --> 00:14:36.500 or the commission side right there. There 292 00:14:36.500 --> 00:14:39.600 are a number of different fee models out there in compensation models 293 00:14:39.600 --> 00:14:42.800 and I think they all have their pros and cons but you 294 00:14:42.800 --> 00:14:45.100 just said something that I'm gonna ask Peter O'Brien on 295 00:14:45.100 --> 00:14:45.300 right? 296 00:14:46.100 --> 00:14:47.600 We talked about fiduciary. 297 00:14:48.500 --> 00:14:50.800 If you are paying a commission. 298 00:14:51.900 --> 00:14:55.200 Is your advisor acting as a fiduciary necessarily? Yeah, 299 00:14:54.200 --> 00:14:57.500 if you've your your fee only your 300 00:14:57.500 --> 00:15:00.200 being charged in a fee for your advice and 301 00:15:00.200 --> 00:15:04.700 and whatever the the Investments would be. Where's fee-based 302 00:15:03.700 --> 00:15:06.400 you could be receiving commissions. 303 00:15:07.400 --> 00:15:10.100 On investment products. It's sort of 304 00:15:10.100 --> 00:15:15.800 I guess I'll use the term hybrid approach. So it's 305 00:15:14.800 --> 00:15:17.800 a gray area. They I don't 306 00:15:17.800 --> 00:15:20.100 know if because we don't do that here, you know, 307 00:15:20.100 --> 00:15:23.600 we don't have commission based investment products. It's strictly 308 00:15:23.600 --> 00:15:26.300 putting people into no load low cost 309 00:15:26.300 --> 00:15:29.100 mutual funds and ETFs and we are being 310 00:15:29.100 --> 00:15:32.300 paid a fee based upon those assets under management. We don't 311 00:15:32.300 --> 00:15:35.500 have commissionable investment products to sell and if 312 00:15:35.500 --> 00:15:38.100 you're if an advisor is doing that. 313 00:15:39.300 --> 00:15:42.200 I don't think they can put themselves out there as 314 00:15:42.200 --> 00:15:43.700 as a fiduciary necessarily. 315 00:15:44.500 --> 00:15:47.800 Yeah, I think that the commission side I'm not 316 00:15:47.800 --> 00:15:50.500 knocking it. Just calling it 317 00:15:50.500 --> 00:15:53.100 what it is. It's it's rot with conflicts of interest and 318 00:15:53.100 --> 00:15:56.500 you just said something that I think would would mean 319 00:15:56.500 --> 00:15:57.500 a lot to our listeners, right? 320 00:15:58.500 --> 00:15:58.800 these 321 00:16:00.600 --> 00:16:03.600 percentage of assets fees paying fees you're paying 322 00:16:03.600 --> 00:16:06.200 for advice in that fee stays the 323 00:16:06.200 --> 00:16:09.900 same regardless of the investment product. It's a 324 00:16:09.900 --> 00:16:12.500 with your charging 1% regardless of 325 00:16:12.500 --> 00:16:15.400 the advice you give you earn five you earn that one percent rather. 326 00:16:16.100 --> 00:16:16.900 commissions 327 00:16:17.800 --> 00:16:20.700 Is in compensation for advice it's compensation 328 00:16:20.700 --> 00:16:23.300 for selling a product and that product 329 00:16:23.300 --> 00:16:26.100 has to be suitable not necessarily best interest. 330 00:16:27.700 --> 00:16:30.500 Okay, so that I think that's something that people 331 00:16:30.500 --> 00:16:34.000 don't understand outside of this industry. You 332 00:16:33.400 --> 00:16:36.300 know, there's two ways two major ways 333 00:16:36.300 --> 00:16:39.200 that advisers get compensated fees versus commissions and 334 00:16:39.200 --> 00:16:42.500 one other point that I'll make about fees and correct 335 00:16:42.500 --> 00:16:45.400 me if I'm wrong gentlemen if you're charging fees on assets. 336 00:16:46.300 --> 00:16:49.600 If the asset level goes up the advisor 337 00:16:49.600 --> 00:16:52.900 gets paid more the asset level goes down. I 338 00:16:52.900 --> 00:16:55.800 mean the percentage stays the same but the actual dollars change, so 339 00:16:55.800 --> 00:16:58.500 I think that it actually aligns the interests. 340 00:16:59.400 --> 00:17:02.500 Of the investor and the advisor using a fee model 341 00:17:02.500 --> 00:17:05.400 for Susan commission model where someone might 342 00:17:05.400 --> 00:17:08.600 be asking you to buy a product that you may not necessarily 343 00:17:08.600 --> 00:17:08.900 need. 344 00:17:10.500 --> 00:17:13.800 Correct. And that's that's the thing. We you 345 00:17:13.800 --> 00:17:14.800 start talking about different. 346 00:17:16.100 --> 00:17:19.700 Whether it's Insurance products investment products that have commissions on 347 00:17:19.700 --> 00:17:20.000 them. 348 00:17:20.700 --> 00:17:23.500 Now all of a sudden it could be suitable. But if product 349 00:17:23.500 --> 00:17:24.600 a May pay 350 00:17:25.300 --> 00:17:28.900 X percentage products B may pay X 351 00:17:28.900 --> 00:17:31.100 percentage plus something on top of 352 00:17:31.100 --> 00:17:31.300 it. 353 00:17:32.700 --> 00:17:35.400 A non-fiduciary advisor is probably 354 00:17:35.400 --> 00:17:38.400 going to go to product B because it's going to pay him 355 00:17:38.400 --> 00:17:41.000 or her more and it's a perceived conflict of 356 00:17:41.400 --> 00:17:44.300 interest. I'm not saying that every person out there who's earning a commission is 357 00:17:45.100 --> 00:17:48.500 Is not acting in good faith, but there 358 00:17:48.500 --> 00:17:51.600 is there's a potential for that conflict to be there. Sure. It's 359 00:17:51.600 --> 00:17:54.900 it's all things being equal right? It's they're gonna pick if it's 360 00:17:54.900 --> 00:17:57.500 if it doesn't necessarily hurt the 361 00:17:57.500 --> 00:18:00.500 client and all and the Investments are relatively the 362 00:18:00.500 --> 00:18:04.100 same they're going to gravitate probably towards the higher commission product. 363 00:18:03.100 --> 00:18:06.400 Not that it's a bad thing. But that's the conflict of 364 00:18:06.400 --> 00:18:09.000 interest that we talk about right isn't necessarily in the best 365 00:18:09.300 --> 00:18:12.600 interest of the client. Yeah, and I think investors don't need products as 366 00:18:12.600 --> 00:18:15.600 much as they need advice. Yeah agreed. I totally agree. 367 00:18:15.600 --> 00:18:18.700 We were talking the the other 368 00:18:18.700 --> 00:18:21.800 day just that the the meetings we were we were at and 369 00:18:21.800 --> 00:18:24.300 and the model the way it was is you 370 00:18:24.300 --> 00:18:27.700 had insurance companies or investment firms sort of 371 00:18:27.700 --> 00:18:30.900 sitting at the top designing product and starting 372 00:18:30.900 --> 00:18:33.400 to push that product down to advisors who would 373 00:18:33.400 --> 00:18:36.300 then push it to clients down at the bottom and really our 374 00:18:36.300 --> 00:18:37.800 model is where we flip the script. 375 00:18:38.600 --> 00:18:41.600 The client is at the top and the client comes to the advisor. 376 00:18:42.200 --> 00:18:45.400 And we then go out to the product manufacturers to 377 00:18:45.400 --> 00:18:48.400 find the the best product the best solution for 378 00:18:48.400 --> 00:18:51.000 for the client to make as part of 379 00:18:51.500 --> 00:18:54.300 their financial plan. So I think that's that's a big difference there. 380 00:18:54.300 --> 00:18:57.600 We have nothing proprietary and we are acting in the best interests 381 00:18:57.600 --> 00:19:00.500 of the client looking for a best of breed approach. And 382 00:19:00.500 --> 00:19:03.600 again, usually it comes down to well, what 383 00:19:03.600 --> 00:19:06.100 are the fees associated with that and that's another great piece of 384 00:19:06.100 --> 00:19:07.000 advice for clients. 385 00:19:08.400 --> 00:19:11.300 Understand who you're paying and what you're paying 386 00:19:11.300 --> 00:19:12.100 them and what for? 387 00:19:12.900 --> 00:19:16.000 Whether it's mutual funds inside your 401k or 388 00:19:15.400 --> 00:19:18.800 something inside if you have an IRA through your bank 389 00:19:18.800 --> 00:19:21.500 understand what it what it is and and 390 00:19:21.500 --> 00:19:24.500 how it works. You're the one paying it and and understand how 391 00:19:24.500 --> 00:19:27.400 all of that works and a lot of times people don't realize 392 00:19:27.400 --> 00:19:30.500 that because a lot of times things are are not 393 00:19:30.500 --> 00:19:33.300 apparent you got to do a got to do a little bit of digging to understand 394 00:19:33.300 --> 00:19:36.500 what those those fees are inside of certain products. 395 00:19:36.500 --> 00:19:39.300 Yeah. Absolutely. No, no what you're paying and I think 396 00:19:39.300 --> 00:19:42.200 that there are some compensation models for 397 00:19:42.200 --> 00:19:45.700 advisor out that they're a little bit opaque if 398 00:19:45.700 --> 00:19:48.600 you will but as an investor 399 00:19:48.600 --> 00:19:51.600 working with the financial professional transparency matters, 400 00:19:51.600 --> 00:19:54.200 and if someone's not being transparent, then there's 401 00:19:54.200 --> 00:19:57.000 probably not a lot of trust there in this business is built on trust. 402 00:19:58.100 --> 00:20:01.300 So yeah, I have to disclose everything to everybody up 403 00:20:01.300 --> 00:20:01.700 front because 404 00:20:03.300 --> 00:20:06.300 It's coming out. It's coming out of the account and they'll see it right on the statement as 405 00:20:06.300 --> 00:20:09.600 a line item to the penny. Yeah, exactly, except a 406 00:20:09.600 --> 00:20:09.700 penny. 407 00:20:10.200 --> 00:20:13.700 Absolutely. Well gentlemen, thank you so much for your time. So I 408 00:20:13.700 --> 00:20:16.400 just want to kind of recap because there was so much great information 409 00:20:16.400 --> 00:20:19.500 that the two of you shared if you're an investor 410 00:20:19.500 --> 00:20:22.300 out there if you're one of our listeners and you're looking to work with a financial 411 00:20:22.300 --> 00:20:25.500 professional or if you're looking for maybe a second opinion a couple 412 00:20:25.500 --> 00:20:28.100 of things that that Peter and Michael had talked to us 413 00:20:28.100 --> 00:20:31.400 about today. Make sure you ask the question. Are you acting 414 00:20:31.400 --> 00:20:34.600 in a fiduciary capacity? Probably the most important question to 415 00:20:34.600 --> 00:20:35.700 ask a financial professional. 416 00:20:36.300 --> 00:20:40.100 Number two. What is your financial planning process? Right 417 00:20:39.100 --> 00:20:42.200 the value proposition of a 418 00:20:42.200 --> 00:20:46.200 financial advisor should be based on that planning process. And 419 00:20:45.200 --> 00:20:48.500 since you are paying for advice, I think a great 420 00:20:48.500 --> 00:20:51.300 question is what is your investment philosophy? How do you see the 421 00:20:51.300 --> 00:20:54.400 world work? How are you going to advise me based on that investment 422 00:20:54.400 --> 00:20:55.200 philosophy 423 00:20:55.900 --> 00:20:58.300 When it comes to credentials, I think looking for any credential 424 00:20:58.300 --> 00:21:01.100 makes a lot of sense after a person's name. But if you're 425 00:21:01.100 --> 00:21:04.100 looking for a true financial planner, the cfp designation is the 426 00:21:04.100 --> 00:21:05.900 one that that our guests recommend. 427 00:21:06.600 --> 00:21:09.400 Look for people that work with people like 428 00:21:09.400 --> 00:21:12.600 you look for advisors that are working with people like yourself 429 00:21:12.600 --> 00:21:15.900 and there's a lot of resources out there. Mike mentioned 430 00:21:15.900 --> 00:21:18.600 Napa. There's the advisor's website. Of 431 00:21:18.600 --> 00:21:21.300 course Facebook LinkedIn are great ways to look at how 432 00:21:21.300 --> 00:21:24.200 these advisors are working with 433 00:21:24.200 --> 00:21:28.200 people that may or may not be like you and let me throw another resource 434 00:21:27.200 --> 00:21:31.200 out there. A lot of investors don't realize that you 435 00:21:30.200 --> 00:21:34.300 can Google broker check broker check 436 00:21:34.300 --> 00:21:38.000 is a government website where tracks the history 437 00:21:37.100 --> 00:21:41.000 of every single Financial professional whether they're SEC 438 00:21:40.600 --> 00:21:43.900 registered or member of finra and you'll 439 00:21:43.900 --> 00:21:46.400 see if there's any disclosures or anything like that 440 00:21:46.400 --> 00:21:49.400 so broker checks are great way to see if 441 00:21:49.400 --> 00:21:52.200 if there's any dings on the record of 442 00:21:52.200 --> 00:21:55.100 the person that you're speaking to and then in terms 443 00:21:55.100 --> 00:21:58.700 of compensation look for fees versus commissions not 444 00:21:58.700 --> 00:22:01.200 to say that commissions are necessarily bad, but they 445 00:22:01.200 --> 00:22:04.100 there could be some conflicts of 446 00:22:04.100 --> 00:22:06.500 interest in there and a fee-based advisor. 447 00:22:06.600 --> 00:22:09.200 Even a fee only advisor is going to sit in the same side of 448 00:22:09.200 --> 00:22:12.700 the table as you the investor. So Michael, thank 449 00:22:12.700 --> 00:22:15.200 you so much for your time. Thanks Tom Peter. So thank you 450 00:22:15.200 --> 00:22:19.100 for joining us here today. This has been a great conversation and so 451 00:22:18.100 --> 00:22:21.300 for our listeners out there. Thank you for joining us. 452 00:22:21.300 --> 00:22:24.200 We'll get you on the next one. And if you 453 00:22:24.200 --> 00:22:28.400 want to look at any of our previous unfiltered Finance podcasts, they're 454 00:22:27.400 --> 00:22:30.600 available wherever you might be getting your podcast today. 455 00:22:30.600 --> 00:22:34.200 So thank you till next time. Bye Cemetery Partners. 456 00:22:33.200 --> 00:22:36.600 LLC is an investment advisor 457 00:22:36.600 --> 00:22:39.300 firm registered with the Security and Exchange Commission 458 00:22:39.300 --> 00:22:42.500 The Firm only transacts business in states where 459 00:22:42.500 --> 00:22:45.600 it is properly registered or excluded or 460 00:22:45.600 --> 00:22:49.200 Exempted from registration requirements registration of 461 00:22:48.200 --> 00:22:51.400 an investment advisor does not imply 462 00:22:51.400 --> 00:22:54.500 any specific level of skill or training and does 463 00:22:54.500 --> 00:22:57.300 not constitute an endorsement of the firm by the 464 00:22:57.300 --> 00:23:00.300 commission. No one should assume that future performance of any 465 00:23:00.300 --> 00:23:04.400 specific investment investment strategy product or 466 00:23:03.400 --> 00:23:06.100 non-investment related content. 467 00:23:06.600 --> 00:23:10.000 Reference to directly or indirectly in this material will be 468 00:23:09.000 --> 00:23:10.500 profitable. 469 00:23:11.400 --> 00:23:14.300 As with any investment strategy there is the possibility 470 00:23:14.300 --> 00:23:17.500 of profitability as well as loss due 471 00:23:17.500 --> 00:23:20.200 to various factors including changing market 472 00:23:20.200 --> 00:23:22.600 conditions and/or applicable laws. 473 00:23:23.400 --> 00:23:27.000 Content may not be reflective of current opinions or 474 00:23:26.600 --> 00:23:29.600 positions. Please note the material 475 00:23:29.600 --> 00:23:32.300 is provided for educational and background use only 476 00:23:32.300 --> 00:23:36.000 moreover. You should not assume that any discussion or information 477 00:23:35.700 --> 00:23:38.600 contained in this material serves as 478 00:23:38.600 --> 00:23:42.400 the receipt of or as a substitute for personalized 479 00:23:41.400 --> 00:23:43.700 investment advice.
As financial professionals, we're often asked one simple question: “do you know what I should buy right now?” In truth, we don't believe it's possible to successfully predict market behaviors most of the time. But, we do believe that a qualified financial advisor can help you devise a plan for long-term success. In this episode of Unfiltered Finance, our own Tom Romano, Head of Strategic Relationships and Product Development, is joined by Symmetry's Michael Storer, Senior Regional Director, and a financial advisor from our sister firm, Apella Wealth, Peter Leppones, CFP®, to answer a more important question: “what should you consider when choosing a financial advisor?” If you have any questions or would like more information, reach out to us at https://symmetrypartners.com/contact-us/ You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice. Transcript: 00:00:01.900 --> 00:00:07.400 Hello and 1 00:00:07.400 --> 00:00:10.700 welcome to unfiltered Finance. I'm your host Tom romano. 2 00:00:10.700 --> 00:00:13.300 And thank you for joining us this episode today. We 3 00:00:13.300 --> 00:00:17.000 are talking about choosing the right financial advisor and 4 00:00:16.200 --> 00:00:19.400 I have the perfect guests for this topic 5 00:00:19.400 --> 00:00:22.300 joining us here today first and foremost Mike 6 00:00:22.300 --> 00:00:25.600 store who is a senior Regional director 7 00:00:25.600 --> 00:00:28.100 at symmetry Partners. I asked Mike to be 8 00:00:28.100 --> 00:00:31.700 on the podcast because he works with thousands of financial advisors across 9 00:00:31.700 --> 00:00:34.200 the country. He knows which ones 10 00:00:34.200 --> 00:00:37.200 are doing the appropriate job and due diligence and 11 00:00:37.200 --> 00:00:41.200 planning for their clients and the others who might be dare. I 12 00:00:41.200 --> 00:00:44.500 say fake it Mike faking it and of 13 00:00:44.500 --> 00:00:47.800 course a long time friend of mine Mr. Peter loponis 14 00:00:47.800 --> 00:00:50.900 who's a certified financial planner and financial advisor 15 00:00:50.900 --> 00:00:53.100 with Apollo wealth and happens to be 16 00:00:53.100 --> 00:00:56.200 my personal financial planner. So gentlemen, thank you both for joining 17 00:00:56.200 --> 00:00:59.600 us here today. You're welcome, Tom. Thanks Tom. Great to be here. I thought 18 00:00:59.600 --> 00:01:01.600 this was appropriate topic for us to discuss. 19 00:01:01.900 --> 00:01:04.500 you know coming out of the pandemic I travel a 20 00:01:04.500 --> 00:01:07.400 lot for business and I've been on many planes 21 00:01:07.400 --> 00:01:10.400 over the last few months and you know, whether it's an 22 00:01:10.400 --> 00:01:11.100 airport or 23 00:01:12.400 --> 00:01:16.200 Are sitting next to someone on a plane and just bring 24 00:01:15.200 --> 00:01:19.000 up some small talk and people understand 25 00:01:18.300 --> 00:01:21.300 that I'm working in the financial services a business. 26 00:01:21.300 --> 00:01:25.000 And the first question. I always get is got any 27 00:01:24.200 --> 00:01:27.300 tips. What should I be buying? What 28 00:01:27.300 --> 00:01:31.000 should I be selling? Right? It's a very common question and for 29 00:01:30.300 --> 00:01:33.100 years, my response has always been and I'm 30 00:01:33.100 --> 00:01:36.400 a firm believer of this is the best advice I can give anyone in 31 00:01:36.400 --> 00:01:39.300 that moment is to work with 32 00:01:39.300 --> 00:01:42.300 someone you trust financial planner financial 33 00:01:42.300 --> 00:01:46.300 advisor that's working in a fiduciary capacity. I 34 00:01:45.300 --> 00:01:48.300 have a number of reasons why I say that but 35 00:01:48.300 --> 00:01:51.700 Mike I'd love to hear it from your perspective. Why should 36 00:01:51.700 --> 00:01:54.300 investors people planning for 37 00:01:54.300 --> 00:01:57.300 retirement or for any other Financial need be working 38 00:01:57.300 --> 00:02:00.100 with a financial professional? That's a great question. 39 00:02:00.100 --> 00:02:03.100 I think you hit on it at the in your opening 40 00:02:03.100 --> 00:02:04.100 remarks Tom is that 41 00:02:04.900 --> 00:02:05.200 You know. 42 00:02:06.300 --> 00:02:09.300 Having traveled the country for many 43 00:02:09.300 --> 00:02:14.300 years working with a number of different types of advisors and meeting 44 00:02:13.300 --> 00:02:16.900 with clients at the same time, you know clients have 45 00:02:16.900 --> 00:02:19.200 different desperate needs in terms of when it 46 00:02:19.200 --> 00:02:22.100 comes to financial Financial advice so they can 47 00:02:22.100 --> 00:02:25.100 certainly learn about it on on a website if they 48 00:02:25.100 --> 00:02:28.500 want to but I found that especially the 49 00:02:28.500 --> 00:02:31.900 best advisors are working working with 50 00:02:31.900 --> 00:02:34.400 clients and from that 51 00:02:34.400 --> 00:02:36.300 perspective. I know who these advisors are. 52 00:02:37.300 --> 00:02:40.500 And I know they're doing a great job for their clients. And for me, 53 00:02:40.500 --> 00:02:43.400 the one thing that comes to mind besides everything 54 00:02:43.400 --> 00:02:46.100 else at a financial advisor does because I think about it in 55 00:02:46.100 --> 00:02:49.600 my own world is comfort and peace of mind, right? There's lots 56 00:02:49.600 --> 00:02:51.400 of different moving Parts when it comes to planning. 57 00:02:52.200 --> 00:02:55.500 And and what you're going to do with your money for the long term and even myself 58 00:02:55.500 --> 00:02:58.200 being in this business, I worry about am I making 59 00:02:58.200 --> 00:03:01.900 the right decisions? So I think a lot of it comes down 60 00:03:01.900 --> 00:03:05.400 to peace of mind and comfort. I think that that's high 61 00:03:04.400 --> 00:03:07.300 level. There's a lot of you can drill down from there 62 00:03:07.300 --> 00:03:10.900 but I think for most clients if you think about it, it's getting that 63 00:03:10.900 --> 00:03:13.400 pressure off of you and bringing a 64 00:03:13.400 --> 00:03:16.500 professional and to make sure that you're meeting your life goals, whatever those might 65 00:03:16.500 --> 00:03:19.400 be sure. No, absolutely. I think what I'm hearing you say, I 66 00:03:19.400 --> 00:03:23.100 hear things like planning and long-term and Peter 67 00:03:22.100 --> 00:03:25.700 I'll shift over to you. So 68 00:03:25.700 --> 00:03:28.400 what I'm hearing Mike say and I loved for you to plan 69 00:03:28.400 --> 00:03:31.400 on this when someone asks me got any tips, 70 00:03:31.400 --> 00:03:32.700 why is that the wrong question? 71 00:03:34.600 --> 00:03:35.200 well, I think 72 00:03:36.700 --> 00:03:39.500 the answer they're looking for everyone wants something 73 00:03:39.500 --> 00:03:42.600 that's exciting and and sexy that 74 00:03:42.600 --> 00:03:43.200 they can tell. 75 00:03:44.400 --> 00:03:47.500 Their friends. I think you've used the term water cooler alpha or 76 00:03:47.500 --> 00:03:50.900 Golf Course Alpha everyone thinks somehow because we're 77 00:03:50.900 --> 00:03:53.600 sitting here on the inside. We're insiders. We've 78 00:03:53.600 --> 00:03:56.600 got more information than than they do 79 00:03:56.600 --> 00:03:59.300 as as retail investors, but 80 00:03:59.300 --> 00:04:02.600 that's just not the case and and it's not about 81 00:04:02.600 --> 00:04:05.200 hitting that home run with the stock because 82 00:04:05.200 --> 00:04:08.500 if you're gonna be picking individual stocks, there's gonna 83 00:04:08.500 --> 00:04:11.300 be some home runs in there, but there's got to be some singles and 84 00:04:11.300 --> 00:04:14.500 doubles there's gonna be some losers too. It just 85 00:04:14.500 --> 00:04:18.000 it's gonna happen statistically, but when 86 00:04:17.100 --> 00:04:20.600 we talk about a plan and what 87 00:04:20.600 --> 00:04:23.700 it can do for you long term the sense of confidence 88 00:04:23.700 --> 00:04:26.300 that it's going to give you. That's what you really need. Hey, it's 89 00:04:26.300 --> 00:04:29.300 great to be able to say Jesus I bought in at this stock when when it 90 00:04:29.300 --> 00:04:32.500 was at 10 and it went to a hundred and in two years. It's a 91 00:04:32.500 --> 00:04:33.700 great story, but 92 00:04:35.200 --> 00:04:38.500 Is better to have a sense of confidence and comfort with your 93 00:04:38.500 --> 00:04:41.200 plan and with your financial outcomes, and that's why 94 00:04:41.200 --> 00:04:44.500 sitting down and taking the time to go through a plan with a 95 00:04:44.500 --> 00:04:47.100 cfp with someone who's a fiduciary is really in your 96 00:04:47.100 --> 00:04:50.400 best interest versus getting that that hot stock tip. 97 00:04:50.400 --> 00:04:53.100 Yeah, I would agree. The one thing that 98 00:04:53.100 --> 00:04:56.200 I always comes to mind when someone says got any tips the first 99 00:04:56.200 --> 00:04:59.700 thing I'm thinking well if I had some I wouldn't tell you I'd keep 100 00:04:59.700 --> 00:05:02.300 it all for myself, right? There's wildly more Capital 101 00:05:02.300 --> 00:05:06.600 to be to be earned when you keep those secrets to yourself right quick 102 00:05:05.600 --> 00:05:08.100 short story. Tom and 103 00:05:08.100 --> 00:05:11.400 Peter. My son is out in gainfully employed 104 00:05:11.400 --> 00:05:14.600 in the Working World now and he has a little bit of money and he 105 00:05:14.600 --> 00:05:17.700 asked me about a year ago a year and a half ago to Dad what 106 00:05:17.700 --> 00:05:20.700 stocks should I pick? And so I immediately opened 107 00:05:20.700 --> 00:05:24.300 up the Barron's journal and 108 00:05:24.300 --> 00:05:27.200 I just looked at the stocks to pick now I said, hey, you 109 00:05:27.200 --> 00:05:30.100 know, if you want to buy some technology, here's a bunch of Technology names. I said, 110 00:05:30.100 --> 00:05:33.400 you know, the market has been involved, but if you want to buy stocks, here's a 111 00:05:33.400 --> 00:05:34.800 couple of names that you can just 112 00:05:35.300 --> 00:05:39.500 Your portfolio. So of course he did that on my advice and 113 00:05:38.500 --> 00:05:41.300 then about a year later. He 114 00:05:41.300 --> 00:05:44.400 was blaming me because I'm the one that picked the stocks from in the 115 00:05:44.400 --> 00:05:45.000 stocks were Downs. 116 00:05:45.800 --> 00:05:48.600 I just thought that was kind of interesting because it I did 117 00:05:48.600 --> 00:05:51.400 exactly the opposite of what I should have said to him right in terms 118 00:05:51.400 --> 00:05:54.400 of how we should be approaching these but you know, this was play 119 00:05:54.400 --> 00:05:57.500 money for him. So I let him learn a little bit about what it 120 00:05:57.500 --> 00:06:00.300 really means to invest in those types of questions of the wrong questions, 121 00:06:00.300 --> 00:06:03.000 right as you just mentioned Peter and so I thought it was 122 00:06:03.200 --> 00:06:06.400 a really good it was a it was a learning moment for him to understand that 123 00:06:06.400 --> 00:06:09.700 you don't just pick stocks and they go up. Oh, absolutely and like 124 00:06:09.700 --> 00:06:13.000 I I actually I do that with with clients. I'll 125 00:06:12.200 --> 00:06:13.600 say to them. 126 00:06:14.600 --> 00:06:17.100 If you want to open up a small account and I 127 00:06:17.100 --> 00:06:20.000 use the term your Casino money. Hey, you got to go to 128 00:06:20.100 --> 00:06:23.300 the casino and sit there and maybe go out to dinner have a drink play the 129 00:06:23.300 --> 00:06:26.500 slot sit at a table if you lose a hundred or 200 130 00:06:26.500 --> 00:06:27.100 or $300. 131 00:06:28.500 --> 00:06:30.300 It was a night of entertainment you had a good time. 132 00:06:31.300 --> 00:06:34.600 I see take your Casino money and put it into an account and 133 00:06:34.600 --> 00:06:37.300 buy a couple of stocks and just it's it's 134 00:06:37.300 --> 00:06:40.400 good education for you. You might learn some valuable 135 00:06:40.400 --> 00:06:43.900 lessons, but you're gonna pay really close attention. Even 136 00:06:43.900 --> 00:06:46.200 if it's only five or 10 shares of a 137 00:06:46.200 --> 00:06:49.200 company and you'll you'll learn a lot for it. So I think there is certainly a 138 00:06:49.200 --> 00:06:52.900 value in that but with large sums of Money Retirement accounts 139 00:06:52.900 --> 00:06:55.400 brokerage accounts. Absolutely not none of 140 00:06:55.400 --> 00:06:58.700 this stock picking. It's got to be a low cost. Well Diversified portfolio. 141 00:06:58.700 --> 00:07:01.100 So I'm hearing you say it's okay to sit in a 142 00:07:01.100 --> 00:07:01.300 little bit. 143 00:07:02.300 --> 00:07:05.800 Any bit tiny bit? Absolutely. No, I didn't. You 144 00:07:05.800 --> 00:07:08.300 know, I like to play the market myself, but I'm only doing 145 00:07:08.300 --> 00:07:11.500 that with my my entertainment dollars not my 146 00:07:11.500 --> 00:07:14.500 long-term assets that that my family 147 00:07:14.500 --> 00:07:18.100 and I are going to need at some point in time. Right? So Peter 148 00:07:17.100 --> 00:07:20.400 you've been talking a lot about planning right and and 149 00:07:20.400 --> 00:07:23.200 I've been in this business for a long time as with you 150 00:07:23.200 --> 00:07:27.500 you and I've worked together for many many years. I've noticed 151 00:07:26.500 --> 00:07:29.800 the value proposition of financial advisor 152 00:07:29.800 --> 00:07:32.300 has changed right at one point. It was that 153 00:07:32.300 --> 00:07:36.200 stock picker many many years ago. So this 154 00:07:35.200 --> 00:07:38.400 day and age what what do 155 00:07:38.400 --> 00:07:41.500 you see as the value proposition to a financial advisor? 156 00:07:42.200 --> 00:07:46.000 In my opinion, it has to be the plan because that's 157 00:07:45.300 --> 00:07:48.500 where we've had success as a firm. I've 158 00:07:48.500 --> 00:07:51.300 had success as an advisor clients have had success 159 00:07:51.300 --> 00:07:54.700 following that advice and and really 160 00:07:54.700 --> 00:07:57.100 it's about the planning and that's the most 161 00:07:57.100 --> 00:08:00.600 valuable advice. I give to my clients. Hey, we're with 162 00:08:00.600 --> 00:08:04.200 a low cost. Well Diversified portfolio. We're going 163 00:08:03.200 --> 00:08:06.300 to get a market return the market for us 164 00:08:06.300 --> 00:08:09.300 taking risk. We will get a market return and my 165 00:08:09.300 --> 00:08:12.700 return will be no different than my clients because we invest in very similar 166 00:08:12.700 --> 00:08:16.300 similarly constructed portfolios, but 167 00:08:15.300 --> 00:08:16.700 really 168 00:08:17.900 --> 00:08:20.800 Whether we get an 8% return 9% 10% 169 00:08:20.800 --> 00:08:23.300 return long-term. It's really 170 00:08:23.300 --> 00:08:24.100 the plan. 171 00:08:25.200 --> 00:08:28.500 That is is going to drive all that and just because 172 00:08:28.500 --> 00:08:31.400 their portfolio is up a certain year that that's 173 00:08:31.400 --> 00:08:32.800 great and they like to see that. 174 00:08:33.900 --> 00:08:36.100 But again, the plan is going to say well geez, I 175 00:08:36.100 --> 00:08:39.700 know now I can retire at age 62. I'm 176 00:08:39.700 --> 00:08:43.600 going to take Social Security at 67 when 177 00:08:42.600 --> 00:08:44.700 I retire at 62. 178 00:08:45.500 --> 00:08:48.500 I'm going to be able to pay for my own health insurance until 179 00:08:48.500 --> 00:08:51.700 I hit MediCare at age 65. I mean, those are questions 180 00:08:51.700 --> 00:08:54.300 that aren't even related to a rate 181 00:08:54.300 --> 00:08:57.300 of return or a stock pick or any of that. They're planning 182 00:08:57.300 --> 00:09:00.300 questions, but they're extremely important to people the very 183 00:09:00.300 --> 00:09:03.300 comprehensive list of questions versus should you be in a 184 00:09:03.300 --> 00:09:06.100 60% stock 40% bomb for far beyond that 185 00:09:06.100 --> 00:09:09.400 correct? Correct, but it's it's about the the layers and 186 00:09:09.400 --> 00:09:13.200 the investment management risk reward asset 187 00:09:12.200 --> 00:09:16.000 allocation being allocated appropriately. 188 00:09:17.400 --> 00:09:20.100 According to your risk tolerance that's all part of it. But you 189 00:09:20.100 --> 00:09:23.200 do when I sit down with clients we talk about the 190 00:09:23.200 --> 00:09:26.200 performance we talk about what the markets have been doing and we really start 191 00:09:26.200 --> 00:09:29.700 to get into those those items Healthcare Medicare long 192 00:09:29.700 --> 00:09:33.900 term care gifting money to people grandchildren 193 00:09:32.900 --> 00:09:35.700 setting up a 529 194 00:09:35.700 --> 00:09:38.200 accounts. All those types of things. These 195 00:09:38.200 --> 00:09:41.200 are the goals and the things that are important to clients and they come 196 00:09:41.200 --> 00:09:45.000 through the planning process. Yeah, that's extremely valuable right life 197 00:09:44.100 --> 00:09:47.800 comes at you fast, and there's a number of instances in 198 00:09:47.800 --> 00:09:50.400 my personal life where I've leaned on you for things that 199 00:09:50.400 --> 00:09:53.100 are fun far beyond investable assets. 200 00:09:54.100 --> 00:09:57.200 So that's that's good. So what so far listeners out there. 201 00:09:57.200 --> 00:10:01.100 I mean you're looking for a financial professional that 202 00:10:00.100 --> 00:10:02.300 is planning focused. 203 00:10:03.400 --> 00:10:06.700 But also from a very comprehensive standpoint Beyond 204 00:10:06.700 --> 00:10:09.700 stocks bonds mutual funds Exchange Trade 205 00:10:09.700 --> 00:10:10.300 funds Etc. 206 00:10:11.300 --> 00:10:14.500 So let's one of the things that's a 207 00:10:14.500 --> 00:10:15.100 change gears a little bit. 208 00:10:16.500 --> 00:10:19.500 You know, there's over 300,000 financial advisors in 209 00:10:19.500 --> 00:10:22.400 the United States, right? The term 210 00:10:22.400 --> 00:10:25.700 fiduciary comes up quite a bit and I'm 211 00:10:25.700 --> 00:10:28.800 always surprised maybe I'm not as surprised 212 00:10:28.800 --> 00:10:31.600 as I once was that investors are don't 213 00:10:31.600 --> 00:10:34.900 necessarily understand that sometimes advisors are 214 00:10:34.900 --> 00:10:38.200 acting any fiduciary capacity and sometimes 215 00:10:37.200 --> 00:10:40.300 they are not before we 216 00:10:40.300 --> 00:10:41.500 jump into that. 217 00:10:42.400 --> 00:10:45.500 Explain to us Peter. What is a fiduciary? Well, it's 218 00:10:45.500 --> 00:10:48.700 it's the highest standard of care in in 219 00:10:48.700 --> 00:10:51.700 our industry. And I've sort of I've been on both 220 00:10:51.700 --> 00:10:54.300 sides of it. So I have to act in my 221 00:10:54.300 --> 00:10:57.200 clients best interest not only being affiliated with with a 222 00:10:57.200 --> 00:11:00.600 palette but also being a cfp and really 223 00:11:00.600 --> 00:11:03.300 what that comes down to at the end of the day 224 00:11:03.300 --> 00:11:05.300 is the type of 225 00:11:06.600 --> 00:11:09.200 Investment product. I'm going to refer to 226 00:11:09.200 --> 00:11:12.900 everything as a product that we put our clients into and 227 00:11:13.700 --> 00:11:18.800 I've got a really focus on the cost the level 228 00:11:17.800 --> 00:11:20.600 of care below a fiduciary. It's 229 00:11:20.600 --> 00:11:23.400 referred to as the suitability standard. Does that mean if I'm 230 00:11:23.400 --> 00:11:26.800 not a fiduciary? I'm doing something unethical absolutely not 231 00:11:26.800 --> 00:11:30.300 the last thing I want to do because I again I was there I've worked 232 00:11:30.300 --> 00:11:33.200 with clients where I was just doing by this suitability standard. I 233 00:11:33.200 --> 00:11:36.200 was not a fiduciary at the end of the 234 00:11:36.200 --> 00:11:40.200 day. I'm putting my clients into something that is putting more money back 235 00:11:39.200 --> 00:11:43.100 into their pocket meaning the fees 236 00:11:42.100 --> 00:11:46.200 and the costs associated with those products are 237 00:11:45.200 --> 00:11:49.200 much lower. We have 238 00:11:49.200 --> 00:11:52.500 no Front End Sales charges. We have no backend sales charges. 239 00:11:52.500 --> 00:11:55.100 So I said to clients that are that are coming on board. 240 00:11:56.100 --> 00:11:59.400 I will bend over backwards to make sure that you are happy but at some 241 00:11:59.400 --> 00:12:03.300 point if you don't realize the value 242 00:12:02.300 --> 00:12:05.500 of our services or you chose to go elsewhere, you 243 00:12:05.500 --> 00:12:08.800 can do that. You're going to be able to take what you have here and 244 00:12:08.800 --> 00:12:11.400 move that elsewhere. You're not going to be tied up for three or 245 00:12:11.400 --> 00:12:14.300 five or ten years. No surrender charges or big 246 00:12:14.300 --> 00:12:17.000 fees to go acting in their best interest and that helps 247 00:12:17.200 --> 00:12:20.100 to protect them. And I think it's extremely important that people 248 00:12:20.100 --> 00:12:20.700 need to ask 249 00:12:22.800 --> 00:12:25.700 Are you a fiduciary is your firm of fiduciary? And how 250 00:12:25.700 --> 00:12:27.600 do you work? So when? 251 00:12:28.900 --> 00:12:32.200 Investors are looking for a financial 252 00:12:31.200 --> 00:12:34.400 professional to work with right what I'm 253 00:12:34.400 --> 00:12:37.800 hearing someone the first things I should look for and they should ask about it potentially 254 00:12:37.800 --> 00:12:40.600 even get it in writing. Are you acting any fiduciary 255 00:12:40.600 --> 00:12:45.100 capacity? Are you acting in my best interest? Correct? They 256 00:12:44.100 --> 00:12:48.800 absolutely should and and interview multiple 257 00:12:47.800 --> 00:12:52.600 people Tom has 258 00:12:51.600 --> 00:12:54.200 been not only a great client. But I've worked 259 00:12:54.200 --> 00:12:57.500 with many of Tom's family members. Why because they come to Tom. Jeez 260 00:12:57.500 --> 00:13:00.700 Tom. I've got some questions. Who should I work with? Well talk 261 00:13:00.700 --> 00:13:03.400 to Peter. So if you have a friend or family member who you 262 00:13:03.400 --> 00:13:06.500 know works with an advisor ask for that that person's name. 263 00:13:06.500 --> 00:13:09.400 And if they will if you have a friend or family member they'll 264 00:13:09.400 --> 00:13:12.300 refer them over if they enjoy working with them. So I think that's a 265 00:13:12.300 --> 00:13:15.800 good place to start but interview them there's many checklists 266 00:13:15.800 --> 00:13:18.800 online and I think one of the things you want to ask about are 267 00:13:18.800 --> 00:13:21.800 you a fiduciary understand what that means and it's 268 00:13:21.800 --> 00:13:24.900 it's something important because there's 269 00:13:24.900 --> 00:13:27.300 plenty of us out. There aren't as many as probably there should 270 00:13:27.300 --> 00:13:28.900 be but there's plenty fiduc. 271 00:13:28.900 --> 00:13:30.000 He's out there for you to work with. 272 00:13:30.800 --> 00:13:33.000 Absolutely. You made a really good point. I was doing a little research. 273 00:13:34.300 --> 00:13:35.600 Knowing that we were going to have this. 274 00:13:36.500 --> 00:13:39.400 Talk today the three of us and you know, 275 00:13:39.400 --> 00:13:42.700 the number one way investors find their financial advisors through 276 00:13:42.700 --> 00:13:45.500 through referrals. Right number two is through 277 00:13:45.500 --> 00:13:49.500 you know online searches and things like that. So 278 00:13:48.500 --> 00:13:51.200 I think that's that's really important 279 00:13:51.200 --> 00:13:54.200 when you're looking for financial audience advisor talk to your family 280 00:13:54.200 --> 00:13:57.800 your friends people who have or may have similar Financial 281 00:13:57.800 --> 00:14:00.200 situations as you do but I 282 00:14:00.200 --> 00:14:03.600 think you know, the important thing. Is that the very good question. Are 283 00:14:03.600 --> 00:14:06.900 you acting and a fiduciary capacity at all times, right? 284 00:14:11.300 --> 00:14:14.100 We talked about the planning process one of the things I want to 285 00:14:14.100 --> 00:14:17.700 touch upon and Mike will turn to you is that sometimes giving 286 00:14:17.700 --> 00:14:20.700 good advice means saying no not giving 287 00:14:20.700 --> 00:14:23.900 the client what they're looking for. Right and 288 00:14:23.900 --> 00:14:27.400 I've seen advisors who act 289 00:14:26.400 --> 00:14:29.700 as more of a facilitator 290 00:14:29.700 --> 00:14:32.400 very high service level but whatever the client 291 00:14:32.400 --> 00:14:35.400 wants they they get what are some of the Perils of 292 00:14:35.400 --> 00:14:35.500 that? 293 00:14:36.700 --> 00:14:40.200 The Perils are that you become all 294 00:14:39.200 --> 00:14:42.100 things to all people and as I think 295 00:14:42.100 --> 00:14:46.400 Thomas you have famously said if everything's 296 00:14:45.400 --> 00:14:48.600 important nothing's important and 297 00:14:48.600 --> 00:14:51.300 I think from the perspective of advice that we work with 298 00:14:51.300 --> 00:14:54.100 it's it's you know 299 00:14:54.100 --> 00:14:57.800 when you when you think about that kind of cafeteria style 300 00:14:57.800 --> 00:14:59.000 service. 301 00:14:59.900 --> 00:15:01.400 It becomes very difficult to. 302 00:15:02.900 --> 00:15:05.500 Address clients needs concerns or 303 00:15:05.500 --> 00:15:08.000 fears because you know 304 00:15:08.700 --> 00:15:11.400 in terms of of investment investment advice, 305 00:15:11.400 --> 00:15:14.400 if you're if you've got clients that are in individual stocks 306 00:15:14.400 --> 00:15:17.800 and you have clients in Diversified portfolios, or they're in a more passive 307 00:15:17.800 --> 00:15:21.200 investment or they're in a tactical investment. You're constantly 308 00:15:20.200 --> 00:15:23.400 pivoting to try to answer questions to 309 00:15:23.400 --> 00:15:26.300 all these different constituencies within your practice what we 310 00:15:26.300 --> 00:15:29.700 find in our in our work is that you know advisors that 311 00:15:29.700 --> 00:15:32.400 have a philosophy advisors have a way that 312 00:15:32.400 --> 00:15:36.000 they approach the capital markets and how they construct portfolios I 313 00:15:35.500 --> 00:15:39.000 tend to do the best because their clients are like-minded and 314 00:15:38.400 --> 00:15:41.300 it keeps them in their seats even when markets are 315 00:15:41.300 --> 00:15:42.900 difficult. So having a 316 00:15:43.800 --> 00:15:46.200 Kind of a carte blanche or 317 00:15:46.200 --> 00:15:49.900 I like to say cafeteria style investment or at 318 00:15:49.900 --> 00:15:52.300 least offering makes it more difficult for you to keep your 319 00:15:52.300 --> 00:15:56.200 clients in line. I think over time and I think what I 320 00:15:56.200 --> 00:15:59.600 like like best about being at symmetries, we do have that investment philosophy. That's 321 00:15:59.600 --> 00:16:02.700 straightforward. It doesn't deviate and most 322 00:16:02.700 --> 00:16:05.000 of the advice that work with us tend to have 323 00:16:05.100 --> 00:16:08.300 that same philosophy. The interesting thing about that too is you notice 324 00:16:08.300 --> 00:16:11.300 when markets are fairly volatile which where this is really important 325 00:16:11.300 --> 00:16:14.700 is that you know investors that 326 00:16:14.700 --> 00:16:18.000 kind of adhere to similar investment 327 00:16:17.400 --> 00:16:20.700 strategy like symmetries is that they tend 328 00:16:20.700 --> 00:16:23.800 to have less gap between What markets are doing and what 329 00:16:23.800 --> 00:16:26.300 their Investments are doing because they tend to stay in their seats. They're not 330 00:16:26.300 --> 00:16:29.800 moving around behaviorally moving in and out of the market or moving in and 331 00:16:29.800 --> 00:16:31.600 out of Investments. And I think that's sometimes can be the 332 00:16:32.400 --> 00:16:35.700 the offshoot of having a strategy where 333 00:16:35.700 --> 00:16:37.200 you're just trying to be everything to everybody. 334 00:16:38.800 --> 00:16:41.200 I'm going to unpack use it a lot of really yeah, I get 335 00:16:41.200 --> 00:16:44.100 there. Sorry, but no. No, I just want to make sure our listeners get it to get 336 00:16:44.100 --> 00:16:47.700 some really really good insight there Mike. So first 337 00:16:47.700 --> 00:16:50.800 and foremost you talk about an investment philosophy 338 00:16:50.800 --> 00:16:53.700 and what I'm hearing you say is that we're talking 339 00:16:53.700 --> 00:16:56.100 about advice, right and if someone wants to 340 00:16:56.100 --> 00:16:58.200 give advice you have to have a stake in the ground. 341 00:16:59.400 --> 00:17:02.300 You have to have that place where your your view on 342 00:17:02.300 --> 00:17:04.200 how Capital markets work? 343 00:17:04.900 --> 00:17:07.400 And if you don't have that view you might fall into that 344 00:17:07.400 --> 00:17:08.700 facilitator capacity. 345 00:17:10.300 --> 00:17:13.300 The other thing that she said I'm glad you 346 00:17:13.300 --> 00:17:16.300 said it as you talked a lot about behavior and what I'm hearing you 347 00:17:16.300 --> 00:17:19.500 say is the study we've used many times the dial 348 00:17:19.500 --> 00:17:22.500 bar study for our listeners. Could you talk a little bit about what that dial bar 349 00:17:22.500 --> 00:17:26.000 research shows us sure is that it shows that the the investor 350 00:17:25.200 --> 00:17:26.600 over, you know? 351 00:17:27.600 --> 00:17:30.100 Many time periods. I mean they updated every year but it goes 352 00:17:30.100 --> 00:17:33.600 back a number of years and it looks at what investors 353 00:17:33.600 --> 00:17:36.200 do in terms of investing in 354 00:17:36.200 --> 00:17:39.600 the let's say the S&P 500 as an index versus what the 355 00:17:39.600 --> 00:17:43.300 index does and we find year in and year out that investors 356 00:17:42.300 --> 00:17:45.200 tend to underperform the 357 00:17:45.200 --> 00:17:48.500 index and the question always is Peter and you know this why 358 00:17:48.500 --> 00:17:51.500 and it's because they're holding period is 359 00:17:51.500 --> 00:17:54.600 tends to be I think it's less it used to be in the old days three 360 00:17:54.600 --> 00:17:57.300 three plus years now. It's three minus here. It's less 361 00:17:57.300 --> 00:18:00.200 than three years of holding period of time, which means they're 362 00:18:00.900 --> 00:18:03.500 Behaviorally trying to in some 363 00:18:03.500 --> 00:18:06.400 ways time the market and so what we 364 00:18:06.400 --> 00:18:09.000 try to do at least in as I talk 365 00:18:09.100 --> 00:18:12.300 to advisors is to try to educate them and educate clients as 366 00:18:12.300 --> 00:18:15.300 well that you know, we want to close that Gap we 367 00:18:15.300 --> 00:18:18.200 call that the the performance Gap right? 368 00:18:18.200 --> 00:18:22.000 There's a gap between what investments do and what the investor 369 00:18:21.300 --> 00:18:24.300 does right? We know this plenty of Dad out 370 00:18:24.300 --> 00:18:27.100 there to show that so how do we do that? Peter had talked about a little 371 00:18:27.100 --> 00:18:30.300 bit earlier is we look at things like, okay, what's important? How do 372 00:18:30.300 --> 00:18:33.600 we close that Gap? It comes from financial planning. It comes 373 00:18:33.600 --> 00:18:37.000 from portfolio selection, not necessarily portfolio 374 00:18:36.300 --> 00:18:39.400 management, but portfolio selection in terms 375 00:18:39.400 --> 00:18:42.600 of picking the right model of the right strategy for for clients 376 00:18:42.600 --> 00:18:45.000 education and communication with clients. I 377 00:18:45.100 --> 00:18:48.900 think those are great ways that we see that behavioral Gap 378 00:18:48.900 --> 00:18:51.700 closing through time and that and 379 00:18:51.700 --> 00:18:54.900 ends up being a an experience 380 00:18:54.900 --> 00:18:57.000 that clients will be with their advisors for a long time 381 00:18:57.300 --> 00:19:00.400 because you focus on the things that matter not the investment 382 00:19:00.400 --> 00:19:00.700 itself. 383 00:19:01.800 --> 00:19:02.700 a great computer 384 00:19:03.500 --> 00:19:06.800 You're the the man in the seat here. So talk 385 00:19:06.800 --> 00:19:09.200 to us a little about that. Right? I mean that dial bar study is 386 00:19:09.200 --> 00:19:11.600 pretty telling every year investors are underperforming. 387 00:19:12.300 --> 00:19:15.900 You focus on planning. How does planning help with the 388 00:19:15.900 --> 00:19:18.200 long-term thinking that is required for 389 00:19:18.200 --> 00:19:20.500 successful experience. It comes into 390 00:19:21.800 --> 00:19:24.500 Not only the planning but educating clients and 391 00:19:24.500 --> 00:19:27.600 communication and the example I'll use and we were 392 00:19:27.600 --> 00:19:27.800 all. 393 00:19:28.500 --> 00:19:32.200 working from back home during the the pandemic and 394 00:19:33.900 --> 00:19:36.200 the markets dropped about a 395 00:19:36.200 --> 00:19:36.800 third 396 00:19:37.800 --> 00:19:40.700 so about 33% in about a month's time thinking 397 00:19:40.700 --> 00:19:43.600 the numbers are 33% over 34 days 1/3. 398 00:19:44.300 --> 00:19:47.300 And we're sitting here stuck at home. We think the world is going 399 00:19:47.300 --> 00:19:50.400 to end and my message to my clients because 400 00:19:50.400 --> 00:19:54.000 it's the message of our firm message that I truly believe. 401 00:19:55.300 --> 00:19:55.700 And it wasn't easy. 402 00:19:56.400 --> 00:19:59.600 No, we're not doing anything this too shall 403 00:19:59.600 --> 00:19:59.700 pass. 404 00:20:00.600 --> 00:20:03.600 You know, this is the.com bubble. This 405 00:20:03.600 --> 00:20:06.600 is 911. This is the 406 00:20:06.600 --> 00:20:09.900 great financial crisis of 2008. 407 00:20:10.600 --> 00:20:13.400 It doesn't necessarily matter what the event 408 00:20:13.400 --> 00:20:16.500 is because everyone know Peter is a pandemic. It's different like you're 409 00:20:16.500 --> 00:20:20.100 right, but you're not it's the uncertainty and what 410 00:20:19.100 --> 00:20:22.700 lo and behold what happens after the 411 00:20:22.700 --> 00:20:23.900 market drops a third. 412 00:20:24.800 --> 00:20:27.800 In March February and to March it 413 00:20:27.800 --> 00:20:30.700 shoots back up. It comes roaring back why we 414 00:20:30.700 --> 00:20:34.100 had no vaccine. We still were unemployment had 415 00:20:33.100 --> 00:20:36.200 still not hit its peak because of 416 00:20:36.200 --> 00:20:39.900 all the you know, retail and entertainment losses 417 00:20:39.900 --> 00:20:42.200 that that took place in in this country and around the 418 00:20:42.200 --> 00:20:45.000 world. We still have this crazy election in front 419 00:20:45.100 --> 00:20:48.800 of us. There was still uncertainty but why why did it happen and I 420 00:20:48.800 --> 00:20:51.500 don't think there's necessarily an answer but the lesson learned 421 00:20:51.500 --> 00:20:54.800 is we stay in our seats regardless of what's going on because 422 00:20:54.800 --> 00:20:57.500 the markets have they've always come back and I 423 00:20:57.500 --> 00:20:59.500 believe any time we hit something. 424 00:21:00.700 --> 00:21:03.300 They'll come back again. We just don't know when so that 425 00:21:03.300 --> 00:21:06.100 experience because I I think 426 00:21:06.100 --> 00:21:09.200 you use the term staking in the stand or stake in the ground. That was my 427 00:21:09.200 --> 00:21:12.200 stake in the ground. And now as we went through all of this in 428 00:21:12.200 --> 00:21:15.500 2022 with all of the uncertainty and inflation and 429 00:21:15.500 --> 00:21:18.700 gas prices and all of that impacting 430 00:21:18.700 --> 00:21:20.700 the markets interest rates being increased. 431 00:21:22.200 --> 00:21:25.200 People said yeah, I remember what you said back during the 432 00:21:25.200 --> 00:21:28.200 pandemic. So yeah, okay that that makes sense. It's the 433 00:21:28.200 --> 00:21:30.300 messaging my messages consistent. 434 00:21:31.200 --> 00:21:34.000 And when people hear that, there's a sense of confidence like, you know what he was 435 00:21:34.200 --> 00:21:36.400 right last time. He'll probably be right this time, too. 436 00:21:37.400 --> 00:21:40.200 Fantastic, and I remember that Panda right that 437 00:21:40.200 --> 00:21:43.500 first quarter of 2020 was one of the top 10 worst 438 00:21:43.500 --> 00:21:48.100 quarters in the United States history going back to 1926. The 439 00:21:47.100 --> 00:21:50.200 second quarter of 2020 was one of the top 10 440 00:21:50.200 --> 00:21:53.400 best quarters the United States ever experienced going 441 00:21:53.400 --> 00:21:56.200 back. And and the funny thing is if we had 442 00:21:56.200 --> 00:21:59.200 been if we had moved our money out of we did 443 00:21:59.200 --> 00:22:02.500 not stay calm and we moved money out 444 00:22:02.500 --> 00:22:05.300 of the market in March. What would 445 00:22:05.300 --> 00:22:08.700 we have missed? When do we get back in? It's it's 446 00:22:08.700 --> 00:22:11.200 difficult. It's difficult to sit there 447 00:22:11.200 --> 00:22:14.100 when the market is dropping and say my gosh we have to do 448 00:22:14.100 --> 00:22:17.600 something but you're also playing the same game when you get out. It's like 449 00:22:17.600 --> 00:22:20.200 well if you get out, okay well, but then the market will eventually 450 00:22:20.200 --> 00:22:21.700 come back. Well, when do you get back in? 451 00:22:22.600 --> 00:22:25.300 And and and we just see long-term what the 452 00:22:25.300 --> 00:22:26.600 results are you're better off. 453 00:22:27.400 --> 00:22:30.500 Staying going dealing with the rollercoaster ride 454 00:22:30.500 --> 00:22:33.500 staying in your seat versus making rash decisions based 455 00:22:33.500 --> 00:22:36.100 upon fear and emotion Peter Michael. Thank you so much 456 00:22:36.100 --> 00:22:39.400 for joining us here today that concludes part one of our discussion 457 00:22:39.400 --> 00:22:42.200 on choosing the right financial advisor. I look 458 00:22:42.200 --> 00:22:45.200 forward to continuing the conversation at part two, and if you want to 459 00:22:45.200 --> 00:22:48.800 look at any of our previous unfiltered Finance podcasts, they're 460 00:22:48.800 --> 00:22:51.700 available wherever you might be getting your podcast today. So, 461 00:22:51.700 --> 00:22:53.400 thank you till next time bye-bye. 462 00:22:53.900 --> 00:22:56.500 Symmetry Partners LLC is an 463 00:22:56.500 --> 00:22:59.500 investment advisor firm registered with the Securities and 464 00:22:59.500 --> 00:23:02.200 Exchange Commission The Firm only transacts business 465 00:23:02.200 --> 00:23:06.200 in states where it is properly registered or excluded 466 00:23:05.200 --> 00:23:10.000 or Exempted from registration requirements registration 467 00:23:08.100 --> 00:23:11.700 of an investment advisor does 468 00:23:11.700 --> 00:23:14.900 not imply any specific level of skill or training and 469 00:23:14.900 --> 00:23:17.400 does not constitute an endorsement of the firm 470 00:23:17.400 --> 00:23:20.500 by the commission. No one should assume that future performance 471 00:23:20.500 --> 00:23:23.600 of any specific investment investment strategy 472 00:23:23.600 --> 00:23:26.900 product or non-investment related content 473 00:23:26.900 --> 00:23:29.200 made reference to directly or indirectly in 474 00:23:29.200 --> 00:23:31.400 this material will be profitable. 475 00:23:32.400 --> 00:23:35.400 As with any investment strategy there is the possibility of 476 00:23:35.400 --> 00:23:38.600 profitability as well as loss due to 477 00:23:38.600 --> 00:23:41.600 various factors including changing market conditions. 478 00:23:41.600 --> 00:23:44.800 And/or applicable laws the content 479 00:23:44.800 --> 00:23:47.800 may not be reflective of current opinions or 480 00:23:47.800 --> 00:23:50.500 positions. Please note the material 481 00:23:50.500 --> 00:23:53.800 is provided for educational and background use only moreover. 482 00:23:53.800 --> 00:23:57.000 You should not assume that any discussion or information 483 00:23:56.700 --> 00:23:59.700 contained in this material Services the 484 00:23:59.700 --> 00:24:03.300 receipt of or as a substitute for personalized 485 00:24:02.300 --> 00:24:04.500 investment advice.
In our last episode, we discussed the importance of a portfolio's asset allocation, and, how that relates to “Reducing Your Tax Bill”. In part two of this episode, we are joined once again by Symmetry's Managing Director of Research and Investments, Philip McDonald, CFA, CAAIA & Glenn Shirley, CAIA, Head of Investor Relations for Quantinno Capital Management, to discuss the methods by which you can “re-charge that tax benefit”. If you have any questions or would like more information, reach out to us at https://symmetrypartners.com/contact-us/ You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice. 00:00:01.800 --> 00:00:07.600 Hello listeners, 1 00:00:07.600 --> 00:00:10.900 welcome back to part two of our conversation on 2 00:00:10.900 --> 00:00:13.500 investing in taxes. Once again, I'm joined by Glenn 3 00:00:13.500 --> 00:00:16.500 Shirley from quantino and Phil McDonald from symmetry. 4 00:00:16.500 --> 00:00:19.100 Thanks gentlemen for joining us again, whether or not the market goes up 5 00:00:19.100 --> 00:00:22.800 or down when you have the long short overlay you have 6 00:00:22.800 --> 00:00:26.700 opportunities to to find losers losses. 7 00:00:26.700 --> 00:00:29.700 If you will to reach hard that tax benefit, 8 00:00:29.700 --> 00:00:32.400 it's some what counterintuitive right we're looking 9 00:00:32.400 --> 00:00:35.300 for Securities that have gone down in 10 00:00:35.300 --> 00:00:38.100 value, but I think the truth of the matter is is that when you 11 00:00:38.100 --> 00:00:41.600 own an ETF that's tracking an index or mutual 12 00:00:41.600 --> 00:00:44.300 fund that's tracking index. The reality is Phil 13 00:00:44.300 --> 00:00:47.600 you do own those losers. You just might not see them right? They're always 14 00:00:47.600 --> 00:00:50.200 that's right. Yeah looking at and that's 15 00:00:50.200 --> 00:00:53.300 a great Point looking at say in S&P 500 or 16 00:00:53.300 --> 00:00:57.300 Russell 1000 ETF. You you see one number, 17 00:00:56.300 --> 00:00:59.300 you know one one price 18 00:00:59.300 --> 00:01:01.500 one return but behind 19 00:01:02.300 --> 00:01:06.100 You're likely going to have dozens and dozens of positions 20 00:01:05.100 --> 00:01:08.200 that throughout the year and at year end 21 00:01:08.200 --> 00:01:11.900 are in or in a lost position. So in 22 00:01:11.900 --> 00:01:14.400 direct indexing, it just kind of breaks down that wrapper and 23 00:01:14.400 --> 00:01:17.700 you hold, you know hundreds of Securities directly. So 24 00:01:17.700 --> 00:01:20.800 you kind of see those a little bit more clearly sure and 25 00:01:20.800 --> 00:01:24.400 we've seen that in recent years right with some of these tech stocks 26 00:01:24.400 --> 00:01:27.400 the Fang stocks if you will Facebook Apple Amazon Netflix Google 27 00:01:27.700 --> 00:01:30.200 Etc. They were driving the returns of the S&P and there 28 00:01:30.200 --> 00:01:33.400 was a vast majority of those securities within the S&P that 29 00:01:33.400 --> 00:01:36.300 were in the red and by unwrapping it you can 30 00:01:36.300 --> 00:01:39.600 take advantage of those you still run into the issue of 31 00:01:39.600 --> 00:01:42.700 the portfolio seizing and what 32 00:01:42.700 --> 00:01:45.400 I mean by that is what we've been talking about having that portfolio 33 00:01:45.400 --> 00:01:48.000 get to a point where you don't have any room to make 34 00:01:48.300 --> 00:01:51.600 any trades without incurring some sort of tax consequence, but I 35 00:01:51.600 --> 00:01:54.900 think that's where the 1330 comes in right Glenn you're 36 00:01:54.900 --> 00:01:57.300 able to apply that strategy on 37 00:01:57.300 --> 00:02:00.700 top of an existing portfolio generate losses in 38 00:02:00.700 --> 00:02:02.200 any Market environment. And so 39 00:02:02.200 --> 00:02:05.100 So I think that that's a really interesting thing Glenn. Can you talk a little bit? 40 00:02:05.100 --> 00:02:08.200 I didn't mean to interrupt you, but could you talk a little bit about what is 41 00:02:08.200 --> 00:02:11.400 what happens with the risk exposure by putting that overlay on 42 00:02:11.400 --> 00:02:14.500 right investor with that 100 dollars 30 long 43 00:02:14.500 --> 00:02:17.100 30 short what what happens to the 44 00:02:17.100 --> 00:02:20.600 risk characters of that particular account? Sure. Yeah great 45 00:02:20.600 --> 00:02:23.300 question Tom. So if you look at if you just 46 00:02:23.300 --> 00:02:26.900 put on a 30% long 30% short 47 00:02:26.900 --> 00:02:29.300 portfolio. And you said what is the risk of 48 00:02:29.300 --> 00:02:32.500 that portfolio in isolation by itself? The answer 49 00:02:32.500 --> 00:02:36.000 to that is about one percent and that 50 00:02:35.100 --> 00:02:38.300 could be there be you know, standard deviation how much it's 51 00:02:38.300 --> 00:02:42.100 going to move around or it could be if you're if you're looking at that benchmarked 52 00:02:41.100 --> 00:02:44.200 to a you know, an index like 53 00:02:44.200 --> 00:02:47.400 the S&P 500 that would be one percent tracking here. So pretty 54 00:02:47.400 --> 00:02:50.500 modest, you know, a lot of active Equity strategies have tracking 55 00:02:50.500 --> 00:02:53.300 air easily of two percent or more. So we're 56 00:02:53.300 --> 00:02:56.300 not adding a lot of of risk just via that long 57 00:02:56.300 --> 00:02:59.500 short extension, but in reality as I mentioned you have 58 00:02:59.500 --> 00:03:01.600 these kind of Legacy accounts that 59 00:03:02.200 --> 00:03:05.700 Some elevated levels of risk that long short extension is 60 00:03:05.700 --> 00:03:08.200 a tool to reduce that risk. So even though 61 00:03:08.200 --> 00:03:11.400 you have a 1% risk in 62 00:03:11.400 --> 00:03:14.300 that long short extension in isolation. If you use that 63 00:03:14.300 --> 00:03:17.400 long short extension efficiently to reduce 64 00:03:17.400 --> 00:03:20.600 the total risk of the portfolio, then oftentimes we 65 00:03:20.600 --> 00:03:23.900 can also we can actually reduce kind of the total tracking 66 00:03:23.900 --> 00:03:26.400 error or risk versus The Benchmark of a 67 00:03:26.400 --> 00:03:29.200 tax less harvesting strategy often we can at least 68 00:03:29.200 --> 00:03:32.400 keep it the same. So when you look at a quantino kind 69 00:03:32.400 --> 00:03:35.900 of 130 30 tax loss harvesting account tracking errors 70 00:03:35.900 --> 00:03:38.400 typically one and a half percent on average 71 00:03:38.400 --> 00:03:41.400 and that's very very similar to what of 72 00:03:41.400 --> 00:03:44.300 what a clients are probably experiencing in their long only text less 73 00:03:44.300 --> 00:03:47.100 harvesting accounts as well. So just to reiterate what you're 74 00:03:47.100 --> 00:03:50.400 saying by applying the the 1330 extension to 75 00:03:50.400 --> 00:03:53.700 a portfolio the clients risk exposures still that 76 00:03:53.700 --> 00:03:56.300 principle investment is what I'm hearing you say, 77 00:03:56.300 --> 00:03:59.400 however, I think what I think a really really strong 78 00:03:59.400 --> 00:04:01.700 point is that it's not necessarily 79 00:04:02.200 --> 00:04:05.900 the risk by putting the overlay but it actually can be a risk mitigator Phil 80 00:04:05.900 --> 00:04:09.200 you and I have run across these many many times where investors 81 00:04:08.200 --> 00:04:11.600 come to us and we look at their existing Holdings 82 00:04:11.600 --> 00:04:14.200 and we're working on a Case right now 83 00:04:14.200 --> 00:04:17.600 where the investor who probably should 84 00:04:17.600 --> 00:04:20.500 have a balanced portfolio between Brawley Diversified 85 00:04:20.500 --> 00:04:21.600 stocks and bonds. 86 00:04:22.200 --> 00:04:25.900 Is stuck in a single stock position that they 87 00:04:25.900 --> 00:04:28.200 can't do anything with because of the 88 00:04:28.200 --> 00:04:31.200 fact that it's it's got such a low cost basis if 89 00:04:31.200 --> 00:04:34.600 they were to sell that security. They would be looking at some significant. 90 00:04:35.400 --> 00:04:38.400 Tax consequences, but only a single 91 00:04:38.400 --> 00:04:41.300 stock is a real risky Endeavor. Oh, no question, 92 00:04:41.300 --> 00:04:41.800 and I think 93 00:04:43.300 --> 00:04:46.400 This is such an incredibly powerful benefit of this 94 00:04:46.400 --> 00:04:49.600 strategy. And I think it it sometimes is you know 95 00:04:49.600 --> 00:04:52.600 mentioned second after the the tax Alpha 96 00:04:52.600 --> 00:04:55.300 and hey, you can keep more of what you earn but this is so 97 00:04:55.300 --> 00:04:57.100 incredibly powerful, you know, thinking of 98 00:04:58.200 --> 00:05:01.300 Really sad examples through time like Enron, you know things went 99 00:05:01.300 --> 00:05:04.400 very bad for people who held most of their company 100 00:05:04.400 --> 00:05:07.200 stock a lot of incentive plans. These 101 00:05:07.200 --> 00:05:10.400 days will give employees options and shares and 102 00:05:10.400 --> 00:05:13.000 all that. So this is an issue or a lot 103 00:05:13.500 --> 00:05:16.700 of investors and I think this solution really is, you know virtuous and 104 00:05:16.700 --> 00:05:19.400 really helping them in their Financial Health and just to 105 00:05:19.400 --> 00:05:22.600 maybe put a finer point on it and at the 106 00:05:22.600 --> 00:05:25.900 risk of being a little repetitive, you know, if you own a 107 00:05:25.900 --> 00:05:29.200 large amount of your, you know, large amount of your financial wealth 108 00:05:28.200 --> 00:05:31.600 is in an oil stock or a 109 00:05:31.600 --> 00:05:32.100 tech stock. 110 00:05:32.700 --> 00:05:35.800 Immediately in putting on the 13030 strategy 111 00:05:35.800 --> 00:05:38.400 the the 30 extension the 112 00:05:38.400 --> 00:05:40.000 30 more long can hold. 113 00:05:40.700 --> 00:05:42.900 Every other industry except that one you hold. 114 00:05:43.500 --> 00:05:46.900 Imagine that diversification and then the short can reduce 115 00:05:46.900 --> 00:05:50.000 that exposure to that one industry. So overnight in 116 00:05:49.500 --> 00:05:52.400 what in in the first, you know 117 00:05:52.400 --> 00:05:55.700 day of transactions you go from hey, I 118 00:05:55.700 --> 00:05:58.800 might end up like Enron or wow. My my 119 00:05:58.800 --> 00:06:01.400 financial wealth is gonna ride up and down with 120 00:06:01.400 --> 00:06:04.900 the price of crude oil or how Google does and 121 00:06:04.900 --> 00:06:07.400 immediately you're getting more 122 00:06:07.400 --> 00:06:10.000 of a diversified Market portfolio. Even if 123 00:06:10.200 --> 00:06:13.900 you're just shooting toward maybe an S&P 500 Index. It's immediately 124 00:06:13.900 --> 00:06:16.100 beneficial Glen. I don't know if you'd add 125 00:06:16.100 --> 00:06:20.400 anything to that but I really find that as you know, powerful benefit 126 00:06:19.400 --> 00:06:22.400 to the end investor. Yeah, the 127 00:06:22.400 --> 00:06:25.900 your correct fell the deals exchange solution that 128 00:06:25.900 --> 00:06:28.300 quantino offers is really a use case 129 00:06:28.300 --> 00:06:31.400 that came about from client feedback. We're fortunate to 130 00:06:31.400 --> 00:06:34.400 work with a lot of family offices. These are very wealthy families that 131 00:06:34.400 --> 00:06:37.500 have concentration in their portfolio. 132 00:06:37.500 --> 00:06:40.300 They built wealth via service to a public company or 133 00:06:40.300 --> 00:06:43.400 investing in a company that went public and eventually 134 00:06:43.400 --> 00:06:46.000 They want to turn the corner from you know, 135 00:06:46.300 --> 00:06:50.600 this this wealth that has been built by that concentration turning 136 00:06:49.600 --> 00:06:52.400 the corner toward wealth preservation and that 137 00:06:52.400 --> 00:06:55.500 means diversification. So how do we do that in a tax efficient manner? 138 00:06:55.500 --> 00:06:58.800 There's exchange funds that we you 139 00:06:58.800 --> 00:07:01.500 know that are really an option for very wealthy families, but 140 00:07:01.500 --> 00:07:05.200 really not for clients at scale. They're multi-million 141 00:07:04.200 --> 00:07:07.200 dollar minimums their private 142 00:07:07.200 --> 00:07:10.500 Fund Solutions and you know, you're vestly 143 00:07:10.500 --> 00:07:13.800 investing in a hedge fund that's gonna take seven years to diversify 144 00:07:13.800 --> 00:07:15.500 and they're very expensive. So we always knew 145 00:07:16.600 --> 00:07:19.800 that if we could use our capabilities to help clients diversify 146 00:07:19.800 --> 00:07:22.100 concentrated positions to be a pretty powerful thing and 147 00:07:22.100 --> 00:07:25.600 that 30 by 30 extensions the the way we do that so, you 148 00:07:25.600 --> 00:07:27.100 know, we put that long short extension on 149 00:07:27.700 --> 00:07:30.300 The extension generates tax benefits along the 150 00:07:30.300 --> 00:07:33.100 way we can use that extension to reduce the risk of 151 00:07:33.100 --> 00:07:36.200 that concentrated position. You're totally right there. And then 152 00:07:36.200 --> 00:07:39.300 over time as we generate those consistent tax benefits 153 00:07:39.300 --> 00:07:42.300 that gives us a mechanism to sell 154 00:07:42.300 --> 00:07:45.900 down that concentrated position, but we're always matching 155 00:07:45.900 --> 00:07:48.300 the tax benefits that we generate with the 156 00:07:48.300 --> 00:07:51.100 capital gains that we are realizing by selling down that 157 00:07:51.100 --> 00:07:51.400 position. 158 00:07:52.400 --> 00:07:55.700 And then once we sell we're rebalancing into a 159 00:07:55.700 --> 00:07:58.300 diversified index of the advisor and the client's Choice 160 00:07:58.300 --> 00:08:01.900 could be S&P 500. It could be Global stocks really whatever 161 00:08:01.900 --> 00:08:04.700 the asset allocation decision ends up 162 00:08:04.700 --> 00:08:07.400 being so yeah a typical even low basis very 163 00:08:07.400 --> 00:08:10.500 low basis position 20% cost basis. We 164 00:08:10.500 --> 00:08:13.400 can help diversify in a tax efficient manner 165 00:08:13.400 --> 00:08:15.100 in around seven years. 166 00:08:16.300 --> 00:08:19.100 That's very cool. It's a very clever strategy. I mean 167 00:08:19.100 --> 00:08:23.200 we're talking about tax benefits, but what we're really talking about is 168 00:08:22.200 --> 00:08:24.500 transitioning a 169 00:08:25.300 --> 00:08:28.900 Well, I would consider a concentrate risky portfolio very 170 00:08:28.900 --> 00:08:31.200 risky at times into something that 171 00:08:31.200 --> 00:08:34.700 is more suitable for that investor more Diversified but 172 00:08:34.700 --> 00:08:37.600 doing it in a way that they don't 173 00:08:37.600 --> 00:08:40.900 have to feel the the pain of unwinding 174 00:08:40.900 --> 00:08:44.000 those positions that might have some very significant embedded 175 00:08:43.300 --> 00:08:46.600 gains. You know it our 176 00:08:46.600 --> 00:08:47.500 industry we get 177 00:08:49.100 --> 00:08:52.000 picked on I guess for being very jargony right a lot 178 00:08:52.600 --> 00:08:55.100 of jargon and terms that a lot of folks that 179 00:08:55.100 --> 00:08:58.400 are not in this industry on a daily basis and 180 00:08:58.400 --> 00:09:02.000 we throw out the term tax Alpha quite a bit and 181 00:09:01.300 --> 00:09:04.300 I'll throw this question out to both the a Phil and Glenn. 182 00:09:04.300 --> 00:09:07.700 Can we just Define what tax Alpha is 183 00:09:07.700 --> 00:09:10.400 and then can you quantify it? Sure. Yeah. Yeah 184 00:09:10.400 --> 00:09:13.300 to us. I think of tax Alpha is 185 00:09:13.300 --> 00:09:13.900 tax savings. 186 00:09:14.900 --> 00:09:18.400 So, you know if if quantino generates 187 00:09:17.400 --> 00:09:20.900 a dollar of short-term 188 00:09:20.900 --> 00:09:22.200 capital loss. 189 00:09:22.700 --> 00:09:25.700 Then if you have a short-term gain 190 00:09:25.700 --> 00:09:28.500 a dollar of short-term gains, that saves you 191 00:09:28.500 --> 00:09:32.200 40.8 percent. So I've saved the client 40 cents 192 00:09:31.200 --> 00:09:34.900 41 cents in tax. If 193 00:09:34.900 --> 00:09:37.400 I'm using that short-term law stuff set long 194 00:09:37.400 --> 00:09:41.300 term gains that that long-term gains rate essentially 23% 195 00:09:40.300 --> 00:09:43.400 at the federal level. So I've 196 00:09:43.400 --> 00:09:46.800 saved clients, you know, 24 cents 197 00:09:46.800 --> 00:09:49.000 on that dollar of a capital loss. 198 00:09:49.900 --> 00:09:52.700 So if I can consistently generate Capital losses 199 00:09:52.700 --> 00:09:55.700 if quantino can consistently do that. We're letting 200 00:09:55.700 --> 00:09:58.500 clients offset the capital gains 201 00:09:58.500 --> 00:09:59.500 that they have in their portfolio. 202 00:10:00.100 --> 00:10:03.600 and they're just keeping more of the return from those capital gains 203 00:10:03.600 --> 00:10:06.200 year to year and those capital gains from can come from a lot of different, 204 00:10:06.200 --> 00:10:08.500 you know Avenues it could be 205 00:10:09.300 --> 00:10:12.300 Capital gains distributions from Mutual Funds. It could 206 00:10:12.300 --> 00:10:15.700 be long-term gains realized from rebalancing your portfolio 207 00:10:15.200 --> 00:10:19.000 Etc. So to me tax Alpha 208 00:10:18.700 --> 00:10:21.200 is keeping more of that return in the 209 00:10:21.200 --> 00:10:24.400 client's pocket paying less in capital gains and using those 210 00:10:24.400 --> 00:10:27.800 Capital losses as a vehicle to do that great. 211 00:10:27.800 --> 00:10:30.500 That's a that's a very eloquent definition of 212 00:10:30.500 --> 00:10:33.300 taxol. Do you care to add that? Yeah. I I like that 213 00:10:33.300 --> 00:10:36.100 definition as well. Yeah. One thing I'd say is 214 00:10:36.100 --> 00:10:40.000 that I think there's again pretty broad agreement 215 00:10:39.300 --> 00:10:42.700 that long only tax loss harvesting 216 00:10:42.700 --> 00:10:45.300 does have a benefit to the portfolio 217 00:10:45.300 --> 00:10:48.500 and it might be, you know one to two percent maybe maybe 218 00:10:48.500 --> 00:10:51.500 two percent on you know, really good implementations call 219 00:10:51.500 --> 00:10:54.400 it one percent. But again that has a 220 00:10:54.400 --> 00:10:57.600 horizon that's gonna likely track down as your portfolio 221 00:10:57.600 --> 00:11:00.300 ossifies seizes up turns into 222 00:11:00.300 --> 00:11:03.600 our favorite word. No, you know, 223 00:11:03.600 --> 00:11:06.400 nothing with unrealized gains. So, you know, 224 00:11:06.400 --> 00:11:09.100 you're talking 1% dish in 225 00:11:09.700 --> 00:11:12.600 Long only tax less harvesting type of tax Alpha that 226 00:11:12.600 --> 00:11:15.300 that is going to go away in a handful 227 00:11:15.300 --> 00:11:18.700 of years, right? Thank you for that. One of 228 00:11:18.700 --> 00:11:21.800 the the questions and this is gonna go really to 229 00:11:21.800 --> 00:11:24.200 investment vehicle more so than anything else. I've heard 230 00:11:24.200 --> 00:11:27.400 investors say like 2022 for instance. 231 00:11:28.200 --> 00:11:31.400 Horrible, no good very bad year for investors Equity fixed 232 00:11:31.400 --> 00:11:35.100 income both down investors who hold actively 233 00:11:34.100 --> 00:11:36.800 managed mutual funds. 234 00:11:37.900 --> 00:11:38.900 having negative return 235 00:11:39.900 --> 00:11:42.500 But they also got a pretty hefty tax bill 236 00:11:42.500 --> 00:11:45.600 in some scenarios right capital gains distributions in 237 00:11:45.600 --> 00:11:48.500 December. So Phil when investors 238 00:11:48.500 --> 00:11:51.200 are looking at open-ended mutual funds what are 239 00:11:51.200 --> 00:11:54.700 some of the things that they should be considering from a tax efficiency standpoint, 240 00:11:54.700 --> 00:11:57.700 you raise a good point and to some extent 241 00:11:57.700 --> 00:12:00.300 those examples of you know, being down and 242 00:12:00.300 --> 00:12:03.600 having a gains distribution. That's an unlucky 243 00:12:03.600 --> 00:12:06.600 combination of a handful of things right like it comes 244 00:12:06.600 --> 00:12:09.300 down to perform some fun what the 245 00:12:09.300 --> 00:12:12.400 Redemption level was how the fun generates cash 246 00:12:12.400 --> 00:12:15.900 to meet those redemptions and whether 247 00:12:15.900 --> 00:12:18.600 or not that's kind of gain realizing 248 00:12:18.600 --> 00:12:21.700 lost real estate realizing or neutral history of 249 00:12:21.700 --> 00:12:24.500 the mutual funds experience can maybe give you 250 00:12:24.500 --> 00:12:28.000 some insight into that as well as the strategy whether 251 00:12:27.300 --> 00:12:30.500 it's going to be, you know tax efficient in 252 00:12:30.500 --> 00:12:33.800 a neutral kind of scenario and whether 253 00:12:33.800 --> 00:12:36.500 it's you know, growing or stable 254 00:12:36.500 --> 00:12:39.500 as opposed to, you know, shrinking with a lot of redemptions. 255 00:12:40.400 --> 00:12:43.800 you mentioned tack sorry investment vehicles so very often 256 00:12:43.800 --> 00:12:44.200 we 257 00:12:45.100 --> 00:12:48.600 We compare mutual funds and ETFs and there are some important differences 258 00:12:48.600 --> 00:12:51.300 there on the income side, they're pretty 259 00:12:51.300 --> 00:12:55.200 even right funds all funds have to distribute income and 260 00:12:55.200 --> 00:12:58.900 they can choose the frequency with which they do that. Some of 261 00:12:58.900 --> 00:13:01.500 the differences really come into play with capital gains 262 00:13:01.500 --> 00:13:04.400 realization. Now mutual funds to me 263 00:13:04.400 --> 00:13:07.300 to Redemption they have to do that with the cash in the fund. They might 264 00:13:07.300 --> 00:13:10.500 have enough cash. They might need to sell to realize that 265 00:13:10.500 --> 00:13:13.000 to fund that Redemption and some of 266 00:13:13.100 --> 00:13:16.900 the things I mentioned earlier, you know, whether they have enough cash what 267 00:13:16.900 --> 00:13:19.300 their tax Lots look like how their age 268 00:13:19.300 --> 00:13:22.600 how they're Diversified how the fund's been performing, you know 269 00:13:22.600 --> 00:13:25.300 frequency and magnitude of redemptions all that will 270 00:13:25.300 --> 00:13:28.600 kind of impact whether or not you're end. They have realized 271 00:13:28.600 --> 00:13:31.800 game they need to distribute or not with ETFs. 272 00:13:31.800 --> 00:13:34.400 There's a little more complexity in how they're traded 273 00:13:34.400 --> 00:13:38.100 and some of the some of the capital gains efficiencies. 274 00:13:37.100 --> 00:13:40.400 So you and I can trade an ETF 275 00:13:40.400 --> 00:13:43.300 on an exchange and that doesn't involve the fund at all, you know, you 276 00:13:43.300 --> 00:13:44.900 sell share I buy a share from you and 277 00:13:45.100 --> 00:13:49.000 The fund's not involved funds doesn't need to find cash pretty 278 00:13:48.300 --> 00:13:51.400 simple. But there are some transactions that do 279 00:13:51.400 --> 00:13:54.700 involve the fund, you know, something called authorized participants help 280 00:13:54.800 --> 00:13:57.300 ETFs trade efficiently 281 00:13:57.300 --> 00:14:00.900 and sometimes they'll redeem directly with the fund the 282 00:14:00.200 --> 00:14:03.100 ETF the ETF has a choice 283 00:14:03.100 --> 00:14:06.600 to you know, redeem in kind or give Securities to that 284 00:14:06.600 --> 00:14:09.500 redeeming entity, right and in 285 00:14:09.500 --> 00:14:12.400 doing that there's no transaction. There's no realization 286 00:14:12.400 --> 00:14:15.100 of of gains and it gets 287 00:14:15.100 --> 00:14:18.400 even more interesting because that the fun can choose 288 00:14:18.400 --> 00:14:22.300 which shares to redeem out and they can often redeem 289 00:14:21.300 --> 00:14:25.000 out the lowest cost basis shares. Thereby, you 290 00:14:24.400 --> 00:14:27.700 know creating a very tax efficient fund vehicle. 291 00:14:27.700 --> 00:14:31.200 The investors still needs to pay tax on their gain 292 00:14:30.200 --> 00:14:33.800 if they sell their shares, right, but the 293 00:14:33.800 --> 00:14:36.700 fund itself can get pretty creative in 294 00:14:36.700 --> 00:14:39.300 in reducing cap games realization. So, 295 00:14:39.300 --> 00:14:42.300 you know, it depends sometimes on the strategy, you know, 296 00:14:42.300 --> 00:14:44.900 fixing strategies might not be as 297 00:14:45.100 --> 00:14:48.600 Efficient in an ETF as as Equity strategies and some 298 00:14:48.600 --> 00:14:51.200 mutual funds can certainly be very tax efficient. So, you know, 299 00:14:51.200 --> 00:14:54.300 it comes down to you know, I think education getting the 300 00:14:54.300 --> 00:14:57.200 right investment strategy and then, you know also choosing the right vehicle 301 00:14:57.200 --> 00:15:00.800 now, that's that's really interesting and we've had conversations 302 00:15:00.800 --> 00:15:03.100 on the differences between ETFs and mutual funds on 303 00:15:03.100 --> 00:15:06.300 this podcast. And what's really fascinating to me again, 304 00:15:06.300 --> 00:15:09.300 I'm gonna use the term convenient byproduct the creation of 305 00:15:09.300 --> 00:15:12.900 redemption process of an ETF isn't designed 306 00:15:12.900 --> 00:15:15.700 for tax efficiency. It's designed to 307 00:15:15.700 --> 00:15:18.200 making sure that the 308 00:15:18.200 --> 00:15:21.300 nav is equal to the underlying basket of 309 00:15:21.300 --> 00:15:24.700 stocks in that process in itself makes ETFs 310 00:15:24.700 --> 00:15:26.100 extremely tax efficient. 311 00:15:26.900 --> 00:15:29.900 So it's not the goal but it is is something 312 00:15:29.900 --> 00:15:33.700 that you get through that process, which is interesting. Okay, 313 00:15:32.700 --> 00:15:35.300 so just kind of recap here for 314 00:15:35.300 --> 00:15:36.600 our investors. 315 00:15:38.400 --> 00:15:41.100 When considering your tax status with your 316 00:15:41.100 --> 00:15:44.700 portfolios consider what we call an evidence-based 317 00:15:44.700 --> 00:15:47.400 investment philosophy Buy and Hold that 318 00:15:47.400 --> 00:15:51.700 tends to lead to not only a greater likelihood of outperformance 319 00:15:50.700 --> 00:15:53.100 by staying the course, but it 320 00:15:53.100 --> 00:15:56.500 reduces frictions reduces transactions in 321 00:15:56.500 --> 00:16:00.400 the portfolio. Thus leading to a higher level of tax efficiency consider 322 00:15:59.400 --> 00:16:03.000 the vehicles that you're using when using 323 00:16:02.300 --> 00:16:06.100 open-ended mutual funds gravitate towards 324 00:16:05.100 --> 00:16:08.400 more passively managed growing mutual 325 00:16:08.400 --> 00:16:12.000 funds ETFs certainly have tax benefits and 326 00:16:11.200 --> 00:16:14.400 for those investors that are deploying a 327 00:16:14.400 --> 00:16:17.200 direct indexing strategy. There's certainly more 328 00:16:17.200 --> 00:16:21.100 opportunities through the sheer number of names to identify losses 329 00:16:20.100 --> 00:16:23.500 to perform ongoing tax loss harvesting 330 00:16:23.500 --> 00:16:26.200 and then lastly Glenn against thanks for 331 00:16:26.200 --> 00:16:29.700 joining us adding a long short 332 00:16:29.700 --> 00:16:33.100 extension a 1:30 strategy certainly can 333 00:16:32.100 --> 00:16:36.100 help not only from a diversification standpoint, 334 00:16:35.100 --> 00:16:37.200 but also from 335 00:16:38.300 --> 00:16:42.000 Alpha generating strategy. So Glenn. 336 00:16:41.200 --> 00:16:44.300 Thank you so much for your time Phil. Thank you for joining us 337 00:16:44.300 --> 00:16:47.200 here for our listeners. Thank you for for listening to 338 00:16:47.200 --> 00:16:50.200 us. You can access this podcast and all of 339 00:16:50.200 --> 00:16:53.900 our podcasts and our series anywhere you get your podcasts and 340 00:16:53.900 --> 00:16:56.000 I look forward to our conversation next time. Thank you 341 00:16:56.200 --> 00:16:59.800 so much gentlemen, thank you. Thanks Cemetery Partners. LLC 342 00:16:59.800 --> 00:17:02.600 is an investment advisor firm registered with 343 00:17:02.600 --> 00:17:05.400 the Securities and Exchange Commission The Firm only 344 00:17:05.400 --> 00:17:08.300 transacts business in states where it is properly 345 00:17:08.300 --> 00:17:11.600 registered or excluded or Exempted from 346 00:17:11.600 --> 00:17:14.300 registration requirements registration of 347 00:17:14.300 --> 00:17:17.400 an investment advisor does not imply any specific level 348 00:17:17.400 --> 00:17:20.600 of skill or training and does not constitute an 349 00:17:20.600 --> 00:17:23.700 endorsement of the firm by the commission. No one 350 00:17:23.700 --> 00:17:27.200 should assume that future performance of any specific investment investment 351 00:17:26.200 --> 00:17:30.200 strategy product or non-investment 352 00:17:29.200 --> 00:17:32.000 related content made reference to 353 00:17:32.600 --> 00:17:35.600 directly or indirectly in this material will be profitable. 354 00:17:36.600 --> 00:17:39.100 As with any investment strategy there is the 355 00:17:39.100 --> 00:17:42.700 possibility of profitability as well as loss due 356 00:17:42.700 --> 00:17:45.400 to various factors including changing market 357 00:17:45.400 --> 00:17:47.800 conditions and/or applicable laws. 358 00:17:48.600 --> 00:17:51.700 Content may not be reflective of current opinions 359 00:17:51.700 --> 00:17:54.800 or positions. Please note the material 360 00:17:54.800 --> 00:17:57.200 is provided for educational and background use 361 00:17:57.200 --> 00:18:00.700 only moreover. You should not assume that any discussion or 362 00:18:00.700 --> 00:18:03.800 information contained in this material serves as 363 00:18:03.800 --> 00:18:06.400 the receipt of or as a substitute for 364 00:18:06.400 --> 00:18:08.900 personalized investment advice.
The “Tax-Man” cometh! As this tax season proceeds ever forward, many investors are asking themselves the same question - “am I going to take a large tax-hit this year?” We cannot say how much you'll be taxed on your present investments. But, we believe it's possible to structure your portfolio in a manner that mitigates tax-loss, and, leaves more money in your respective pockets. Joining us today is Philip McDonald, CFA, CAIA, Symmetry's Managing Director of Research and Investments & Glenn Shirley, CAIA, Head of Investor Relations for Quantinno, to explain how investors can more effectively structure their portfolios and avoid an excess of taxation. If you have any questions or would like more information, reach out to us at https://symmetrypartners.com/contact-us/ You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice. Transcript: 00:00:01.800 --> 00:00:07.400 Hello everyone. 1 00:00:07.400 --> 00:00:10.800 Welcome to unfiltered Finance. This is your host Tom Romano. 2 00:00:10.800 --> 00:00:13.800 I want to welcome you all back. We have a very 3 00:00:13.800 --> 00:00:17.100 interesting topic to discuss with you today. It's 4 00:00:16.100 --> 00:00:19.400 the notion of investors keeping more money in 5 00:00:19.400 --> 00:00:22.900 their pockets by bringing tax management into 6 00:00:22.900 --> 00:00:25.300 their investment Holdings. Not only are 7 00:00:25.300 --> 00:00:28.200 we going to talk about tax management, but some of the things investors should 8 00:00:28.200 --> 00:00:31.200 be considering in terms of how they view Capital markets how they should be 9 00:00:31.200 --> 00:00:34.400 investing and then we have a couple of special guests 10 00:00:34.400 --> 00:00:38.000 to talk about some additional strategies that investors should 11 00:00:37.400 --> 00:00:40.700 consider in terms of bringing tax 12 00:00:40.700 --> 00:00:43.700 Alpha if you will to the table so joining 13 00:00:43.700 --> 00:00:46.100 us is Phil McDonald who is the 14 00:00:46.100 --> 00:00:49.400 president of the panoramic trust and managing director of 15 00:00:49.400 --> 00:00:52.700 research of symmetry Partners as well as Glenn Shirley 16 00:00:52.700 --> 00:00:55.700 who is a principal and head of investor relations 17 00:00:55.700 --> 00:00:58.200 at quantino Capital Management Glen and 18 00:00:58.200 --> 00:01:01.500 Phil. Thank you so much for joining us here today. Thanks for having me tone. Thanks Tom. 19 00:01:01.500 --> 00:01:01.800 It's great. 20 00:01:01.900 --> 00:01:04.900 be with you, you know at quantino 100% of 21 00:01:04.900 --> 00:01:07.200 our focus is on taxable investors and 22 00:01:07.900 --> 00:01:10.500 We're managing portfolios while also seeking 23 00:01:10.500 --> 00:01:13.300 to generate really consistent and strong tax benefits 24 00:01:13.300 --> 00:01:16.800 for clients. And that goal is to maximize their 25 00:01:16.800 --> 00:01:19.400 after-tax wealth to help them keep as much return as possible 26 00:01:19.400 --> 00:01:22.200 year to year and we couldn't be more thrilled to partner with Symmetry and 27 00:01:22.200 --> 00:01:25.200 the incredible advisors that you serve. So thanks 28 00:01:25.200 --> 00:01:28.300 for having us pleasure to have you both. I look forward 29 00:01:28.300 --> 00:01:31.300 to to the today's dialogue. Sometimes taxes aren't the 30 00:01:31.300 --> 00:01:34.300 most interesting topic. However, I think that 31 00:01:34.300 --> 00:01:37.300 there's some very important information that investors should 32 00:01:37.300 --> 00:01:40.700 be considering in terms of how they invest their assets. And 33 00:01:40.700 --> 00:01:43.000 so thank you both for joining us. There's a couple 34 00:01:43.100 --> 00:01:46.100 of different angles. I want to take this conversation, right? And the first 35 00:01:46.100 --> 00:01:49.000 one I think I want to to go towards is 36 00:01:50.100 --> 00:01:53.500 Specific investment philosophies, right? So Phil we adhere 37 00:01:53.500 --> 00:01:57.300 to what we refer to as an evidence-based investment philosophy allowing 38 00:01:56.300 --> 00:01:59.200 markets to produce the returns that 39 00:01:59.200 --> 00:02:03.300 are investors are entitled to at the end of the day. So talk 40 00:02:02.300 --> 00:02:05.700 to us a little bit from a tax standpoint 41 00:02:05.700 --> 00:02:08.200 the benefits of an evidence-based investment 42 00:02:08.200 --> 00:02:09.500 philosophy versus 43 00:02:10.500 --> 00:02:13.500 Paying for Alpha or active 44 00:02:13.500 --> 00:02:16.600 money management. Mm-hmm. No, you raise a erase. 45 00:02:16.600 --> 00:02:19.700 Very good point Tom. So our investment philosophy all 46 00:02:19.700 --> 00:02:22.800 often refer to it as multi-factor investing. It 47 00:02:22.800 --> 00:02:27.300 involves specific rules quantitative indicators 48 00:02:26.300 --> 00:02:29.800 that research for 49 00:02:29.800 --> 00:02:32.100 a very long time has indicated, you know 50 00:02:32.100 --> 00:02:35.400 might create a premium over time. So following, you know, 51 00:02:35.400 --> 00:02:38.900 a value and small and momentum and high quality 52 00:02:38.900 --> 00:02:41.600 High profitability type of strategy you might 53 00:02:41.600 --> 00:02:44.700 expect to do a little bit better than just a cap weighted 54 00:02:44.700 --> 00:02:47.300 index over time what you get with 55 00:02:47.300 --> 00:02:50.900 that again is, you know, rules-based very Diversified. So 56 00:02:50.900 --> 00:02:53.700 for the most part low turnover right there, 57 00:02:53.700 --> 00:02:56.300 there are there are some strategies that have 58 00:02:56.300 --> 00:02:59.000 a little turnover specifically momentum. You probably have a little 59 00:02:59.100 --> 00:03:02.600 bit higher turnover than a market capitalization way to index but 60 00:03:02.600 --> 00:03:05.600 generally speaking, you know, these signals are relatively slow 61 00:03:05.600 --> 00:03:08.500 moving you're very diverseified. Each holding is 62 00:03:08.500 --> 00:03:10.200 a small percentage of your portfolio. 63 00:03:10.700 --> 00:03:13.300 So for the most part, you don't have to turn over 64 00:03:13.300 --> 00:03:16.400 the portfolio very often. You don't have to trade a lot sell a 65 00:03:16.400 --> 00:03:19.200 lot to reposition into the into the next 66 00:03:19.200 --> 00:03:22.700 Holdings you would want. I mentioned momentum alone has has a 67 00:03:22.700 --> 00:03:25.900 higher turnover as an individual strategy. There are 68 00:03:25.900 --> 00:03:29.100 benefits in putting it together with other factors specifically 69 00:03:28.100 --> 00:03:31.100 momentum and value work very well 70 00:03:31.100 --> 00:03:35.000 together because they're negatively correlated and in the same portfolio, 71 00:03:34.600 --> 00:03:37.000 the the turnover momentum can be 72 00:03:37.600 --> 00:03:41.000 somewhat counteracted in reduced by having other factors 73 00:03:40.200 --> 00:03:43.200 in there specifically value. So the 74 00:03:43.200 --> 00:03:46.400 pairing of factors can help with the tax efficiency of 75 00:03:46.400 --> 00:03:49.200 the portfolio, right momentum by definition is a high 76 00:03:49.200 --> 00:03:53.100 turnover strategy. Meaning there's a lot of trading right now this 77 00:03:52.100 --> 00:03:55.800 this signal is you know, essentially a year 78 00:03:55.800 --> 00:03:58.300 or so a little less than a year. So you would 79 00:03:58.300 --> 00:04:01.200 expect and that's the 80 00:04:01.200 --> 00:04:04.400 standard kind of academic one year price momentum type of 81 00:04:04.400 --> 00:04:07.700 indicator quantitative rule. So you'd 82 00:04:07.700 --> 00:04:10.400 expect momentum to lead to changes at about 83 00:04:10.800 --> 00:04:14.500 Near Horizon your portfolio, which is especially inconvenient 84 00:04:13.500 --> 00:04:16.300 to with regard to tax 85 00:04:16.300 --> 00:04:19.600 law because you know, you have the short-term long term type of 86 00:04:19.600 --> 00:04:22.300 cap gain consideration as well. Sure. So I 87 00:04:22.300 --> 00:04:25.400 mean we've had a lot of conversations about on this podcast about 88 00:04:25.400 --> 00:04:28.100 a fishing markets diversification Buy and Hold 89 00:04:28.100 --> 00:04:31.600 stay the course, but what I'm hearing you say is that just from a 90 00:04:31.600 --> 00:04:34.500 tax standpoint it almost sounds like it's a convenient byproduct of 91 00:04:34.500 --> 00:04:37.300 it hearing to a buy an old strategy. That's a 92 00:04:37.300 --> 00:04:40.700 great way to think about it and you you mentioned relative to 93 00:04:40.700 --> 00:04:43.400 other strategies. So I want to respond directly to 94 00:04:43.400 --> 00:04:46.300 that as well. So let's just call, you know, 95 00:04:46.300 --> 00:04:49.300 multi-factor Diversified investing as a strategy 96 00:04:49.300 --> 00:04:52.400 and investment philosophy relative to you know, 97 00:04:52.400 --> 00:04:55.800 kind of old-fashioned active management where a 98 00:04:55.800 --> 00:04:58.500 manager is picking and choosing you were stocks 99 00:04:58.500 --> 00:05:02.000 maybe reacting to Market events 100 00:05:01.100 --> 00:05:04.400 making predictions turning the portfolio over, 101 00:05:04.400 --> 00:05:07.400 you know, if you know, each position is about 10% 102 00:05:07.400 --> 00:05:10.100 you know, just selling one position creates a lot 103 00:05:10.100 --> 00:05:10.700 of turnover. 104 00:05:10.700 --> 00:05:13.400 Or so typically those actively managed strategies 105 00:05:13.400 --> 00:05:16.500 that are more concentrated and and require more 106 00:05:16.500 --> 00:05:19.300 trading are less tax efficient. Lord know 107 00:05:19.300 --> 00:05:22.800 that absolutely makes sense and Glenn. I know that you share in our 108 00:05:22.800 --> 00:05:25.400 view on how Capital markets work. Do you 109 00:05:25.400 --> 00:05:28.500 care to add anything to fills comments? Well, I think tax laws 110 00:05:28.500 --> 00:05:32.200 harvesting in general is a perfect strategy 111 00:05:31.200 --> 00:05:34.600 to use evidence based investing 112 00:05:34.600 --> 00:05:37.100 and I say that because tax laws are 113 00:05:37.100 --> 00:05:40.300 visiting at its core is you have names in the portfolio that 114 00:05:40.300 --> 00:05:43.300 are essentially winners. They've appreciated we want 115 00:05:43.300 --> 00:05:45.400 to hold those continue to hold those names. 116 00:05:46.300 --> 00:05:49.700 But you're gonna have stocks that have gone down those stocks 117 00:05:49.700 --> 00:05:52.400 in a really simple example you 118 00:05:52.400 --> 00:05:55.400 would sell but at that moment when you sell that 119 00:05:55.400 --> 00:05:55.700 name. 120 00:05:56.500 --> 00:05:58.300 You have to replace it with another stock. 121 00:05:59.300 --> 00:06:02.600 So at that moment, that's a perfect time to utilize 122 00:06:02.600 --> 00:06:05.200 your evidence-based beliefs. If 123 00:06:05.200 --> 00:06:08.100 you want to tilt the portfolio toward cheaper stocks or 124 00:06:08.100 --> 00:06:11.900 stocks with better attributes of quality or profitability. If you 125 00:06:11.900 --> 00:06:14.400 add that in to the stock 126 00:06:14.400 --> 00:06:17.500 selection of replacing that name via, which 127 00:06:17.500 --> 00:06:20.200 you've realized that tax loss then we believe you 128 00:06:20.200 --> 00:06:23.200 can add some nice return Over The Benchmark over 129 00:06:23.200 --> 00:06:23.400 time. 130 00:06:24.100 --> 00:06:28.100 So yeah tax loss harvesting and offering after tax improvements 131 00:06:27.100 --> 00:06:30.200 for clients can type very nicely with 132 00:06:30.200 --> 00:06:31.700 evidence-based investing. 133 00:06:32.400 --> 00:06:35.500 Yeah, I think that intentional turnover if you will with 134 00:06:35.500 --> 00:06:39.000 tasks lost harvesting does open up the door for some creativity 135 00:06:38.500 --> 00:06:41.600 is what I'm hearing. You say Glenn in order 136 00:06:41.600 --> 00:06:45.600 of enhancing returns. I mean I've seen in the past people liquidata 137 00:06:44.600 --> 00:06:47.600 position, they might hold cash for 30 138 00:06:47.600 --> 00:06:49.700 days or might replace it with an ETF. 139 00:06:50.700 --> 00:06:53.400 But Glenn what I'm hearing you say is that when that happens, there's 140 00:06:53.400 --> 00:06:54.600 opportunities to be a little bit more. 141 00:06:55.700 --> 00:06:58.900 Creative I guess the word when it comes to reinvesting those 142 00:06:58.900 --> 00:07:01.400 assets special specifically 143 00:07:01.400 --> 00:07:04.500 through a factor lens, right? That's right. And and 144 00:07:04.500 --> 00:07:07.300 I would also add Tom that's one advantage of 145 00:07:07.300 --> 00:07:10.600 the Symmetry platform versus maybe other tax loss 146 00:07:10.600 --> 00:07:13.700 harvesting options is that you know with with quantino 147 00:07:13.700 --> 00:07:16.600 involved we can add a modest long short extension 148 00:07:16.600 --> 00:07:19.300 to a strategy which gives it some 149 00:07:19.300 --> 00:07:22.400 unique advantages versus long only text less harvesting so 150 00:07:23.200 --> 00:07:26.800 And long only tax loss harvesting. You'll typically have a risk budget. 151 00:07:26.800 --> 00:07:29.500 So to speak, you know, there's only so much 152 00:07:29.500 --> 00:07:32.600 deviation versus The Benchmark the clients willing 153 00:07:32.600 --> 00:07:32.700 to take 154 00:07:33.600 --> 00:07:35.200 but with that risk budget 155 00:07:35.800 --> 00:07:38.300 If you do tilt toward maybe you're 156 00:07:38.300 --> 00:07:41.500 evidence-based beliefs would maybe value momentum 157 00:07:41.500 --> 00:07:44.900 you're taking up a little bit of that rich risk budget. So 158 00:07:44.900 --> 00:07:48.000 by taking up that risk budget, you're reducing the 159 00:07:47.800 --> 00:07:50.300 expected tax benefit because you're a 160 00:07:50.300 --> 00:07:52.400 little bit more constrained and tax less harvesting. 161 00:07:53.400 --> 00:07:56.200 So one disadvantage of perhaps long only text less 162 00:07:56.200 --> 00:07:59.800 harvesting with the long short extension that long 163 00:07:59.800 --> 00:08:02.500 short extension itself is the engine for tax benefit 164 00:08:02.500 --> 00:08:03.100 generation. 165 00:08:03.800 --> 00:08:06.300 So you can do a lot of created them things in 166 00:08:06.300 --> 00:08:09.100 the portfolio. You could tilt toward your your factors and 167 00:08:09.100 --> 00:08:12.900 your in your beliefs, but you're not giving up any expected 168 00:08:12.900 --> 00:08:13.600 tax benefit. 169 00:08:14.600 --> 00:08:17.400 If you're if you're employing that long short extension. 170 00:08:18.300 --> 00:08:22.300 Yeah, I kind of want to hang on that point Glen because we say 171 00:08:21.300 --> 00:08:25.100 and Phil I think would agree with with you 172 00:08:24.100 --> 00:08:27.000 that you know, there's no such thing as 173 00:08:27.100 --> 00:08:29.200 a perfect portfolio, right? Every portfolio is 174 00:08:30.200 --> 00:08:33.500 As it's trade-offs or is 175 00:08:33.500 --> 00:08:37.500 a compromise if you will and if you want tax efficiency 176 00:08:36.500 --> 00:08:40.400 as a main goal Factor investing 177 00:08:40.400 --> 00:08:43.200 might not be the best way to do it. It's a 178 00:08:43.200 --> 00:08:47.000 better way of doing it versus just a beta portfolio. But 179 00:08:46.100 --> 00:08:49.500 what I'm hearing you say Glens you get kind of The Best of Both Worlds 180 00:08:49.500 --> 00:08:52.500 by utilizing things like margin and 181 00:08:52.500 --> 00:08:55.400 short positions. Is that correct? I would 182 00:08:55.400 --> 00:08:58.900 I would agree that I would think the long short extension 183 00:08:58.900 --> 00:09:02.100 itself introduces more creativity in 184 00:09:01.100 --> 00:09:06.000 the portfolio because that 185 00:09:04.500 --> 00:09:07.800 engine of tax benefit generation 186 00:09:07.800 --> 00:09:10.900 is there it doesn't depend on the underlying portfolio 187 00:09:10.900 --> 00:09:13.500 for those strong and consistent text benefits. So, 188 00:09:14.400 --> 00:09:17.400 You have a lot more flexibility to implement the core part 189 00:09:17.400 --> 00:09:20.200 of that portfolio as you see fit. Sure. No, I think that makes 190 00:09:20.200 --> 00:09:24.000 a lot of sense. There's a lot of strategies that we're deploying now the 13030 191 00:09:23.300 --> 00:09:27.200 which you're alluding to Glenn I think is very interesting but filament 192 00:09:26.200 --> 00:09:29.400 in our experience, we've seen our new 193 00:09:29.400 --> 00:09:33.100 favorite word ossification, right which essentially means 194 00:09:32.100 --> 00:09:35.400 that when you own a a basket of 195 00:09:35.400 --> 00:09:39.300 security is whether it's ETS mutual funds are stocks at some 196 00:09:38.300 --> 00:09:42.000 point you get to an area 197 00:09:41.200 --> 00:09:44.300 over time where you can't do anything 198 00:09:44.300 --> 00:09:48.000 with that portfolio because of embedded gains, right 199 00:09:47.300 --> 00:09:51.100 and we've seen that over the years with our portfolios. 200 00:09:50.100 --> 00:09:53.700 Can you comment a little bit on that? Yeah, absolutely and 201 00:09:54.900 --> 00:09:57.200 The the irony in that 202 00:09:57.200 --> 00:10:00.300 situation is you should want to get there right because 203 00:10:00.300 --> 00:10:03.200 you want your portfolio to increase in value. So 204 00:10:03.200 --> 00:10:06.600 the way you you get to the point of having 205 00:10:06.600 --> 00:10:09.500 no unrealized losses in your portfolio to 206 00:10:09.500 --> 00:10:13.100 clip and realize for for tax efficient 207 00:10:12.100 --> 00:10:15.100 repositioning is your portfolio goes up 208 00:10:15.100 --> 00:10:19.200 over time and there's some interesting research on this. I think there's broad 209 00:10:18.200 --> 00:10:21.500 agreement that even in a 210 00:10:21.500 --> 00:10:24.300 diversified long only portfolio. You probably 211 00:10:24.300 --> 00:10:27.200 only have a single digit number of years, you know, some of 212 00:10:27.200 --> 00:10:30.200 it's going to depend on your assumptions and where the market goes and and how 213 00:10:30.200 --> 00:10:33.200 you've invested and how your tax Lots look but, you know, 214 00:10:33.200 --> 00:10:36.600 three four five years. Maybe might be the limit 215 00:10:36.600 --> 00:10:38.400 you have to do. 216 00:10:39.100 --> 00:10:42.900 Efficient tax less harvesting and that type of portfolio before you 217 00:10:42.900 --> 00:10:45.300 have to start to really give on the 218 00:10:45.300 --> 00:10:48.200 risk budget and and we refer to this idea 219 00:10:48.200 --> 00:10:51.700 of tracking error, which is you know, how different returns essentially 220 00:10:51.700 --> 00:10:54.100 will look relative to a benchmark and you start 221 00:10:54.100 --> 00:10:57.600 to to need to accept a lot of a lot of tracking error. If 222 00:10:57.600 --> 00:11:00.700 you're not willing to accept some realization of gains in 223 00:11:00.700 --> 00:11:03.500 in managing that portfolio. So all of a sudden, you know 224 00:11:03.500 --> 00:11:06.400 portfolio you you might be paying somebody to manage and 225 00:11:06.400 --> 00:11:09.700 do tax laws harvesting on becomes something 226 00:11:09.700 --> 00:11:12.400 that might look a little bit more like an expensive 227 00:11:12.400 --> 00:11:15.100 and noisy index. You don't have the ability to 228 00:11:15.100 --> 00:11:18.500 do many transactions in that so, you know, the 1330 that 229 00:11:18.500 --> 00:11:21.100 you and Glenn have started to talk about really frees up 230 00:11:21.100 --> 00:11:24.800 the opportunity to do something with that portfolio sure 231 00:11:24.800 --> 00:11:27.600 and you know, we talked a lot about direct indexing you 232 00:11:27.600 --> 00:11:30.400 and I did a podcast of a few episodes ago 233 00:11:30.400 --> 00:11:31.900 about direct indexing. 234 00:11:32.400 --> 00:11:35.700 And the more names the more tickers the 235 00:11:35.700 --> 00:11:38.200 more opportunity you have to harvest losses, but even 236 00:11:38.200 --> 00:11:41.100 with direct indexing when you hold maybe a hundred or so 237 00:11:41.100 --> 00:11:44.200 underlying stocks you do get it 238 00:11:44.200 --> 00:11:48.300 to a period where you you're eventually going to hold a basket 239 00:11:47.300 --> 00:11:50.600 of very low cost basis with 240 00:11:50.600 --> 00:11:52.900 high embedded gains securities. 241 00:11:53.500 --> 00:11:56.100 And so and the irony is that's the goal. 242 00:11:56.100 --> 00:11:59.100 You had alluded to like we want to see games in our 243 00:11:59.100 --> 00:12:02.100 portfolio. However, you know, we want our investors to be 244 00:12:02.100 --> 00:12:06.500 able to keep more in their pockets through through tax efficiency. So clunky. 245 00:12:05.500 --> 00:12:08.000 We started going down the path of the 246 00:12:08.900 --> 00:12:11.800 1330 strategy, right and in direct indexing 247 00:12:11.800 --> 00:12:14.600 certainly is a step up from a tax efficiency standpoint. 248 00:12:14.600 --> 00:12:17.300 It certainly helps describe for us a little bit about 249 00:12:17.300 --> 00:12:20.500 how that 130 30 works and multiple Market 250 00:12:20.500 --> 00:12:23.400 environments if you will sure that you 251 00:12:23.400 --> 00:12:26.600 Tom so, you know at the end of the day if you 252 00:12:26.600 --> 00:12:29.900 have a hundred dollars of a direct indexing portfolio 253 00:12:31.900 --> 00:12:34.400 maybe assume that direct indexing portfolio maybe 254 00:12:34.400 --> 00:12:37.900 has a 50% cost basis or a 60% cost basis 255 00:12:37.900 --> 00:12:40.200 that tends to be roughly the cost basis where 256 00:12:41.100 --> 00:12:44.700 You're kind of handcuffed from a tax benefit generation perspective. 257 00:12:44.700 --> 00:12:47.600 You know what quantina would do would be take 258 00:12:47.600 --> 00:12:50.800 that $100 portfolio use the the margin inherent 259 00:12:50.800 --> 00:12:52.800 in that account just like clients who 260 00:12:53.500 --> 00:12:56.200 You know borrow us modest amount from their Equity port for 261 00:12:56.200 --> 00:12:59.600 those from time to time use that same margin capability and then 262 00:12:59.600 --> 00:13:03.000 we're going to go long thirty dollars in short 263 00:13:02.400 --> 00:13:05.600 thirty dollars. So we're building a 130/30 strategy 264 00:13:05.600 --> 00:13:09.200 using the margin borrowing of 265 00:13:09.200 --> 00:13:12.700 that account. No other cash is required. That's an important part and 266 00:13:12.700 --> 00:13:15.000 then if you think about that $30 long $30 267 00:13:15.600 --> 00:13:18.400 short, that's gonna be Diversified across hundreds of stocks. 268 00:13:18.400 --> 00:13:21.600 Every tax loss harvesting strategy needs breath. You 269 00:13:21.600 --> 00:13:24.400 need just a lot of stocks to be invested in because you're gonna have winners 270 00:13:24.400 --> 00:13:27.900 and losers and then you think about that portfolios the 271 00:13:27.900 --> 00:13:30.500 market goes up as the market goes down. You have 272 00:13:30.500 --> 00:13:33.400 a little bit of a structural Advantage versus long only long only 273 00:13:33.400 --> 00:13:36.400 will tend to generate great tax benefits When the market dips 274 00:13:37.300 --> 00:13:40.600 But it struggles to generate tax benefits When the market Rises and 275 00:13:40.600 --> 00:13:43.100 you know clients invest in equities because they believe 276 00:13:43.100 --> 00:13:46.400 the Market's going to rise over time. So that short side of that portfolio is 277 00:13:46.400 --> 00:13:49.900 really important in the consistency of 278 00:13:49.900 --> 00:13:52.300 tax benefits over time. So if you have a 279 00:13:52.300 --> 00:13:55.300 long short portfolio on top of 280 00:13:55.300 --> 00:13:58.800 your direct indexing account, you're able to recharge 281 00:13:58.800 --> 00:14:01.300 tax benefits, you know almost immediately after 282 00:14:01.300 --> 00:14:04.400 you apply that long short extension. We can also use 283 00:14:04.400 --> 00:14:07.300 that to clean up the portfolios as 284 00:14:07.300 --> 00:14:10.700 Phil mentioned over time. You're tracking air may rise, you're making 285 00:14:10.700 --> 00:14:13.700 some deviations versus The Benchmark. So the 286 00:14:13.700 --> 00:14:15.500 risk in that portfolio is also Rising. 287 00:14:16.200 --> 00:14:20.300 So if you have an overexposure to say Information Technology, 288 00:14:19.300 --> 00:14:22.100 those names have done really well over the past 289 00:14:22.100 --> 00:14:26.200 five to 10 years. We can use the short book the short 290 00:14:25.800 --> 00:14:28.900 $30 of that portfolio to reduce 291 00:14:28.900 --> 00:14:31.900 some of that overweight which will help clients reduce 292 00:14:31.900 --> 00:14:34.500 risk in those accounts as well. So it's a combination of 293 00:14:35.400 --> 00:14:38.000 You know using that long short extension obviously to 294 00:14:38.400 --> 00:14:41.100 generate great text benefits and a consistent way for clients, but also 295 00:14:41.100 --> 00:14:45.000 to give them a better and less risky Investment Portfolio along 296 00:14:44.300 --> 00:14:47.300 the way. Thank you gentlemen, that that's very 297 00:14:47.300 --> 00:14:50.100 insightful for our listeners. Thank you for for listening to 298 00:14:50.100 --> 00:14:53.000 us. You can access this podcast and all of 299 00:14:53.100 --> 00:14:56.600 our podcasts and our series anywhere you get your podcasts, we're 300 00:14:56.600 --> 00:14:59.400 gonna continue this conversation. So for our listeners, be sure 301 00:14:59.400 --> 00:15:02.300 to tune in for part two on our topic of investing 302 00:15:02.300 --> 00:15:05.700 in taxes Cemetery Partners. 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Government bonds saw one of the single greatest drops since their inception, value stocks failed to outperform, and international stocks were adversely affected by foreign conflicts. It was a challenging year to say the least. But, we firmly believe that a well-researched strategy of diversification (across asset classes of all types) can help investors endure these down market periods. Listen to the second half of our "2022 Year-in-Perspective" for a detailed review of market performance last year, and, discussion of our hopes for 2023. If you have any questions or would like more information, reach out to us at https://symmetrypartners.com/contact-us/ You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. 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Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice. Show Notes/Transcript: 0 00:00:01.800 --> 00:00:07.300 Welcome back 1 00:00:07.300 --> 00:00:10.200 listeners. This is your host Tom romano, and thank you 2 00:00:10.200 --> 00:00:13.300 for joining us for part two of our 2022 year 3 00:00:13.300 --> 00:00:16.900 in perspective. Once again, we're joined by Casey Dillon 4 00:00:16.900 --> 00:00:19.700 to give us some insights on the markets and 5 00:00:19.700 --> 00:00:22.300 how they affected investors throughout the course 6 00:00:22.300 --> 00:00:25.600 of the previous year. Thanks for joining us again. Casey talked us 7 00:00:25.600 --> 00:00:28.400 a little bit. How did the markets react right? I mean we saw both 8 00:00:28.400 --> 00:00:32.200 equities and fixed income have negative 9 00:00:31.200 --> 00:00:34.900 performance for the year. And what 10 00:00:34.900 --> 00:00:37.400 are we seeing from rates of 11 00:00:37.400 --> 00:00:40.000 return from the US as well as abroad? 12 00:00:40.800 --> 00:00:44.200 Yeah, well the the sharp increase 13 00:00:43.200 --> 00:00:46.900 in rates reverberated across 14 00:00:46.900 --> 00:00:49.700 markets everything from stocks to 15 00:00:49.700 --> 00:00:51.300 bonds to real estate to commodities. 16 00:00:52.200 --> 00:00:55.300 And in what we observed was 17 00:00:55.300 --> 00:00:58.900 sort of some interesting things 18 00:00:58.900 --> 00:01:00.400 again threads that 19 00:01:01.300 --> 00:01:05.300 We'd seen coming into 2022 for instance. The 20 00:01:04.300 --> 00:01:08.400 the growth of tech stocks 21 00:01:08.400 --> 00:01:12.100 becoming a huge portion of 22 00:01:11.100 --> 00:01:14.600 the sort of the the US market, 23 00:01:14.600 --> 00:01:17.700 right? So if you you think about the Fang stocks Facebook 24 00:01:17.700 --> 00:01:19.600 Apple Amazon Netflix, Google 25 00:01:20.400 --> 00:01:23.700 They accounted for almost 25% of 26 00:01:23.700 --> 00:01:25.000 the market cap of the US. 27 00:01:25.900 --> 00:01:28.000 Coming into 2022 and they were 28 00:01:28.100 --> 00:01:31.400 the sort of those growth oriented tech stocks were the drivers 29 00:01:31.400 --> 00:01:34.600 of the tremendous returns 30 00:01:34.600 --> 00:01:37.000 that the market had given kind of the past five years. 31 00:01:37.800 --> 00:01:40.800 Or even ten and and to the 32 00:01:40.800 --> 00:01:43.100 point that there were a lot of folks who looked at that and said, 33 00:01:43.100 --> 00:01:47.200 hey, look are we out over our skis here this feels 34 00:01:46.200 --> 00:01:49.800 very much. Like we're entering into kind 35 00:01:49.800 --> 00:01:52.800 of frothy Tech bubble territory 36 00:01:52.800 --> 00:01:56.700 and there were sort of the Hallmark things 37 00:01:55.700 --> 00:01:58.300 trappings of 38 00:01:58.300 --> 00:02:01.200 that that were that felt very familiar to 39 00:02:01.200 --> 00:02:04.300 those of us who lived through the first tech bubble. So you saw things 40 00:02:04.300 --> 00:02:07.300 like the mean stocks right with games stop 41 00:02:07.300 --> 00:02:10.200 and Best Buy and sort of, you know day trading. 42 00:02:11.100 --> 00:02:15.300 To to the overuse of Leverage on these 43 00:02:15.300 --> 00:02:18.200 and a lot of that was kind of being driven by 44 00:02:18.200 --> 00:02:21.300 this idea that you know coming out of the pandemic these 45 00:02:21.300 --> 00:02:24.300 growth stocks. This was the story. These were the story 46 00:02:24.300 --> 00:02:27.700 stocks that people were gravitating to so so what happens people 47 00:02:27.700 --> 00:02:30.900 buy them up they to the point where the valuation 48 00:02:30.900 --> 00:02:33.200 no longer makes sense. If you 49 00:02:33.200 --> 00:02:37.300 take a step back and say well what am I buying right at 50 00:02:36.300 --> 00:02:38.000 the end of the day? 51 00:02:39.700 --> 00:02:42.700 Investing is about purchasing future cash flows. And 52 00:02:42.700 --> 00:02:45.600 so you arrive at a price today based on 53 00:02:45.600 --> 00:02:48.300 some assessment of what you think those future cash flows 54 00:02:48.300 --> 00:02:49.700 are and what you're willing to pay for those. 55 00:02:50.400 --> 00:02:54.300 If you get to a point where you're paying so much today for 56 00:02:53.300 --> 00:02:56.400 you know, this idea of 57 00:02:56.400 --> 00:02:59.400 heightened future cash flows at some 58 00:02:59.400 --> 00:03:00.800 point you enter into a world where? 59 00:03:01.600 --> 00:03:04.300 To to even substantiate the price you're willing 60 00:03:04.300 --> 00:03:07.900 to pay today. You have to have Perfection on those future casuals 61 00:03:07.900 --> 00:03:10.400 going forward and the world doesn't work that way right? You 62 00:03:10.400 --> 00:03:13.100 have a situation where Russia invades Ukraine, you have 63 00:03:13.100 --> 00:03:16.800 a situation where you have, you know pandemics and Avian flues 64 00:03:16.800 --> 00:03:19.300 and things like that. So the world is just in that 65 00:03:19.300 --> 00:03:23.200 need a place where you can predict Perfection 66 00:03:22.200 --> 00:03:26.000 for cash flows for things like yeah, Facebook 67 00:03:25.500 --> 00:03:28.200 Apple Amazon, and in fact what we see 68 00:03:29.100 --> 00:03:32.900 The the case for Perfection fell off the cliff in 2022 69 00:03:32.900 --> 00:03:35.200 because the the earnings for 70 00:03:35.200 --> 00:03:38.300 those companies started to turn around and go the other way and that 71 00:03:38.300 --> 00:03:41.700 caused Market participants to rethink the 72 00:03:41.700 --> 00:03:44.800 valuations that they were giving them and what 73 00:03:44.800 --> 00:03:47.600 we observed was the Fang stocks lost 74 00:03:47.600 --> 00:03:50.500 collectively over three trillion dollars in market 75 00:03:50.500 --> 00:03:53.300 cap over the course of the year. So that that 76 00:03:53.300 --> 00:03:56.700 was a homos 25% of the total market cap lost in 77 00:03:56.700 --> 00:03:59.400 the US was attributable to those handful of stocks 78 00:03:59.400 --> 00:04:02.000 right those those Fang stocks that you allude to. I mean 79 00:04:02.400 --> 00:04:06.200 at some point they were you know, collectively very 80 00:04:05.200 --> 00:04:08.800 large percentage of common us benchmarks 81 00:04:08.800 --> 00:04:11.300 like like the S&P 500, right they've been 82 00:04:11.300 --> 00:04:14.200 inflated and so when there is that correction, you're gonna 83 00:04:14.200 --> 00:04:17.300 feel it across the the industry across the all 84 00:04:17.300 --> 00:04:20.100 the markets rather. So I think that makes a lot of 85 00:04:20.100 --> 00:04:23.800 sense a lot of our investors are evidence-based investors, 86 00:04:23.800 --> 00:04:26.800 you know, Casey you and I share the same investment philosophy 87 00:04:26.800 --> 00:04:28.700 of buying hold. 88 00:04:29.500 --> 00:04:33.200 Long-term taking a factor approach to investment management. 89 00:04:34.800 --> 00:04:37.200 What how did factor-based investors or 90 00:04:37.200 --> 00:04:40.900 evidence-based investors fair in 2022? 91 00:04:40.900 --> 00:04:43.500 Yeah, so if you think about what what 92 00:04:43.500 --> 00:04:47.100 are you doing? If you're a factor investor? Well yours, you're 93 00:04:46.100 --> 00:04:49.700 lazing in on specific characteristics of 94 00:04:49.700 --> 00:04:52.200 risk to invest in and those 95 00:04:52.200 --> 00:04:55.600 character those risk factors those characteristics of 96 00:04:55.600 --> 00:04:58.200 risk that that you have 97 00:04:58.200 --> 00:05:02.300 been identified by way of academic research to have a 98 00:05:01.300 --> 00:05:04.800 premium or return 99 00:05:04.800 --> 00:05:07.600 associated with that that characteristics of risk. 100 00:05:07.600 --> 00:05:10.800 So you're trying to figure it 101 00:05:10.800 --> 00:05:13.500 out and say okay, you know, the the tech stocks 102 00:05:13.500 --> 00:05:17.000 is great example, the thing stocks if things become exceedingly 103 00:05:16.800 --> 00:05:19.300 expensive. Well, what does that 104 00:05:19.300 --> 00:05:22.300 do? Then to the cheaper stocks the stocks that aren't the 105 00:05:22.300 --> 00:05:25.800 thing stocks, right? How are they priced relative 106 00:05:25.800 --> 00:05:28.800 to these these growthier stocks? 107 00:05:29.500 --> 00:05:32.200 What historically we've observed is that 108 00:05:32.200 --> 00:05:35.700 there is a premium associated with valuation. Meaning 109 00:05:35.700 --> 00:05:38.700 the cheaper stocks tend to outperform the 110 00:05:38.700 --> 00:05:40.200 more expensive stocks over time. 111 00:05:41.300 --> 00:05:44.200 And so you enter into a world where the Fang stocks are 112 00:05:44.200 --> 00:05:47.800 ripping the cover off the ball and they're kind of the expensive growth stocks and 113 00:05:47.800 --> 00:05:50.300 by comparison, the the cheaper value 114 00:05:50.300 --> 00:05:54.100 stocks just aren't keeping up with that on the upswing and 115 00:05:53.100 --> 00:05:56.600 you got to a point where the 116 00:05:56.600 --> 00:05:59.100 market was collectively the one of 117 00:05:59.100 --> 00:06:02.900 the most expensive markets in history. Meaning that 118 00:06:02.900 --> 00:06:03.300 the 119 00:06:04.400 --> 00:06:08.200 thighs and weight of those Bank stocks across 120 00:06:07.200 --> 00:06:08.600 the market 121 00:06:09.400 --> 00:06:10.800 and how expensive they become 122 00:06:11.900 --> 00:06:13.100 lifted the whole market up 123 00:06:13.800 --> 00:06:16.300 But the spread between the growth stocks and 124 00:06:16.300 --> 00:06:19.400 the value stocks became as wide as we've 125 00:06:19.400 --> 00:06:22.400 seen really since the tech bubble right going back to 126 00:06:22.400 --> 00:06:25.200 that that the the value stocks were 127 00:06:25.200 --> 00:06:28.500 just so unloved and so beaten down my price relative to 128 00:06:28.500 --> 00:06:31.200 the tech stocks. So if you're 129 00:06:31.200 --> 00:06:34.400 a value investor rolling into a year like 130 00:06:34.400 --> 00:06:38.000 2022 when the the Fang 131 00:06:37.700 --> 00:06:41.000 stock bubble sort of starts to become deflated and 132 00:06:40.100 --> 00:06:44.500 those prices start to to come 133 00:06:43.500 --> 00:06:46.800 back to the mean if 134 00:06:46.800 --> 00:06:47.000 you will. 135 00:06:48.100 --> 00:06:51.400 One consequent of that is is that on a relative 136 00:06:51.400 --> 00:06:55.000 basis those cheaper value stocks start to perform better. Even 137 00:06:54.100 --> 00:06:57.700 if the market is going down as a whole the value 138 00:06:57.700 --> 00:07:00.400 stocks tend to hold up better because it's the 139 00:07:00.400 --> 00:07:02.900 top end of the market the expensive end. That's moving more. 140 00:07:03.700 --> 00:07:06.500 And so we we saw that and in 2022 value 141 00:07:06.500 --> 00:07:09.700 stocks actually did quite well, they did exceedingly well 142 00:07:09.700 --> 00:07:12.400 relative to grow stocks large 143 00:07:12.400 --> 00:07:16.100 cap value outperform large cap growth handily 144 00:07:15.100 --> 00:07:18.600 for 2022. And 145 00:07:18.600 --> 00:07:21.100 so if you're a value a factor investor with 146 00:07:21.100 --> 00:07:24.500 a tilt towards value that was really helping your portfolio in 147 00:07:24.500 --> 00:07:28.100 2022. We also saw factors like 148 00:07:27.100 --> 00:07:30.500 low volatility or 149 00:07:30.500 --> 00:07:33.900 associated with lower volatility stocks 150 00:07:33.900 --> 00:07:36.400 doing well across the 151 00:07:36.400 --> 00:07:39.200 board minimum volatility globally and 152 00:07:39.200 --> 00:07:42.500 also here in the United States. So those stocks that tend 153 00:07:42.500 --> 00:07:44.800 to be less volatile than the market in general. 154 00:07:45.500 --> 00:07:48.000 There's a return premium associated with that and of course 155 00:07:48.300 --> 00:07:52.000 in a year that highly volatile like 2022 those less 156 00:07:51.500 --> 00:07:54.400 volatile stocks had a premium associated with 157 00:07:54.400 --> 00:07:57.200 them relative to everything else. And if you're a factor investor who 158 00:07:57.200 --> 00:08:00.300 has a tilt towards minimum volatility you you reap the 159 00:08:00.300 --> 00:08:03.200 reward on that but it is as we sort of 160 00:08:03.200 --> 00:08:06.300 break out of kind of globally or looking at the US things like 161 00:08:06.300 --> 00:08:09.600 small cap stocks and Emerging Markets continue to do quite well. 162 00:08:09.600 --> 00:08:12.500 So if you had a tilt towards size in your 163 00:08:12.500 --> 00:08:15.500 Factor tilt that that paid off 164 00:08:15.500 --> 00:08:18.500 for you on a more broadly Diversified basis. 165 00:08:19.200 --> 00:08:22.700 And so you you started to see that these these 166 00:08:22.700 --> 00:08:26.000 Factor tilts in at 167 00:08:25.300 --> 00:08:28.100 a time when normally you would think a look 168 00:08:28.100 --> 00:08:31.700 if it's a risk off environment. Well Factor, it is 169 00:08:31.700 --> 00:08:34.700 a risk anyway, right? So you might 170 00:08:34.700 --> 00:08:37.800 expect for the factor exposures to 171 00:08:37.800 --> 00:08:40.300 be down it and to a degree you're 172 00:08:40.300 --> 00:08:43.700 right, but they're also relative to the other things that 173 00:08:43.700 --> 00:08:46.200 they're trading against and in that case they held up 174 00:08:46.200 --> 00:08:47.600 much better than the market in general. 175 00:08:48.300 --> 00:08:51.600 And so a broadly based a broad 176 00:08:51.600 --> 00:08:55.000 Diversified broadly Diversified Factor portfolio 177 00:08:54.100 --> 00:08:57.600 tended to do better on both a relative 178 00:08:57.600 --> 00:09:00.300 and absolute basis than the market in general 179 00:09:00.300 --> 00:09:03.300 did and certainly more so than the Contra points 180 00:09:03.300 --> 00:09:06.800 of that things like growth or more volatile stocks or you 181 00:09:06.800 --> 00:09:09.800 know, large cabs. So so being a factor investor 182 00:09:09.800 --> 00:09:12.500 really was beneficial in 183 00:09:12.500 --> 00:09:14.600 many regards in 2022. 184 00:09:15.300 --> 00:09:18.300 Yeah, we've seen that in the performance of a number of 185 00:09:18.300 --> 00:09:21.200 portfolios that that you and I have talked about over the 186 00:09:21.200 --> 00:09:25.200 years that you know, a diversified portfolio factors in 187 00:09:24.200 --> 00:09:27.400 2022 albeit was 188 00:09:27.400 --> 00:09:30.600 still in the red at the end of the year, but not nearly as as bad 189 00:09:30.600 --> 00:09:34.100 as some of those market like portfolios 190 00:09:33.100 --> 00:09:36.900 or benchmarks that we've seen. I do 191 00:09:36.900 --> 00:09:39.300 want to hang on the value conversation a little bit. Right? 192 00:09:39.300 --> 00:09:42.400 We you know value as a factor you and 193 00:09:42.400 --> 00:09:46.000 I share the the belief that investors should have exposure 194 00:09:45.200 --> 00:09:48.600 to value in their portfolios. And I know 195 00:09:48.600 --> 00:09:51.300 over the years Casey you and I have had shared a cocktail 196 00:09:51.300 --> 00:09:54.300 discussing. What was the underperformance of 197 00:09:54.300 --> 00:09:57.100 value for a number of years. We saw the rise 198 00:09:57.100 --> 00:10:01.300 of the things which we discussed earlier and for 199 00:10:00.300 --> 00:10:03.200 Value investors. I think that they were 200 00:10:03.200 --> 00:10:06.700 someone Vindicated in 2020 to but for 201 00:10:06.700 --> 00:10:09.900 those are out there listening, you know with this outperformance 202 00:10:09.900 --> 00:10:12.300 of value. Is there still room for Value to 203 00:10:12.300 --> 00:10:14.500 continue to outperform in 2023? 204 00:10:15.200 --> 00:10:19.200 You know, I love the quote history rare 205 00:10:18.200 --> 00:10:21.700 rarely repeats itself, but it often Rhymes because 206 00:10:21.700 --> 00:10:25.000 I think that that's incredibly true 207 00:10:24.600 --> 00:10:27.600 across markets in particular and I 208 00:10:27.600 --> 00:10:30.400 heard an a quote that I think shed some light on that and it's 209 00:10:30.400 --> 00:10:33.200 not that history repeats itself. It's that people 210 00:10:33.200 --> 00:10:36.600 repeat themself, right? And so if you think about markets are 211 00:10:36.600 --> 00:10:40.000 made up of people making purchasing and 212 00:10:39.300 --> 00:10:43.000 selling decisions across the board it it's it 213 00:10:42.200 --> 00:10:45.500 should be no surprise that in a similar 214 00:10:45.500 --> 00:10:47.200 type of dynamic or environment. 215 00:10:48.100 --> 00:10:51.300 People might Chase things like large cab growth 216 00:10:51.300 --> 00:10:54.300 tech stocks, right? And so if you look back to 217 00:10:54.300 --> 00:10:57.600 a time that was very similar to that during the tech bubble where 218 00:10:57.600 --> 00:11:00.900 you saw again Tech socks become very expensive and 219 00:11:00.900 --> 00:11:05.300 value stocks kind of be left to languish 220 00:11:03.300 --> 00:11:06.300 on the sidelines for 221 00:11:06.300 --> 00:11:09.300 some time when the tech Bubble Burst, right all of 222 00:11:09.300 --> 00:11:12.900 those growthy tech stocks valuation plummeted 223 00:11:12.900 --> 00:11:15.200 and value stocks had a tremendous run for several 224 00:11:15.200 --> 00:11:15.400 years. 225 00:11:16.700 --> 00:11:17.600 Well, where are we now? 226 00:11:18.200 --> 00:11:21.400 The we see these these Fang stocks the the air going 227 00:11:21.400 --> 00:11:23.300 out of them value having a nice run. 228 00:11:24.300 --> 00:11:27.000 So you might think is the run over. Well, if you 229 00:11:27.300 --> 00:11:30.600 look at the sort of globally the value spreads. 230 00:11:31.300 --> 00:11:35.400 So again cheap versus expensive we are still in 231 00:11:34.400 --> 00:11:37.800 the 90 plus percentile 232 00:11:37.800 --> 00:11:41.000 meaning it still one of the most expensive markets, 233 00:11:40.400 --> 00:11:43.700 right? So if we look at the, you 234 00:11:43.700 --> 00:11:46.400 know, nine out of 10 markets have been cheaper than 235 00:11:46.400 --> 00:11:51.100 the market that we're in currently even after 2022's price 236 00:11:50.100 --> 00:11:53.700 decline. So that tells you that value 237 00:11:53.700 --> 00:11:56.800 stocks, even though they had a tremendous year 238 00:11:56.800 --> 00:11:59.300 in 2022. The potential is there 239 00:11:59.300 --> 00:12:02.700 for them to continue to experience this 240 00:12:02.700 --> 00:12:05.600 reversion to the mean of these expensive stocks 241 00:12:05.600 --> 00:12:08.600 coming back down and value could have 242 00:12:08.600 --> 00:12:12.000 a run akin to what we observed post 243 00:12:11.500 --> 00:12:14.700 the tech bubble in the early 2000 when value 244 00:12:14.700 --> 00:12:17.900 was really dominant for a 245 00:12:17.900 --> 00:12:20.700 good three years in the marketplace. Now, 246 00:12:20.700 --> 00:12:23.800 I'm not suggesting that that it will exactly repeat itself. 247 00:12:23.800 --> 00:12:26.100 But you see the dynamic there in the case 248 00:12:26.100 --> 00:12:29.400 to be made for hey, it looks like there's still some fuel for 249 00:12:29.400 --> 00:12:29.900 this fire. 250 00:12:31.300 --> 00:12:34.200 And it would not be surprising to continue to 251 00:12:34.200 --> 00:12:38.100 see value run relative to the the 252 00:12:37.100 --> 00:12:39.100 more expensive stocks. 253 00:12:39.800 --> 00:12:42.300 Certainly, and you know, I think it's 254 00:12:42.300 --> 00:12:45.300 important for our listeners to know we're by no means suggesting people 255 00:12:45.300 --> 00:12:48.600 should speculate between growth and value. We think that you 256 00:12:48.600 --> 00:12:52.100 know factors specifically value are our 257 00:12:51.100 --> 00:12:55.700 long-term Endeavors and investors who maintain that 258 00:12:55.700 --> 00:12:58.500 exposure tend to do better over time 259 00:12:58.500 --> 00:13:02.000 is what I'm hearing you say and I 260 00:13:01.300 --> 00:13:04.200 and I lived through the tech bubble as you did 261 00:13:04.200 --> 00:13:08.200 and you know, those those years after where value did outperform 262 00:13:07.200 --> 00:13:11.400 they were still poor years, right 2000 263 00:13:10.400 --> 00:13:13.300 2001 weren't positive years in 264 00:13:13.300 --> 00:13:16.500 the market. And do you have any comments on you 265 00:13:16.500 --> 00:13:19.200 know value kind of shining during those downturns when 266 00:13:19.200 --> 00:13:22.500 we say values out performing. It doesn't necessarily I mean values positive, right? 267 00:13:22.500 --> 00:13:25.700 I think this is this the the Crux 268 00:13:25.700 --> 00:13:29.100 of why it's difficult to be a value investor because 269 00:13:28.100 --> 00:13:32.300 I mean sexually value investing 270 00:13:31.300 --> 00:13:34.400 is not hard to get your head around by cheap stuff 271 00:13:34.400 --> 00:13:39.100 and hold it right like that's not hard from sort 272 00:13:37.100 --> 00:13:39.500 of a conceptual. 273 00:13:39.800 --> 00:13:42.500 Went to get the hard part is actually doing it 274 00:13:42.500 --> 00:13:45.600 and being able to be patient through those 275 00:13:45.600 --> 00:13:48.100 periods when it doesn't look like 276 00:13:48.100 --> 00:13:51.300 it's working because those are those come right you 277 00:13:51.300 --> 00:13:54.300 you have those periods where the the tech bubble 278 00:13:54.300 --> 00:13:57.100 occurs where the Fang stocks are ripping the cover off the 279 00:13:57.100 --> 00:14:00.300 ball for five years in a row and your value stocks are languishing. 280 00:14:01.400 --> 00:14:04.700 Most investors the vast majority of investors cannot 281 00:14:04.700 --> 00:14:05.600 sit still through that. 282 00:14:06.300 --> 00:14:10.600 that's why value investing well easy to to 283 00:14:09.600 --> 00:14:12.400 sort of implement is hard 284 00:14:12.400 --> 00:14:15.700 to maintain and yet right what 285 00:14:15.700 --> 00:14:18.600 why do why do folks like you and I gravitate to 286 00:14:18.600 --> 00:14:21.500 Value as an important element of 287 00:14:21.500 --> 00:14:24.800 kind of a broad-based factor portfolio because 288 00:14:24.800 --> 00:14:27.600 the data going back over time 289 00:14:27.600 --> 00:14:30.300 suggests that if you can be patient 290 00:14:30.300 --> 00:14:33.500 through those periods when values not working the 291 00:14:33.500 --> 00:14:36.400 payoff for you when it comes in times 292 00:14:36.400 --> 00:14:39.200 like after the tech bubble when it comes when it 293 00:14:39.200 --> 00:14:42.300 comes in times like 2022 the payoff for 294 00:14:42.300 --> 00:14:44.500 you for being patient through that period 295 00:14:45.400 --> 00:14:49.300 And maintaining that that value exposure is 296 00:14:48.300 --> 00:14:51.600 significant enough such that 297 00:14:51.600 --> 00:14:54.700 over the total holding period you you 298 00:14:54.700 --> 00:14:57.100 end up ahead of where you might otherwise have been 299 00:14:57.100 --> 00:15:00.800 had you just had kind of Market level performance right? 300 00:15:00.800 --> 00:15:02.100 Just just broad beta. 301 00:15:02.900 --> 00:15:05.400 And so at the end of the day, you know, the question is, how 302 00:15:05.400 --> 00:15:08.200 do I out? How do I outperform the market? Well, one way to 303 00:15:08.200 --> 00:15:11.300 help perform. The market over time is to tilt towards 304 00:15:11.300 --> 00:15:15.000 these characteristics of risk, which have shown over 305 00:15:14.300 --> 00:15:18.000 time to outperform the market and values 306 00:15:17.100 --> 00:15:20.000 one of those now what I 307 00:15:20.200 --> 00:15:23.600 would say Tom is that it's incredibly difficult to just 308 00:15:23.600 --> 00:15:25.500 be a value investor and that's all you do. 309 00:15:26.100 --> 00:15:29.300 Which is why it's so beneficial to have a 310 00:15:29.300 --> 00:15:33.100 blend of factor exposures to have other things 311 00:15:32.100 --> 00:15:35.400 working when things like value for instance 312 00:15:35.400 --> 00:15:38.900 aren't so a good example of that is momentum, right? So 313 00:15:38.900 --> 00:15:41.300 it momentum and value are really nice 314 00:15:41.300 --> 00:15:44.600 pairing to put together in a portfolio because they're 315 00:15:44.600 --> 00:15:48.200 negatively correlated meaning when when values down 316 00:15:47.200 --> 00:15:50.400 momentum tends to be up and vice versa. 317 00:15:50.400 --> 00:15:53.400 So if the value investor if it's incredibly difficult 318 00:15:53.400 --> 00:15:57.300 to sit through those periods when value is not doing well with momentum 319 00:15:56.300 --> 00:15:59.200 exposures you end up 320 00:15:59.200 --> 00:16:01.100 having things in your portfolio. 321 00:16:02.200 --> 00:16:05.400 Which are picking up what's working and so in the case of the past five 322 00:16:05.400 --> 00:16:07.700 years a broad-based? 323 00:16:08.400 --> 00:16:12.100 Factor multi-factor portfolio would have value stocks 324 00:16:11.100 --> 00:16:15.100 in it, but it would also have some exposure 325 00:16:14.100 --> 00:16:17.200 to the fangs because those are 326 00:16:17.200 --> 00:16:20.400 representing kind of the momentum in the market until you have exposure to 327 00:16:20.400 --> 00:16:23.700 that and and that becomes an easier portfolio for 328 00:16:23.700 --> 00:16:27.300 most people to consume and sit through and the 329 00:16:27.300 --> 00:16:30.100 real magic here is the longer you 330 00:16:30.100 --> 00:16:33.900 can hold on to any of these Factor exposures. The more 331 00:16:33.900 --> 00:16:36.700 you have an expectation that you're going to have performance that's 332 00:16:36.700 --> 00:16:37.200 above Market. 333 00:16:37.900 --> 00:16:40.300 And and the real challenge for everybody is 334 00:16:40.300 --> 00:16:43.500 to sit still long enough to reap 335 00:16:43.500 --> 00:16:46.200 the reward of putting that Capital to risk. So you just trying to 336 00:16:46.200 --> 00:16:49.700 build a portfolio that people can actually stay in 337 00:16:49.700 --> 00:16:53.000 through these Market turmoil these ups 338 00:16:52.300 --> 00:16:56.000 and downs because if they can sit still there, you 339 00:16:55.400 --> 00:16:58.700 know it a bears make 340 00:16:58.700 --> 00:17:01.100 money Bulls make money pigs get slaughtered. Right? What does that mean? 341 00:17:01.100 --> 00:17:04.400 Look regardless of what your philosophy is, if you 342 00:17:04.400 --> 00:17:07.200 maintain that philosophy eventually the market 343 00:17:07.200 --> 00:17:10.400 will come around and rotate to you and pay you off for it. If you 344 00:17:10.400 --> 00:17:13.000 keep jumping from philosophy to philosophy trying to 345 00:17:13.400 --> 00:17:16.200 chase whatever is in front of you and get those returns. That's when 346 00:17:16.200 --> 00:17:19.000 you get slaughtered. That's when the cost of 347 00:17:20.300 --> 00:17:23.700 Trading in and out eats up your returns that 348 00:17:23.700 --> 00:17:26.200 that's when you're catching a falling knife. That's when 349 00:17:26.200 --> 00:17:29.200 all of these things that you hear why you might want to 350 00:17:29.200 --> 00:17:32.300 not want to be a growth investor or a value investor or 351 00:17:32.300 --> 00:17:35.100 right? All of those things can be true. If you're 352 00:17:35.100 --> 00:17:38.800 trying to find those things because the timing is is has 353 00:17:38.800 --> 00:17:41.900 been proven to be elusive if not impossible. So 354 00:17:41.900 --> 00:17:44.000 picking a philosophy and sticking with 355 00:17:44.200 --> 00:17:48.100 it as shown consistently over time to to be the way to go and we 356 00:17:47.100 --> 00:17:51.700 happen to believe in the philosophy of what's been 357 00:17:51.700 --> 00:17:54.100 shown from the academic research to be these 358 00:17:54.100 --> 00:17:57.200 characteristics of risk that pay off over time certainly and so 359 00:17:57.200 --> 00:18:01.300 in a nutshell, it's time in the market versus 360 00:18:00.300 --> 00:18:03.600 timing. The market is the best course of 361 00:18:03.600 --> 00:18:06.600 action. I want to hit upon something 362 00:18:06.600 --> 00:18:09.900 that you're alluding to and that platitude or 363 00:18:09.900 --> 00:18:12.700 it sounds like a platitude to most investors, especially 364 00:18:12.700 --> 00:18:15.400 when the markets down right telling them. I'm 365 00:18:15.400 --> 00:18:18.300 in the market not timing the market that doesn't mean much to somebody 366 00:18:18.300 --> 00:18:19.700 who's like am I gonna be able to retire? 367 00:18:20.200 --> 00:18:23.500 Right, but you have to understand where that platitude 368 00:18:23.500 --> 00:18:26.200 comes from right where where that rule of thumb comes 369 00:18:26.200 --> 00:18:30.600 from any and it is informed by 370 00:18:30.600 --> 00:18:34.400 decades upon Decades of observations 371 00:18:33.400 --> 00:18:36.400 of how markets behave 372 00:18:36.400 --> 00:18:39.600 and where returns to markets come from. Yeah. That's an excellent 373 00:18:39.600 --> 00:18:42.100 point. You were alluding to 374 00:18:42.100 --> 00:18:45.000 diversification Factor diversification but diversification as a whole 375 00:18:45.300 --> 00:18:48.300 and there's one thing I'd like you to comment on, you 376 00:18:48.300 --> 00:18:51.300 know, I've been hearing in Reading in popular press and 377 00:18:51.300 --> 00:18:54.100 in the various industry trade Rags that you know 378 00:18:54.100 --> 00:18:57.700 diversification didn't work in in 2022. My 379 00:18:57.700 --> 00:19:00.200 thought on that is that I think it's a misunderstanding of 380 00:19:00.200 --> 00:19:03.100 how diversification actually works and I'd love to hear your 381 00:19:03.100 --> 00:19:06.100 thoughts on that. Yeah. So you sort of 382 00:19:06.100 --> 00:19:09.400 come back to well. What are your expectations? I went 383 00:19:09.400 --> 00:19:12.600 when when you hear someone like you or 384 00:19:12.600 --> 00:19:16.400 I say, hey a broadly Diversified portfolio is 385 00:19:15.400 --> 00:19:18.900 is the starting point for most 386 00:19:18.900 --> 00:19:19.800 investors like 387 00:19:20.200 --> 00:19:23.500 Everybody should have if you're going to invest you should do it in a 388 00:19:23.500 --> 00:19:26.400 fashion that allows you to take advantage of broad-based diversification. 389 00:19:27.300 --> 00:19:30.800 If your expectation when you hear that is, oh, okay. I'll 390 00:19:30.800 --> 00:19:33.200 never lose money. Well, no that that's not what we're saying, 391 00:19:33.200 --> 00:19:36.500 right? The the point of broad-based diversification 392 00:19:36.500 --> 00:19:39.800 is you're taking off some of the idiosyncratic risk 393 00:19:39.800 --> 00:19:42.200 of any one kind of investment meaning. 394 00:19:43.400 --> 00:19:47.000 All I want to invest the only thing I know about is expensive wine 395 00:19:46.600 --> 00:19:49.200 French wine, right? That's the only thing I know about that. 396 00:19:49.200 --> 00:19:50.200 The only thing I want to invest in 397 00:19:50.900 --> 00:19:53.400 So if that's my investment philosophy the risk 398 00:19:53.400 --> 00:19:57.500 that I have is that the the wine 399 00:19:56.500 --> 00:19:59.800 market goes away people, you know, 400 00:19:59.800 --> 00:20:02.100 they're tasting preferences. They no longer want 401 00:20:02.100 --> 00:20:05.200 to drink expensive wines. We see 402 00:20:05.200 --> 00:20:08.600 a shift in the in the wine market where French wines are are no 403 00:20:08.600 --> 00:20:11.700 longer as highly valued as California wines, for 404 00:20:11.700 --> 00:20:14.100 instance. And if I've invested in 405 00:20:14.100 --> 00:20:17.400 a bunch of French wines, just the shift in the market now, I have 406 00:20:17.400 --> 00:20:20.700 a dramatic impact in my portfolio and or 407 00:20:20.700 --> 00:20:23.400 you know fires in 408 00:20:23.400 --> 00:20:26.700 California and drought in France and 409 00:20:26.700 --> 00:20:29.400 suddenly the wine market has absolutely no 410 00:20:29.400 --> 00:20:32.600 Supply. And so the 411 00:20:32.600 --> 00:20:35.300 price of what you're holding goes up dramatically, but then 412 00:20:35.300 --> 00:20:38.500 when it's gone, it's gone, right and then what do you invest in? So 413 00:20:38.500 --> 00:20:41.300 so the the risk of investing in any one 414 00:20:41.300 --> 00:20:45.600 thing you may know that thing inside and out but it's idiosyncratic 415 00:20:44.600 --> 00:20:47.200 to that thing. You're 416 00:20:47.200 --> 00:20:47.900 investing in like wine. 417 00:20:48.900 --> 00:20:51.700 So, you know the idea is with 418 00:20:51.700 --> 00:20:54.400 diversification. Yeah, okay invest in wine, but while 419 00:20:54.400 --> 00:20:57.900 you're doing that can we find some other things to invest in that are 420 00:20:57.900 --> 00:21:00.600 going to behave differently than Wine does 421 00:21:00.600 --> 00:21:01.100 because 422 00:21:02.200 --> 00:21:05.400 If the risks come to bear for wine, you don't get wiped out. 423 00:21:06.100 --> 00:21:09.400 Right. So we want to invest you know in a fashion 424 00:21:09.400 --> 00:21:12.300 that allows us to sort of achieve these long-term goals without getting 425 00:21:12.300 --> 00:21:15.300 wiped out along the way. So instead of investing in 426 00:21:15.300 --> 00:21:18.100 wine. Maybe we invest in, you know, 427 00:21:18.100 --> 00:21:21.100 small cap stocks in the United States and those are 428 00:21:21.100 --> 00:21:23.200 gonna look and behave very differently than the wine market. 429 00:21:23.600 --> 00:21:27.100 And maybe we invest in Emerging Market 430 00:21:26.100 --> 00:21:29.200 debt because we know that that's gonna 431 00:21:29.200 --> 00:21:32.700 behave differently than Securities and wine 432 00:21:32.700 --> 00:21:35.200 and maybe we invest in treasuries and 433 00:21:35.200 --> 00:21:38.200 maybe right. So as you start to go down that path you look at 434 00:21:38.200 --> 00:21:42.100 all of the different things you can lay around that are going to behave differently 435 00:21:41.100 --> 00:21:44.500 from the other things that you're holding. That's not 436 00:21:44.500 --> 00:21:48.700 to say that when a systematic level 437 00:21:48.700 --> 00:21:51.600 risk comes along like a pandemic or 438 00:21:51.600 --> 00:21:54.500 Rising interest rates that all of those things aren't 439 00:21:54.500 --> 00:21:58.100 going to be impacted by them. They will be right your your 440 00:21:57.100 --> 00:22:00.800 wine your small counts dogs. You're you're 441 00:22:00.800 --> 00:22:03.200 treasuries, right? You're you're emerging market 442 00:22:03.200 --> 00:22:06.400 that all of those things are gonna be impacted if there are 443 00:22:06.400 --> 00:22:09.300 issues that are roiling markets across the 444 00:22:09.300 --> 00:22:12.600 board. And and so if you're expectation going 445 00:22:12.600 --> 00:22:15.300 into a broadly based Diversified portfolio as I'll 446 00:22:15.300 --> 00:22:16.700 never lose money, or it'll never go down. 447 00:22:17.100 --> 00:22:20.200 That's the wrong. I would like to disabuse you of that notion. 448 00:22:21.200 --> 00:22:24.400 What you should expect is if any one or two of these things 449 00:22:24.400 --> 00:22:27.200 are impacted by a risk specific to it. 450 00:22:27.200 --> 00:22:30.500 I'm not going to be wiped out and that's why I would have a 451 00:22:30.500 --> 00:22:33.500 broadly based portfolio Diversified portfolio. Now, 452 00:22:33.500 --> 00:22:36.000 I will say that if a part of your 453 00:22:36.800 --> 00:22:39.800 diversification are things like Factor exposures. Well, you 454 00:22:39.800 --> 00:22:42.400 you end up often doing 455 00:22:42.400 --> 00:22:45.200 better than the market even if the markets down 456 00:22:45.200 --> 00:22:48.200 and your portfolio is down you end up doing a 457 00:22:48.200 --> 00:22:50.100 bit better than the market did in general. 458 00:22:51.100 --> 00:22:54.500 And if you look at like a sick just a generic 60 40 portfolio. 459 00:22:55.400 --> 00:22:57.700 It was one of the worst years on record for. 460 00:22:59.100 --> 00:23:00.600 1640 board folios 461 00:23:01.400 --> 00:23:04.200 because stocks and bonds both went down 462 00:23:04.200 --> 00:23:08.600 dramatically in fact bonds had a historically bad year led 463 00:23:07.600 --> 00:23:10.300 by treasuries which had the 464 00:23:10.300 --> 00:23:13.300 worst year since the you know in 200 and 465 00:23:13.300 --> 00:23:16.300 something years, right? So a 60 40 466 00:23:16.300 --> 00:23:20.500 a broad base 640 portfolio being down is unusual. 467 00:23:19.500 --> 00:23:22.300 It's Unique to have 468 00:23:22.300 --> 00:23:25.300 that experience, but it's also 469 00:23:25.300 --> 00:23:29.100 not unexpected given the the 470 00:23:28.100 --> 00:23:31.100 Catalyst for why all of those 471 00:23:31.100 --> 00:23:31.900 things were down. 472 00:23:32.900 --> 00:23:35.800 That doesn't mean you abandon that that 473 00:23:35.800 --> 00:23:38.300 investing discipline. It just means that 474 00:23:38.300 --> 00:23:43.000 you should expect there are going to be times when broad-based 475 00:23:41.400 --> 00:23:44.100 diversification isn't going to 476 00:23:44.100 --> 00:23:48.800 be the thing that saves you from experiencing a 477 00:23:48.800 --> 00:23:49.500 downmark. 478 00:23:50.300 --> 00:23:53.300 So it sounds like there's like two two things that you're bringing 479 00:23:53.300 --> 00:23:56.800 up here, right diversification certainly provides you with some 480 00:23:56.800 --> 00:23:59.700 protection from concentrated stock concentrated 481 00:23:59.700 --> 00:24:02.300 industry or even sector right? Like you bring 482 00:24:02.300 --> 00:24:06.000 up wine a great way to sort of 483 00:24:06.400 --> 00:24:10.300 balance that out by maintaining diversification. But however diversification is 484 00:24:10.300 --> 00:24:13.600 not going to necessarily protect you from the natural ebb and 485 00:24:13.600 --> 00:24:16.400 flows of the market, right? Those are gonna continue to happen 486 00:24:16.400 --> 00:24:19.400 but the market risk and I 487 00:24:19.400 --> 00:24:23.000 think you would agree is that that's what rewards investors for deploying 488 00:24:22.100 --> 00:24:25.200 their Capital into the market. Why would I invest 489 00:24:25.200 --> 00:24:28.500 broadly in you know, the S&P 500 well because 490 00:24:28.500 --> 00:24:31.300 there's risk associated broadly with the SD, but and 491 00:24:31.300 --> 00:24:34.700 I should be paid for doing so you're absolutely spot on right? Yeah. Why 492 00:24:34.700 --> 00:24:37.200 are we investing in anything because there's risk associated with 493 00:24:37.200 --> 00:24:40.200 it and that risk generates return, right? Yeah risk and return our 494 00:24:40.200 --> 00:24:43.600 absolutely Inseparable and I think it's it behooves investor 495 00:24:43.600 --> 00:24:46.200 to keep that investors to keep that sort of Mantra in 496 00:24:46.200 --> 00:24:49.200 mind so Casey, thank you so much for 497 00:24:49.200 --> 00:24:50.100 your comments. I do have 498 00:24:50.400 --> 00:24:53.500 Last question for you, you know, we covered the current events 499 00:24:53.500 --> 00:24:57.100 how that affected the markets, you know investors are 500 00:24:56.100 --> 00:24:59.400 listeners are looking at the retirement 501 00:24:59.400 --> 00:25:02.500 accounts. They're seeing a lot of red. What advice 502 00:25:02.500 --> 00:25:05.300 would you give investors? What should 503 00:25:05.300 --> 00:25:08.100 they do going into 2023? What are some of the things investors could be 504 00:25:08.100 --> 00:25:11.800 doing now? Well, you know, my my knee jerk 505 00:25:11.800 --> 00:25:14.200 response to that is nothing right. So if you're 506 00:25:14.200 --> 00:25:18.000 if you're a discipline investor maintain that discipline, right? 507 00:25:17.300 --> 00:25:20.600 There's no question 2022 was challenging year 508 00:25:20.600 --> 00:25:23.300 for investors. And there is likely, 509 00:25:23.300 --> 00:25:26.500 you know, these issues that we've been talking about they're not resolved. 510 00:25:26.900 --> 00:25:29.800 Right and in and in fact, there will be other things 511 00:25:29.800 --> 00:25:32.300 that will Royal the markets layered on 512 00:25:32.300 --> 00:25:35.400 top of these like for instance a fight over 513 00:25:35.400 --> 00:25:36.300 the debt ceiling, right? 514 00:25:37.300 --> 00:25:40.700 So there's likely more turbulence ahead. However, right the 515 00:25:40.700 --> 00:25:44.200 the best option for the long-term investor is 516 00:25:43.200 --> 00:25:46.300 to find a philosophy that 517 00:25:46.300 --> 00:25:49.500 makes sense for them build a portfolio around that and 518 00:25:49.500 --> 00:25:53.100 then maintain the course maintain 519 00:25:52.100 --> 00:25:54.200 the discipline. 520 00:25:55.800 --> 00:25:58.300 Through up markets down markets, you know turbulence in 521 00:25:58.300 --> 00:26:02.000 the headlines the it's the discipline of maintaining 522 00:26:01.200 --> 00:26:04.800 that philosophy over time that is provides the 523 00:26:04.800 --> 00:26:07.600 reward for long-term investors and their steadfast 524 00:26:07.600 --> 00:26:08.000 patients. 525 00:26:08.800 --> 00:26:12.700 Through these short-term Market movements or macroeconomic 526 00:26:11.700 --> 00:26:14.300 events are the things 527 00:26:14.300 --> 00:26:18.000 that are going to generate returns for them over the next Century, right? That's 528 00:26:17.500 --> 00:26:20.900 it just is what it is. It's what it has been for 529 00:26:20.900 --> 00:26:23.600 those investors who are looking at 2023 here are 530 00:26:23.600 --> 00:26:26.400 some statistics. Hopefully that will Empower you to maintain 531 00:26:26.400 --> 00:26:30.800 the course over the sort of the past Century 532 00:26:29.800 --> 00:26:32.600 the US has endured 15 533 00:26:32.600 --> 00:26:33.600 recessions. 534 00:26:34.500 --> 00:26:37.700 In 11 of the 15 or 73% in 535 00:26:37.700 --> 00:26:37.800 time. 536 00:26:38.400 --> 00:26:41.500 Returns on stocks were positive two years after the 537 00:26:41.500 --> 00:26:42.300 recession began. 538 00:26:43.200 --> 00:26:46.900 With an annualized average Market return 7.8% So 539 00:26:46.900 --> 00:26:49.800 if you're concern going into 2023 is always 540 00:26:49.800 --> 00:26:52.100 it gonna tip into recession. Should we be concerned with 541 00:26:52.100 --> 00:26:55.700 what the FED is doing? Are they gonna go too far? My answer to you 542 00:26:55.700 --> 00:26:59.100 would be look recessions are not new with the 543 00:26:58.100 --> 00:27:00.300 we've experienced them. 544 00:27:01.500 --> 00:27:04.300 Over time in fact more frequently than 545 00:27:04.300 --> 00:27:07.200 you would think and yet in a vast majority of those 546 00:27:07.200 --> 00:27:10.100 recessions. If you just have the patience to ride through 547 00:27:10.100 --> 00:27:13.400 it you're rewarded on the back end of that to to 548 00:27:13.400 --> 00:27:16.300 the tune of sort of a healthy average annual Market return of 549 00:27:16.300 --> 00:27:16.800 almost 8% 550 00:27:17.200 --> 00:27:20.500 So going into 2023 expect volatility 551 00:27:20.500 --> 00:27:23.300 expect there to be things playing out in the headlines. Do not 552 00:27:23.300 --> 00:27:27.000 let that pull you away from the long-term 553 00:27:26.600 --> 00:27:29.800 discipline and know that the the 554 00:27:29.800 --> 00:27:33.200 rationale for why you're investing over 555 00:27:32.200 --> 00:27:36.400 the long term is sound and 556 00:27:35.400 --> 00:27:38.400 you have expectation that this too 557 00:27:38.400 --> 00:27:40.500 shall pass and I'll be rewarded for that patients. 558 00:27:41.300 --> 00:27:44.500 Yeah, absolutely discipline and patience tends to be the biggest Catalyst 559 00:27:44.500 --> 00:27:47.600 for rewards for investors over the long term and going 560 00:27:47.600 --> 00:27:51.000 into 2023, you know investors who might be uneasy 561 00:27:50.500 --> 00:27:54.000 unable to sleep at night concerned about their portfolios. 562 00:27:53.300 --> 00:27:56.500 They should go meet with their financial advisor. 563 00:27:56.500 --> 00:27:59.500 Make sure that their current asset allocation is aligned with 564 00:27:59.500 --> 00:28:02.200 their financial plan and their long-term goals 565 00:28:02.200 --> 00:28:06.100 and objectives and you know, I think staying 566 00:28:05.100 --> 00:28:09.300 the course and remaining disciplined makes the 567 00:28:08.300 --> 00:28:11.700 most sense but making 568 00:28:11.700 --> 00:28:14.500 sure that your portfolio is aligned with what you want to achieve with. 569 00:28:14.500 --> 00:28:17.500 Your hard-earned capital is something investors could 570 00:28:17.500 --> 00:28:20.600 be doing into 2023 and then expect your 571 00:28:20.600 --> 00:28:23.300 advisor say everything's gonna be fine unless there's 572 00:28:23.300 --> 00:28:27.200 some sort of life-changing event that happens with the 573 00:28:26.200 --> 00:28:29.700 investor not necessarily the markets 574 00:28:29.700 --> 00:28:32.100 Casey. Thank you so much for your insights today. 575 00:28:32.100 --> 00:28:35.100 It's always a pleasure. We love talking to you and 576 00:28:35.100 --> 00:28:38.000 we look to have you back over the next 577 00:28:38.200 --> 00:28:40.700 couple of podcasts and I want to thank all of our listeners out there. 578 00:28:41.100 --> 00:28:45.500 Joining us today. Please feel free to access other 579 00:28:45.500 --> 00:28:49.500 podcasts that we have done and they 580 00:28:48.500 --> 00:28:51.300 can be accessed anywhere you get your 581 00:28:51.300 --> 00:28:54.500 podcast. So thanks everyone and we will see you 582 00:28:54.500 --> 00:28:57.900 next time symmetry Partners LLC is an 583 00:28:57.900 --> 00:29:00.500 investment advisor firm registered with the Securities 584 00:29:00.500 --> 00:29:03.500 and Exchange Commission The Firm only transacts business 585 00:29:03.500 --> 00:29:06.400 in states where it is properly registered or 586 00:29:06.400 --> 00:29:09.900 excluded or Exempted from registration requirements 587 00:29:09.900 --> 00:29:12.700 registration of an investment advisor 588 00:29:12.700 --> 00:29:15.200 does not imply any specific level of skill or 589 00:29:15.200 --> 00:29:18.200 training and does not constitute an endorsement of 590 00:29:18.200 --> 00:29:21.200 the firm by the commission. No one should assume that 591 00:29:21.200 --> 00:29:24.900 future performance of any specific investment investment strategy 592 00:29:24.900 --> 00:29:27.800 product or non-investment related 593 00:29:27.800 --> 00:29:30.600 content made reference to directly or indirectly in 594 00:29:30.600 --> 00:29:32.700 this material will be profitable. 595 00:29:33.700 --> 00:29:36.200 As with any investment strategy there is the 596 00:29:36.200 --> 00:29:39.800 possibility of profitability as well as loss due 597 00:29:39.800 --> 00:29:42.500 to various factors including changing market 598 00:29:42.500 --> 00:29:44.900 conditions and/or applicable laws. 599 00:29:45.600 --> 00:29:48.800 The content may not be reflective of current opinions 600 00:29:48.800 --> 00:29:51.900 or positions. Please note the material 601 00:29:51.900 --> 00:29:54.300 is provided for educational and background use 602 00:29:54.300 --> 00:29:57.800 only moreover. You should not assume that any discussion or 603 00:29:57.800 --> 00:30:01.100 information contained in this material Services the 604 00:30:00.100 --> 00:30:03.500 receipt of or as a substitute for 605 00:30:03.500 --> 00:30:05.900 personalized investment advice.
For most investors, 2022 has felt like a “terrible, horrible, no good, very bad” year. International conflict, inflation, and historically paced interest rate hikes, have made this a challenging year for markets. While finishing the quarter with positive returns, the gyrations of markets in the fourth quarter did little to assuage investors' general unease moving into 2023. In this first half of a special two-part episode, we are joined by Casey Dylan, CIMA®, CEO, Founder & Director of Story Market Services, to discuss the most critical events of 2022 and their subsequent effects on the stock market. If you have any questions or would like more information, reach out to us at https://symmetrypartners.com/contact-us/ You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
While the efficient market hypothesis was derived from historical studies, we firmly believe that it is still applicable to our current approach to long-term investment planning. We are once again joined by Symmetry's Brendan Kruh, Research Associate, to talk about current events such as, inflation, rising interest rates, the present war in Ukraine, political tumult, and other compounding difficulties posed by the current economy. To the surprise of exactly no one, we continue to trust that the market will endure these challenges. If you have any questions or would like more information, reach out to us at https://symmetrypartners.com/contact-us/ You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
Investors, and active money managers, rarely outperform capital markets on their own. The data to prove this point is both ubiquitous and vast. We believe that markets are efficient, and investors are best served with a well-diversified portfolio that owns the market for decades a time. In this episode of Unfiltered Finance, we are joined by Symmetry's Brendan Kruh, Research Associate, to discuss the efficient markets theory and how its academic basis can be used to design investors' portfolios. If you have any questions or would like more information, reach out to us at https://symmetrypartners.com/contact-us/ You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
Open-ended Mutual Funds and Exchange Traded Funds are both popular investment vehicles. They carry a number of similarities, including; their "basket-like" structure, and exposure opportunities. But, there are critical differences between the two, which, can impact the way you invest your hard earned money. Joining our own Tom Romano is Symmetry's Kevin Scully, CFA, Senior Research Associate, Portfolio Manager, to discuss these key differences, and how you can determine which investment best suits your needs. If you have any questions or would like more information, reach out to us at https://symmetrypartners.com/contact-us/ You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
No investor wants to work with a financial advisor who is content with settling for less. In this episode of Unfiltered Finance, our own Tom Romano is joined by Symmetry's Associate Director of Marketing, Andrea Loin, to explain why, and how, financial advisors should work to continuously develop their businesses. We'll give you a hint, it can improve the client experience…for all involved. If you have any questions or would like more information, reach out to us at https://symmetrypartners.com/contact-us/ You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
For investors, the following statement is self-evident, “my portfolio is better off in the hands of a well-informed and skilled advisor.” This is the fundamental belief that led us to hold our educational conference - Summit 2022. From November 9th - November 10th, we covered any number of topics including marketing, client service, and direct indexing. In this episode of Unfiltered Finance, Tom Romano is joined by William Chettle, Symmetry's Head of Advisor Relations & Client Experience, to discuss this year's Summit and the potential benefit this sort of event can ultimately have for advisors' clients. If you have any questions or would like more information, reach out to us at https://symmetrypartners.com/contact-us/ You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
While some online technologies can prove to be valuable assets for investors, and their advisors, the internet is not exactly void of malicious actors. In this episode we are once again joined by Symmetry's Director of Operations and Technology, Robert Hawke, and our Director of Operations, Mark Longmore, for an in-depth discussion about cybersecurity and the online tools that can be used to protect your data. Click here and listen to our full episode: https://info.symmetrypartners.com/unfiltered-finance #technology #operations #investmentservices #behindthescenes If you have any questions or would like more information, reach out to us at https://symmetrypartners.com/contact-us/ You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
There is no magic bullet solution to the technological component of investing. In reality, solutions come from diligent research, testing, and a focus on developing quality investor experiences. Today we take a look behind the curtain to see how various technologies can be used to service both financial advisors and investors. Symmetry's Director of Operations and Technology, Robert Hawke, and our Director of Operations, Mark Longmore, will be leading the way in this first of two installments. If you have any questions or would like more information, reach out to us at https://symmetrypartners.com/contact-us/ You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
Welcome Back to Unfiltered Finance for "Part Two" of our episode - Popular Questions About Investing. Symmetry's Tom Romano, Director of National Sales, is joined once again by the founder of Story Market Services & CEO of Empirica Solutions Group, Inc., Casey Dylan, CIMA®, to discuss the value of seeking qualified (and accredited) insight before making critical investment decisions. To get your question answered, reach out to us at https://symmetrypartners.com/contact-us/ You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
In this episode of Unfiltered Finance, Tom Romano, Symmetry Partners' Director of National Sales is joined by the founder of the newly formed Story Market Services & CEO of Empirica Solutions Group, Inc., Casey Dylan, CIMA®, to address some of the questions we frequently receive from both investors and financial advisors. To get your question answered, reach out to us at https://symmetrypartners.com/contact-us/ You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
For the financial advisors in our audience, it's a cornerstone of quality service to address clients' concerns and meet their needs when customizing portfolios. In this episode of Unfiltered Finance, Symmetry's Tom Romano, Head of Strategic Relationships, and Phil McDonald, CFA, CAIA, Managing Director of Research Investments & Portfolio Manager, relay the importance of ongoing reevaluation (and reallocation) when managing a personalized index portfolio. To learn more about personalized direct investing visit http://www.symmetryaxiom.com You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
Many high-net-worth individuals, and their families, have specific requirements, tax considerations, and investment preferences, that cannot be addressed by conventional investment options. Welcome back to Unfiltered Finance! In the first installment of this two-part episode, Symmetry's Tom Romano, Head of Strategic Relationships, and Phil McDonald, CFA, CAIA, Managing Director of Research Investments & Portfolio Manager, discuss the practice of personalized direct investing, how it works, and how it can be customized to suit investors' individual values. To learn more about personalized direct investing visit http://www.symmetryaxiom.com Listen to the full episode here: https://info.symmetrypartners.com/unfiltered-finance You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
In many ways, the virtual reality space, Web 3.0, holds both experiential and financial opportunities for the future. But how can we tell the difference between those opportunities that are authentic and those which are not? In this episode, we are joined by VR content creator Brody Parksua, to discuss the economic potential of Web 3.0. *Symmetry is not affiliated with Brody Parksua. Follow Brody Parksua on Twitter - @RuffStu84697214 Visit Unfiltered Finance at https://info.symmetrypartners.com/unfiltered-finance For more information visit https://www.symmetrypartners.com. You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
The second quarter of 2022 has been challenging for investors as markets responded negatively to shifting interest rates, supply chain snarls, inflationary pressures, and geopolitical challenges. Join us for this episode of Unfiltered Finance as we discuss these issues, among others, in this quarterly review. Visit us at https://www.symmetrypartners.com. You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice. All indexes have certain limitations. Investors cannot invest directly in an index. Indexes have no fees. Historical performance results for investment indexes generally do not reflect the deduction of transaction and/or custodial charges or the deduction of an investment management fee, the incurrence of which would have the effect of decreasing historical performance. Actual performance for client accounts may differ materially from the index portfolios.
“Alternative Investments” are those that do not fall into one of the conventional investment categories of stocks, bonds, and cash. While you may be familiar with Crypto and NFTs, what you may be less familiar with are some of the more unusual categories such as; art, wine, specialty real estate like farmland, rare books…and sneakers?! Today, we are joined by Wyatt Cavalier, Chief Investment Officer of Alts.co, to discuss how investors may potentially benefit from some amount of exposure to "alt funds". Visit Unfiltered Finance at https://info.symmetrypartners.com/unfiltered-finance Visit us at https://www.symmetrypartners.com. You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
As we all know, no single market trend lasts forever. Even the online streaming industry has fundamentally changed in recent weeks (on the heels of the pandemic). In this episode, we are joined once again by Symmetry's Andrew Willard, Research Analyst, to debate the topic of Netflix's recent financial performance as compared to other, more diversified companies, such as Disney. Visit us at http://www.symmetrypartners.com. You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
"Story Stocks" can be described as investments of artificially inflated value. From time to time, mass media coverage of a given stock will bolster its popularity by way of broad speculation and forecasting. In this first half of a two-part episode on the subject, we are joined by Symmetry's Andrew Willard, Research Analyst, to discuss the importance of resisting spontaneous, or popular, investment decisions and keeping to a reasonable investment approach. Visit us at www.symmetrypartners.com. You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
Markets reflected a host of investor concerns during the first quarter of 2022. Over the past four decades, U.S. investors have experienced declining interest rates, benign inflation, globalization of trade, and relative stability among the world's superpowers. During the first quarter of 2022 those trends were upended as markets were faced with rising interest rates, spiking inflation, ongoing supply-chain snarls, and a land-war in Europe. Stocks and bonds alike slumped. Visit us at www.symmetrypartners.com. You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice. All indexes have certain limitations. Investors cannot invest directly in an index. Indexes have no fees. Historical performance results for investment indexes generally do not reflect the deduction of transaction and/or custodial charges or the deduction of an investment management fee, the incurrence of which would have the effect of decreasing historical performance. Actual performance for client accounts may differ materially from the index portfolios.
In this special installment of Unfiltered Finance, we are joined by William Chettle, Symmetry's Director of Experience and Engagement, to explore the ramifications of Russia's invasion of the Ukraine, including the immediate and potential longer-term impact for investors, markets and the global economy. Visit us at www.symmetrypartners.com. You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempt form registration requirements. Registration with the U.S. Securities and Exchange Commission or any state securities authority does not imply a certain level of skill or training. All data is from sources believed to be reliable but cannot be guaranteed or warranted. The information is provided for educational and background use only. This information should not be construed as an offer to buy, sell, or recommend a security, market sector, or investment strategy. No one should assume that future performance of any specific investment, investment strategy, product, or non-investment related content made reference to directly or indirectly in this material will be profitable.
The cost to attend college gets more and more expense every year, and roughly 40% of families cite cost as the “most important” criteria when choosing where and how to pursue college education. On this episode we are joined by Jim Femia, the Director of College Planning for Apella Capital, to get his thoughts about saving for and funding college. Visit us at www.symmetrypartners.com. You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempt form registration requirements. Registration with the U.S. Securities and Exchange Commission or any state securities authority does not imply a certain level of skill or training. Symmetry Partners, LLC, and Apella Capital, LLC are affiliated entities. Apella has an arrangement with Symmetry under which Symmetry makes model portfolios available to Apella for use with Apella's clients. All data is from sources believed to be reliable but cannot be guaranteed or warranted. The information is provided for educational and background use only. This information should not be construed as an offer to buy, sell, or recommend a security, market sector, or investment strategy. No one should assume that future performance of any specific investment, investment strategy, product, or non-investment related content made reference to directly or indirectly in this material will be profitable.
Equities markets have gotten off to a decidedly ugly start to the year, as various indices flirt with correction, if not bear market, territory. On this episode we explore causal factors for market corrections and crashes from both an academic and practical standpoint with Dr. John McDermott. Visit us at www.symmetrypartners.com. You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice. All indexes have certain limitations. Investors cannot invest directly in an index. Indexes have no fees. Historical performance results for investment indexes generally do not reflect the deduction of transaction and/or custodial charges or the deduction of an investment management fee, the incurrence of which would have the effect of decreasing historical performance. Actual performance for client accounts may differ materially from the index portfolios.
Investors experienced a roller-coaster ride, replete with dramatic drops and historic highs, over the final months of 2021. On this episode we review market performance for the quarter, and explore several key issues that were impactful, and may continue to be into 2022. Visit us at www.symmetrypartners.com. You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice. All indexes have certain limitations. Investors cannot invest directly in an index. Indexes have no fees. Historical performance results for investment indexes generally do not reflect the deduction of transaction and/or custodial charges or the deduction of an investment management fee, the incurrence of which would have the effect of decreasing historical performance. Actual performance for client accounts may differ materially from the index portfolios.
As another year comes to an end, it is critical for investors to take an inventory of their financial priorities, and, plan for the future. On this episode of Unfiltered Finance, we are joined by Symmetry's Director of Experience and Engagement, and, host of The Evidence-Based Marketer, William Chettle, to discuss our "Year-End Checklist". Download our "Year-End Checklist" here: https://bit.ly/3pKvgou Visit us at https://www.symmetrypartners.com. You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
No one can completely predict the direction of inflation expectations. This fact makes speculative investing a risky proposition. In this episode, we continue our discussion of a potential interest rate increase, and the possible effects bond investors may face. Once again we are joined by Symmetry's Chief Investment Strategist, Dr. John McDermott, and Managing Director of Investments & Research, Philip McDonald. Visit us at www.symmetrypartners.com. You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
Rising inflationary pressures associated with the post-COVID reopening have driven central banks like the Fed to begin to unwind some of the extraordinary steps they had taken to provide liquidity and stabilize markets during the pandemic. One of the primary tools available to central banks to combat inflationary environments is the ability to influence interest rates. When markets begin to anticipate an increase in interest rates, much is made about the potential losses bond investors could experience. Joining us today, to shed some light on the relationship between interest rates and fixed income, are Symmetry's Chief Investment Strategist, Dr. John McDermott, and Managing Director of Investments & Research, Philip McDonald. Visit us at www.symmetrypartners.com. You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
Digital assets have grown to over a $2 trillion market value, and new ETFs based on Bitcoin futures could bring crypto into the mainstream. On this episode we are joined by analyst Andrew Willard for an update on the current state of the crypto market, and where things in this space might be headed. Visit us at www.symmetrypartners.com. You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
Market participants have recently grappled with growing concerns over signs of elevated inflation, persistent supply shortages, fading economic recovery indicators, and an anticipated shift in Fed policy. Join us as we take a closer look at the various events and economic headlines that helped drive market performance for the third quarter of 2021, and explore what may be in store for investors in the near future. Visit us at www.symmetrypartners.com. You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
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